Fredrik Cassel and his colleagues at Creandum are constantly looking for new, promising businesses to back with growth capital and other resources in exchange for small shares in these companies.
“We have contact with about one thousand entrepreneurs each year. So far we have screened tens of thousands of companies,” says Fredrik.
So far the venture capital fund has invested in 75 companies since 2003. On average, only 1 out of 100 gets a yes. You could be one of them. Or could you? You are about to find out.
First condition: Do you want to play the big game?
“If you are one of those entrepreneurs who is happy building a company that does well in the local market so you can live a nice lifestyle while you run your own businesses, venture capital is probably not the right choice. At least, that is not the kind of company Creandum is investing in”, says Fredrik.
“We are looking for entrepreneurs who see themselves on a journey towards becoming a leading global company in a specific category within ten years. Only on very rare occasions does Creandum invest in companies that can be market leaders locally, when the local market is big enough.”
Second condition: Is your market big enough?
“How much money is spent each year in the market you are targeting? For us to be interested in partnering up with your company, it should be at least a billion-euro market.”
Third condition: Is your business competitive enough to win?
“Just because you are successful in Norway, Germany or Sweden doesn’t mean your company will reap the same success when opening up to an international market. The competitive situation internationally is a very important factor for us, and one of the most common reasons we end up saying no.”
Fourth condition: Do you attract the right talent?
“Your core team must be of an exceptional calibre. You as the entrepreneur must have a team of people who are as driven and skilled as you are, if not better. They should compliment your skills. If it’s too much of one-person show, we become less interested. We always take the time to explore the dynamics of the core team before investing. Are you pushing one another to make yourselves better? And do you have the kind of leadership that attracts great talent?”
Fifth condition: Do you have a strong customer appeal?
“The best thing you can do as an entrepreneur – whether you want venture capital or not – is to build a company that gets love from customers or consumers early on. Even on a small scale, this usage data helps you validate your proposition. Getting revenue from the first few customers is a nice bonus, of course, and will make it even easier to get extra capital if you want it,” says Fredrik.