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      "permlink": "pedro-santos-vieira-on-founders-helping-founders-in-the-shilling-founders-fund",
      "title": "Pedro Santos Vieira on Founders Helping Founders in the Shilling Founders Fund",
      "body": "This is an exclusive interview with [Pedro Santos Vieira](https://www.linkedin.com/in/santosvieira/), Founding Managing Partner of [Shilling Founders Fund](https://www.shilling.vc/founders-fund).\n\n🎧 To get this interview straight in your ears, listen [wherever you get your podcasts](https://linktr.ee/theeuropeanvc). \n\n🔎 To check out all the European VC champions we’ve interviewed [go here](https://untamedpotential.com/). \n\n# A little bit about Pedro Vieira\nPedro Vieira is a founding and managing partner at the Shilling Founders Fund. In this interview, we dive deep with Pedro on everything from raising the fund, how they’ve strategically designed their LP-base for superior value add to their investment, and portfolio management strategy. We have also featured Pedro in a previous interview where we learned more about his time as Europe & Africa Lead at 500 Startups and the creator of West to West.\n\nhttps://i1.wp.com/untamedpotential.com/wp-content/uploads/2021/08/EUVC-Profile-pedro.jpg?w=1800&ssl=1\n\n**Some things you’ll learn from Pedro:**\n\n* Why do Pedro and Shilling share part of their profit with founders of the portfolio companies.\n* Shilling’s SLA with founders: in thirty days you’ll have money in the bank or a no-go.\n* How an institutional investor can tackle the pre-seed space in the south of Europe.\n* How to think about partnering with founders and other VCs for a competitive edge.\n\nIf you’d like to listen to more of these meetings with European VC champions, follow the [EUVC Podcast](www.theeuropeanvc.com).\n\nDavid: We’ve recently welcomed Pedro Santos Vieira, and he is here once more because he has awesome news to share.\n\nAndreas: Yes, we want to shift things around and pass it right on to Pedro and let him introduce himself and give us the update.\n\nPedro: Thanks guys, those are very kind words. It’s great to be back on such short notice. People will read this in the previous interview: I’m an entrepreneur turned investor and I’ve been working with this investor hat in different ways: as an angel, then later as an institutional investor at 500 Startups and now, more recently, with Shilling, which is an investment fund anchored in Portugal – and of which I think we’ll talk about a little bit more today.\n\n> The initial target was 20 million and we’re way past that, very close to the hard cap of 30 million, and the way we went about it was by leveraging the track record of the team, investing with previous vehicles.\nPedro Santos Vieira\n\nAndreas: Yes, absolutely. I think we’re going to be talking a lot more about it because this is an interview dedicated to Shilling and there’s nothing that we want to push more than the agenda of emerging managers in Europe. So let’s kick it right off and dive into fundraising. We’re going to go through all the basics of a VC fund, we’re going to be looking first at fundraising, then we’re going to talk about the investment thesis and strategy, then deal flow – How do they create deal flow? Why do founders pick you instead of someone else? How do you create value for the startups? And in the end, we’re going to touch on fund management and decision making. But right now let’s deep dive into fundraising. Let us know Pedro, how did you make it to where so many haven’t yet, which is raising a fund?\n\nPedro: Let me share some context for everyone: we are kicking off a fund of 30 million to invest in early-stage technology – pre-seed and seed tickets. The initial target was 20 million and we’re way past that, very close to the hard cap of 30 million, and the way we went about it was by leveraging the track record of the team, investing with previous vehicles. Shilling, as a brand, has existed for about eight to nine years now, investing as a group of angel investors under the same brand and the track record for that team is very good. \n\nI’ve joined the team six months ago, roughly, to help institutionalize a new fund, and that’s the fund we’re talking about today. This fund is going to be branded as the Shilling Founders Fund and it is a fund from founders to founders in many different ways. In the investment team, we are all founders, we’ve all had our companies with smaller or bigger exits and we bring that perspective into the investment decision process. But, we’re also building the fund around what we call a pool of LP founders. These are people who have also had their own venture successes, building up their companies and their teams in global settings, and are now liquid enough that they decided to invest in us, support our mission with capital, but also with know-how and expertise. They will be available for our portfolio companies and they are available even before the companies become portfolio companies – they help us scout deals, and help us with deal flow – we’ll talk about deal flow later. But this pool of highly successful people will be there to help us push out this mission of a fund, which is from founders to founders. \n\n> It’s way more effective to have someone who’s been through your pains in your segment of your industry, in your region, walk you through what they’ve learned, and help you with shortcuts and tricks of the trade to fast track your growth. That’s done more effectively in a small setting than on a batch of 20 or 30 companies.\nPedro Santos Vieira\n\nAndreas: I think that’s super cool Pedro and maybe we should dwell on that a bit because you have an LP base that consists of different types of LPs. In your case, you have the founder LPs, but I guess you also have institutional ones, maybe with some of them being pension funds or funds of funds. Could you elaborate on how you have thought about the LP make-up and what are you looking for, as value-add, from the LPs?\n\nPedro: Yes! We try to have a balance of institutional and then other individuals in our case, maybe slightly more skewed towards individuals, which are the founder LPs that help us with the portfolio. These are people that invest relatively small cheques when compared with the institutionals. I can’t speak right now in detail about the institutionals that we have on board, but I can tell you there are some promising names and maybe when this interview gets published, it will be public. We have some pretty cool LPs, including other European VCs who are betting on our team as the Southern European partner for them.\n\nAs you know, from our previous interview, I come from the world of global acceleration programs from 500 Startups, and I have a lot of experience designing these programs and running them. We believe that the acceleration model is already past its current format, it needs reinvention. The way I think about our base of LP founders is they will help us with what we call the experience-based acceleration. It’s way more effective to have someone who’s been through your pains, in your segment of your industry, in your region, walk you through what they’ve learned, and help you with shortcuts and tricks of the trade to fast track your growth. That’s done more effectively in a small setting than on a batch of 20 or 30 companies and we’re betting on that big time.\n\nAndreas: Just out of curiosity. Do you know By Founders in Denmark?\n\nPedro: Yes but I don’t know the team personally. We’re not claiming we’re reinventing the wheel…\n\nAndreas: No, that’s not what I’m suggesting. Just let me know if you want an intro, I’d be happy to hook you up. They’re cool guys.\n\nPedro: Yes, I’d be happy to meet them! And again, without crossing conversations here, one of the other things we believe it’s unique in our approach is the premium network of co-investors, both European and American, that we’re bringing to Southern Europe. Schilling is, probably, the brand that has done the biggest number of co-investments with tier one VCs in Europe, they’re there for us. We’ve designed the investment thesis for this fund focused on pre-seed and seed, exactly to avoid competing with these European VCs on the series A stage, for example. So, the incentives are super aligned, and we believe that these partnerships are only going to get stronger over time.\n\nAndreas: That is something that I would love to double click on, because you said that you are backed by other VCs in Europe, betting on Shilling. That’s a very interesting new development that we’re seeing in Europe. Would you tell us how you’ve thought about that and how you’ve managed to make it happen? And also, because you know so much about the European ecosystem, what do you see it doing to the ecosystem at large?\n\nPedro: Well, there are a lot of parts to that question. Let’s try and oversimplify it first, and then we can go deeper. Any VC wants vetted deals – to have access to deals of which you have already when you start the conversation with the founders, a high level of certainty that are good deals. And, at the same time, you’re trying to stay focused on your investment stage and your region. It, it’s hard for midsize (when compared to the Silicon Valley funds where I come from) VCs in Europe to do all of this at the same time. So, it’s very important to have partners with whom you’re aligned in terms of the investment thesis and, more importantly, in terms of incentives. By making this clear split between phases, or stages, you remove any conflicts of interest and make it very easy for us to be the go-to brand in Southern Europe, where other European and Silicon Valley VCs see that we are a good source of deal flow. It’s very easy for us to take and open up a conversation, coming from an introduction from them. And, if they have some of their capital already invested in us as an LP, that’s an even stronger alignment. That’s what we’re building.\n\n> We’re all founders and we’re bringing even more founders as LPs that will help the companies. We’re not financiers investing in metrics on a spreadsheet, we know how to build companies and how to help you do it.\nPedro Santos Vieira\n\nDavid: We should shift to investment thesis and strategy. Pedro, you were quite clear about the secret sauce here: from founders to founders. Leveraging founders, basically. And also, knowing you and some of the partners behind Shilling, that secret sauce becomes very clear. But I want to give you the spotlight for a minute. To our readers who might not know you or Shilling as a brand yet, what is your secret sauce and what is your investment thesis?\n\nPedro: That comment reminds me of one thing that I think is important to mention and, hopefully, it will be public by the time this interview goes live: we’re also instituting a profit-sharing model with our founder base. So, if you become a founder under Shilling, we will be sharing some of the proceeds from our carry with you and the other portfolio founders. That’s an extra incentive for the community of founders under Shilling to help each other. So, we’re bringing the “from founders to founders” motto to a whole new level. \n\nNow, to answer your question about the secret sauce. Other than the founders to founders, it’s a combination of factors and we’ve touched upon some of them already. So, it’s founders to founders, we’re all founders, we’re bringing even more founders as LPs that will help the companies. We’re not financiers investing in metrics on a spreadsheet, we know how to build companies and how to help you do it.\n\nThe second thing is the international networks that we bring. I’ve mentioned the networks of co-investors in Europe and the US because I come from Silicon Valley, having spent a decade and a half there. Miguel Santo Amaro, and others who you guys know, have been very active in the European scene, and a series of my partners have been active in VC and PE in Europe, and we believe that those networks are also going to be very interesting. A core part of our value proposition is accelerating out of Southern Europe and into the global markets. So, we’re not just investing in small players, in small markets. We are investing in things that we can accelerate out of here, therefore it’s important to have these international networks to support them. And then, I think the profit-sharing model will create an extra incentive to bring in the founders. I believe that these are the key things when it comes to attracting the best deals and then helping them scale out of this market.\n\nDavid: Let me follow up on that. If I’m a founder reading this, why should I reach out to you? What are you guys looking for? What gets you guys excited and makes you tick?\n\nPedro: I’ll answer that question in two parts. What gets us excited is founders with a big vision, ambition and the skills to back that up – no BS, we see through the cracks, and we’ve told stories ourselves, so we can tell storytellers from others. We look for a strong team with the capability to solve the problem that they’re targeting, addressing big markets. And, in terms of sectors, we are a sector-agnostic fund. There are a couple of things where we will not invest in – capital intensive sectors like life sciences or very expensive to build hardware. We will invest in hardware if the unit economics make sense, and in direct-to-consumer places, for example. We’ve already announced publicly one of our investments in a hardware company that builds electric skateboards. They are trying to revolutionize the future of urban mobility and trying to enter extreme sports at the same time. I think it’s going to be cool to see how they evolve – Hunter Boards, that’s the name. We will not invest in anything that takes a long time to get to market, because our fund has a limited lifetime, and we want to see the returns delivered to our LPs as quickly as we can.We are raising a fund amidst the pandemic, which is interesting because we were able to raise it so fast. But we also want to take this as an advantage and an opportunity to invest in sectors that are being accelerated by the pandemic. We are going after sectors like the future of work, digital health, marketplaces, and other things that are being accelerated by more things going online and the increasing the digitalization of some industries – things like digital health, future of work, eCommerce, FinTech, collaboration and developer tools. We have the know-how and we have the network to do that. Another thing we’ve started doing is to use the know-how of these LP founders to tell us where the industries are going, and it helps us a lot to direct the deployment of capital.\n\n> We focus on the stage and then we try to use these experts in our LP base and our own team, to have dedicated sub-teams.\nPedro Santos Vieira\n\nAndreas: Emerging managers are often advised to focus on a sector, don’t go broad, and don’t say that you can do it all. I’m guessing that this is connected to your secret sauce, but please explain to us why do you go for an industry-agnostic route rather than being very narrow-focused?\n\nPedro: I would say we focus on stage, and by focusing on stage we’re reducing the uncertainty. It would be easier to be focused on one stage, one region, and one industry or one segment, but that would leave us with very little deal flow. Therefore, we are mitigating our risk by focusing on the stage – pre-seed and seed. \n\nAnd we haven’t talked about the ticket size in detail, yet. We’ll be doing pre-seed deals up until €100k with a decision process that’s very fast. Our value proposition goes like this: in 30 days, you’ll either have money in the bank or a no go from us. And we’ll do seed tickets up until around €500k, going slightly higher if needed, and then follow-ons up to a million, million-and-a-half.\n\nGoing back to your point, we focus on the stage and then we try to use these experts in our LP base and our own team, to have dedicated sub-teams. So, for example, we have one expert who invested in us as an LP, that understands the cloud world and cloud services very well. He has helped us screen deals in this space and, eventually, we invested. We now have a board seat in that company, it’s called Vawlt, and it does multi-cloud services security. We will continue using the expertise of these founders so we’re not spread tooth thin. I’m optimistic that we’re going to be able to pull it off and the results will tell in a few years.\n\nDavid: One question merging two topics that we talked about: This network of founders seems quite hands-on at a certain stage. How did you manage to buy them into your vision, and to align the interests? They’re more than LPs, right? It’s not a traditional LP relationship. How do you manage that operational collaboration?\n\nPedro: Actually, I’ll pick up on the latter part of that, which is the operational side of building all this. We have built, and we’ll continue building, a platform around this concept. We have a head of platform working for us full time, who we just hired out of a very good VC in Europe. I think we can claim we’re the first fund in Europe to have a platform and a head of platform helping us connect the dots, both people and tool wise, so we’re supporting the portfolio in that way.In terms of the incentives and how were we able to get these LPs on board: once the founder always a founder – and I speak from the heart because I’m one of those cases. These are people who want to stay close to the market, regardless of how much money they’ve made. We have LPs who sold companies for over a billion dollars, but they remain close to other founders and now they want to be able to pay it forward, to give back to the community. Many of them are of Portuguese descent or they’re connected to the Portuguese ecosystem, so that helps the conversation. Many of them come from the Portuguese tech mafia in San Francisco, which I helped to grow over the last 10 years, with that being another selling point. And some of them are internationals who’ve had experiences living in Portugal or working in Portugal. They understand the value of what’s happening in the Portuguese ecosystem in the last five years or so, they want to be a part of it, and this is an easy way. It’s like: “here are some dollars, I’m going to help you multiply them by helping the companies you’re investing in.” You know, why not? It’s a no brainer.\n\n> One thing that we’re also going to push hard is to continue being a key contributor to establishing Portugal as the new EU tech hub.\nPedro Santos Vieira\n\nAndreas: I must then ask about deal flow because it’s very closely connected to these guys. Pedro, please take the floor and let us know how do you think of deal flow and how do you make sure that you are the pick of the founders?\n\nPedro: Again, splitting this in two:\n\nOne is brand awareness and making sure they know we exist.\nAnd the second thing is to convince them to work with us.\nThe latter, I think, is another no brainer. Our track record speaks for itself as builders – I’m not even talking about as investors, I’m saying as builders – so it’s easy to explain how we can help the companies, both us and the LP founders.\n\nRegarding the former, in terms of building up the deal flow, it’s deeply related to brand awareness. Shilling, for the last few months, has been fairly quiet because we were fundraising. But before that, it was a top brand in the Southern European ecosystem – and I would say even more, or broader than that. Now we’re going to continue pushing the boundaries of deal flow attraction. \n\n60% of our capital will be deployed in Portuguese entities, but the remaining is flexible. Between my networks in the US and Silicon Valley, and my partners’ in Europe, we’re already looking and entering deals that are coming from outside Portugal and we will continue doing so. I’m not going down the road of saying we’re going to do events, and we’re going to do this and that. That’s what everyone else does and we’ll continue doing it. But our personal networks and these founder LPs are helping us a lot to enter in the best deals very early, even if it’s with a small ticket initially, but with the ability to continue following-on, and that’s where we think a lot of the returns may come from. We’ll continue with that strategy of attracting deal flow to us.\n\nOne thing that we’re also going to push hard is to continue being a key contributor to establishing Portugal as the new EU tech hub. And to do that, we will prove to founders outside Portugal, and in Portugal obviously, that we are smart capital, that we invest with founder-friendly terms and we have the networks that will help them with their follow-on money. We are very good at designing fundraising rounds because we’ve done it ourselves. \n\nWe also believe that we can attract international founders to come to accelerate out of Portugal, because:\n\nOne it’s a good place to live, everyone knows that there’s a high quality of life for the founders and their families. And it’s a safe place – religious acceptance, etc, etc.\nTwo there’s talent availability. There are gaps in some segments, as in everywhere, but there’s a bunch of different tax and fiscal policies now in place that we think will attract foreign talent to come to Portugal.\nThree, we have the networks – between us, our partners in Portugal, and the members of our investment committee – that allow these foreign founders to come to Portugal and pilot these things in the top telco, in the top bank, in the top insurance companies, in the top health group…\nAnd that’s a really interesting value proposition because it’s like: “spend a few months here in Portugal, work with us, work with the prospective clients we’re bringing you, validate your product probably at one-fifth of the cost, and then we’ll help you fundraise your next round and you go address the global markets”. Again, it’s a no-brainer, right?\n\nAndreas: That’s interesting, Pedro. You are doing international deals, but at the same time, you’re also talking about bringing founders to Portugal. We just had a chat with a VC that is doing international rounds also at the very early stage – pre-seed and seed – and they’re doing it 100% remote, have done that for 12 years and will continue doing it like that. That sounds like it’s not your case.\n\nPedro: I think we have a mixed approach. We are doing things that are here and they’re not remote, and we are also doing remote deals. But let me make one thing clear, we’re not just going to invest in a good deal because it’s a good deal, it’s an international deal with tier one partners in Silicon Valley and, since I know them, they give me a small allocation and we write a ticket for that. We’re not going to do that. We will do it if we have a connection to the company and the founding team, and we see a clear way to support their growth. That’s the only way for us to write a ticket into these international deals.\n\nWe’re flexible, we’re a bunch of founders, we’re malleable. We’re not black and white on leaving the deals. We like to be the first institutional money in, and we’ll continue working for that, but we’re not going to say no to a deal if we’re not leading. We’re about to announce a very interesting deal on a pre-seed company that got into Techstars, we invested alongside them, and it’s not because the company was entering Techstars that we didn’t invest. We will do this on a deal by deal basis but, again, always striving to be first institutional money if we can.\n\n> It’s great to have LPs who sold their companies to Cisco, who you can call and ask their opinion about a deal on a broader industry context, and that helps us mitigate the risk in these pre-seed deals.\nPedro Santos Vieira\n\nAndreas: Then I’ve got one question: what are your views about doing pre-seed deals? It is a stage that many have shied away from before because it’s too early, too many of them fail, they need too much help, etc. How do you look at this and why do you believe you can do pre-seed?\n\nPedro: Again, it’s our background as doers. We started stuff from scratch, so it’s easier for someone who’s done it to access if there is a potential path for success or not. We can make that assessment in a somewhat more comfortable way than other financier VCs. On the other hand, we’re also mitigating our risk as a fund by making sure that the percentage of capital going into these pre-seed deals is limited. Only 15% of the fund will be deployed as pre-seed tickets, because we also have to look after the interest of our LPs, and we will manage risk that way. Another other thing is our ability to understand from our networks where the industries are going. From there it’s very easy for us to shoot an email or make a phone call and say: “Hey, we’re looking into this pre-seed deal. It’s so early we have no clue if the industry is going to take it or move this way.” And we get industry insights from that. It’s great to have LPs who sold their companies to Cisco, who you can call and ask their opinion about a deal on a broader industry context, and that helps us mitigate the risk in these pre-seed deals.\n\nDavid: So Pedro, we had value creation strategy as the next topic, and I feel like we’ve been tiptoeing around it so much that I’ll be repeating what you said. So let’s play with it a bit, I’ll try and put it out there and you’ll tell me if I got it right, to make sure the readers get it. \n\nIt seems there are two major pillars to your value creation strategy, that attract me as a hypothetical founder and make me want to work with you. \n\nFirst, you guys are founders, are operators, so I can count on you for support, not only on the strategy and development of my venture but also you have that operational background of taking a thing from zero to a huge tech success story. Not only you and the partners but also your LPs have that background. So, one of the big core building blocks of that valuation strategy is the support on strategy operations, or even piloting for a fraction of the price because you can leverage those arbitrage opportunities. \nSecond, the follow-on. So, it’s not only smart money, it’s not only the ability to get capital and support to make that capital efficient, but also you guys have awesome brands, awesome track records, and you have the institutional connections through the fund to get those follow-on rounds. \nDid I pitch you well  or is there something missing?\n\nPedro: Very good summary! Let me emphasize the second part which is, in emerging markets, it’s easier to raise capital from local investors, but there’s a big risk that you get stuck with them and then you can’t make the leap to international VC. We mitigate that risk and break that barrier, by bringing in a family of co-investors.\n\nDavid: We’re looking into data on the round-to-round percentage of success and that after your first institutional money, that’s a really tough place to play.\n\nPedro: I can give you a number on that. Shilling, so far, has had a 60x multiplier on capital-on-capital raised. So Shilling has invested about three and a half million up until now, with all its funds initially, and these companies have raised over 210-220 million in follow-on rounds. That speaks for what I was just saying, about us helping the companies with their next rounds.\n\n> If it’s not a fit for us, we’re not going to push our way in and we’ll help them design the next round, we believe good will come back to us by doing that.\nPedro Santos Vieira\n\nDavid: So, for founders, that means you’re not only getting the money, you’re getting a whole platform that will support you through that growth process – and that’s why you have the platform, I guess. \n\nPedro: Yeah. And I can tell you, we’ve had multiple conversations within the context of the new Shilling Founders Fund where we understood that a deal wasn’t a fit for us in the round that the founders were designing. Nonetheless, we still gave them feedback and insights on how to design that round to the best of their advantage. And we’ll continue playing that role. If it’s not a fit for us, we’re not going to push our way in and we’ll help them design the next round, we believe good will come back to us by doing that.\n\n> One-to-one knowledge transmission, or knowledge sharing, is always more effective than one-to-many. That was the point I was trying to make with our model of the LP founders.\nPedro Santos Vieira\n\nAndreas: Pedro, we love bashing things when there’s something to bash and you said something that sounded like we could tease you out to say something dangerous. [Laughs] You said that the old traditional accelerator model is dead, and you believe in experience-based acceleration. I’d love for you to expound on that and, if you really can put the accelerator model up as a piñata, please do!