Nick Kingsbury (Amadeus Capital Partners): We are a DeepTech investor, so we do like things with solid IP and outstanding technical teams behind the product.
23 Feb, 2021
Inventor, Entrepreneur, and Investor focusing on technology-enabled business.
At GPO Fund they back visionary Founders who want to accelerate their aspirations to disrupt and dominate global industries. Fund believes the private venture capital markets are broken, resulting in unnecessary fundraising cycles, a lack of transparency, misalignment of incentives across funding rounds, inflexible holding periods for investors, and outcomes that are often suboptimal. GPO Fund invest in rapidly scaling, growth-stage global tech firms whose strategy can substantially benefit from access to international capital markets. Interested in technology-driven business models in the fields of emerging markets, education, clean-tech, network effects, B2B SaaS, blockchain, big data, and financial services.
I was a technology entrepreneur. My co-founder and I started our first businesses in the mid-nineties at the early days of the world wide web. Since then we started several businesses around AI, data, B2B, and enterprise software. Through that period, we did a fair amount of early-stage angel investments. Then we started to notice that in the US companies weren’t going public and the criteria there was a structural change. Previously if companies wanted to go public they had to have a $200-300 million valuation. Now it needs to be a $2-3 billion valuation. And we saw the corrosive negativity impact of that structural change. I had a simple idea: why not invest in North American companies and go public earlier just outside the US. That’s how we started the global public offering fund.
We are interested in technology-enabled businesses. We like artificial intelligence and are very comfortable with fintech and enterprise software. These are all areas that we’ve invested in and are very comfortable with. Our strategy is to invest in companies that have phenomenal great founders, who want to build big important companies that are global. When we talk about Global Public Offering Fund, think about companies that are going to have a big customer base and operations all over the world.
We don’t invest in biotech and pharmaceutical technologies. We are data and software-driven businesses. Healthcare is an area that we’ve clearly stayed off. I wouldn’t say that it’s more subtle. We have a digital health company. We’ve invested in regulatory technology, also we’ve invested in space – a satellite company. I would say that pharmaceutical and biotech are definitely areas we don’t invest.
We are looking for companies in North America that want to expand globally, especially in Asia. Generally, these are Canadian, US, and Mexican companies.
At Global Public Offering Fund, we invest in a later stage. They are a little past-startups. I met the most unusual companies before, when we were investing in the early stages. I backed a fractal art company and that was unusual. The investment ended up doing quite well, but they had to pivot substantially before they found their calling. That was an unusual business. In that case we were backing the team.
That was before the Global Public Offering Fund in the days of angel investments. Now we are looking for companies that have over $10 million in revenue. They have customers, figured out product market fit and it’s really scaling capital.
We invested in a satellite technology company. We invested in a regulatory dashboard company that monitors regulatory change. We invested in a mobile tracking and mapping software for the enterprise. So, it’s a tough question for me to name something unusual.
We invest after the baby stage in companies that have completed their series B. Round C and D are where we like to play.
We are a growth-stage investor and are looking for well-run technology companies that want to accelerate their international growth, particularly in the Asia-Pacific region. We invest in technology-enabled growth companies. They tend to be venture-backed and have already completed a series B round of investment, usually from a venture capital firm before us. We are a later stage and are really about backing the exceptional founders. Me and my cofounder are founders ourselves. We’ve started over a dozen companies and we realized that there is a substantial benefit in accelerating international growth. Also, there is a substantial benefit in diversifying your investor base to include international investors. Usually, when we invest we try to include in our syndicator regional investors from the Asia-Pacific, who can help lead the path to growth and ultimately, if appropriate, to a public offering in the region, mostly in the Hong Kong, Singapore or Australian stock exchange.
Our target is a $40 million round of which we pay about a half. Usually, we pay the whole amount in one round.
At first, we are looking for ambitious and visionary founders. Second is, we look for a product that has global appeal and potential. That is very important for us. Then we look for investments where we can add a lot of value, as a really strategic investor, where our knowledge and relationships in Asia can accelerate the growth of the company and de-risk our investment.
We have a thing that is called investor-founder fit. For us it is very important that there’s a good fit between the vision of the founder and the value, we think we can bring to execute on that vision.
It really depends on the company, but we are minority investors. We are venture investors and we are not looking to take control of the company. Generally, these companies are valued between $100 and $500 million. I think 20% plus would be enough.
We are looking for companies that can be multi-billion-dollar companies. We are interested in companies that can be held after the company goes public. We are long term holders. If we don’t think it can be a unicorn we don’t invest. We are interested in companies that can be big and important. We are looking for the next Oracle, Salesforce, or Amazon. We are looking for founders who want to build multi-billion-dollar companies.
We expect to hold at least two years as a private company and at least three years as a public company. It really depends on the company. We have a lot of flexibility when we exit because the company should be listed. Ideally, we hold it for a very long time because we invest in great companies. Unlike traditional funds, we don’t have the same type of exit pressure because it’s a partnership. We invest crossover: we invest while it’s private, but we’re able to hold it while it’s public.
I’ve had a computer since I was a kid and I used to write software. We are very concerned about the technical team and architecture, and we do a lot of technical diligence. We tend to like microservice architectures, distributed architecture, and next generation technical architectures. We always look at technical dev as part of our diligence process. And I would say an exceptional technical team is absolutely critical to our investment selection process.
