In this episode, Andreas Munk Holm talks with Jim Pulcrano, an entrepreneur turned venture capital educator and professor at IMD Business School. Jim shares how his early startup experience in Switzerland pulled him into the orbit of venture capital back when the ecosystem was still in its infancy. He talks about creating IMD’s VC Asset Management Program, which aims to give LPs a crash course in venture, teaching them both the appeal and the real difficulty of being a GP. It’s a fresh look at how education can bridge the knowledge gap between conservative allocators and the fast-moving world of startups.
Jim also shares what he’s learned running IMD’s startup competition and Swiss scale-up programs. He shares insights from his research into VC behavior, like why less experienced investors are often eager to lead rounds while mid-career ones take a backseat. He explains why experienced GPs tend to source proactively and why most avoid relying too much on HR assessments when evaluating founders.
Watch it here or add it to your episodes on Apple or Spotify 🎧, with chapters for easy navigation available on the Spotify/Apple episode.
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✍️ Show notes
Why IMD Built a VC Program to Help European LPs Invest Smarter
A billionaire walks into a bar….. Three years ago, a successful Swiss entrepreneur, i.e., a billionaire, came to us at IMD, frustrated that pension funds in Switzerland were so hesitant to invest in VC funds. His background was in education, and he hoped that research and teaching by a business school could change this, even if only slightly. If my memory is correct, there was $1.2 trillion locked up in pension funds in Switzerland, and just over 1% was invested in alternative assets such as VC and PE.
Since then, we’ve successfully run the Venture Capital Asset Management program 3 times. Each class has been composed of pension find managers, family offices, CVCs, aspiring VCs, serious angels, and even a few entrepreneurs.
Our goal is NOT to “sell” venture capital. We are an educational institution, and our objective is to help LPs and potential LPs understand the world of venture capital. By the end of the 4-day program, I hope that LPs will either decide to invest in VC funds (and understand how hard the GP’s job is) or choose not to invest (and know what they’re giving up in potentially high returns). An important outcome, no matter which way they go, is to convince LPs that investing directly into startups, without the expertise and experience of GPs and the portfolio benefits of a fund, is an incredibly dangerous risk to take with your pensioners’ money.
What 26 Years of Founder Collaboration Taught IMD About Scaling Startups
IMD was not starting from scratch in entrepreneurship and venture capital. We’ve been running the IMD Startup Competition for 26 years, choosing what we consider to be the best of Swiss startups each year to collaborate with our MBAs and Executive MBAs. In small teams, the MBAs, 30-year-old young managers, are tasked with delivering something of crucial value to “their startups”. The EMBAs, 40-year-old senior execs, look at their startup more holistically, as they are required to pitch their startup to Silicon Valley VCs.
This experience has given us, IMD professors, incredible insights into how entrepreneurs think and how VCs make their decisions. In addition, we’ve built up a strong network of entrepreneurs and VCs in Switzerland and Silicon Valley.
The next offering of IMD’s Venture Capital Asset Management program is May 8-11 in Lausanne, Switzerland. More info at https://bit.ly/3PGn3iQ
Teaching Venture the Right Way in Europe
A few days ago, you had a guest post from Eleanor Kaye, Managing Director at Newton Venture Program, titled “Can you teach VC?” I believe the answer is yes, though I might rephrase it to be “Can you help people learn VC?” I would extend this to entrepreneurship.
Eleanor’s statement about the general lack of public awareness of the VC industry is true. Or worse, people only know what they read in headlines and TV shows about venture capital in Silicon Valley. The Silicon Valley model works well in Silicon Valley; I believe we need to have a model in Europe that suits Europe. Learning from Silicon Valley is good, but copying the region is not.
Helping Founders Answer the Hardest Question: Am I the Right Person to Scale This Company?
Five years ago, the state office for innovation and development came to IMD and proposed a joint venture. They felt that our region had plenty of young tech startups, but many were struggling to scale. Today, we are running the fourth edition of this program with a group of 15 founders/CEOs, helping them understand the changes they need to make so that they begin scaling efficiently and effectively.