\n\nPedro: [Laughs] Well, now you put me in the hot seat. Just to be clear, I did not use the word dead…\n\nAndreas: No, no, no. You said that it’s ageing, or it should be on pension… [Laughs]\n\nPedro: I did indicate that it is at a point where it’s changing, it’s under revision, it’s under evolution, however you want to call it. There are still good acceleration programs out there. They’re becoming more focused on verticals, or regions for example, and there’s a lot of value in that. And so, my point was that they’re evolving. And the second point I made at that stage was that one-to-one knowledge transmission, or knowledge sharing, is always more effective than one to many. That was the point I was trying to make with our model of the LP founders. And best of luck to all my friends running accelerators, they know what I’m talking about, and this is not news to anyone.\n\n> So, the tricky part with accelerators, and that’s what I think Shilling was able to solve, is the operational cost of an accelerator and an acceleration program. We’ve not just flipped the model upside down, we found ways that allow for the people who bring the knowledge, to also bringing the capital.\nPedro Santos Vieira\n\nAndreas: No, but I think that this goes for accelerators just as for angels. We have some very good ones out there, then it became a very sexy area and, for that reason, there are many who probably shouldn’t be doing it, but who are nonetheless.\n\nPedro: Exactly. The risk when something seems easy to do is that everyone wants to do it and then, on average, the quality of the product in the market may lower. There are a lot of accelerators out there that shouldn’t exist. So, what we need to continue doing is to educate our founders on which ones are worth it, and which ones are not. As you know, I just came from the 500 Startups world, so I can’t bash the accelerator programs in general. I think bashing stereotypes is always shooting your foot, but there are things to improve in accelerators. I think all the key brands – YC, Techstars, 500 Startups, etc – know about this, and they’ve been evolving their models. So, the tricky part with accelerators, and that’s what I think Shilling was able to solve, is the operational cost of an accelerator and an acceleration program. We’ve not just flipped the model upside down, we found ways that allow for the people who bring the knowledge, to also bringing the capital. Typically, an accelerator pays the mentors for them to train the companies. And we’re bringing in these people, they train the companies, and they give us money. I really hope this works!\n\nAndreas: Pedro, let’s shift the focus to fund management and decision making, this of course includes the investment process. Would take us through how do you manage your fund and how do you make sure that you make sound investment decisions?\n\nPedro: So we’re organized with the five partners as an investment team, between the five of us we’ll quickly decide on the pre-seed tickets, up to a €100k, and the assessment leverages the different profiles in the team. We have some of us with strong experience in the consumer space, others on enterprise SaaS marketplace, we mix it up and we can always go back to our networks and ask for advice. These are quick decisions, up to 30 days for money in the bank, or a no go. \n\nThen we have an investment committee, which is constituted of another five partners. Those are the five founding partners of Shilling. They were deploying capital together, as angels, under the Shilling brand, and come from very diverse sectors: retail, insurance, M&A, real estate, telcos, etc. They help us look into the bigger tickets. Our investment team of five will prepare the typical investment memos and will have enough validation, or not, for the deals, but these extra five people in our investment committee will help us with that assessment.\n\nAnd we’re also building an advisory committee, which won’t be a formal contributor to the investment decision but can shed some light on the strategy of the funds every quarter, roughly.\n\nI must say that I’ve been peppering the conversation with some of the numbers instead of dumping them all in my introduction, I hope they don’t get lost. Between the 10 partners that I just mentioned, we are investing 2 million out of our pockets and that constitutes almost twice the industry average for the 20 million fund if we raise a 20 million fund. The skin in the game from these people, in the investment committee and the investment team, completely aligns incentives. And then we have the head of platform that I already mentioned, we have analysts that are helping us screen the deals and assess them before we get to the final investment decision.\n\nAndreas: You have been dropping bread crumbs along the way regarding the numbers of the fund, but it would be fun to have a rundown. If you would then go through, what are the ticket sizes? What are your reserve allocations, and so on so forth?\n\nPedro: Happily! So, recapping: Shilling Founders Fund is going to be a 30 million fund with a hard cap of 30 million. We will invest 15% of that capital in pre-seed tickets up to €100k. About a third of the fund, maybe slightly more, for seed deals that can go up to €500k, and then follow-ons of another third, maybe up to 45% of the fund. We will be investing in multiple sectors and we don’t have a formal breakdown for those. We will be focused on things and sectors that are profiting from the pandemic. We believe that the next two years are going to be very good for us if we double-down and triple-down on the industries that are benefiting from accelerated digitalization. We have a diverse pool of LPs. 7% to 10% of the capital is from the GPs. Everything else is typical for LPs, the typical management fees and carry structure around 2% and 20%, with a step up to 30%, if the fund does really well. \n\nHistorical data on Shilling: we have unrealized results of about 5x multiplier on capital invested. Let’s hope we can do even better than that on the next one, we’ll see. I would be happy with that on this much bigger fund. \n\nDavid: Let me round that off with something you might be too humble to say: it’s a team of freaking rock stars. So, if you’re a founder out there looking for the best founders to support you, I would recommend trying it out. In the worst-case scenario, in 30 days you have a no, so not that bad, right?\n\nAndreas: And what happens Pedro, if we have people in Germany reading this and saying: these guys sound cool. I want to get money from them?\n\nPedro: We’re working on a new website, which may be live by the time this interview goes live, and there’s an open door for founders to not just submit the pitches to us. Also, they can actually schedule office hours with me and my investment team so, if they’re in doubt about Shilling and if they think that we can help them somehow, they can reach out very easily. But we need to understand that we are going to be able to help them with our networks, even if they’re a German company or from elsewhere in Europe. So there has to be a connection to us or Portugal somehow.\n\nDavid: Pedro, thank you very much, we really enjoyed this chat. Thank you for this masterclass on VC. I’m sure our readers will really benefit from it. I had a blast and I know Andreas did as well. We’ll be here to echo all news about Shilling and yourself, so do count on us to help you spread the word. I’m looking forward to talking to you again, soon.\n\nPedro: Thank you for the kind words, you guys are the rock stars, not me. Happy to come back, hopefully with the next big IPO out of Shilling, some unicorn or something like that. The results will have to speak for themselves for you guys to invite me back, right?\n\nDavid: We’ll hold you onto that one and we’ll reach out the second we know of rumours of something interesting going on with Shilling. \n\nPedro: Happy, happy to come back. I always have fun in this podcast, and I highly recommend it to other folks out there in the industry.\n\nAnd this wraps up our interview with Pedro Vieira, Founding Managing Partner of Shilling Founders Fund.",
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      "title": "Pedro Santos Vieira on Founders Helping Founders in the Shilling Founders Fund",
      "body": "This is an exclusive interview with [Pedro Santos Vieira](https://www.linkedin.com/in/santosvieira/), Founding Managing Partner of [Shilling Founders Fund](https://www.shilling.vc/founders-fund).\n\n🎧 To get this interview straight in your ears, listen [wherever you get your podcasts](https://linktr.ee/theeuropeanvc). \n\n🔎 To check out all the European VC champions we’ve interviewed [go here](https://untamedpotential.com/). \n\n# A little bit about Pedro Vieira\nPedro Vieira is a founding and managing partner at the Shilling Founders Fund. In this interview, we dive deep with Pedro on everything from raising the fund, how they’ve strategically designed their LP-base for superior value add to their investment, and portfolio management strategy. We have also featured Pedro in a previous interview where we learned more about his time as Europe & Africa Lead at 500 Startups and the creator of West to West.\n\nhttps://i1.wp.com/untamedpotential.com/wp-content/uploads/2021/08/EUVC-Profile-pedro.jpg?w=1800&ssl=1\n\n**Some things you’ll learn from Pedro:**\n\n* Why do Pedro and Shilling share part of their profit with founders of the portfolio companies.\n* Shilling’s SLA with founders: in thirty days you’ll have money in the bank or a no-go.\n* How an institutional investor can tackle the pre-seed space in the south of Europe.\n* How to think about partnering with founders and other VCs for a competitive edge.\n\nIf you’d like to listen to more of these meetings with European VC champions, follow the [EUVC Podcast](www.theeuropeanvc.com).\n\nDavid: We’ve recently welcomed Pedro Santos Vieira, and he is here once more because he has awesome news to share.\n\nAndreas: Yes, we want to shift things around and pass it right on to Pedro and let him introduce himself and give us the update.\n\nPedro: Thanks guys, those are very kind words. It’s great to be back on such short notice. People will read this in the previous interview: I’m an entrepreneur turned investor and I’ve been working with this investor hat in different ways: as an angel, then later as an institutional investor at 500 Startups and now, more recently, with Shilling, which is an investment fund anchored in Portugal – and of which I think we’ll talk about a little bit more today.\n\n> The initial target was 20 million and we’re way past that, very close to the hard cap of 30 million, and the way we went about it was by leveraging the track record of the team, investing with previous vehicles.\nPedro Santos Vieira\n\nAndreas: Yes, absolutely. I think we’re going to be talking a lot more about it because this is an interview dedicated to Shilling and there’s nothing that we want to push more than the agenda of emerging managers in Europe. So let’s kick it right off and dive into fundraising. We’re going to go through all the basics of a VC fund, we’re going to be looking first at fundraising, then we’re going to talk about the investment thesis and strategy, then deal flow – How do they create deal flow? Why do founders pick you instead of someone else? How do you create value for the startups? And in the end, we’re going to touch on fund management and decision making. But right now let’s deep dive into fundraising. Let us know Pedro, how did you make it to where so many haven’t yet, which is raising a fund?\n\nPedro: Let me share some context for everyone: we are kicking off a fund of 30 million to invest in early-stage technology – pre-seed and seed tickets. The initial target was 20 million and we’re way past that, very close to the hard cap of 30 million, and the way we went about it was by leveraging the track record of the team, investing with previous vehicles. Shilling, as a brand, has existed for about eight to nine years now, investing as a group of angel investors under the same brand and the track record for that team is very good. \n\nI’ve joined the team six months ago, roughly, to help institutionalize a new fund, and that’s the fund we’re talking about today. This fund is going to be branded as the Shilling Founders Fund and it is a fund from founders to founders in many different ways. In the investment team, we are all founders, we’ve all had our companies with smaller or bigger exits and we bring that perspective into the investment decision process. But, we’re also building the fund around what we call a pool of LP founders. These are people who have also had their own venture successes, building up their companies and their teams in global settings, and are now liquid enough that they decided to invest in us, support our mission with capital, but also with know-how and expertise. They will be available for our portfolio companies and they are available even before the companies become portfolio companies – they help us scout deals, and help us with deal flow – we’ll talk about deal flow later. But this pool of highly successful people will be there to help us push out this mission of a fund, which is from founders to founders. \n\n> It’s way more effective to have someone who’s been through your pains in your segment of your industry, in your region, walk you through what they’ve learned, and help you with shortcuts and tricks of the trade to fast track your growth. That’s done more effectively in a small setting than on a batch of 20 or 30 companies.\nPedro Santos Vieira\n\nAndreas: I think that’s super cool Pedro and maybe we should dwell on that a bit because you have an LP base that consists of different types of LPs. In your case, you have the founder LPs, but I guess you also have institutional ones, maybe with some of them being pension funds or funds of funds. Could you elaborate on how you have thought about the LP make-up and what are you looking for, as value-add, from the LPs?\n\nPedro: Yes! We try to have a balance of institutional and then other individuals in our case, maybe slightly more skewed towards individuals, which are the founder LPs that help us with the portfolio. These are people that invest relatively small cheques when compared with the institutionals. I can’t speak right now in detail about the institutionals that we have on board, but I can tell you there are some promising names and maybe when this interview gets published, it will be public. We have some pretty cool LPs, including other European VCs who are betting on our team as the Southern European partner for them.\n\nAs you know, from our previous interview, I come from the world of global acceleration programs from 500 Startups, and I have a lot of experience designing these programs and running them. We believe that the acceleration model is already past its current format, it needs reinvention. The way I think about our base of LP founders is they will help us with what we call the experience-based acceleration. It’s way more effective to have someone who’s been through your pains, in your segment of your industry, in your region, walk you through what they’ve learned, and help you with shortcuts and tricks of the trade to fast track your growth. That’s done more effectively in a small setting than on a batch of 20 or 30 companies and we’re betting on that big time.\n\nAndreas: Just out of curiosity. Do you know By Founders in Denmark?\n\nPedro: Yes but I don’t know the team personally. We’re not claiming we’re reinventing the wheel…\n\nAndreas: No, that’s not what I’m suggesting. Just let me know if you want an intro, I’d be happy to hook you up. They’re cool guys.\n\nPedro: Yes, I’d be happy to meet them! And again, without crossing conversations here, one of the other things we believe it’s unique in our approach is the premium network of co-investors, both European and American, that we’re bringing to Southern Europe. Schilling is, probably, the brand that has done the biggest number of co-investments with tier one VCs in Europe, they’re there for us. We’ve designed the investment thesis for this fund focused on pre-seed and seed, exactly to avoid competing with these European VCs on the series A stage, for example. So, the incentives are super aligned, and we believe that these partnerships are only going to get stronger over time.\n\nAndreas: That is something that I would love to double click on, because you said that you are backed by other VCs in Europe, betting on Shilling. That’s a very interesting new development that we’re seeing in Europe. Would you tell us how you’ve thought about that and how you’ve managed to make it happen? And also, because you know so much about the European ecosystem, what do you see it doing to the ecosystem at large?\n\nPedro: Well, there are a lot of parts to that question. Let’s try and oversimplify it first, and then we can go deeper. Any VC wants vetted deals – to have access to deals of which you have already when you start the conversation with the founders, a high level of certainty that are good deals. And, at the same time, you’re trying to stay focused on your investment stage and your region. It, it’s hard for midsize (when compared to the Silicon Valley funds where I come from) VCs in Europe to do all of this at the same time. So, it’s very important to have partners with whom you’re aligned in terms of the investment thesis and, more importantly, in terms of incentives. By making this clear split between phases, or stages, you remove any conflicts of interest and make it very easy for us to be the go-to brand in Southern Europe, where other European and Silicon Valley VCs see that we are a good source of deal flow. It’s very easy for us to take and open up a conversation, coming from an introduction from them. And, if they have some of their capital already invested in us as an LP, that’s an even stronger alignment. That’s what we’re building.\n\n> We’re all founders and we’re bringing even more founders as LPs that will help the companies. We’re not financiers investing in metrics on a spreadsheet, we know how to build companies and how to help you do it.\nPedro Santos Vieira\n\nDavid: We should shift to investment thesis and strategy. Pedro, you were quite clear about the secret sauce here: from founders to founders. Leveraging founders, basically. And also, knowing you and some of the partners behind Shilling, that secret sauce becomes very clear. But I want to give you the spotlight for a minute. To our readers who might not know you or Shilling as a brand yet, what is your secret sauce and what is your investment thesis?\n\nPedro: That comment reminds me of one thing that I think is important to mention and, hopefully, it will be public by the time this interview goes live: we’re also instituting a profit-sharing model with our founder base. So, if you become a founder under Shilling, we will be sharing some of the proceeds from our carry with you and the other portfolio founders. That’s an extra incentive for the community of founders under Shilling to help each other. So, we’re bringing the “from founders to founders” motto to a whole new level. \n\nNow, to answer your question about the secret sauce. Other than the founders to founders, it’s a combination of factors and we’ve touched upon some of them already. So, it’s founders to founders, we’re all founders, we’re bringing even more founders as LPs that will help the companies. We’re not financiers investing in metrics on a spreadsheet, we know how to build companies and how to help you do it.\n\nThe second thing is the international networks that we bring. I’ve mentioned the networks of co-investors in Europe and the US because I come from Silicon Valley, having spent a decade and a half there. Miguel Santo Amaro, and others who you guys know, have been very active in the European scene, and a series of my partners have been active in VC and PE in Europe, and we believe that those networks are also going to be very interesting. A core part of our value proposition is accelerating out of Southern Europe and into the global markets. So, we’re not just investing in small players, in small markets. We are investing in things that we can accelerate out of here, therefore it’s important to have these international networks to support them. And then, I think the profit-sharing model will create an extra incentive to bring in the founders. I believe that these are the key things when it comes to attracting the best deals and then helping them scale out of this market.\n\nDavid: Let me follow up on that. If I’m a founder reading this, why should I reach out to you? What are you guys looking for? What gets you guys excited and makes you tick?\n\nPedro: I’ll answer that question in two parts. What gets us excited is founders with a big vision, ambition and the skills to back that up – no BS, we see through the cracks, and we’ve told stories ourselves, so we can tell storytellers from others. We look for a strong team with the capability to solve the problem that they’re targeting, addressing big markets. And, in terms of sectors, we are a sector-agnostic fund. There are a couple of things where we will not invest in – capital intensive sectors like life sciences or very expensive to build hardware. We will invest in hardware if the unit economics make sense, and in direct-to-consumer places, for example. We’ve already announced publicly one of our investments in a hardware company that builds electric skateboards. They are trying to revolutionize the future of urban mobility and trying to enter extreme sports at the same time. I think it’s going to be cool to see how they evolve – Hunter Boards, that’s the name. We will not invest in anything that takes a long time to get to market, because our fund has a limited lifetime, and we want to see the returns delivered to our LPs as quickly as we can.We are raising a fund amidst the pandemic, which is interesting because we were able to raise it so fast. But we also want to take this as an advantage and an opportunity to invest in sectors that are being accelerated by the pandemic. We are going after sectors like the future of work, digital health, marketplaces, and other things that are being accelerated by more things going online and the increasing the digitalization of some industries – things like digital health, future of work, eCommerce, FinTech, collaboration and developer tools. We have the know-how and we have the network to do that. Another thing we’ve started doing is to use the know-how of these LP founders to tell us where the industries are going, and it helps us a lot to direct the deployment of capital.\n\n> We focus on the stage and then we try to use these experts in our LP base and our own team, to have dedicated sub-teams.\nPedro Santos Vieira\n\nAndreas: Emerging managers are often advised to focus on a sector, don’t go broad, and don’t say that you can do it all. I’m guessing that this is connected to your secret sauce, but please explain to us why do you go for an industry-agnostic route rather than being very narrow-focused?\n\nPedro: I would say we focus on stage, and by focusing on stage we’re reducing the uncertainty. It would be easier to be focused on one stage, one region, and one industry or one segment, but that would leave us with very little deal flow. Therefore, we are mitigating our risk by focusing on the stage – pre-seed and seed. \n\nAnd we haven’t talked about the ticket size in detail, yet. We’ll be doing pre-seed deals up until €100k with a decision process that’s very fast. Our value proposition goes like this: in 30 days, you’ll either have money in the bank or a no go from us. And we’ll do seed tickets up until around €500k, going slightly higher if needed, and then follow-ons up to a million, million-and-a-half.\n\nGoing back to your point, we focus on the stage and then we try to use these experts in our LP base and our own team, to have dedicated sub-teams. So, for example, we have one expert who invested in us as an LP, that understands the cloud world and cloud services very well. He has helped us screen deals in this space and, eventually, we invested. We now have a board seat in that company, it’s called Vawlt, and it does multi-cloud services security. We will continue using the expertise of these founders so we’re not spread tooth thin. I’m optimistic that we’re going to be able to pull it off and the results will tell in a few years.\n\nDavid: One question merging two topics that we talked about: This network of founders seems quite hands-on at a certain stage. How did you manage to buy them into your vision, and to align the interests? They’re more than LPs, right? It’s not a traditional LP relationship. How do you manage that operational collaboration?\n\nPedro: Actually, I’ll pick up on the latter part of that, which is the operational side of building all this. We have built, and we’ll continue building, a platform around this concept. We have a head of platform working for us full time, who we just hired out of a very good VC in Europe. I think we can claim we’re the first fund in Europe to have a platform and a head of platform helping us connect the dots, both people and tool wise, so we’re supporting the portfolio in that way.In terms of the incentives and how were we able to get these LPs on board: once the founder always a founder – and I speak from the heart because I’m one of those cases. These are people who want to stay close to the market, regardless of how much money they’ve made. We have LPs who sold companies for over a billion dollars, but they remain close to other founders and now they want to be able to pay it forward, to give back to the community. Many of them are of Portuguese descent or they’re connected to the Portuguese ecosystem, so that helps the conversation. Many of them come from the Portuguese tech mafia in San Francisco, which I helped to grow over the last 10 years, with that being another selling point. And some of them are internationals who’ve had experiences living in Portugal or working in Portugal. They understand the value of what’s happening in the Portuguese ecosystem in the last five years or so, they want to be a part of it, and this is an easy way. It’s like: “here are some dollars, I’m going to help you multiply them by helping the companies you’re investing in.” You know, why not? It’s a no brainer.\n\n> One thing that we’re also going to push hard is to continue being a key contributor to establishing Portugal as the new EU tech hub.\nPedro Santos Vieira\n\nAndreas: I must then ask about deal flow because it’s very closely connected to these guys. Pedro, please take the floor and let us know how do you think of deal flow and how do you make sure that you are the pick of the founders?\n\nPedro: Again, splitting this in two:\n\nOne is brand awareness and making sure they know we exist.\nAnd the second thing is to convince them to work with us.\nThe latter, I think, is another no brainer. Our track record speaks for itself as builders – I’m not even talking about as investors, I’m saying as builders – so it’s easy to explain how we can help the companies, both us and the LP founders.\n\nRegarding the former, in terms of building up the deal flow, it’s deeply related to brand awareness. Shilling, for the last few months, has been fairly quiet because we were fundraising. But before that, it was a top brand in the Southern European ecosystem – and I would say even more, or broader than that. Now we’re going to continue pushing the boundaries of deal flow attraction. \n\n60% of our capital will be deployed in Portuguese entities, but the remaining is flexible. Between my networks in the US and Silicon Valley, and my partners’ in Europe, we’re already looking and entering deals that are coming from outside Portugal and we will continue doing so. I’m not going down the road of saying we’re going to do events, and we’re going to do this and that. That’s what everyone else does and we’ll continue doing it. But our personal networks and these founder LPs are helping us a lot to enter in the best deals very early, even if it’s with a small ticket initially, but with the ability to continue following-on, and that’s where we think a lot of the returns may come from. We’ll continue with that strategy of attracting deal flow to us.\n\nOne thing that we’re also going to push hard is to continue being a key contributor to establishing Portugal as the new EU tech hub. And to do that, we will prove to founders outside Portugal, and in Portugal obviously, that we are smart capital, that we invest with founder-friendly terms and we have the networks that will help them with their follow-on money. We are very good at designing fundraising rounds because we’ve done it ourselves. \n\nWe also believe that we can attract international founders to come to accelerate out of Portugal, because:\n\nOne it’s a good place to live, everyone knows that there’s a high quality of life for the founders and their families. And it’s a safe place – religious acceptance, etc, etc.\nTwo there’s talent availability. There are gaps in some segments, as in everywhere, but there’s a bunch of different tax and fiscal policies now in place that we think will attract foreign talent to come to Portugal.\nThree, we have the networks – between us, our partners in Portugal, and the members of our investment committee – that allow these foreign founders to come to Portugal and pilot these things in the top telco, in the top bank, in the top insurance companies, in the top health group…\nAnd that’s a really interesting value proposition because it’s like: “spend a few months here in Portugal, work with us, work with the prospective clients we’re bringing you, validate your product probably at one-fifth of the cost, and then we’ll help you fundraise your next round and you go address the global markets”. Again, it’s a no-brainer, right?