In recent years, a new crop of European Venture Capital (VC) firms has emerged, claiming to operate under the motto "entrepreneurs backing entrepreneurs." This trend may be in its early stages, but Swedish fund Node.vc has now joined this group, securing €71 million in funding to deploy into startups across the Nordics and Baltics.
"We hope it is a beginning trend," said John Elvesjö, managing partner of Node.vc. "Europe has been significantly behind the U.S. when it comes to operational experience in VC investors. There’s a lot of marketing around being founder-led and operator experience, but when you scratch the surface, it’s usually pretty thin."
A Deeper Connection to Entrepreneurship
Node.vc’s ties to entrepreneurship run deeper than just its investment team. Elvesjö co-founded Swedish eye-tracking startup Tobii, which went public in 2015. However, this connection is not limited to the investment team; Node.vc also has a significant number of limited partners (LPs) who are founders themselves.
"We have 70 LPs who are founders," explained Elvesjö. "While they have no obligation to add more than money, they have a natural penchant to invest their time as well."
Securing Institutional Investors
Despite its unique approach to VC math and focus on founder-led investing, Node.vc would not have been able to close a fund of this size without securing institutional investors. Its LPs include Saminvest, Sweden’s fund-of-funds, and the life and pension arm of Nordic bank Nordea.
A Deliberately Oversized Team
"We have a team that is deliberately a bit oversized," said Elvesjö. "We are more people on the team than what the fund can normally finance. And the reason for this is we are entrepreneurs and we are building a VC firm."
With eight full-time and eight part-time staffers, several of whom previously worked at Nordic VC firm Brightly Ventures, Node.vc should have enough hands on deck to support the seven startups it plans to back each year.
Typical Fund Structure
The rest of the equation is more typical for a fund of that size. "We write an average entry ticket of 1.3 million euro," said Elvesjö. "And we can follow on for a very long time."
"We can actually invest even up to 10 million euro in one single company if we want," he added.
Three Themes and Sectors
The fund is sector-agnostic but focuses on three themes: the future of entertainment, represented by portfolio company Roro, a gaming studio; the future of work, with Lemonado and Starhive; and platform technologies, which include fintech, IoT, cloud infrastructure, and machine intelligence.
"These themes correlate with the strengths and sectors the Nordics are known for," said Elvesjö. "But we only realized this after putting a significant amount of effort into research."
"We did this enormous investment in figuring out where trends are going," he explained. "And then we condensed it and put it in a slide, what the slide says is we think the Nordic ecosystem will be good at what it has been good at before."
Talent Availability in the Nordics
Paradoxically, the fact that several Scandinavian unicorns let people go could also be beneficial for its startup scene. According to Elvesjö, "talent in the Nordics is now available and looking for opportunities."
"We believe this is a great time to invest in the region," he said.
A New Era for European VC
The emergence of Node.vc and other European VC firms operating under the "entrepreneurs backing entrepreneurs" model may signal a new era for European venture capital. With its unique approach to investing and focus on founder-led growth, Node.vc is well-positioned to make a significant impact in the region.
As Elvesjö noted, "we hope it is a beginning trend."
