Caroline in EU talks


Last weekend, Sweden and Gothenburg hosted an EU meeting, with the official title “Social summit for fair jobs and growth”. Because of this, Carline was invited to take part of a round table discussion on EU related issues. Representatives from both politics and business attended, among others, Antonio Tajani, President of the European Parliament and Klaus Walle, Secretary General of the European Parliament, Anna Maria Corazza Bildt, the Swedish member of the European Parliament, Nami Zarringhalam, Cofounder and CSO of Truecaller and Staffan Helgesson, General Partner Creandum.


Among the issues brought up were the biggest impediments to growth for startups, and how to create the next huge successes in Europe. Truecaller and SUP46, who attended, talked about free data and less strict integrity rules. Caroline and Walerud Ventures raised the discussion on talent acquisition, to allow the worlds experts to move to Europe, educating and retaining them here. 


Other topics discussed were the importance of being forward thinking with the big upcoming trends, like AI, automation and biotech. To ensure that EU helps those industries grow through providing clear frameworks.


Thanks to all the participants for the invitation and an interesting discussion!


Caroline on the jury for Rivstart

Today the Swedish bank Swedbank announced their new competition called “Rivstart”- a contest concerning entrepreneurship that improves society. Ten entrepreneurs will win 250 000 Swedish kronor each.

Read more about it in Breakit!

Caroline Walerud is on the jury together with Sara Wimmercranz (co-founder of Backing Minds), Arash “Ash” Pournouri (who runs Symposium and Driver at Night) and Richard Båge (co-founder of Mediaplanet and Insplanet).

Send them your brilliant ideas!

Jane and Caroline on list of Sweden's most powerful business women

Veckans Affärer, Sweden's business weekly, lists Jane and Caroline among Sweden's 125 most powerful business women. They take place two and fourteen, respectively, among the tech profiles. 

Jane was also named one of Europe's 50 most inspiring women http://www.inspiringfifty.com/inspiring-fifty-europe-2017/

Make it or break it! Pricing and the Business Model

Start-ups often wrestle with critical decisions on their pricing and business model;  since I’ve consulted on these subjects for hundreds of companies of all sizes, entrepreneurs often ask me for recommendations.

It is hard to give general advice since each company faces different challenges depending on at least the product offering, the competitive landscape and the types of customer. 

There are a few factors that are always relevant:

1. Value Based Pricing

Cost is obviously a consideration when setting prices, since no company can afford to sell below their cost for very long.

As long as you are selling above your cost, put thoughts of them aside and ask yourself how much your product is worth to your customers. Try to capture a fraction of the customer value in your pricing model.

Finding out the customer value is often difficult, depending on the situation. 

In many B2B settings, you can calculate the customer’s return on investment from adopting your offer. 

You’ll need to compare the benefits of your offer to your competitors’ offers and their pricing. If your offer improves something customers care about, you should be able to get a significant price premium.

Here is a Harvard Business Review article with a little more detail on value based pricing.

2. Customer Segmentation


Customer segmentation is widely talked about, but often misunderstood. 

Correctly applied, it is about identifying groups of customers with different needs, seeking different combinations of benefits and having different willingness-to-pay.  Identifying these customer groups and their needs is, of course, essential when packaging your offer into different bundles for those different customer groups.

Customer differences in needs seldom follow simple characteristics such as sex, age, type of industry or geographic location. To find your segments, you must do market research. Market research is quantitative stuff; you engineers ought to be comfortable with it. Since many companies don’t do market research, they go for a simple scheme, like selling different product bundles to different age groups. Those simple schemes do not capture real need differences between groups, and this approach therefore often fails.


3. The Business Model

Prices come in many shapes and forms. Most people think in terms of price level - “How much”. The way you price, the business model, is at least as important as the price level for commercial success.

There are many ways to sell and price products or services, including:

  1. Give it away and make money on advertising or some other indirect source of         revenue. Prominent examples are Facebook and Twitter.
  2. Free (or almost free) Product bundled with paid services.  

    Companies can charge for installation, maintenance, training, customization, and         consulting services. This model is often used by companies distributing Open Source Software, like Red Hat Linux.
  3. A Freemium Model. Software companies like LinkedIn and Dropbox offer a free,         limited-functionality version of their product, hoping that enough users will pay for a     premium version with more advanced features. 
  4. Razor and blade Model. Sell a necessary base component cheaply and make money     on consumables and maintenance or some other life-cycle dependent factor.
  5. Subscription Model. Instead of selling a product, offer it as a subscription including     maintenance, service etc. This model may be used in a wide range of situations. Rolls Royce famously decided to supply jet engines at a cost per running hour, including service and maintenance, rather than sell engines outright as they and all their competitors had done before.

There is no recipe for which business model is best for your company but selecting the most appropriate one will definitely have a major impact on your commercial success and the future value of your company.

Startup Exits

We often get worried questions from entrepreneurs about exits.

This description is meant to give a rough idea about what happens in an exit. We've exited a number of times, most recently selling Teclo Networks to Sandvine in March 2016. 

