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Aligning Investments

When interests of VC firms are aligned with those of corporate investors


In 2013, Amadeus Capital Partners (Amadeus) raised $75 million at the first close of its IV Digital Prosperity Fund. The cornerstone investor in the fund was MTN Group (MTN), a global telecoms provider headquartered in Johannesburg, South Africa. The fund was established to invest in late-stage venture and growth companies developing web and mobile applications predominantly in mature markets for emerging markets. Potential portfolio companies were expected to develop products and services targeted at the rapidly expanding middle classes in BRICS (Brazil, Russia, India, China, and South Africa) countries, excluding Russia and China.


MTN believed that investment in Amadeus’ fund would provide exposure to various opportunities in digital and mobile technology, and services relevant to the needs of the emerging consumer middle class. According to Karel Pienaar, Group Chief Strategy and M&A Officer of MTN at the time, the plan was to invest in companies focused on technologies that leap-frogged existing applications, which was well-suited to MTN’s business strategy of driving sustainable growth through data services.


Amadeus’ success hinged not only on its structure as an independent venture capital firm, but on its link with the local university, industry research groups, and new technology companies.

At the time, Amadeus already had a track record of investments in over 20 portfolio companies serving customers globally, including Cambridge Broadband Networks, Edgeware, Celltick and ip.access. However, 16 years prior to 2013, the firm’s fortune was quite different. In 1997, Amadeus I, then a new venture capital fund, received a commitment of $5 million from Microsoft. Amadeus I was the first fund managed by Amadeus Capital Partners, founded by Anne Glover, Peter Wynn, and Dr. Hermann Hauser, some of Cambridge’s renowned investors and entrepreneurs. The objective of the fund, which was aligned with that of Microsoft’s new research lab in Cambridge, was to support early stage technology companies with global potential.


The goal of the Microsoft Research lab in Cambridge as described by Nathan Myhrvold, Microsoft’s former Chief Technology Officer, was to create a home for those world-class researchers based in Europe who wanted to develop innovative technologies and make an impact in the lives of millions around the world. The lab was set up with an $80 million investment from Microsoft, working closely with computer science researchers at the University of Cambridge. $10 million was earmarked for investment in small technology companies and a $5 million commitment was made to the Amadeus fund for venture capital investments.


Myhrvold suggested that Amadeus’ success hinged not only on its structure as an independent venture capital firm, but on its links with the local university, industry research groups, and new technology companies. He believed that by investing in local technology companies, they could complement Microsoft Research activities and reap financial return on investments when the companies succeeded.


Today, Microsoft Research has made progress in areas such as artificial intelligence and machine learning, while Amadeus has had successes with portfolio companies like Aepona, Secerno, and Vocaliq. However, as the market value of the MINT countries (Mexico, Indonesia, Nigeria, and Turkey) increases, and fund managers gradually reduce their asset under management in BRICS funds, will Amadeus’ investments be well aligned to the strategy of investors and businesses in these emerging economic giants? The MINT countries are far from the easiest places to do business, which will come as no surprise to anyone familiar with them. They all have growing economies, large populations, and emerging middle classes. They are strategically located, but have different political environments.


Yet, Amadeus is optimistic and excited about backing iyzico, their first Turkish investment. “Let’s get past the front-page news”, a Partner at Amadeus recently wrote, on their insights blog. “Yes, Turkey had a failed military coup d’état […] but there are 80 million Turks, about the same population as Germany, who live in a landmass approximately twice its size. It has the world’s 18th largest GDP, just behind Canada and ahead of Australia. Its large population though means it ranks 85th on the per capita GDP scale but still ahead of Brazil. A sizeable portion of the Turkish public is middle class with easy access to the latest media and gadgets.”



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