It is at all times attention-grabbing when a brand new enterprise capital agency with a brand new crew of companions emerges. And with Yellow it’s attention-grabbing in a number of methods. Based by Oscar Pierre and Sacha Michaud, the founders of Glovo, and Adam Lasri, a former investor of enterprise capital big Atomico, Yellow is a brand new €30 million pre-seed fund that goals to speculate on the earliest attainable stage (that is $32 million on the present alternate fee).
Along with this distinctive founding crew, the main target of the VC agency can be very totally different. Whereas most enterprise capital companies working in Europe concentrate on Britain, France, Germany and the Nordic international locations, Yellow needs to place extra emphasis on Southern Europe – and particularly on some key markets within the area, reminiscent of Spain, Italy and Portugal.
Final week I spoke with Adam Lasri in regards to the new fund and the crew’s funding thesis. Yellow will probably be an opportunistic expertise fund, which means it doesn’t intend to focus particularly on any vertical sector. The corporate will put money into each B2B and B2C startups throughout industries.
“Over time I’ve gained increasingly entry to early-stage deal move. Typically at Atomico I spoke to firms that had been within the thought part, by which we couldn’t make investments,” Lasri instructed me. “And I discovered that irritating, as a result of just a few months later you would have Index or others make investments, whereas it was not a part of our thesis to speculate at entry degree.”
Later within the dialog, he additionally added that he has no laborious emotions in direction of his former crew. He solely needs to put money into the seed (or pre-seed) part.
“Founders like to speak to a different founder who has efficiently offered their firm” Adam Lasri
And but Yellow won’t be the lead investor, because it plans to speculate €200,000 to €500,000 per deal. As a substitute, it thinks it may be the primary believer, entice different buyers and supply recommendation at scale. “We’re by no means leaders, however solely collaborators,” Lasri mentioned. In response to him, many early-stage firms face the identical issues: learn how to arrange a crew, learn how to arrange a pitch deck, learn how to navigate the VC ecosystem, and so forth.
And naturally, Glovo’s founders additionally know a factor or two about organising a startup. “Founders love to speak to a different founder who has efficiently offered their firm,” says Lasri. This could possibly be why Atomico, based by Skype founder Niklas Zennström, is so profitable.
“Oscar, the CEO [of Glovo], spent a whole lot of time with entrepreneurs. He did not know learn how to scale the time he spent with them, however each time he invested in an organization he talked about all these elements: learn how to go from 0 to 1, learn how to scale your crew, how to consider hiring, all that,” Lasri mentioned.
“Final yr they offered their firm to Supply Hero for simply over €2 billion. And so they considered how they might professionalize their funding actions. I used to be already eager about my subsequent steps, so we began speaking so much,” he added.
Whereas Yellow plans to put money into startups in France and Southern Europe, it additionally plans to put money into firms trying to rapidly broaden into Spain, Italy and Portugal. In that case, Yellow can act as a strategic investor and unlock a complete vary of points that entrepreneurs might face in these new markets, reminiscent of expertise assist, regulatory hurdles and introductions to giant enterprises.
Yellow’s crew will probably be cut up between Paris and Barcelona, whereas Oscar Pierre and Sacha Michaud will stay in Barcelona. They’ll retain their management roles at Glovo, the on-demand supply firm acquired by Supply Hero. However Pierre and Michaud have already been fairly lively as angel buyers. Yellow is only a strategy to take this exercise one step additional.
Adam Lasri will probably be primarily primarily based in Paris and one other crew member will quickly be part of the fund. Victor Navarro, a enterprise capital investor who labored for Ok Fund, additionally joins the Yellow crew in Barcelona.
From €0 to €30 million in 5 months
Curiously, the Yellow founding crew managed to shut this preliminary fund in only a few months. They began their fundraising in June and managed to succeed in their purpose in lower than 5 months.
Behind the scenes, greater than a dozen European unicorn founders are investing in Yellow, in addition to a dozen household workplaces from Spain, Italy and Portugal. A few of the wealthiest people from Southern Europe are restricted companions in Yellow’s first fund. The corporate has not acquired any authorities cash for this fund.
It appears to point that there’s some demand for extra enterprise capital funds in Southern Europe. Definitely, there are quite a few funds in Spain alone, reminiscent of Ok Fund, Nauta Capital, Kibo Ventures, Seaya Ventures and Inveready – this checklist just isn’t exhaustive.
However wanting on the numbers, a current report from Dealroom highlights the discrepancies between the three largest European international locations in terms of startup funding – and the remainder. In the course of the first half of 2023, UK-based startups raised a complete of $11 billion. Germany and France adopted go well with with $6 billion and $5 billion respectively.
In Italy and Spain, startups raised “solely” $1 billion and $744 million respectively throughout the identical interval. Portugal just isn’t even among the many prime 15 international locations.
Does this imply that there are fewer startups in Southern Europe? Or does this imply that there’s nonetheless untapped potential within the area?
Spaincap’s annual report reveals that worldwide enterprise capital companies are more and more taking a look at alternatives in Spain. In 2022, Spanish funds invested a complete of $430 million in native startups (€400 million), whereas overseas buyers invested $1.7 billion in Spanish firms (€1.6 billion).
Some overseas buyers may search for alternatives in underserved markets, as their native market might turn out to be overheated and too many enterprise capital companies are preventing for a similar offers. And this disruption between native buyers and overseas buyers might clarify why household workplaces from Southern Europe are prepared to again a brand new native fund.
This VC hole confirms Geel’s positioning. Now let’s examine if the enterprise capital agency can leverage this capital into profitable startups and switch a thesis into return on funding.
Natasha Lomas contributed reporting.