\n\nAndreas: That’s interesting, Pedro. You are doing international deals, but at the same time, you’re also talking about bringing founders to Portugal. We just had a chat with a VC that is doing international rounds also at the very early stage – pre-seed and seed – and they’re doing it 100% remote, have done that for 12 years and will continue doing it like that. That sounds like it’s not your case.\n\nPedro: I think we have a mixed approach. We are doing things that are here and they’re not remote, and we are also doing remote deals. But let me make one thing clear, we’re not just going to invest in a good deal because it’s a good deal, it’s an international deal with tier one partners in Silicon Valley and, since I know them, they give me a small allocation and we write a ticket for that. We’re not going to do that. We will do it if we have a connection to the company and the founding team, and we see a clear way to support their growth. That’s the only way for us to write a ticket into these international deals.\n\nWe’re flexible, we’re a bunch of founders, we’re malleable. We’re not black and white on leaving the deals. We like to be the first institutional money in, and we’ll continue working for that, but we’re not going to say no to a deal if we’re not leading. We’re about to announce a very interesting deal on a pre-seed company that got into Techstars, we invested alongside them, and it’s not because the company was entering Techstars that we didn’t invest. We will do this on a deal by deal basis but, again, always striving to be first institutional money if we can.\n\n> It’s great to have LPs who sold their companies to Cisco, who you can call and ask their opinion about a deal on a broader industry context, and that helps us mitigate the risk in these pre-seed deals.\nPedro Santos Vieira\n\nAndreas: Then I’ve got one question: what are your views about doing pre-seed deals? It is a stage that many have shied away from before because it’s too early, too many of them fail, they need too much help, etc. How do you look at this and why do you believe you can do pre-seed?\n\nPedro: Again, it’s our background as doers. We started stuff from scratch, so it’s easier for someone who’s done it to access if there is a potential path for success or not. We can make that assessment in a somewhat more comfortable way than other financier VCs. On the other hand, we’re also mitigating our risk as a fund by making sure that the percentage of capital going into these pre-seed deals is limited. Only 15% of the fund will be deployed as pre-seed tickets, because we also have to look after the interest of our LPs, and we will manage risk that way. Another other thing is our ability to understand from our networks where the industries are going. From there it’s very easy for us to shoot an email or make a phone call and say: “Hey, we’re looking into this pre-seed deal. It’s so early we have no clue if the industry is going to take it or move this way.” And we get industry insights from that. It’s great to have LPs who sold their companies to Cisco, who you can call and ask their opinion about a deal on a broader industry context, and that helps us mitigate the risk in these pre-seed deals.\n\nDavid: So Pedro, we had value creation strategy as the next topic, and I feel like we’ve been tiptoeing around it so much that I’ll be repeating what you said. So let’s play with it a bit, I’ll try and put it out there and you’ll tell me if I got it right, to make sure the readers get it. \n\nIt seems there are two major pillars to your value creation strategy, that attract me as a hypothetical founder and make me want to work with you. \n\nFirst, you guys are founders, are operators, so I can count on you for support, not only on the strategy and development of my venture but also you have that operational background of taking a thing from zero to a huge tech success story. Not only you and the partners but also your LPs have that background. So, one of the big core building blocks of that valuation strategy is the support on strategy operations, or even piloting for a fraction of the price because you can leverage those arbitrage opportunities. \nSecond, the follow-on. So, it’s not only smart money, it’s not only the ability to get capital and support to make that capital efficient, but also you guys have awesome brands, awesome track records, and you have the institutional connections through the fund to get those follow-on rounds. \nDid I pitch you well  or is there something missing?\n\nPedro: Very good summary! Let me emphasize the second part which is, in emerging markets, it’s easier to raise capital from local investors, but there’s a big risk that you get stuck with them and then you can’t make the leap to international VC. We mitigate that risk and break that barrier, by bringing in a family of co-investors.\n\nDavid: We’re looking into data on the round-to-round percentage of success and that after your first institutional money, that’s a really tough place to play.\n\nPedro: I can give you a number on that. Shilling, so far, has had a 60x multiplier on capital-on-capital raised. So Shilling has invested about three and a half million up until now, with all its funds initially, and these companies have raised over 210-220 million in follow-on rounds. That speaks for what I was just saying, about us helping the companies with their next rounds.\n\n> If it’s not a fit for us, we’re not going to push our way in and we’ll help them design the next round, we believe good will come back to us by doing that.\nPedro Santos Vieira\n\nDavid: So, for founders, that means you’re not only getting the money, you’re getting a whole platform that will support you through that growth process – and that’s why you have the platform, I guess. \n\nPedro: Yeah. And I can tell you, we’ve had multiple conversations within the context of the new Shilling Founders Fund where we understood that a deal wasn’t a fit for us in the round that the founders were designing. Nonetheless, we still gave them feedback and insights on how to design that round to the best of their advantage. And we’ll continue playing that role. If it’s not a fit for us, we’re not going to push our way in and we’ll help them design the next round, we believe good will come back to us by doing that.\n\n> One-to-one knowledge transmission, or knowledge sharing, is always more effective than one-to-many. That was the point I was trying to make with our model of the LP founders.\nPedro Santos Vieira\n\nAndreas: Pedro, we love bashing things when there’s something to bash and you said something that sounded like we could tease you out to say something dangerous. [Laughs] You said that the old traditional accelerator model is dead, and you believe in experience-based acceleration. I’d love for you to expound on that and, if you really can put the accelerator model up as a piñata, please do!\n\nPedro: [Laughs] Well, now you put me in the hot seat. Just to be clear, I did not use the word dead…\n\nAndreas: No, no, no. You said that it’s ageing, or it should be on pension… [Laughs]\n\nPedro: I did indicate that it is at a point where it’s changing, it’s under revision, it’s under evolution, however you want to call it. There are still good acceleration programs out there. They’re becoming more focused on verticals, or regions for example, and there’s a lot of value in that. And so, my point was that they’re evolving. And the second point I made at that stage was that one-to-one knowledge transmission, or knowledge sharing, is always more effective than one to many. That was the point I was trying to make with our model of the LP founders. And best of luck to all my friends running accelerators, they know what I’m talking about, and this is not news to anyone.\n\n> So, the tricky part with accelerators, and that’s what I think Shilling was able to solve, is the operational cost of an accelerator and an acceleration program. We’ve not just flipped the model upside down, we found ways that allow for the people who bring the knowledge, to also bringing the capital.\nPedro Santos Vieira\n\nAndreas: No, but I think that this goes for accelerators just as for angels. We have some very good ones out there, then it became a very sexy area and, for that reason, there are many who probably shouldn’t be doing it, but who are nonetheless.\n\nPedro: Exactly. The risk when something seems easy to do is that everyone wants to do it and then, on average, the quality of the product in the market may lower. There are a lot of accelerators out there that shouldn’t exist. So, what we need to continue doing is to educate our founders on which ones are worth it, and which ones are not. As you know, I just came from the 500 Startups world, so I can’t bash the accelerator programs in general. I think bashing stereotypes is always shooting your foot, but there are things to improve in accelerators. I think all the key brands – YC, Techstars, 500 Startups, etc – know about this, and they’ve been evolving their models. So, the tricky part with accelerators, and that’s what I think Shilling was able to solve, is the operational cost of an accelerator and an acceleration program. We’ve not just flipped the model upside down, we found ways that allow for the people who bring the knowledge, to also bringing the capital. Typically, an accelerator pays the mentors for them to train the companies. And we’re bringing in these people, they train the companies, and they give us money. I really hope this works!\n\nAndreas: Pedro, let’s shift the focus to fund management and decision making, this of course includes the investment process. Would take us through how do you manage your fund and how do you make sure that you make sound investment decisions?\n\nPedro: So we’re organized with the five partners as an investment team, between the five of us we’ll quickly decide on the pre-seed tickets, up to a €100k, and the assessment leverages the different profiles in the team. We have some of us with strong experience in the consumer space, others on enterprise SaaS marketplace, we mix it up and we can always go back to our networks and ask for advice. These are quick decisions, up to 30 days for money in the bank, or a no go. \n\nThen we have an investment committee, which is constituted of another five partners. Those are the five founding partners of Shilling. They were deploying capital together, as angels, under the Shilling brand, and come from very diverse sectors: retail, insurance, M&A, real estate, telcos, etc. They help us look into the bigger tickets. Our investment team of five will prepare the typical investment memos and will have enough validation, or not, for the deals, but these extra five people in our investment committee will help us with that assessment.\n\nAnd we’re also building an advisory committee, which won’t be a formal contributor to the investment decision but can shed some light on the strategy of the funds every quarter, roughly.\n\nI must say that I’ve been peppering the conversation with some of the numbers instead of dumping them all in my introduction, I hope they don’t get lost. Between the 10 partners that I just mentioned, we are investing 2 million out of our pockets and that constitutes almost twice the industry average for the 20 million fund if we raise a 20 million fund. The skin in the game from these people, in the investment committee and the investment team, completely aligns incentives. And then we have the head of platform that I already mentioned, we have analysts that are helping us screen the deals and assess them before we get to the final investment decision.\n\nAndreas: You have been dropping bread crumbs along the way regarding the numbers of the fund, but it would be fun to have a rundown. If you would then go through, what are the ticket sizes? What are your reserve allocations, and so on so forth?\n\nPedro: Happily! So, recapping: Shilling Founders Fund is going to be a 30 million fund with a hard cap of 30 million. We will invest 15% of that capital in pre-seed tickets up to €100k. About a third of the fund, maybe slightly more, for seed deals that can go up to €500k, and then follow-ons of another third, maybe up to 45% of the fund. We will be investing in multiple sectors and we don’t have a formal breakdown for those. We will be focused on things and sectors that are profiting from the pandemic. We believe that the next two years are going to be very good for us if we double-down and triple-down on the industries that are benefiting from accelerated digitalization. We have a diverse pool of LPs. 7% to 10% of the capital is from the GPs. Everything else is typical for LPs, the typical management fees and carry structure around 2% and 20%, with a step up to 30%, if the fund does really well. \n\nHistorical data on Shilling: we have unrealized results of about 5x multiplier on capital invested. Let’s hope we can do even better than that on the next one, we’ll see. I would be happy with that on this much bigger fund. \n\nDavid: Let me round that off with something you might be too humble to say: it’s a team of freaking rock stars. So, if you’re a founder out there looking for the best founders to support you, I would recommend trying it out. In the worst-case scenario, in 30 days you have a no, so not that bad, right?\n\nAndreas: And what happens Pedro, if we have people in Germany reading this and saying: these guys sound cool. I want to get money from them?\n\nPedro: We’re working on a new website, which may be live by the time this interview goes live, and there’s an open door for founders to not just submit the pitches to us. Also, they can actually schedule office hours with me and my investment team so, if they’re in doubt about Shilling and if they think that we can help them somehow, they can reach out very easily. But we need to understand that we are going to be able to help them with our networks, even if they’re a German company or from elsewhere in Europe. So there has to be a connection to us or Portugal somehow.\n\nDavid: Pedro, thank you very much, we really enjoyed this chat. Thank you for this masterclass on VC. I’m sure our readers will really benefit from it. I had a blast and I know Andreas did as well. We’ll be here to echo all news about Shilling and yourself, so do count on us to help you spread the word. I’m looking forward to talking to you again, soon.\n\nPedro: Thank you for the kind words, you guys are the rock stars, not me. Happy to come back, hopefully with the next big IPO out of Shilling, some unicorn or something like that. The results will have to speak for themselves for you guys to invite me back, right?\n\nDavid: We’ll hold you onto that one and we’ll reach out the second we know of rumours of something interesting going on with Shilling. \n\nPedro: Happy, happy to come back. I always have fun in this podcast, and I highly recommend it to other folks out there in the industry.\n\nAnd this wraps up our interview with Pedro Vieira, Founding Managing Partner of Shilling Founders Fund.",
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      "title": "Kate Talbot, Expert Social Media & Marketing Strategist for Revered VC Firms",
      "body": "This is an exclusive interview with [Kate Talbot](https://www.linkedin.com/in/katetalbot/), founder of [Kate Talbot Marketing](https://www.katetalbotmarketing.com).\n\n🎧 To get this interview straight in your ears, listen to it [wherever you get your podcasts](https://linktr.ee/theeuropeanvc). \n\n🔎 To check out all the European VC champions we’ve interviewed [go here](www.untamedpotential.com).\n\n# A little bit about Kate Talbot\n\nKate Talbot is Senior Forbes contributor and Marketing strategist for great VC firms such as Plexo Capital, Community Fund and Flybridge. Kate has a background from working directly with none other than the famed Sir Richard Branson, in startups backed by revered firms such as Andreesen-Horowitz and has now started her own consultancy where she works with VCs on developing and executing their marketing strategy.\n\nhttps://i2.wp.com/untamedpotential.com/wp-content/uploads/2021/09/EUVC-Profil-Kate.jpg?resize=1024%2C1024&ssl=1\n\n**Some things you’ll learn from Kate:**\n\n* The importance of saying “Yes!”.\n\n* The strength of a well-crafted content marketing strategy & how to build it.\n\n* How to benefit from your ethos and use it to hack current media agendas and stand out from the crowd.\n\n*  Why marketing needs to be top of mind of any VC firm.\n\n*  How to humanize VC & make it leverage the power of community.\n\nIf you’d like to listen to more of these meetings with European VC champions, follow the [EUVC Podcast](www.theeuropeanvc.com).\n\n\nAndreas Munk Holm: Kate, I must say I’m a fanboy of Lo Toney and Plexo Capital, and I must get out here that you’ve done a great job with him and his team.\n\nKate Talbot: Thank you so much! Working with Lo and seeing how much he skyrocketed this past year-and-a-half has been amazing. I can’t wait to share more.\n\nAndreas: There’s a funny story because, when we reached out to you, I didn’t realise you were actually working with Lo and Plexo Capital, and once I found out I was super happy because I am a big fan of your work without knowing!\n\nKate: Yeah, that’s great! We think that we’re just tweeting for a small audience or for the US, but to know that it’s international and so many people are becoming huge fans of Plexo Capital and Lo, who’s done amazing work all throughout his career, is just incredible. We’re a small team but, when we hear these words, it means a lot.\n\n> Always remember to say yes, in your career.” The action sparked by Shomit’s advice made me catapult my career. And I hope anybody who’s listening just says yes to any adventure that comes their way.\nKate Talbot\n\nDavid: Kate, you were introduced to us via Shomit Gose, and we could start our interview there. Shomit gave you some career advice years ago: What was it and how do you apply it to your career today?\n\nKate: I love the story of meeting Shomit. I was getting my MBA in San Francisco, one of our courses was Silicon Valley immersion. I was the only woman in the course, it was me and 10 men. We went to Sandhill Road where Onset Ventures is located, to ask Shomit some questions and show our interest. I think my question was “what was it like going to UC Berkeley at the age of 15?” Shomit was, of course, very humble about it. \n\nMy project at Silicon Valley immersion was to write about social venture capital. He helped answering some questions for my white paper and, through that, he saw that I was a great writer – I don’t say that boastfully, I say it because that’s what he said. For the last 10 years he’s, literally, told me “you are smart, you can do anything.” \n\nHe also told me to always say yes. So, as I built out my own consultancy, every time something incredible comes my way, whatever it is that seems so outside of my comfort zone, I tap into what Shomit said to encourage me. Remember to always to say yes, in your career. That led to diverse challenges as becoming a Snapchat expert witness, to interviewing Courtney Kardashian or do a series B deck. The action sparked by Shomit’s advice made me catapult my career. And I hope anybody who’s listening just says yes to any adventure that comes their way.\n\n> What’s great about Plexo Capital is that it is focused on diversity and inclusion. So, our brand ethos was always in the messaging that we’ve done and has been a part of every single social media tweet, LinkedIn post, and every kind of content that we did.\nKate Talbot\n\nDavid: That’s so cool! I think that story speaks both about Shomit, he’s a great friend of The European VC, and about you, Kate. Andreas is a real fanboy of Lo Toney and, as he said, you made some really amazing work with him, and I truly believe that it embodies the strengths of a well-crafted content marketing strategy. I’d love for you to lay it out for us, explain the overall rationale behind it and what it has done for Lo and Plexo Captial.\n\nKate:. So just some background. I worked with Lo about six years ago at a social media startup, we sat next to each other and that startup pivoted. Then, in November 2019, as Lo was about to launch Plexo Capital – it was a spin-off of Google Ventures – I get an email that says, “Kate you’re running my social media”. It was very much faded in the stars that we would work together. I’m not sure I even had a say in it but, as Shomit told me, I said yes, and it’s been a great journey. \n\nSo, this was in November of 2019 and Lo launched his firm to the public in December with great fanfare. We worked with a PR firm but, after that, it was just Lo and me working together on a social content and PR strategy. My background, as you guys said, is in social media. I’ve worked with many VC firms and startups, so I knew what we need to do, focusing on Twitter as well as on LinkedIn.\n\nWhat’s great about Plexo Capital is that it is focused on diversity and inclusion. So, our brand ethos was always in the messaging that we’ve done and has been a part of every single social media tweet, LinkedIn post, and every kind of content that we did. But a lot of people might not know that we’re also an institutional investor going across all different aspects of the startup ecosystem. That’s a big part of Plexo Capital that we want to bring into our messaging as well. Therefore, from November to March, Lo would go to a lot of events. He went to Upfront Summit, we got a great photo with Paris Hilton and him, and we thought about influencers from the start. That’s a funny story that maybe I’ll tell on another day. And we did a lot of “on the fly” content – he was in LA and I was in the bay area. But, when COVID hit, we really thought about real-time communications and being part of conversations that were happening. In March Sequoia did a Black Swan about what founders should do in these times. And we drew from that idea and did it for what emerging managers should do as they’re raising a fund. We’ve always been trying to help the VCs that are also raising funds at the same time.\n\nThen, a pivotal point for Lo and for Plexo Capital happened during the summer, with the unfortunate events of George Floyd. Lo is a black man, he grew up in Oakland, and he also has an amazing voice. We were able to get out an incredible medium post called “I’m a VC, but still a black man in America”. Maybe that’s when you guys heard of him, because it truly catapulted everything to a next level for Plexo Capital and Lo. That article got Lo tons of press: Fortune, Tech Crunch, Forbes, you name it! For them Lo became the go-to venture capitalist that had insights about Black Lives Matter and what we could do as a community, to make changes within the startup and tech ecosystem. \n\nThe fact that we’ve always focused on community, diversity, inclusion, and how we can be part of conversations that are happening in real time, helps not only the founders, because we do direct investments, but also our institutional investments. That’s just been part of our strategy. We’re really lucky and thankful that people have been so receptive to the words that we put out there.\n\nAndreas: Kate, just to double tap on the fact that Plexo Capital actually acts as institutional investors, since VCs that invest directly into companies and also into management companies is something that most in Europe people haven’t seen. I’d like to ask you what it has been like to target emerging managers, in contrast to targeting founders. Have you seen any difference there?\n\nKate: From a marketing perspective it feels a little bit different because traditional VC firms try to find their specific founder audience, so that they can speak to them and get deal flow. But, since we’re an LP and about 15 GPS, that definitely requires a different way of looking at the market. We’re not just doing the direct investments; we’ll soon launch an open source YC for GPs. We’re going to help emerging managers learn how to be better fund managers and let them know and all the stuff that can help them rise up. \n\nSo, when we talk to founders, we’re not only thinking about what we can do to get deal flow, we also want to empower the emerging managers that are out there. Lo built-out Plexo Capital on his own, he has insights from his past learnings and has a great network that we’re going to bring in, so that we can teach the Emerging Managers. And this might all change by the time it launches, we’re going to use emerging platforms like Clubhouse to do our open-source communication. The marketing looks different as a firm that’s not just doing direct investments but, because of that, we’re thinking of ways that we can empower and help the emerging fund managers out there.\n\nDavid: Will it be open to European emerging managers?\n\nKate: If you’re on Clubhouse… [laughs]\n\nDavid: Well, many of our readers will keep their eyes peeled as this might be interesting for them!\n\nAndreas: David and I are in our day-to-day work trying to help emerging managers in Europe, because there are so many people trying to crack into VC, and people are just left out on the field. We need people like Lo and Founder Institute working to create a new breed of VCs. That alone gets him all the respect in the world from us.\n\n> I would encourage anybody within Europe to just think of ourselves as one big ecosystem, because we all have the same tools to connect, converse and build a brand as somebody who’s going to be great within the vertical that you’re investing in.\nKate Talbot\n\nDavid: Kate, as you know, Europe is made of several different countries, and this makes it very hard to build established brands because it’s hard to have that consistent ethos, that’s embedded in every single piece of content you put out there. What would be your tips to face this challenge?\n\nKate: At the beginning of this conversation, Andreas pointed out that he’s a big fan of Lo. And when I think of my own content, I don’t think hitting specific geographies. I think we’re just creating for Lo to be the best diversity investor in the ecosystem. Therefore, I wouldn’t think so much about Europe and being geo specific. We live in a Zoom world or however you want to call it, we can think about how you build your brand to be the best investor in the the FinTech space, or the Green space, or whatever space you focus on. I know obviously there are differences between Europe and Silicon Valley, but now I feel it’s a whole different world. So I would encourage anybody within Europe to just think of ourselves as one big ecosystem, because we all have the same tools to connect, converse and build a brand as somebody who’s going to be great within the vertical that you’re investing in.\n\n> I think press is great, but you also want to be thinking about how you can live on different channels.\nKate Talbot\n\nAndreas: That also speaks to an interesting point, Kate. It means, to a large extent, you’re saying to transcend the traditional media sources. PR is one of the things that I see many of the older school European VCs thinking as an important source, but if you went to the local media you’ll be only hitting that’s media’s national community. What are your thoughts on PR in general and using it to get your word out?\n\nKate: PR and the traditional media forms still need to be part of your strategy. PR is great, especially when a startup is in the early fundraising stages, when they raise the Series A and they get that PR, they get mentioned in Tech Crunch or Venture Beat. That visibility helps with varied things, such as hiring better, and I’m sure the VCs are always happy to see their investments out in the press. \n\nIn terms of traditional media, you can build relationships with press and then use social media – Twitter, Instagram, or any kind of social media – to nurture that relationship. So, when you have an announcement – launching a new fund, for example – and you want press for it, those relationships are super important. Another option is to own your own press: you can put it on PR Newswire, see who’s reaching out to you, and what you get from that. Or you can use your social media to do your announcement. \n\nRight now, I think it’ll always imply a mixed approach. You can own your own press and make your announcement on your own channels; you can also build those long-term relationships with journalists that might not be so close to you; and you are able to connect through social media like Clubhouse, Twitter, LinkedIn, and then you might get visibility that way. \n\nEither way, I think press is great, but you also want to be thinking about how you can live on different channels. Not everybody’s reading Tech Crunch, they might be scrolling on Twitter for their insights, and the world is always changing around press and media.