In a world increasingly fragmented by cultural, political, and geopolitical divides, the task of identifying and investing in startups that can scale to deliver venture-scale returns is a challenging one. Kompas VC, a venture firm, has developed a unique strategy to navigate this complex landscape. With a new €160 million fund, Kompas is doubling down on its approach, focusing on regional sensitivity and core industrial competitiveness challenges.
Sebastian Peck, a partner at Kompas VC, highlights the three main spheres of economic and political activity: the U.S., Europe, and China. These regions are following distinct trajectories, and Kompas is strategically positioned to capitalize on this diversity. The firm's investment thesis centers around tackling core industrial competitiveness challenges, including manufacturing, supply chains, critical infrastructure, and sustainability.
However, the landscape has shifted significantly since 2021, with a renewed focus on AI and fast, explosive growth. This shift has led Kompas to refine its niche, focusing on startups that work on decarbonization, productivity, and risk management in the physical world, particularly in the production of physical goods.
Kompas's broad niche is evident in the trend of reshoring, which is prevalent in nearly every market. The firm's early-stage investments, ranging from €3 million to €5 million, provide an opportunity to lead in this evolving space. Despite being dwarfed by some venture funds, Kompas's regional focus and specialized approach give it a competitive edge.
One of the challenges Kompas faces is the global fragmentation that limits the potential for certain startups to deliver venture returns. Prefab housing, for example, is a widely used approach in Scandinavian countries but less so in Germany or the rest of Europe, let alone the United States. Peck attributes this to cultural conditioning rather than the technology itself, emphasizing the importance of market fit.
The fragmentation extends beyond housing, with sustainability being a broadly attractive theme in Europe, contrasting with its diminished cachet in the U.S. Kompas acknowledges the dynamic nature of the investment landscape, noting that a lot can change quickly over the 10- to 15-year investment horizons they operate within.
For smaller investors like Kompas, this shifting landscape presents both a challenge and an opportunity. Peck believes that highly focused, specialized funds can play a crucial role in identifying and supporting specific themes and founders. This approach allows Kompas to be the first to invest in and support certain startups, giving it a unique advantage in the market.
In conclusion, Kompas VC's strategy of investing in a fragmented world, while challenging, is a calculated and nuanced approach. By focusing on regional sensitivity and core industrial competitiveness, the firm is well-positioned to capitalize on the diverse opportunities presented by the current global landscape.
