The Lowdown | 14.10.22
Welcome to this week’s edition of The EUVC Lowdown 🗞️ The show that wraps up the week in European Venture with some of the key people making the headlines. In the newsletter, we’re gonna cover:
This week’s events
This week’s podcasts
This week’s GIFs & MEMEs
This week’s LP syndicate news
This week’s story: who are VCs kidding with their phony fund sizes?
This week’s funds
This week’s hires
Listen & subscribe to the audio version of The Lowdown here 🎧 we covered:
State of mental health in European VC? by Andreas ✌️LP Hypeman
2022 VC Events - where do we go from here? by Csongor Biás
What’s the coverage model for VC in Europe? by Andreas ✌️LP Hypeman
UrbanTech in Europe - what’s happenin’? by Mark Harré
Avrio - a new tool for research in VC? by Andrew Michael
This week’s events 🥳
Next up is our EUVC Cookout at Websummit! 🧑🍳 If you haven’t yet applied to join make sure to do so! 👇
Program of the day
1:00 PM - Tapas & chill
2:30 PM - Professional program 👩🏫 💬
4:30 PM - ☕ break with 🎂🍥🍰
5:15 PM - Professional program 😴
6:00 PM - Tasting Portugal - regional 🍷, 🫒 and 🛢️
7:00 PM - Cooking our dinner together 🧑🍳
20:30 PM Munch tiiime 🤤
LATE: End of program - i.e. wasted 😵
& as always, 🪣’s of love for Affinity.co for supporting us in connecting Europe 💖
This week’s podcasts 🎧
The European VC, #118 Juan Alonso-Villalobos, Startup Wise Guys
In this episode, we’re happy to welcome Juan Alonso-Villalobos, Partner of Startup Wise Guys. This year, we had the pleasure of recording with Juan at How To Web in Bucharest.
In this episode you’ll learn
– How the SWG accelerator works and interplays with their funds
– How Juan thinks about LP profiling and why nailing this is so central
– How SWG builds their ecosystem around verticalized accelerators and funds
– What FinTech solutions Juan sees coming to the venture industry and how it’ll impact us
The European VC #117 Mich Halsband, Lunar Ventures
Today we are happy to introduce you to Mick Halsband, Founding GP of Lunar Ventures, a deep tech seed stage investor, backing technical founders solving problems in big markets.
Mick is a CTO and a software architect. He has two decades of key roles at startups and multinational leading tech firms. Led software development for embedded mobile, realtime systems, computer graphics, computer vision, and trading infrastructure.
In this episode you’ll learn:
– What's happened at Lunar Ventures since their launch last year and how founders have reacted to their position as the most technical VC in Europe
– How Mick thinks about the state of deeptech in Europe and the technologies he’s most excited about
– Why Mick sees Bucharest and Romania as one of the most promising deeptech hubs in Europe
The UrbanTech VC #03 The use of public spaces – a restaurant owner’s view - Fabio Haebel, CIRCUS
Today we are happy to welcome Fabio Haebel, Founder and CXO of CIRCUS, a ghost kitchen operator. We will be talking about public spaces in urban areas, not the obvious topic for a Michelin star chef and entrepreneur, right? Tune in for more insightful ideas from this amazing guest.
In this episode you’ll learn:
– Why everyone should have an experience officer
– Why the use of public spaces is major issue all over the world and what are the implications of moving big companies to the outskirt of cities
– How sustainability can play a key role in new projects of public funding
– How it is possible to bring classic restaurant food without opening an actual classic restaurant, using ghost kitchens
This week’s GIFs & Memes 🙊
Tiger Global and Coatue these days 👇
The difference between emerging manager who should raise a fund vs three guys wanting to raise a fund 👇
Every founder, VC staffer & GP Getting Ready for WebSummit 👇
This week’s LP syndicate news 💸
500 Emerging Europe is spreading & growing
Last week we announced 500 EE’s 70M€ fund, this week we’re happy to share proof of that growth. Esat Acar, their VP has moved to Warsaw, Poland where he will be engaging more with the startups, VC funds, accelerator programs, angels, and all ecosystem players in Poland and the surrounding ecosystems.
And the majority of the team members have been traveling, participating in & even organizing events, and worked in different countries in Central Eastern Europe - a snapshot counts Romania, Croatia, Germany, Hungary, Poland, and Denmark, this last month alone. We ourselves at EUVC had the pleasure to meet the team at no less than three of those 💞 Next month will spell Talinn, Belgrad, Helsinki and of course Lisbon.
We love seeing 500 EE flexing their muscles across the whole region.
Expect great things 🚀
And finally, Selin Esin has joined the team as a Talent Analyst. She will be responsible for talent mapping, meeting and recruiting top tech talent in Turkey, overseeing internal people management processes, supporting portfolio during hiring processes, building leadership teams, and organizational design.
