Key Factors for Startup Success: Unveiling the Secrets of Investing in Startups

14 Jun 2023
Key Factors for Startup Success: Unveiling the Secrets of Investing in Startups

Johan Riddergard is an experienced entrepreneur with a robust strategic advisory and business development track record. With over two decades of experience, he has held key leadership roles in renowned organizations, contributing to their growth and success. His entrepreneurial journey started with an attempt to create an independent distributor of structured investment solutions. Riddergard also co-founded Lioncrest Global, which merged with Venturous, forming Venturous Group in 2019. As Co-Founder and Managing Partner, he enabled access to alternative investments and venture capital opportunities for ultra-high-net-worth families. Riddergard is Co-Founder and Chief Commercial Officer of Venturous Group, a Citytech™ business builder and investor. Leveraging Citytech, strategic partnerships and digital transformation, they transform cities into smarter, more sustainable and more productive environments.

In an exclusive interview with Startupcity APAC, Riddergard shared his first-hand experience in the startup environment. He also talked about some of the exciting projects that Venturous Group has invested in. 

What are your roles and responsibilities in your current organisation?

I am a Co-Founder of Venturous Group and hold the title of Chief Commercial Officer. Founded in 2019, our company focuses on creating, building and investing in game-changing technology companies, starting from China, to make cities smarter—more livable, sustainable, and productive.

As an organisation backed by shareholders, we have raised USD 152 million so far and currently have 11 companies in our portfolio. While we invest in startups, it constitutes a smaller portion of our balance sheet. Most of our capital and resources are directed towards larger, established companies that are profitable and poised for IPO within a few years. However, we also have a history of investing in early-stage companies.

What challenges do startups commonly face while seeking funding, and how do they overcome them?

We receive funding requests regularly, and the selection process for investment depends on several factors. The uniqueness of the business model plays a crucial role. However, to maintain a highly effective approach when selecting companies for investment, we also place considerable importance on the team behind the business.

We have to believe and trust the individuals we invest in to successfully execute the plan. While a solid business plan and model are important, their value is limited unless they can be effectively implemented.

We devote considerable time to getting to know the founders and management team, especially since startups are establishing their presence in the market. We tend to allocate smaller ticket sizes initially, and as the company demonstrates progress and success, we increase our investment. That’s what we refer to as the “doubling up” approach. The companies need to deliver results and prove their viability. If they make substantial progress, we are open to providing additional capital. However, for companies we have funded that are not performing well, we refrain from further investments to avoid compounding losses.

What are some of the most interesting companies that you have invested in?

Our focus lies in Smart Buildings, Smart Energy, and Smart Computing. Currently, we have invested solely in China, including Hong Kong but are open to opportunities beyond its borders while maintaining a connection to the Chinese market.

China’s strategic direction emphasises technology, Smart Cities, AI, and decarbonisation. Our investments align very well with these goals. We have companies dedicated to reducing energy expenses and consumption, assisting building owners and managers in achieving savings. China’s urbanisation process also presents huge opportunities for Smart Cities to create livable, sustainable, and productive urban environments.

Within our portfolio, we have a Smart Energy tech company that achieves 15 to 30% energy cost reduction. Additionally, we operate a joint venture with Arup, a global consultant for the built environment, focusing on Smart Buildings, reducing energy consumption, operating costs, and improving tenant satisfaction. Our investments address the significant potential in one of the least digitised sectors – buildings – which account for nearly 30% of the global carbon footprint.

In the realm of Smart Cities, one of our portfolio companies collaborates with cities in China, implementing Smart City management systems, with a vast track record of hundreds and hundreds of projects in over 170 cities.

What advice would you share with budding entrepreneurs looking to start their own companies? 

Drawing from my experience as an entrepreneur involved in failed startups before Venturous Group, which has been successful, I can share a few key insights. Firstly, offering a product or service that fills a demand in the market is crucial. This entails providing something unique, better, or more efficient than existing options.

Secondly, assembling a strong team is paramount, as this journey cannot be undertaken alone. A cohesive team with a shared vision and complementary skill sets is essential. It is important to have individuals who possess leadership qualities, those who excel in execution, and those who offer diverse perspectives. Embracing a range of viewpoints during joint decision-making enables comprehensive analysis and yields the best outcomes.

Lastly, a supportive backer who believes in your vision can make a significant difference. This individual, ideally with deep pockets, can be instrumental in propelling your success. Often, these backers may be found within your network, such as friends or acquaintances. From an investor’s perspective, we prioritise introductions and connections from trusted intermediaries within our network or ecosystem. While early-stage companies often rely on family and friends due to the foundation of trust, securing access to more substantial capital requires finding larger backers, typically through the help of professional intermediaries who have the experience and network for capital raising.

Source: Interview published by StartupCity on 15 June 2023