EU fund puts €20m into Swedish investor hunting founders others ignore

The European Investment Fund has committed 220 million Swedish kronor (about €20 million) to BackingMinds, a Stockholm venture capital firm that sets out to find founders traditional investors tend to miss.

The money will go into BackingMinds Invest III, which will back early-stage companies in Sweden and the wider Nordic region. The firm looks in particular for businesses started by women, people from immigrant backgrounds and founders based outside capital cities. It also favours companies working on environmental and social problems such as emissions, energy efficiency, healthcare and education.

The EIF, part of the EU-owned European Investment Bank Group, is the first institutional investor in the fund. The commitment is backed by the EU’s InvestEU programme. Its purpose is to give the fund credibility with private investors, who are expected to follow.

BackingMinds was founded by Sara Wimmercranz and Susanne Najafi, who built e-commerce businesses before moving into investment. Its first two funds backed 23 companies. Of those, 46 per cent had at least one female founder, 43 per cent had founders from immigrant backgrounds and 71 per cent were based outside a capital. The firm says there have been several successful exits but has not named them.

Wimmercranz presents the strategy as a commercial one rather than a moral one. “A network is a filter,” she said. “It lets through what already looks like the network and repeats the patterns of the past.”

Merete Clausen, the EIF’s deputy chief executive, said Europe “cannot afford to leave talented entrepreneurs undiscovered simply because they are outside the traditional venture capital networks.”

The argument will be familiar in Britain, where venture funding is still heavily concentrated in London and the South East. Whether public money should be the one to prove that overlooked founders are worth backing is another question. If BackingMinds really has found an edge, private capital should be chasing it.