Virtually kicked out of his job at McKinsey (twice), turned down by Klarna (twice) — and now the highest canine (or “previous canine”, as he jokingly places it) of enterprise capital agency Northzone. Who’s Pär-Jörgen (PJ) Pärson?
Pärson apologises when he arrives on the Japanese fusion restaurant TAK three minutes late for our brunch. He says he was held up ready to be proven to our desk.
Carrying a lightweight puffer jacket, denims, knitted zip-up jumper and brim-free glasses, the 58-year-old investor refrains from giving me a hug since he’s affected by a slight chilly, his first in over 5 years — he’s nonetheless untouched by Covid, he assures me.
Pärson sits down and pours himself a glass of glowing water while telling me why he has chosen TAK as our spot. Not like Kry cofounder Johannes Schildt, who I brunched with on the similar restaurant, Pärson picked it himself.
“That is one in all few eating places you’ll be able to truly get a desk at,” he says. “And I favor to eat seafood or vegetarian and this place is nice at making each.”
Pärson orders a Josper-grilled miso and sake-marinated aubergine with miso butter sauce and cabbage salad, whereas I’m going for the safer guess of a sushi bowl. Then I get caught into my mission for the subsequent hour: determining how somebody so wealthy and profitable can appear so humble.
The Spotify Saga
Northzone, the place Pärson has been a associate since 2004, is greatest identified for its profitable bets on firms like Spotify and iZettle. However they aren’t the one gems within the portfolio: Northzone has been doing fairly effectively throughout the board. In response to Pärson, 45% of startups invested in by its 2019 fund are actually unicorns (Sifted wasn’t capable of verify that determine).
However the Swedish scene hasn’t at all times been as mature as it’s now. He left McKinsey after 5 years and whereas engaged on the digital transition for a seafood producer within the mid-90s, he acquired a style for tech. By changing into an investor, he thought he may assist different firms grow to be digital.
Whereas making an attempt to lift his first fund, he was provided a job making internet-focused offers for Cell Ventures, one of many early buyers within the Swedish tech scene — and the plan for his fund was placed on maintain.
“I used to be a little bit of a wild card again then. I had carried out a couple of investments that had gone haywire and I suppose the staff was a bit sceptical of me”
Cell financed a number of the early Swedish startup successes, like market Tradera. In a spare workplace of Cell, the digital advertising and marketing firm Tradedoubler was based by Felix Hagnö (later an early investor in Spotify) and Martin Lorentzon (who then cofounded Spotify). Tradedoubler’s first worker was Jacob de Geer (who later cofounded iZettle). Tradera’s cofounder Jonas Nordlander (later cofounder of Russian market Avito) was in search of a CTO and employed Daniel Ek (who additionally went on to discovered Spotify), who was nonetheless in school on the time.
“Many of those folks turned the spine of the profitable Swedish tech scene. I imagine that the folks round Cell weren’t eager on the cool Icon Medialab or the quirky Framfab tradition, they have been extra like regular enterprise folks,” Pärson says whereas buttering a bit of bread.
“I had super respect for Lorentzon. He performed in one other division than the remainder of us at the moment. He teamed up with Daniel [Ek] who was untested as a frontrunner however was very spectacular from the beginning. It didn’t take lengthy to get satisfied that he was the man.”
Ek, who was solely 23 when he based Spotify, has grow to be an inspiration to many — together with Pärson.
“He’s most likely the perfect instance of an individual who grows in a method that few others handle. I typically use him as a psychological mannequin when speaking to different entrepreneurs about handle that change. Most leaders work actually arduous and their very own growth is a results of that arduous work,” says Pärson.
“Daniel has been far more strategic about his development as a frontrunner.”
Chilly ft
To convey a deal to the desk at Northzone, you wanted a coinvestor to again your guess. That posed a little bit of an issue to Pärson in 2008, when he pitched Spotify to his staff.