Selin started her studies in Cognitive Neuroscience and Psychology at the University of Nottingham, before transferring to and graduating from Koc University with a bachelor’s in Psychology. She has also been a member of the “Global Turks par Excellence” project, aiming to create a diaspora among the most prominent Turkish talents living abroad.
During her free time, Selin enjoys making ceramics, playing tennis, and traveling to rural destinations. Welcome to the family, Selin!
Cristobal Alonso commits to writing a cookbook 🧑🍳
Well, this maybe isn’t the most important news of the VC scene this year, but we gotta hand it to the guy: that is commitment. And I do believe there’s some solid reasoning behind it. Let’s hear it from the man.
+ Cooking is one of those ways in which I can show love to people.
+ Cooking for my team and our startups somehow makes you more human, you are not the CEO, you are not their investor, I am just Cristobal Alonso cooking for them.
+ While I must admit I don’t interact much during these cooking nights (cooking is hard work my friends), I always feel it creates a special atmosphere in the room, some of the most magical moments for people to get to know each other happen during and after those dinners.
+ Cooking for large groups somehow brings me back to my Grandma Piki’s (my Dad´s mum) kitchen during Christmas or a Sunday family gatherings. A magical place in my mind (the sounds, the smells, the conversation, her love)
+ And yes, I must admit, I love the challenge, to always surprise them a bit, to be able to get the right amount, at the right time, satisfying vegans, vegetarians, different nationalities and manage ways to hit their spots.Cristobal Alonso, CEO & GP, Startup Wise Guys.
With a portfolio of more than 300 startups, I guess it makes sense that even this crazy Spaniard has to find a way to scale his cooking 🤔
Think a small LP investment via the LP syndicate might get you a seat at the table? Well, maybe. But that’d require you moving fast, ‘cos we’re wiring the last €€’s these days 😂 .. I’ll close this on a pic from the evening 👇
Pacenotes moving really fast 💸
This isn’t actually a headline from the portfolio, but rather from the syndicate. And it’s a rather self-indulging one, i.e. just me enjoying to see our Pacenotes allocation filling up really quickly 🏃♀️💨
Thx everyone for supporting us and Jeroen Van Doornik in building one of Europe’s new strong Emerging LPs ✌️.
Learn more about Pacenotes and join us in backing the team here.
This week’s story 🗞️
This week’s segment I wanna dedicate to our dear David’s article in Sifted. Hope you enjoy it as much as I did.
Who are VCs kidding with their phony fund sizes?
The original take below on Eminem’s Lose Yourself was inspired by a real story that happened this year to an emerging European VC fund manager. Hit play, turn up the volume & give it a read 🎧
All joking aside, the anecdote reveals the worrying state of transparency and clarity in European venture, especially when it comes to misleading announcements of new funds raised.
I’ve seen everything from funds announced in the media that aren’t even incorporated yet, pre-first close funds announcing the target size of the fund as being raised or, to make it a bit more concrete, firms announcing their fund size when they only have like 0.02% of the capital effectively raised.
I love the hustle mindset; truly. But I also love transparency and honesty. And I dare say I love integrity above all.
This behaviour has real consequences on our beloved venture ecosystem — most of them negative. I’ll go into those in detail below, and talk about how we need more clarity around capital raised in Europe, while still staying ambitious.
This behaviour has real consequences on our beloved venture ecosystem — most of them negative.
Founders
Let me start with founders, the atomic unit of the venture ecosystem. Without entrepreneurs, all of us, VCs and LPs alike, wouldn’t exist. The practice of announcing funds that aren’t raised or purposefully inflating what has been raised so far leads to founders wasting their time when reaching out to VCs. And what are founders supposed to think when they see headlines like: “Firm A announces first close of €Xm, targeting a €XXm final close”, “Firm B closes fund of €Ym” or even “Firm C is fundraising a fund with target size of €Zm”.
I cannot count how many stories I’ve heard — in the last month alone! — of founders trying to raise from fund managers just to realise, a couple of months in, that they have no money.
VC Investors
As we move up the venture value chain, more issues arise. As an emerging LP myself, I speak with emerging VC fund managers every day. When I do due diligence on a new VC firm or syndicate, I often ask other GPs (general partners) for their view on the specific fund or team. More than once, VCs have mentioned that they have seen funds in the market speaking about inflated raise figures.
More and more VCs in Europe are following US practices of co-investing and collaborating more. This is great, and a huge opportunity for emerging managers. Announcing funds that do not exist, or inflating the numbers, creates trust issues between parties. We all have very little time, so please don’t waste it.
Announcing funds that do not exist, or inflating the numbers, creates trust issues between parties. We all have very little time, so please don’t waste it.
