Wireless is the focus of the new fund from Spanish VC, Rodania. The firm is hoping to raise EURO45 million and has already secured EURO15 million from the European Investment Fund with a final close scheduled for December.
“We have been fund raising for about six months and for a first time fund in this market I think we are doing reasonably well,” says Svante Borjesson, who founded the venture in 2000 with college friend Fredrick Groth. Neither of the partners have a VC background, but are confident as Borjesson says they are targeting a gap in the Spanish marketplace.
What they do have is a strong industry background and management expertise. Prior to launching the fund Borjesson went to Sweden and Finland to find a Nordic partner to gain experience in the wireless sector and to study Northern European market trends and apply the same strategies to the Spanish market. Swedish quoted firm Ledstiernan backed the company and supported it in its first investment in Spanish high speed wireless Internet access company Kubi Wireless. Rodania co-invested with another Spanish VC, Barcleona-based Finaves to acquire 15 per cent of the company.
The fund has also secured EURO15 million from Spanish savings banks and utility companies. The remaining third of the fund Borjesson hopes will come from a technology partner. “This could be one of the Spanish telecoms operators or a foreign technology partner. We would like to have an experienced UK or US investor with a VC background.”
The group is not going to limit itself exclusively to wireless. Depending on the success of the first fund, Borjesson hopes to launch a succession of specialist funds. “We want to create a fund management company that is sector specialist. So far in Spain that does not exist. We know the Spanish market very well and we know what the market lacks,” he says. “There are very few specialist funds in Spain and none that invest exclusively in early stage. We are targeting two niches.” He adds that there is not a great telecoms tradition in Spain. “It is a user country, but not a developer of technology and so the fund will gain its expertise from the well-advanced Nordic region.”
Borjesson says the reason for the lack of early stage funds in Spain is the risk factor. “It is a market development issue. I think it will come. It is very difficult to raise funds in Spain as pension funds do not commit to this asset class. I’m sure they will in five to ten years’ time, but not just yet.”
The fund has made two investments so far and hopes to build up a portfolio of 15. “It is good timing for us. In retrospect, I think we are lucky we didn’t start earlier.” As there is a lack of seed and early stage funds in the Spanish market Borjesson is optimistic that there will be demand for his fund. In terms of exit opportunities, the Spanish mid-market offers the perfect solution: “It is good for people like 3i that we exist for them, we will provide an extra source of deal flow.”