For , who was promoted to partner at the Luxembourg venture capital firm Expon Capital in September 2023, nothing has really changed in terms of the work itself. “Being a partner means a long-term commitment to the firm, but also to the job of being a VC investor,” she told Delano. “This job, it’s about backing entrepreneurs and the next generation of businesses. All big companies today--they were once a startup. And I think that’s what I’ve been most excited about since day one of joining a VC. That’s still what I’m excited about today.”
That being said, it’s not just an individual VC firm that helps entrepreneurs and portfolio companies in scaling up. Successes are thanks to the “entire ecosystem” present in Luxembourg, from government grants for startups to acceleration and incubation programmes.
Wang also offered a note of caution. “On the outside, when people think about VC investors, they think, ‘It’s so cool!’ When they think about entrepreneurs, they think, ‘Everything’s so cool!’ But, especially for entrepreneurs, it takes a really long time and a lot of hard work to build a business from scratch,” she said. “When you become an entrepreneur, you just have yourself. And you have a product that is not perfect from day one. And then you need to convince clients.”
VC also requires a lot of patience and resilience
It’s not easy. “VC also requires a lot of patience and resilience,” said Wang. Expon’s fund is a 10-year fund, meaning it takes 10 years to get returns. And those 10 years are more about “solving problems rather than celebrating success.”
In VC, “we need to distinguish what is the long-term business opportunity vs short-term hypes,” she highlighted. Some hypes last six months, one year, three years. “But our fund is 10 years. We need to make sure it’s a long-term opportunity, rather than just hype. We’re doing the tedious work to make sure we are turning the money from our investors into good returns, and getting money to the right entrepreneurs at the right opportunity.”
Fintech, healthcare and climate tech
“We’re sector-agnostic,” said Wang, in response to a question regarding the sectors Expon focuses on. There’s Salonkee (an online reservation website for beauty salons), Passbolt (cybersecurity) and Next Gate Tech (fintech), to name a few of the companies the VC firm has invested in, which also invests in digital health, the circular economy and the energy sector, amongst others.
“We still see there’s tremendous opportunity in digitalisation across all sectors,” noted Wang. “There are a lot of opportunities to back the right entrepreneurs in capturing the wave of digitalisation that is amplified by AI.”
There are three main “categories” in which Expon has already successfully invested and plans to continue: fintech, healthcare and climate tech. “Fintech is a huge sector, and we’re based in Luxembourg, so it’s a no-brainer,” said Wang.
We also see a wave of not just digitalisation, but also technological advancement in healthcare, particularly when it comes to aging populations
“We also see a wave of not just digitalisation, but also technological advancement in healthcare, particularly when it comes to aging populations,” she noted. Expon Capital and the Luxembourg Institute of Health in July.
And the third, climate tech, is a “huge sector.” Energy, the circular economy and agriculture are three sub-sectors that the firm is focusing on, but they’re open to other sub-sectors as well. Expon, for instance, has invested in Hydrosat, a spacetech company that uses data from space to improve water management and irrigation in farmland. “That’s also how we define climate tech: how can we use technology to solve climate issues? Even though it’s a spacetech company, we consider that to be climate tech.”
Four key elements in a company
“Compared to a traditional private equity firm, we see a lot more opportunities”--around 2,000 annually, said Wang. Expon Capital finds opportunities through sector research, as well as their network of entrepreneurs, investors, accelerators and incubators.
When evaluating a company, there are four main aspects to consider: the team, the product, the market and the business model. “We are here to invest in a company that is managed by real people. If a company comes to tell me, “I’m an AI company,’ that doesn’t mean anything to me.” The company needs to come with a product, explain why they’ve developed the product, how it addresses real-life problems, prove that their product has real value and show that it can be sold.
You need to spend time to understand the critical issues with the company
But just because Expon rejects a deal doesn’t necessarily mean the company is bad. Expon Capital has its own “sweet spot” and its own specific criteria. A rejected company could, for instance, just be out of the VC firm’s geography.
Importance of investing time
How does Expon support the companies it invests in?
“You need to spend time to understand the critical issues for the company.” Most of the time, Expon also sits on the board of the company, meaning they attend board meetings and other ad hoc meetings on topics such as strategy, sales pricing, international expansion or recruitment. “A lot of times, we have 12 meetings with a company every year.”
Moreover, as a VC investor, “we have already had 30 portfolio companies. We have seen good things, but also tonnes of mistakes. And we can share with entrepreneurs all the learning and knowledge that has been accumulated over the years: what worked, what didn’t work, across different types of sectors, businesses.”
“We also have our own network, so we can make introductions to sector experts, potential partners and commercial advisors.”
It’s also important to have a good, constructive relationship with the management and with the founder. “Our role is also to listen and to support and help them to focus their time and energy.”
Incentivised by overall fund performance
Hours could be spent discussing an effective investment process, due diligence or the questions need to be asked, but in the end, it comes down to the people, the investment professionals that are behind the investment, said Wang. Everybody wants to do their own deal, but a fund size is fixed. It’s therefore key to consider the right incentives.
“It’s important to make sure there’s the right culture and mindset, that people are incentivised by the overall performance of the fund,” rather than by individual deals.
Looking ahead
Wang is also Expon Capital’s first woman partner. Though it may seem rare in Luxembourg or surrounding countries, “If you look at the Nordic countries, there are many female VC or PE partners,” said Wang. “But I hope there will be more coming,” adding that the grand duchy also has a VC investor group with many female VC investors.
And at a firm level? “We have several opportunities at the moment, so we hope to close more deals in the coming months!”
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