\n\nAndreas: Kate, I understand that you’ve been helping some VCs raising their funds during COVID. Covid has changed how things work and I guess it has also had some impact on the VC fundraise playbook. Can you share some of your learnings on that subject?\n\nKate: This is one of the first times that I’ve been part of the fundraising process. At Plexo Capital, Lo’s involvement with the Black Lives Matter movement helped us get more investment from some of our previous investors. We’ve been fundraising for the last couple of months and, despite being a marketer and not taking part of the fundraising meetings, there are some COVID changes that helped us. We did our LP meeting virtually, that made it possible for us to record it and make it into something for us to learn from. We branded the whole LP meeting to be an asset for our fundraising. This was an unexpected benefit that the COVID situation brought and made it possible to have those assets that we can always use.\n\nRecently we did a Clubhouse room with Lo Toney and Richard Kerby from Equal Ventures, and that room had 1100 people, which is really big for Clubhouse. It was all about how to raise your first fund and we had some other VCs there, like Sheel Mohnot from Better Tomorrow Ventures, who’s also a Clubhouse influencer with 2 million followers. After that event, Kuji Chahal who helps raise with Lo, got tons of inbound, some of the people that they’re targeting were in that room such as people from CalPERS. We’ve been really cognizant about who our target list is, how we can communicate better with them, show them who we are, build our brand, and then throw it all together to make sure that we get our funding.\n\nAndreas: I’m an avid Android user so I’ll be looking for my wife’s old iPhone 4 to try and run Clubhouse to get in those rooms! [laughs] I wanted to dive in your help to emerging managers, especially the under-represented ones. In Europe you can often meet managers thinking that external marketing advice is something you get if you are a big, well-established fund. But is that really the case?\n\nKate: No, definitely not. I think that most venture capital funds in America have a marketing specialist part of their team, whether in-house or as a consultant. Even The Community Fund, which is run by Lolita Taub and Jesse Middleton, that’s only a $5 million fund – it’s more like a rolling fund –that had marketing as well and I helped them. \n\nMarketing is great and I think it’s an amazing resource to have. The world of marketing, and the world of VC, is always changing, so you want to be up on the trends, understanding how to get the best distribution, how to tell your story, and build your brand to the global audience.\n\n> Now, if we just had come across and said: “we raised $5 million for the fund and X, Y, and Z.” That story isn’t exciting, you’ve heard it many, many times before. But the story of Lolita being very vulnerable made so many people connect with her and we were able to really galvanize our audience.\nKate Talbot\n\nDavid: When we fist talked, you said something that really stayed with me – you talked about making VC digestible and, connected to that, you talked about humanizing it. All of that to understand and use the power of community to achieve the goals of the emerging managers and their funds. Can you share your views on that with our readers?\n\nKate: I think that’s best exemplified when I worked with The Community Fund. Lolita Taub, who is pretty huge on social media, has done a really incredible job of being vulnerable and telling her story. She’s a female millennial and I think that some of the best influencer storytellers out there are female millennials, because they understand the social ecosystem very well. So, when we launched The Community Fund, we launched with Lolita Taub’s and Jesse Middleton’s personal stories front and centre. It wasn’t about how big is the fund? It was, this is my story: Lolita had cancer, her dad had passed away, she’s building the community fund because she came from the ghettos of LA and now has access to capital.\n\nNow, if we just had come across and said: “we raised $5 million for the fund and X, Y, and Z.” That story isn’t exciting, you’ve heard it many, many times before. But the story of Lolita being very vulnerable made so many people connect with her, and we were able to really galvanize our audience. The community fund has 11 additional partners and we’re using a soft launch where they tell their stories to get inbound and to have people be part of the fund.\n\nI think almost 500 people applied to be part of the fund right then and there, because people share their stories. The fact that they started with their stories and humanized themselves from the beginning led to everybody that they chose to be part of that fund having a beautiful story as well. So, when the fund actually launched, we also had every single partner share their stories – maybe that was an Indian, or a black guy from Chicago, or a black and Jewish from LA. The way that we look at storytelling in 2021 is really what is different about us, and that really helped out. \n\n> Always take a long form piece of content and then diversify that across the content distribution spectrum to make it shorter and more digestible, because not everybody has time to read your long form content that might take 30 minutes.\nKate Talbot\n\nThe digestible part is that our attention spans are really short. We look at something like TikTok and that’s doing well because it’s based on 15- or 30-second videos. So, I know a lot of VCs love long form content, people get a lot from it and that’s value, but also try to think about having that long form article, but then you do a two-minute LinkedIn post, or a short newsletter. Always take a long form piece of content and then diversify that across the content distribution spectrum to make it shorter and more digestible, because not everybody has time to read your long form content that might take 30 minutes.\n\nDavid: Through the podcast we’re trying to find ways to help make VC more understanded by people. Andreas and I are working with founders and some terms are completely alien even to them. When you’re building a community, you want to bring in all the players in the ecosystem, not the just the founders, the GPs and the LPs, and you need to make your message super clear. Could you share some learnings from working in the industry – some concepts that are particularly hard to translate and make them digestible? \n\nKate: I’m a newcomer in some ways this whole world, I’m not an investor, but I had a conversation once with Lo about GP stakes, the private equity world and how you do management fees – I’m not perfect with it either. That was a conversation that blew my mind, and I spent the weekend researching it. \n\nWhat I like to do when I’m editing or revising content with VCs is thinking: how I would understand this if I was just a normal person. Somebody I worked with, Jeffrey Bussgang, a Harvard business school professor as well as a partner at Flybridge Capital, does a tremendous job of making stuff digestible and understandable for the common audience. And I think any writer, whether writing about VC, crypto, cybersecurity, or fashion, has to make it digestible and understandable for everybody out there or you’re just not going to get a larger audience. If that’s your goal and you don’t make things digestible, then you’re going to be missing out. So, we all must write for the common person like me [laughs].\n\nAndreas: To the tough people who would only want to talk to VCs and say they don’t need the common people, the point would be that the LinkedIn algorithm doesn’t like people who don’t talk for a lot of people, so they won’t get to the VCs unless they talk for everyone.\n\nKate: Exactly! That and doing the right content for each medium – long form posts don’t do well on LinkedIn, but short videos do. \n\nIf you have a bigger message, that’s harder, but always be thinking about how can you make it quicker, digestible, and understandable because we have to base our lives off the algorithm at this point.\n\nDavid: Kate, I want to circle back and ask you a question suggested by Shomit Gose. You have interviewed a lot of super interesting and famous people – Sir Richard Branson, Kourtney Kardashian, Maria Shriver, Alex Morgan, just to name a few. What would you say that you see in common across them? And is there any insight to the regular mortal that we can use to build our personal brands?\n\nKate: [laughs] Well, I’m not a reality TV mogul or a super soccer star, but here are some things that I’ve thought about that might answer your question. \n\nThe first one is perseverance. If you look at every single one of the people I’ve interviewed, they’ve all hit rough patches or launched something that didn’t go well. Sir Richard Branson did Virgin Cola, the Kardashians have launched many things that haven’t done well, but instead of letting it stop them, they’ve gone right back up, tried again and iterated. \n\nI think that’s a big lesson for the VCs or startup founders reading us – to truly have perseverance. And I use that in my own entrepreneurial journey as well. Sometimes, no matter how hard we try, it’s just not going to go our way, but we’ve got to have a positive attitude and move forward.\n\nThe second thing that I think they do great is having diversification. You look at somebody like Alex Morgan, who’s a soccer star, but she also has her own clothing line, she’s done great partnerships as a brand ambassador. You look at the Virgin brand and they have everything under the sun. The Kardashians have so many different product lines and businesses. \n\nSo, think not only about what your main core product is, but how can you diversify yourself as an entrepreneur. And I do that myself, I have about eight different business lines of revenue, and that helps me out because if the service side of consulting isn’t going well, maybe I’ll get a great Forbes interview and that will help me out. \n\nAnd the third one I’ve thought about, and which I really love, is that every single person I’ve interviewed references family and I think that’s so important. A few years back, I was at the Hollywood walk of fame with Sir Richard Branson and his family when he was getting a star and you could tell that he really cared about making sure that his family was well taken care of and that they were part of the journey with him. Then you look at the Kardashians and it’s all about a family business. And Alex Morgan is a new mom and really thought about how her business is going to look that way. Maria Shriver is now doing a show with her son, Patrick, and she loves all her kids. I think that the fact that they put family first really shows that these celebrities’ entrepreneurial journey is also supported through having great family and friends and making sure that they’re a part of that, because without them it doesn’t have as much value.\n\nI’m so thankful, for being able to interview these incredible entrepreneurs and superstars. And I’ve been able to take their insights to my own business and, hopefully, spread the word through my Forbes writing as well.\n\nAndreas: A lesson for all of us: Family and perseverance, and oftentimes I find that those things go hand in hand. It’s time to challenge you with the quickfire round, are you ready to go?\n\nKate: Yes!\n\nAndreas: What would you say to VCs thinking that they can take care of their marketing themselves without a dedicated resource in their team?\n\nKate: You definitely need to hire out because you want to make sure that you’re seen and visible to the whole public. \n\nAndreas: What’s the one thing VCs should remember when building their brand on-line\n\nKate: You brand is a moat that differentiates you from everybody else. Invest in it so that you’re able to be seen when people are looking for funding.\n\nAndreas: What’s next for Kate Talbot?\n\nKate: Well, I just launched my course about how to be a solopreneur and I’m really excited! It’s now out in the public, and it’s all about how to craft your founder story, get press, scale your social media, and work with influencers. It’s been very exciting to add that as an entrepreneur, and it’s one more thing to my business revenue! You can see it on my website, and I also have a newsletter that you can find there. You can also find me on Twitter, Instagram or LinkedIn, and I love connecting with everybody who reaches out!\n\nDavid: It was really great chatting with you today, we both wish you all the best in your future endeavours. Reach out to us if we can ever be of assistance, you can always count on us at the The European VC!\n\nKate: Thank you guys so much! This was awesome and I’m so thankful.\n\n\nAnd this wraps up our interview with Kate Talbot, founder of Kate Talbot Marketing.\n\nFollow our podcast, [The European VC](www.theeuropeanvc.com), also available on your usual podcast platform.",
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      "title": "Ryan Floyd on Breaking Into Venture & Founder/Advisor relations",
      "body": "An exclusive interview with [Ryan Floyd](https://www.linkedin.com/in/ryanfloyd1/) , a Founding Managing Director at [Storm Ventures](https://www.stormventures.com/). The interview first aired as the 15th episode of [The European VC podcast](https://theeuropeanvc.com/).\n\n# A little bit about Ryan Floyd \n\n\n![Ryan-Floyd-EUVC-Artwork.jpg.webp](https://cdn.steemitimages.com/DQmVnxDBk6tJB9CjZ1t9r2Ydg6HLyMbrYDxU7WziDRuYv2p/Ryan-Floyd-EUVC-Artwork.jpg.webp)\n\nRyan Floyd is a Founding Managing Director of Storm Ventures based in Silicon Valley but investing globally. He focuses on early-stage enterprise SaaS and has a true love for applications and cloud/infrastructure related companies.\n\nRyan is dedicated to making VC more accessible and is doing important work on this via his YouTube channel Ask A VC. In this conversation, we put the spotlight on how to think about startup advisors and strategies for breaking into VC.\n\n**Things you’ll learn from Ryan Floyd:**\n\n* The role of advisors and how founders and VCs can get the best out of them to build successful companies.\n* How to think about compensation for advisors.\n* What skills are most important in a venture investor and how to build and prove them\n* Strategies for breaking into venture, including shadow portfolios and angel investing.\n* How Storm Ventures think about go-to-market strategies for early-stage companies.\n\nIf you’d like to listen to more of these meetings with European VC champions, follow the [EUVC Podcast](https://theeuropeanvc.com/).\n\n# Advisors are integral in building most successful businesses.\n\nRyan believes nobody builds a successful company by themselves. A dedicated team is crucial to building something of value, and in that team, there will be some advisors. Advisors can have different roles, according to the background and experience of the founders, to help them become successful. Advisors often have had success before and want to help others in the same way they were helped to reach success.\n\n> A lot of these folks [advisors] just want to give back. They want to make other people successful because they know they were successful because other people helped them.\nRyan Floyd\n\nAs an advisor, you need to approach the relationship as someone who has something to give, not something to take. That doesn’t mean the advisor’s work and effort gets nothing in return, but it’s not consultancy – which is defined by projects, deliverables and has some sort of payment involved. Advisors tend to be more plastic, shift and change over time to adapt to the company’s needs, and need to take into account the advisor’s characteristics and the situations in which he or she can add value. \n\n> From an advisor’s standpoint thinking about where you can be helpful, rather than just staying engaged is probably the perspective and place to come from, in terms of working with founders.\nRyan Floyd\n\nAdvisors need to appreciate that founders should be cautious not to get caught in the noise of all the people surrounding them, and understand that it includes their advice as well. Advisors who get too operationally involved blur the difference between an advisor and a consultant. Founders need help to build the team around them, but if an advisory role is to be formalized, that effort should be driven by the founder – that’s not up to the advisors, Ryan believes. \n\nGenerally, unless the advisor is terrible, Ryan encourages founders to keep using advisors throughout their journey and as such he welcomes them warmly in the investments he makes.\n\n# The job of an investor is not to invest. \n\n> As an investor, you spend a lot of time giving advice and opinions about things, hopefully, based on a lot of experience that you had, which is what has enabled one to have raised money and to be given the privilege and the responsibility of allocating capital.\nRyan Floyd\n\nThe job of an investor is not to invest, but to generate a return for the Limited Partners (LPs), so advice is not per se the main part of the job description. It only is to the extent that it helps an investor drive a return, Ryan believes. The responsibility to drive returns to LPs, who in turn are stewards of someone else’s money (think pension funds) is tremendous.\n\n# The fiduciary duty’s responsibilities and the skillset needed to rise up to them.\n\nConfidence that you’ll be able to generate a return. There are no guarantees, but at Storm Ventures, all funds have been profitable and have returned 3x net or better. The key is to continue to work at it, to make sure to continue to follow a strategy that you’re confident can deliver returns. \n\n> The most important thing is accountability and feeling of stewardship for LPs money, and realizing that your job it’s not being an investor, it’s not being an advisor. It’s, very simply put, to generate a return for your LPs.\nRyan Floyd\n\nThere are lots of investors that are not up to steward for other people’s money and invest from their own account. That allows them to do lots of different and risky things because they’re using their own dollars, so they’re only accountable to themselves. Being a steward for other people’s capital comes first, but being able to contribute to the success of a business is part of the skillset to be a successful investor. Other things are important, such as being able to generate great opportunities, the ability to pick which opportunities to invest in, and that’s equally important to being able to contribute with value add after the investment. \n\n# Paths to break into venture for those who can’t go the Angel route\n\nThere are lots of different ways for advisors to break into venture, but the first question should be whether someone has capital or not, says Ryan. That doesn’t mean it has to be huge sums of money, you can start from 5k to 10k. Look at the people you know, create opportunities there and build a portfolio to get a sense of what it means to be an investor by having some of your money at stake.\n\nRyan shared with us that one of the best ways to position yourself to break into VC is by creating a shadow portfolio of companies that you would want to become an investor in if you had the capital to do so. And in doing so, you should develop your investment thesis of each company to demonstrate the logic of your decision. \n\n> Generally, for most people, I would say Angel investment is a good way to lose a lot of money. It’s very difficult to invest small amounts of money as an Angel and generate good returns. Most great angel investors found success because they invested in a lot of companies.\nRyan Floyd\n\nRyan is less interested in whether people have actually invested in companies and more focused on their thought process. Being able to think through an investment, spot opportunities in new areas, that’s the kind of thing that catches a VC’s eye.\n\nAs such, he recommends looking at companies and thinking of what drives the success of those businesses, and then write or putout content explaining your interest in one business over another. You need to put yourself out there and share your thoughts – all these things help you get positioned as a great potential investor as those are all part of the foundation of any investment. \n\nTo summarize if you want to break into Venture retain these key tips from Ryan:\n\n* Build a coherent investment thesis \n* Build a shadow portfolio based on that thesis.\n* Elaborate on the thesis behind each of the investments\n* And make sure to put out there the way you think by producing relevant content\n\n# Turning Operators into Investors vs Advisors into Investors.\n\nMost people will tell you their route is the best to be a successful venture investor – from former operators to people who went to business school – because people are biased to what they know. There are lots of successful people from a lot of very different backgrounds and no background is a guarantee of success. Ryan thinks it’s less about what you did and more about the skill set that you bring with you. He also reminds us that while your background can be useful, it must also be kept in check, in order to be a tool and not something that hinders your judgement when looking at companies and trying to help founders.\n\nBut to Ryan, it’s clear that one dimension of any aspiring VC trumps all:\n\n> What really matters is your ability to generate opportunities, your network.\nRyan Floyd\n\n# Go-to-Market (GTM)– Survival to thrival.\n\n> The book helps avoiding making some mistakes and puts them into a context of why and how you ought to be thinking about this, from a process standpoint, that’s just not mysterious.\nRyan Floyd\n\nThe framework is very good at bringing everyone together in seeing the company as a whole and act in a coherent and aligned way, like an orchestra. Looking at what worked in each circumstance can teach you valuable lessons to approach the next step and make it work appropriately. A company is a step function, you can’t go from zero to 60 in one day, and a lot of people think that money will solve that problem. Rather, Ryan stated, you need to respect the process and the time necessary to make things happen and grow. Resources matter but you must keep in mind that they can give you a lot of false signals that hide that you haven’t built things in a scalable way. You need to look for sustainable success and think through all the processes to get there.\n\nCompanies follow a lot of patterns that aren’t obvious when developing a product and thinking about the GTM motion in terms of what works. Breaking down the elements of what could work in a GTM environment for your specific product is the key – it’s not some kind of mysterious magic. \n\nThe book was written for others to take advantage of the learnings of a documented journey. It’s a framework to build on what’s been working over time and, if you do that, you’ll eventually end up in a successful spot.\n\n# Quickfire round:\n\n**What do you strongly believe that most people around you disagree with?**\n\n“I’m more bullish on tech today than I’ve ever been in twenty years!” Ryan said. \n\n**What’s common advice that you hear advisors giving to founders that you strongly disagree with?**\n\n“Don’t trust your Venture Investors!” It drives Ryan crazy to hear it. VC has a lot of guardrails built into it to make sure VCs do the right thing. The strongest of course being that founders can reference VCs any time, and if one is a bad actor, no one is going to want to work with them.\n\n**We believe that genius is global, and we hate that opportunity isn’t. How can VCs help?**\n\nDoing this, Ryan says. Talking to get to a broader audience and spreading the word. Storm Ventures will invest anywhere in the world and have even closed lots of deals over zoom, so it’s easy to reach out to them. But knowing who you are reaching out to and why is critical. Ryan thinks that VCs should focus more on getting out to a global audience, because great ideas come from all over the world. \n\nDon’t forget to follow the [EUVC podcast](http://www.theeuropeanvc.com/).",
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      "title": "Pedro Santos Vieira on Making the European Ecosystem More Cohesive and Competitive",
      "body": "This is an exclusive interview with [Pedro Santos Vieira](https://www.linkedin.com/in/santosvieira/), Managing Partner at [Shilling](https://www.shilling.vc/) and Europe & Africa Lead at [500 Startups](https://500.co/).\n\n🎧 To get this interview straight in your ears, listen [wherever you get your podcasts](https://linktr.ee/theeuropeanvc).\n\n🔎 To check out all the European VC champions we’ve interviewed go [here](www.untamedpotential.com). \n\n\n\n# A little bit about Pedro Vieira\n\n\n![EUVC-Profile-pedro.jpg](https://cdn.steemitimages.com/DQmSws9qJrAwTWQVdXc1GZSAyhRMFYFahYVibpDc9MSiqvK/EUVC-Profile-pedro.jpg)\n\n\nPedro Santos Vieira is Managing Partner at Shilling and Europe & Africa Lead at 500 Startups, where he is working with governments in building their ecosystems and training all stakeholders. Pedro is a scientist, turned founder, turned investor, with deep experience in the tech world.\n\nHe is also the creator of West to West, a not-for-profit that helps create and support a thriving environment for Portuguese entrepreneurship in the San Francisco Bay Area.\n\n\n**Some things you’ll learn from Pedro:**\n\n– The contrasting characteristics of the European and US ecosystems from the perspective of someone connecting the West Coasts of these two geographies.\n\n– The differing profiles of European and American founders.\n\n– How 500 Startups creates synergies to help countries across Europe build stronger and more robust innovation ecosystems.\n\n– The value perceived by LPs in aligning and training all stakeholders of the ecosystem.\n\nIf you’d like to listen to more of these meetings with European VC champions, follow the [EUVC Podcast](www.theeuropeanvc.com).\n\nAndreas Munk Holm (Andreas): Pedro, I’d love to kick off this interview with you telling us the story of how you started the West to West project, to help connect entrepreneurs from Portugal to Silicon Valley. Can you guide us through that journey?\n\nPedro Santos Vieira (Pedro): Definitely! The thing is that the Portuguese diaspora is all over the world, but we are a small country and, in some cases, spread quite thin. When I got to San Francisco for grad school, and when I was starting my company, there was a Portuguese diaspora in the Valley already, with some of it in tech, but a lot in other sectors as well. In that community, some of us felt that there was a need to create a network to support Portuguese entrepreneurs trying to come to Silicon Valley, either to raise money, to look for partners or look for business deals. \n\nSo, we set up West to West as a network of people that are linked to the diaspora – either directly by blood links or by friendship – and wanted to help Portuguese founders. And the mission really has been the same from the very start: bridging Portugal to Silicon Valley. But the name “West to West” indicates broader goals, and we’ll continue to help as many people as we can.\n\n> The mission has been the same from the very start, bridging Portugal to Silicon Valley.\nPedro Santos Vieira\n\nDavid Cruz e Silva (David): Even though you’re focusing on connecting Portugal to the US, your ambition is bigger, it’s connecting the west coast of these two beautiful continents that are Europe and North America. With that in mind can you share your take on the contrasting characteristics of the European and the US ecosystems?\n\nPedro: Yes, certainly. Maybe we should focus on the key levels where those differences manifest themselves. I think we have different profiles of LPs, startups and founding teams on each side of the Atlantic. \n\nRegarding the LPs, we know there is a disparity of capital available, but the profile of the LPs is also very different. In Europe there is, probably, two to three times more public money from government agencies involved in the ecosystem – and that comes with pros and cons – and you have, probably, two to three times fewer pension funds involved as well. So, different profiles of LPs injecting money into the system will have consequences along the way.\n\nRegarding the profile of the startups, that is actually something that is impacted by the difference in LP profiles, because the availability of capital determines how you grow your company. But their profile is also impacted by the nature of the markets where they have to scale.\n\n> Different mindsets: in the US we invest in your company because you may succeed, but in Europe, we invest in your company because you’re succeeding.\nPedro Santos Vieira\n\nAndreas: Would you care to elaborate on how you see the startup’s profiles differ as a function of the LP difference?