Having flown below the radar for a long time, we think now is as good a time as any to share our story. It’s a story about choosing the path less trodden and challenging a few golden VC rules along the way. Always searching for a very special entrepreneur to support. We tested 1,000’s of assumptions on what makes an entrepreneur truly extraordinary. Often by accident or dumb luck, we progressed on our quest. We don’t fancy ourselves rock n roll guitarists, but we like to think of Keith Richards who once said, “I play until I start making the right mistakes..”.
Before we dive in and share with you some of the lessons we’ve learned along the way, here’s a quick snapshot of where Hummingbird stands today:
1. Since 2010, we invested in 22 companies in 10+ countries including Belgium, Brazil, Germany, Greece, Turkey, UAE, UK, US.
2. None of these companies had any revenue pre-2010.
3. Combined, these companies are on a $1Billion+ annualized net revenue run rate as of today, scaling exponentially and collectively profitable!
4. Our portfolio evidently has a few outliers with one unicorn, one $100M+ ebitda zebra, but also 7 other triple-digit-million revenue companies, as well as some early stage bets growing at a healthy clip. Our record challenges the accepted wisdom among early-stage VCs that if you aim for outsized wins (aka moonshots), you must accept that 40–60% of your companies will fail. So far, we’ve managed to swing for the fences while consistently getting the ball to bat.
All of this is thanks to some exceptional entrepreneurs across the world whose paths we crossed. If we had forecast these numbers to our shareholders in 2010, you wouldn’t have blamed them for diagnosing us with a severe case of reality distortion. We’re not counting our chickens yet and know that more painful twists and turns lie ahead for our entrepreneurs. But fundamentally, the world has changed since 2010 and some great entrepreneurs are working on a very different scale now. Millions more people are coming online every year. Global winners can be built from anywhere in the world in record time.
This summer, we set out to raise our third fund. In less than a month, we had 100M EUR of commitments, double the size of our initial fund target of 50M EUR. We did not rely on any special tax incentives or the EIF’s of the world. Our LP base consists of 100+ private investors including entrepreneurs who built $1bn+ tech companies, strategic family offices and entrepreneurs who we once backed at seed stage. We are very grateful for our LP base’s continued support, jumping through all the hoops at such a short notice!
We went from an invitation to invest all the way to having the money in the bank in 40 days. We also chose to cap the fund at 80M EUR and resisted the temptation to hit the road and raise a larger fund, say in the 200M EUR range. Why? Firstly, we believe this segment looks crowded in Europe, especially with US funds swooping up many of the best European Series B deals. But most importantly, we want to stay true to ourselves. Our heart is in early stage investments: It’s what we do best.
On that note, we couldn’t help ourselves… Gearing up to the new fund, we already found three great entrepreneurs to back: Instacarro (Brazil), Frontier Car Group (Nigeria, Pakistan, Turkey, Chile, Mexico, Indonesia), and a stealth company in NY. Hummingbird III is off to a promising start and we couldn’t be more excited by the talent and ambition we are meeting across the globe.
So what’s different?
Our journey sculpted our view on Venture Capital. We have come to believe that to generate alpha returns in the VC business, you can’t be like everyone else. So, how is Hummingbird different? Simply put, we are drawn to entrepreneurs, innovation, and geographies overlooked by others. A few things stand out:
Finding extraordinary entrepreneurs is the core of our investment thesis and we spend more time refining our DNA pattern recognition on extraordinary entrepreneurs than anything else. For us, it’s less about CaC/LTV or TAM but about the entrepreneurs first and foremost. We partnered up with a self-taught coder who was previously a shepherd with no schooling, an overachiever at school who ranked 4th out of >1 million people in a national university entrance exam, a Peter Thiel fellow who entered Harvard at the age of 15, and an art gallery owner who was a top competitor in Magic the Gathering tournaments. An eclectic bunch!
Nomad VC: We go wherever great entrepreneurs are to be found, whether it’s the outskirts of Europe or the emerging markets that are producing the global winners of tomorrow. We search in places, some consider backwaters. Many investors still abide by the rule that they only invest in companies within a 2-hour driving radius of their HQ. We believe that the best entrepreneurs can come from anywhere and in fact, we have found that regionally-focused tech hubs risk transforming into treacherous echo chambers. Hummingbird’s remote VC “offices” will continue to pop up in different parts of the world, mostly in coffee shops.
