EUVC Newsletter | 🎄End of Year Edition 🎆
EUVC Newsletter | 🎄End of Year Edition 🎆
Read on for reflections on the year from some of Europe's leading LPs, GPs and Angels 💸
Welcome to the newsletter that rounds up the week in European Venture from a GP/LP perspective… or well, this time: the year.
Table of Contents:
Hotlinked table of contents for your pleasure and ease below - click-away!
#2 Keith Grose, Plaid on grit, trust, communication and investing
#141 Patrick Newton, Form Ventures on going from a 1M€ fund I to 30M Fund II
#140 Sergey Jakimov, LongeVC on the pursuit of eternal life (or not)
#139 Sasha Kaletsky, Creator Ventures on leveraging a community of celebrities
#138 Enis Hulli and Kaan Eren, 500 EE on going building regional dominance and going from 10M to 75M
#08 Bernd Oswald, A founder’s view on what city residents really need
‘22: A year of landmark achievements in technology
‘22: A year of tears
Virtual Event Recording | From Bubble to what? Making sense of the current market
Listen & subscribe to the accompanying Lowdown podcast here 🎧 where we wrapped up the highs and lows of the year with Chris Wade, Tom Hughes-Ellis, Dan Bowyer, David and the always magnificent Cathy White at the helm 🎙️.
Do let us know if you have news, opinions or GIFs you want us to share on the Lowdown! We’re here to amplify the EUVC community 📣
This week’s events 🥳
Wednesday, Feb 8, 2023, London
Been wondering how some dealmakers remain successful in the face of a shifting market? Register today and see what Affinity's Relationship Intelligence conference, Campfire London, has in store for you on February 8!
VC Exclusive: Track Record Deep Dive with Michel Geolier, CEO of Betterfront
Tue, Jan 24, 2023, 3:00 PM - 3:45 PM
Join us for a true deep dive on how to create and present your track record as a VC with Michel Geolier, founder of Betterfront.
We will cover everything from:
🤔 Why track records are so important
💾 What data's required
📈 What the track record should cover
⛔ Top 3 mistakes made by VCs
🧙♂️ Why storytelling is key and how to compensate for a thin record (so far).
About Michel & Betterfront:
Michel is the CEO and co-founder of Betterfront, a B2B vertical SaaS company dedicated to private markets. Previously, Michel led due diligence and fund managers selection for the Siemens’ pension fund. He started Betterfront out of his frustration of poor alternative investment analytic solutions.
What we listen to 🎧
The Super Angel Podcast, #2 Keith Grose, Plaid
Today we are happy to welcome Keith Grose, Head of International for Plaid, an open finance platform and data network that powers over 3,000 digital financial apps and more than 12,000 financial institutions across the US, Canada, UK and Europe. Keith leads the strategy and operations for Plaid’s international products.
In this episode you’ll learn:
How Keith thinks about solo founders and why he believes having angels & VCs around you is even more important for these
Why Keith thinks grit is the number one thing to look for and how he tests for it
Why establishing trust and psychological safety is so important to angel investing
Why Keith prefers Whatsapp and email to regular reporting and how that can save communications from going bad
The European VC, #141 Patrick Newton, Form Ventures
Today we are happy to welcome Patrick Newton, co-founder of Form Ventures, an early-stage VC focused on investing in startups that are disrupting regulated markets, or building in new markets that will face regulation. Patrick helps founders break down policy barriers and shape winning regulatory strategies.
In this episode you’ll learn:
How Patrick got to found Form Ventures to fund the future regulated markets
The surprising story behind going from a 1M€ fund I to a 30M€ fund II
How Patrick thinks about VC brand building from a strategic and tactical point
The European VC, #140 Sergey Jakimov, LongeVC
Today we are happy to welcome Sergey Jakimov founding partner of LongeVC, a venture capital company supporting early-stage biotech and longevity-focused founders that are changing the world. Sergey is a serial entrepreneur, having co-founded 3 deep-tech ventures and raised more than $40 million in venture funding for his own ventures and as an entrepreneur in residence.
In this episode you’ll learn:
How Sergey ended up doing longevity from a non-medical background
How to think about longevity as a vertical and the frontiers of the space
A deep dive on longevity techs frontiers: 1) Consumer adoption, 2) Age-related diseases (therapeutics and non-therepeutics), 3) Systemic rejuvenation of the human-being
An usually light-hearted deep dive for the EUVC show on how we can all live longer and have better lives
The European VC, #139 Sasha Kaletsky, Creator Ventures
Today we are happy to welcome Sasha Kaletsky, Co-Founder and Managing Partner of Creator Ventures, a firm that invests and collaborates with content creators. This year they closed their first $20m fund, to invest globally in early-stage companies innovating in consumer-internet.