“I used to be a little bit of a wild card again then. I had carried out a couple of investments that had gone haywire and I suppose the staff was a bit sceptical of me,” he says. (A kind of investments was in Fox Applied sciences, which he describes as “horrible”. One other portfolio firm, Proxiliant, additionally failed miserably.)
The coinvestor, who was alleged to have his again on the funding committee assembly, acquired chilly ft and was about to wreck Pärson’s deal.
“After I requested him what he thought [of the Spotify investment] he couldn’t give a sure or no — he chickened out,” Pärson says.
Fortunately for Pärson and Northzone, he managed to win over the committee — and the agency turned the primary VC to put money into the music platform.
And what occurred to that different investor? Pärson offers a mischievous smile: “He didn’t keep round for lengthy after that.”
Since that rocky begin, Pärson has constructed a status as one of many prime buyers in Europe. Because of his early investments in Spotify (which is now listed on the New York Inventory Trade) and iZettle (which was acquired by PayPal), he’s been a characteristic of the highest 10 of the newest Forbes Midas Record of Europe’s most profitable VCs, alongside Jan Hammer at Index Ventures, Sonali de Rycker at Accel and Johan Brenner at Creandum.
Turned down by Klarna
Pärson didn’t catch all his Swedish unicorns whereas they have been nonetheless in nappies although. Purchase now, pay later (BNPL) decacorn Klarna — which remains to be non-public with a whopping $45.6bn valuation — solely entered the Northzone portfolio in 2015, 10 years after it was based. Although not for lack of making an attempt: Northzone had tried to put money into 2011 and 2013.
“We had the chance to take a position however we have been stingy and that excluded us from the offers,” Pärson says. Not like some worldwide buyers, again then Northzone wasn’t satisfied Klarna was price what it was asking for.
Klarna’s greatest buyer on the time was CDON, one in all Sweden’s greatest ecommerce firms. Northzone requested CDON what it considered Klarna and was advised that it was constructing its personal BNPL answer. On the time, CDON accounted for 60% of Klarna’s enterprise. If all the large ecommerce firms went down the identical path, then Klarna would grow to be insignificant.
However, as we now know, they didn’t. “We overvalued some buyer info and thought the deal was dangerous,” Pärson says as he takes a chew out of his aubergine. “We had two of those main misses. However Klarna was too good an organization to not put money into so then we needed to chew the bullet.”
In 2015 Northzone managed to purchase secondaries from early buyers and the Klarna founders — and looking out again, Pärson is glad that they acquired in after they did.
“We’re actually glad that Sebastian [Siemiatkowski] and firm weren’t utterly fed up with our indecisiveness. However these are the errors you make as an investor.”
Dangerous actors
Working as a VC has grow to be an unique and fascinating occupation. However in response to Pärson, VCs are nonetheless seen by founders as solely a way to the tip of a big bag of money or typically, even worse, those who are available in and alter the enterprise. As a substitute, he’d favor to be seen as a mentor to the businesses he invests in.
“The buyers who’ve been round for some time have seen quite a bit and typically can convey up examples of what occurred in an analogous scenario earlier than,” he says. “That doesn’t imply that it will likely be the identical now however it may be meals for thought.
“It’s a massive step to intervene within the operations. The day you do this the enterprise is more likely to have big issues or actually dangerous actors.”
Pärson offers an instance: again within the day, Northzone invested in an organization (Fox Applied sciences) that later employed an exterior CEO from the US, who closely elevated the corporate’s prices. That CEO needed to herald a brand new investor — Frank Amodeo at Mirabilis Ventures, based mostly in Florida.
As a part of the beneficiant funding deal within the somewhat-troubled startup, the brand new investor would deal with the startup’s payroll processing by his personal firm. The CEO of the startup went forward and signed the time period sheet.
“Then the CFO known as me up and mentioned that he had a foul feeling about it however that he hadn’t talked about it to the CEO. He simply needed me to know,” says Pärson.
