“In the past few years, the market has overheated. Now it’s getting back to normal.” Interview with Trind Ventures
Since the launch of its second fund in 2022, Trind Ventures has closed almost a dozen investments, including the most recent ones in Webel, Boksi, Your.Rentals, and Wudpecker. Due to its activity, the fund was included in out 19 most active Baltic VC funds in H1 2023 ranking, where it placed the ninth.
AIN.Capital talked with Reima Linnanvirta, Partner at Trind Ventures, about the fund’s activities and recent investments in an interview, where he also shared his thoughts on the Baltic VC and startup market.
Tell me about Trind Ventures. What is the fund about, what startups do you invest in?
Trind Ventures is a seed-stage venture fund focusing on European software startups. We are currently investing from our second fund, which is a €55 million fund we launched in 2022, exactly a year ago. And we focus on companies with a consumer or community component, so typical examples are marketplaces, platforms, and anything with many users. Geographically, we invest all over Europe, with the core region being the Nordics and Baltics.
Can you tell me about the second fund’s performance since its launch in September 2022?
Well, it’s still so early, you can mainly measure how much you have invested. Our goal was to make 8 to 10 deals per year. By now, we made 11. So we are pretty much exactly on schedule. The big plan is to continue investing the same for the next three years and aim to build up a portfolio of between 30 and 40 companies, probably ending up closer to 40.
Is it too early for any exits?
No, no exits. So far, only one company has had a follow-on funding round. In Fund 1, we have had two exits, both positive. But in regards to Fund 2, no exits yet.
If you have an early exit, you know it’s not going to be the best story for the fund.
Did any startups surprise you with their growth since the investment?
In Fund 1, the best-performing startups have been Ready Player Me, which attracted Series B round led by Andreessen Horowitz. There is also Neural DSP that has been growing really well and attracted a lot of attention recently. Jobilla has been expanding quite nicely. All in all, I would say that in Fund 1, there’s five companies that are performing well. Those are the highlights.
In terms of Fund 2, Webel is the one with the best performance so far. It is also the one that we did a follow-on investment for. So it’s been developing nicely since the first investment.
2022 seems like quite a time ago. Have there been any changes in your investment strategy since the fund’s launch?
No, but we have seen this shift in the market, and that sort of works in our favor. We have always been a conservative and quite data-driven investor. And when the market overheated, there were quite a few deals that got funding without any data. They were just a great story and great founders, so they were able to raise funding.
Now we see more and more that there is increased attention to traction, you have to check customer acquisition and retention. I would say that the market is getting back to normal, which makes it easier for us to invest within our thesis. We didn’t need to make any changes.
Since the start of autumn, you have had four deals announced. Can you tell me more about them?
In the last four weeks, we have had four investments already; pretty busy during summer:
- Webel — we made the first investment in December last year. A very small ticket. It was an early-stage deal, but they had a great team and promising metrics. We wanted to see how it develops. And it’s been developing well. So, recently, we led a follow-on investment, which was a €2.1 million round.
- Boksi — is also from Fund 1, so it was another follow-on investment. Boksi is a Finnish influencer marketing platform connecting influencers and brands who want to perform influencer marketing. So that A-round was led by 3TS Capital Partners together with Nexit Ventures, and we participated in it.
- Your.Rentals — is a Danish company providing a short-term rental marketplace. It’s a platform for those who rent apartments out, where they manage the property featured on Airbnb, booking.com, and others all in one place.
- Wudpecker — is from Tampere, Helsinki. They are providing knowledge management solutions. Their main product is the automated note taker, which can take notes and make automated summaries of calls and meetings. It’s a very, very passionate team and they have really nice product growth going on.
Earlier, you told us that the market is coming back to normal. Can you tell me more about that?
I’m actually saying that this, what we are seeing now, this is the normal. In the past few years, the market has overheated, and we have forgotten what it’s like to be normal. I’ve been working in the venture capital industry since 2006, and this, in my view, is not downturn. This is what we saw in the big part of the 2010s before it got overheated a few years ago.
A year ago, we were in a situation where some companies had cut down their burn and postponed their funding rounds because of the positive cash flow. There were deals around, but those investment opportunities were not necessarily good investment cases.
Last spring, those quality cases started to fundraise, and this summer was super busy. And that’s the reason why we have had so many announcements lately — those deals that we were doing during summer are finally public.
Investors tend to prefer deals with a bit longer runway. So instead of going for 12 months, it’s 18 to 24 months. It means that the rounds are bigger, and the plans are less aggressive. And it also means that instead of a single investor, there are two or three joining the round. It’s true in the Baltics, and the same happens in the Nordics, even in Southern Europe.
Do you have any pieces of advice that you would give founders or VCs in the area?
From the VC point of view — stick to your investment thesis whether it’s a good time or bad time. If you follow your thesis, regardless if the market is hot or cold, you can still make good investments.
Regarding founders — I would put an extra effort into understanding what the investors seek. One thing that I noted when I participated in Latvia Startup Day, where we had four VCs on the table — everyone had different viewpoints. So, understand how different VCs are thinking. One thing that we all love is how well the founders are prepared. We love data. So, the better the data regarding the company, the easier it is to analyze it and invest in the company.
Can you tell me more about your Trind VC plans? Do you plan to invest in more startups this year?
We plan to do 30 to 40 investments from the current fund. That means we still have to do some 25 deals. So far, we have had 11, but we have something in the works as we speak. There are a couple in the closing stages. I expect that we will still announce something new this year.