Together with his partner Caspar Lee, Co-Founder of influencer.com, a content creator with an audience of over 10 million across social channels, they help founders navigate the social media and influencer marketing landscape.
In this episode you’ll learn:
All about how Creator Ventures leverages a strong network of celebrity co-investors
Why Sasha has opted for a model with celebrity co-investors rather than celebrity LPs
The direct & indirect value-add of celebrities, influencers & athletes for founders as well as VCs
What Sasha’s advice to other emerging managers is and why quality LP updates are high on his agenda
The European VC #138 Enis Hulli and Kaan Eren, 500 EE
Today we are happy to welcome Enis and Kaan, General Partner and Investor at 500 Emerging Europe, who the EUVC syndicate is investing into. In this episode, we dive deep on their recent rebrand from 500 Istanbul to 500 Emerging Europe, their emerging talent thesis and the value chain drift that’s causing emerging Europe to be such an overlooked opportunity. It was an absolute pleasure to meet up with the guys at How To Web and experience exactly how hot the ecosystem and the support for what Enis is building is.
In this episode you’ll learn:
How to think about growing a 10M€ fund I to a 70M€ fund II
Why brand is the only competitive advantage in VC and how to build it
The 500 Emerging Europe Talent thesis & it’s connection to the value chain drift that 500 is leveraging
How Enis thinks about building a truly sustaining firm that may rise to dominance
The UrbanTech VC #08 What city residents really need - a founder’s view - Bernd Oswald, GROPYUS
Today we are happy to welcome Bernd Oswald, Co-Founder of GROPYUS, a tech-company with a Building Operating System that is the central hub for a fully connected smart home system for both residents and asset holders. Bernd is responsible for Business Development and M&A, and he is shaking up the construction industry.
In this episode you’ll learn:
number one reason to move out is noise
product touching whole value chain needs a lot of expertise in the team
the role of research and degree of customization
why MVP should not always fulfil the pure minimum requirements
We’re pioneering Operator LP Syndicates to back the best VCs in Europe with money, passion and superpowers 💸
GIFs & Memes 🙊
🚨 View the newsletter in browser to watch the films without it being a mess. Promise it’ll be worth it.
Your VC is not your friend 👇
Watching a founder hit their groove 👇
Me chasing hot solo GP 👇
Learning from ‘21: Not everything will fly 👇
If you think you've lost money in crypto... 👇
by Tien Ma, Director at REDHILL
We’re pioneering Operator LP Syndicates to back the best VCs in Europe with money, passion and superpowers 💸
End of Year Reflections 💭
For this instalment of the EUVC Lowdown Podcast we were joined by Chris Wade from Isomer Capital, Tom Hughes-Ellis, Head of UK at Affinity, Dan Bowyer from SuperSeed and our own David on to reflect on the year’s highs and lows. What ensued was a powerful conversation and here’s the wrap-up (…of the wrap-up 🤦):
2022 - a year of landmark achievements in technology
This year has been a special one in technology - with achievements that far more substantial than the fiascos of crypto. Though not in the realm of VC, Chris points our attention to a series of achievements we should all pause to reflect on:
Achievement #1: The US National Ignition Facility at Lawrence Livermore National Laboratory, near San Jose have announced that they’ve created a positive nuclear fusion reaction where more energy was generated than used to start the reaction - this is a true first and something mankind has been trying to achieve for the last 70 years.
Achievement #2: We’ve achieved successful operation of the James Webb telescope - an international collaboration that had over 400 single points of failure from launch to sending data from its position 1M miles from Earth. Some facts that should blow the mind of anyone: the telescope operates at -230C and to prevent the sun from changing this temperature it has a shield the size of a tennis court and thickness of a single human hair.
Achievement #3: The Pharmaceutical industry went entrepreneurial enabling yielding an amazing year for medical science. Perhaps this is not surprising as big pharma increased R&D spending by 5% in the last 5 years, but consider these breakthroughs:
Cancer treatment has now extended to over 18 different tumour types.
First positives sign of a decrease in cognitive decline in Alzheleimer patient has a result of a new drug.
