Sunstone Capital is based in Copenhagen and also has offices in Menlo Park (California) and Båstad (Sweden) – it specialises in tech, life sciences, web and mobile, and raised a new €85m fund in December 2011.
How did you get into investing?
I started out doing investing in listed equity, back in the early ’90s – only tech and media stocks. After 7-8 years of that, I decided it was more fun to be on the other side – seed-funding a couple of startups myself, and also getting directly involved myself. Then I eventually moved into venture capital, back in 2000.
What would you do if you weren’t working in investment?
I’m actually doing what I really fancy. The thing you do as a VC, you get involved in a lot of exciting projects but you don’t necessarily run operations. Being involved in a lot of things… I like most the strategic, business-building aspects of it. I think I’ll be doing this for a long while.
Do you invest in companies that you think will change the world for the better?
We only do things that can potentially change something on a global scale, so a lot of it will fail and we accept that.
How many of your companies do you expect to fail?
We’re very US-style in our model. We only invest in things that are inherently in a global market, so the drop-out rate would be very high. We probably invest in 20, 25 companies in fund generation. I’d say at least half would fail or almost fail and one or two would generate most of the returns.
What do you consider your biggest success so far?
We’re still a young firm. We were founded 2007 so we haven’t done a lot of exits yet. The most recent one is a company called Podio that we sold to Citrix. A 14-month holding period, right? Which is pretty phenomenal in terms of your venture return.
Door closed on dot com, now open again for web plus mobile…
Image credit – Flickr user zzkt
What’s your biggest or most expensive regret?
After the dotcom bubble, you tended to invest in a lot of hard-tech type companies because nobody wanted to invest in web. Some of those things where you have a long tech cycle, you invest a lot of dollars, after seven years, you end up failing… That’s really a catastrophe. First you take risk, then you take product risk, then you take market risk. That’s a chain we don’t really fancy anymore. Burnt by the hardware…
What are you most passionate about?
I’ve spent most of my time on mobile. We had a long phase where it was impossible to make any money with mobile but now the model for mobile is becoming even more and more like web services, so I’m really passionate about it – I think there’s a lot of opportunity in that space.
If you could invest in any three companies, who would they be?
I respect Amazon for the things they’ve done consistently when many people have sparks of fame and then fail afterwards. That’s pretty impressive.
Right now, we look at a lot of consumer marketplaces. We have three things that we really invest in – prosumer web services, where online comes back into offline, and then consumer marketplaces. That’s what we really focus a lot on right now.
Airbnb is a really interesting model. I respect that a lot.
And I’m still a fan of Spotify. Still a user.
Any advice for founders dealing with investors?
It’s important that you stick to what you really know and what you’re passionate about. You should also do your homework on who is it you’re meeting and what have they been doing…
Do you have a catchphrase or a motto or a favourite quote?
No… We’re value-driven, so we think fairness. VCs get a lot of opportunities to screw people and I think you have to be really, really careful that you don’t do that. You have to really see commitment – on both sides, from the entrepreneur and the other way. And courage. Be brave. Just say the things that sound ridiculous but are really bold…
FOR RELATED READING, CHECK OUT:
So you want to be a VC? The 10 steps to setting up a fund – Part 1
So you want to be a VC? The 10 steps to setting up a fund – Part 2
Investor spotlight: Earlybird’s Ciaran O’Leary talks Berlin hype and tough decisions