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.¬† 83North, formerly Greylock IL, has been an important partner for us over many years, particularly in its focus on earlier-stage opportunities.
Laurel Bowden, a Partner at 83North, shares her thoughts with Kreos on 83North‚Äôs current focus across Europe and Israel. Laurel joined Greylock IL, now 83North, in 2008 and is based in London. Her areas of focus include software, internet and fintech. Laurel has led investments in many leading European companies, including Just Eat (LSE: JE), Qliktech (NASDAQ: QLIK) and Hybris (acquired by SAP). Laurel‚Äôs current company boards and investments include the following companies: BlueVine, Ebury, iZettle, Mirakl, Notonthehighstreet, Wandera, Wonga and Workable. She is also on the boards of Investec PLC and Ltd. Laurel was previously at JVP and GE Capital in London.
83North is a global venture capital firm with more than $550m under management. The fund invests in exceptional European and Israeli entrepreneurs across all stages of the consumer and enterprise spaces. 83North has offices in London and Tel Aviv, and is deeply rooted in the main US tech hubs, with over half of its portfolio companies having operations in the US.
Kreos and 83North have had a long-standing relationship over many years.¬†83North is unique in terms of its focus both on Israel and Europe. Can you tell us more about that?
We are actively investing in both geographies and leveraging the core competencies of both. For example, in Israel, we see many companies with deep technology in areas such as storage, cyber security and data centres, and in parallel across Europe we have looked at and invested in companies in commerce, fintech and gaming. Because we are involved with a diverse network of people and companies, across geographies, we can connect and facilitate knowledge-sharing among them.
In addition to backing exceptional European and Israeli companies, our operation remains deeply rooted in the US, given our personal backgrounds and origins as investors with Greylock IL.
Many European and Israeli entrepreneurs are based in the US, either before or after our funding, and as a result, over half of our portfolio has presence in the US. In addition, almost all of our LP investors are based in the US, as well as some of our key strategic advisors. That depth allows us to help our companies in the US in unique ways in areas like business development, recruiting and networking.¬† Some of our current investments with offices in the US include: Actifio, Mirakl and Workable in the Boston area, Payoneer and PlayBuzz in the NYC area, and SuperSonic, BlueVine and Margeta in CA.
You did some mid to later-stage investments, some of them very successful such as JustEat. What‚Äôs the rationale behind it?
A significant number of our portfolio companies were funded at earlier stages and some of these investments have grown to become very large companies, such as Payoneer, Zerto and ScaleIO, which was recently acquired by EMC. However, as you noted, we are also looking for great companies that have already proven market traction and are chasing a very large opportunity. On that front, in addition to Just Eat, we also funded Hybris, which was later acquired by SAP, and Telit, which we invested in as part of a PIPE deal, to name a few.
Your fund has a great reputation for a good reason. What has been the key to your success historically at Greylock, and now at 83 North?
I don‚Äôt think there is a specific one but I would say that we are investing in exceptional people. This is driving our modus operandi ‚Äì the entrepreneurs are most important: they are running the business and we are trying to help them as much as we can by using our experience and connections. Most of our investments came from our immediate network; many are second-time entrepreneurs who we worked with previously or managers who referred to us from our portfolio.
We understand you have some special advisors to the fund – how are they involved?
As part of working with exceptional people, we have a small group of people who help both the fund and its portfolio companies in unique ways (e.g. co-invest with us and/or help in due diligence and business development). These unique individuals come from investment backgrounds and also have deep operational experience, and provide a unique perspective and network for our companies. Some of these figures include Dave Strohm and Henry McCance from Greylock Partners, David Buttress the CEO of JustEat and Mans Hultman, former CEO of QlikTech.
How do you build expertise in specific verticals?
Let me provide two examples: we are strong believers that the financial world presents some huge opportunities for smart entrepreneurs to build large companies. So we leverage our unique combination of being a global fund on the one hand, and a focused boutique firm with vertical expertise on the other. With this strategy, we have already invested in 6 fintech companies in Sweden, Israel, London and NYC.
Our fintech portfolio includes payments processing infrastructure companies like Payoneer and Marqeta, innovators of payment acceptance like iZettle, and lending and services companies such as Ebury, Wonga and BlueVine. These companies provide a diverse and comprehensive global network of fintech expertise for us.
Another example would be the area of commerce and marketplaces – with investments in companies like Mirakl in France, Hybris in Germany (sold to SAP), NotOnTheHighStreet and JustEat (LSE: JE) in London and Via in NYC/Israel, we have built deep expertise in commerce and market places that provides true added value to our portfolio and cross-pollination of best-practices.
Laurel, how would you summarise Kreos as a partner?
Kreos was the pioneer in Europe and Israel with growth debt. I have personally known and worked with the core team for over 12 years. So, together, we have seen the ups and downs of the industry through two cycles.
We have done and shared many deals and will continue working together going forward. We especially appreciate Kreos‚Äôs consistency, reliability, quick decision making and their willingness to consider options that give our companies maximum operational flexibility and useable capacity. They are a friend of the firm and we look forward to many more years and successful co-investments