Spotify CEO Daniel Ek pledges $1Bn of his wealth to back deeptech startups from Europe

At an online event today, Daniel Ek, the founder of Spotify, said he would invest 1 billion euros ($1.2 billion) of his personal fortune in deeptech “moonshot projects”, spread across the next 10 years.

Ek indicated that he was referring to machine learning, biotechnology, materials sciences and energy as the sectors he’d like to invest in.

“I want to do my part; we all know that one of the greatest challenges is access to capital,” Ek said, adding he wanted to achieve a “new European dream”.

“I get really frustrated when I see European entrepreneurs giving up on their amazing visions selling early on to non-European companies, or when some of the most promising tech talent in Europe leaves because they don’t feel valued here,” Ek said. “We need more super companies that raise the bar and can act as an inspiration.”

According to Forbes, Ek is worth $3.6 billion, which would suggest he’s putting aside roughly a third of his own wealth for the investments.

And it would appear his personal cash will be deployed with the help of a close confidant of Ek’s. He retweeted a post by Shakhil Khan, one of the first investors in Spotify, who said “it’s time to come out of retirement then.”

During a fireside chat held by the Slush conference, he said: “We all know that one of the greatest challenges is access to capital. And that is why I’m sharing today that I will devote €1bn of my personal resources to enable the ecosystem of builders.” He said he would do this by “funding so-called moonshots focusing on the deep technology necessary to make a significant positive dent, and work with scientists, entrepreneurs, investors and governments to do so.”

He expressed his desire to level-up Europe against the US I terms of tech unicorns: “Europe needs more super companies, both for the ecosystem to develop and thrive. But I think more importantly if we’re going to have any chance to tackle the infinitely complex problems that our societies are dealing with at the moment, we need different stakeholders, including companies, governments, academic institutions, non-profits and investors of all kinds to work together.”

He also expressed his frustration at seeing “European entrepreneurs, giving up on their amazing visions by selling very early in the process… We need more super companies to raise the bar and can act as an inspiration… There’s lots and lots of really exciting areas where there are tons of scientists and entrepreneurs right now around Europe.”

Ek said he will work with scientists, investors, and governments to deploy his funds. A $1.2 billion fund would see him competing with other large European VCs such as Atomico, Balderton Capital, Accel, Index Ventures and Northzone.

Ek has been previously known for his interest in deeptech. He has invested in €16m in Swedish telemedicine startup Kry. He’s also put €3m into HJN Sverige, an artificial intelligence company in the health tech arena.

#articles, #artificial-intelligence, #balderton-capital, #biotechnology, #business, #daniel-ek, #economy, #energy, #entrepreneurship, #europe, #forbes, #founder, #kry, #machine-learning, #northzone, #private-equity, #spotify, #startup-company, #tc, #telemedicine, #united-states

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As it delists, Rocket Internet’s ill-fated experiment with public markets is over

It was all supposed to be so different. When Rocket Internet IPO’d in 2014 it was the largest tech company floatation in Europe for 7 years. A year later it had lost $46m and it’s valuation had dropped by 30%. Since then the German start-up factory behind internet companies such as Delivery Hero, Zalando and Jumia has languished, in part because the reason for it’s existence – to provide growth capital for ‘rocket-fuelled’ startups – has ebbed away, as the tech market was flooded with capital in recent years. Today the company said it was delisting its shares from the Frankfurt and Luxembourg Stock Exchanges for just that reason.

Rocket’s market value has fallen from its high of 6.7 billion euros ($8 billion) on the day of its IPO on the Frankfurt Stock Exchange to just 2.6 billion euros and is now offering investors 18.57 euros ($22.23) for each of their shares, lower than Monday’s closing price of 18.95 euros.

The company said it was “better positioned as a company not listed on a stock exchange” as this would allow it to focus on long-term bets.

In a statement, the company said: “The use of public capital markets as a financing source as essential [sic.] parameter for maintaining a stock exchange listing is no longer required and adequate access to capital is secured outside the stock exchange. Outside a capital markets environment, the Company will be able to focus on a long-term development irrespective of temporary circumstances capital markets tend to put emphasis on.”

Delisting, it said, will also reduce operational complexity when setting up new companies, “freeing up administrative and management capacity and reducing costs”.

Its investment division, Global Founders Capital, and CEO Oliver Samwer, will retain their stakes of 45.11% and 4.53% respectively, meaning the virtual shareholder meeting on Sept. 24 ask for shareholder approval to delist will be largely a formality. It has also launched a separate buyback program to secure 8.84% of its shares from the stock market. Although the decision to de-list makes sense, smaller shareholders will be burned, especially as Rocket is using its own cash for the buy-back.

The bets Rocket took, however, have of course paid off. For some. According to Forbes, Samwer and his brothers and co-founders Alexander and Marc are worth at least $1.2 billion each.

The Berlin -based firm became quickly known as a “clone factory” after Samwer famously conceded during his PHD that Silicon Valley had got innovation wrong by comping up with new ideas, and the ‘innovation’ would simply be to make existing models more efficient. The fact those existing models were usually dreamt up by other people never seemed to phase him.

Almost like clockwork Rocket produce clones of various guess for Amazon, Uber, Uber Eats and Airbnb. Its defence for this rapacious strategy was that it was simply adapting proven models for other markets.