New drugs to target obesity by regulating the area of the brain responsible of appetite.
Perseverance is the key to these achievements.
What all these highlights have in common is perseverance. All these projects were way over budget both in time and cost, but the goal was so great they just continued. What is more, some of these projects PIVOTED as new science proved that the original goals needed to be changed - and the leaders had the courage to do so. Let’s not forget that as VCs and LPs.
Necessity is the mother of all invention.
The progress that happened in pharma was because of COVID forcing us all to move quick. We needed to dare to take calculated risks. The use of an RNA process that encode a viral protein to stimulate the immune system was entrepreneurial and saved millions of lives - and has now become a core technology platform for future drug discovery. This is one of the most inspiring stories of venture, technology and innovation and it’s never been told in as great detail and with as many learnings for VC as by Stephane Bancel and Mike Maples Jr. in this podcast. Don’t miss it 👇
Let’s never forget that achievements like these are what got most of us into venture in the first place. Be that as founders, VCs or LPs.
Let’s keep telling these stories and position ourselves in relation to them.
Asked to reflect on the year we’ve been through, Dan Bowyer from SuperSeed had a great point: when you take the time to reflect on things every negative or low also has an uplifting and generous opposite. He gave some strong examples:
Dichotomy #1: I can't stand what crypto means for society - it's greed and ignorance bundled together and fuelling the worst of the human condition. I hate that it still exists in 2022 with Bitcoin still trading at $17k or so. But I love the drive for change, the kick it will give central banks / govts and some of the blockchain efficiency platforms that will appear because of it.
Dichotomy #2: I've hated the raise process for our second fund, SuperSeed Fund II. It's been arduous misery. There have been no patterns to follow, rules to apply and it's just been deflating. The flip of that is that I've met some fascinating people, been pushed out of my comfort zone, raised millions over Zoom calls! And am using the fund to invest in business transformative startups - which is where innovation and societal change really lives. How can that be in any way hateful? I need to get over myself right?
Dichotomy #3: I hate that the pandemic, the cost of living crisis and market disruptions have destroyed lives and livelihoods - BUT I love that in startupland we're now firmly in the 'Great Reset'. No more faster grocery delivery startups, nonsense SPAC investment vehicles, stupid investments in general with too much money being spluffed up the wall driving little real-value for society. Thank goodness it's over (for now).
Exactly the point of coming back from the COVID lockdown was highlighed by Tom from Affinity as his highpoint of the year:
My high point has to be seeing everyone back on the road, getting together and making deals happen. It’s been so good to see the community come back together. Meeting new people building new funds, seeing the energy, the camradery of the European venture scene and being part of that after such a hard period has just been amazing.
True to EUVC style, asking David for his reflections, he opted for a slightly contoversial one:
After a record-breaking first half year, the flywheel slowed this summer in response to a tough macro environment. The public tech market has been reset with that impacting rounds and valuations for later stage rounds. However, specific sectors (such as Climate Tech, Life Sciences, Deep Tech and Sustainability) have remained resilient. My message being: Tech faces new challenges, but remains resilient. And I want to highlight that word: resilient.
Many have looked at this tech reset as a negative. At EUVC, we don’t share that view entirely. Don’t get us wrong. This macro-economic phenomenon is horrible for economies in general. It’s horrible for the more than 14,000 tech employees of European head-quartered companies who lost their jobs. Horrible for their families. Horrible for many of our own friends and families. Our hearts go out to them and we are all finding ways in which we can help. But, as we discussed on the lowdown when going over Atomico’s State of European Tech report, we do believe it carries long term pros for our industry.
Venture is about solving real problems. It’s not about developing new widgets, features or shit apes. It’s about resilience and consistency. It’s not about the latest fad. It’s about long term thinking. Not about quick flips.
2022 - a year of tears
But 2022 was also the year of tears. Especially in Europe. As Chris said:
It is estimated that over 150,000 Ukrainian soldiers and civilians have died in 2022 assuming a similar number on the enemy side. That’s nearly 1000 deaths a DAY in 2022. Millions have gone with less food because of a lack of grain shipments from Ukraine.
A dramatic reduction in oil and gas then meant that our poorest must go cold this winter and inevitability become less resistant to disease and severe hardship.
For the rest of us YES energy and food price increases caused inflation which has led to raising of increase rates to levels not seen for nearly 30 years. This matters to our industry with a few headlines as follows:
LP’s will consider 4-5 % with no venture risk as a serious investment alternative.
