The Lowdown | 7.11.22
The show & newsletter that wraps up the week in European Venture with some of the key people making the headlines.
Welcome to this week’s edition of The EU VC Lowdown 🗞️ The show that wraps up the week in European Venture with some of the key people making the headlines.
Table of Contents (now hotlinked!🥳)
Listen & subscribe to the audio version of The Lowdown here 🎧
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 🥳
US vs EU: The Battle of the 🦄's
The new unicorn report by Affinity & Dealroom is out and we’re well-entertained 🤓 Read on for our take on some of it or download it directly here:
And join us for our live session tomorrow at 4 PM CET as we try to make sense of the current cycle. ‘Cos honestly, even the most experienced investors say “I have no clue” 🤷♂️ Hopefully, we’ll get closer by putting the question to the our expert panel on the 8th of November at 4 PM CET - we sincerely hope you’ll want to come join us! 😍
Our expert panel for the webinar will be:
Holla from Web Summit ‘22
We caught up with our main man Enis from 500 Emerging Europe. Look at the love. You’d think we hadn’t seen him for years. Tbh, this is the spirit of the LP syndicates incarnated 💖
At the summit, yours truly had the pleasure to moderate a panel on the venture stage with Sabina Wizander from Creandum, Carmen Alfonso Rico from Cocoa, and Anthony Saleh from WndrCo (& Kendrick Lamar’s new manager - where does this guy get the time!?).
The conversation revolved around: "how bad is it really right now?" and Sabina put together a pretty damn summary:
First of all its different for early stage and late stage. It is very quite in growth right now, and if you are a series D company already turning over ~50- 100m going profitable is probably one of your best paths
If you are early stage however, you most likely don't have a path to profitability, and your reason of being is to scale the company. That means you can not stop being obsessed with growth. That means growth will still be one of the most important KPIs. It is however about growing at the right cost - with healthy unit economics (as it always should have been!).
Hiring great talent as an early stage start-up has never been easier, option programs for big companies are not valuable right now, and most of them have cut people (and even for people not let go its not the most fun situation)
Early stage rounds are still happening, and fantastic founder building 10x better products in large market will get great investors onboard, to valuations closer to the trends up until 2019 (2020-2021 outliers)
There has never been a better time to back early stage founders. This cohort will only have founders that are in it for the right reasons, not looking for a quick exit, and they will build the right muscles for long term success:
Focus + Growth at the right cost.
David, being the hotter of us 🔥, was of course also invited to MC the venture stage. Look at them moves 👇
Thanks Websummit for having us!
This week’s podcasts 🎧
The European VC, #125 John Dutton, World Economic Forum, & Sandra Osborne Kartt, ImpactAssets
Today's episode is a special one, as we are happy to welcome John Dutton, Head of UpLink at the World Economic Forum, as our co-host. John will tell you all about the Innovative Funds for our Future. And as our guest, we welcome Sandra Osborne Kartt, Managing Director of Investments at ImpactAssets.
In this episode you’ll learn:
A rare peak into how the WEF’s Uplink supports the VC ecosystem
How Sandra as an important LP in multiple climate funds thinks about their investments
How the funds were selected for the Innovative Funds Program and what's to come
An opinionated but loving run-through of the selected funds by Andreas, John and Sandra
The European VC #124 Special Episode - Braving Innovation at EUVC - Nada Ahmed
Today's episode is a special one, as we share with our audience the amazing content from Nada Ahmed, from the Braving Innovation Podcast. Nada hosts conversations with global leaders in the field of Innovation, Technology and Leadership. She dives into transformational stories from startup founders and thought leaders in Innovation and Venture Capital. And this time, the tables were flipped, as David and Andreas acted as her guests.
In this episode you’ll learn:
How David and Andreas found their way into venture and hooked up to build EUVC
Why we need to preach VC to the wider ecosystem and how it might be done
How syndicated LP investments can help build your career in venture and get you ready for greatness at any stage of your journey
Why and how skill, network and diversification are the key factors that the EUVC LP syndicates focus on building
Churn FM Ep 186: Hubert Palan
How Productboard prioritizes their backlog and defines retention-driving products strategy
In this episode, Andrew Michael talks with Hubert Palan, Founder, and CEO of Productboard. They talked about:
Hubert’s experience as an early hire at GoodData through their rapid expansion and how it ultimately led him to discover the pain that Productboard now solves.
How Productboard prioritizes their product backlog and defines their product strategy.
