ArK Kapital has announced it raises €165m in seed funding

By Joy Dumasia

ArK Kapital, the data-driven precision finance company, enabling startups to grow faster and smarter through long-term loans, maintains control for founders, and reduces the risk for investors, announces it has raised €165 million in seed funding. A combination of debt and equity, the round was led by Local Globe, with participation from Creandum and angel investors, including Supercell CEO Ilkka Paananen, iZettle founder Jacob de Geer, and EQT Ventures founding partner Hjalmar Winbladh. Beyond investing in promising companies, the new capital will be used for R&D and doubling the 20-person team within 2022. 

ArK Kapital was founded in summer of 2021, launching in November the same year by six-time entrepreneur Oliver Hildebrandt (CEO), veteran banker Axel Bruzelius (COO), and Spotify’s ex-VP of Analytics and former EQT Ventures partner Henrik Landgren (CPTO). The firm targets early-stage, tech-driven companies predicted to grow super-fast but not yet profitable. ArK uses its artificial intelligence (AI) platform, the ArK Intelligence Machine (AIM), to analyse a company’s business health and offer a suite of AI-powered financial and intelligence products. The firm shares daily access to its analytics and insights in a borrower dashboard so that companies can optimise their business performance. 

At the seed stage, it’s common for founders to part with 20-25% of their company when taking equity-based funding. Offering an alternative to this, ArK will initially focus on non-dilutive loans to multi-sector European startups ranging from €1 million-10 million. Typically, loans are short-term and must be repaid within two years, which doesn’t give early-stage startups enough time to grow. ArK solves this problem by offering long-term loans lasting up to seven years, unique to every company; the loans are based on predictions of a company’s future revenue. ArK’s unique combination of serial entrepreneurship, banking and FinTech expertise, and world-class developer skills creates an ideal team to help future-facing companies realise their potential. 

Commenting on this news, CEO and Co-Founder Oliver Hildebrandt said: “Any founder will tell you how difficult fundraising can be: retelling your story and hoping to convince the other side really adds up and results in precious time spent away from a business. We believe that entrepreneurs should retain more ownership of their companies, and more transparency is needed throughout the fundraising process. After all, no matter how small, any investor equates to a long-term relationship. This is where the power of an AI-driven approach becomes clear: companies can benefit from tailored financing options based on their potential, backed up by data. As an entrepreneur-first company, we want to offer the best network for founders. That’s why we’re delighted to partner with our new investors, whose collective expertise complements us perfectly.” 

Henrik Landgren, CPTO and Co-Founder, added: “We have seen the rapid evolution of tech, data and machine learning over the years, and how the fastest-growing tech startups are stellar in taking advantage of their own data to optimise their growth. This trend also grows across all industries, where now over a quarter (27%) of respondents in McKinsey’s AI adoption survey now attribute over 5% of their earnings to AI. ArK Kapital was born from the belief that connecting to companies raw data and applying state-of-the-art AI modelling enables both best possible financial products and instant access to AI-powered growth analytics tools for founders. We believe we can enable many more founders to grow way faster with data-driven growth tools and smarter finance products.”

Axel Bruzelius, COO and Co-Founder, concluded: “Most ambitious startup journeys need to start with equity. However, it doesn’t make sense for companies with predictable revenues to be solely reliant on equity as a funding source. It’s very expensive and doesn’t scale well. We believe that, by unleashing loans as a major funding source for European tech companies, we can be a major benefactor of their growth.”