GPs with cost of capital much higher will take less risky bets
Founders will worry about revenue growth as recessions hit consumers and that will eventual impact even B2B companies as well.
In our EUVC episode to be released on Thursday 5th of Jan, we dive into this in much more detail. Tune in here.
Going forward
Before we leave you, I want to restate some real testaments of founder perseverance Chris brought up in our conversation. While we’ll all go through trials in 2023, we will persevere:
Testament #1: A Founder started the year having to air freight components to build the company’s products, however did not panic and start double buying to ensure supply. Today, shipment cost is 1/6 of Jan 2022. This is a good proxy to the end of the supply chain constraints we’ve been through. Managing through hardship has enabled the management to move with much more agility and resilience.
Testament #2: Another founder grew revenue 2x in 2022 and unit economics to almost breakeven. A target originally set for 2024. Despite all this progress the company decided to reduce headcount by 30% because of potential headwinds in 2023. This will ensure a 50% growth and cash runway until 2026 where fund raising will be an option and not a necessity. It is about being in power of your own destiny by retaining control.
Testament #3: Twice as many carbon reduction companies were started in Europe in 2022 versus the previous year. As a result, carbon reduction focused VCs are maturing and becoming investable from an LP perspective. There’s now strong evidence of customers buying with their sustainability €€’s and as a result companies in the recycling/sustainability space saw revenues accelerated in 2022. Some of the most important technology will be developed and funded in the years to come as a consequence.
This week’s stories 🗞️
Navigating the current market as an angel
Wrapping up the year, Jesper Jarlbæk gave some sage advice in the DanBAN newsletter that I wanted to restate here for our angel readers 👼 👀
Be transparent. Becoming illiquid can happen to anyone. Share it, be open in your syndicates about the fact that you cannot join in the next round - that gives the rest of the syndicate the opportunity to adapt and assist. That’s what your syndicate is there for!
Identify and handle issues with burn rate and runway in all of your portfolio. Help founders devise a financing plan that’ll take them 12 - 24 months forward.
Don’t be afraid of down rounds. Values go up and down and until they’re realized, they’re just paper money.
Know your liability & governance. Pay attention to liquidity and accounting. Make sure everything is documented. Don’t ever forget that there must be money for wages, taxes and VAT - as a board member, that’s also your responsibility!
Help founders mentally. It’s easy to tell someone off when you’re disappointed. But it’s a terrible pressure and an even greater burden to put on founders. They were expecting exponential growth. They might be in a state of denial and become passive by meeting the wall of debt or no’s from VCs.
Think about relevant exit routes. Consider M&A with a competitor, voluntary restructuring, zombie break until demand resurfaces.
We’re pioneering Operator LP Syndicates to back the best VCs in Europe with money, passion and super powers.
Matt Turck’s VC resolutions for 2023
Matt Turck from FirstMark had me laughing hard with his VC resolutions. Check them out.
1 - Update social profiles - Remove any reference to ever having ever liked crypto/web3, deny any rumors that I was claiming to be “down the rabbit hole” less than a year ago, say that I would have “definitely done deep due diligence” on FTX
2- Show thought leadership - Tweet incessantly about Generative AI, change my PFP to a Lensa avatar, talk about how GPT-4 is “insanely mind-blowing” (reminder: cold email OpenAI to actually get early access to GPT-4)
3 - Add value - Advise CEOs to a) grow at least as fast as before, but also b) drastically cut all costs. Use terms like “EBIDTA” and “FCF” which I just learned about in 2022. It’s all about “responsible growth” now (hint that I always advocated for it, deep down)
4- Be encouraging - Repeat more often that “some of the greatest companies were started in bear markets”, because founders really like hearing that from VCs whose personal downside is protected by management fees no matter what
5 - Lead by example - emphasize valuation discipline, unlike those other silly VCs (not me) who YOLO’ed into crazy expensive deals in 2020-21 — HOWEVER, be flexible - if I do get an allocation in the next Generative AI platform Series A at 500x ARR, then definitely do it (because that’s different)
6 - Cut costs - given low likelihood of carry in the next couple of years, fire my now-outed $250k-a-year ghostwriter, and instead hire an unpaid high schooler to write ChatGPT prompts for my posts on Twitter and, increasingly, LinkedIn. Tweet about how I’m grooming the next generation.