\n\nPedro: The nature of the capital brought in by LPs (public vs. private, for example) can influence the risk profile of the companies they invest in. By doing that they may limit the ability to scale as fast as companies would in the US, where their sources of capital are fully, or mostly, private. It also sets up different mindsets: in the US we invest in your company because you may succeed but, in Europe, we invest in your company because you are succeeding. \n\nI hate to make stereotypes like these because there are pretty good investors in Europe that think with the US mindset, as there are some bad investors in the US too. But overall, the nature of the capital, its risk profile, can impact the risk profile of the company because, at the end of the day, founders must report to VCs and VCs report to LPs. \n\nThe third point on that list was the profile of the founding teams themselves. For this one I don’t have stats, but I have the experience and perceptions gathered from having worked on both sides of the ocean: I seem to see more technical teams on the EU side. A lot of the science and technology that’s being created in universities is becoming commercialized but, usually, with big gaps on the commercial side. And I think that the big difference that I see for founding teams between Europe and the US is exactly that; the degree to which there are gaps in the founding teams around commercialization of Intellectual Property (IP).\n\nAndreas: I completely concur, it fits the bill with what I’ve seen in Denmark. I’d love for you to go a bit deeper on how you, at 500 startups, work with these very technical teams in Europe. Do you have a different setup in Europe versus the US, now that you have noticed this management gap?\n\nPedro: There’s a core set of subjects and things that we know companies around the world need but, at 500 startups, we always adjust our programs to the needs of the local markets. In some of the programs we’re doing in Europe we take exactly that into account and focus more time on topics that we know the companies need more help with, such as:scale, digital distribution, user acquisition online, but also enterprise deals, sales, and so on.\n\n> I don’t think the LPs, the VCs, or the startups need to adjust to being more Silicon Valley-like. I think each of these groups must work with what they have in the context that they’re in.\nPedro Santos Vieira\n\nDavid: Two of our former guests, Stephan Morais and William McQuillan, also brought up a topic you’ve just touched: the LP landscape in Europe. You explained it quite simply, almost as if it was a chain with the LPs affecting the VCs which, in turn, affect the founders. So, in your opinion, are we hindered in terms of capacity to finance innovation and technology in Europe, or is it just a different context? And the follow-up question to that would be: what can we do? Maybe this is taking the discussion to a policy perspective, but I would love to have your take on that. \n\nPedro: I don’t think the LPs, the VCs, or the startups need to adjust to being more Silicon Valley-like. I think each of these groups must work with what they have in the context that they’re in. I also don’t think the solution is to bring Silicon Valley rules and best practices to the rest of the world, they need to be adjusted. Regarding LPs, since there is two or three times more public money in the EU vs the US, there is room to improve the risk profile of the public money deployment in early-stage VC, making it more effective and agile in the multiple ecosystems around Europe.\n\nAs we were discussing before, more capital helps. Roughly a third [33%] of the startups in the world are in Europe but only about 15% or 20% of unicorns come from the continent. And that may be driven by less capital being available because there is three to four times more VC money in the US than in Europe. So, naturally, more capital helps, but the profile of that capital and of the LPs behind it is also a thing to improve – they need to be more agile and more understanding of technology needs. I think that the LPs in Europe need to be more evangelized about technology and the risk profile of investing in technology, whereas in the US you may have them ready and ripe for investing in VC Funds.\n\nAndreas: Pedro, how can we get closer to a stage where we have LPs ready to invest in technology-driven companies or VCs investing in this space?\n\nPedro: It is an evolutionary process and if we look at Silicon Valley it wasn’t an overnight success. It was decades in the making and everyone in the Valley and in the US has had plenty of time to learn. And I think that’s happening in Europe. What I’ve been saying sounds negative in a way, and there’s a lot of room for improvement in Europe, but there is progression. I gave you a specific number, static in time, for the pension funds’ involvement in the system, but the pension funds in Europe have deployed two to three times more capital in the last three to five years. So, there’s progress in the positive direction and I think we will get there, but we just need time. VCs need to play their role in educating the LPs and doing the evangelization work that I was talking about.\n\nIt’s like the circle of life, we talk about the circle of life for founders that get to liquidity and then become VCs and invest, and it’s the same thing with VCs. They may become LPs or they may exchange experiences and so people will learn along the way, we just need more time.\n\n> For companies to be able to be competitive in the global market, not just the EU market, they need to scale fast, and capital is like the gasoline being pumped into the engine: if it doesn’t get pumped fast enough the engine goes slower.\nPedro Santos Vieira\n\nDavid: I think 40% to 50% of the money being deployed into European startups has public origin, so we need to throw some love at that. Would you highlight anything you’ve seen from those public capital sources? \n\nPedro: With my 500 Startups EU-hat I can’t single out specific countries, I would feel bad about it. But I see it working better in the countries where a Fund of Funds (FoF) is created, that then allows the capital to be deployed by professional teams. And professional investors know how to deploy capital into the VC space better than public servants. So, the cases where I think this is working better are those when the public capital is deployed through professional investment teams, with agile rules and not in a bureaucratic way. For companies to be able to be competitive in the global market, not just the EU market, they need to scale fast, and capital is like the gasoline being pumped into the engine: if it doesn’t get pumped fast enough the engine goes slower. That’s why we need public capital to be deployed in a fast, agile, and flexible way.\n\nAndreas: In Europe we see a lot of the government money coming with hard strings attached, especially with regards to geography; and we know that 500 startups is working globally. So, how have you been able to work with governments even though you don’t focus on one geography?\n\nPedro: That’s a terrific question! We operate in different layers. 500 Startups has regional hubs and regional funds, and those operate in their regional contexts. But then, we have global funds, anchored in the US and deployed from there, investing around the world. \n\nWe start in the local and regional context, understanding the founders, the local capital, the local policy and we help them at that level. Then, in the second stage, we help them scale, whether through partnerships with local partners with deeper pockets or with our own global funds, and that’s how we set it up.\n\nAndreas: Your model works closely with governments to build up their individual ecosystems. I would love to understand better the thinking and the strategy behind it, and the synergies that you’re trying to develop and harvest. \n\nPedro: That goes back to the core of 500 Startups. 500 Startups was one of the first Silicon Valley investors to invest outside the Valley. It was started in 2010 and in that year, we started making investments in other continents. Right now, the portfolio is very diversified geographically with companies in over 70 countries, and our favourite modus operandi is to work with local governments in building up capacity at all levels. Not just investing in the best founders, which is our company’s ultimate goal, but start by training the different stakeholders in the ecosystem so that the investors know how to invest effectively and efficiently; the founders know how to scale their companies faster; and the policymakers understand the role of the policies that they’re designing in the whole ecosystem. \n\nWe have training programs and initiatives for all these different things. \n\nOur ideal scenario is to work with a local government, or a regional government, to train all these pieces of the puzzle and set them up nicely. That way, two to three years down the road we can be in our favourite role: That of and investor who has close ties to that region and will continue helping but is mainly an investor. We don’t come to a country to replace existing accelerators or existing investors, we come there to create capacity with everyone in a local partnership and then, eventually, evolve to just be the investor we want to be in the future.\n\nAndreas: So, Pedro, 500 Startups’ structure is such that you have one organization that is doing the ecosystem building and is a company in itself, and then you’ve got the funds on top of that. Did I perceive that correctly?\n\nPedro: Exactly. Those are two groups that work with great synergies. We have this flywheel concept that we like to refer to when we talk about our strategy internally. We believe that our involvement with the local governments, in helping build up ecosystems around the world, will help feed into the mission of the investment side, and so it is synergetic from the beginning. 500 Startups has believed from the beginning that there are very good deals and very good founders outside Silicon Valley and the US. Fortunately, more VCs from America and from around the world are catching up to that and doing the same, because we need more capital deployed in that way. \n\n> I think the most important thing, regardless of the model chosen, is that whoever leads the efforts in Europe understands the local context in the European markets, which is so different from the US.\nPedro Santos Vieira\n\nDavid: This transatlantic operation isn’t always easy. Have you seen good cases of American VCs building relationships here in Europe that you can share for readers looking to strengthen their connections here?\n\nPedro: We’ve seen examples of VCs trying to set up their office in London or Berlin and not all of them succeed. The reasons for that are multiple: sometimes it works because the team is right, sometimes it doesn’t work because the local context is different. We’ve seen some of them working in co-investment partnerships, others become LPs into new VCs to feed their funnel or start to learn. \n\nI don’t think there’s a single model that’s the best way to do it, all can fail or succeed, and it really depends on your company’s structure. If you go way back in time, even DFJ had this concept of different regional funds and, in some cases, it worked, in other cases, it didn’t. 500 Startups has funds around the world that operate slightly differently from each other, and so it depends on the mission of the company. \n\nI think the most important thing, regardless of the model chosen, is that whoever leads the efforts in Europe understands the local context in the European markets, which is so different from the US. Like I said earlier, just bringing the US perspective and best practices to the investment scene in Europe may not be the best approach.\n\nAndreas: Pedro I would like to go back to your structure and the whole strategy: how do the LPs perceive this and how do you communicate it to them?\n\nPedro: The LPs like this approach very much and it opens a lot of opportunities for us in terms of LPs from around the world. Our core investment team is in the US and then we have the investment teams for the regional funds around the world. They can leverage these ecosystems’ networks to find other LPs outside the US. These LPs then become more understanding of the whole tech scene, because they interact with our local team in their region; again, it’s very synergetic. And we have cases where non-American LPs, through interaction with our programs around the world, became LPs of the 500 Startups Global Flagship Funds.\n\nDavid: Pedro we always round off our interviews with a quickfire round – quick questions with 30 to 60 seconds to answer. \n\nPedro: Let’s go for it! \n\nDavid: As an Angel investor yourself, what’s your personal investment thesis?\n\nPedro: I invest so early that my thesis is that I need to understand very well the founder, or the founding team, and why they’re solving that problem. That’s the first thing. After that, I’ll try to figure if the problem is worth solving and if enough people are willing to pay to get the problem solved, as all other investors should. But I connect with investors at a very personal level, because I invest very small cheques as an Angel, and so I need to understand why they’re doing it.\n\nDavid: What do you think is most important in promoting a stronger European VC ecosystem?\n\nPedro: Recapping what we mentioned earlier: more capital helps but, regarding specifically the public capital It is important to make it deployed professionally with agile rules. \n\nA second thing would be sharing market and regulation experience. One of the biggest challenges for companies scaling in Europe is that we’re a common market, but we’re not a common market. We have common regulations, but we don’t have common regulations. So, making some progress there would help them grow faster.\n\nA third thing would be more support for the founders. In Silicon Valley, there is a high density of talent at all levels: VCs, LPs, and Founders. In Europe, things are more dispersed and there’s no mega-hub. You can refer to London or Berlin, but owing to Europe’s bigger dispersion and lower density, the VCs need to play a bigger role in helping their portfolio companies with networking, talent acquisition and all those challenges, that I believe are bigger in Europe than in the US.\n\nDavid: A company based on the East coast of North America has no issue selling on the West Coast, but a company based in Portugal finds complex challenges to sell in Poland or Germany, for example. The potential of the single market is huge but to a small first-time founder, it doesn’t feel like a single market. How do you think these challenges can be tackled? Could it be with policy actions or with an individual VC perspective, for example?\n\nPedro: I don’t think there’s a silver bullet and it will depend on the challenge we’re trying to address. If it’s just a matter of cultural differences that impact the sales process, that can be addressed by having local sales teams that understand the local context. Making the sales and user acquisition local specific, is a useful tool there.\n\nOn the policy side, it’s a trickier challenge. We already have some shared EU regulations that enable a few things, but other regulations are not shared and then some countries are using that as an advantage: You have countries saying that they’re crypto’s country, or that they’re drone’s country. That’s might help one or two countries individually, but it’s not going to help the EU market overall, so I think that making some progress there would be beneficial to the founders.\n\nAndreas: What have you seen happening on the European scene, when it comes to creating a remote workforce and being able to bring that into the post-covid times?\n\nPedro: I think the question is still open as to if COVID made a pivotal difference in how the teams will be distributed or not. I feel that you will see many companies becoming fully remote from now on, and not coming back to the office. From my perspective it helps Europe in a way that, if that becomes the de facto paradigm, now we’re all playing with the same rules – disbanding Silicon Valley’s high-density advantage that we talked about earlier. I don’t know if that’s good or bad, it is what it is, and it will probably help Europe more than the US.\n\nDavid: What can we expect in the future from 500 Startups and from Pedro Vieira?\n\nPedro: From 500 you should expect what you’ve always expected, which is support for founders around the world in multiple ways: with capital, expertise, training, and network. Today we’re, probably, the largest platform for early-stage VC, if you account not just for the capital, but also for everything else. \n\nFrom Pedro is the same, I’m always here to help. I usually tell this to my friends, and they corroborate it: I don’t know how to say no, so I continue helping founders in any way shape or form. Often with more time and know-how than capital, but both will continue available. I am intending to be a full-time investor, so I will continue the journey with 500 now, and with some other funds in the future… Who knows? But I’ll be around to help, and people know where to find me!\n\nAndreas: Pedro, it was great chatting with you, and we wish you the best in your future endeavours. You can always count on us at the EUVC, and we’re always looking forward to keeping in touch with you.\n\nPedro: Thank you so much for hosting me and congrats on your initiative. I think that we need more of this in Europe and since we’ve been talking about EU vs the US, it’s amazing to have a podcast like this! Best of luck with the future.",
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      "body": "This is an exclusive interview with [Itxaso del Palacio](https://www.linkedin.com/in/itxasodp/), Partner at [Notion Capital](https://notion.vc/).\n\n🎧 To get this interview straight in your ears, listen on [Spotify](https://open.spotify.com/episode/2iE4PzromzKMFNLr9hj75n?si=EuTO5k63RVSR--raXf4Myw&dl_branch=1), [Apple Podcasts](https://podcasts.apple.com/pt/podcast/euvc-10-itxaso-del-palacio-notion-capital/id1544598239?i=1000518234961) or wherever you get your podcasts. \n\n🔎 To check out all the European VC champions we’ve interviewed go [here](www.theeuropeanvc.com).\n\n# A little bit about Itxaso del Palacio \n\nhttps://i2.wp.com/untamedpotential.com/wp-content/uploads/2021/09/Itxaso-EUVC-artwork.jpg?w=1800&ssl=1\n\nItxaso del Palacio is a Partner at Notion Capital, one of Europe’s strongest early-stage SaaS and enterprise tech investors. Notion Capital was founded in 2009 and has invested in more than 60 startups and has more than €500 M assets under management. Itxaso joined the team of entrepreneurs and operators turned investors with a laser focus on product-led growth and a truly founder-centric perspective that has quickly made her a central figure in the SaaS space.\n\nSome things you’ll learn from Itxaso:\n\n* What is product-led growth and why it’s one of the best growth routes for B2B SaaS in Europe.\n\n* Why product-led growth companies are extra resilient during hard times.\n\n* How Itxaso views startups advisors and best practices for working with them.\n\n* Key lessons from Itxaso’s work with some of Europe’s best SaaS success stories.\n\n\n**David Cruz e Silva (David)**: Welcome Itxaso! We like to kick things off on the personal side and, since you practised classical ballet what are, in your opinion, the biggest misconceptions regarding ballerinas?\n\n**Itxaso del Palacio (Itxaso)**: That’s an interesting question to a start! There are lots of things written out there, but the reality is that ballerina breeding is a very, very competitive and individualistic environment. We work very hard to be a dancer and when there is a play, all the ballerinas within a team are trained for different roles. Until almost the last day, you don’t know if you will dance or not, and in that way, we are made to compete with each other. You want to improve every day and show how good you are because everyone wants to be the first dancer.\n\nAnd so, when you are 10 or 12 years old, this might destroy the friendships that exist in the class because of this highly competitive environment. You’re left in the dark until the last moment, without knowing if you’re even going to dance, and that’s a very tough situation for a 10- or 12-year-old to deal with, especially after having trained for the whole year. \n\nIt trains you for the future and teaches you a lot that is usually valuable for the rest of your life.\n\n**Andreas Munk Holm (Andreas)**: Would you say that the environment is as tough as an outsider would think it is? \n\n**Itxaso**: Yes, it is really tough. The daughter of one of my colleagues has been training until now at the Royal Ballet in the UK. She’s absolutely fantastic and was just selected to be of the first dancers. She trains day and night and, and she’s right now, 17 years old. So definitely I would say it is very, very tough.\n\n**Andreas**: As you know, a lot of our readers are trying to break into venture and I’ve been meaning to ask you, Itxaso, how did you get into VC?\n\n**Itxaso**: That’s a great question that I get asked a lot! My entryway into VC came by chance, it wasn’t planned. I have an engineering background and, went to work for a big manufacturing firm, as it’s usual for engineers. I went to work for Daimler in Berlin for a couple of years, but it really wasn’t for me and I was not enjoying it. So, I went back to the university to do a master’s in engineering, and I started my PhD. Through my PhD and my research, I ended up at UC Berkeley researching entrepreneurial ecosystems and, as you can imagine, in 2005 or 2006, Silicon Valley was the place to understand those entrepreneurial ecosystems. Then I got embedded in this entrepreneurial venture capital environment with other stakeholders in the ecosystem too. I got into venture back then and I’ve since been working with the startups either as a founder, as an investor, or as an academic. That’s why I would say it happened a little bit by chance.\n\n>Product-led growth companies use their product as a way, to engage, sell, upsell, to build loyalty, with their customers.\nItxaso del Palacio\n\n**Andreas**: Itxaso, let’s shift to Product-led growth (PLG), one of your recurring topics and a passion, I imagine. I’d love to focus on this from the perspective of VCs so, what is your playbook when it comes to investing in PLG companies, and what are the most important things that VCs can learn from it?\n\n**Itxaso**: I think SaaS investors have traditionally been thinking about SaaS from the enterprise perspective. Notion was started by three or four guys who built a couple of internet companies in the past and one of them was SaaS. In the early days, SaaS was mainly for enterprises. That meant that you were going to market with a sales team, account executives, long sales cycles and procurement processes. So, in the early days, SaaS investors were focused on those enterprise SaaS companies. \n\nNow the reality is that the market has shifted towards having also mid-market and smaller companies using software as their main productivity tools on the cloud. It has become much more agile. So, it’s not that they are using office 365 and that’s the way they live anymore, right? They do have their tools on their verticals and for smaller companies. \n\nThat has created a great opportunity for what we call the PLG companies. Those companies use their product as a way, to engage, sell, upsell, to build loyalty, with their customers. That is exactly what PLG is. \n\nBut I would say that, within my team, I am probably the most PLG oriented. And maybe that’s the reason why the rest of the team loves the enterprise investments, and they are really patient in all these long cycles of enterprise investments. Once you get in those, it’s very difficult to get you out. It is a different go-to-market strategy so, for investors, it has changed the mentality a little bit. And other investors in Europe are already investing in PLG companies.\n\n> If you are introducing a new product category that nobody knows about, the market needs a little bit of education. In those cases, PLG doesn’t work because people don’t search for your solution.\nItxaso del Palacio\n\n**David**: Itxaso, I’m going to ask a question as a complete layman since SaaS isn’t a space that I have much exposure to. What about PLG in less mainstream verticals? For example, I’ve had a lot of exposure to the healthcare sector, and we have a lot of SaaS – such as solutions being sold directly to doctors or small clinics. What’s your view on that? \n\n**Itxaso**: I think that’s a good analysis. I believe that PLG is more suitable for some types of companies. And I’m saying type specifically, I’m not using the word vertical. What I mean is that I think PLG is much more suitable to operate in markets where there is already a high education of the buyers. It’s usually a red market, it’s pretty competitive, in such a way that buyers know what they want, what they can look for when they try a new product, and they search for it because they need it. They are used to use those tools. \n\nIf you are introducing a new product category that nobody knows about, the market needs a little bit of education. In those cases, PLG doesn’t work because people don’t search for your solution. You need to educate them a little bit, right?\n\nPLG also doesn’t work in ecosystems, or in situations, where the product needs deep integrations to be useful. Or, it doesn’t work either in situations that have a very long time to value, which means customers need to train a tool or to have data within a tool to get some value out of it. You need to bring those customers to what we call the “Aha!” moment very quickly in a PLG model.\n\nTo answer your question, about using PLG in health: Yes, we can use it in health. As far as the product that we are selling has a very easy, or short, time to market and a pretty low price, which in some sectors is easier than in others.\n\nIn health, there are many cases where there is high regulation or where the product needs to go through hospitals or big institutions to be bought. Maybe doctors cannot reach for their credit card, buy whatever they want and start moving the clinical records there because there is a lot of compliance involved. \n\nYou need to think of what the application of the product is, and I wouldn’t limit it to some verticals, but rather to some types of situations, markets, and so on.\n\n**David**: You just said that PLG it’s more suitable for specific types of businesses and markets, but what about stages? How do you see the development of the venture from “inception” to “wild success tech story” and how PLG plays a part in there? \n\n**Itxaso**: That’s very interesting, in fact, I was talking with a colleague about that, today. I believe that you can have a company in which you sell through PLG and enterprise. However, I do think that the transition from PLG to enterprise it’s much easier than the other way around. And the reason is, when you build a product for PLG, you need to take into consideration some points like the onboarding process. It is critical, really, really, really critical. So it needs to be very quick and very short time to value. \n\nOften, when you build an enterprise product, you are thinking of a much more integrated solution within the customers. Now, when you start with PLG, you can always include capabilities that are serving enterprises. And not only that but also requirements for enterprises, because the authentication, the security, the data volumes that you are using in a small company, usually are not sufficient to sell to enterprises. But you can start building those. And obviously, you would build an account executive team to take that to the market, but it is absolutely possible to build both strategies within a company.\n\n**Andreas**: Itxaso, we often see startups thinking that they will growth hack through PLG, but then it seems the hockey stick gets too wild. What are your views on this?\n\n**Itxaso**: I’ve seen many of those [laughs], as you can imagine Andreas! As you said, I talk a lot about PLG so, many of these companies who have this PLG strategy in mind come to me. Some companies come to me and say: “We are PLG but, just in case, we are calling all the leads and helping them getting on board.” And what does that tell? Either you don’t think your product is ready to onboard your customers in a self-service way, or it is very difficult to use, or you need some sort of integration. \n\nI’m seeing those things happen and I think we are still in the early stages in this PLG learning curve. I think many companies have succeeded in the process and therefore these companies – like Slack, Pipedrive and a couple of others in Europe – will create the next generation of founders who know what takes to build a PLG company. Many people are trying to do it and they come to me either saying that they are already doing PLG, or, looking for help to do it.\n\n> I talked about how resilient PLG companies are when compared to other, more traditional, business models. And the reason is that PLG companies get embedded within their customers through a test. So, you go, and you try, before you buy.