Dutch entrepreneur Kees Koolen and investor in Booking.com and Uber from the very outset is busy all day providing support to technological start-ups which he invests in. He has never experienced a crisis as extreme as the current one that’s caused by the corona virus. He expects that the consequences for society will be unprecedented. “A complete reset of the world awaits us.”
You invest in a lot of things. In what and why?
“That varies quite a bit. I always assume that everything can go wrong and I’ll end up with nothing to live on. That’s why I’ve invested in a number of land holdings. I build them up so that if everything does go wrong, I can live off plots of land for the rest of my life by working on them or selling them. That’s my savings account. I do that all the time. So I’m never too panic-stricken when something bad happens in the world. Because I grew up with nothing. But also because I know that no matter what happens, I still have a bit of pocket money.”
But you also invest a lot in companies.
“Yes, in companies that I like and that I think are good for the world. I’ve been involved in medical technology for a very long time, especially in brain research such as epilepsy and Alzheimer’s disease. I put money into that. But I don’t expect a lot to come out of it because it takes such a long time and it’s expensive. Maybe someday I’ll earn something from it, and maybe I won’t. I don’t care about that. I invest in modern companies who have a future and are generating turnover, and from whom I think I can earn something from soon. And I invest in technological start-ups. To be honest, that’s where I make the most money.”
What type of technological start-ups do you invest in primarily?
“Over the last few years, I’ve been investing in renewable energy technologies. Previously, I invested a lot in genuine technological start-ups like Uber. I can’t name too many names, but at the time it concerned companies active in logistics. I’m in around four large delivery companies. I’m really into distance learning, communication and digital content. These are all developments over the past seven years. I try to keep up with everything.
This morning I explained to a young VC (Venture Capitalist, ed.) that it’s easy to see what’s doing well right now. But it’s hard to know what will be needed in ten years’ time. That’s why I’m spreading out my investments and making a lot of smaller investments. What I’ve learned is that it is very difficult to predict what will happen. You can identify trends though. You know that now things are pointing towards working from home more and more. Although it is very difficult to predict exactly which product is going to do well. If I believe in a sector, I invest heavily in it. It’s almost always the case that I end up with a number of good companies in a particular sector. But it also invariably means that I’ve invested in a number of companies that, for whatever reason, turn out to have less of a future and which I’m not going to continue with.”
I’ve never witnessed the world come to a standstill. That has far greater consequences than people currently dare imagine.
Surely you are familiar with Techleap, an organization that supports tech start-ups?
“I myself was the chair of StartupDelta for many years. Techleap is what came out of that and its what I put in place for The Netherlands, together with Prince Constantijn.”
A Techleap survey of 445 start-ups reveals that most of them are experiencing short-term financial difficulties due to the Corona crisis because they are struggling to attract investors.
“Tech start-ups are basically always short of money. If you have the right attitude, it’s pretty easy to convince investors to put money into your company. When things get worse economically speaking, it becomes more difficult to raise money. Because anyone who does have money, suddenly becomes very frugal and cautious.
My lesson for young entrepreneurs is that you always have to make sure that you are building a healthy business. That you have a sound cash-flow planning in place and that you have sufficient runway. A tech start-up that has only planned money for two months in advance is not on the right track. Most of them have money for a year. When things start to get tough, you can see that six months in advance. Yesterday I had quite a discussion with a start-up which is also in trouble and which I invest in. I advised them: go back to basics. What do you need to survive? Because if you look ahead into the future – two, three, four years – there is no crisis then. Parties who get through a crisis successfully, are usually the winners.”
What kind of business activities should start-ups in crisis stop doing then?
“All kinds of marketing initiatives that cost a lot and yield nothing, for one thing. Some things you can put off for the time being. But you can’t postpone the core of your business. You have to continue on with that. If you do well as a start-up, then you make sure that you can always let that core activity survive for at least a year. I have my reservations if a start-up gets into acute trouble.”
But this also happens with start-ups which you have invested in.
“Yes. But they still have until October. They are thinking about what they want to continue on with after October. Then you often see that they will still need a bit of money. In that case, investors are likely willing to help them get through the winter.”
Are there any start-ups that you’ve already put extra money into because it was necessary?
“No. So far, no one is panicking. Although the differences between the start-ups are huge. I’m in companies that are 100 % inactive at the moment and I’m involved in companies that have grown by a factor of six over the past month. Like companies active in online learning and working from home.”
So you’re not in companies that have gotten into acute difficulties because of the corona crisis?
“No. But now I and other investors will be taking another critical look at our portfolio. You simply have a limited amount of capital. If you think you’re going to lose capital in certain companies, you won’t reinvest in them.”
Two weeks ago, the hospitality sector had to shut down. That means that some tech start-ups have to close down as well.
How many companies have you invested in?
“About a hundred. Of those, about 80 are tech start-ups and scale-ups. I’m involved in lots of them via small funds, along with dozens of other investors. In some funds, there are three of us investors. While in others, there are ten of us. You cannot personally know every one of those companies yourself.”
How do you view this crisis?
“I think we’re going to end up with a complete reset of the world. I’ve never seen anything so extreme. I started doing business at a very young age and went through a crisis in 1987 and all the other crises since then. During each crisis, business always slows down for a while. But it has never happened before that companies were shut down from one day to the next. Two weeks ago, the hospitality sector had to shut down. That means that some tech start-ups have to close down as well. I’m involved in an IT company that makes planning systems for the hotel business. When hotels and the hospitality sector shut down, a company like that also closes down. Then it’s just over and done with.
I’ve never witnessed the world come to a standstill. That has far greater consequences than people currently dare imagine. I have been telling my start-ups for three weeks already that they should take into account that they will have to close down in April and May. And that they will start up again very gradually after that. Like 25% in June, 50% in July and after that they will start to very slowly scale back again. I expect the global economy to shrink 10 or 15 % over the next year. We have never experienced an impact like this before. I think that very strange things are going to happen.”
What kind of strange things?
“It may be that you are dependent on a certain company and that it no longer exists, which means that you will have to rebuild certain facilities. When we set up Booking.com, we had to build our own data centers. When Uber was set up, you had a lot of standard tools for customer services, data centers, the Cloud and so on. If you take a look now, I’m in a lot of tech start-ups. There are a lot of pretty self-explanatory criteria that you don’t have to think about at all as a starter. It’s possible that start-ups will be left in the doldrums in a year’s time because they’re used to services that are no longer available. On the other hand, we are now getting used to working online. Fundamental societal shifts are taking place that are difficult to ascertain right now.”
It’s possible that start-ups will be left in the doldrums in a year’s time because they’re used to services that are no longer available.
Such as?
“We’re in a kind of lock-down right now. But what happens when it’s over? Are we going to have any more events like these again? I was sitting in a company canteen yesterday where the seats were spaced meters apart …”
You mean we should continue to anticipate the risk of infection?
“We are now being taught that we should not get together. We had a hard time with that during the first week. Some salespeople said they couldn’t sell anything if they weren’t seeing their customers in person. Now they seem to be able to do that remotely, via a computer. That’s working out well too. Two months ago everyone said: that will never work. Some of the things we were used to doing have changed fundamentally in just a few months.”
Do you see any opportunities for innovation in this crisis?
“Look at the situation in the ICUs. Initially, they said they couldn’t make new ventilators in a hurry. They seem to be able to do that now. We have started to work together differently because there is no other way. Every crisis leads to innovations because the situation demands solutions that were previously not available.”