7 - travel less - it’s going to be a high intensity year where my founders are going to need me, so keep it to essential travel only: Deer Valley skiing, Egypt kitesurfing, Mykonos for the Summer, some long weekends in Miami, bit of pickleball in the Hamptons, that’s it
8- Start a podcast - because more people need to know what VCs think, especially on topics outside of venture capital. Plus, the All In guys get stopped in the street for autographs and I don’t.
No, VC will not change fundamentally.
For once, I had an original thought. Or at least, wrote something myself that I’ll repost here in the newsletter. Am I off?
VC will not change fundamentally. I’ve been seeing so many arguing all kinds of changes to the VC market. Let’s
No, Niche will NOT be the next big thing.
No, Momentum will NOT be any less important.
No, Mega-rounds will NOT go away any time soon.
No, Profitability will NOT be more important than growth.
No, TAM being front and center for a VC investment case will NOT change.
Why is this?
VC is a power law business.
Small does not cut it in this world.
We pursue big outcomes with big risk.
What we’re going through is a tech CORRECTION not a tech DISRUPTION.
So stop arguing that VC will change fundamentally. It will not.
Virtual Event Recording| From Bubble to what? Making sense of the current market | 📅 08/11/22 4-5 PM CET
We hosted a conversation with some of our close friends in the European VC ecosystem: Dan Bowyer, Enis Hulli, Marvin Liao, Daniel Polonka, Augustin Sayer, Orla Browne, David Cruz e Silva, Annelie Ajami and as usual, hosted by Andreas.
We covered:
The rate of unicorn creation in Europe vs US - what are we seeing and why?
Capital efficiency across geos and it's importance for shaping VC returns
The role of networks in pan-European investing
How the best build competitive advantage via community
How our expert panelists think about the coming 6 months, what they see in their pipeline and how they plan to act
This week’s funds 💵
Section powered by the InnovatorsRoom.
🇮🇪 CRH - $250m, CVC, construction-tech - Dublin
🇮🇱 10D - $185m, fund 2, early-stage; $60m, opportunity - Tel Aviv
This week’s hires 👩💼
Section powered by the InnovatorsRoom.
🇵🇹 Dealflow.eu - Senior Investment Analyst - Lisbon
🇦🇹 STRABAG - Venture Associate Startup Partnerships - Vienna
🇦🇹 STRABAG - Venture Associate New Business Models - Vienaa
🇬🇧 ZINC - Managing Director - London innvtrs.com/3PN0WWX
🇩🇪 OBI SQUARED - the innovation factory - VC Analyst - Cologne innvtrs.com/3YRZNli
🇬🇧💻 UCL Innovation & Enterprise- Innovation & Growth -LDN innvtrs.com/3WMGaJg
🇬🇧 Carta - VC Business Development Manager - London innvtrs.com/3hTUYqW
💻 First Momentum Ventures - VC Ambassador - Online innvtrs.com/3YPa81d
💻 mammaly - Entrepreneur in Residence - Online innvtrs.com/3hTV022
💻 Planet A Ventures - VC Analyst - Online innvtrs.com/3Wut5Vy
🇬🇧 Rainmaking - Venture Studio Head - London innvtrs.com/3VvBLcK
💻 KKA Partners - PE Mentorship for Women - Online innvtrs.com/3hWMKOQ
🇩🇪💻 Stealth Startup - Acquisition Manager - Berlin, Hybrid innvtrs.com/3FYA8OT
🇦🇹 Corecam Capital Partners - PE Analyst / Associate - Vienna innvtrs.com/3I2tg5S
🇩🇪 Cherry Ventures - VC Analyst SaaS - Berlin innvtrs.com/3Vz9Hp6
🇩🇪 Hawa Dawa - VP Finance - Munich innvtrs.com/3VpxOGG
🇳🇴 Antler - Scouting Internship - Oslo innvtrs.com/3jxzP65
🇸🇪 CVX Ventures - Venture Scout - Stockholm innvtrs.com/3Vq4IH4
🇩🇪 High-Tech Gründerfonds - VC Analyst - Bonn innvtrs.com/3FWDPoz
Thx for reading and being awesome 💗 we love you for it.
What others are saying 💬
“The EU VC team is amazing to work with. They became a trusted partner for us and we’ve gained another 28 LPs, giving our founders more people invested in their success and who are willing to open their respective networks. And accidentally, they’ve also grown to become our favorite gif supplier 💪”
- Joachim Laqueuer, GP of Acrobator Ventures