This Low-Profile London VC Is Winning Big By Betting On Germany’s Startup Scene

One of Europe’s largest IPOs this year helped make venture capital veteran Nenad Marovac of DN Capital one of the continent’s leading venture capitalists. The London-based investor, who doesn’t court publicity, reaped a 25x return on his investment in the Berlin-based used car dealer Auto1, which went public on the Frankfurt Stock Exchange at a $12 billion valuation in February. 

Thanks to this investment and two other Berlin-based exits this year, Marovac has joined the Midas List Europe of the best dealmakers in venture capital for the first time in 2021. His other deals included a German version of Airbnb, HomeToGo, which announced a $1.4 billion merger with the SPAC of fellow Midas List member Klaus Hommels’ firm Lakestar and began trading in September, and online spectacle retailer Mister Spex, which went public in Frankfurt in July. 

The German startup scene has been kind to Marovac, who says that eight of the top 25 German companies by market cap from the last twenty years have been backed by his team. “We came to Berlin from 2005 onwards, and there were very few people looking at that market,” he says. “We built a franchise for ourselves.”

Marovac is based in London and Berlin, but he isn’t originally from either. The investor was born in Croatia and grew up in San Diego, then worked on Wall Street before moving to the newly-unified Berlin in 1991 to help sell assets of the former East Germany Communist regime. “My nickname was the Schlossverkaufer [castle seller]. Castles are very hard to sell and I sold three of them,” Marovac says.

That deal-making streak carried Marovac back to the United States and Harvard Business School, where he studied with future Facebook COO Sheryl Sandberg and DN Capital cofounder Steve Schlenker. After graduating, Marovac found himself back in Europe working for private equity heavyweight Advent International. “I went through a chicken slaughter company and thought, `This was terrible. I don’t care how much money you make,’ ” says Marovac, who made partner by age 32 thanks to a big bet on a Hungarian IT company. “A lot of people thought I was nuts to leave.”

DN Capital was founded over lunch with Bill Comfort, chairman of Citicorp Venture Capital, who offered to stake Marovac. San Francisco-based Schlenker joined later. “I was getting recruited by a lot of venture funds in 1999 and 2000, but a lot of these guys had no track record — just like today,” Marovac says. “Twenty years later, we have five funds and $1 billion dollar under management.”

Marovac admits the first ten years of the fund were difficult, but DN Capital avoided the fate of scores of other venture investors of the same generation that flamed out as returns diminished and the markets went through lean cycles. “I tell you why I think we made it — we came out of private equity,” says Markovac. “Having a really disciplined approach to analysis has boded well for us.”

One of DN Capital’s earliest hits was the song identification app Shazam; Marovac and Shlenker faced a 14-year wait to claim a 20x return on that investment. The pair’s “hands-on” approach saw them lead a restructuring round, hire a new management team, and make an introduction to Apple that helped “phoenix” the British startup. It was acquired by the Cupertino-based tech giant for $400 million in 2017. “If you want to make money easily, it’s not in venture capital,” says Marovac. 

A trio of investments in Marovac’s old hunting grounds in Berlin, which was being pulled out of economic hibernation by a new digital economy and startup factory Rocket Internet’s warp-speed culture, transformed the fortunes of DN Capital. Marovac was one of the earliest investors in Mister Spex, HomeToGo and Auto1, all of which debuted on the Frankfurt Stock Exchange this year. “He was one of the first U.K. investors to spend a lot of time in Berlin, and while he always pretends not to speak German, he understands it quite well,” says Dirk Graber, founder and CEO of Mister Spex.

While DN Capital might lack some of the flashy marketing of a new generation of American and European VCs, Marovac and Schlenker can boast of deep networks stretching across the continent and the Atlantic. “Nenad has a very good gut feeling for picking the right teams, people, and business model, and what he offers on top of that is a very strong network outside of venture capital,” says Graber. 

Marovac’s partner Schlenker has also landed an IPO this year, with Seattle-based remittance platform Remitly going public with a $6.9 billion stock market value. The pair have started to venture outside Berlin to find new targets. Marovac co-led tutoring service GoStudent’s Series A round last year; the Vienna-based startup is now valued at $1.7 billion. He also led a Series A round for Madrid’s digital staffing agency Jobandtalent, which raised $610 million from investors including SoftBank, Atomico and Kinnevik in the last year. 

Jobandtalent cofounder Juan Urdiales says Marovac’s connections open doors to growth investors and potential clients around the world. “I’m a Spanish entrepreneur, and the Madrid ecosystem is a long way from London or Berlin, but Nenad knows all the investors there and that has been key for us,” says Urdiales. “When he makes an introduction, everyone takes it seriously, because he has been around for a long time and he knows what good looks like.”

Marovac may only spend a fraction of his time now at DN Capital’s office just a stone’s throw from Buckingham Palace, but his desk is still decorated with pictures of San Diego surf breaks from his youth. That global outlook and willingness to jump on a big wave when it breaks has served Marovac and DN Capital’s investors well. “When you have your first losses, you freak out,” he explains. “But when you have been in the industry for twenty years, you realize every fund has four to five companies that need to be outperforming unicorns, and without them this business doesn’t work.”