How a Swedish venture capital firm is finding fresh startups in the blind spots of the industry
Swedish venture capital funding to startups has a massive impact on the country’s GDP. BackingMinds believes the effect could be even greater if more investors did what they do: focus on heavily underinvested areas.
Copenhagen Economics says private equity and venture capital in Swedish firms have raised the GDP level by nearly 5 percent since 2007. The Swedish Private Equity and Venture Capital Association commissioned the organization to study the footprint of venture capital in Sweden.
Those researchers detail how venture capital funding in Sweden positively effects GDP through direct contributions to entrepreneurs, knowledge spill-overs to the rest of the economy, and better adaptation of new technologies.
The economic firm says there’s still untapped growth potential. It’s a sentiment venture capital firms like BackingMinds agree with. Founder Susanne Najafi says the responsibility is on the industry and investors to expand to fresh ideas.
“To be able to scale your company, you need competence, network and capital,” Najafi said. “Almost all capital, not only in Sweden but in Europe, or in the U.S., remains in very tight homogeneous networks or bubbles.”
Najafi says this is what BackingMinds calls the blind spots of venture capital. Most VC companies rely on companies either applying or being recommended by someone who’s already in the network.
“What we find important, is to go and hunt for a company”
Najafi says BackingMinds does a lot of analysis. They look at user trends and behavior to find the biggest problems in need of solutions, in underinvested areas. The company then contacts the startups tackling those issues.
One important issue BackingMinds is targeting now is solutions for an aging population of people.
“Almost 30 percent of us are going to get a stroke when we get old,” Najafi said. “Brain rehab, for example, or the whole rehab market is heavily underinvested.”
One of the startups they’re backing in that area is BrainStimulation. The Umeå-based company provides individualised stroke rehabilitation with mixed reality glasses.
“When we contacted them, we couldn’t see anything but potential,” Najafi said. “And this company is now growing in Europe and in the U.S., and can change the lives of many.”
She says almost all Swedish venture capital goes toward startups in Stockholm, even though a majority of companies are outside of the city. She also notes a small percentage of founders getting funding are women, immigrants, and other minority groups.
“Let’s invest outside of the hypes and bubbles,” BackingMinds Founder Susanne Najafi said. “Maximize our returns, but at the same time drive change and create new role models.”
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