SCC Patron Northzone is one of the largest venture capital funds in Europe. The company provides the capital, connections, and experience to help tech entrepreneurs build the global companies of tomorrow. Over the last 20 years, Northzone has invested in some major Swedish success companies such as Spotify, Klarna, iZettle, Tobii and Trustpilot. The LINK met up with Hans Otterling, Partner at Northzone, and talked about the past and the future of the tech sector, Swedish unicorns and why the UK is a good market for start-ups.
Tell us a bit about your career journey to where you are today?
I am a recovering serial entrepreneur. Since the 80s I have built three global companies: Waymaker (an investor relations tool for news distribution), RIM (a pharmaceutical and health care information provider) and StreamServe (a customer communications system). Streamserve we grew to 13 offices and ran from the HQ in Boston, US. I joined Northzone in 2006 and in 2013, we decided to strengthen Northzone’s UK presence, so I moved to London with my wife Maria and our three children.
What companies have Northzone made the biggest investments into?
We invest in different stages of the life of a company, and sometimes even before they have even launched a product. As the company grows, we continue to invest in and work with the company. Take Spotify, for example, we were the first investors in the company back in 2008 and we have been on the board during the past ten years. Some of our biggest recent successes are Spotify, iZettle, Tobii, Trustpilot, and Klarna.
You have been with Northzone since 2006, how has the industry changed since then?
The tech industry as a whole, has grown significantly during the past ten years. In 2006, only one of the five largest US companies were a tech company. Today, six of the largest companies are tech companies. It is remarkable to think back to when I joined Northzone, iPhones didn’t exist. Tech has disrupted and is disrupting industries as far reaching as banking, healthcare, agriculture, and transport. The European tech ecosystem has gone from strength to strength. There are now so many ambitious companies being built, and there is capital to support them.
What can we expect in the future?
In terms of technology, the biggest, and potentially most far-reaching development, is the continued growth and application of artificial intelligence (AI) and automation. We already see how AI is central to our companies in a range of sectors, including fintech, edtech and health tech. In terms of the European venture capital ecosystem, I hope that we continue to grow with new funds to support tomorrow’s entrepreneurs.
What are the biggest challenges in your job today?
We invest in about 1 percent of all companies we meet, which means we unfortunately spend a lot of our time saying no. Just because a company is not right for us, does not mean it doesn’t have the potential to be a great business.
What is the best part about your job?
Meeting entrepreneurs. It is a fantastic privilege to share their ideas and vision, and we are amazed by the talent and drive we see every day.
Why is Sweden so good at creating unicorns?
Although I think the unicorn label (companies valued over $1bn) is largely arbitrary, Sweden punches above its weight relative to size in terms of building big tech companies, with companies like iZettle, Klarna, and Spotify. It is down to a combination of factors. A strong design and technology heritage, a close community of role models where the first generation of success stories inspires the next, and a society that has the support structure to enable people to take risks.
Why is UK a good market for Swedish start-ups?
We opened our office in London in 2013 because we knew that London is a global market. For many Swedish companies, London is the first-choice international market to crack. The language, size, access to world-leading financial institutions and global connections make it attractive.
Northzone is a Patron of the SCC, why do you think it is important that start-ups join the Chamber and what can companies gain from doing so?
The SCC has deep experience of the UK market, and a unique membership network, which start-ups can benefit from. You can’t underestimate the benefit of practical help and guidance when setting up an office in the UK, and the connections with the corporates that could be your next partner or customer.