One step to the left of the crowd: Our best returns have come from those decisions where many raised an eyebrow. Where others go right, we often go left. We are not tech visionaries but we have shown ourselves willing to go against the grain and make investments against consensus. It’s been scary at times. As a result, we are among the first European investors to have backed global winners in cloud storage, mobile-first, gaming and blockchain. Those have turned out to be our best companies.
Selectivity: We have no fixed mantra that keeps us from doing more investments, but we question the traditional VC interpretation of power law distribution. This law can be used an excuse to lower the bar. Rather, we’ve spent years to refine the notion of entrepreneurial excellence. We push ourselves to be patient, sometimes hovering for long periods, and resisting deals or trend fever. We invest with conviction, doubling down on our winners. Unconventional for an early stage fund, we do not “spray and pray”. We’ve done ~20 investments over 5 years, rather than the usual 20 investments per year.
Radical Candor: As time is short, we embrace radical candor (sounds somewhat better than ‘brutal honesty’). A few of our entrepreneurs will wildly exaggerate how crucial we are to them, but in reality we’ve become increasingly modest about our value-add. For some, we spend over 30% of our time helping them hire while others need little in the way of guidance. Every entrepreneur is different. We always listen to our entrepreneurs and provide a sounding board that is both honest and supportive. We’ve noticed that we are one of the few who are comfortable with the ‘hard-to-articulate’ conversations. A traditional board setting doesn’t allow entrepreneurs to be vulnerable or openly address insecurities. When needed, informally, we help to articulate a few taboos (read: “euh, my co-founder has an.. issue”).
Founder-First: Founder friendliness seems to be falling out of fashion these days, particularly in light of the Uber-saga. But in Europe, founder-friendliness never really came into full bloom. In fact, we are miles away from finding the right balance as many of the reputational mechanics of the valley don’t yet exist here. Amazingly, there are still some “screw-you-over” or even steal-your-idea investors out there. Our experience has taught us that the best companies, the global winners of tomorrow, are built by founders who stay at the helm. Hopefully our founders will reward us and continue to be Hummingbird ambassadors, the kind of marketing that money can’t buy.
So Why Haven’t You Heard More of Hummingbird?
If you’ve made it this far, I suspect you’re asking yourself that question. Are we willfully ignorant of the importance of VC branding? Why so quiet?
1. We wanted to experience the complexity (often misery) of building global winners up close, and repeat this a few times before speaking up. One lucky bet would have yielded a narrow perspective on succes. Easy opinions that work in one situation only tend to fly back as a boomerang.
2. We are generally not a fan of conferences. Our favorite breed of entrepreneur seems to be absent. Expert panels don’t break new ground. Rather, conferences amplify the noise. It’s easy to view Buffet as a special recluse, who lives on a farm and spends 80% of the day reading, but he smartly stayed away from buzz or gossip-bait. Investing is about removing noise and seeing value where others don’t. While perfect for socializing, most conferences don’t work for us.
3. Finally, our best entrepreneurs tend to dislike publicity. These entrepreneurs are focused on getting sh*t done. A good portion of our inspiration in life comes from the entrepreneurs we work with. If these special entrepreneurs are so careful with bold claims then we feel we should be equally selective with the publicity we invite.
Last but not least, Hummingbird is special because of a few great people I have the honor of working with. Firat Ileri is one of the youngest VC partners in Europe, and a discrete, smart force of nature (Forbes 30-under-30 seemed to agree). And we wouldn’t have gotten here without the insatiable curiosity and drive of Pamir Gelenbe, who managed to have a strong impact as a venture partner while also working on many other great projects. More recently we expanded our team, check out our team link. Notably Cameron McLain joined us a Principal with an early impressive track record as an angel investor. His first blog post about blockchain got 60,000 views, so if you haven’t read it, please check here.
Barend Van den Brande, founding partner, Hummingbird Ventures
We are hiring. Our latest hire was candidate 4,231 (and we didn’t use a headhunter btw), but we’re still on the lookout for somebody out of the ordinary. If you consider joining Hummingbird, please click here.
PS2. Hummingbird Chronology
2010, Hummingbird raised a first $35M fund, focused on early-stage tech, mostly exploring a few overlooked and upcoming ecosystems in Europe,
2012, Hummingbird II raised $40M with a focus on emerging markets, in particular Turkey with its amazing talent pool, and then,
2014, we raised a $25M Hummingbird’s Opportunities fund, to double down on some of our winners.
To date, all together $100M in funds operating in parallel and cross-investing. We invested initial ticket sizes of $1-$2M, mostly series A, entering at median entry valuations of $5M. Our smallest ticket was $250k and our largest investment is $8M.
2017, Hummingbird III raised $95M.