Disrupting venture capital

— an interview with Roberto Bonanzinga from InReach Ventures

Roberto Bonanzinga, Co-founder and Investment Partner at InReach Ventures, is working to disrupt venture capital. Bold as it may sound, his track record suggests he knows what he’s doing. Before co-founding InReach, he was a Partner at Balderton (formerly Benchmark Europe), one of the most venerable VC firms in this part of the world. While there, he invested in Depop (sold to ETSY for USD 1.6bn in June 2021), Contentful (valued at over USD 3bn after its latest round in July), and Vivino (raised USD 155m in February 2021), among others. At InReach, he strives to build an AI-powered VC firm that could topple traditional early-stage investing ways.

Paweł Michalski (PM): How did you become a venture capitalist?

Roberto Bonanzinga (RB): I became a VC by mistake. I always wanted to work in the technology field. This passion for tech and entrepreneurship started very early for me. When I was growing up in Sicily, my dad was running a family bookstore. When I was sixteen, I convinced him to start selling computers — which was crucial for my future career. We started selling Commodore 64’s and Apple II’s. At some point, our small bookstore became one of Apple’s top resellers in Italy. What followed was a trip to Cupertino and the discovery of Silicon Valley. That’s when I knew for certain I wanted to work in the tech business.

It was a stroke of luck, the first one in my career, because I knew very clearly what I wanted to do with my life from then on. I was also fortunate to meet the right people to guide me. Actually, I think the most important thing in every career is not what you do but with whom you do it.

I spent the first fifteen years of my career working as an operator between Silicon Valley and Europe, learning from fantastic entrepreneurs and meeting incredible people. I was the right person in the right place at the right time.

The transition to the investing side happened gradually. It was, once again, shaped by me meeting the right person — the founder at Benchmark Europe — who taught me how to be an investor. I never planned to become one, but I also didn’t wake up one day and became a VC all of a sudden. When recent graduates ask me how to become an investor, I tell them: find an amazing startup with fantastic founders and work for them. Learn what it’s like on the “other side” first.

PM: You’ve had a fantastic career as a VC over the last fifteen years. First, you were part of Balderton, one of the most successful and recognized VC firms in Europe. Then, in 2015, you decided to leave to create your own firm, InReach Ventures. Why, if I may ask?

RB: Venture Capital has been the same since 1985, more or less. I’ve been observing the creation of new investment strategies, but the industry hasn’t changed at its core. At InReach Ventures we believe there is a massive opportunity to apply innovative approaches to venture capital. We want to reinvent the way a VC firm works, and if we are correct, we will reshape this entire industry. One does not have such an opportunity very often.

PM: What’s wrong with the way this industry works now?

RB: Well, for one, there’s this belief that investors are too busy to reply to an email. There’s another belief that an entrepreneur needs a warm intro to get to an investor because investors are too cool to be cold approached directly. Founders don’t have the time to go out and hunt for VCs. They should be focused on growing their businesses after all.

Venture capital is a service business, and founders are our customers. If you believe in that, everything changes. This aristocratic view that we are too cool to get our hands dirty — it’s anachronistic!

At InReach, we think there’s no difference between a founder in Vilnius, Rome, London, or Budapest. Great companies can start anywhere in Europe, and it’s our job to find these entrepreneurs instead of waiting for them in our ivory tower. Discovering them is not easy, but instead of hiring dozens of associates to navigate every ecosystem, we massively use data and machine learning technologies to scout at scale.

PM: Alright, but what differentiates InReach?

RB: Our organizational values are based on three core dimensions: native, innovative, and approachable. Those three core values represent what kind of an organization we are and we want to build.

Being innovative means that we are using all kinds of technology to rethink how a VC firm works. For instance, 50 percent of people at InReach are software engineers so that we can build our data platforms and machine learning algorithms to source the best targets across Europe before anybody else. However, we are not innovative for the sake of innovation. Instead, we want people to take risks and find new, better ways of doing what they are doing in the measure in which it provides a significant business benefit.

Being native, actually entrepreneurially native, means that we operate in the same way entrepreneurs operate. We are native to that type of culture. We use the same tech stack and embrace the same tools. We use OKRs to run our business and organize things in the same way we expect of our founders. Even when we travel, it’s not about staying in fancy hotel because that’s not how our entrepreneurs travel.

Finally, we are approachable. It means that even if you don’t know me but write to me and make an effort, I have a moral obligation to reply. Your time and my time are the same. We sit at the same table.

We ask all people on the team to walk the talk of InReach. If you’re not a native, if entrepreneurship is not something you’re passionate about, you will probably never be a fit for us. If you’re not approachable because you think you are better, you will never fit in our culture. Those three traits are critical for our recruitment, operations, and the future we want to build.

PM: Speaking of fitting with company culture, have you ever struggled finding the right people for the job?

RB: We are doing a very innovative thing. Because of that, the definition of the right skill set is not trivial. It’s about getting the right people that want to innovate in the way we want to innovate. I am delighted by the quality of our team. I also think that a traditional VC firm wouldn’t hire most people at InReach. I am extremely proud of that.

PM: Why wouldn’t they?

RB: It’s because they have a different skill set. We are solving an entirely different problem.

PM: Do you believe that technology will replace VCs in the long run?

RB: It’s already happening, to a point. Look at trading in public markets — the investment decisions are made by machines already. Why? Because they are quantitative in nature, and machines can deal with those better than humans. Early-stage venture capital is different because these decisions are rarely data-driven. Instead, they are judgmental calls. While I don’t doubt that machines will play a more significant role here — making investing more efficient — I don’t believe they will replace humans entirely. However, being native to the entrepreneurial spirit…I might be totally wrong!

PM: How far do you think you are in accomplishing what you set out to do at InReach from a data and machine learning point of view?

RB: I would say 20 percent. But if you had asked me three years ago, I would have also told you 20 percent. That’s because every year, our understanding of what’s possible is getting clearer. In the beginning, there was an opaque idea, a moonshot — we have reached the Moon and are now zooming in to see not only the planet Earth but a single house on the planet.

PM: Where do you see InReach going in the next three to five years?

RB: I expect us to successfully validate our model in Europe and expand it, though I’m not yet sure in which direction. One thing that I know is that to get there, we need to do three super important things:

• Number one: attract, train and retain the best possible people.
• Number two: attract, train and retain the best possible people.
• Number three: attract, train and retain the best possible people.

It’s that important. If we’re successful in this, the rest will follow.