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Michael Wax, Co-founder of Forto, on his journey and learnings as an angel investor

Michael Wax, Co-founder of Forto, on his journey and learnings as an angel investor

The number of founders who have raised 600Mn USD in Europe can be counted on very few fingers. We met with Michael to dive deep on his angel investing and tease out his core learnings & tactics

Today, we’re thrilled to introduce a true luminary in the realm of digital innovation within the logistics sector - Michael Wax, the ingenious Co-Founder and CEO behind Europe's trailblazing digital freight forwarding titan, Forto. Today, we delve into the visionary leadership and groundbreaking accomplishments that have cemented Forto's position as a vanguard in shaping the future of supply chain dynamics.

Forto's indomitable pursuit of a supply chain revolution that rests upon the pillars of transparency, seamlessness, and sustainability has not just set them apart, but has firmly established them as the avant-garde in the European logistics technology landscape. With a formidable infusion of over $600 million in funding, Forto proudly stands as the continent's foremost 'log-tech' conglomerate, a testament to their unparalleled ingenuity and capacity to drive transformative change.

At the helm of this groundbreaking venture stands Michael Wax, a true visionary with an unwavering ardor for redefining global trade and e-commerce paradigms. Michael's entrepreneurial spirit finds its roots in his prior engagement as a foundational force within KONUX, a pioneering entity at the forefront of industrial IoT innovation. This history of involvement in shaping nascent technological domains underscores his prowess in recognizing and catalyzing industry-disrupting trends.

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Michael’s Journey Into Angel Investing

Meet Michael, the entrepreneur extraordinaire who's been in the game for a solid decade. "The first company I started was an industrial monitoring company that helped make railways more reliable and increase the amount of trains being on time," he states. It all began in 2013, when he founded KONUX, a venture that's still up and running, headquartered in Munich.

Now, let's fast forward a bit. Michael's journey didn't stop at KONUX. He went on to create "Fortu, a digital freight forwarding company that simplifies global trade for businesses," he shares.

Since founding Fortu in 2016, Fortu has grown immensely under Michael’s leadership boasting "more than a thousand people across 21 locations and roughly $600 million of capital that we raised."

Gifting the founders around the world, Michael decided to also venture into the world of angel investing. Though initially unplanned, his approach quickly transformed into a more calculated approach:

"I probably should approach this a bit more strategically," he thought. That's when he set a goal: "I decided that I wanted to support 3 - 5 companies per year going forward."

Michael found a unique blend of purpose in this dual role angel investing, allowing him not only to be a benefactor but just as much a student;

"It's a super rewarding combination of doing good by doing well and ultimately learning while basically sharing some of your own learnings,"

For Michael, this venture into investing and mentoring isn't just about the numbers. It's about a deeper connection to the entrepreneurial ecosystem. "It's a way to stay plugged into the scene, to stay on the pulse," he acknowledges. The startup landscape has evolved tremendously over time, and Michael is acutely aware of the transformation. "What we've been doing seven years ago may easily not work again today anymore," he observes.

In essence, Michael's journey is a harmonious symphony of entrepreneurship, investment, and mentorship. It's about seizing opportunities and sharing insights, all while remaining deeply entrenched in the ever-evolving startup world. His path is one of growth, both for himself and for the startups he supports, as he continues to rewrite the entrepreneurial playbook, one investment at a time.

Michael’s Investment Thesis & Strategy

Michael unveils his investment philosophy with candor.

"I have to disappoint you a bit on this point. There's not a big thesis. There's not a big strategy behind it,"

He believes in investing in people during the early stages.

"If you invest early stage, you invest in people. I usually invest into people that I know very well, that I've been following for a while,"

But don't mistake this for a casual approach. Michael emphasizes a significant presence in B2B investments. "I certainly have a heavy concentration around B2B investments. I think that's just a space I understand better," he explains and adds,

"This is where I can help founders the most through connecting them with early customers and partners, coaches or experts in the field of go-to-market and the product-market fit processes."

Founder Selection Criteria

According to Michael, there's a paramount quality to look for in budding entrepreneurs – resilience that's akin to the cockroach's survival instinct. In his words,

"The number one character trait you wanna look for is that they need to be like cockroaches. As in; they can't be killed."

Think of the tenacious spirit of Richard Branson, who defied conventional norms to build a conglomerate that spans industries. Reflect on the audacious vision of Daniel Ek, the mind behind the music streaming giant Spotify, who dared to disrupt an entire industry. And then there's the story of Amancio Ortega, who transformed a small dressing-gown workshop into the global fashion powerhouse, Inditex - one of the owners of Zara, Bershka, Pull&Bear and many more.

