Immediately after receiving its license as a Luxembourg AIFM, GP Bullhound launched its first fund (Fund VI) a year ago “and successfully secured the first closing just three months after,” Alek Jakima, director and conducting officer at the Luxembourg office told Delano in a written correspondence on 20 March.
During an interview with Delano the year before, Jakima explained that the firm--which invests in and advises tech firms--wanted to play a substantial role in Luxembourg’s tech ecosystem. How close then has the company come to this aspiration? Jakima wrote: “The past year was all about the groundwork, including hiring a dealmaker--based in Luxembourg--to concentrate on the local market and support local companies, including pro-bono work for a local start-up incubator.”
“We have also been busy participating in numerous tech-focused events, meeting with founders of local companies, and increasing our knowledge of the local market.” The firm has also twice brought its flagship event series--the Annual Tech Predictions networking day--to the country.
Hurdles are part of the experience
Like many firms in various sectors of Luxembourg’s labour market, GP Bullhound came across a significant hurdle: hiring qualified and quality staff. “We spent several weeks looking for good people to join our team,” Jakima told Delano.
In addition, “the biggest challenge was identifying the local provider with the technology required by our LPs,” Jakima said. “We spoke with several players to identify that only a handful of them can support us with the tech that our investors can benefit from.”
Overall, the firm looks at the branch’s first year in a positive light. “It’s taken us some time to build the infrastructure but we’re definitely moving in that direction,” confirmed Ben Prade in a separate interview. “But, we want to go a lot further and become a bigger presence here. We want to grow our investment business; we want to have funds here that we invest in, growth stage software companies across Europe. So first, we’d love to invest in Luxembourg companies.”
An ambiguous environment for the tech sector
Focusing on fostering tech talent, GP Bullhound was pleasantly surprised, both by the ease of access to the biggest stakeholders--like the government--and recent development in the sector. “Strong government support and a highly educated, multinational population have led the fledgling ecosystem all the way to an inflexion point that makes it primed for growth capital and international expansion to Europe,” explained Jakima.
But whether the growth capital will be enough in the country remains to be seen. Prade explained: “For companies that need amounts of money maybe €10m, 20m, 30m and up is there enough visibility? Are they getting that capital? Are there enough funds operating here? That would be a question mark we’re still trying to find out about.”
This need for greater accessibility to growth capital is also listed by Jakima, who also identifies other elements the local sector needs to work on. Despite Luxembourg’s advantages as a multicultural and “neutral party” with a “strong regulatory environment,” “we feel there is a lack of awareness of the benefits of opening a European HQ in Luxembourg to most large firms.”
A new fund in the making
Blowing out its first candle, the private equity firm is now also fundraising for Fund VI, which will be “will be a continuation of our growth stage strategy,” said Jakima. The investments in this fund will focus on software companies that address current and developing societal challenges like dropping productivity, an overload of healthcare systems, fewer social connections and dwindling resources. In short, technologies benefitting the planet, health, play and the future of work.
“We see our Luxembourg office playing an integral part in our next fund. Not only is it our AIFM and main port of call for our investors but we see it becoming a hub for our sourcing efforts in the region and beyond. With more senior team engagement and local event attendance we hope to help take the Lux ecosystem to the next level.”
This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. Subscribe using this link.