Investing Passion and Capital

The story behind why and how Doberman started the Investment Firm Doberman Forward.

We have been around as a digital design firm for 20 years, participating in the wonder of how digital technology became a natural part of everyone’s everyday life. Being a designer with a passion for improving the world, and having an impact, you couldn’t have wished to work in a more exciting field. We have designed the future, and seen it come to life in all the fantastic, innovative and creative new digital products and services launched in the last two decades. We have always believed in the power of utilizing new technologies when designing solutions to increase people’s quality of life, make it better and more rewarding. Digital technology is changing everything fast; transforming businesses and impacting the behaviors of billions of people. And not least, transforming our business model as a Design Consultancy.

Digital services, products, and solutions are no longer an add-on to your business, product or marketing. It is your entire business, and the value you deliver through your customer experience will determine whether your business will succeed or not. We design customer experiences with a holistic perspective on business strategy, brand, service design, and product development. We know how complex and integrated your solution must be to deliver on the expectations and delight that customers demand in the digital era.

For a large corporation, launching integrated digital services means considerable changes in the core business and ways of working, and therefore tend to take a very long time. The interest for our knowledge in; leadership in rapid change, digital transformation, and innovation culture never seems to diminish. That is fine, and we are happy to help. But as designers, we do love to take the strategy to the streets and see how our brilliant design end up in the hands of people to have a real impact. That’s why we love working with startups.

kidsReal impact for real people

Startups live or die with their ability to design a product that people love to use. The design of the customer experience is crucial to the success of a startup, regardless of business model. Early stage startups that have built a first version of their product can accelerate their progress through engaging a design partner that can help to identify and design the defining moments in the user experience. One option is to recruit and scale your design team, but that is costly, and the need for the design team will vary over the early release-cycles of new versions of the product. A growing startup needs to build internal design-capabilities over time, but in the early stages, an External Design partner (that has also invested in your company and is willing to go the extra mile) can be a perfect solution. It has proven to be for several of the startups we have worked with over the years.

Designing a delightful digital product experience is complex. Especially if it needs to be innovative and unique enough to turn into a thriving business of its own. You may have a brilliant tech solution that can solve a problem that most people have. But between your deep tech solution and your market need, there’s no pedagogic way of explaining your product. You need to launch a first version that will have customers, and investors to go WOW! You can’t copy the best in class or wait for someone else to develop a tech that solves a gnarly problem for your platform. You have to design, develop and launch it before anyone else does. Engaging a design partner is a fast way to get a team of experienced designers to help. Recruiting designers takes a lot of time and focus away from your work in developing the product and all the other operations you need to handle as an entrepreneur.

Why Startups love Working with Us

As a Design Firm, we navigate the force-field between business objectives, user needs and avant-garde tech every day. We have been doing it for 20 years, and that makes us good at leading a lead design and development process that doesn’t compromise on quality or elegance in the product. That has been recognized by a lot of startups that understand we are the perfect partner in bringing their tech and business model to life. Whether it be in products, business, brands, or services, we will help cut through the noise and attract their future customers. The design process involves everything. With a focus on delivering a valuable customer experience, you have to consider not only the UX in your product but how the underlying tech enables the most elegant and straightforward solution, what the defining moments from a user perspective are, how you should communicate it and when and how people are prepared to start paying for your product. You design the tech, the business, the strategy, the product and the marketing — all at once. With new data from each launch, you have to iterate and change. Adapt and pivot. It’s exhausting and confusing. You need a robust design process and methods to ensure that you focus on the right things at the right time. Your entire team needs to be aligned with the ever-moving target, and have strong empathy for who they are building the product. As an experienced design firm, we are trained to do just that.

Why we Started Doberman Forward

We have been working with many startups as clients over the years, and have done much of our most exciting design work for them. We have been a design partner to some of the most successful startups in Stockholm and New York, such as Oscar, Wealthsimple, Goldi, and Klarna.

And it would have felt good to get more than a high five from the founders of Oscar at SXSW when they stated; “We would never have made it without you!”. Knowing they were valued $2billion at the time, eight months after the launch of the product we designed.