"Ultimately, you seek individuals who instill the belief that you can breach steel doors through sheer unwavering resilience and an exceedingly optimistic attitude.

But Michael's founder selection criteria aren't confined to resilience and optimism. He delves further, emphasizing the significance of humility and curiosity. Founders who not only weather storms but also approach challenges with an open mind and a thirst for learning are the ones who thrive in the dynamic world of startups.

But on top of that, I also look for people that are very humble and bring a natural curiosity to the game,"

While an individual's strengths are undoubtedly essential, Michael's perspective unveils a different facet – the significance of a cohesive founder team.

In his view, the real magic unfurls when this team is not only individually strong but also impeccably aligned in terms of their incentives and shared objectives. This alignment, Michael believes, serves as the bedrock upon which an entire startup's narrative and journey are constructed. He elaborates:

"You want a strong founder team that is a hundred percent aligned in terms of incentives as that just builds a great foundation for the story and journey of a company."

This synergy within the founder team cultivates an environment where challenges are confronted head-on, decisions are reached cohesively, and the startup's trajectory is propelled forward with unwavering energy. Michael recognizes this unity as a pivotal catalyst for the triumphant evolution of a startup's narrative, as in many instances of startup failure, it's not the business model or the technological solution that falters. Surprising to many, it's often the dynamics within the founding team that ultimately unravel the venture. This resonates with Michael's approach:

"I've been through difficult founder periods myself, where there were dynamics in the founder team that needed to be sorted out."

Drawing from his own experiences, he recognizes the vital role of having an angel investor who possesses a knack for resolving such challenges. This is particularly crucial as it ensures that a founder isn't solely reliant VCs that are going to participate in future funding rounds to navigate internal conflicts:

"You may not open up to the same level to your VC investor."

And truly, this is where angel investors shine as mentors. They offer a level of guidance and empathy that can be difficult to attain with investors evaluating if they wanna support you in the coming rounds. Having access to such trusted mentorship can prove invaluable during tough times.

In the larger picture, Michael views this as a means of substantial risk mitigation. Startup journeys are seldom smooth; challenges and periods of turmoil are almost certain. With the presence of angel investors, founders gain a safety net – an experienced guide who has weathered similar storms, ready to assist in traversing the uncharted territories of team dynamics.

Embracing the Global Horizon: Angel Investing Without Borders

Michael Wax's journey in angel investing is far from confined to a single location. His endeavors echo a resounding truth – the realm of startup investments knows no geographical boundaries.

While he resides in Munich, his business operations are headquartered in Berlin, sprawled across more than 20 locations worldwide. The global nature of his enterprise extends to six offices in Asia and multiple spots across Europe. His immersion in diverse cultures and markets lends a unique perspective to his angel investment pursuits. He candidly shares:

"I travel pretty much every week of the year, more or less so, I'm certainly not tied to Munich as my core investment location."

This mobility reflects the new-age reality where investor footprints transcend hometowns. It's an ethos that highlights the significance of international collaboration and the recognition that groundbreaking opportunities exist beyond a single city.

As such, diversity not only characterizes his travel schedule but also the fabric of his investment portfolio. Michael's approach is nothing short of a vibrant mosaic, with investments stretching from Munich to Berlin, London, Madrid, and even across the Atlantic to the United States. He acknowledges, "I think it's a pretty, pretty colorful mix." It's a strategic decision that mirrors the dynamic landscape of startup ecosystems worldwide.

The COVID-19 era has propelled technological innovation, allowing for interactions that transcend borders. Michael underscores this transformation, noting,

"I think we were probably able to raise a bit more than $450 Mn on Zoom in a period where we couldn't meet lead investors in person."

Consequently, Michael's engagement in the global venture network is palpable, as he maintains a roster of 60 to 70 co-investors from the angel side. And importantly, his network isn't merely a collection of contacts; it's a vibrant ecosystem that promotes knowledge exchange, deal-sharing, and collaboration. He explains,

"It allows you to learn, it allows you to basically also keep deal flow up and also share deal flow."

Venturing even further, Michael's commitment to growth shines through his LP investments in VC funds.

I have 8-10 LP investments in VC funds where there's also active deal sharing and participation in doubling down on some of the most promising ones where they feel like I can be particularly helpful.

This diversified involvement underscores Michael’s holistic approach to startup investing and underscores the essential role of collaboration.

