Please note, this interview is also available in Spanish. Click here to read.

With a focus on early-stage companies (pre-Series A or Series A), over the last 11 years Kibo Ventures has empowered tech founders across Europe by helping them scale, and now stands as one of the largest VC teams in Southern Europe.

We are thrilled to be sitting down with Partner, Sonia Fernández for our very first Investor Spotlight. Sonia has over 20 years of experience leading digital businesses, having led companies such as Mercado Libre and Match.com prior to joining Kibo Ventures in 2016 where she invests across a range of verticals in the digital ecosystem, from AI to HealthTech.

Tell us a little more about your background before VC.

Before VC, I fit the classic investment banker profile. I spent three years — two in London, one in New York — at Lehman Brothers and then did my MBA at Stanford. It was a crazy time, it really felt like the internet was just starting (I have four kids, and they all have a hard time comprehending it when I tell them that the internet wasn’t there during my undergrad), as a generation we needed to adapt to the things we now take for granted very quickly.

Some of my classmates during my MBA left to do internships over the summer at companies such as eBay and didn’t return to class the following year because the space was taking off so quickly.

After my MBA, I knew I wanted to return to Spain and I knew I wanted to work in the tech space. At the time, the easiest way for me to get back to Spain was to join a company called 3i, a private equity firm focused on tech. Shortly after joining 3i, two of my classmates from Stanford launched Mercado Libre, which ended up being a landmark company in LATAM in the eCommerce space. They wanted to open an office in Spain and reached out to see if I would know anybody to help and I immediately said yes. I quit 3i and started Mercado Libre in Spain — it was super early stage at the time and offered a steep learning curve in having to sort the office, build the team, launch the product, and work on the go-to market via different channels. My husband was studying part-time for his MBA at the time and when he would leave for his classes on Saturday mornings, I’d leave the house with him on my way to the office — we were working 7 days a week. In the end, eBay acquired a European auction company with an asset in Brazil. They signed a deal where they sold their asset in Brazil for a stake in Mercado Libre, but because eBay was already present in Spain, they shut down Mercado Libre’s Spanish operations. I moved on to work for Prisa.com, the largest Spanish Media group, working on the strategy team at the time when the decision was made to make elpais.com a subscription-only product. Learning about media in such a powerhouse was super interesting but the culture was very different to Mercado Libre. I was there for a little over a year and then decided I wanted to do something more entrepreneurial.

In 2003 an opportunity came up through a connection from Stanford to open the business of Match.com in Spain, Italy, and LATAM. At this time, online dating was in its infancy and was something viewed as a last resort by a lot of people. I worked there for almost 7 years, with a fantastic group of people. Eventually, Match signed a deal with Meetic, a competitor at the time, and those managing Match left the company.

I moved on to an American AdTech company, Specific Media, focused on behavioural targeting. I ran their video business in Europe for a couple of years and then did some consulting work for Fon, another Spanish company.

Can you share your story at Kibo Ventures?

Venture capital is quite a small industry in terms of funds, especially in Spain where the industry is less mature. It’s a difficult industry to get into versus consulting or banking. Getting into VC wasn’t something I had planned. After I completed my MBA at Stanford in 1999, my mindset shifted in terms of what I wanted to do next in response to the boom in tech around the Bay Area with Google, eBay, and others just starting out. I’ve been fortunate in my career to work within the ecosystem since.

In 2014 I took a career break, my mother got sick, and with siblings in the US, I took care of her. After my mother passed, I began contemplating my next full-time role. I knew Aquilino and Javier, the two founders of Kibo Ventures, very well — Javier and I were both analysts working at Lehman Brothers together in the 1990s, and I had known Aquilino from my time in the start-up world. I began looking at an opportunity in a company similar to one in Kibo’s portfolio and reached out to Aquilino to get his thoughts. He asked if I would consider some consulting work for one of Kibo’s portfolio companies with the view to joining Kibo as a Partner after they had confirmed their second fund.

I accepted and the transition was smooth given I knew the founders, but also because it felt natural to use my own experience in tech to provide value to start-ups in their initial stages.

The industry has changed so much over the last seven years. I think if I were to review the first few projects I was involved in alongside the calibre of what we’re seeing today, I wouldn’t have invested in all of them, which speaks to the evolution of the ecosystem as a whole.

We’re now at a point where we have founders that have led start-ups before and know what to surround themselves with to make a project successful. While there are impressive first-time founders out there, they can be harder to find as there are certain things you can only learn by doing.