A solid design and development process through the first MVP-launch and following improved versions takes time and demand a cross-disciplinary team of competences. The founders of the startup have put their sweat, time and passion into the first version of the product. They own the shares in the company, maybe they have seed or angel-funding, and some of those investors have shares too. But an experienced design team working in a reliable, long-term design process is expensive, and that budget many times exceed what the startup can afford in the early stage. That’s where Doberman Forward comes in.

We have met with a lot of startups that we believed strongly in, and who were eager to have us as a design partner but couldn’t afford it. That made us both frustrated since we were all stoked about the idea. We did try sweat-equity and risk-reward deals, but it’s hard to fit into the business for the design studio and makes it difficult in discussions with other investors. The getting-payed-for your-time business model is hard to translate to equity-for-your-time in a clean way where everyone thinks it’s a fair deal. The entrepreneurs put all their time and sweat into the startup, and the investors their money. Our time as consultants have a market price, but that is hard to translate to an equal amount of invested capital that is accepted by the other investors. Even though it’s widely accepted that design deliver value for business. There are several articles on the matter, like this one, and this report from Forrester research.

Our Investment Model

When we meet with a startup we believe in, and we see that our design could bring out the gold in the startup’s product, we invest capital so that the startup can engage us in a stable, long-term design and development process. Since we are not experts in Due Diligence, evaluation or term sheets, we invest in the same financing round and on the same terms as other more experienced investors. So it’s rather simple. We buy shares for money, and the startup uses that money to engage the design studio. Usually, we try to invest twice the money needed for the first launch of the new product, because we want to continue being the design partner for the next version, and up until the startup can present enough cash-flow to land an A-round of financing and start recruiting internal designers and front-end developers of their own.

Screen Shot 2018-06-28 at 14.31.24 (1)Investment model.

What Kinds of Startups do we Invest In?

We look for startups that aim to solve a problem which aligns with our passion and ambition. We do invest capital, but more importantly, bring our knowledge and skills in designing great products. For a period, our team becomes an integrated, immersed part of the startup.

The startups we invest in have built a first version of the product, using an innovative backend or amazeballs tech, and their vision addresses a real problem. Help people live a healthy life, make the labor market more equal using AI, or improve the quality of healthcare is real problems. Just selling more crap that generation Z doesn’t need is not. We invest in early stages, and help design and launch a stronger brand and delightful product that show performance on KPI:s and prove the business model. You could say that we make startups ready for the market, and for the next round of financing. We plan to do an exit from the startup within five years but are happy to make additional pro-rata investments in new financing-rounds along the way if the startup is performing well and show promising growth.

Pending Success

We started Doberman Forward three years ago with our own money. We believe firmly in the power of our design, and we like to prototype, so we spread the word discreetly in our network of investors, and made our first investments, learning as we went along. We decided not to do any PR since we didn’t have the resources to handle a sudden flow of requests from startups. Our first investment was in Amped. Then Ulf Ekberg told Sweden’s largest business magazine about it. They published the news that Doberman had become Venture Capitalists and about 50 startups called us in one week. So much about avoiding media during the prototyping-phase.

Our investment model turned out to be quite smart and raised a lot of interest. Investors approached us that wanted to join in as partners. Since last year, we have external owners in Doberman Forward, and among our founding partners, we have lovely, competent and experienced people like Eva Swartz Grimaldi, Susanna Campbell, Eva Dahlgren, Niklas Bergh, Kent Hansson, Anna Lena von Essen, Marie Ledin, Efva Attling, Michaela Berglund and Sven Hagströmer jr.

Picture1 (1)Doberman Forward Board and Partners.

So far we haven’t made any exits, so the model is yet to be proven successful. However, SuperPhone closed an A-round where the Silicon Valley-based VC:s Runway Venture and Fyrfly Venture invested on twice the evaluation we entered on, and IVBAR is showing exciting growth since our investment in the company together with Summa Equity. We are currently working intensely with the latest startups we invested in — Racefox and Scouted to help improve the products and brands. We learn as we go. And so far, it’s been an exciting and rewarding journey.

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