Investing in network effects - THE X MEN ARE COMING!
Today, I am extremely excited and thankful to finally share what — together with Speedinvest — we have been working on over the last couple of months: Speedinvest x is a new, freshly raised early-stage Micro VC fund under the Speedinvest-umbrella that focuses on early-stage investments ranging from €100k to €1m in European and — occasionally — North American entrepreneurs who are a) building the platforms and marketplace businesses of tomorrow and b) the technologies that enable them. While the fund has a clear business model focus, it is completely sector-agnostic and invests into businesses of any type, be it B2B, B2C, B2D or C2C. Or, put simply, we are strong believers in the power of network effects in whatever form they might occur and benefit your startup.
I am deeply thankful and honored to have the opportunity to collaborate on this with the Speedinvest team that has previously backed platforms and enablers such as Shpock, wikifolio, iyzico, Bitmovin and Wefox. I am uber-stoked about working on this together with Dan Hoffer, an extremely experienced marketplace-entrepreneur (e.g., CouchSurfing) and Silicon Valley-based investor, who is supporting us in launching the fund, evaluating investment opportunities, and helping our portfolio companies to succeed as Advisory Partner.
We have recently completed a first closing of the new fund with commitments amounting to over €20 million. The final closing should bring the total fund size to €25 million in fresh capital and is expected to happen in the first half of 2018. These funds will be invested into the next generation of European and North American marketplace-founders over the coming 3–4 years. It is matched 1:1 and hence doubled (to up to €50 million) by the existing Speedinvest funds that will co-invest alongside Speedinvest x by mirroring its individual investments deal-by-deal. As a founder, this means you get the combined financial power, know-how and network of two funds but you only run one streamlined fundraising process with one contact person.
Why are we doing this now?
We strongly believe that focus is important and can make all the difference: Focusing on a specific theme for the fund will benefit founders and our LPs alike. As an early stage Micro VC, our customers are founders. How can we best help you to make your startup a success? By sharing a) the same passion for platform-businesses and b) the knowledge and experience that my partners and I have gained through more than 60 individual investments and entrepreneurial endeavors in this space (e.g., Lieferando, SpotHero, Couchsurfing, Shpock, Xeneta, wikifolio, StarOfService, Tourradar,…).
Platforms can also provide for an extraordinary return on investment and are one of the main value drivers of the tech startup ecosystem in Europe:
- In GP Bullhound’s 2016 Report on European unicorns, “marketplaces” are the second strongest category representing 19% of all 47 European unicorns.
- On top of that, they dominate the Top 10 of the fastest growing European unicorns (30%).
- According to a recent study conducted by NFX, over the last 23 years network effects have accounted for 70% of the value creation in tech.
Some people believe that there are no more blue ocean categories for marketplaces in developed markets such as Europe or the US. Personally, I have a strong conviction that the “platform-trend” is here to stay and has actually just begun: Centralized or decentralized marketplaces will continue to “eat the world” enabled by new technologies in areas that we cannot even imagine today. For example, there are still many untouched B2B-categories that are ripe for disruption through a platform-approach such as logistics, manufacturing, agriculture or construction. That’s why one of our first investments of Speedinvest x is London-based Stowga, a B2B-marketplace for warehousing and related services. If you are launching a platform in these or adjacent areas, come and talk to us!
Why am I doing this?
Some of you might be surprised to see me back on the “dark side of the force,” i.e., the investment-side after only a short tenure as an operator at Uniplaces. I have never made a secret out of my passion for early-stage investing in marketplace businesses. That said, my idea was to potentially return full-time on the investment-side only in a couple of years and — if possible — launch my own fund. Then, somewhat out of the blue, I got in touch with Oliver from Speedinvest over the last summer. Everything he told me about Speedinvest’s plans to launch a business model-specific fund sounded exactly like what I had been imagining. So, I asked myself, why wait a couple of years when I can do it now together with a group of great people? The answer to that question was obvious to me. It came naturally without much thinking, and thus it was a quick but very conscious decision. Fortunately, the founders and management-team at Uniplaces have always been very understanding and sympathetic. The great advantage of being a founder is that you can see and understand that special “entrepreneurial” sparkle in the eyes of your counterpart. They totally understood me and immediately accepted my decision. I am incredibly thankful for their great empathy and everything I’ve learned during my time at Uniplaces. It was a short but very intense and insightful experience that I would not have wanted to miss. I am extremely grateful to everyone at Uniplaces, and I am happy to stay connected and close to the company as a small shareholder.
Why Speedinvest x?
…because ❌ describes best what we are striving for:
- The symbolic meaning of a platform or marketplace that connects different ends — both in terms of investment focus as well as the fund building a platform itself.
- The mathematical meaning of the letter “x” as an operator: Like the multiple (as a metric of return) we aspire to generate and to act as a multiplier and operator ourselves.
- The algebraic meaning of the letter “x” as an unknown that is meant to be deciphered.
- The phonetic pronunciation: In Latin, “ex” means “out of”: The founders we back are seeking outlier potential that you can only achieve by exceeding the norm.
- The numerical meaning of the roman number X (10): We are striving to back founders that want to “10x” their business and that want to build a product that is 10x better than what is on the market today.
- Coincidentally, organizations and people we look up to have used “X” before:
- Alphabet has a subsidiary named “X” developing so-called “moonshot projects.”
- Elon Musk’s company X.com acquired Confinity, which later became PayPal.
- The X-Men ;-)
Who are we?
Speedinvest x is a startup itself. Our crew of 6 is an integral part of the overall Speedinvest team (totaling over 40 people). Currently, our x-men are
- Dan “Wolverine” Hoffer, Advisory Partner at Speedinvest x based in San Francisco
- Gregor “Beast” Kury, Analyst at Speedinvest x based in Vienna
- Isabel “Mystique” Russ, Associate at Speedinvest x based in Vienna & Berlin
- Jeroen “Iceman” Arts, Principal at Speedinvest x based in Berlin
- Philip “Pyro” Specht, Associate at Speedinvest x based in Vienna
- Mathias “Cyclops” Ockenfels, Partner at Speedinvest x based in Berlin
- Michael “Professor X” Schuster, Partner at Speedinvest based in Vienna
I am very excited to work with and learn from such a great bunch of incredibly talented people. We are still missing a few x-men to complement our crew, so let us know if you’re the “Storm” or “Quicksilver” for our Berlin or Vienna office! ;-)
Last but not least, all of this would not be possible without the commitment and confidence of our amazing LPs. I would like to take this as an opportunity to thank everybody who put trust in us and decided to embark on this exciting journey together with us.
We know that this is just the beginning. We have yet to prove that we deserve the trust of our LPs and the entrepreneurs we want to back. While you are reading this, we’re already back to work in Berlin, Vienna, and San Francisco with our sleeves rolled up, giving our best to earn that trust. If you’re keen to learn what this means in reality, then please get in touch.
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 In this blog post, the term “early stage” is used as a synonym for pre-seed, seed and early Series A rounds.
 “Enabling technologies”: Think of anything that is needed to run and enhance your marketplace or platform business (most likely SaaS-based).
 e.g., VR/AR, Blockchain/Cryptocurrencies
 The Speedinvest x platform: By growing our portfolio, we are building a network of founders that work on the same business model and who share the same passion and challenges. All of this enhanced by 14 hands-on partners in the Speedinvest fund family and 2 in-house agencies to help with recruiting and growth hacking.