We prefer to invest at the Pre-IPO stage, less than three years before the expected exit. We invest in IT and technology-driven businesses driven by smart entrepreneurial teams with disruptive ideas for extreme impact solutions across the US and Europe. In addition to financial support, we advise and take a proactive role to fundraising equity or debt for our investments.
Black Swan is a late-stage venture capital manager. We invest in IT and technology businesses are driven by smart entrepreneurial teams with disruptive ideas for extreme impact solutions. Typically, we will begin to provide financial and mentoring support around the time of possible cash flow positive in the sight of up to two years.
We invest across the US and Europe. A particular focus area is on identifying emerging talent in the Nordic region, which has a strong tradition of innovation and has produced more than 30% of European technology unicorns (start-ups valued at $1 billion) since the year 2000.
Our investment philosophy is rooted in Black Swan Theory (Taleb, 2007) and our screening strategy rests on our development of a unique Black Swan Rating System. Our Black Swan Rating system describes the objective dynamics of potential Black Swans – the mega game-changers of IT and technology – and guides our investment selection.
In Nassim Taleb’s 2007 book, ‘The Black Swan: The Impact of the Highly Improbable’, Black Swan is the term Taleb gives to a highly improbable event with three main attributes:
The most notable and largest Black Swan events of recent times in technology, include revolutionisers such as Apple and Facebook, and more recently start-ups like Uber, Airbnb, Tesla and Klarna, that seemingly came out of the blue and went onto turn whole industries upside down. Few people saw them coming, and even those who were told in detail found it difficult to believe – with some of the most experienced and well-heeled Silicon Valley VCs rejecting opportunities when pitched by the hopeful founders.
This is because potential Black Swans are notoriously, and by definition, very difficult to spot before the fact. One reason for this is that revolutionary ideas almost exclusively present with so many unknowns – both known and unknown – and such a huge level of risk, that the classic human response – even for risk-ready enthusiastic VC partners – is to reject the risk and refuse to believe in the opportunity.
At Black Swan, we combat this bias in thinking, aiming always to recognise potential Black Swans if and when they are drawn to our attention. To help us do this, we have developed a unique Black Swan Rating System. Our Black Swan Rating System specifies and quantifies the objective dynamics of a potential Black Swan event and enables us to conduct an objective analysis of the potential of the pitched initiative to reduce the human bias. The system focuses on the manifold objective dynamics of Black Swan phenomena and includes measures of scalability, rebel-rating, partner impact, positive network effect on both supply-side and demand-side, removal of pain points, and many other dynamics and sub-dynamics. It is the backbone of our initial investment screening and evaluation process. This process is naturally accompanied by a comprehensive subjective appraisal of the team, resources and all other aspects of the business.
Using our unique objective Black Swan Rating System, we aim to identify future Black Swans in IT and technology. We will then give ongoing support to entrepreneurs, providing capital, mentoring and introductions throughout the last phase of the company before IPO, building an extreme impact portfolio, and growing the businesses and networks of all those within it.