This week we had a great interview with David Cruz e Silva and Andreas Munk Holm, co-founders of The European VC. We talked about the EU VC community and their new platform, Syndicates. Without further ado, let's move on to our interview.
"We Are Startup Lovers"
Andreas: The European VC community is a local community for everyone who is as much in love with the VC ecosystem as we are. There is so many actors in this ecosystem and the EU VC community compasses all of them. What brings them together is the focus on Venture Capital. And what we’re building is the ability for everyone in that ecosystem to participate into venture funds and earn the rewards after great returns that come from this magical sector.
David: I agree with everything Andreas said. Andreas and I are startup lovers. We were born in startup ecosystem, that’s how our career started. We’re strong believers of the power of technology, we’re strong believers of the need for technology.
For an example, in Portugal we had more than 180 wildfires this year already. People have died. And I know and everyone in the startup ecosystem knows that they can play a role helping solve these problems and the others.
And as that atomic unit of the value being a startup, we also come from the financing of these amazing Technologies. For us, you can’t talk about startup ecosystem without talking about the venture ecosystem. So that’s why everything we do very much revolves around empowering this community of investors. Because that will then trickle down to the startup ecosystem. So that's why we started our whole activity. Which sharing practices, highlighting the best investors out there in the hopes of helping the rest of the community in Europe to learn from that and taking part in that. And the the next level of that, is actually is the “Syndicates”. That we allow the community to participate in basically financial up-side and but also in the value-add of helping these startups.
So it all comes down to that atomic unit, which is a startup and how can we help them. And capital is a such an important factor in that equation.
Andreas: I’d like to add the answer of “Why Do We Need the EU VC Community”.
If you look at the United States, you see one central hub for startups basically. That is Silicon Valley. All the money is in one Street, you can walk from one investor to the other. Everyone goes to the same Cafe’s and the same parties and that means, getting money into your startup is just a walk away. But in Europe, investors are investing in everywhere. The Syndicate that we’re doing into 500 startups, Enis Hulli in Istanbul (I’m sure you know him quite well) He is investing in all of Eastern Europe. And that means the organisation that he needs to build needs to be completely different that also the ecosystem that he is tapping into is completely different from what you’re seeing in the US because its not just about a city. It is about 15 countries from Turkey all the way up to Poland.
"This Is For Us to Get to a Better World"
Andreas: David and i, we both came from a background from the startup ecosystem and from Venture . We’ve both helped the managers raise their funds. I did it in Denmark, David did it in Portugal. What i always say is, that we have seen how difficult it is to raise capital for a venture fund.
Because venture is in the large scale financial ecosystem. So getting someone who really care about an industry which has the potential to change the world and that is where all the large S&P 500 companies are coming from. If you need to get financing to that very little ecosystem in the beginning where those companies haven’t grown yet. It is a humongous task for anyone involved. So that is what we saw, that this is for us to get to a better World. We need venture capital and we need more to get emerging managers, raising capital efficiently from everyone in the ecosystem be very wealthy and less wealthy.
David: As Andreas says, he went into working with an incubator, then he got into the VC by running a co-state funded program in Denmark. He started working with first time with investors by helping them set up their funds. My track is so much similar, slightly different. I went straight into the startup business for a couple of years. Started doing fundraising for startups as an external consultant and that led me in venture. Doing the same as Andreas was doing at that time for venture investors. That's how we connected, that's how we got together. That's also how we fell in love with the problems that we’re trying to solve now. At the end of the day, we got into the venture by pure chance as everyone does. Bu its super fun!
And i agree with Andreas, we’re community builders at heart and we are strong believers of technology. So we are heavily involved with many communities across the globe, mostly Europe of course because that's our focus. As a great example a project that we kickstarted last month with partnering UpLink which is a project by the World Economic Forum were we launched together with them, called for the venture funds that are helping tackle the way that the SDG goes.
So its a great example for what we believe and what we want to drive more capital to make an impact. And thats also a great omen to the type profiles that us as founders have.
"Syndicates Allows People to Come Together to Do an Investment"
David: That is a great question (he laughs)
Andreas: I was about to say there is no reason for us to talk too much about the complexities of it. Because there is a bunch of stuff around legal structures but the interesting part of the “Syndicates” is a group of people who come together to invest into a single unit. And that is what we’re doing. We’re bringing multiple small time investors and small size investors together around investing into venture funds.
David: Exactly. I completely agree with Andreas. Syndicates allows people to come together to do an investment. But the interesting question from our perspective is “Why”. Why’re we doing it? And that is what i love to answer.
We’re doing it because in Europe, if an individual or an organization wants to invest into a venture there are some kind of regulations. There is a minimum amount of money that you must invest. That amount across Europe is mostly 100 thousand euros/dollar etc., at some parts, it is even more.
As a fund proves its ability to deliver returns, that number goes up. So you will easily find 250k, bigger brands this number goes up to 1-2 million or 5 millions. But at the basic, the minimum limit is the 100k.
Andreas: We’re pulling everyone into the same investment. We’re allowing everyone to join in for 1.000 euros. And then put the honest on us to make sure that we raise the capital and go on. So that we can actually do that. That's of course the difficult part of this process. That's why its not done typically.
I always say that the venture investments, if you go to your bank and say; “Hey man, i got a 1.000 euros, I'd like have a chance to make 10x one them, over the next 10 years? I’m ok if i lose that 1k but I'd like to have a chance”. If you say that, your banker will probably laugh at you and say; “I don’t know who can work those metrics but i certainly can’t” and will ask you leave.
But if you actually look at venture capital, that is what the venture capitals doing and some of them even doing more. And that is the kind of investment, its only been open for someone who can do more than a 100k in one go. And that is hugely unfair in the way that has set up right now. That is what we’re solving.
"That Is Why We Are Community Centered"
David: What is interesting about this is connecting to your first question; That is why we are community centered. Because at the end of the day, who helps the startups on a day by day basis? It is everyone from the junior staff to the incubator or from university to investor. So our goal is to allow this whole ecosystem to gain the benefits. It is not about excluding the wealthy or only including the less wealth. It is about allowing everyone to participate. That is why the community is so important at the core.
Andreas: I think Emircan, the big difference between what we do and everyone else because there is a lot of companies that are pooling people’s capital to invest into venture funds. A kind of crowdfunding. That is all good and well and we wish them the best, we all need them.
But what we’re doing is different. We’re pooling the venture ecosystem. So we’re allowing our investors to actually acces the GP, the fund that they’re investing in and provide value to them and that is also build their ecosystem around themselves and all the connections that they need to further their career and getter better at venture investing. That is the big differrence because if you go with all the other platforms, yes you might get accces to capital but you don’t get this community experience that we are delivering.
When you invest with us, as an example you might want to say; “I want to do the scout work” then we allow you and help you to do the scout work. Helping you get visibility on the deals if you believe it could be good for the fund. That will of course then allow you to become a better investor yourself and get yourself better in the ecosystem.
"We Want to Help Fund The Future"
David: That quote is not ours actually (laughs). But we love it.
Andreas: We use it as a slamdoor but it belongs to one of the fathers of the Venture Capital.
David: I think it comes down what i started by saying i think it is a great way to finish it which is we all believe in the power of technology, we all believe using money to innovate and solve big problems. I don’t believe that i’m the best person to do that myself. But if i can follow the money to the founders across Europe to making that chance, i will be extremely happy for my impact in the ecosystem. That is basically what this sentence means to me. If i can’t invent the future at least let me fund it right? That is basically what drives us. We want to help fund the future. We want to help fund all those amazing things that are happening out there.
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