\nItxaso del Palacio\n\n**David**: I once heard you say that founders need to understand that no churn means love. And I’ll use that as an entry line to ask you about the resilience of PLG vs. non-PLG startups. Maybe we can use COVID and the lockdown period as an example there, but I’m really curious to know if investors and LPs get it. Do they grasp the resilience of those startups and how do you pitch that to potential LPs in the fund? \n\n**Itxaso**: I usually don’t pitch that to LPs [laughs]… But they have started to ask about it because I wrote an article in May 2020, that was specifically around this topic. I talked about how resilient PLG companies are when compared to other, more traditional, business models. And the reason is that PLG companies get embedded within their customers through a test. So, you go, and you try, before you buy. You might try four different solutions and you choose the one you like. It is not one account executive that comes through the door and tells you how the other three work. You have tried the other three too and you have made your mind. If you stay with them over time and there is a crisis in the market, that is not going to change your mind. If you start using the product and in two weeks, it’s not working for you: “Hey, I’m done with this. I’m moving to the other one that I tried, that I thought it was, in fact, worse, but it might be better.” But the crisis is not going to change my mind. I still like that product. That’s one of the reasons. \n\nThe second reason is nicely explained this way: imagine you have a smallish company, of about 250 people. In that company you have ten or 20 individuals within the organization who have taken their cards out of their pockets, bought the product so that product has gone through expenses, rather than a SaaS expense line within the CFO. And getting rid of that is much harder than getting rid of a line within the CFO, who is the one looking at all of the things the company must cut. The CFO usually has a view of the biggest ones, because these things are all around the company and are invisible, therefore more difficult to catch.\n\n> If we think specifically about SaaS, we had around 16 unicorns just in 2019 – one of them was UI Path valued at five billion at the time. If we look at 2020, we had over 25 SaaS unicorns. Note that I’m only talking about SaaS.\nItxaso del Palacio\n\n**David**: Itxaso, when we first spoke you talked about the fact that VC returns in Europe have now shown to be better than in the US. What’s your take on the future for VC in Europe and, specifically, the SaaS space?\n\n**Itxaso**: When we first spoke about this interview, I mentioned that because I am very, very optimistic about the European startup ecosystem. \n\nIf we think specifically about SaaS, we had around 16 unicorns just in 2019 – one of them was UI Path valued at five billion at the time. If we look at 2020, we had over 25 SaaS unicorns. Note that I’m only talking about SaaS, there were more than 16 unicorns in 2019, but I’m talking about SaaS, specifically cloud solutions. In 2020, ten of the unicorns were valued at over 2.5 billion, which gives you an understanding of not only the number of big companies but also their scope.\n\nTo me, that means better returns, a better growth mindset within the companies and the teams, and new entrepreneurs building companies looking much more towards this growth. It also means investors becoming much more bullish because, whenever you have already returned your fund, then you can go and be bullish. Instead of looking too much at the numbers, you can focus much more on the future and bigger opportunities. I think all of that is positive, it will only accelerate, increase and give bigger returns in the future. \n\n> No churn is love! So that’s probably the one I would say I look at a lot because, when we move to smaller customers, we really can suffer from churn. And that is important to track.\nItxaso del Palacio\n\n**Andreas**: I’d Like to shift the focus back to the companies and “due-diligencing” them. What do you look for when evaluating these PLG companies? Are there certain metrics that you’d swear to for each stage?\n\n**Itxaso**: There are some metrics that I look at more than others, but I’m a very product-centric investor. I like to find founders who are obsessed with products, with user experience, and that comes with engagement metrics. \n\nEngagement metrics, meaning: \n\n* How much your customers are using your product.\n* How are you measuring the value? \n* How do you know they are happy?\n\nFounders who know the answer to these questions are measuring all these KPIs, and they are, basically, my target, and bring me to a position where I want to invest in the company much faster. When you are a SaaS investor, there are some metrics that are the typical SaaS metrics and need to be there. Those are more related to the unit economics on the CAC payback and so on. But, in my case, I go really deep on understanding engagement metrics. \n\nAnd obviously, as you mentioned in our previous conversation, churn. No churn is love! So that’s probably the one I would say I look at a lot because, when we move to smaller customers, we really can suffer from churn. And that is important to track. \n\n> I test those founders in their ability to think business and commercial, and not feeling worried about putting a product in front of the customers, which is not perfect.\nItxaso del Palacio\n\n**David**: When you’re working with product-centric people, that eat, sleep and always think about their product, how do you, as an investor, address the risk of them not having a commercial vein developed when it is necessary to go enterprise? \n\n**Itxaso**: That’s a very good question because we’ve seen it. I test those founders in their ability to think business and commercial, and not feeling worried about putting a product in front of the customers, which is not perfect. I test them on that a lot, and I do test them on their next hires – in many cases, we need to help them hire those commercial people. If you think of somebody who is very product-oriented and technical, how can they interview someone for marketing and search for the most adequate characteristics? We help them a lot with talent, through the interviews, by looking at the characteristics and so on. They’ll be hiring very early in the company’s life to fill these gaps and it is important that they are aware of what they don’t know.\n\n> I think that, if you are thinking of pursuing a PLG strategy, you need to start doing that from day one. This is not something that you change overnight.\nItxaso del Palacio\n\n**Andreas**: To people being inspired by the PLG route, what would you say are the main takeaways? And how far down the line as a non-PLG company can you realize that PLG is the way we go and build it into your existing product?\n\n**Itxaso**: I think that, if you are thinking of pursuing a PLG strategy, you need to start doing that from day one. This is not something that you change overnight. There are strategies that you can use if that enterprise or mid-market approach is not working as well as you thought and there are ways in which you can involve your account executives and salespeople in building a much more PLG go-to-market strategy, but it is super complex. \n\nYou need to be thinking of that from the start, because everyone within the company is incentivized through product-related metrics, and everyone is responsible for those. That means that if you haven’t hired people with that mindset, you are not going to be able to change it next week.\n\n**Andreas**: And I guess it’s both mindset and also skillset.\n\n**Itxaso**: Correct! That’s why I was saying that some companies that have been successful throughout the process are very good examples. And I think companies that today are trying to build PLG and don’t yet have those capabilities should be looking to bring in advisors who have built such companies. There’s no need to bring them full time, maybe they can’t even pay them, but bring them in as an advisor and let them help you throughout the process. \n\n> And I think companies that today are trying to build PLG and don’t yet have those capabilities should be looking to bring in advisors who have built such companies.\nItxaso del Palacio\n\n**Andreas**: You just brought up a topic that is very close to David and me: bringing in advisors. I’d love to hear your thoughts on how do to do that? What is important to remember both as a founder, but also as a VC, when looking at startups, engaging with advisors?\n\n**Itxaso**: I think the advisors that I’m talking about are the advisors that are experienced, have seen the movie before, are operators 99.9% of the time. I’m not sure if you are referring to the advisors who help companies fundraise [laugh].\n\n**Andreas**: We can talk about them as well…\n\n**Itxaso**: I thought you were talking about those, but they are not our best friends. I’d love for founders to approach me, to be able to sell to me without the need of going to someone who needs to sell. If they are not able to convince me, themselves, to put money in their company, then how can they convince a customer to buy the product? How can they convince another employee to join their company? They need to sell their company themselves. So, I don’t believe in those advisors.\n\nI do believe in the advisors that were operators and can help founders. And I do believe in mentors for everyone, in every sector. I’m a big believer in advisors and mentors in that sense.\n\n> I think you need to move forward and propose to them a much more formal connection or advisory role. And that can be paid, options, or a mix of both. I’m keen on doing it in a mix of both or options that vest over time.\nItxaso del Palacio\n\n**Andreas**: Itxaso, what is your opinion when founders engage these advisors? What kind of terms should they do it on – Is it good just to have them loosely connected and base it on trust or should you quickly get them committed?\n\n**Itxaso**: I think there is no time to waste, but at the same time, you need to make sure that you like them before you get to a more formal engagement. You must make sure you like their style and guarantee they are valuable for you because you really need to feel comfortable taking the phone, at any point in time, and calling these people. I think you need to move forward and propose to them a much more formal connection or advisory role. And that can be paid, options, or a mix of both. I’m keen on doing it in a mix of both or options that vest over time. For many of those advisors, if they’re working for another company, that amount of money is unnecessary, it’s not what drives them. \n\nBut, in some cases, some advisors only do that for a living – and I’m not saying they are bad. They were successful in building a company from one to 10 million, and they are now helping every company in that sector building their one to 10 million revenue. These people are expected to be paid a little bit and get a little bit of options but, either way, I think is very, very valuable. And it helps companies without assuming the risk of hiring somebody full-time before there is a product-market fit. In some cases, companies end up hiring a lot of salespeople before there is that product-market fit. If you bring in an advisor who can really help you close those contracts, you can realize if you are ready to scale those contract sales. And so if you can do it with an advisor, then bring somebody on board, specifically in the enterprise sales.\n\n**David**: Very cool! We always end our interviews with a quickfire round where we ask you quick answer questions, with 30 to 60 seconds for each. Are you ready?\n\n**Itxaso**: I think so… [laughs]\n\n**David**: I’m sure you are! What would you personally like to change about VC in Europe?\n\n**Itxaso**: Probably having more operational partners within the venture teams. We do have an operational partner at Notion, and he has been a game-changer for our companies. Andy Leaver has been at five IPO’d companies, he knows how high growth looks like, and that’s what it’s in his mind and what he brings to the companies. It’s fantastic to see how the companies react to it and improve.\n\n**David**: Second Question, Itxaso. Of the most common SAS metrics, which ones do you love – as you said, engagement metrics, right? – and which ones do you hate?\n\n**Itxaso**: So, engagement metrics are the ones I love and I hate churn! [Laughs] I hate churn, I don’t want to see any churn! [laughs]\n\n**David**: The third question is: What’s what do you strongly believe in that most people around you don’t? \n\n**Itxaso**: I can’t speak for the belief of others, but I do believe that the European venture ecosystem will be at the same level as the US, in terms of the amount of money invested and the number of unicorns, growth, and the critical mass of talent. I know there is incredible talent in Europe, but maybe the critical mass of talent is going to be at US level very soon. And I truly believe that is going to be the case.\n\n**David**: I hope that’s more of a premonition than a belief [laughs]. Finally, what can we expect in the future from Notion and, obviously, from Itxaso?\n\n**Itxaso**: Definitely, many more investments into cloud. And I say that because Notion traditionally has been much more about SaaS, but cloud is more of a developer-first approach, a bottom-up approach, open-source infrastructure and, obviously, PLG. I am the one who’s leading many of those investments within the team, and we are very much looking forward to doing more of those.\n\n**Andreas**: Itxaso, we really appreciated this conversation, it’s been awesome to deep dive with you on PLG today! Thank you so much, and we’re looking forward to our next opportunity to chat with you again.\n\n**Itxaso**: Thank you so much, Andreas and David, it has been a great pleasure.\n\n\n\n\nAnd this wraps up our interview with Itxaso del Palacio, Partner at Notion Capital.\n\nIf you happen to know one you think fits these interviews, we’d love to hear from you.",
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      "title": "Andrés Dancausa on Investing in Mission-Driven and Diverse Founders",
      "body": "An exclusive interview with [Andrés Dancausa](https://www.linkedin.com/in/andresdancausa/), the EMEA Partner at The [Venture City](https://theventure.city/). The interview first aired as the 7th episode of ]The European VC](https://www.theeuropeanvc.com) podcast. \n\n# A little bit about Andrés Dancausa\n\n\n![Andre Dancausa.jpg](https://cdn.steemitimages.com/DQmbQRfwpEhjj3U9AGVTPHxCYPJzNbfqq6WbbdDLMPwgS8y/Andre%20Dancausa.jpg)\n\nAndrés Dancausa is the EMEA Partner at The Venture City. Based in Madrid (Spain), TVC helps founders achieve global impact.\n\nThey do it through a unique model that brings together a global product-led acceleration program and an early-stage Venture Capital (VC) fund.\n\nAndrés is a true operator turned investor & a friend of founders for his constant readiness and good advice.\n\nSome of the things we chatted about:\n\n* Why diversity is imperative for generating Limited Partner (LP) returns;\n* How Andrés and The Venture City (TVC) build with an operator mindset;\n* How TVC, as a truly globally diverse and mission-driven VC firm, adds value to founders;\n* What product-led growth is and why it’s part of TVC’s secret sauce.\n\nIf you’d like to listen to more of these meetings with European VC champions, follow the [EUVC podcast](https://www.theeuropeanvc.com).\n\n# “Symbiosing” an accelerator and a fund while betting on diverse founders and geographies. \n\nTVC was founded by Laura González-Estéfani and Clara Bullrich, after realising that not all the best founders were getting the best support. It was hard for great founders without the right network to build the tech success companies they envisioned.\n\nClara helped setting up the firm internationally, and that led to the current geographical dispersion, having people in places like San Francisco, São Paulo, Miami, Madrid and Barcelona. Their approach helps startups grow globally and brings diversity into the ecosystem.\n\nTVC also boasts a great team made of experienced operators – usually hard to attract to VC – with either an entrepreneurial background or experience working for tech giants. It has also built two vehicles to support the team: an accelerator to invest in the early stages of a startup and a VC capital firm that invests in seed or series A startups.\n\nThese two vehicles work in symbiosis, having the fund and the accelerator combine their influence over a larger period of the startups’ life. This allows TVC to provide the startups access to a combination of each vehicle and their teams’ skills.\n\nAndrés highlights three main value adds for [LPs](https://www.divestopedia.com/definition/4785/limited-partner-lp):\n\n* A 50 Million € fund that has experienced operating partners without the increase in the management fees usually associated with that. \n* That structure attracts the best entrepreneurs, as they want capital and access to a highly skilled team.\n* Deal flow is reinforced through the accelerator, by investing in around 40 companies per year. Some startups get investment from the fund after the accelerator, being a de-risking factor for investors.\n\n# How diverse and purpose-driven entrepreneurs are embedded in the investment strategy \n\nAndrés believes TVC is naturally directed towards diversity from its inception. It was founded by two immigrant women and, in three years, the accelerator and the fund have invested in 80 companies, in three different geographies (US, Latin America and Europe). TVC prefers to take entrepreneurs on their team, instead of bankers or M&A consultants.\n\nTVC invests in purpose-driven and diverse founders not only because they want to change the world, but because it’s a good strategy. Diversity helps build stronger companies that face challenges with broader skillsets, especially when expanding globally.\n\n> Nowadays I think it is almost impossible to build a global business without a multicultural and diverse team, capable of understanding different angles of the same issue. So, if you want to conquer the world you need a global team. \n> by Andrés Dancausa\n\nTVC’s team is aligned with this purpose, so this mindset is transversal to their investments and also present within the company and its team. That’s why, in TVC, you’ll find Americans, Spaniards, Brazilians, Russians, Venezuelans, British, just to name a few.\n\n# Doing good and making a profit doesn’t imply a trade-off\n\nAndrés believes that, in the long term, there’s no conflict between doing good and making a profit, and that’s what he states to LPs.\n\nAs an example, in the same way, that diversity brings a wealth of ideas and creates stronger companies, looking out for the environment plays an important role.\n\nCabify, one of TVC’s portfolio companies, went carbon neutral back in 2018 and it’s doing great.\n\nIt’s not unusual for some very early-stage startups to struggle with some of those principles in the beginning, but all startups in TVC’s portfolio aim to operate under the Environmental, Social and Governance (ESG) principles.\n\nSome numbers from TVC’s investments, corroborating their beliefs:\n\n* Have invested in multicultural founders from more than 20 countries;\n* 50% of founders are from minorities;\n* Portfolio companies employ people from more than 50 countries;\n* 11% of the portfolio companies have female founders – about 10 times the industry average – TVC is working to drive the previous number up to 50%;\n* Constantly pushing founders to involve women in the management.\n* The first conversations with founders tend to reveal their thinking towards ESG principles. Andrés also emphasised that it’s not that a team is bad for not being diverse, he believes that diversity helps the teams in being even stronger.\n\n# Investing in product-led growth and predicting the future of Profit and Loss (P&L)\n\nProduct-led growth companies use their product as the main weapon to grow, instead of marketing campaigns. They find growth opportunities by looking at data, their product users.\n\n> The best way to identify if you are looking at a product-level growth company is by stopping the marketing investment and see if they still grow without spending any single penny next.\n> by Andrés Dancausa\n\nTo the investors, this approach is beneficial by helping create capital-efficient companies. Instead of companies addicted to finance to pay for those marketing investments, product-led growth companies are better at protecting the investors against frequent dilution, preserving the equity value for everyone throughout the years. Some renowned companies using this strategy are Facebook, LinkedIn, Slack and Airbnb. \n\nTo pursue this approach, TVC looks at the data behind growth, especially regarding engagement, such as retention and virality. Also, looking at the [Quick Ratio](https://www.cobloom.com/blog/saas-quick-ratio-how-to-measure-your-startups-revenue-health) or the retention rate helps determine the growth’s sustainability and the ability to keep the user base in subsequent product phases.\n\n> We can anticipate what is going to happen to the P&L in the future by understanding what is happening to the product today.\n> by Andrés Dancausa\n\n# How TVC stands out from 95% of the funds in Europe and helped Andrés transition from Founder to Investor. as a strategy to see globally.\n\nAndrés shared that TVC’s positioning gives them access to the best deal flow. Founders of early-stage companies need three things: capital, talent and growth. Founders pick TVC for access to the knowledge and expertise of their partners. These services are offered by less than 5% of the funds in Europe.\n\n> We are in the top quartile in terms of net IRR competing with other more experienced funds.\n> by Andrés Dancausa\n\nAccording to Andrés, the more you give, the more you get, and operational experience is something TVC wants to give to the community.\n\nAndrés believes in passion. Despite that seeming a cliché in the area, he discovered that it is a hard thing to find in an entrepreneur.\n\nThe Covid-19 crisis helped separate the wheat from the chaff, showing the founders who are passionate about their dreams and their companies, and distinguishing their “do whatever it takes” attitude from the crowd. That attitude allowed their companies to become stronger now than one year ago.\n\nTech, product and all of those things are, obviously necessary, but in Andrés’ perspective, these are not enough if there isn’t any passion there. His experience as a founder is one of the things Andrés finds useful in assessing how passionate founders are.\n\n> The first thing that we analyse in our portfolio companies is the founder-market fit. This is key for us! Even more important than the product-market fit. A founder market fit company has a lot of opportunities with the product-market fit but not the other way around.\n> by Andrés Dancausa\n\n# Quickfire round:\n* The VC ecosystem needs more operational experience and fewer decision-making processes based just on P&L analysis;\n* If the ESG principles are an essential piece of your firm’s mindset, then they will flourish in every conversation with your portfolio companies;\n* Andrés joined TVC to help build unicorns but found out that TVC is looking for [iguanacorns](https://www.ndtv.com/world-news/miamis-answer-to-silicon-valleys-1-billion-unicorns-iguanacorn-2086612) – unicorns from emerging tech hubs. Look out for them, TVC is helping build them as we speak!",
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      "body": "William McQuillan is a Founding Partner of Frontline Ventures and joined us for a chat.\n\n<a class=\"spreaker-player\" href=\"https://www.spreaker.com/episode/43364674\" data-resource=\"episode_id=43364674\" data-width=\"100%\" data-height=\"350px\" data-theme=\"light\" data-playlist=\"false\" data-playlist-continuous=\"false\" data-autoplay=\"false\" data-live-autoplay=\"false\" data-chapters-image=\"true\" data-episode-image-position=\"right\" data-hide-logo=\"false\" data-hide-likes=\"false\" data-hide-comments=\"false\" data-hide-sharing=\"false\" data-hide-download=\"true\">Listen to \"EUVC #5 William McQuillan, Frontline Ventures\".</a>\n\nWe chatted about:\n\n* How William has built a truly differentiated investment thesis for Frontline’s two funds.\n* What William looks for in seed-stage startups and why he believes integrity is all-important and money cannot be the founder’s main driver.\n* How William perceives the effects of Brexit and its implications for their investment strategy and work with startups.\n* Why William is a supporter of founders taking a small bit of secondaries.\n\nIf you’d like to listen to more of these meetings with European VC champions, follow the [EUVC podcast.](www.theeuropeanvc.com)\n\n# A little bit about William McQuillan\n\n![EUVC profile e5.jpg](https://cdn.steemitimages.com/DQmSudciS1ahVPGTgNPqDADAK4us8MzVhLi1JM4ovtDce6S/EUVC%20profile%20e5.jpg)\n\nWilliam McQuillan is a co-founding partner at Frontline Ventures. Before starting Frontline, William was a founding employee at Ondra, an award-winning startup investment boutique that went from a 4-person team to 70+ employees across London, New York and Paris in just 18 months.\n\nWilliam experienced firsthand the difficulty that European founders have when fundraising. This inspired him to set up Frontline and try to make VC better for entrepreneurs. Since then, he has led investments in over 20 b2b technology companies across Europe.\n\n# Keeping your ego in check as a VC\n\nWilliam shared his experience of first becoming a VC, having been only on the entrepreneur side before. Almost kind of overnight he started getting more and more people wanting to meet him, and sending him invites for conferences, events, podcasts, and so on.\n\n> It’s very easy to believe that the reason why everyone wants to spend time with you is because you’re great!\nby William McQuillan\n\nAs a VC, you just have to constantly keep in check that the reality is that you are in an enormously privileged position of being able to invest potentially millions into companies. And these amounts of money are life-changing for founders building their company – especially at the start. \n\nWilliam says that he has to make sure that he is always keeping his ego in check. As a VC he is incredibly privileged because every single day people come in and they’re trying to get him excited. These founders need to get William as passionate about their project as them so that he will, hopefully, invest. It is an amazing ego-boosting experience. It’s about being highly self-aware of this and knowing that people are constantly wanting to meet you and lifting your ego, not necessarily because of you, but because of the money you can mobilize.\n\n# Focusing on globally ambitious B2B companies\n\nFrom the very start, when William, Will and Shay started Frontline, they thought of venture capital as a product. A product where the customers are entrepreneurs. So, with that mindset, they’re constantly trying to figure out what are the biggest challenges for entrepreneurs and what are the things Frontline can do to help them.\n\n> The VC market is a very competitive space for top companies.\nby William McQuillan\n\nOne of the key things the Frontline founding team noticed when they started was that a lot of the venture capital funds in Europe – actually most of them – were not thinking globally enough and ambitiously enough. So, for their first fund, Frontline Seed Fund, they wanted to make sure that they were effectively reducing the friction for European founders to expand into the US.\n\nBack in the US, they also realized that, even though there were these incredibly evolved and very big VCs, top US founders weren’t getting the support to expand into Europe. After crunching the data, the team realized that roughly up to 35 per cent of the revenue for B2B companies, when they IPO, is coming from Europe. So, the thesis there is that if you’re thinking about Europe too late, you’re just not going to be in a great position to IPO. And so, Frontline created Frontline X, which does kind of the opposite, but at a later stage. It helps bring US companies into Europe.\n\nShortly after recording this interview, Frontline announced Frontline Seed fund III. The new fund brings Frontline’s total funds under management to €250 million and arrives only ten months after the launch of Frontline X.\n\n> Seed Fund III will be an extension of our work – to help founders get off the ground – and go global.\nby William McQuillan\n\n# Building global companies from day one\n\nFrontline believes that, no matter where you’re starting a company, if you want to build a globally transformational business, you need to be thinking internationally from day one.\n\nSo, whatever the firm continues to do, international will always be a core part of it. The most ambitious entrepreneurs are thinking internationally from day one, and Frontline can help them accelerate that.\n\nFrontline highlights five questions for US companies to answer when expanding to Europe:\n\n* Why should you expand?\n* When should you expand?\n* Where should you expand to?\n* How to sort out the product-market fit?\n* How to hire?\n\nThese are explored in further detail in Frontline’s report: ]“Global Ambition: How B2B Software Companies Win (and Lose) In Europe”.](https://www.frontline.vc/expanding-to-europe/)\n\nBut looking at it the other way around, William made the case for European founders to expand into the US. Firstly, for B2B SaaS companies, the US is a larger market than Europe. Secondly, US corporates are far less risk-averse than their European counterparts, and more willing to collaborate with startups. This means lead times are shorter, average contract sizes are higher and so on. Thirdly, timing is a really big challenge. When to expand is highly dependent on the type of company. For large enterprise companies it tends to be in between series A and series B, whilst for companies targeting SMEs it should be, most likely, from day one. Fourthly, understanding where to expand to is also really important. William highlighted to main criteria: i) location of your customers and ii) location of potential hires. These tend to be located in the same place. Finally, William highlights that a key thing to consider is whether the products are fit for the US. Frontline’s experience so far is that most of their companies don’t need to change their products too much when expanding it to the US, besides some minor content-based changes.\n\n# Investing in passionate, self-aware, founders\n\nEighty per cent of Frontline’s companies are pre-product and 50 per cent are pre-revenue. Investing in such early-stage businesses means they are investing in people. It’s mostly about understanding if the people are good enough for them to invest in.\n\n> We have much more of a thesis around what we look for in the entrepreneurs than necessarily what are going to be the future technologies in B2B.\nby William McQuillan\n\nFrontline is specifically looking for founders who have a basic understanding of who they are, what they are good at and what they’re not good at. Even though this is not particularly relevant at the seed stage, it does come into play at later stages. For example, people with low self-awareness tend to hire people who are similar to themselves rather than complimentary. So investing in teams with low self-awareness can, quite easily, lead to building a team that just cannot scale.\n\nAlso, for someone to turn down the 50 million exits shortly down the road, you need them to care about the mission of what they’re building. Founders need to be passionate about why they’re doing it. Frontline cares about understanding the motivation behind the founders they invest in and distilling how they envision success. This might almost sound like a paradox, but to build a global B2B tech success story, founders can’t only care about becoming a millionaire. It has been done in the past but, today, the competitiveness of the market demands that motivations run deeper.\n\n# Quickfire round\n\n* There are still not enough good later stage funds in Europe, since most companies still need to go internationally to raise a great Series B and, sometimes, even a Series A.\n* Over the next five years, we’ll probably see an almost doubling of the Series B, or the later stage, investors in Europe; with a blend of US funds coming to Europe and more European funds.\n* To build better relationships with investors in the US you have to physically go there. Meeting virtually is great to maintain relationships but doesn’t cut in fostering new ones.\n* Relationships with investors are not a one-way thing; they require time investment and sharing of information and knowledge about the ecosystems.\n* Frontline is constantly going to be evolving as to what the most ambitious founders need.\n\nDon’t forget to follow the [EUVC podcast.](www.theeuropeanvc.com)",
