Kreos Capital works closely with equity sponsors across all aspects of its pan-European strategy. In addition to our core focus of larger facilities for later stage companies, our strategy also includes financing companies at the earlier stages of their development. Eight Roads Ventures, formerly Fidelity Growth Partners, has been an important partner for us over many years.
Eight Roads backs technology entrepreneurs with aspirations for greatness. By combining a collaborative approach with a global network and a 50-year history of investing, Eight Roads helps companies across the globe accelerate their growth and become leaders in their field.
A strong track record includes investments in market leaders such as Alibaba, China PnR, CloudByte, C√∫ram (IBM), Hile, InnoGames, Made.com, Manthan Systems, Metaps, NewBay (RIM), NotontheHighStreet.com, Rivo Software, VMC and Wahanda (Recruit). In Europe, Eight Roads is currently investing a ¬£150 million fund dedicated to backing fast-growing European companies focused on enterprise, consumer and financial technology.
Davor is a Partner and Head of Europe Ventures at Eight Roads‚Äô London office, and he is on the board of several companies, including Notonthehighstreet, and focuses on internet, software and digital media. Davor spent several years at McKinsey and Company, where he advised companies worldwide on issues in strategy and technology.
With an increasing number of growth company investors in Europe, how does Eight Roads differentiate themselves?
We are really proud to be one of the long-time investors focused on Europe for over fifteen years. We launched our first dedicated European fund in 2010, when perhaps Europe wasn‚Äôt as obvious an opportunity, and announced our second fund (50% bigger at ¬£150m) earlier this year.¬† At the same time, we have a 45-year heritage of patient investing across the globe in places like the US and China (we were early investors in Alibaba back in 1999 and remain shareholders).
We think entrepreneurs today want to work with truly global platforms that can help them win in the US where we originated but also in Europe and in Asia, so we built out capabilities in the UK, China, India and Japan.¬† We tend to be active investors helping companies like Wahanda, Notonthehighstreet, and Appsflyer with whatever they need to build regionally and globally successful companies ‚Äì we think our portfolio CEOs are usually our best references. And we don‚Äôt just look in well-established hubs like London, Berlin and Stockholm ‚Äì we are willing to spend time to find successful entrepreneurs all across Europe. We have a multicultural team with the know-how and ability to do just that.
What is the story behind the Eight Roads name?
Last year, we officially changed our name from Fidelity Growth Partners Europe to Eight Roads Ventures and the news coincided with the announcement of our new ¬£150m fund.
The number eight represents success, wealth and prosperity. The word ‚Äòroads‚Äô speaks to our entrepreneurship with a sense of exploration and discovery. This development brings all the Fidelity Growth Partners brands under a single identity, making the global nature of our business much clearer and reflecting the passion and energy of a young, fresh team, with the wisdom of Fidelity‚Äôs well-proven experience.
What type of businesses do you invest in?
We focus very much on growth stage businesses in the tech space, both enterprise, consumer, and fintech. Typically they are already revenue generating and are growing fast. They usually have a solid model, a great addressable market, but the business needs support to scale.
In some cases, they may never have taken on venture or growth capital before. In terms of sectors, we‚Äôve built a wealth of experience in marketplaces, with portfolio companies like notonthehighstreet, Wahanda and Packlink, software like Appsflyer, GoodData, and Neo Technologies and we‚Äôre also really interested in fintech. We love to back entrepreneurs we have worked with before and we also like co-investing with other investors who share a similar ethos to us.
Do you think it‚Äôs possible for Europe to build billion dollar global businesses?
Without a doubt. In fact, we‚Äôve already done it. Look at Zoopla, King and JustEat ‚Äì these are fantastic success stories just to name a select few. For the first time in Europe we have people who‚Äôve built huge global businesses relatively quickly, and we have a next generation of entrepreneurs who have the desire to do the same. It‚Äôs our role as investors to help make that happen. Not only with money, but by helping high potential entrepreneurs and companies scale. And why should our ambitions stop at a billion? I believe we‚Äôll be seeing $10bn companies in the medium term as well. That has historically been our weakness but the likes of Spotify, Zalando, and perhaps a few more have a chance to become as successful as some of the US counterparts and transform the overall European ecosystem.¬† We shouldn‚Äôt lose sight that the European ecosystem is at least three decades younger than the US one ‚Äì so things will evolve further over time.
What do you see as the biggest issue for European high growth companies?
Like our rich and diverse cultures, Europe has always been great at creating really interesting and successful businesses. But historically, we‚Äôve not been great at scaling those businesses. For a business to take major leaps in growth over a relatively short period of time takes special know-how. The same team that takes you from ¬£0m to ¬£10m in revenue may not be the team that knows how to take you from ¬£10m to ¬£100m and beyond. There‚Äôs a whole other level of systems and processes needed, and you need someone around the company who has been through the journey. We see this with a number of our successful portfolio like Innogames, Made.com or Notonthehighstreet ‚Äì they have built a whole new layer of management capabilities as they grew towards the ¬£100m mark. So the biggest issues all relate to the challenges of scale ‚Äì access to the right talent, right mental models of creating large companies and ambition to keep going when the business already shows success.
Davor, how would you summarise working with Kreos as a partner?
As the leader in the European growth debt landscape, Kreos has consistently been a go-to partner for our companies.¬† In instances like Wahanda, which was a great outcome for both Eight Roads and Kreos, your team has been able to recognise the potential of the business early and stay committed to the company throughout different stages of development.¬† It is that understanding of company evolution and dedication to the success of entrepreneurial ambition that make Kreos a strong partner and a good friend of Eight Roads.