LPs
Coming back to our opening Eminem segment, this practice also affects LP appetite — something I have witnessed first-hand. A lot could be told about trust and perception towards venture as an asset class; but that’s similar to perspective above.
This of course has implications for the perception of venture as an asset class, but let’s look at it from a different perspective as well. Say I’m raising an early-stage €30m VC fund to back biotech companies, particularly in drug development, in southern Europe. I have a stellar team, and early access to all tech being developed at R&D centres through a right-of-first-refusal agreement in exchange for carry (a cut of the upside) to fund R&D at these often money-strapped organisations.
If another GP announces a €50m fund to do the same, or even something similar, LPs may very well ask if there is enough dealflow for that capital and whether you can get into the best deals. This is all good and fair if it were true. I have seen LPs completely dismiss GPs because they assume these announcements are true.
Impact on the ecosystem
It goes without saying that this short-sighted practice hinders the whole ecosystem and is a disservice to those actually succeeding in raising a VC fund (whether it’s a €5m microfund, or an astonishing €1b fund). It would be easy to point our fingers at some and put the blame on them but, honestly, we are all responsible!
LPs should be held accountable because they should reference check before building any type of conviction. VC investors should be held accountable because they just shouldn’t be doing this! Ecosystem builders (accelerators, incubators, tech event organisers, etc) should be held accountable to cross-check before inviting “pseudo” VCs to their events, pitch days, panels and so on. Media should be held accountable because journalists have a responsibility to interrogate news and not just print whatever is fed to them. Founders should be held accountable because they should publicly call out the VCs who do misrepresent themselves, just as much as they should celebrate the VCs who are doing good work.
Bringing more transparency into VC in Europe
VC’s older brother, private equity, is a good role model for best practice — and I almost hate myself for saying this as I’m quite vocal about the negative aspects of VCs in Europe having such a strong PE background. The whole PE ecosystem understands the dynamics of fund structures better than most stakeholders in the VC/startup ecosystem.
What can we do in our little “cottage” industry to get better? I think we can do, at least, three simple things:
Educate — All stakeholders who are serious about their involvement in the industry must learn the basics of VC fund structures and their dynamics. There are many free (and paid) programmes out there that do this quite well.
Do basic due diligence — We can always ask around and request the documentation to prove whatever information is being provided by a VC fund. Remember that VCs operate under tight regulations and there are things VCs can and cannot say. We tend to be very lenient in the industry, but one can ask and request a lot of documentation to check.
At least freaking ask — It’s the least we can do to start holding everyone accountable so the whole ecosystem gets better. Remember, VCs are regulated and should not be evasive in answering this question. In fact they cannot inflate values when asked directly.
This week’s funds 💵
🇳🇱 Newion - €130m, fund 4, early-stage, B2B-SaaS - Amsterdam
🇨🇿 Credo Ventures - €75m, fund 4, 🌍 CEE, final close - Prague
🇱🇺 MiddleGame Ventures - €40m, seed, fintech - Luxembourg
🇬🇧 Black Seed - £5.6m, fund 1, diversity - London
Thx to InnovatorsRoom for creating this list 💖
This week’s hires 👩💼
🇩🇪 Ananda Impact Ventures - Investment Professional - Berlin
🇦🇹🇩🇪🇬🇧 Speedinvest - Visiting Associate - Vienna, Berlin, London
🇬🇧 Octopus Ventures - Investment Manager B2B Software - London
🇬🇧 Crisis - Strategic Partnership Lead - London
🇩🇪 Foundamental - VC Fellowship program 2022 - Berlin
🇬🇧 SIS Ventures - Investment Manager - Edinburgh, Hybrid
💻 Sequence - Founder Associate - Remote
🇩🇪 Deutsche Bank - Corporate VC Principal - Berlin
🇫🇷 2050 - VC / PE Internship - Paris, Hybrid
🇬🇧 TempoCap - Senior Associate - London
🇬🇧 WeGift - Chief of Staff - London
🇬🇧 BECO Capital - VC Associate Web3 - London
🇩🇪 Companisto - Investment Manager - Berlin
🇩🇪 adesso SE- Investment Analyst / Manager - Berlin, Hamburg
🇩🇪 Pups Yoga - Entrepreneur in Residence Internship - Berlin
🇫🇷 Earlybird Venture Capital - VC Analyst Internship - Paris
💻 Wi Venture - Visiting Analyst Impact - Mainz, Hybrid
🇫🇷 École Polytechnique - Startup Manager - Paris
🇩🇪 Enpal - Entrepreneur in Residence - Berlin
🇫🇷 OSS Ventures - CEO / Cofounder - Paris
Thx to InnovatorsRoom for creating this list 💖
That’s it for this week - seems someone thinks it’s time dad kicks off the weekend 🥳 Have a great one everyone 🙏
I’m sooooo looking forward to the EUVC cookout in Lisbon ❤️❤️