Catching up with former colleagues and friends: Henrik Kraft

During my time at KKR, I’ve come to value maintaining strong ties with alumni of the firm, and, given my own sector focus, of the TMT team in particular. With such a depth and breadth of experience to draw upon and learn from, I always find discussions with them enlightening and insightful. Recently, I spoke to Henrik Kraft, former KKR Partner who headed the Technology and Telecoms team in Europe and helped the firm take its first strides into tech investing in Europe. When I arrived at KKR, I joined Henrik’s team.

Henrik has since become an angel investor in the enterprise software, fintech, sport-tech, eSports, social networks and health-tech sectors. When I caught up with him recently, Henrik was generous with knowledge and views, sharing his views on KKR, 2021 trends, technology, and beyond.

Henrik, you have now spent a few years investing in early stage companies. What sectors/themes do you focus on? 

I initially thought I would focus on enterprise software and telecoms given my investment experience at KKR including having been on the board of TDC and also Visma where KKR supported a large number of SaaS and cloud-enabling acquisitions.

But I’ve found it actually quite difficult to have a very specific investment thesis as an early stage investor because the deal flow is rather coincidental, opportunistic, and often based on referrals from other entrepreneurs. My portfolio now is about a 50/50 split between B2B and B2C, and includes a wide range of sub-sectors from enterprise software, fintech, sport-tech, eSports, social networks and health-tech. I have learned that it’s much more important to be flexible and to focus on finding a great team to back rather than pursuing what you initially thought you’d invest in.

I also find it particularly satisfying when I can combine my interest in tech investing with some of my personal interests such as sport and wine and really influence a particular industry. I have invested in 3 companies in the world of professional football, which are transforming areas such as transfers, scouting and physical performance analysis. Another example is Vivino, which has driven innovation in the very traditional wine industry by creating a social network for users to scan and rate the wines they are drinking. Vivino also offers a commercial market place where users can buy wines with the enhanced knowledge and ratings of others to make better purchasing decisions. With more than 8 million active users this is a powerful and reliable tool for any wine lover and is benefiting greatly for the accelerated adoption of digital purchasing we have experienced in 2020.

From your perspective as an early stage investor, what’s the view that tech entrepreneurs and founders have of KKR?

Historically, KKR has been associated with very large transactions and leveraged buyouts. However, there’s a growing awareness amongst entrepreneurs that KKR has now developed deep expertise within their tech operations team and is now also looking for growth stage companies where the initial investment could be in the $30-50 million range.

Many of these entrepreneurs are keen to discuss my experience at KKR since private equity is very likely to be a partner for them further down the line. Most don’t have much experience with this type of investor compared to traditional VCs.

A large fund like KKR, however, can be a really exciting partner for a growth stage tech company: They have the resources to continue to fund the company through their later stage expansion, and provide founders the ability to leverage the firm’s network of portfolio companies that could be potential customers or channel partners. Finally, KKR has deep contacts with the large tech companies that may become strategic partners. To summarise, the KKR approach focuses on strong partnerships with tech founders backed by a great track record in helping tech firms grow.

What tech trends are you closely watching in 2021?

Automation stands out as having been really accelerated by the Covid-19 crisis. The experience of 2020 has brought the realisation that people can do many tasks from many different locations and many tasks can also be automated. This will hasten the development of AI, machine learning, the Internet of Things, and augmented reality that can help automate industrial applications. Consequently, we’ll see a huge transformation of our society in the next five to ten years.

The other trend I’m watching closely is how our emphasis on mental health and wellbeing will impact the healthcare and wellness sector. Related to this, I’m curious to see the effects of the more positive side of increased automation, which is more leisure time!

What's the one piece of technology, whether it’s software, hardware or something else that has affected your life the most?

It’s obvious, but definitely the smartphone. If you think about the amount of time you spend on that device every day and the connectivity it gives you, nothing can trump it.  You’ve got everything you might need in your pocket - it’s not just a phone, it’s a tv, a computer, a digital watch, a camera, a calculator, a handheld game console and a Walkman - all the devices that I wanted to have growing up. My kids, for example, don’t really watch TV anymore, but rather watch everything on their phones. Nothing beats the smartphone in terms of overall profound, daily constant interaction and impact.

Thanks for taking the time to come back and talk to us, Henrik. 

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The views expressed reflect the current views of the writer as of the date of publication and neither the writer nor KKR undertakes to advise you of any changes in the views expressed herein. Opinions or statements regarding current events or trends are based on current conditions and are subject to change without notice. Nothing contained herein constitutes investment, legal or other advice nor is it to be relied on in making an investment or other decision. The views expressed herein may not be reflected in the strategies and products that KKR offers or invests, including strategies and products to which the writer provides assistance with or on behalf of KKR. Further, KKR and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this writing.