2Gears successfully raised 2 million euros with the help of nyuko funding expert, Nicolas Valaize. We talked with Bert Boerman, CEO and co-founder, to learn more about their journey.
2Gears and nyuko teams
What is 2Gears about?
We provide Governance.io, our solution that helps professionals in the funds industry to deal with regulatory oversight. This includes all the data, controls, documentation and supervision that they have to perform.
Our clients are all professionals that deal with investment fund structures, but our typical customers are depositaries and fund management companies (“ManCos”).
I started looking for a solution and when I couldn’t find it I decided to build it myself.
How did you come up with this project?
I’m an ex-banker, I worked for 15 years in a large bank where I was in charge of the investment fund depository business. I found it very complex to manage, and it is only becoming more complex because of new regulations coming out. The systems that banks use are not equipped to deal with this kind of complexity, so I started looking for a solution. When I couldn’t find it, I decided to build it myself with my twin brother.
What are the reasons behind being in Luxembourg?
Well I have been in Luxembourg since 2002, but most importantly, this is the second-largest fund domicile in the world and if you look at cross-border distributed funds it is actually the biggest fund domicile globally. It gives us a massive launch market in a very tiny piece of land, so it is a good place to find customers.
Also Luxembourg has such a big track record in investment funds that the solution you build and deploy in Luxembourg can be easily exported to other European countries. At the end of the day, it is the same European regulation that is governing all those countries, and people are very much looking at Luxembourg as one of the global leaders in investment funds.
What is the financing round you’re announcing today?
We’ve just closed a 2 million euros funding round from private investors. This was structured as an equity/debt round, partly through the InnovFin tool – a European initiative to provide financing support to innovative SMEs – distributed by the BIL. The private investors joining us are top industry specialists in the financial sector. I’m also glad to mention that most of our existing investors decided to invest again.
What is interesting is the fact that it is not only useful for investors, but also very valuable for ourselves.
What was the fundraising process like?
When you go for above Seed-stage rounds (Editor’s note: 2Gears raised a €405k seed round in August 2015), the requirements on the quality of your pitch & presentation go up quite significantly. So the first thing we did was we sat down with Nicolas Valaize (Editor's note: fundraising expert at Nyuko) and focused on redoing the entire pitch-deck. We could benefit from his experience on what investors expect and focused on building a flowing storyline of taking somebody by the hand from the very specifics of the business all the way up to the long-term vision.
What is interesting is the fact that it is not only useful for investors, but also very valuable for ourselves, because Nicolas challenged me a lot on the numbers, the markets and the go-to-market strategy. This helped our vision of where we want to take this company to become much more defined now then it was before.
How did Nyuko support you in finding investors?
So far I had been dealing principally with business angels. I found it’s pretty difficult to get appointments with VCs. Thus Nicolas introduced me to a good number of both Venture Capitalists and relevant business angels, which I had meetings and presentations with. We finally ended up raising cash from individual investors, as their terms were better for the company’s growth than VCs’ Term Sheet. One of the private investors was also introduced by Nicolas. Even if we did not continue with the VCs, I still consider these introductions very valuable, as we might still raise money from them in a future round.
What about negotiations with investors?
As an entrepreneur, I had very little knowledge about the so-called term-sheets. I tried to educate myself as much as possible, but there are a lot of tricky terms and also market practices that I don’t know about. You really need to have seen a lot of term-sheets and deals before you can analyze and understand their impact on your business. Nicolas worked alongside us to make sure we got the best deal out of the talks. For instance, one of the term-sheets we received, while it looked very interesting, we found out that underneath the surface there were a couple of tricky parts in there which were not very good for us. We later on declined the offer.
Fundraising is just the beginning, what are your next steps?
After we won the FinTech award a couple of months ago, we got much more traction: many new customers but also much larger companies. We really need to have people on board to serve this growing number of customers. We also have big ambitions for international growth too, and we have already seen a good number of leads from Europe, Asia and the US. As a first step, we are looking for three new team members in Luxembourg, and four in the Netherlands. If you are in clients support, sales management, implementation management or development we are looking for you (apply at www.governance.io/careers).