Venture capital platforms: supporting entrepreneurs beyond money
Venture capital funds are creating platforms to make available to their investee startups, in addition to capital, the knowledge, expertise and networks necessary to accelerate their growth.
It all starts with an idea, but in order to develop it, scale it and make it a success, it takes a lot of hard work and resources. In many cases, funding is sought from venture capital (VC) funds, which invest in startups seeking extraordinary financial returns.
2021 was a record year for investment in startups in Spain, exceeding 4.2 billion euros. This year, 2022, despite the complicated macroeconomic situation, there has been an investment of more than 3.3 billion euros, a decrease of 843 million euros . However, these funds are increasingly aware that money is only one of the ways to drive forward a project. By providing advice, experience, contacts, talent or experts, these venture capital firms are able to accelerate the success of their companies.
This is something that fund managers were already doing, but now it is being consolidated under the term ‘platform’, which encompasses structures that seek to provide a comprehensive service to their projects and nurture them with knowledge, licenses or talent that they do not necessarily contain within the company.
In the last two years, in a context of low interest rates, the private equity market has been flooded with liquidity. This meant that the startups, unlike in other times with a different macroeconomic context, were being tested by a multitude of investors and were in a position to choose the most attractive ones. “When choosing an investor, startups rely primarily on two criteria. The first has to do with liquidity, that is, the fund’s ability to invest in successive rounds of financing and, therefore, accompany the startup for a longer period of time,” says Joan Cuscó, MAPFRE’s global director of Transformation. “The second criterion is more linked to the prestige of the fund itself, its positioning in the market and the capabilities it makes available to the startup to get customers, talent, knowledge and new investors.”
The pan-European venture capital fund Samaipata created by entrepreneurs José del Barrio and Eduardo Díez-Hochleitner, knows how important it is to devote time and resources, not only financially, to its companies. Samaipata invests in early stage rounds of digital platforms–SaaS, marketplaces and B2B and B2C platforms–with network effects. In 2020 it began deploying its second fund, this time with 110 million euros.
A startup, says Marcia Maciel, head of this venture capital firm’s Founder Success Platform , is a risky project where “a lot of things have to go right to disrupt a market, product or technology.” Maciel maintains that financial support is “essential,” “but a good investor can do many other things to increase a project’s chances of success.” For this reason, she says, it is vitally important for the founders of these companies to be able to access a support network that covers everything from something as simple as a acquiring a contact, gaining access to a new service or finding talent.
Although all projects have their particular strengths and weaknesses, especially in the early stages, Maciel refers to a common mistake: sometimes raising capital seems like an end in itself. “This is never the case. Capital is a means to build and to scale, but value creation lies in the startup’s product or service and its ability to take it to market and sell,” she says.
The Hive, Samaipata’s hive to support its projects
As they would argue, capital is not the only way to build. This VC has created The Hive, which has already become a benchmark among international platforms. It is a 360º project that seeks to connect human capital through a community of funders and stakeholders. “Through this initiative, which is managed by the Founder Success team, we are committed to supporting and empowering these entrepreneurs in a variety of ways throughout the journey. For example, through The Hive, we help them to attract talent, structure the next rounds of investment or scale their operations,” says Samaipata.
“We also provide entrepreneurs with a series of exclusive assets: our network of Operating Partners (market experts), an extensive portfolio of partnerships with top-tier service providers, ad hoc workshops for management teams of invested companies and an extensive network of ecosystem players,” says the head of the Founder Success Platform.
“At The Hive we are always experimenting with new initiatives and projects that generate a great impact on our portfolio companies. We have a highly committed team and the best industry experts in our community. We are always aligned with the strategy of the investee companies and their priorities, which ensures for us more effective and dynamic accompaniment,” she says.
“Samaipata Operating Partners and The Hive alumni have supported us from our initial seed investment through Series A, facilitating core infrastructure projects, from setting up our DataStack to re-evaluating incentive schemes for our sales team.” – William Hoyer, founder and CCO of Geomiq.
Between its two funds, Samaipata has invested in 28 large companies and raised 400 million euros, with two successful launches: Deporvillage an online sportswear store, and FoodChéri, a virtual restaurant with its own kitchen that prepares fresh food for home delivery. Its tickets range from 500,000 to 2 million euros, and its portfolio includes companies like Matera, Legl, Colvin, Fintecture or Retraced.
Mundi Ventures and an exclusive Platform team
Likewise, Mundi Ventures, led by Javier Santiso, focuses on technology-based projects that are at an early stage, have B2B business models and are in Series A or B financing. This year it launched its second fund specializing in the insurtech sector, with a target of 250 million euros, of which MAPFRE is the anchor investor. Since the first Insurtech fund was launched three years ago, Alma Mundi Insurtech has analyzed more than 2,500 proposals that have resulted in 40 investments. Its success stories include the artificial intelligence tool for sustainable investing Clarity AI or the platform for managing home care for the elderly Cuideo.
“The partner network has been a great advantage in growing faster, hiring the best people and selecting strategic local partners.” – Tim Dumain, co-founder and CEO of Bigblue
When choosing its portfolio of projects, venture capital fund manager Mundi Ventures focuses on those that have a technological base, are quickly scalable and have a global impact. “We are mainly looking for them to be led by a top-notch team that is capable of executing a major international project,” says Lluis Viñas, investment director at Mundi Ventures. “We look at projects that are leading the transformation of the [insurance] industry.”
Support in ESG, finance or sales
When you support a company, you do it with capital for growth, being able to join the Board, but also with the experience that is now encompassed under the term “platform.” “In Spain, we are one of the first to build a Platform team to support startups beyond only money.” It includes an ESG (environment, social and governance) person, a finance expert, a business development expert and a compliance person.
The importance of supporting these startups in terms of knowledge, says the investment director of Mundi Ventures, lies in the fact that “these companies very often have quite ambitious business plans that require a 200% focus on execution. In other words, a lot of time is spent on carrying out the business plan, and sometimes it’s hard to gain perspective,” he says. “We as investors have a more global position and can offer this kind of talent that maybe a startup doesn’t think it needs at that precise moment. With this team we offer them talent that they don’t now have and that they can use to prepare themselves for the next phase one or two years down the road,” says Lluis Viñas.
To illustrate this, the Mundi Ventures executive refers to a success story of one of his projects, which he does not name for confidentiality reasons. This is a company that is starting to work on a non-organic growth plan within its sector, with the objective of acquiring small non-digital businesses, digitizing them, and integrating them into its activity. “This company had no experience with this type of growth, so our financial analysis specialist helped structure the whole process,” he says.
In other cases, he explains, the Platform’s business development expert can support a company, for example, by helping to hire a growth manager or structuring sales plans.
KFund: fundraising, customer and talent search
Like Mundi Ventures and Samaipata, other venture capital firms are pursuing similar strategies, such as KFund which, with tickets ranging from 50,000 to 10 million euros, have boosted the success of companies such as Factorial, Goin, Exoticca or Abacum and have a portfolio of around 60 projects. “We like to invest in companies where technology is driving the business. We look especially at those that make new and interesting use of artificial intelligence, quantum computing or data science. We’re also looking for problem solvers in really big markets,” says its Platform head, Max Bray.
Bray notes that the three key pillars of support for startups are help with fundraising, finding customers and hiring the right people. “We determine what the objectives of that business are for the next 12 to 18 months and then actively work with them to understand their needs. This way, we help the startup find the right talent through recruiters. “We also have a large database with very diverse contacts. Every time we make an investment, we ask ourselves how we can help them on a one-to-one basis, so we go to our database and we can provide them with all kinds of customers and contacts,” concludes Bray.