Investor Spotlight: Jacob Key

Investor Spotlight: Jacob Key

Jacob Key is a Founder and General Partner of Luminar Ventures, from Stockholm.

He chatted with Atara’s Co-Founder Robert Taylor, and he had some valuable insights to share about VC investing and the challenges of being a Founder.

Robert: What is the investment thesis for Luminar’s fund and what 3 industries are you most excited about heading into 2023?

Jacob: Our core thesis is to find the best and most ambitious and most talented entrepreneurs to start companies. As we invest so early it’s so much about the team. So, in that we are then quite agnostic to which problem and what area, as long as it is big enough and that the team has what it takes to grow a successful company, grow it fast and could become a category leader.

If I should pick some specific sectors: obviously cybersecurity. We have just made an investment there, that’s super relevant in these times. Being based in Sweden: music tech! Coming from that background that is an interesting area for me personally. We’re starting to see a lot of innovation coming into the space with the second or third wave of music companies. And then sustainability and everything around electrification and sustainable electric production systems. Obviously, we invest in software so anything around software like Greenely would be a good example or Normative that is in that area. We see now they have a huge tailwind when it comes to customers, investors, and talents. Everyone wants to be part of those kinds of companies.

Robert: Can we get a summary of your background and how did it lead you to VC investing?

Jacob: Yeah, so I’m a serial founder myself in tech. Obviously going from idea to exit in my own companies, I can relate to founders in a great way.

That normally resonates very well with entrepreneurs. We’ve done it. Most of the team here has that background: they’re founders or at least have invested in the early stages. Seed-stage investing is very different from even Series A and Series B investing. I have also been an angel investor for many years. I’ve invested in 20+ companies, privately, and helped them in a similar way. I also have a long background in the music industry. Warner Music, I helped them to transform from a CD business to a full streaming business. Which had its challenges and still has, I guess. But that was super interesting to be part of that journey. And then I saw that this will happen across the board for many industries.

Robert: What are the standout characteristics or experiences that you look for when it comes to an aspiring founder that’s looking to raise capital?

Jacob: The first will be that you are a serial entrepreneur, that you’ve done it before because that makes it so much easier, and you’ve hopefully learnt from your mistakes. Then you need to be hungry, always looking to learn and be curious about new technology and new markets and then obviously complement your own skills with others that have other skillsets and other backgrounds. So, a full team with both technical and commercial and product skillsets. That’s the perfect match I would say. And then in some cases, it is good to have a strong industry understanding and network, in some cases it’s not when you’re trying to change stuff. Sometimes it’s good to not have that legacy, but it’s good to have some insights.

Robert: What are the biggest pitfalls that you see founders fall into or the biggest mistakes that you see founders making at that kind of early stage, following on from seed or series A investment? And what would be your advice to help avoid making those mistakes?

Jacob: Obviously in the last few years money has been easy. So, founders haven’t been sometimes as efficient as they should with investing and making every day count and think that they can wait for twelve months to get some more money.

You have to be frugal from day one even though they have a lot of money you should be very cautious with that money. So that is definitely one.

Then making sure you hire the best people and making sure you hire people that are smarter than yourself. Sometimes people don’t really understand what great looks like in other areas. Like if I don’t have a technical background, but I have to hire a CTO it’s hard to really see good from great and then it’s good to have good partners and others that can verify that.

Robert: That is interesting and that feeds into my last question. The question is: What would you say your biggest challenge is that your portfolios face when it comes to hiring?

Jacob: I think it has been very competitive. Particularly strong and experienced engineers are hard to find out there. It’s so important to have a good vision of what you’re doing and trying to convince people to join the journey and not just join because there’s a good option package or a good salary package. You want them to be on the same journey as you are.

Investors Spotlight is our short interview series where we shine a light on experts hoping to illuminate the topic of the day.

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