What is the first thing you look for when looking at potential portfolio companies?

What we do is a lot of fun! I enjoy understanding what founders are building and really getting to fall in love with their product, but it’s also incredibly hard. We have finite resources, our fund is a certain size and we can only use it to invest in a few companies, so our business is mostly to say “no” instead of “yes”. Founders can have a great business but that doesn’t mean it will check all the boxes for us.

I think the most important aspect of any company is the team. We want to understand how founders came to the problem they’re trying to solve. Is it something they’ve always planned to do? Have they experienced the problem in the past and wanted to do something about it? Are they obsessed with wanting to make their solution work — and do they understand what it takes?

I think if you ask undergrads what they want to do, many will answer that they want to start their own company. It may sound glamorous but it’s not for everybody.

Life as a founder — especially a solo founder — is incredibly hard. We need to be able to see whether founders have the resilience to get them through hard times. We need them to understand it’s going to be tough, and we need them to be humble enough to surround themselves with great people for team support.

Sometimes we see founders that are incredibly smart, oftentimes with an impressive technical background, but they may not fully appreciate that this alone isn’t enough. It’s not enough to know you’re going to create the best product, you need to be able to attract great people across finance, marketing, and sales too. You also need to find the right investors.

When meeting founders we are always questioning whether other people will want to work with them. Founders must be able to convey their passion and enthusiasm for what they do to other people. If you’re a more introverted founder that struggles with this, then it’s a good idea to bring on a co-founder to assist in this area to help you attract the best talent. You shouldn’t underestimate the importance of building a great team.

The second key thing to consider is opportunity size — is the opportunity big enough? You can be obsessed with solving a particular need, and you may have a great resolution for it, but is it something we can help grow exponentially?

What’s the number one red flag for you when looking at potential portfolio companies?

When going into a deal, we often don’t know what the end goal will be, when we’re going to exit, and how much that will be for.

Not all entrepreneurs will have what it takes to succeed, and as a result, write-offs are common in the industry.

We need founders to see their companies as a long-term project, we don’t want founders thinking about a quick exit. Sure, these can be life-changing for founders if they do well, but for the funds, it’s not what we expect. We tend not to like it when a founder has a short-term exit strategy. While it may be that a founder is inexperienced, and needs us to work with them to help them realise further potential in their business, we need to see that vision and ambition.

Another red flag is a broken cap table. Maybe at the beginning, a founder gives a large portion of their company away to an accelerator — this would have been more common 10 years ago but, nowadays founders need to consider their equity and how they can own their destiny. If a founder feels there isn’t as much value in the business for them personally, it can lead to wanting an early exit.

What advice would you offer to growth companies about financing their business?

Bootstrap as much as you can. It’s not an easy thing to do, you may feel you need the initial funding to build a team, but if you can get a bootstrapped, dedicated, founding team, and can demonstrate that you’re able to add value with your product initially, you put yourself in a much better position for fundraising later. It’s important to find the best investors and partners you can to scale your business from there on. You should always think long-term when it comes to selecting investors.

While an initial funding round is a big milestone for a start-up, it’s only one stone in the path. In the long run, the money you raise initially won’t matter if you don’t select your investors carefully.

You may choose to optimise for valuation, and while this may sound obvious given the side I’m on (it’s in my interest not to overpay for a company), a high valuation at the start won’t add much value to your growth journey. It will, however, add pressure through needing to continue delivering on these metrics, as adjusting the valuation later will not look good. These early valuations are not indicative of your future outcome.

Choose the partners that really believe in your product and your thesis — partners with a good fit that will support you in future rounds. Prioritise this over someone who may pay more but, is unlikely to accompany you through the rest of the journey. It can be difficult for founders to avoid the temptation of chasing a high valuation, but my advice would be to build slowly.

What makes a good founder?

You need to be humble, resilient, and a good listener. Be willing to hire fantastic people without worrying about being outshined. Your priority should be to build a great company. If founders are incentivised to hire people who can take the company to the next level, everything else will fall into place.

We have a few examples in our portfolio of CEOs who took companies to a certain level, and then handed the reigns over to someone else with the knowledge to take the company even further. Thinking about the company first is an admirable quality in a founder.

The common thread amongst good founders is having passion and an obsession with solving whatever the company is solving — this bigger motivation is what separates the good founders from the incredible ones.