VC Profile: OpenOcean

Software-focused VC OpenOcean held a second close on €92m for its third main fund in February, and plans to reach €130m before the end of H1.

"During the last 20 years, every business in the world has been looking for software with which they can gather, store, manage, and analyse data, and provide machine learning and artificial intelligence," says OpenOcean managing partner Tom Henriksson. "From this data, you get outcomes that help businesses become better, and if they don't do that, they will probably wither away. Slowly, but they will. Therefore, the demand for data is large and of course we feel good to be in a place where that is happening and that we have this background in software, and a fresh fund."

OpenOcean's founding members are Michael Widenius, Ralf Wahlsten, and Patrick Backman, who created the software startup MySQL, and Henriksson, who led the early-A round in MySQL as a managing partner at Holton Ventures. The four were later involved in founding other software businesses, including MariaDB.

Since then, the VC firm has backed 30 software startups in various technologies and is now looking to invest in technologies it calls "the next frontiers" – artificial intelligence, application-driven data infrastructure, intelligent automation, and open source. It has recently appointed Ekaterina Almasque as general partner in the fund to accelerate its investments in AI, data and cloud infrastructure, and new technologies such as quantum computing, and to lead the London team and its operations for the firm.

Ekaterina Almasque, OpenOcean

OpenOcean's third fund was launched in 2020. It held a first close on €74m in October, an interim close in February this year on €92m, and is targeting a final close on €130m by the end of H1 2021.

The new fund will be larger than its €80m predecessor, which was raised in 2015. It invested in 13 companies and is now fully invested. The GP will commit its own capital to the tune of 2.5% of total commitments.

The new fund has around 20 LPs, many of which are existing investors. LPs include the European Investment Fund, Tesi, Elo Mutual Pension Insurance Company, Fund of Fund Growth, Oxford University's Corpus Christi College, and several family offices from Europe and one from Hong Kong. No placement agent was used for the fundraise.

The strategy for the new fund will be the same as its predecessors, says Henriksson: "At the core, it's always the same; strong, European companies that have data and software solutions that they want to take to the global market."

The fund will invest in startups at "early A rounds", which for the GP means being a lead investor and deploying €2-5m in a round of up to €7m, or co-investing alongside other investors in a round of up to €10m. It will make up to 18 investments over a period of around three years and carry out five or six transactions each year. It has already invested in two companies, Finnish market research automation startup Cambri and Cambridge-based software company Sunlight.io.

Recent investments

Company	Company description	Total value of latest round (€m)
Cambri	A market research automation startup accelerating product and concept testing of consumer brands.	3.6
Booksy	Marketplace for finding, scheduling and managing beauty and hair salon appointments.	50.0
Sunlight.io	Sunlight is an HCI stack that can be deployed on-premise on standard data-centre hardware.	5.0
IQM	Developer of high-speed quantum processors.	39.0
Supermetrics	Provider of automation tools for web analytics, social media and online marketing.	40.0
AppGyver	B2B provider of mobile app development tools.	2.0
MindsDB	Open-source automated machine learning platform that allows users to gain insights from their data.	2.5
Leadoo	A marketing technology company providing chatbot technology to help businesses convert leads from websites.	3.0
Bitrise	Provides a platform that enables its clients to build and operate mobile applications.	17.9

Source: Unquote Data

Henriksson adds: "We like companies to have software solutions in the market so we can speak to customers, if they have any at that stage, to see how they're using it, what their strengths are, what the opportunities are, and then based on this, extrapolate on what kind of business you can build around that."

The new vehicle will focus particularly on "tech enablers" – software companies that, Almasque says, will help remove bottlenecks. "In healthcare, for instance, there is a lot of heavy data, but the old way of dealing with data doesn't work. So we're trying to invest in technologies and everything that will allow healthcare to be digitalised in an easier way, making it easier to adopt and integrate."

Sourcing companies
The GP looks at up to 3,000 European software businesses each year, which is a mixture of inbound pitches and referrals, but the latter have a higher likelihood of becoming an investment. Henriksson says: "The most important channel is referrals from entrepreneurs we've invested in before, or investors who've already invested in something, because they know the kind of companies we like." A fair share of opportunities is also sourced through events hosted by OpenOcean with its online network of 2,000 data professionals.

As an early-stage investor, sourcing opportunities can sometimes happen even before the startup has launched, as was the case with several portfolio companies, says Almasque. "During my time at Samsung Catalyst Fund, I was in discussion over dinner with a team of 20 engineers from a company called Xmos, who were thinking of developing a new AI processor. I helped them spin out, funded the company, and then led the series-A. Today, it's a $2.7bn company. This is the type of journey we enjoy, because we can bring entrepreneurs the tools they need to start the journey, and then help them all the way."

But as an investor with background in software, the GP has also tried various ranking systems and tried automating the data-gathering process to see lots more companies. However, says Almasque: "We have seen a lot of approaches these days to use AI to find startups, but we are worried about introducing bias in these tools. Very often we see a very narrow type of judgment approach in those systems and that's why we believe we need to think about this as an industry so as not to head off in the wrong direction."

Recent exits

Company	Year of exit	Sector	Exit route
Appgyver	2021	B2B provider of mobile app development tools.	Trade sale
Outlyer	2019	A self-service cloud infrastructure monitoring platform for developers, DevOps and microservice environments.	Trade sale
Zentyal	2019	Open source email and groupware software based on Ubuntu Linux.	n/d
Oppex	2018	Provider of a search engine for public sector bidding contests and a  source of public procurement data in Europe.	n/d
TapDaq	2018	Helps app developers maximise revenue with ad mediation and cross promotion.	Trade sale
Platform.sh	2018	Second generation Platform-as-a-Service offering a continuous deployment cloud hosting service.	Financing round
EyeEm	2018	AI-powered marketplace for stock photography and royalty-free images.	Financing round

Source: Unquote Data

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