Expon Capital is one of the rare venture capital firms with its head office and team based in Luxembourg. Started back in 2015, it is time to take a closer look at its strategy, portfolio, and the team behind it.
Despite Silicon Luxembourg’s mission to help startups in the Grand Duchy through this difficult time with coverage on the implications of the COVID-19 crisis, it is important to still share some stories about the local ecosystem that are not related to it. One of the stories that our editorial team finally wanted to shed a light on is the one of venture capital (VC) firm Expon Capital. Operating from Luxembourg, its team has managed to build a strong reputation by investing in promising local startups like nexten.io and Passbolt as well as notable international tech companies like Catalyte, WeFarm and Dott within only a few years after starting the firm from scratch.
“We saw the massive opportunity of capturing digital transformation.”
Capturing Digital Transformation
Expon Capital was created five years ago by founding partners Marc Gendebien, Alain Rodermann, Rodrigo Sepúlveda Schulz, and Jérôme Wittamer.
“The Expon Capital story is one of people with different backgrounds and totally different ways of thinking”, as Alain Rodermann describes it. But when taking a closer look, it is apparent that the team has the common thread of already having had an extensive and successful track record in entrepreneurship and investing.
What brought the four experienced operators together to start their own VC firm was the common realization and conviction that the global megatrend of digitalization was still just at the beginning and that a lot of potential remained untapped. “We saw the massive opportunity of capturing digital transformation. We saw its acceleration. For us, it was inconceivable to not be part of it”, as Jérôme Wittamer puts it. “Every sector of the economy will be digitalized”, Alain Rodermann emphasizes in this regard.
To invest in the digital winners of tomorrow, the firm currently manages two funds: the “Digital Tech Fund” (DTF) with a focus on tech companies that have a strong link to Luxembourg, and “Expon I” that is aimed at startups at any stage in Europe, Israel, and North America.
“We put money on exceptional people, not intellectual property.”
Searching for ExOs
When the four partners teamed up, they decided that they wanted to invest in a different way than other VCs do. Starting their own firm gave them the possibility to shape things according to what they believe in.
As its name implies, Expon Capital was founded based on the strong belief in the success and superiority of companies that manage to scale exponentially. But the firm’s investment approach is not just about a startup’s growth in sheer numbers, it is first and foremost about the existence of a certain DNA that all exceptional tech companies of the past decade like Airbnb and GitHub share.
Inspired by the book “Exponential Organizations” by Salim Ismail (who is also an advisor to the firm), the Expon Capital team is looking for a set of “exponential genes” that allows some tech companies to scale at least 10x faster, cheaper, and more successfully than others. As written on the firm’s website, “exponential startups have specific operational structures and processes that unleash explosive growth”. At the core of these “ExOs” (exponential organizations), there always has to be a Massive Transformative Purpose (MTP).
For Expon Capital, that MTP must aim at contributing positively to the advancement of humanity and the planet by being aligned with the United Nations Sustainable Development Goals (SDGs).
“Mankind is facing challenges that are both massive and urgent but most venture capital investments do not address the SDGs. At Expon, we do“, as Jérôme Wittamer states. The Expon Capital team wants to contribute to the positive change that tackles the growing global challenges, which are also tremendous business opportunities. “Money is an enabler for this change, and being technology investors with this clear purpose gives meaning to the underlying mission to be high-performing financial investors.”
In this regard, for Jérôme Wittamer, there are two implications: First, having an idea for solving an SDG comes with the moral obligation for an entrepreneur to scale to a global level so that the largest number of people can benefit from such a solution. Second, in order to provide that benefit sustainably (i.e. over time), the company can only do so by being profitable. “Loss-making businesses can do good but they are not sustainable.”
“Glovo ticks all the boxes of what we look for in an investment opportunity.“
Supporting Exceptional Founders
The Expon Capital team is not solely investing in promising technologies to accomplish its mission. It is primarily about the exceptional founders that create and leverage them. “We put money on exceptional people, not intellectual property”, Alain Rodermann points out.
The founders that Expon Capital is backing have started some truly game-changing companies in their respective fields. For example, Israeli tech startup Pliops is developing a technology that significantly cuts the energy consumption of the world’s largest cloud and data centers, ultimately reducing CO2 emissions by 100 million tons a year by 2025.
Another example would be Glovo, a Barcelona-based unicorn operating in the delivery services industry. “Glovo ticks all the boxes of what we look for in an investment opportunity. They work on a solution for a major global trend, have an exceptional founding team, are very capital-efficient, and care deeply about the impact they have through their activity“, Jérôme Wittamer highlights.
The founding partners work closely with their portfolio companies to help them achieve global scale. Besides financial support and helpful advice, the Expon Capital team also brings a great group of advisors. Among others, renowned Silicon Valley investor and author Brad Feld (Co-Founder of Techstars) and Marie d’Huart (Founding Executive Director, CAP conseil) support the team and its startups.
But also the firm itself grows. Over the past two years, two Analysts and an Associate joined the team. And, despite the COVID-19 crisis, the search for the next ExOs continues. “After a hard couple of weeks providing urgent support and care to our courageous founders and their companies, the team at Expon Capital remains open for business”, as Jérôme Wittamer concluded in a recent blog post on Medium. After all, even though several great investments were already made to date, Expon Capital is still just getting started.