He acquired on a airplane to Orlando to satisfy with Amodeo and hope that the CFO’s fears have been unfounded — a hope that was quick lived. “Sitting on the highest flooring at his penthouse with a big glass desk, surrounded by guys with weapons and spy-style earbuds, I realise he’s a real-deal mob man. I left feeling that it was actually dangerous,” Pärson says.
After a little bit of googling Pärson came upon that one of many guys on the funding agency had additionally been concerned in a coup in Congo. He returned to the startup and advised them that they couldn’t go ahead with the funding.
Nevertheless, it wasn’t fairly that simple. Amodeo had already lent the startup cash with out telling the board — and the CEO had signed off on it.
The board determined that the CEO needed to go and Pärson hopped on a airplane once more, this time to California, to sack him. He then went again to Orlando to as soon as once more meet with Amodeo.
At this level, even in pre-Zoom years, most individuals would have chosen to leap on a name as an alternative of exhibiting up in individual at Amodeo’s home. Pärson admits that he would have a lot most popular that, however he felt he needed to do it in individual.
“I advised him, sorry however there received’t be a deal in any case, that we had paid again the cash the startup loaned and that the payroll processing nonetheless hadn’t been transferred in order that wouldn’t occur both.
“One month later he was arrested by the FBI — and the entire payroll processing fraud was revealed.”
Amadeo had stolen $181m from completely different firms and was later sentenced to 22 years in jail. “That was a very dangerous actor,” Pärson concludes.
€100m to philanthropy
When our espresso arrives, our dialog turns away from criminals to Pärson’s newest challenge — The Interior Basis.
Alongside different rich founders within the Swedish ecosystem, together with the Klarna founders Siemiatkowski and Niklas Adalberth, in addition to Tink cofounder Daniel Kjellén, Pärson has determined to not go away an enormous fortune to his three youngsters.
“In essence, we expect it’s a dangerous factor to ship cash to later generations. It’s higher that they’ve the liberty to create their very own future with out expectations. Neither me nor Annika [his wife] has that form of [overly wealthy] upbringing and it could really feel unfamiliar to place our kids in that scenario,” Pärson says.
“I’ve at all times seen myself as being a bit too loud, a bit an excessive amount of”
So, in 2021, the couple based the Interior Basis, which invests in startups and non-profits targeted on range or psychological well being. On the record to this point are the likes of early-stage VC agency Unconventional Ventures, which is investing in startups with underrepresented founders, and the Swedish psychological well being startup Nudgelabs, which was accepted to the most recent consumption of Y Combinator.
It’s a considerable sum to offer away — €100m for grants and funding over the subsequent 20 years.
Mr Humble
Having labored in VC for nearly 25 years, Pärson is a widely known — and well-liked — determine in Sweden. He typically has folks over for meals and drinks in his backyard — although I’m nonetheless awaiting an invitation — and has a status for being humble and right down to Earth.
“He at all times has time for you, and that’s not one thing not all buyers have. And when he offers you his perspective on issues, it’s clear that it is just his perspective — not the reality,” Magnus Liungman, the cofounder of Nudgelabs, says.
“I feel you determine your path,” Pärson says. “Northzone was very completely different 15 years in the past, however since then issues have modified. We wish to have an inclusive environment and wish to be a spot the place folks wish to work and thereby have entry to the perfect expertise no matter their background, ethnicity, gender or orientation. The identical goes for our investments. However I’ve at all times seen myself as being a bit too loud, a bit an excessive amount of.”
Sitting throughout from Pärson at lunch, I couldn’t agree. Maybe he’s an excellent actor, or maybe combating with the concept of your self as loud will humble you ultimately.
When the invoice arrives, Pärson picks up his pockets earlier than I’ve the chance to inform him that the brunch is on Sifted. I realise I’ve utterly forgotten to ask him about his meal and can’t actually say that I believed a lot of mine both. I let it go and we are saying goodbye — with no hug.
Mimi Billing is Sifted’s Nordic correspondent. She additionally covers healthtech, and tweets from @MimiBilling
