daphni’s investment strategy
Each component of our investment strategy has been described in our series daphni investment thesis. Prefered business models, sectors, amount of money, geographical scope: you will learn a lot about our analysis grid, so you can prepare yourself to apply under the best conditions possible.
Our vision falls into a context in which the rules that apply to startups are not specific to local markets such as the European one but are part of international economic and social macro-trends.
When you are committed to give the proper means to an ambitious startup, you need to have a well-thought-out investment strategy, backed and reinforced by the experience of the daphni members. If the concerned companies want to have the means to their ambition, great discipline with regards to a well-thought-out investment strategy is necessary.
Our investment criteria
Different lines of force are noteworthy for daphni purple (the name of our first investment fund), and constitute our investment criteria:
1. EUROPEAN DNA. daphni will aim to support projects primarily carried out by European founders regarding significant subjects sustained by European-based DNA. More pragmatically, daphni will prioritise the accompaniment of European entrepreneurs wherever they are located whether in Europe or outside Europe with a specific attention to the United States.
2. GLOBAL. the targeted companies should have proven international ambitions consistent with their strategy. We are looking for companies planning to launch in several countries within their first two years.
3. CONSUMER OR PROSUMER. The fund aims at investing primarily in companies addressing market-oriented users: B2User, User2User B2B2User, for personal or professional use. We believe that technology should be and stay invisible for the users. Our primary focus is social needs, usages and customer experiences, from anyone and not solely tech-enthusiast adopters.
4. SECTOR AGNOSTIC. We believe technology is not the end but the means to develop great success stories. Disruptions are moving and deals with different sectors and industries along time. That’s the reason why we have no dogma regarding our targeted topics of interests.
The Five Pillars of our Investment Strategy
1. we play an active role in round-table discussions . We also provide potential co-investors, either through our own investors or with outside investors that we know well, in Europe or in the US.
2. we get involved in the strategic and operational development of the company, through an inside sponsor in daphni team and with our ecosystem around us, daphnipolis
3. we invest primarily in unproven companies (only partially proven product-market fit), with an European DNA, a great founding team, a large enough addressable market, an international strategy and a disruptive experience, through a ticket size between €100.000 & €5.000.000
4. we will also invest some tickets in seed stage companies (between €300.000 and €1.000.000)
5. we mainly target shareholdings of 12–25%
6. we only invest in companies that can reach a 500m€+ valuation in 7–8 years.
Providing you with enough resources to reach your ambitious goals
In our sweet spot (unproven companies), the initial amounts invested by daphni purple and any of its co-investors will be able to provide sufficient means for entrepreneurs to be able to carry out their business plan for 2 years and not lose energy and attention on the early research into the next round of funding.
The nature of these two years allows entrepreneurs the ability to execute their strategy:
- without the constraint of short-term refinancing,
- enabling them to make the necessary iterations for the proper development of a disruptive business,
- while able to recruit high-level talent.
In turn, the daphni team will be very cautious regarding reinvestments in companies that have not implemented their development plans or not found new investors after said 2 years.
Our relationships with other investors
We are really committed to be involved in the development of the company, so we will lead the roundtable discussions and set the terms with the founding team.
Yet we will also promote the integration of co-investors, local or foreign, in order to maximize the resources for the founding teams. For the teams planning to establish a rapid internationalization and that will need significant funding, we are especially in favour of the early integration of at least one foreign co-investor.
The fund model also provides the opportunity for our LPs to co-invest (via dedicated vehicles managed by daphni) in companies that they love. This makes them all the more willing to the success of the startup and enable more capital to be deployed in the round.
Here is our investment strategy:
- part 1: The 7 Mutant Rules of the Digital Economy
- part 2: Uberization? Nope, Platformization
- part 3: What The Most Successful European Startups Look Like?
- part 4: International Is The New Normal
- part 5: Leverage The European DNA (Digital Natural Advantages)
- part 6: daphni’s Investment Strategy