[VivaTech 2019] What’s Your Next Bet
A 22-minute fireside chat at VivaTech 2019, moderated by Harry Stebbings, Founder of Stride VC and The Twenty Minute VC, featured Pär-Jörgen Pärson, General Partner at Northzone, available on YouTube. Connected via LinkedIn and LinkedIn, Harry and Pär-Jörgen discussed VC decision-making. This 1000–1200-word post, for VCs, startup founders, and tech enthusiasts, explores lessons from market cycles and Spotify’s success.
Navigating Market Cycles
Pär-Jörgen, having weathered the 2001–2003 dot-com crash (95% value loss) and 2008–2009 cleantech wipeout, emphasized resilience. These cycles taught him to prioritize sustainable growth over hype-driven valuations. Europe’s VC ecosystem, now complete with angel-to-growth financing, avoids early exits (e.g., $60 million sales once deemed successes). In 2018, six of eight global IPOs were European, reflecting a maturing market. Pär-Jörgen advises founders to choose investors wisely, ensuring alignment for tough times, as market booms tempt over-valuation risks.
Aligning Interests in VC
Pricing, Pär-Jörgen argued, hinges on aligned interests, often undermined by high valuations with anti-dilution clauses. These misalignments strain founder-VC partnerships during downturns. He recommends founders stress-test investor alignment pre-investment, prioritizing resilience over maximizing valuation. Northzone avoids consensus-driven decisions, relying on individual conviction to back founders like Spotify’s Daniel Ek. This approach, coupled with transparent, meritocratic fund structures, has driven Northzone’s success, including three multi-billion-dollar exits, despite long-term performance uncertainty in VC.
Lessons from Spotify’s Growth
Pär-Jörgen’s early bet on Spotify, led by Daniel Ek, hinged on Daniel’s vision and ability to oscillate between granular details (e.g., instant playback UX) and strategic abstraction. Initially reluctant to lead, Daniel’s paranoia and customer focus—balancing creators, consumers, and labels—built a two-sided marketplace over a decade. Spotify’s near-death moments, resolved in hours, underscore the value of experienced VCs who remain calm. Pär-Jörgen’s latest unannounced investment in group travel reflects his knack for spotting young, serial founders with high-growth potential.