Rocket would say it was merely adapting proven models for untapped local markets. Of course, the kicker was usually that the company would either scale faster globally than the original US-based startup, thus forcing some kind of acquisition, or that it would have its clones IPO faster. It did however produce some big, global, companies, even if they were not particularly original, including e-commerce firm Zalando, food delivery service Delivery Hero and meal-kit provider HelloFresh .

There have been successes. Jumia, the African e-commerce company, listed in April last year and when Rocket sold its stake earlier this year, it contributed tp Rocket’s net cash position of €1.9bn at the end of April.

But it has not benefitted from the recent stock market rally for tech companies, as it is overly exposed to e-commerce rather than pandemic-proof companies like Zoom .

For nostalgia sakes, here’s that interview I did with Oliver Samwer in 2015, just one more time.

#airbnb, #alexander, #amazon, #berlin, #ceo, #companies, #delivery-hero, #e-commerce, #europe, #food, #forbes, #frankfurt, #global-founders-capital, #hellofresh, #internet, #jumia, #kicker, #listing, #marc, #oliver-samwer, #retailers, #rocket-internet, #tc, #uber, #zalando, #zoom

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Vista Partners founder calls for a fintech revolution to help pandemic-hit, minority-owned small businesses

The head of what is arguably private equity’s most successful technology investment firm — Vista Equity Partners — made a rare appearance on Meet The Press to discuss the steps that the country needs to take to help minority-owned businesses recover from the economic collapse caused by the COVID-19 epidemic.

Robert F. Smith is one of the worlds wealthiest private equity investors, a noted philanthropist, and the richest African American in the U.S.  Days after announcing a $1.5 billion investment into the Indian telecommunications technology developer Jio Platforms, Smith turned his attention to the U.S. and the growing economic crisis that’s devastating minority businesses and financial institutions even as the COVID-19 epidemic ravages the health of minority communities.

Calling the COVID-19 “a pandemic on top of a series of epidemics”, Smith said that the next round of stimulus needs to support the small businesses that still remain underserved by traditional financial institutions — and that new financial technology software and services can help.

“We need to continue to rally as Americans to come with real, lasting, scalable solutions to enable the communities that are getting hit first, hardest, and probably will take the longest to recover with solutions that will help these communities thrive again,” Smith told NBC’s Chuck Todd.

Smith called for an infusion of cash into community development financial institutions and for a new wave of technology tools to support transparency and facilitate operations among these urban rural communities that aren’t served by large banking institutions. 

In all, the first round of the Congressional stimulus package poured $6 trillion into the U.S. economy through authorizations for the Treasury to issue $4 trillion in credit and $2 billion in cash payouts to various industries. The average size of those initial loans was just under $240,000, according to a post-mortem assessment of the Payroll Protection Program written by Lendio chief executive Brock Blake for Forbes

Blake’s assessment of the shortcomings of the PPP echoes Smith’s own criticism of the program. “Many of these small communities — urban, rural — aren’t being banked by the large institutions,” Smith said. Instead they’re working with community development financial institutions that in many instances weren’t approved lenders under the Small Business Administration and so were not able to distribute PPP money and make loans to their customers.

“We have to take this opportunity to reinvest in our business infrastructure in these small to medium businesses. In our banking infrastructure so that we can actually emerge out of this even stronger,” Smith said. “We have to invest in technology and software so that these ‘capillary banking systems’ are more efficient and they have more access to capital so they can engage with these businesses that are underbanked.”

In many instances this would amount to the construction of an entirely new financial infrastructure to support the small businesses that were only just beginning to emerge in minority communities after the 2008 recession.

“We need to get this average loan size to $25,000 and $15,000,” said Smith. To do that, community banks and development finance institutions are going to need to be able to access new fintech solutions that accelerate their ability to assess the creditworthiness of their customers and think differently about how to allocate capital and make loans. 

In some ways, Smith is echoing the call that fintech executives have been making since the PPP stimulus first started making its way through the financial system and banks began issuing loans.

“We would be remiss if we didn’t take a significant portion of capital to reinvest in the infrastructure of delivering capital back into those businesses and frankly reinvest in those businesses and give them technology and capability so there’s more transparency and visibility so there’s an opportunity to grow [and] scale,” said Smith. “I don’t want to see us go back to the same position where we were so we have these banking deserts.”

The head of Vista Equity Partners has even tasked his own portfolio companies to come up with solutions. As Barron’s reported last week, Smith told the Vista Equity portfolio company Finastra to develop technology that could help small lenders process Paycheck Protection Program loans for small businesses in underserved communities.

“In the process, it became apparent how unbanked these most vulnerable communities are, and we felt it was imperative to help build out permanent infrastructure in those banks so that they can build long-term relationships with the U.S. Small Business Administration beyond PPP,” Smith told Barrons.

As of last week, 800 lenders had processed 75,000 loans using the software that London-based Finastra developed for U.S. small lenders. Those loans generated $2.2 million in processing fees for the fintech company, proving that there’s money to be made in the small ticket lending market. And even as Finastra is reaping the rewards of its push into small business lending services, Vista Equity and Smith are donating the same amount to local food banks, according to a spokeswoman for the private equity firm, Barron’s reported.

 

#bank, #banking, #economy, #finance, #financial-infrastructure, #financial-technology, #forbes, #head, #lendio, #london, #money, #tc, #u-s-small-business-administration, #united-states, #vista-equity-partners

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