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      "title": "Meeting European VC Champions: Collaborating across the Atlantic",
      "body": "Shomit Ghose is the General Partner of ONSET Ventures and joined us for a chat.\n\n<a class=\"spreaker-player\" href=\"https://www.spreaker.com/episode/43122320\" data-resource=\"episode_id=43122320\" data-width=\"100%\" data-height=\"350px\" data-theme=\"light\" data-playlist=\"false\" data-playlist-continuous=\"false\" data-autoplay=\"false\" data-live-autoplay=\"false\" data-chapters-image=\"true\" data-episode-image-position=\"right\" data-hide-logo=\"false\" data-hide-likes=\"false\" data-hide-comments=\"false\" data-hide-sharing=\"false\" data-hide-download=\"true\">Listen to \"EUVC #4 Shomit Ghose, ONSET Ventures\".</a>\n\nWe chatted about:\n\n* If data ethics are the next big differentiator for startups;\n* How the European and American VC landscapes differ and what we can learn from both;\n* How to increase your presence and establish collaborations between US and European VCs;\n* How to approach building a country-agnostic fund and the role of VCs, LPs and Institutions.\n\nIf you’d like to listen to more of these meetings with European VC champions, follow the EUVC podcast.\n\n# A little bit about Shomit Ghose\n\n![EUVC profile e4.png](https://cdn.steemitimages.com/DQmZG4x5a9hby2h5YJF4EdxHKqQs3S51hnXbX5niXtbA1tX/EUVC%20profile%20e4.png)\n\n\nShomit Ghose is the General Partner of ONSET Ventures, a leading early stage venture firm operating out of Sand Hill Road, in Silicon Valley.\n\nWith more than 130 startups and 7 funds under its belt, ONSET Ventures is a highly respected firm in the Valley. Shomit has operational startup experience from three successful IPOs.\n\nShomit has a highly successful career thanks to his tremendous insights into data driven business models. Shomit is known for his breakthrough thinking and for boldly stating that all human products are commodities; with data being the only exception.\n\n# Data is the only human product that isn’t a commodity\n\nBeing a VC is about helping to prepare the next generation of entrepreneurs. Shomit believes that everything in the world is data centric. Companies like Amazon, Google, Uber and many others are extremely good at experimenting with their data. And they do so in very nuanced and different ways. Except for data, all human products are commodities. These companies have an insatiable appetite for data and leveraging it as the ultimate source of competitive advantage.\n\n> The more you have, the less it is worth.\nby Shomit Ghose\n\nAs such, Shomit is very much dedicated to equip entrepreneurs with the skillset to compete with these giants. He wants to help founders understand how these companies view and use data; in particular how variety of data allows you to leverage it to drive insights.\n\n# Data as both a retrospective and a prospective resource\n\nIt is really interesting to look at data to understand what has happened. But, if everything is commoditised, there are actually only two way to compete.\n\n> Either you reduce prices or you predict the future.\nby Shomit Ghose\n\nAnd the latter is particularly interesting. The greater the variety of data available, the better one can predict the future. Shomit clearly believes that it is interesting to query and ask questions about the past, but much more interesting to correlate and expand into the future. It’s the difference between of drawing a clear picture of what happened in the past and drawing the picture of what will happen in the future.\n\nGoogle, Amazon, Uber, and other companies fo the like, are doing this. Shomit shared the particular example of Uber, which is using data to forward price based on weather and location. This is basically a case of predictive pricing applied to a commodity product. But these companies take it even further. They actually hire behavioural economists and go beyond predicting behaviours to actually driving behaviour.\n\n# Data ethics as one of the most important sources of competitive advantage\n\nNowadays there is so much data that it might, quite easily, become intrusive, to the point of compromising our privacy. The point is to understand how to counteract this. Ethics is the foundation for future differentiation business models. Now more than ever. As individuals, we all want ethics; in our personal and professional life.\n\nShomit believes we must be thinking of cybersecurity in the terms of obscuring details about an individual’s life. We must reimagine cybersecurity as cyber-safety. In the same way as a firewall protects data stored on a server. This calls for a new set of innovation and startups in the field of cybersecurity. Tech users are now, more than ever, more aware of privacy and of its role as a pillar of liberty. No one wants to work with people who don’t have that sort of integrity and the same will come into play for startups.\n\n> I think this is gives a particular advantage to European startups.\nby Shomit Ghose\n\nEuropean startups can start, from day one, with all of these philosophies enshrined in how the company is built. These can be ethics-first companies. Shomit believes that these companies will get even stronger, particularly because there are strong regulations in place in Europe. Shomit sees these as helping drive home the need for ethical behaviour; particularly because there is a trend, among younger people, favouring data ethics.\n\n# Global startups from day one\n\nMarkets are global and, in fact, the most successful US startups are global and were global from day one. None restricted itself to regional dominance. So if a founder is set on being very successful, by definition, there must a global ambition from the get-go. To be truly global one must understand how things work in the rest of the world.\n\n> None of us is so smart, at least I know I’m not, to know exactly how things work in every part of the world.\nby Shomit Ghose\n\nThe best way to acquire this knowledge is by working with people who are knowledgeable and can complement each other. For this reason, Shomit’s view is that collaboration is implied in building a successful enterprise. For any company to succeed, it has to be global. And that’s what Shomit is actually looking for: companies that think strategically and that want to be a global presence. He is looking for teams that are thinking about how can their product be impactful worldwide, and that have this mindset from the very beginning. This allows them to lay the groundwork for actually being successful worldwide.\n\n> My advice and counsel to investors and entrepreneurs everywhere is to plan on global domination from day one.\nby Shomit Ghose\n\n# Investing across borders\n\nMore and more we are facing challenges and opportunities that are global. No region will, by itself, be able to optimally address any of them. Going forward, Shomit thinks that this needs to be an onus for investors. With Covid-19, whilst in the past investment decisions were made based on face-to-face meetings between entrepreneurs and investors (giving a bias towards founders geographically co-located with the investors), today it’s easy for anyone to meet with a startup from the other part of the world.\n\n> Enforced social distancing might actually help democratize the process of access to capital.\nby Shomit Ghose\n\nThe understanding that genius is global and that people are smart everywhere is actually beneficial. Shomit highlighted the value of making capital equally accessible to people no matter where they may be. By democratising the process of access to capital, founders with the best solutions and the most passion have a chance to shine.\n\n# Intellectual Venture Capital\n\nThe most important input into a startups is actually the guidance. It’s not the money. Money is a commodity. In fact, if money were the only thing founders needed, they’d be better off getting that money from a bank. The most important thing any startup can get is not the money, but the guidance on how to make the right decisions.\n\nIn the past these needs were best met out face-to-face, hence the requirement to be geographically co-located. What we’re finding out, through the dynamic of times of enforced social distancing, is that we can have really good relationships, as well as opportunities to provide really good guidance completely over virtual means.\n\nHistorically, the VC model has been really effective and will continue to be so. Mostly because it’s a way of providing risk tolerant capital, which the startups need, where, if things succeed, great, if not, founders are not left to having to repay a loan or something like that. The risk tolerance behind the capital is what has actually made the model successful and foundational in driving the modern world.\n\n> My view is, once again, that capital is great, but capital is a commodity. And you know how i feel about commodities.\nby Shomit Ghose\n\nThe anti-commodity here would be good guidance. It’s being able to provide the counsel to make the right decisions as a startup. As a startup, founders are in a situation where even the smallest miscalculation will lead to failure. So they need to constantly optimize making the right decisions given the circumstances them. Thus, guidance is what wins.\n\nShomit expanded a bit on this by proceeding to say that, maybe, we should look beyond the definition of venture capital. Look beyond it being monetary capital, and think of it as being the investment of intellectual capital. Thinking about it not just in terms of monetary venture capital, but in terms of intellectual venture capital.\n\n> Maybe that’s where the future lies: being able to optimize for not just the commodity of money, but being able to optimize for the anti-commodity of good guidance.\nby Shomit Ghose\n\n# Quickfire round\n* Venture Capitalists must think globally, and in an inclusive way, in order to cease to be a narrowly focused practice and broaden the aperture;\n* Genius is global and exists everywhere;\n* Fostering relationships in VC requires more than just the transaction, we need to get to know each other well before there is ever an investment in play;\n* Building trust requires VCs to get to know each other, to understand who may be congenial with whom, identify personalities who may share congruent views when it comes to investment and technology futures.\n\nDon’t forget to follow the EUVC podcast.",
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      "title": "Meeting European VC Champions: Collaborating with Business Angels",
      "body": "Michael Hansen is the CEO of the Danish Business Angels Network and joined us for a chat.\n\n<a class=\"spreaker-player\" href=\"https://www.spreaker.com/episode/42889064\" data-resource=\"episode_id=42889064\" data-width=\"100%\" data-height=\"200px\" data-theme=\"light\" data-playlist=\"false\" data-playlist-continuous=\"false\" data-autoplay=\"false\" data-live-autoplay=\"false\" data-chapters-image=\"true\" data-episode-image-position=\"right\" data-hide-logo=\"false\" data-hide-likes=\"false\" data-hide-comments=\"false\" data-hide-sharing=\"false\" data-hide-download=\"true\">Listen to \"EUVC #3 Michael Hansen, DanBAN\".</a>\n\nWe chatted about:\n\nThe importance of politicians making brave strategic decisions in promoting cluster development;\nThe story of the Danish Robotics Cluster in which the first collaborative robots were hatched, counting with two acquisitions at a valuation of almost 1 billion EUR;\nHow to work with national clusters to generate deal flow and fast track deals;\nCollaboration models between Business Angels and VCs.\nIf you’d like to listen to more of these meetings with European VC champions, follow the EUVC podcast.\n\n# A little bit about Michael Hansen\n\n![EUVC profile e3.png](https://cdn.steemitimages.com/DQmQqvifMcoqqNixvUPabqa8sTNcJsK5eRtBZCTxB6KHhZv/EUVC%20profile%20e3.png)\n\nWe were joined by Michael Hansen, CEO of DanBAN, Denmark’s leading Business Angel Association. DanBAN consists of more than 200 active Angels who collectively invest more than 30 M€ on an annual basis.\n\nPrior to joining DanBAN, Michael was the chief architect behind the sprawling investment environment around the Danish Robotics Cluster which is broadly recognized as one of the very strongest clusters for Robotics companies in Europe if not the world.\n\nWe focus on Michael’s time taking the investor ecosystem around the robotics cluster from nothing to world class and on translating his learnings from that side of the table to relevant advice to VCs and angels. \n\n# Standing on the shoulders of giants\n\nThe first step in building a strong investor ecosystem is to have something for people to invest in. The Odense Robotics Cluster, for example, was built upon the 30 year long history of robotics in the shipyard industry. It did so by leveraging strong cluster management capabilities. These capabilities resulted from a strong team of highly skilled business developers.\n\nThis is what really helped bridging the gap between companies looking for moneys and investors. The focus was really on making sure that companies worked together to create business cases. Michael’s view is quite straightforward. More business cases leads to more companies. More companies leads to more investment possibilities. Which ultimately led to increased investor interest. It’s basically about marketing. It’s showing all the successes in the cluster.\n\nWith that in mind, investor relations also played a huge role in the development of the Odense Robotics Cluster. In that sense, the image of a single point of contact was created. This one person who served as an entry point into the cluster for all stakeholders. Everybody with money and looking into investing in robotics, would contact this same person. By centralising all these contacts, this one person became extremely well connected and was able to quickly capitalize on synergies of the whole network.\n\n>You don’t just call a guy with money and say: “Hey, come and see us”. You need to show the whole story.\nby Michael Hansen\n\nCluster management needs to be totally aligned with the top 10 investors in a cluster/geography. Single point of contact approach leverages this.\n\n# It’s about more than just money\n\nMichael shares that he has seen highly skilled and intelligent successful entrepreneurs, who have done it themselves, shifting gears into investing. These former entrepreneurs suddenly have a lot of money, a track record and network and want to invest themselves. unlike other asset classes, like for example real estate, they don’t want others handling their cash. This is mostly because they have had success in this area in the past. In developing startups and venture investing, they want to do it.\n\nThese emerging investors and business angels tend spread risk and work together with investors within the ecosystem; particularly, in Odense’s case, around robotics. Some of these people are extremely well connected and tap into an informal network of highly skilled individual with money and access to deal flow. Michael shared that this network can get up to 1 to 5 pitch decks every day, each person.\n\nIt’s really up to founders to screen if investors can help with more than just money. Venture success is when money, investment opportunity (i.e. deal) and guidance meet. These former entrepreneurs are in fact people who have done it before and that is worth a lot. However, one success doesn’t mean future successes.\n\n# The role of politicians in cluster development\n\nThe city of Odense was deeply involved in the development of the Robotics Cluster. The politicians made some tough decisions and were brave. They made a strategic decision, ensured funding for 5 years to deploy it and hired highly skilled business developers who actually cared about making a difference. Money, dedication and strategy made the cluster.\n\nThe money was not only sufficient, but deployed in the right manner. It had a long term perspective to it. In the sense that the cluster had enough time to develop, but also had to show some results after the first two years. tho whole business case around the cluster was quite simple. More employees means more taxes collected by the city,. And since the city cannot invest directly in ventures, this was it. It was all about matching companies with potential investors.\n\n# Business Angels in Denmark work with VCs\n\nThe Danish Business Angels Network (DANBAN) has a total of 230 members and sees around 600 deals per year. In 2019, it invested a total of 30M€ in, mostly, Danish startups. This money is really good for early stage startups and is, often, the first relevant investment being done into these small ventures.\n\nHowever, there is still some work to be done. DANBAN isn’t great, yet, in showing its portfolio. This portfolio goes through the due diligence of more than 230 business angels, and consists of more than 1000 startups. It is quite clear for them that venture capitalists are quire interested in collaborating. They can be a great source of deal flow for these funds. In fact, it’s more than access, it is also knowledge. Funds can actually get to know these companies 12 to 18 months well before investing. This is really the next step in terms of collaborating with venture capitalists.\n\nEven though the collaboration medal is still in its early days, the relationship seems to be getting stronger and stronger. Over the last 2 years, 4 new venture capital funds have joined as members.\n\nOne of the ways this collaboration happens is by funds reverse pitching into the network of business angels. This is basically an opportunity for business angels to invest directly into a specialised financial intermediary (i.e. venture capital funds).\n\nSimilarly, all partner funds are participating in the activities of DANBAN and its pitch and memo meetings. To this point, venture capitalists add value by educating investors and startups on the basics of venture investing.\n\nThe future shines bright in Michael’s opinion, and this collaboration will further develop itself and add even more values for all parties – business angels, founders and venture capital funds.\n\nIn the future, Michael wants to make this showroom and have all the basic info on all companies available. But it’s about much more than just basic business information. It’s about working on a way to show investors when portfolio companies are looking for money. The concept being that this should be done in a proactive way. Meaning, investors should have visibility of the companies before they are actually ready for the investment, so that there is more information into past venture development. By knowing, beforehand, that companies will move into fundraising, investors can actually reduce their risk.\n\nThis will not come without its challenges. Particularly in terms of privacy and data. It has to be done in a way that founders and investors are comfortable with. If it’s done right, and all stakeholders truly understand how it is done and value reaped, the impact in the ecosystem will be huge. At the end of the day, Michael sees it as a game of stakeholders relations. There are so many different people with so many interests. You really need to map out interests. But more importantly, truly grasp shared interests. These mobilise the whole ecosystem. A truly shared interest gathers support from all stakeholders and creates a synergy with a snowball effect.\n\n# Quickfire round\n\n* In investing across Europe, culture, language and taxation rules are second to the business case.\n* In cross-border investing, call your friends from that region and syndicate: it removes a ton of obstacles.\n* Michael is adamant on showing European VCs that Denmark has amazing startups funded by really good BAs.\n* Currently, DANBAN only has 10% of the potential investors Denmark. In 3 years time, they will a have national coverage.",
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      "title": "Meeting European VC Champions: Leading Early-Stage Deep Tech",
      "body": "The second VC champion I had the opportunity of chatting with was Stephan Morais. Stephan is the founder and Managing Partner of Indico Capital Partners, a leading early-stage deep tech VC firm.\n\n<a class=\"spreaker-player\" href=\"https://www.spreaker.com/episode/42703062\" data-resource=\"episode_id=42703062\" data-width=\"100%\" data-height=\"150px\" data-theme=\"light\" data-playlist=\"false\" data-playlist-continuous=\"false\" data-autoplay=\"false\" data-live-autoplay=\"false\" data-chapters-image=\"true\" data-episode-image-position=\"right\" data-hide-logo=\"false\" data-hide-likes=\"false\" data-hide-comments=\"false\" data-hide-sharing=\"false\" data-hide-download=\"true\">Listen to \"EUVC #2 Stephan Morais, Indico Capital Partners\".</a>\n\nWe chatted about:\n\n* How Stephan tackled raising a VC fund and what to should look for in LPs\n* How European VCs can push for policy developments that allow for more capital to be deployed into the industry\n* What Europe can learn from other countries and regions\n* What learnings Stephan has drawn from running an iberian fund\n\n\nIf you’d like to listen to more of these meetings with European VC champions, follow the EUVC podcast.\n\n# A little bit about Stephan Morais\n\n\n![EUVC profile e1.png](https://cdn.steemitimages.com/DQmZTsVbokYVgQntzz4U18AuuFgvBQy4XsXwGqD59LdwL5J/EUVC%20profile%20e1.png)\n\nStephan Morais is the founder and Managing Partner of Indico Capital Partners, a leading early-stage deep tech VC firm based in Portugal. Stephan was formerly an Executive Board Member at Caixa Capital, where he led investment rounds in many Portuguese global tech success stories. \n\nI was particularly excited to be talking with Stephan. He has been a major player in building up the entrepreneurial ecosystem in Portugal.\n\nWith a diversified background as an investment banker, consultant, entrepreneur and CEO, he has lived in 8 countries and 4 continents over the last 24 years. Stephan (also the Founding Curator of the Global Shapers Lisbon Hub) was appointed as a Young Global Leader by the World Economic Forum in 2010, and is a Member of their Digital Leaders of Europe Community.\n\n# Path into ecosystem building\n\nStephan was first exposed to the wonderful world of private equity and venture capital back in Harvard with Prof. Josh Lerner. Prof. Josh Lerner is the world-wide authority in this industry. Later on, with experience as a founder, during the dot com boom, and with an ensuing bust at HBS, he realised that VC would be his career of choice.\n\nHowever, as eloquently said by Stephan, “life takes time”. Stephan ended up doing a lot of stuff in the middle, but always with an eye on becoming a VC.\n\nStephan realizes that having been on different sides of the table gives him great insights on to how founders feel. That’s why Indico keeps close relationships with founders. Their objective is to always try to support founders as much as they can. Stephan sees that this relationship really impacts the level of happiness of founders.\n\nStephan’s entry into the wonderful world of VC started at Caixa Capital. This happened during the boom of the Portuguese ecosystem. At this time things were starting to brew up and the first success stories were arising.\n\n> Small is beautiful in the world of VC.\nby Stephan Morais\n\nAccording to Stephan, since the Portuguese market is so small, the good companies go global very quickly. This is also why he finds VC such a fun profession. However, he alerts that being a VC requires experience. Experience in what goes well but, also, and maybe more importantly, on what doesn’t go well (since that is the norm). Stephan highlights that it is really important VCs are able to enjoy these successes. VCs must them to counteract the impact of so many failures.\n\n# The rolling snowball that keeps growing\n\nA successful tech and innovation ecosystem needs specialised and knowledgeable investors, as well as experienced entrepreneurs and angels. Corporates willing to work with founders are also important. Corporates allow for the deployment of local pilots, knowledge sharing and develop senior professionals.\n\nIn other words, an ecosystem isn’t built only with money, time is a huge factor. Things need time. An ecosystem is built by creating a few early stage success stories and giving them the time to get capital abroad. There specific locations where more capital is concentrated, for later stages and growth. Ecosystems need the angels, particularly those who are former tech entrepreneurs, among others. Big corporates in tech also need to be active in the market. Otherwise, how can these fast growing success stories source the senior talent they actually need? All in all, things need time to develop. Specially when kickstarting an ecosystem.\n\nAt Caixa Capital (a public bank), Stephan was focused on helping angels with capital. He also worked in supporting accelerators with sponsorships, capital and knowledge. Caixa Capital was trying to develop and professionalize all stakeholders. They developed them to a stage where they could cherry pick the best companies posing out of the ecosystem itself.\n\nFor Stephan, the decision of going private was, partly, based on the belief that an ecosystem can’t only have public money. Public money, and corporate money, is exposed to policy priorities and market dynamic, respectively. A new government can easily change priorities and redirect capital to other priority areas, such as healthcare and education. A corporate, particularly during an economic downturn, is likely to close their innovation practice or corporate accelerator/incubator. An ecosystem needs this private capital because it is robust and strategic in its capacity of funding the ecosystem.