Why understanding your ideal customer profile is critical in building a retention-driving product
how layering on a services component can have a big impact on customer churn for your enterprise customers.
This week’s GIFs & Memes 🙊
Real footage of tourist VC having deployed all of fund I in ‘21
Same VC figuring out portfolio model for fund II
When Family Office LP joins the portfolio demo day
Generalist VC at first working activity with DeepTech founder
This week’s LP syndicate news 💸
What the hell are the EUVC Syndicates really about?
We’re a vested community of founders, operators, angels, VCs, & LPs. We invest in & with the best and double down on building real connections that make a difference.
We want to make a difference - for the founders we invest in, for the investors we invest with and for the world we live in.
We’re active investors and we don’t like hang-arounds. Join us if you’re serious about being part of a vested community of VC insiders that add value.
We optimize for impact and prioritize the investors with the biggest commitment and value add to the funds we invest in. While anyone can join the EUVC LP syndicate, the members of each individual syndicate is designed with the GP in question and optimized for strategic fit.
We focus on top performing VC funds that are committed to working actively with us. We prioritize funds that recognize the power of our investors and who will work proactively with us around co-investment opportunities and a mutual value-add.
We aspire to build a family, more than just a business.
LP perspectives with JD from Venture at Web Summit
Jeroen from Pacenotes (whose syndicate we’re btw currently closing oversubscribed 🎉) gave his perspectives on how to manage #LP relationships at the Venture 2022 in Lisbon.
Yana wrapped up the key takeaways:
LPs are no longer just looking for a firm to invest in, they want a firm they can actively collaborate with
Building trust is key (constant updates, being transparent on what is happening);
Market uncertainty prevails, but for upcoming funds is a good opportunity to invest since the valuations are back to normal;
#Emergingmanagers: write-offs should be communicated properly. It’s ok to have them, as long as you have an outlier in your portfolio.
And we took JD for dinner 🤣 and planned a Euro VC Gumball for ‘23 🚗🚓
This week’s stories 🗞️
Sifted’s done a great job compiling a list of (most of) the first time funds that have been raised in ‘22. Keeping my bro David’s post on phony fund sizes and definitions of “raised” in mind, I’d recommend fellow readers of this to also think of this as a hit list if you’re an LP looking for managers open for business - at least, many on that list are still raising for their final close 💖 so don’t hesitate to reach out!
Listen, before you speak 🦜
To be precise, I said:
I don't want to hear about your X startup. I'm doing LP investments, meaning only funds.
But I also said that if founders said:
Hey Andreas! I see that you're an LP and really doubling down on community - super cool! I also see that you're investing in 500 Emerging Europe and have written a really cool memo on their strategy. I especially loved the interview with Enis Hulli - what a guy! I'm building a [CEE country of choice] in [vertical] and think it's a really good fit for Enis because of [reason]. Is there any chance you might want to introduce me to him?
If they said that, I'd be more than willing to help them out!
So, I guess what I was trying to say was: selling 5-10% of a startup isn't like selling eggs at the market. If you don't care to figure out who the fuck I am: sorry, but not sorry, I can't help you. Or engage in a conversation where there's a 90% chance that you'll disregard my polite “no” just to try and convince me that your opportunity is great.
Funnily enough, the post had (some) founders concluding I was an angry old man and should take a chill pill. Hopefully, some others saw it and got the point.
Piotr made a hilarious comment to it though 👇 what a guy 😂
Funnily enough, I remember our webinar with Chris Wade from Isomer Capital on raising capital in the current market. In it, one of his pieces of advice for VCs fundraising was that they should listen before they started pitching. Understand who you’re talking to, understand what they’re looking for, understand what their timing is.
Much of the fundraising advice that VCs give their founders, they tend to forget themselves when raising. Have you ever?
Financial Times: The volatility laundering, return manipulation and ‘phoney happiness’ of private equity
FT put out a very interesting article on whether the illiquidity of VC and PE is a bug or feature - and speculating on whether there’s a conspiracy between GPs and (insituational) LPs to report false interim returns.
On the first part, I’m square in the “feature not a bug”-camp but that’s an on-going discussion you’ve probably met many times. The other part - of GPs and LPs colluding to boost interim results is somewhat less described I found. Let’s see what they say:
Similar to the idea that banks design financial products to cater to yield-seeking investors or firms issue dividends to cater to investor demand for dividend payments, we argue that PE fund managers boost interim performance reports to cater to some investors’ demand for manipulated returns.