Probably the most important question they need to answer, for themselves, is “Am I the right person to lead the company through this stage?” and together with this, “Do I want to?”. In many ways, it is my most interesting program, as these founders are battle-scarred and have already brought their companies to a certain level of success, but are now grappling with more customers, more complex client needs, more employees, more choices, and often, multiple offices outside Switzerland and Europe.
Why Some VCs Lead and Others Follow?
Prompted by many entrepreneurs who voiced frustration with the fund-raising process…. yes, I know it is frustrating…. Many raised the issue of finding lead investors. I’d hear things like “I have 50% of the round committed, but no one will move ahead until we have a lead investor who will carry out the due diligence and manage the syndicate”. We asked ourselves why this might be and tried, through a survey of VCs around the world, to understand their view on leading.
There is sampling bias in the data (it is mostly my curated list of VCs) and the data set is small, but a couple of things we can say that I hope will get your listeners interested, and perhaps make them question what they’re doing:
The VCs we surveyed led or co-led 53% of their deals in the past 12 months.
The biggest reason for not leading was that the startup already had a good lead investor. The 2nd biggest reason was that the amount of capital they were investing was too small for them to expend the effort on due diligence.
VCs were most likely to lead a fund-raising round if it was with a serial entrepreneur they’d previously backed, or the already-committed VCs were experts in the startup’s domain. A 3rd reason was that the already-committed VCs had brand value for them. It’s a people game!
The most experienced and least experienced VCs are likely to lead or co-lead a U-shaped curve. Those with 5-10 years are most likely to be passive investors. Our cynical hypothesis is that young VCs don’t realize how difficult managing a syndicate or running the due diligence is. Our positive hypothesis is that less-experienced VCs do it to get into the game, get known, and get started, rather than waiting to be invited in. By the time they reach the 5-year mark, they’ve earned their scars and have a network of VCs who know them. When we get to the most experienced VCs, well, they know what they’re doing, others know and trust them, and they have deal flow.
Use of HR experts to evaluate the team/founder. A U-shaped curve across experience, with most experienced and least experienced VCs most likely to NOT use expert advice or tools. We’d seen anecdotal evidence that some VCs were bringing in HR experts or psychometric tools to evaluate founders and their teams. Our data does NOT show this as a pervasive trend. GPs in the 5-10 years of experience range were the most likely to use HR experts or tools, but even with them this was not high.
The most experienced VCs are much more likely than less-experienced VCs to initiate contact with startups. Whereas VCs with less than 10 years of experience could get 3 to 6% of their deal flow proactively, experienced VCs got 20-30% of their deals by proactively reaching out to entrepreneurs. Why? In interviews, we’ve been told that experienced VCs know what they’re looking for, want to get in early to shape the deal, and have great networks.
Some things are made for platforms - music, cabs & pizzas. But fund solutions aren’t one of them. Their individual client focus and regulation-first approach is your guarantee for flexible solutions accommodative to a broad range of deal and client specifics. The kicker? Prices that match any of the shelf-products in the market.
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✍🏻 EUVC Masterclass | The Secondaries Market: Key Insights, Strategies, and Applications
Get access to the full potential of the secondary market. Join our exclusive 2-hour online masterclass and get expert insights on liquidity strategies, valuation techniques, and successful selling tactics.
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Demystify the fundamentals of the secondary market
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Gain actionable insights on valuation, pricing, and sale preparation
⏰ April 8 | Tuesday | 💻 Online
💬 Community event | LP AMA with Herve Cuviliez
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Join our exclusive AMA with Hervé Cuviliez, co-founder of ID4 Ventures, in a small-group, interactive setting where you can ask real questions and get real answers.
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⏰ April 23 | Tuesday | 💻 Online | Available for Members Only
Join us at the EUVC Summit & Awards Show
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🗓️ The VC Conferences You Can’t Miss
There are some events that just have to be on the calendar. Here’s our list, hit us up if you’re going, we’d love to meet!
0100 Europe 2025 | 📆 02 - 04 April 2025 | 🇳🇱 Amsterdam, The Netherlands
0100 Emerging Europe 2025 | 📆 14-16 May 2025 | 🇭🇺 Budapest, Hungary
GITEX Europe 2025 | 📆 23 - 25 May 2025 | 🇩🇪 Berlin, Germany
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