Also, we’re comfortable with artificial intelligence, blockchain, and various data encryption techniques. We are comfortable with next generation architectures.
We are looking for investing in companies that are over $10 million in revenue. At that point, they have a sizable team.
Ideally, we’d like to get to know the founders before they’re looking for money. We can move very fast, but our preference is to get to know them over time and build a relationship with them in advance before they are looking for financing.
Many of the founders or members of the management team we’ve known for over a year. A formal procedure could take a couple of weeks. It really depends on the investment. We are investing in a later stage. We do technical diligence. We do diligence on the market opportunity. We talked to customers and with potential customers at our stage.
We look at hundreds of companies every year. Right now, I think we are tracking 1800 companies. We are making a handful of investments every year.
We do outreach to find new companies to invest in. Number one is our network. We’ve done angel investing for two decades, so we have a deep network in the venture community. We get a lot of referrals from A and series B venture investors. Then is our research-driven, proactive outreach. Technical blogs are an important source of information for us.
Often we get information by asking other people. Last week I had three meetings in Nashville and every single meeting I asked, what are the fastest growing technology companies in the region. I did the same thing in Kentucky. So, we are asking people and business leaders who they see as breakout companies. We are asking top technical talent, who they see as a breakout talent. We are researching all the time. We have over a thousand employees with whom we try to stay in touch with and we constantly asking them. I think if you know us we probably have asked you who you think is an exceptional company.
We usually do deep personal references. It is critical for the management team. The other important thing is, we deeply look at the technical side of the company. Also, we check how they recruit. Their desire and ability to attract top talent is very important to us. These are our three red flags.
Most important to us are the vision, integrity, and drive of the founders. That’s critically important for us.
I had an opportunity to invest in a Tableau. This happens when I was an angel investor. At that time, I was pretty busy and I didn’t have a chance to finish my investment process. I loved the company but I just didn’t was fast enough. Another company that I liked was Twilio. There are great companies around but when you are a seed-stage investor it doesn’t always come together.
Everything is different with a fund where we’re investing in on a later stage and we are able to do a lot more diligence on them. They’ve got operations, customers and it’s really about scaling. And that’s great. Quite opposed to at the early stage when you’ve got to swing for the fences, take risks, and not all the early-stage companies succeed.
I think that it depends on the startup. The main reason to go to a conference is to find customers. For me, that is the most important aspect of conferences. I think you could find a customer or learn about the industry there.
What we currently are seeing is that Asia-Pacific countries have recovered differently, and are shown an eagerness to invest. It opened up new opportunities for us because there’s increased interest for founders to diversify their investor base. At the portfolio level, we’ve seen some companies accelerate sales as a result of COVID. Others require a lot of research because their environment has changed. And that creates an opportunity for active investors that do a deep research as we do.
I believe it is more the opportunity. World pandemic accelerated the willingness to try new things. It also accelerated digitalization. Without a doubt, it is an opportunity for technological investors.
Often founders are insufficiently technical. Also, it’s management and founding team dynamics. Those are two common problems in startups.
I think that all of them demonstrated a vision, which is very important. The thing that really impresses me about Elon Musk is that he has a curiosity spans in multiple areas of science. I respect that. One of the things that I respect about bill Gates is he respects and appreciates the technology. He also respects the importance of human resources, processes, training, and employee onboarding. Every business founder has an area where he is the strongest. But I think the great entrepreneurs appreciate all the different areas as being important for a business’s success. You can’t focus on all areas, but you should respect them all.
My co-founder for my first two businesses was the head of technology and I was the head of the business. He appreciated that technology without business was not going to be successful. And I appreciated that a business without the technology was not going to be successful. We both were very passionate about the success and the integration of these two things. If Steve Jobs would say ‘All that matters is the product’, he would have failed. If Bill Gates would say ‘All that matters is the technology and the operating system’, he would have failed. All of those people that were mentioned appreciated the integration of the various elements of a business that make it successful.
You have to be impressed by the Carnegie Steel Company. That is certainly, an incredible startup story. Microsoft is very amazing too. Obviously, Intel drove a lot of things. That’s a great company to look at. But Carnegie Steel is on the top of all of them. I also would like to admit Thomas Edison, who started over 36 companies. He proceduralized them and that is very impressive.
There are hundreds and hundreds of companies that could benefit from our strategy and we’ve got a lot of work ahead of us. We predict in 10-15 years when you’ll go to raise money, you won’t go to a local venture capitalist. You’ll go to the global. Think much more globally about how to raise money. I think that the way companies raise money is going to fundamentally change. And it’s going to take 10-20 years. Ask me that question again in 20 years.
I like mogul biographies, which are biographies of impactful business people. I really like a book by Ben Horowitz «The Hard Thing About Hard Things». I think it is very well written and it is a good book. Other than that, I like to rock line and snowboarding. This year I have to stay in the US but as we built the Global Public Offering Fund over the last couple of years I was traveling to Asia very often. I have spent on the road almost 50% of the time. It really inspires me.
It is important to have diverse founders with knowledge and expertise that are very different than your own. It’s important to have advisors who are going to disagree with your thoughts, but that you respect. The key here is respect.
That’s a good question. I like to live in New York, Singapore, London, and San Francisco. I think that New York is an incredible place, but San Francisco is simply incredible. But I’m going to stay with Singapore. You know, I love Sydney too. It’s difficult for me to pick up only one favorite city.