When venture capitalists start applying words like ‘disrupt’ to themselves rather than to the ventures they invest in, we’re all ears. StartupAmsterdam met with Ton van ‘t Noordende, now a former partner at Keadyn, to find out just how this firm intended to disrupt the world of investing.
You might know Keadyn as one of the forces behind the startup Nestpick, built from an attic in Rotterdam and then hauled in by Rocket Internet. Since then, they have steadily invested in other up-and-coming startup teams, such as Amsterdam based fintech startup Daalder or mobile marketing platform Notificare. As Keadyn grew, they expanded their offices to Amsterdam. As Ton put it: “Amsterdam has its focus on startups. It was obvious to us we had to have a presence here.”
Adding value to startups
Keadyn started with two founders as an investment fund built out of passion. A startup founder himself, he experienced first-hand how difficult it was to navigate the venture capital landscape. This is one of the reasons which pushed Keadyn to build upon the philosophy of remaining open and approachable to the startup community. Ton elaborated: “We want to disrupt the Venture Capital ecosystem because the status quo of how deals are made and how fees are collected is just crazy. With the startup landscape changing almost by the week, we are stepping into a decade where we will see the half-life value of our personal knowledge drop from twenty to two years. If a venture capital firm is built on a traditional mindset, it won’t be able to truly add value to startups.”
Why accelerators are flawed
In 2015, Keadyn invested in multiple pre-revenue tech-based startups. They initially invest up to €500,000 per investment, with a hundred percent of the money coming from the managing partners. In 2016, Keadyn is looking to expand upon this model by partnering up with former entrepreneurs-turned-investors to partake in Keadyn’s deals. Keadyn is currently building an expert network with talents on all areas needed to help build and boost early stage startups. They will be rewarded financially for contributing their expertise, network and time in Keadyn’s portfolio. It is an answer to traditional accelerators, which, Ton said, are great but flawed. He explains: “They are built out of a passion for helping others, but the pay-it-forward model is not sustainable if the experts relied upon are not compensated. We want to reward the people who bring in the knowledge that help startups evolve and scale faster. We, the managing partners at Keadyn, do not charge a recurring management fee to our investors. We get paid via a carry, once everyone else involved has taken their share of the pie. A part of the carry Keadyn receives is put aside for our expert network as a reward for having invested in an early stage of the deal.”
Too good to be true?
It sounds too good to be true: a venture capital firm giving all those involved their due before taking care of their own fee. Is this a model of venture capital as a social enterprise? “In all honesty, this is why we frame ourselves as disruptive, because we do things differently. We are entrepreneurs as well as active investors. We are not philanthropists, we are in this for a future return on investment. But why not let the startup ecosystem profit as well? What matters most to us is to work with the very best entrepreneurial talents.”
The startup team
The primary determinant for Keadyn’s investments is the startup team, with the business coming in second. “Our most valuable asset is the open and fun culture of our company. Likewise, this is what we look for in the teams we invest in.” Which is why they partnered with a team expert, a former triathlon athlete, to help them evaluate startup teams. Upon meeting potentials, the usual topics such as MVP and future plans are addressed. The trick for Keadyn, however, is to dig deeper: “You have to look beyond the financial data. We want to know what their MTP is (Massive Transformative Purpose), why they do what they do, what drives them and who the people are within the teams we are dealing with. This tells us where they are in their process, and, more importantly if we are the right match to help them.”
A personal approach
Key in Keadyn’s personal approach is automating time-consuming processes, leaving more time to invest in people and accelerate ventures. “Take for example the management of deal flow, for which the traditional scene works with excel sheets. We allow startups to enter their deals into our system, which means we have the framework, and we waste less time evaluating the financials and have more time to talk to our startups.” In fact, Keadyn does not work with junior analysts or associates putting startups through endless conversations. “Startups meet with us, managing partners, as soon as possible.” Keadyn also automated the PR process for startups and uses a software tool for the matchmaking with experts. Keadyn is set to build a growth machine, but with people rather than money at its backbone. Ton: “We ask startups the question: why should you take our money?”