There are the standard criteria that VCs use when surveying startups – an innovative idea, market potential, talented founders…Then there are Expon Capital’s criteria.
At the top of its checklist for potential investments you will find something called massive transformative purpose (MTP).
Having dedicated the last two years to setting up Luxembourg’s Digital Tech Fund, the team launched its own fund – Expon I – in June 2017, with MTP at its core.
A company can be promising, profitable and innovative, but its aspirations must extend beyond its own success if it hopes to get Expon I’s attention.
“This fund backs ambitious founders with bold ideas for solving hard, valuable problems that will have a meaningful impact on the world,” explained Jérôme Wittamer, Partner, Expon Capital.
This Luxembourg-based VC firm cares about the why. Is a company motivated by profit, by exciting tech or by the chance to positively impact industry, community or planet? The greater the purpose, the greater the motivation.
“Creating Expon Capital was really an opportunity for us to express our values – like a writer with a blank page”
“We want people who are on a mission to do something. This unites and inspires action and gives meaning to their work. It’s clearly aspirational,” he noted. “We’re looking at hugely profitable bets, but we add another dimension.”
Expon Capital’s commitment to MTP makes the selection process significantly more challenging. It is easier to find potentially profitable projects than to find those that can be both profitable and impactful.
“In the grand scheme of things, you have 100,000 new startups globally every year. Ninety-five percent don’t have the ambition to be global leaders and less than one percent combine that with a higher purpose, so we’re going after a miniscule subset,” he added.
Recognizing that technology has no inherent moral compass, the team vows to help steer technological advancements in a direction that aligns with its values. An innovative product that actively fosters negative behaviors – addictions, for example – would not earn Expon I’s consideration, no matter how high the potential for commercial success.
This resolute approach grew from the team members’ experiences as parents with children and from years spent working as investors and entrepreneurs.
“Creating Expon Capital was really an opportunity for us to express our values – like a writer with a blank page,” Wittamer explained. “People make the mistake of assuming VCs are all alike, but they are all unique because of the values that emerge from the individuals on their teams.”
“A few years ago, we saw that this era is a salient moment in history and we wanted to be at the heart of the action”
Each VC firm possesses its own traits and quirks. Offbeat questions, diverse opinions and a shared affinity for deep tech differentiate how Expon Capital operates. All four partners interact with each project and engage in tried and tested processes that reduce human bias when making decisions.
The team – Alain Rodermann, Marc Gendebien, Rodrigo Sepúlveda Schulz and Wittamer – came together in 2015 with a shared appreciation for exponential growth, specifically, the laws underlying the evolution of technology (e.g. Moore’s Law) and viral networks (e.g. Metcalfe’s Law).
Exponential growth became a guiding light that would (literally) define the firm.
“When we interview founders, we look for the presence of specific processes that are essential to the type of growth we call exponential,” Wittamer said.
The right combination of exponential genes – from self-provisioning interfaces and service delivery automation to social elements – will create enough momentum to launch a startup toward market dominance.
“A few years ago, we saw that this era is a salient moment in history and we wanted to be at the heart of the action. For us, this means being a VC because you get to see the whole innovation picture and choose who you want to back. As a founder, you don’t see the forest, just your tree,” he explained.
Since its launch, Expon I’s founding tenets have not wavered. If anything, they have taken stronger hold, as has the team’s resolve to earn money for its investors while striving to make the world a better place.
So far, four companies have managed to meet the fund’s uncommon standards: Tribe (video messaging), Spire (Big Data from space), Catalyte (job creation via AI) and Glose (education tech).
In five years from now, Expon Capital hopes to have backed around 25 exceptional companies – all with measurable impacts and substantial increases in valuation – while sticking to its promise to “be a force for good.”