Michael Wax's journey encapsulates the evolution of angel investing in the global age. It's a testament to the power of adaptability, collaboration, and the unyielding pursuit of innovative opportunities that transcend borders. As we embrace this interconnected era, his story reminds us that the world of angel investing is ever-expansive, offering boundless horizons for those who dare to explore.

Michael’s learnings from Angel Investing

Michael's advice echoes with wisdom as he stresses, "So I think it's first and foremost you gotta build up a portfolio." The foundation of a successful angel investor lies in a robust and diversified portfolio. The concept of placing all bets on a single investment may yield miraculous results, yet the probabilities lean towards the contrary. Diversification emerges as the elixir to mitigate risks and amplify potential gains.

Calculating the Equation of Diversification

Michael has outlined a clear strategy for his angel investments, but he acknowledges the dynamic nature of the field. His goal is to strike a balance between deal flow and personal excitement, aiming to make around three to five investments each year. Keeping a consistent ticket size ranging from $25,000 to $30,000, he maintains a level of flexibility. He has ventured both above and below this range, with his largest investment reaching around $50,000 and his smallest being approximately $15,000.

For budding investors Michael advises that they should consider if their capital can support "10 plus investments," marking the threshold where a portfolio becomes statistically significant. But the concept of diversification goes beyond quantity. Michael highlights, "Make sure you diversify ideally in terms of vintages...topics and markets." A strategic blend of investments spanning various sectors and timeframes shields against undue risks and positions investors to ride the tide of market trends.’

Reflecting on his approach, he concurs with a challenge Anthony pointed out—making decisions solely based on conviction can prove intricate. Michael's past inclination has leaned toward slightly larger investments, particularly in later-stage opportunities. Yet, he remains humble about the complexities of this choice. He recognizes the ever-evolving nature of startup journeys, which can only truly be assessed over the span of eight to ten years. In this dynamic landscape, strategic decision-making persists as a thought-provoking endeavor, where there is no definitive formula for success. Similarly, the discourse on whether to double down on successful ventures or diversify further presents an ongoing debate, highlighting the nuanced nature of angel investing.

The Art of Long-Term Value Creation

Michael's insights aren't confined to numbers alone; they are rooted in fostering long-lasting partnerships.

"Making sure both sides go happy from the deal is just super essential if you wanna do this for multiple decades,"

A deal's success isn't measured solely in profits; it's measured in the satisfaction and value it generates for all parties involved. This philosophy underpins his approach to investment, transcending short-term wins in favor of building lasting relationships.

A Marathon, Not a Sprint

Delving into the temporality of investments, Michael underscores the virtue of patience.

“There were instances when I believed certain companies were poised for rapid success, only to witness them encountering challenges. Conversely, there were also companies I thought were struggling, yet their trajectory defied expectations and headed in a completely different direction.”

The startup journey isn't confined to a sprint; it's a marathon. His words carry a valuable lesson in resilience, reminding investors that the trajectory of startups is an unpredictable odyssey.

Balancing Priorities: The Reality of Commitment

Yet, Michael's role extends beyond the realms of investments. He candidly admits, "I'm CEO of a company that's going through a massive growth period right now." Acknowledging the juggling act of responsibilities, he affirms his commitment to investing, albeit in the "magic time" carved amidst a whirlwind of activities. His transparency serves as a testament to the delicate art of managing multifaceted roles.

The Quest for Sustainable Impact

Michael's approach resonates with authenticity and humility. "I love to share my experience along the way and see how the founders grow," he says. Beyond mere investments, his intention is to empower founders and cultivate growth. This philosophy embodies the essence of angel investing – a journey where financial gains are intertwined with fostering meaningful impact.

Strategic Foresight: Balancing Conviction and Caution

Navigating the landscape of investment decisions, Michael recognizes the complexity of conviction. "It's fair to think about this in such a sophisticated way," he concedes. The blend of analytical reasoning and instinct shapes an investor's choices. He acknowledges that while the path of angel investing isn't a gamble, it bears similarities in terms of uncertainties and risks.

🔫 The Quickfire Round 🔫

What's the most counterintuitive thing you've learned since you started Angel Investing?

That's some of the best companies you initially think are gonna do great, will fail very quickly.

What would be your top tips to Angels wanting to do more international investments?

Start with LP investments.

What advice would you give your 10 year younger self if you only had 30 seconds?

Take a lot of risk early. Then make sure you don't forget to enjoy life and never lie to yourself.

Europe is amazing 🚀 And some ecosystems are moving very fast, despite what you might think. Learn more about which and why in Affinity’s latest unicorn report 👀

Download the full report here