Another company decides they want your product, your employees (or most of them), and your customers as part of their company. They buy your intellectual property, your customer contracts, and contract the employees they want to stay so that those employees will themselves want to stay through the sometimes bumpy integration process. 

You decide to sell the company. Either the shares of the company ("share deal"), or "just" what is in the company: employees, intellectual property, customer contracts, etc. but not the shares of the company itself ("asset deal"). The difference is mostly in the taxation effects.  

The following section pretty much holds for both share and asset deals:   

You promise: ( "warrant")

  • you had the right to sell it
  • you owned the shares you said you owned
  • you haven't violated anyone else's intellectual property
  • you aren't in serious breach of contract
  • the company is not in legal trouble

You get money and shares in the purchasing company. 

  • proportions of money and shares vary
  • sometimes, the amount of money paid is partly dependent on the purchasing company's sales of the product ("earn out"). The more of your former product they sell, the more money the company sellers get, up to some limit. 
  • the purchasing price is deposited with a third party ("in escrow"), and is released over time as the contract terms are fulfilled. 
    • so the purchasing company can be sure your promises are true
    • so key employees stay employed by the purchasing company


This very complex subject changes often, is a subject for heated debate, and is just too much detail to cover in this blog post. Taxation of entrepreneurial companies is scheduled to change again next year. 

Just make %&/&%€!!! sure you talk to a tax lawyer before you sign that Letter of Intent.  


  • will sign an employment contract with the purchasing company. Sometimes these contracts are onerous, including draconic non-poaching and non-compete clauses not commonly seen in Sweden. 
  • will get payment of their part of the purchase price over time, often four years nowadays. At least two years ("vesting"). This period of working in the purchasing company in order to get the full value of your sales price is also known as "Golden Handcuffs".
  • will sometimes get extra money/options/ earn out for staying with the purchasing company, over and above the payment to shareholders.


  • Their employment contracts will be terminated if legally possible, often on the closing date.  
  • Employment contracts that can't be legally terminated on the closing date will be handled by the purchasing company. 


  • Mostly, the purchasing company wants to keep your contracts.  They'll do what's necessary formally to transfer them, either sending notices of contract transfer or waiting for a passive accept. Passive accept means a customer doesn't object when the usual service is delivered by the purchasing company. 
  • Key contacts with suppliers, customers, prospects ... are "handed over". 
  • One of the old employees visits the key contact together with the new company representatives, if they're really very important. Or you can teleconference, call, or write... 

To make sure that the hand over is smooth and the purchasing company can continue to sell  and supply your product.  


It's not bad, not bad at all. 
You usually continue to work with the people and technology you know and love for a few years ("vesting period", at least), you have many new customers and many new colleagues, the bigger scale of the purchasing company is exhilarating, and things do get a bit bumpy. 

Have some patience, the purchasing company does want you and your technology. 
Plus you have money and a salary you can depend on.  


Nowadays, it seems that companies do what they can to keep people happy and motivated and working, but...not always.

A good integration will designate a head office "fixer" who makes integration problems go away. When your company credit card suddenly doesn't work, or the new sales person stands you and the customer up, or prospects call about products you were once planning to make but no longer, or whatever, this is the person to call.

You'll be expected to get your contact network working in the new company, as fast as possible. Work on it, that contact net is key to a happy life in the new constellation.  

A good integration will have made clear to the employees who are staying that they will have jobs and be very welcome to contribute to the company, who they report to, who they work with, a road map going forward, and have regular integration meetings. The purchasing company will do everything reasonable to make people comfortable. 

You will sometimes report to managers who are jealous of your successful exit and can make life pretty miserable for you, just because they can. 

I once had a manager, based in California, nine hours ahead of us, who scheduled direct report meetings four days a week from 14 to 16 in the afternoon. I called in, my time 23 to 1AM. FOUR DAYS A WEEK. I started coming in to work a bit late, and soon realised that wasn't a good idea; the others at the office started coming in late as well. I was short on sleep for years.


Investment philosophy: Time Money Exit


We join your team, build the company with you and don't take over. We spend about a day a week with you and are around when you need us. We're useful people to have around: we're experienced entrepreneurs and up to date, since we're currently facing the same problems you are in other companies. When your company is no longer a startup or in early expansion, we will stop spending so much time with you. You won't need us then! 



We work on building trust, so our investment terms are as easy and simple as we can make them.  We want common shares, just like the entrepreneurs have. The entrepreneurs should own the lion's share of the company. We use standard, fair contracts from Startupdocs.se, take a seat on the board and invest up to 10Million SEK.



We don't have to sell; we are a family. 

We don't have a fund with an end date, where all investments must be sold by the end date and the money returned to the investors. Those end dates can force exits when the timing isn't right for the companies.  

We sell our shares when it is best for the company. Some examples: 


  1. We let several early key employees take some of our subscription rights in a new financing round, so they became Klarna owners as well.

