#11 Words of VC-isdom | Investors compilation
April 2022 | Practical content about venture capital investment and the startup ecosystem curated by and for entrepreneurs
After ten newsletter editions that featured the views from ten outstanding European investors and the story behind ten formidable founders from our portfolio, we have collected a plethora of wisdom that we want to share with you. With that in mind, we have compiled all of our guests’ responses into two special newsletters: one that gathers the investors’ views and another that collects the founders’ learnings.
This issue honors our Words of VC-isdom section, where good friends from top international VCs told us about what they do, what they look for, what they think about Europe and Spain as investment destinations, and shared valuable do’s and don’ts.
Stay tuned for the next special edition featuring founders!
The European tech ecosystem has grown significantly in recent years. How do you see Europe as an investment destination? Are there any particular European geographies you focus on? How much do you invest internationally vs. in your home country?
Luca Bocchio, Partner, Accel: The European and Israeli ecosystems have come of age and reached a tipping point. It’s been amazing to see the acceleration over the last few years in particular. The quality of entrepreneurs and senior teams, the strength of the ecosystem and companies being built by first and second-generation teams, and the availability of capital — everything has come together. We believe that innovation can come from anywhere.
Apostolos Apostolakis, Founding Partner, Venture Friends: Europe is a fast-growing and very promising investment destination. Apart from the UK, France, Germany, and the Nordics, which have high activity, success gradually becomes more widely spread. We now see peripheral ecosystems like Iberia, Eastern Europe, including Poland and the Balkans, and Greece, grow their numbers of successful companies.
Is Spain a geography you are interested in and actively looking into? Why is that? What are your views on the Spanish entrepreneurial ecosystem and its state of development? How does it compare to those in other European countries?
Antoine Nussenbaum, Co-founder, Felix Capital: We see some great attributes about the Spanish ecosystem: you’re starting to see cohorts of repeat and experienced entrepreneurs blended with very ambitious first-time founders. Interestingly, cities like Barcelona and Madrid also attract more international entrepreneurs and operators, and I can only see this pattern accelerating post-Covid with companies emphasizing decentralized and remote teams.
Also, we can all agree the quality of life in Spain is relatively much better than in most European countries with the sea, great weather, good food, and friendly people. In a world where we all aspire to have a better life, these ingredients shall contribute a lot to fostering a more central position for Spain in the European ecosystem. I suspect Spain suffers a bit from relatively more limited local funding sources vs. other European countries such as the UK, France, Germany, or Sweden. Still, thankfully there is a new generation of firms like All Iron Ventures who will help change this dynamic.
Scott Sage and Krishna Visvanathan, founders and Partners, Crane: We can’t get enough of Spain (the food, the wine, or finding new startups!). We made two investments in Spain out of our first fund, including Tinybird in Madrid.
Spain is now onto the next generation of serial founders and leadership teams who have been through the various scale-up cycles, so the ambitions have grown even more, and there are numerous vital hubs.
Regarding your overall investment track record and experience, what is your opinion about the Spanish entrepreneurs vis-à-vis those in other countries?
Ben Marrel, Founding Partner, Breega: Spanish entrepreneurs are traditionally very international with education or work experiences abroad, which is a real plus. We’re also seeing a growing sense of bullishness, optimism, and confidence amongst Spanish entrepreneurs, encouraged by the new and increasing interest of foreign investors and domestic policy (Spain’s new Startup Act), which seeks to support their efforts further.
Stefano Guidotti, Partner, P101: The Spanish ecosystem is one of those that have evolved the most in Europe and more broadly in the last five years. And this is due to a mix of elements, including the quality of universities and the broader education system, successful tech scale-ups, larger companies where young people out of university can have their first experiences and then launch their own business, and the availability of capital, also, through public sources and a thriving VC ecosystem with top player VCs at a European level.
And we’ve always found in Spanish entrepreneurs the right mix of execution focus, ambition, and strategic thinking that you need to look for in an early-stage company.
What is a must-have in the projects in which you invest?
Jessica Schultz, General Partner, Northzone: Nothing can stop an ambitious founder from fixing a problem. We truly believe that team is the most critical asset in running a business. Venture capital is not for everyone, so we need to see a huge ambition level from the founding team. We want to invest in entrepreneurs who define a business category, so we’re looking for something very special.
Paul Murphy, Partner, Lightspeed: We look for purpose-driven founders, not founders looking to reverse engineer an exit or fast follow a US market leader without some fundamental innovation. Focus on the problem and purpose, not the solution. Your solution will change over time.
What are the most common mistakes you typically see among founders looking into raising capital from VCs?
Mathias Ockenfels, General Partner, Speedinvest: Raising too much or too little — depending on what stage their startup is in. Besides, in a fundraising process, timing and creating urgency are very important. Time kills every deal!
Moritz Zimmermann, General Partner, 42CAP:
- Not doing your due diligence on the other party: investment is like a marriage, actually even more intense: while you can divorce your spouse, you’ll have to live with the investor on your cap table for a very long time. So, likability, personality, and fit go a long way. I would always ask for references on how a potential investor behaved when the going got tough to find out about these aspects.
- Not planning for the subsequent round: while the expanding venture capital and angel ecosystem have made raising seed financing achievable for more and more companies, the tough test comes ahead for series A (…). The right investors can help secure the follow-on rounds with their network and reputation. And they should also provide the proper signaling by following on with their pro-rata share.
- Complicating your cap table: the logistics of handling many investors is hard. Each investor is a relationship that needs to be managed carefully (…).
If you were to give just one piece of advice to any entrepreneur, what would that be?
Mathias Ockenfels, General Partner, Speedinvest: Obsess about delighting customers.
Jessica Schultz, General Partner, Northzone: My biggest learning while building HelloFresh (I was a founder and CMO) is that it’s an emotional rollercoaster to run a company, so time is the most valuable asset you have and it’s critical to focus on the right things. Another piece of advice I would give is that everything starts and ends with your customers. It’s never as easy as it looks from the outside, but entrepreneurial journeys are so rewarding from a human perspective, and nothing beats that learning curve.
Luca Bocchio, Partner, Accel: Surround yourself with people better than you. Entrepreneurs can’t master every area of expertise and knowledge needed for their business. Hiring great talent as early as possible is always the right thing to do…
Latest AIV portfolio rounds
Just a quick note on some of the most recent transactions relating to our portfolio companies
- HeyTeam — People Ops platform that streamlines the employee journey
France | Seed — €5.1Mn round led by 360 Capital Partners, with the participation of All Iron Ventures and angel investors, complemented with €5.1M in debt.
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