100 startups and counting: why a large portfolio size isn’t just about risk and return
After roughly three years of APX, we recently invested in the 100th startup. That’s 5x the number of companies that most other VCs target per fund. A simple way of looking at why this makes sense to us is the relationship between risk and investment stage. The opportunity/risk profile of a pre-seed ticket is different from an investment later in time. We balance a higher risk per deal by a smaller initial ticket size, a lower valuation — and a larger portfolio.
But for us at APX, being the first investor and building an engaged portfolio of hundreds of founders is not merely about balancing risk and return. Rather, it reflects our attitude. We know what we don’t know. We’re not taking pride in our ability to predict consumer or industry trends and societal developments. Of course, we think about this, but we try not to speculate. Instead, we’re diversifying, investing in extraordinary teams with a great vision for a relevant market, independent of their traction. Our startups build products across the spectrum. Topics range from DevOps to pet training, from psychedelic treatment to usage of space observation data, from security software to responsible AI systems.
Valuations, round sizes, and overall momentum have surged across Europe, in Istanbul, Berlin, or Warsaw. Access to money has never been easier. What hasn’t changed, though, is that founders still need to actually build the businesses. In pre-seed and seed, this means they must find the right early customers, develop and release a sticky product, and convince the right key people to work with them in today’s ever-competitive market.
When money becomes a commodity, the value-add of an investor is what counts. Much depends on an investor’s personal networks and access. However, an activated, curated, and thus well-engaged large portfolio becomes an additional core asset for our founders. In a scalable way, we’re facilitating this through our platform APX.network — our own digital product that connects all founders, experts, mentors and follow-on investors in one place. And we can track how the value of cross-portfolio recruiting, sharing of experience on growth hacks, or investor referrals increases day by day. Most interestingly: founders collaborate independent of the respective industries and sectors they’re in. Thus every new quality member of our portfolio expands the opportunities for the other portfolio founders.
Investing in 100 startups is a milestone for APX, but we are not stopping here or slowing down. Our mission is to be the first investor in the European tech unicorns of the 2020s as Europe’s most active very early-stage VC, and we will continue to enable our founders to use the portfolio to their best advantage through networking and sharing learnings and experiences.
