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Seedcamp's Carlos Espinal on the 10 most important changes in the European VC Landscape

Carlos recently published his 3rd edition of the "Fundraising Field Guide" - in this episode, we unpack 10 of the most important changes in European venture.

We sat down with one of the founding partners of the Firm of The Year-winner at this year’s EUVC Awards: Seedcamp’s Carlos Eduardo Espinal 🥳

Carlos Eduardo Espinal is a Managing Partner at Seedcamp, Europe's seed fund, first launched in 2007 to support European entrepreneurs truly compete on a global scale. With investments in over 460 companies including publicly listed Romanian-founded, UiPathWise and unicorns Revolutwefox and Pleo. Carlos is a published author, fellow podcaster and has been on the Forbes Midas List as one of the most influential VCs in Europe for more or less as long as European venture got started.

In our conversation, we explore several principal themes, including the impact of excess capital on valuations, the emergence of specialized investors, the pressure on founders to tell compelling stories, and the focus on sustainable business models. We also touch on the cyclical nature of venture capital and the challenges faced by founders in navigating the changing landscape. Overall, we provide insights into the current state of the venture capital industry and the strategies employed by investors and founders.

We delve into the changing landscape of venture capital and the challenges faced by founders and investors. Our discussion includes the role of investors in creating liquidity for founders and LPs, the shifting expectations for different stages of companies, and the confusion surrounding investment metrics and growth capital. We also address the impact of market changes on Seedcamp and the importance of supporting struggling companies. The conversation delves into the large portfolio model and the challenges it presents in turbulent times. We conclude with a discussion on financing terms and structures, the rise of VC celebrities, and the role of VCs in shaping the future.

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"Having worked together for many years now, they fully understand the Isomer ethos and process, and we really appreciate the value that this long-term relationship brought to this mandate from start to finish. We look forward to continuing to work with Karma, Ronan, Will and the rest of team.” 

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Chapters:

  • 06:23 The Challenges of Access to Knowledge and Best Practices

  • 09:12 The Three Cycles of Carlos' Book

  • 13:09 The Success of VC as an Asset Class

  • 16:24 The Emergence of Many Unicorns

  • 26:18 Added Pressure on Founders to Tell Compelling Stories

  • 28:41 The Focus on Sustainable Business Models

  • 33:45 The Balancing Act: High-Growth Potential vs. Stable Business Models

  • 38:32 The Cyclical Nature of Venture Capital

  • 43:09 Creating Liquidity and Attractiveness for Companies

  • 46:20 Supporting Struggling Companies and Making Difficult Decisions

  • 49:47 The Challenges and Benefits of the Large Portfolio Model

  • 56:20 The Impact of Financing Terms and Structures

  • 01:13:39 Changing Attitudes to Tech Entrepreneurship and the Role of VCs

✍️ Key Take Aways

  • Excess capital has led to inflated valuations and increased competition in the venture capital industry.

  • The emergence of specialized investors has provided better support and capital for founders in specific sectors.

  • Founders face added pressure to tell compelling stories that justify high expectations from investors.

  • There is a growing focus on sustainable business models and the path to profitability.

  • Investors are seeking a balance between high-growth potential and stable business models.

  • The venture capital industry is cyclical, with different strategies and trends evolving over time. The role of investors in creating liquidity for founders and LPs is crucial in the venture capital landscape.

  • Expectations for different stages of companies vary, and there is confusion surrounding investment metrics and growth capital.

  • The large portfolio model presents challenges in turbulent times, but it allows for better allocation of follow-on capital to promising companies.

  • Financing terms and structures can have both positive and negative impacts, depending on their appropriateness and alignment with the company's needs.

  • The rise of VC celebrities brings both opportunities and risks, and VCs should use their platform responsibly and speak from a place of expertise.

📺 Virtual events coming up

GP/LP Roundtable: Empowering Women in Innovation & Venture | Friday, Jul 5, 2024, 11:00 AM - 12:00 PM (CET) | Register here

Gender diversity in VC isn’t just a buzzword—it's a power move that drives innovation and profitability. 🤘 Balancing the scales in the investment world means more creative solutions and stronger economic growth. Ignoring this is so 2010s. 🕰️

GP/CVC Roundtable on AI in The Physical World | Wed, August 14, 2024, 3:00 PM - 4:00 PM (CET) | Register here

AI is flipping industries on their heads, from health to farming. Get the scoop on what’s real and what’s just sci-fi. With a vertically specialized micro VC, a Robotics CVC with major acquisitions behind him and a generalist who just can’t stay away from the space, you’ll be in the know after listening to this conversation 💸

GP Roundtable: Leveraging AI in Portfolio Monitoring & Management | 📆 Mon, Sep 9, 2024, 3:00 PM - 4:00 PM (CET) | Register here

This roundtable is a must for GPs looking to get an edge using AI. By tapping into AI-driven analytics and predictive modeling, VCs can unlock hidden trends and streamline their operations. Plus, tackling early risk assessment can save portfolios from tanking 💥. It's about staying ahead in a cutthroat world.


🗓️ 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!

Nordic LP Forum & TechBBQ | 📆 11 - 12 September | 🌍 Copenhagen, Denmark

How to Web | | 📆 2-3 October | 🌍 Bucharest, Romania

WVC:E Summit 2024 | | 📆 7-8 October | 🌍 Paris, France

North Star & GITEX Global | 📆 14 - 18 October | 🌍 Dubai, UAE

Invest in Bravery | 📆 21th of October | 🌍 Kyiv, Ukraine

0100 Conference Mediterranean | 📆 28 - 30 October | Milano, Italy

GoWest | 📆 28 - 30 January 2025 | 🌍 Gothenburg, Sweden

GITEX Europe 2025 | 📆 23 - 25 May 2025 | 🌍 Berlin, Germany