Backing Europe’s Pre-Seed Founders: Three Years and Forty Companies in Review
The famous Austrian composer Gustav Mahler is supposed to once have said that if the world were to end, he would move to Vienna because everything happens 50 years later there. Now whether Mahler who spent decades of his life in the Austrian capital actually said this is up for debate. It does certainly summarise though how we felt when in early 2015 we set out to complement Speedinvest’s second fund by building a pre-seed practice from scratch. The thesis was simple: talent is distributed evenly, while opportunity is not. If we can empower the best entrepreneurial talent in Europe, both through capital and operational resources, then the reward is to be a part of a series of companies that might otherwise never even have existed.
We back people first. And to date, we have backed over 100 from 12 different countries.
As any experienced VC will tell you the feedback loops in venture capital are long and it is hard to tell whether you have done a good job for a very long time, sometimes a decade after the first investment. That said, our first indicators are promising. Of the 38 companies we invested in, 34 are either alive or have been sold. More than half went on to raise significant seed rounds and if we are accounting for the ones that are too young to even be raising then the seed ratio is close to 80%. Perhaps most impressively, our portfolio has raised a total of over 40 million euro in follow-on funding and we are confident that at the current trajectory we may well double that number this year.
Vanity metrics aside, what fills me with pride more than cap tables, term sheets and convertibles are the stories behind these companies. Over the past four years we have invested in companies ranging from social network bot detection, health-tech for refugee camps, e-commerce logistics, advanced ultrasound diagnosis and four guys from Slovenia that quit their jobs after bonding over the shared experience of having had speech impediments as kids, to name but a few. As a pre-seed investor we don’t back financial models, excel sheets or unit economic calculations. We back ideas, ambitions and — most importantly — people.
Of course, VC is about capital. But for us, that also means finding those currently underserved by it.
Venture capital is often framed as just another asset class driving returns for investors and of course, that is true. First and foremost, we deliver outsized capital gains to our LPs, such is our fiduciary duty. But our strategy for getting there is not to back founders that have three million in the bank and want to go to five. We back people who are pouring their heart, soul and life savings into something they truly believe in. And we try to be as accommodating as we possibly can. We understand pre-seed companies are legally bankrupt most of the time and don’t have time to wait around for one VC partner to return from vacation just to point her thumb upwards or downwards in the investment committee. We aim for a three-week turnaround on investments and if we pass on an investment we will let you know much quicker than that.
Anyone can claim that they are founder-friendly or a value-add investor. We have the receipts. Whether it is helping a portfolio company launch in the US, supporting with the first hires or simply picking up the phone during a founder dispute: we are an enabler. Four years after our first pre-seed investment the Viennese ecosystem is — potentially to Gustav Mahler’s delight — much more mature. But that does not mean we are done. Going forward we will continue to empower Europe’s most ambitious individuals. We are looking for first-time founders, students, dreamers, those from underserved regions, domain experts, technologists, failed serial entrepreneurs, those who stumbled upon a giant problem they know how to fix and those with an insatiable desire to make their dream a reality. If you think we should hear your story come say hi. We’ll be there.
