Battery Ventures hunts opportunities in Europe

Battery Ventures hunts opportunities in Europe

Boston-based Battery Ventures this month announced investments in European fleet management software providers Vimcar GmbH, based in Berlin, and Avrios International AG in Zurich with plans to combine them and build a larger pan-European company.

In that effort, the venture-capital and private-equity firm is already tracking more than 100 companies in the fleet-management sector and has engaged in talks with dozens of them, according to General Partner Morad Elhafed and Partner Zak Ewen. Maria Armental spoke to the two men about the latest deal and the opportunities they see for software investors in Europe. Responses have been edited for length and clarity.

MA: Why back software deals in Europe?

Mr. Ewen: What we like about Europe in particular is that there is an added layer of complexity relative to the U.S. market, which is geographic and cultural fragmentation. Rather than that being a barrier, we view it as a really nice opportunity because we find a lot of companies that are really compelling, strong businesses [with] strong, intellectual property. But a lot of those companies are built in a way that kind of constrains them to that country, that region or that geography. And our goal is to take those businesses and help them become international champions.

Mr. Elhafed: In Europe, we see very good technology and, therefore, the ability to bring that technology to the U.S. and grow in the biggest software market in the world. That’s one of the strategies that worked for [Battery] in Europe. We’ve done that with Neolane out of France (which sold to Adobe Inc. in 2013). We’ve done that with Mendix out of the Netherlands (sold to Siemens AG in 2018). We’ve done that with Dataiku out of France, and we’ve done that with Collibra.

A second piece of [Battery’s] strategy [focuses] on critical software. It’s enterprise-grade technology but for a very specific use case. A lot of these companies don’t really cross borders. We look at it by country. So we come in with this vision, and then, if we put all these companies together, we can realize some efficiencies, we can build scale, [and] we can be very profitable.

MA: What’s your growth plan for Vimcar and Avrios?

Mr. Elhafed: Vimcar has a very specific logbook and fleet management-type product. Avrios has a fleet-administration product, which is slightly different than [what] Vimcar offers, in a slightly different but overlapping region. The idea here is we’re trying to build a bigger fleet-management company, with potentially five or six different products and applications across a number of verticals. Our goal is to make 10 to 15 acquisitions.

MA: What sectors besides fleet management offer attractive software investment opportunities in Europe?

Mr. Elhafed: Manufacturing has been such a good space for us. We would love to rebuild our portfolio in that space. [Considering the] cost of raw materials and supply-chain issues, it screams for more efficiencies in those markets. It’s a market that we know really well [where] we love the trends, [and] we’re spending a lot of time in right now.

Mr. Ewen: One of the other areas where we spend a lot of time in Europe is the public sector. So technology [is] digitizing the public sector. In 2022, environmental, social and governance-related software was one of the few areas that was attracting a ton of venture capital and private-equity [capital] at what I would call 2020 and 2021 pricing. That will continue to be the case in 2023 and beyond.

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