\n\n# Being an entrepreneur is different from being an investor\n\nFor Indico most capital, but not all, came from institutional LPs. Namely, funds of funds, high net worth individuals (not angels or former tech entrepreneurs), among others. Most capital is actually foreigner.\n\nAccording to Stephan, this is the norm in risk averse countries like Portugal. VC is perceived as being more risky in less mature geographies. In these geographies people have not yet seen results and, therefore, don’t like the asset class. In Portugal, we are yet to see major exits happen (Talk Desk probably being one of the few exceptions). These big exits are required to to sustain funds.\n\nExited and successful entrepreneurs tend to become angels. In more sophisticated markets they become investors in funds. Stephan shared that, quite often, people think they can do it and that they know it better. However he clarifies that being an entrepreneur is different from being an investor or a VC. Nonetheless, there are clear advantages. These entrepreneurs understand tech, venture building and have done it in the past. But there are other dimensions. As Stephan highlighted for Indico itself, VC firms typically have entrepreneurs, but also other backgrounds. Stephan’s main point being that diversity is important in VC and adds a lot of value for investors. With that in mind, Stephan believes that entrepreneurs would benefit from becoming LPs and investing directly into VC funds.\n\n# Raising a fund\n\nRaising a fund in Europe is a particularly difficult task for most VCs.\n\n> Those three things are fundamental: your track record, your ability to source deals and your ability to co-invest with other funds across the globe.\nby Stephan Morais\n\nThe first things investors need to understand is a fund manager’s track record. It is extremely difficult to start a fund without a track record in investing. As Stephan previously shared, there is a need for diversity and a mix of people. A need for those who were successful entrepreneurs but also those with investment experience. At the end of the day, investors want to know if the team knows how to invest in technology.\n\nThe second thing investors need to understand is how the fund managers will access deals. Not any deal, but the best deals and companies out there. It’s important that investors understand how fund managers ensure they are the chosen investors of the best founders.\n\nThe third thing investors need to understand is the international reach of the team. This is a core requirement to make follow on rounds happen. In VC, the investment os actually start of the game. As Stephan said, “VC is a game of layers of capital”. In that game very few investors do it all (or even want to). VCs are basically a supplier of deal flow to more mature ecosystems. For example, Europe provides deal flow to San Francisco. Fund managers need that reach. They need to know the people in the industry.\n\n# The European LP landscape\n\nThe European LP landscape is, arguably, a bit grim for the vast majority of VCs. Not because there is a lack of deal flow (even though some institutional investors bring this up). Europe has great scientists, engineers and entrepreneurs. So, in other words, there is enough demand for capital in Europe.\n\nMost potential LPs in Europe refuse to invest and are very wary of the asset class. In fact, some are actually forbidden of investing in VC. Not surprisingly, VC in Europe is getting a bit left behind.\n\nStephan has experience as a former Advisor to the European Commissioner of Science and Innovation, a past Chairman of the European Venture Finance Network, Board Member of the European Venture Capital and Private Equity Association and Board Member of the International Venture Club. At these institutions, he tried coming up with ideas to make LPs consider VC an attractive asset class. Unfortunately, as Stephan shared, Europe is “still has a long way to go”. The US looks at innovation in a very different way. The sheer amount of capital available in the US for tech investing is larger.\n\n> Size matters in VC!\nby Stephan Morais\n\nOne of the objections heard from potential LPs is that they don’t invest in VC. Some even state that, even if they did, they would do so only in Silicon Valley. Interestingly enough, and as Stephan pointed out, Silicon Valley funds are not really accessible to European institutional investors.\n\nThe fact of the matter is that rounds are getting and bigger. Small funds can’t make it. Fund managers need 50 to 100 million to be able to do follow on rounds. Otherwise, they won’t be able to deliver good results for themselves and investors.\n\nStephan believes policy needs to change in Europe. Not only at a regional level, but also at the member state level. Policy needs to promote the deployment of capital directly into financial intermediaries; particularly, professional, specialised, tech investors.\n\nThere are many public programs that invest in funds; but they often come with a lot of strings attached and fine print. It’s all done with good intention but ends up really hindering the industry and its agility. We need to change this to be competitive. Stephan really believes that there is a lot to be learnt.\n\n# Call for a policy driven revolution in VC\n\nMany institutional investors cannot invest in VC. Thus, Europe must bring down those barriers. As an example Stephan highlighted the fact that certain pension funds can’t invest in this asset class. Therefore, there should be an incentive scheme so that these LPs can and would invest in VC. At the moment there is no incentive, there are actually huge barriers, and that is a big issue.\n\n> If you have 1% of the pension funds in Europe investing in VC, that would be a tremendous revolution.\nby Stephan Morais\n\nSome European countries have made efforts to make individual investors invest in tech. However, these schemes and program did not require this investment to be made through professional investors. Thus, there is this huge risk that these people become “tourist investors”. So, basically, this money is being wasted; because unexperienced investors end up investing in the wrong tech, teams or even investing for the wrong reasons. More importantly, the money wasted is not only their won. It is also public money. It would be smarter if these people had tax breaks to invest directly in professional investors.\n\nOften, the easiest solution is for governments to come up with schemes investing directly themselves. This approach is simpler and faster. This is very important, as public capital has actually allowed to create the European VC industry. However, Europe needs to attract the private capital. Just a tiny bit would be game changing.\n\nThe geopolitical game is being played on the tech level, and Europe cannot fall behind.\n\n# Quickfire round\n* More LPs investing\n* Need to celebrate more the success stories. People don’t know about it.\n* Indico keeps on growing. Investing in great deals and providing return. Amazing talent throughout Europe in small countries. The joy is working with this star people. Probably gonna do this forever.",
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      "permlink": "meeting-european-vc-champions-cross-border-life-sciences-investing",
      "title": "Meeting European VC Champions: Cross-border Life Sciences investing",
      "body": "Recently, I had the opportunity of chatting with Marc Lohrmann, the Managing Partner of Vesalius Biocapital Fund III (VBC III). VBC III is a 120M€ venture capital (VC) fund investing in late-stage companies in drug development, medical devices, diagnostics and digital health, across Europe.\n\n<a class=\"spreaker-player\" href=\"https://www.spreaker.com/episode/42449189\" data-resource=\"episode_id=42449189\" data-width=\"100%\" data-height=\"150px\" data-theme=\"light\" data-playlist=\"false\" data-playlist-continuous=\"false\" data-autoplay=\"false\" data-live-autoplay=\"false\" data-chapters-image=\"true\" data-episode-image-position=\"right\" data-hide-logo=\"false\" data-hide-likes=\"false\" data-hide-comments=\"false\" data-hide-sharing=\"false\" data-hide-download=\"true\">Listen to \"EUVC #1 Marc Lohrmann, Vesalius Biocapital\".</a>\n\nWe chatted about:\n\n* How Marc and Vesalius work as a country agnostic VC fund.\n* The main barriers to cross-border investing.\n* How investors without a natural sciences background can create value in Life Sciences companies.\n* Why Vesalius moved towards later-stage companies and is investing across a several sub-sectors.\n* How Marc invests in these different by dealing with different exit strategies and business models.\n\nIf you’d like to listen to more of these meetings with European VC champions, follow the EUVC podcast.\n\n# A little bit about Marc Lohrmann\n\n\n![EUVC profile e2.png](https://cdn.steemitimages.com/DQmfP2GMYqemRSe5qcMurxWmjja9HG1TSGfHCdpjD45xJnD/EUVC%20profile%20e2.png)\n\nMarc has over 18 years of experience and joined Vesalius Biocapital in 2012 as a venture partner. Since then, Marc advised on the corporate development of portfolio companies of Fund I and Fund II. Marc is the Managing Partner of Vesalius Biocapital Fund III.\n\nPrior to joining Vesalius Biocapital, Marc started eight life sciences companies, namely Reverse Medical which acquired by Covidien in 2014, was an investment manager at Bayer Innovation and worked with several corporate finance boutiques focused on life sciences M&A transactions.\n\nVesalius Biocapital Fund III portfolio companies address unmet medical & market needs and operate on the basis of strong intellectual property protection.\n\n# From operator to VC in life sciences: an emerging trend in Europe\n\nMarc was a Venture Partner for VBC I and VBC II. He shared that he was quite skeptical when the offer to join as managing partner for VBC III came in. Marc was concerned about changing sides of the table.\n\n>Is it really a good idea to change to the dark side of the table?\nby Marc Lohrmann\n\nWhat’s really interesting about this, is the decision making process Marc employed. He read a couple of books to better inform his decision. But what really stayed with him was something his wife told him. Marc’s wife encouraged him to embrace this challenge. She made him face the fact that, as an entrepreneur, he had been complaining for ages about VCs.\n\n>So, why don’t you go ahead and do it better?\nMarc’s wife\n\nWith three years of managing partner experience, Marc finds it interesting to work with entrepreneurs, helping them develop their venture. As a former operator, he believes he brings a different flavour, which entrepreneurs appreciate a lot. His experience as an entrepreneur, with a lot of lows and highs, gives him a different perspective in the board room.\n\nIt seems that a new generation of operators are entering the scene and becoming life sciences VCs. This has been a trend in the US for some time now, but novel in Europe; where, typically, former big Pharma execs were the ones stepping in. Marc believes this emerging trend in Europe will provide some fresh new insights into the industry in the coming years.\n\n# The ups and downs of being country agnostic\n\nFor most European VC, the money comes with hard stings attached in terms of geography. Investors in the VC funds (aka LPs) typically have a specific interest in particular geographies, skewing investments into these countries. This is not the case in the US, and is quite specific to Europe. Often, American VCs struggle to fully understand why this is the case in Europe.\n\nAccording to Marc, VBC being country agnostic really has its upsides. They currently receive deal flow from most European countries. Marc stated that “if you chart the GDP of European countries, those on the top of the list are the strongest” in terms of deal flow. Germany clearly stands out, particularly given the Munich Office of VBC. VBC’s headquarter in Brussels, and the fund’s location in Luxembourg, also lead to significant deal flow coming from BENELUX. Generally speaking, Marc sees great signs from traditional markets like France, Germany and the Nordics. Eastern European countries are also showing interesting development in Life Sciences. Marc gave particular praise to “beautiful Portugal” which has popped out several intercity digital health and therapeutics deals.\n\nHowever, being country agnostic also brings some operational limitations; particularly, syndication. Marc came back to “beautiful Portugal” as an example; stating that there are not many experienced people and investors in Portugal. This aggravated by the fact that there is very little specialised money for Life Sciences deals. As such, building syndicates in Portugal is difficult compared to other geographies, like Germany, or even regions, like the Bavaria. Nonetheless, Marc shard the example of Sword Health. This is a case of a local investment strategy leading to the set up of a global company. VBC invested in Sword Health together with a family office and, later on, Khosla Ventures and Founders Fund joined in. The American VCs ended up relocating the business to New York.\n\n# Different types of founders across Europe\n\nVBC rarely invests in existing business plans. They expect the companies to integrate their feedback and digest it. Either to come back and prove them wrong or, typically, to integrate the feedback and adapt the business plan. This is a collaborative approach with management teams which takes some time, up to a couple of quarters. For Marc, having VBC’s footprint in the business plan increases returns, or improves products and patient care; often both.\n\nVBC, similarly to other verticals, goes through 400 to 450 deals per year and needs to filter them quickly. From Marc’s perspective this is more or less independent of the country. Historial investors/investors interested, science, market potential, competition, IP, and so on, has little to do with geography. He does, however, see very different founder profiles across Europe. Germany, for example, has great Pharma executives; whilst Portugal has really hungry and ambitious entrepreneurs (side: borderline stubborn).\n\nAt the end of the day, Marc believes it’s all about being really selective and true to VBC’s investment thesis: investing in unmet medical and market needs.\n\n# On remote VC and becoming more effective\n\nVBC is becoming more and more effective in supplying ventures with feedback on how to improve the business plan remotely. Dealing with management teams from Portugal to Turku, Finland, VBC has long been using tools like Zoom; well before the lockdown. Marc believes that geography doesn’t play a major role in working with founders. Overall, according to management teams, input is taken as value add.\n\nThis story is a bit different outside of Europe, particularly on the investing side. According to Marc, going over the Atlantic to syndicate is hindered when meeting face to face isn’t possible.\n\n# An insider’s view into life sciences investing\n\nThe assumption out there is that the life cycle of life sciences companies is long. However, life sciences VCs are exit driven and understand that the relation is short winded, ending with a trade sale (or IPO, even though not the preferred exit route in life sciences). Furthermore, recent figures show that, surprisingly, returns of life sciences are on par or above those of tech funds.\n\nMany find it difficult to understand that each sub-sector deeply affects the exit strategy. The life cycle of life sciences companies differs greatly and, as such, so do their business models. This might seem complex from the outside, and even lead to misconceptions about the complexity of life sciences. It’s all about structuring and segmenting between the different sub-sectors of life sciences; which is not that complex when you take an insider’s view:\n\nIn therapeutics deals, once there is good Phase 2a or Phase 2b data, on an interesting indication and new modality, exit likelihood is high. Exits typically lead to double digit returns through big Pharma acquisition.\n\nIn MedTech and Diagnostics deals, strategics tens to wait after first sales. This is far after regulatory approval in major markets, recurring sales and post marketing studies. These deals tend to be sold at a critical moment. The venture has generated enough value, but strategics only pay a multiple on sales, or sometimes even income. According to Marc, this is not a great deal for VCs, and is more of a Private Equity approach.\n\nIn Digital Health deals, there are so many different business models and sub-sectors. Here exits tend to follow a similar rationale to therapeutics. According to Marc, these companies are “sold based on phantasy, rather than hardcore facts” (e.g. sales, recurring revenue, number of patients, etc.).\n\n# Crafting an equity story\n\nMarc has been active in life sciences investing for 21 years now, with no scientific or R&D background. His approach?! He assumes that the technologies, from a scientific, technical and medical standpoint, make sense. He is quick to this assumption because so many talented people have gone through it.\n\nMarc stated that, in the board room, there are already a bunch of amazing R&D people. His added value, and unique perspective, is the ability to create an equity story that is highly attractive to potential acquirers. Marc recognises that this requires a lot of business acumen and market awareness; which is only possible when you look less to the science and more to corporate development and exit strategy. This ends up being “highly valued by entrepreneurs and brings diversity into the board room”.\n\nCrafting an equity story and exit strategy, requires that VCs are very upfront about their investment strategy from the get go. Being very clear helps avoid tension later on; “just like a marriage”.\n\n> When you marry, if you are very upfront with what you can expect and can’t expect, that simplifies what you’re doing afterwards.\nby Marc Lohrmann\n\n# Focus on investors who actually care\n\nVBC’s largest backer is the European Investment Fund, and its second biggest backer is a German pension fund. During fund raising, VBC was driven by the investment topic (i.e. unmet medical and market needs), and it was really important LPs understood what the investment strategy.\n\nWhat Marc find out was that some investors don’t care about that at all; for them it’s all about return. Marc’s take is that you, as a fund manager, have to decide what kind of LPs you want.\n\n> Do they care about the story or just about making money ? If the latter, maybe another asset class is best.\nby Marc Lohrmann\n\nMarc shared a great example of a former entrepreneur from the automotive industry. This type of investor really cares about the story, about the investment strategy. These are really engaging conversations. These LPs want to know all about the spirit leading the fund management team to do what they are doing. Approaching this type of investor increases the HIT ratio and, according to Marc, is a much wiser spend of time.\n\n# Impacting patient care\n\nOne of the major questions for VBC III was whether to go for all the four sub-sectors or only one (i.e. therapeutics). They ended up going for the four sub-sectors. Namely, because it makes for a more balanced portfolio, and it made sense based on previous agreements with LPs. These agreements were such that VBC would look beyond therapeutics, and back deals with an impact on patient care.\n\n# Quickfire Round\n\n* Founders need to understand the geographic agenda of VCs and LPs. Fortunately, most founders do.\n* Many large VC funds in life sciences were raised recently, these are great and exciting news.\n* In the future, expect great deals from VBC and Marc will be supporting founders in realising successful exits.",
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      "title": "In Europe, the startup funding graduation rate is also surprisingly low",
      "body": "We used Crunchbase to look at all European-based companies that raised a Seed round between January 1, 2008, and December 31, 2010. This period is close enough to make any findings actionable, and long enough ago that the companies had time to set their trajectory.\n\nA total of 1092 companies received a seed investment in Europe between 2008 and 2010. Data show that the number of companies securing a Seed round increased yearly from 2008 to 2010. In 2009 the number of seed-funded companies increased by 19%, and in 2010 it increased by 59%. This particular finding is in line with existing research and data; suggesting that securing a Seed round of funding has been more common over the past ten years in Europe.\nThe countries with most companies securing a Seed investment were the United Kingdom, Germany and France. This is likely related to the maturity of their innovation ecosystems. But still, no direct relationship or correlation was evident. Factors like the gross domestic product, tax system and/or the existence of fiscal benefits might also play a role.\nFrom these 1092 companies, only 217 secured Series A funding and, from those, only 118 secured Series B. The drop-off rate is clear. This trend persists throughout Series C, all the way to Series E, and across all yearly cohorts. Only 20% of the companies receiving seed funding can secure a Series A. We found exponential decay in the startup graduation rate in Europe, shown by applying a logarithmic scale.\n\nThe steep drop-off rate, allied with the macro-economic benefits of startups and venture creation, clearly attests to the importance of developing a stable and attractive ecosystem. We must be able to attract more people as potential entrepreneurs. As for governments and institutional players, they must increase capital availability for early-stage investments.\n\nSimilarly, for founders who have been able to secure Seed investment, this paints a stark picture. These founders might be tempted to adopt a somewhat narcissistic view and assume that subsequent rounds will be easy to raise. In reality, as shown above, it is quite the contrary. A couple of takeaways would be, as a founder, to start fundraising long before you need any cash and to favor investors who can help you go through future fundraising. Access to later-stage capital is crucial. The latter is also relevant for investors; who must ensure they have enough gunpowder for follow-on rounds and access to later-stage syndication partners.\n\nMore data here: http://untamedpotential.com/eu-startup-funding-graduation-rate/",
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      "body": "Societies are experiencing a problem upon retirement. People feel stripped of their meaning and purpose, which is often strongly connected to their career. This feeling of emptiness is provoked not only by the fact that someone lost his/her job, but by the fear of losing friends and a place in society.  A study published in the Journal of Population Ageing found that retired people were about twice as likely to report symptoms of depression than those who are still working.\n\nDuring the last century, Austria, especially Vienna, brought forward enormous advances and findings on what motivates and drives human beings. The first two trends of the so-called “Viennese school” were developed by Sigmund Freud and Alfred Adler.\n\nAccording to Sigmund Freud, the father of psychotherapy and psychoanalysis, people are driven by pleasure, namely sexual pleasure. Alfred Adler, a contemporary of Sigmund Freud and the founder of individual development psychology, developed a concurrent line of thought which considers man is driven mainly by power and/or the desire of superiority. In Adler’s opinion, future aspirations, and the construction of a self-ideal man, plays a vital role in our desire to live.\n\nHowever, and immediately after the second world war, Viktor Frankl, a psychologist, and neuroscientist, who survived concentration camps, developed a new way of thought known as “the third Viennese school of psychotherapy”. According to Frankl, based on his experience and time spent at concentration camps, man is driven by meaning. In fact, and based on his book “Man search for meaning” (listed among the 8 books for Humanity in the Era of AI - http://untamedpotential.com/8-books-for-humanity-in-the-era-of-ai/), man needs a reason to live. This line of thought is the basis of logotherapy, which is a technique to help patients identify the meaning of their lives as an escape to depression and/ or suicidal tendencies.\n\n\n![image.png](https://cdn.steemitimages.com/DQmaXnj9v3FfMtANXsCYdQ13L41q79fYwGvzZeeszSCFRsR/image.png)\n\nIn line with Frankl’s approach, and my personal experience as a son witnessing the retirement process of his father, it seems that a lot of us lose the sense of meaning/purpose when retirement is experienced. Mitch Anthony, the author of The New Retirementality, says that this loss of meaning lies behind the retirement model that somehow labels a person based on their age. Additionally, and according to the same author, “It doesn’t matter how much money you have in retirement, it doesn’t give you purpose”.\n\n<h1>Phased retirement<h1>\n\nThere is some evidence that a phased retirement could help with this transitional period. According to research published in the Journal of Occupational Health Psychology, people that choose phased retirement report fewer health problems and overall increased mental health when compared to those who retired abruptly.\n\nPhased retirement was accepted and implemented to different extents and with differing approaches, across seventeen countries including Canada, Germany, Sweden, and the United Kingdom with successful results. Its implementation includes reducing progressively the workload of employees, extracting most of their knowledge (mentor approach). This mentality allows both the company and the employee to adapt to a new reality progressively.\n\nWestern societies have been experiencing unprecedented demographic challenges, as demographic pyramids are being transformed into “solid squares”. This approach could also be an opportunity to improve the already stressed western national pension systems.\n\nA phased retirement approach can be easily implemented and benefits companies and employees alike, giving the latter the chance to gradually adopt new hobbies and lifestyle. A good example of this approach was developed by a Portuguese energy company that created a university in which classes are taught by employees who will retire soon. It is a simple and easy measure to implement.\n\n<h1>Community programs<h1>\n\nThe involvement of retired people in society is not only the State’s responsibility but also a shared responsibility of the whole society given it improves the mental and socio-economic health of seniors. As such, local communities must develop programs that create a sense of purpose and care. Everyone likes belonging to something, and elderly people are not an exception.\n\nRecently, a Portuguese municipality near Lisbon implemented an extremely well-thought measure. For those willing to, this municipality pays a symbolic amount of money to retired people to patrol the area, working alongside police forces. This simple measure has a strong social character. It increases the involvement of retired people in their communities, helping these individuals connect and feel like they provide added value. These programs could be scaled up to include artistic work or children support and/or care.\n\nCommunities play a vital role in the mental and socio-economic health of older generations. These programs are essential to keeping this important part of society occupied, and above all, with the feeling of purpose.\n\n<h1>Connection instead of isolation<h1>\n\nThe Covid-19 pandemic has shown that technology can help reduce isolation by keeping people connected even when there is physical distance. It is fundamental to take advantage of technology for retired people in an effective matter. As an example, mental monitoring programs could be set up at a low cost, and isolation tracking systems could be put into place to avoid and prevent extreme situations. There is a lot to be done in this field since there have only been a few “senior universities” launched.\n\nKeeping people connected in articulation with organizations of the social sector must be a priority. Technology helps to reduce the costs involved in launching this type of infrastructure and in maximizing impact, even with scarce resources.\n\nLast but not least, there is no doubt that depression is becoming increasingly common in western societies, especially close to retirement. Today, and in disagreement with previous theories, we know that the loss of meaning is the root of feelings characterizing depression. However, this meaning, or purpose, can be regained. Phased retirement, community programs and emphasizing social connectedness can help solve one of the biggest societal issues associated with aging.",
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