. . . If a GP boosts or smooths returns, perhaps by strategically timing asset acquisitions and dispositions or by misstating the values of underlying assets, investment managers within LP organizations can report artificially higher Sharpe ratios, alphas, and top-line returns, such as IRRs, to their trustees or other overseers. In doing so, these investment managers, whose median tenure of four years often expires years before the ultimate returns of a PE fund are realized, might improve their internal job security or potential labor market outcomes.
Return manipulations can also produce significant paper wealth for LPs. For U.S. public pension LPs, this can marginally improve funding statuses or alter required contribution funding rates. Because PE returns are often quoted in IRRs, such return manipulations can even permanently window dress the PE fund’s end-of-life returns, which possibly protects LP investment managers in bad states.
Read the full article here for a more in-depth treatment that also dives into the “feature not a bug”-discussion.
Kate Clark put out an article on a subject I’ve been finding myself chatting with a couple of VCs about in Europe: Wonder how their LPs are feeling about these deals!?
But let’s recap the story:
Andreessen Horowitz has had quite a colorful autumn. The firm gave Elon Musk $400 million to help finance his messy effort to take Twitter private, a transaction The Economist said could go down in history as the “deal from hell.” It floated $350 million to Adam Neumann, the disgraced former WeWork founder, for his new startup, Flow.
And last week, according to online news site Semafor, the firm invested in a startup called Simple Things founded by Andy Rubin, the former Google executive who was previously accused of sexual misconduct and whose earlier electronics startup failed after raising $300 million in venture capital funding.
Topping the laundry list of concerns is the $44 billion Musk paid to buy Twitter, with Andreessen Horowitz’s help. The VC firm’s willingness to invest hundreds of millions of dollars without making Musk jump through any hoops—“no additional work required,” Marc Andreessen told Musk in a Signal message in April—tarnished investors’ trust in the firm, one person said. Giving Musk absolute control of Twitter, as The Information previously reported, raised further questions about the investment, the person said.
Kate Clark, The Information
Kate aptly goes on to point out that these are only a handful LPs and as she says:
“They and others don’t seem to be disgruntled enough that they would be willing to confront Andreessen Horowitz about their concerns—or walk away from investing in the firm’s future funds entirely. “
On social media, we’ve all also had a field day with the 40% haircut on their crypto fund, but tbh, that critique does fall without much weight when that same fund has already delivered 3x the money back. Which makes me think back to my chat last week with one of our syndicate investors:
Like it or not, a16z is a monster and they know how to make money.. But maybe it’d be nice to have them not back the likes of Neumann and Rubin 🤔
The hustle never ends.
The behavior of a giant. Nothing to add.
For those of us who tend to myopically follow the tech press, I thought I’d share a great post I stumbled on during the week. Aside from the rant against BBC which I’m incapable of either condoning or discrediting, I loved reading the yellow marked part ✊
This week’s funds 💵
DT Orbio Earth - €500k, pree-seed, energy - Germany
KE Mazi Mobility - €500k, pree-seed, electric motorbikes - Kenya
FR Yeasty - €500k, pree-seed, beer - France
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This week’s hires 👩💼
🇩🇪 EQT Ventures - Investor Venture Lead Tech / Product - Berlin
🇬🇧 ZINC - VC Senior Associate - London
💻 First Momentum Ventures - VC Associate - Online
💻 Deel - Chief of Staff - Remote
🇬🇧 Entrepreneur First - Fundraising Analyst Program Team - London
🇩🇪 voiio - Chief of Staff to the CEO - Berlin
🇬🇧 Venchr - Senior Consultant - London
🇩🇪 Carbon13 - Program Officer - Berlin
💻 Orbify - Growth Lead - Online
💻 Binance - Investment Associate - Online
🇬🇧💻 Flash Ventures - Co-Founder FinTech - London, Online
🇩🇪 Bridgemaker Portfolio - Chief Executive Officer - Munich
🇬🇧 Kindred Capital VC - Community Lead - London
🇰🇪🇳🇬💻 Catalyst Fund - Principal, Africa - Nairobi, Lagos, Online
🇫🇷 Accor - Innovation Product Manager - Paris
🇪🇪💻 Superangel - VC Analyst - Tallinn, Hybrid
🇩🇪 REIMANN INVESTORS - Visiting Analyst Internship - Munich
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Thx for reading and being awesome 💗 we love you for it.