Transatlantic investor EQT Ventures believes in data

Alastair “Ali” Mitchell is convinced there’s a place for data in venture capital when analyzing companies.

Mitchell is a San Francisco-based partner at EQT Ventures, which is part of the Swedish private equity firm EQT and which raised a $630 million debut fund three years ago.

The venture firm, which invests in European companies growing internationally and U.S.-based companies looking to expand into Europe, developed an in-house machine learning platform called Motherbrain. The platform is disrupting the way investments are done, Mitchell said, and this includes the venture model of finding and identifying potential deals.

“The Motherbrain platform is used by us to discover the most promising companies, helping the firm guide its investment decisions,” he said.

To date, it has helped to source four investments in the EQT Ventures portfolio, or about 10 percent of the 45 companies the firm has invested in since it launched in 2016.

It does this by going through convolutional neural networks to analyze company data about companies. One of the companies it found was the German remote desktop software developer AnyDesk. The company wasn’t yet at the stage where most early stage venture investors would be looking, Mitchell said. Without Motherbrain, Mitchell said that AnyDesk wouldn’t have come across the firm’s radar until much later. To date, the company has raised just $7 million and is still in Series A mode.

Another company Motherbrain found was Handshake, a San Francisco recruiting platform for students and alumni. Now backed by EQT Ventures, Kleiner Perkins, Spark Capital, True Ventures and others, Handshake raised a $40 million Series C last year at a reported valuation of $275 million.

As more firms look at or adopt data analysis for their own company sourcing or due diligence, what EQT Ventures is employing with Motherbrain is not that unusual, but Mitchell talks about the Motherbrain like it’s a member of the investment team. And he refers to it as a she. And he noted that EQT Ventures has a number of engineers working on the machine learning technology behind it.

Prior to joining EQT Ventures, Mitchell was co-founder and CEO at Huddle, and an active investor and board member of a number of early stage B2B internet software companies in Europe and the United States. Originally from London, Mitchell now lives in the San Francisco Bay Area, where he helped to establish an office for EQT Ventures near Union Square in San Francisco.

The firm raised its inaugural fund three years ago from European LPs. Mitchell noted the firm is getting more interest from U.S. and Asian LPs as the European tech market is growing, but declined to discuss when the firm might raise a new fund.

Helping to convince LPs might be the firm’s exit late last year of the Finnish gaming company Small Giant Games, which Zynga acquired for $700 million, the firm’s first exit from the debut fund.

Mitchell said he anticipates the firm to generate an IRR well north of 50 percent when all is said and done. EQT Ventures was the lead investor in Small Giant’s last round and the company only raised about $50 million altogether, with EQT Ventures putting in $35 million.

The company wasn’t found via Motherbrain, but Mitchell said it proves the firm’s thesis that their portfolio companies can grow and expand in Europe and the U.S. markets.

Firm Profile

EQT Ventures

• Current fund: EQT Ventures Fund

• Fund size: $630 million or 566 million euros

• LPs: Include HarbourVest Partners, Ilmarinen, Finnish Industry Investment, European Investment Fund, Fourth Swedish National Pension Fund, Vaekstfonden  and SEB Pension och Försäkring AB.

• Offices: Stockholm, Amsterdam, London, Luxembourg, Berlin and San Francisco.

• Notable exit: Small Giant Games, sold to Zynga for about $700 million

• Contact:

• Target: Series A and later in mobile apps, marketplaces, B2C, gaming and other sectors.

• What sets the firm apart: Its use of the machine learning platform Motherbrain to help find companies.