Antler branches out from pre-seed to later stage investing with $285M fund

Antler has made a name for itself with its rather trusting method of investing in founders without actually knowing what they’re founding. Now the global investment network is moving past pre-seed to A rounds and beyond with its hefty new $285M million Elevate fund.

If you’re not familiar with Antler, the investment group was started in 2018 with the idea that, essentially, if you put a bunch of experienced founders and interesting people in a box and shake it, billions of dollars fall out. And amazingly, this seems to be true.

It’s a bit more complicated than that, of course: with offices in more than two dozen cities around the world putting thousands of founders through a curriculum meant to spark inspiration and lateral connections, the company has grown fast and, post-pandemic, even faster. Over 25,000 people applied to take part just this last quarter, putting them in a fair way to hit 100,000 this calendar year.

I recently visited Antler’s home city of Oslo and met with several recently formed early stage companies, and from what I could tell this box-shaking process is remarkably effective. So although they have hinted at later stage investment before, it was surprising to hear that they had raised a bunch of money specifically to take on a more traditional venture role, doing follow-on investments later in a company’s lifecycle.

I spoke with Antler founder and CEO Magnus Grimeland about the decision to branch out from its “day zero” approach and take on an entirely different form of investing. The conversation has been edited for brevity and clarity.

TC: This is like a totally different company, a totally different investment style. How does this new fund fit into the general shape of Antler, the philosophy of starting very, very early?

Grimeland: So the core of what we do is still exactly what you discussed in Norway. Finding incredible founders and supporting from them from day zero, right? A lot of founders all across the globe want to come and work with us — I think it’s possibly the biggest pipeline of founders in the world.

What we realized is to be a great partner to the best founders it’s important to be with them for the long term, Right? If we can say to incredible founders when they’re coming in, that we will not only be there to back you in the first round, but we’re also there to back you in the second round, in the third round and the fourth round… that means a lot, knowing that your first investor is still on board.

And we’re not going to lead deals in our own portfolio with this fund. It’s not competitive with other VCs. We work with the founder to introduce them to our network. Then one of those investors will lead the round, and we’d love to follow.

And now that we’re a global platform across most of the key ecosystems in the world outside of Silicon Valley, a lot of VCs send us a little bit later stage deal flow they think would benefit from having Antler onboard as a co-investor. So we’re reserving a bit of fund for that, direct investments to become an even closer partner to the best VCs in the regions where we operate.

TC: Before, you could just match the founders, make that investment and sort of send them out into the world: “You’re free.” There’s an advantage to that simplicity. Now you have the complications that come with longer term investment, due diligence, evaluations of income, things like that. How have you had to adjust Antler’s systems to evaluate and take part in this more complicated investment economy?

Grimeland: What you mention is correct, we needed to bring on board a different set of people who’ve been working on making these types of investments previously. [Here he listed the people running the fund, whom I’ll put with their titles at the end.] So these guys are well versed in that stage, and they have a team around them to focus on capturing the funnel, right? It doesn’t interfere with the core mission of what we do.

And we never really just made the first investment and then let go of our companies — we built a very strong community, now about 6,000 founders across the globe, a very strong alumni network, and we have a tech platform that enables connecting them. We have an internal talent network — like, we now get a hundred thousand applicants per year and unfortunately we have to say no to 98 percent of them. A lot of those are incredibly great women and men, but we can funnel some of them in as the first, second, or third hire in our portfolio companies. We’ve always had a good view of the funnel, and with this additional team, we can actually utilize those insights to also deploy a bit more capital.

TC: Who are the actual investors in this fund, and will they have any kind of influence on how it is deployed? What does the governance look like?

Grimeland: So, obviously Antler has scaled quite a lot over the last few years. In the early days a lot of our investors were, you know, exited founders, like Eduardo Saverin was one of the Facebook co-founders, people in the region who built great things in Asia, family offices, and so on, right? But we’ve grown in scale and our funds have become bigger, and we’re also getting a lot of institutional backing. So now we have across our funds, I think now seven sovereign wealth funds. We have, I think, nine pension life insurance companies, multiple endowments, other large institutions.

[I’ve listed the actual investors at the bottom of the article in more coherent form than it occurred in our conversation.]

In terms of answering your question around governance, we don’t give our investors any governance rights because we are a primarily a business where we want to support the very best founders, and our expertise is finding great founders. That’s what we do, 100% of the time. So we need to be able to maintain our authority to choose which companies we’re going to back – all of that rests with us. What we do like to do is provide opportunities where there’s a strategically interesting thing for our LP partners to take part.

TC: Are there any particular regions or countries or groups that this fund will be focused on, or excluding? Like if you have a big UK pension fund, maybe there’s, not pressure exactly, but thought about that in where and why that money will be deployed?

Grimeland: Actually, part of the beauty of the fund is, since it is global in scope, we can decide based on the opportunities that arise where we’re going to deploy the capital. A lot of capital gets deployed in kind of artificial groups, right? A big fund will decide, okay I have a billion dollars, I’m going to put 400 in the US, 400 in Europe, and 200 in the rest of the world, or something. But if you make that decision up front, and there are huge opportunities coming up in one region and not that big in another one, then you’re actually going to hurt your returns if you made a pre-allocation.

So we kept the allocation geographically open. Now, what we do expect is that it will be kind of evenly split in a way where almost a third will come from the Americas, a third will come from EMEA, and a third from APAC. I think there will be kind of an even opportunity there.

