Five years, €31 million and 19 investments. Carduso Capital works together with the University of Groningen and the University Medical Center Groningen, to finance promising tech companies that have evolved out of academic research. Co-initiator and partner Frits Kok looks back on the challenges of setting things up, finding the right startups and what the next five years will look like.
BioBTX, BUKU, EV Biotech, ViroTact (recently making international headlines), these are just a few of the Groningen startups Carduso financed recently. Aside from Frits Kok, the fund is headed by his partners Koos Koops (entrepreneur and biochemical engineer) and Robert Polano (finance specialist).
What was the idea behind Carduso Capital?
“The main reason is of course to make sure that scientific and academic innovations are transformed into real life products, rather than remain just research subjects. But we also wanted to make sure that promising startups didn’t leave the region because of lack of funding. And the third reason is to bring outside investors and more money to the region as well.”
“We are a venture capital firm. We don’t provide grants or subsidies, we invest in good ideas and people with the skills to turn that idea into a successful business. What sets us apart from other VC firms is we’re not just looking to see if a proposal checks all the boxes, give money and have quarterly meetings and evaluations. We want to actively be on board and help with guidance and our network.”
What were the biggest challenges in setting up a fund like this?
“Finding the right partners and investors and getting everyone on board initially. But the size of the fund was probably the biggest challenge. You know, €31 million sounds like a lot of money, but that’s really peanuts when you compare it to international venture capital firms that handle billions. Funny story, early on, we were in talks with a possible investor in Amsterdam and when we told them how much we needed and how much we’d raised so far, we were barely allowed to finish our cup of coffee. <laughs> They worked with something like a minimum of hundred times the amount we needed.”
“It was also difficult to get the European Investment Fund on board as a partner. Not just because it’s a long, complicated and bureaucratic process, but also because of the relatively small amount we were asking for. They also handle funds of €500 million easy. It was really difficult to find and talk to the right person and we were actually about to give up, before we finally were able to convince them.”
Was it difficult to find promising startups in the region?
“We focus on companies working in Life Sciences, Energy and Sustainable Society. That may sound like a specific niche, but really, a lot of startups can potentially fall into those categories. I’d say we’ve handled more than 330 serious propositions in total and invested in 19 of them.”
Looking at so many propositions, anything you’ve noticed in terms of quality?
“Energy is probably the most difficult category. A lot of ideas were just the next app that’s a dime in a dozen or very consumer focused in a narrow sense that it just wasn’t scalable. And sometimes the initial idea was good, but the founders just didn’t have the entrepreneurial skills to turn it into a thriving business.”
“And something we've noticed and didn’t expect, was that a lot of founders had great plans, but no exit strategy. It just didn’t really occur to them at all. If you want to turn it into a family business and have your children take over, sure, that’s great. But that’s not in a VC’s interest. For us it’s important to come up with a good exit strategy too.”