VC’s with an Iberian Footprint

Episode 4 | P101 | Stefano Guidotti

P101 Investment Team

P101

P101 is a venture capital firm focused on early-stage investments in the digital sector. They support new entrepreneurs who are committed to developing and strengthening their companies.

P101 focuses on enterprises that have an efficient business model, which allows them to quickly scale and become a leader in their market segment, capitalizing on innovation of technology, products and process.

Interview

Stefano Guidotti — Partner at P101

1. Can you tell us more about you (background, interests, fun facts)?

I am 40, happy husband and father of two daughters. I was born in Milan, but grew up in the hill and lake area north-west of Milan, were my wife and I have also decided to grow our girls and teach them the love we have for nature.

I studied business management at the Catholic University of Milan, then worked as a strategy consultant in the US, launched a renewable energy startup that went belly up in the 2008 crisis (while we were preparing papers to list at the Milan stock exchange), then co-founded a network of accelerators for impact ventures in Nairobi, Kenya (still active at a very large scale throughout Africa under the E4Impact brand), and then entered the VC world by founding U-Start in 2011.

I have always travelled a lot, and I am naturally curious of understanding cultures and ways of live. It is probably that curiosity that have driven me to VC, and right after university I already knew I wanted to be a VC and to spend my professional life mingling with the smart innovators that are finding solutions to evolve on specific aspects of our life. I am also a sport addict. Motorbikes and sports are my hobby. I love practicing any kind of sport, starting from swimming (I was a pro until the age of 18), but then also running, playing tennis, skiing, biking, hiking.

2. How do you describe your investment thesis in terms of geographies, industries, stage, and ticket size?

We typically invest EUR 1 to 5Mio taking a leading position in pre-Series A to Series B rounds. We invest in a broad range of spaces and business models within the digital umbrella, since our story have told us it is more our approach than a specific vertical focus that allow us to deliver value to our portfolio companies.

We only invest in Southern European connected businesses, meaning they are based in Italy or Spain or they have the goal to grow their business in the broader Southern European geography as a key part of their strategy. That’s because through our networks in the business and financial worlds in the area we can be a booster of growth for our portfolio companies. Having said that, there are a number of spaces where we have a defined thesis and are looking for secular trends driving disruption at a global level.

3. How is your typical investment process in terms of steps and timings (describe it briefly)?

We tend to be in touch with the founders we decide to back for quite some time before we write our first check.

The journey is typically a long one, and founders and lead investors need to be aligned on the way they see the evolution of the business and more broadly on their long term vision. That’s why we spend significant amount of time with founders of companies at earlier stages than what we usually invest in.

Then, from the moment we really engage with a company to our wiring it takes from 8 to 16 weeks, depending on the complexity of the deal/business. Of this, the first 2–3 weeks are before term sheet, the remaining for in-depth analysis, DD and contract drafting. Usually it is one of the Partners at the firm leading the process (Andrea, Giuseppe, Glenda, Alessandro or myself), with the constant support of our at least one senior and one junior member of our great team.

Then during the process the whole team is involved, and our decisions are the result of multiple team iterations. The more neurons are involved, the better the decision. And in this way we can put the whole weight of P101 being our portfolio companies much better since everyone is aligned and on-board with the business and the support we can give to it.

4. What are the main characteristics you look for in an entrepreneur? / In your view, what makes up a successful entrepreneur?

First of all, it’s very difficult to have a catch all definition of a good entrepreneur.
Different business models and sectors require very different sot and hard skills, DNAs and approaches. But the common trait is definitely passion. I’ve never seen anyone succeeding without the necessary amount of passion that allows a person to overcome the very deep downs of the typical entrepreneurial trajectory. And passion comes very often from purpose and translates into drive and resilience.

5. What are the three most common deal breakers you find after meeting an entrepreneur for the first time?

  • If the founder is not able to explain what the business is about in three lines. If you can’t make it simple, you don’t master it, and if you don’t master it, you can very hardly scale it. And believe me or not, it happens very often that I finish a first call with a founder without a clear understanding of what the company is doing
  • Lack of complete control on the company’s numbers and economic dimensions. When a funder (at a below 100M revenue size) answers a question on numbers with the line “I need to look into the model”, to me it means there’s a lack of detail that is at least worrisome
  • Lack of understanding of the real competition the business is facing/will
    face, i.e. lack of vision on the long term development of the market arena
    one is playing in
Milan

6. In your view, how much equity should the founding team own before raising a Series A round?

At least 60–65%, and the more the merrier.

7. How do you add value to your portfolio companies?

I’ve probably already covered this one, but in a nutshell we are very hands on and we try to

(a) open up doors that speed up the business development as much as we can,
and we do that with our great partners and advisors, people that have been at the forefront of business in Europe for decades and is at one phone call of distance from game changers for our portfolio companies
(b) be sounding boards for the founders at a strategy level
(c) give our support in structuring the business in the best way possible, from an organizational chart perspective as well as from a capital structure perspective
(d) create (at the right point in time) and pursue exit strategies together with the founders

8. Is there any company you regret not having invested in (anti-portfolio)?

Well, an easy one here is Glovo, from my time as CEO at U-Start. But as a small point to my excuse, we had recently invested in Deliveroo at the time, and didn’t want to concentrate the portfolio too much business model and sector wise.

Another one I do regret not having invested in is Vestiaire Collective.

9. Do you have any specific industries / sectors you are looking at into more detail right now?

With our current and next fund, which will be launched in H1 2022, we are focusing on: Edtech; Fintech and Insurtech; Digital Health; Enterprise Software; Mobility; Sustainability tech. The latter is for us a sort of catch-all characteristic that we’ll be looking for more and more in any investment we make: first of all because the border between digital and sustainability is disappearing, and then because we invest with a long term perspective, and there can be no valuable business in today’s world without a true and solid sustainability DNA.

10. What were the top three reasons that made you look at the Iberian ecosystem in the first place?

We have experienced a few times now the trajectory of companies born in Spain or Italy that become regional leaders in Southern Europe by starting consolidating neighboring markets quickly, to then expand at a broader European level. Since we are historically very strong in Italy, since the beginning of P101’s story we’ve found it straight forward to look at Iberia as a market for expansion of our Italian portfolio companies and to look at Iberian companies that had in mind to expand to Italy, and we’ve proven (also through some successful exits) that such a path is solid and we can be a powerful support for founders that want to build big, international businesses and need to prove that their model is scalable in new geographies fast.

11. What is the best way for a company to apply for investment at P101?

We do value a lot the referral from our network of entrepreneurs and co-investors, which is by far our preferred source of deal flow. Nonetheless we are always open to connect with founders through any mean (you can easily contact us via LinkedIn). Our “virtual door” is always open for smart founders doing innovative and game changing things, especially if those are driven by the purpose of improving any aspect of today’s world through technology.

About The Series

VC’s with an Iberian Footprint invites investors that have Iberian companies within their portfolio to share insights and industry knowledge. With each of its episodes dedicated to a different VC fund, it provides an informal, and deep look at the VC world.

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