If you look at sectors again, we will invest where there are the largest opportunities and where founders are solving the biggest problems. And we also take the impact that we’re having as a group, it’s incredibly important, there are a few specific sectors where we won’t, like, we don’t like to invest in things that we believe have a negative impact on the world.

I think an interesting statistic is 30% of the co-founding teams we back have a female co-founder, which is still not 50/50, but if you look at the world, I think 2% of venture capital goes to women while more than 50% of college graduates are women. You know, I think the future is more female entrepreneurs and more representation in the future than what is there today, right? So it’s exciting to see that there’s such a diversity in the founders.

TC: When I was in Norway, a lot of the teams were talking about a focus on renewables, climate resilience, and I know Norway is very much trying to be a leader in that. Perhaps it is that, at your various centers around the world where you are collecting people and information, they may have there own focuses, because those things are being pursued in that area — even if that’s not built into the fund or governance or anything like that?

Grimeland: Yeah, I mean, this is very interesting, right? Because take, take the Seattle example [we had talked about the tech scene here where I live]. In Seattle, we have people building deep tech companies, which is like real innovation, building things for the first time ever, right, the world has never seen it. But you also have people building B2B businesses, you have people building proven models.

So there are certain cities where we operate in, like New York, Austin, London, that would be similar, where you can build any type of company. There, the founders will typically build a very diverse set of companies from deep tech to proven models to industry 4.0 to B2B companies. It’s a very high diversity of companies being built.

Now if you look globally, there’s actually kind of concentration of business models based on the core competencies of the ecosystem, right? As you mentioned, Norway obviously has been very active in aquaculture, renewable energy, in oil and energy in general. So there tend to be a lot of founders willing to build within energy transition, within climate change, and so on. You go to London, which for a long time and to a certain extent still is one of the world’s largest financial hubs, there’s a lot of fintech companies. If you go to Africa, where parts of the tech ecosystem are a little bit further behind other parts of the world, you see business models with local innovation and adaptation that were built in the US or in China a few years back, because there’s a big opportunity there to improve people’s lives by building companies that haven’t been built there yet, but proven models.

It’s very exciting to follow, right? Because this year we’ll get to know something about what a hundred thousand founders want to build, and we can look at what they want to build in a lot of different cities all across the globe. And very often that ends up being a combination of you know, the biggest problems in the area where they operate in, and the core competencies that exist there to make that one of the best companies in the world within that space.

TC: You have the fiduciary duty, but like you said there is also the responsibility of the impact and knowing that you want to invest in companies that are doing something good. Are there any kind of internal goals or principles, that you could say, well we’re hoping to put 10 to 20% towards ESG stuff, or more or less?

Grimeland: We know as a fact that a large share of the company will a large share of the fund will go towards those industries, right? Because a lot of the world’s best founders are working on
solving those problems right now. Most companies across the globe need to face this. Most consumers need to do something about it. Most governments needs to do something about it. So it’s in itself a pretty big business opportunity on top of solving very important problems.

Here’s some interesting stats. So like, we have not at any point in time set any allocation to go specifically towards these industries, but after having operated for five years 94% of our portfolio score that they have a very positive impact on the world. [This is according to an internally conducted Antler audit of ESG goals elaborated on here.]

And 42% of our portfolio is what we call kind of real impact companies. So there are people who are solving energy decision problems or education or healthcare or pulling people out of poverty. So that’s 42% of all, all, all the capital we deployed. We have people from, you know, more than 80 nationalities. We have as I mentioned earlier, third percent of our portfolio as as female co-founder. So without setting any limits to we put into this category or that category, that is the outcome, right? Because that’s the opportunity in front of us. And if you want to build the best possible funds out there, you gotta have a diverse set of founders. You gotta find the best people.

And our longer term goals, if you look at our 20, 30 year goals is to, you know, help educate a million entrepreneurs to build thousands of companies, and contribute more than a hundred billion to the global GDP. And through that, having supported companies that are solving some, some of the biggest problems out there. And you know, it more or less just happens by finding the best people and backing them in what they want to do.

We do have a fiduciary responsibility to our investors to deliver really strong returns. So we will never invest in something just because we think it’s impactful. We’ll only invest into something because we think it’s a great business, and then we like that it also has a very strong impact on the world. Luckily the very best founders out there are looking to solve these problems these days.

TC: Gotcha.

Grimeland: Long answer.

TC: No, it’s a complex question. But you have expectations based on what you’ve observed, and those trends aren’t changing overnight.

Grimeland: Oh, if anything that opportunity space is growing — the very best people in the world are seeking to solve these types of problems. So if anything, it’s increasing.

The fund’s managing team comprises:

Martell Hardenberg, co-founder of Lazada, in London
Teddy Himler, former VP at SoftBank and principal at Comcast Ventures and Goldman Sachs, in the U.S.
Fady Abdel-Nour, former global head of M&A and investment at Prosus Fintech, in Singapore

And the investors Antler disclosed up front were:

M&G Catalyst (impact fund)
Vaekstfonden (Denmark’s Growth fund)
Korea Venture Investment Corp (Korea’s sovereign wealth fund)
Schroders (global asset manager)
“A U.S. pension fund”
“A number of other U.S. and European institutions and a lot of great family offices”

Others will appear on the fund’s info page as they make their investments public. I’ll attempt to update this post after that happens.

Antler branches out from pre-seed to later stage investing with $285M fund by Devin Coldewey originally published on TechCrunch