  2. When a crucial new investor demanded a certain proportion of the company, we sold some of our shares.

  3. When there was a secondary market in Klarna shares and Klarna had too big a weight in our portfolio, we sold some of our shares. 


When the company didn't look like it would grow quickly, we sold all our shares to the entrepreneur for 10SEK.


We sold our shares when the company was sold, at the same terms as all the other shareholders.

Starting a Unicorn: the Klarna story

The Klarna founders: Niklas, Seb and Victor. Photo courtesy of Klarna

The Klarna founders: Niklas, Seb and Victor. Photo courtesy of Klarna

Niklas: “We knew nothing about technology and we were starting a FinTech company,” says Adalberth, “We quickly realized that if we were going to do this we needed to take in money quickly.”

The twenty-three-year-olds’ own pockets were empty, so there wasn’t much leeway before the capital rolled in. Deliverance came in the form of angel investor Jane Walerud who didn’t just invest in their idea, but also put the Klarna-founders in contact with programmers who could help them develop the necessary software.

“She’s amazing,” says Adalberth, “she really saved us.”

- Niklas, in The story of how a complete coincidence led to the creation of the $2 billion fintech startup Klarna on Business Insider

Sebastian: We were extremely fortunate to meet Jane Walerud. The school we were studying at has a good reputation. When the business lab invited some business angels to listen to pitches from all the companies in the lab, Jane was one of them who attended that Christmas party. Jane has founded and funded a string of successful companies. We were a bit surprised that she gave us more money than we had asked for, and for less of the company. I think part of it was that she liked the idea but even more so that she saw three 23-year-olds who were extremely motivated and prepared to work 90 hours a week to become successful.

- A trip down memory lane with Sebastian Siematkowski in YHP

Did any of you have an entrepreneurial background?

Niklas: No, not at all. When you enter the Stockholm School of Economics, you basically expect to go working at Goldman Sachs or McKinsey (laughs), which was our plan too. But the opportunity to start a company was very enticing, especially because the school’s incubator also told us that it was very interesting. It felt stupid not to try it. We just had to give it a shot. ”

“The problem we faced was: we were three students, we had no money whatsoever, and no tech knowledge either. I mean, I did some homepages when I was younger, but no hardcore programming. We needed money and tech, which was hard to find. There was no commercial solution out there solving our need. But then at a network event we came across Jane Walerud, a famous angel investor in Sweden, who had had a bunch of successful exits. And she said: I have the perfect tech team to build your platform. Three weeks later, she gave us 60 000 € seed money for 10 % of the company and 5 techies to build our platform in exchange for 37 % of the company.”

That’s quite a stake you had to give up so early.

Niklas Adalberth: “Yes. It was a tough decision, but we realised that we wanted to build something big. And we needed to give a lot of shares to enable it. Actually we were cash flow positive before we even burned half the 60k. We were profitable from 2006 onwards. So we could actually have done it with less money.”

- Niklas Adalberth in Whiteboard's Inverview: from Burger King to boardroom, how Klarna became a payments giant

”Vi hade väldigt svårt att resa pengar, det var ingen som var intresserad av oss då,” berättar Sebastian.

De allra första pengarna fick de från affärsängeln Jane Walerud.

”Vi ville ha 400 000, men Jane gav oss 600 000, hon tyckte vi behövde det. Hon värderade vårt bolag, som då bara var en powerpointpresentation, till 6 miljoner.”

Vid nästa finansieringsrunda fick Klarna in den prestigefyllda vc-firman Sequoia som investerare. Och via lite smart agerande från Sebastian fick de in tungviktaren Michael Moritz i styrelsen. Moritz har tidigare bland annat suttit i Googles och Paypals styrelser.

- Sebastian Siematkowski i Startuppodden

Finns det någon specifik milstolpe där ni visste att er affärsidé verkligen skulle fungera?

– En viktig milstolpe var när vi fick in vår första investering, som kom från entreprenören och affärsängeln Jane Walerud. Man får komma ihåg att vi var tre finniga 23-åringar utan någon erfarenhet, inte en krona på fickan och som inte kunde ingenting om tech. Att vi då fick en investering av någon som trodde på oss var otroligt viktigt.

- Niklas Adalberth i Tidningen Entreprenör

Vi såg genast en affärsmöjlighet, men eftersom vi varken hade pengar eller den tekniska kunskapen som krävdes tog vi kontakt med Handels Business Lab, som gillade idén. Vi fick kontakt med affärsänglar och mindre investerare, och vid ett julmingel på Handels kom Jane Walerud fram till oss och erbjöd oss hjälp med kapital och kontakter med tekniker. Teknikerna byggde en plattform och vi började sälja. Det var en tuff period på alla plan, bara det att få kunderna att lita på tre 23-åriga killar var svårt, trots kostymer och fina visitkort. Vi hade det tufft ekonomiskt den första tiden vilket gjorde att det också var svårt att få banklån. Att leva på CSN-pengar och samtidigt driva bolag var på många sätt en bra erfarenhet som gav träning inför framtiden.

- Niklas Adalberth i Founders Alliance