What kind of support do you provide for portfolio startups?

There are three topics on which I work most closely with the founders. The first is helping them develop their financing strategy. You need to consider the next financing round when raising money today. You need to know the value inflection points and goals you have to achieve to raise the next round and plan accordingly. Many founders are too optimistic about how much money and time they need to get there and, therefore, do not raise enough. This increases the financial risk for the company down the road. Such mistakes can and should be avoided. As a part of securing the next financing round, especially if the sums are significant, we bring the founders in contact with relevant later-stage investors. Over the years, we have established ties with many of them around the globe and understand what they seek.

The second part concerns governance. We help strengthen the executive-level team and the board by looking for outstanding candidates, hand in hand with co-investors and recruitment firms. Verve supports many excellent technical founders whose skillset is important to be complemented with people with commercial and scale-up experience after the startup reaches a certain maturity level. Senior candidates with deep industry expertise, high-level networks, and startup experience are rare. If you want to find them, you must converse with them early.

The third part is exit preparation. It starts earlier than many realize. If your exit strategy rests on mere assumptions, you might be in for a nasty surprise.  Successful entrepreneurs should engage very early on with potential partners and buyers. This includes building stronger bridges to the US, where many buyers of deep tech startups are located. We help our founders prepare for the exit process thanks to our ties with M&A boutiques and investment banks, which are essential in this regard. 

Why do you provide this kind of support?

As active investors, we want to maximize the value of our shareholdings and see the vision we are investing in become reality. Therefore, we are keen to help entrepreneurs avoid mistakes. We are doing this systematically thanks to our experience of more than a decade as a European deep tech investor and based on hundreds of real-life experiences from within and outside our broad portfolio. Moreover, we are leveraging our brand, our network of private and institutional investors, and industry experts to support our portfolio companies and open doors for them. I also see it as an important part of a bigger movement to promote the understanding of deep tech in Europe. We need more visible role models and successful entrepreneurs who inspire the next generation. This, in turn, will encourage more European investors to invest in this field and close the financing gap in later-stage rounds that still exist.  

How do you see your role in the investment committee deciding which startups Verve Ventures invests in?

My experience from past transactions and portfolio activity over the last few years has helped me evaluate and challenge business plans. Realistically assessing risks related to the company’s business plan is an elementary part of our overall company assessment. A venture investment’s risks must be balanced by the potential upside that can be gained in that specific case. The investment decision becomes skewed by wrongly assessing the underlying risk, and performance is at risk. For example, we often see that the assumptions in startups’ business plans about the time and costs it takes to close a business-to-business sale with a larger contract value or hire and ramp up a sales team are overly optimistic.  In the end, the investment committee’s decision is, for me, the starting point for an ongoing collaboration with founders, board members, and co-investors that will span over several years. The better this collaboration and the alignment on the strategy among all stakeholders, the better the startup is equipped to overcome difficult situations and the challenges ahead. 

You have been instrumental in developing Verve Ventures’ investment team. What qualities do you look for in new hires?

Our colleagues have different backgrounds in science, engineering and business. We all love to see the world-class fundamental research from Europe’s universities turned into products that solve pertinent problems in today’s society. Working with founders who build such new technologies and address complex problems in health, energy and computing is an absolute privilege. We are, therefore, looking for people who are aware of that privilege and see it the same way. Those people are always curious and open to learning about new approaches, perspectives, and technologies. And they are, at the same time, both humble and confident. Humbleness is essential in this industry and when working with entrepreneurs. Even if you don’t invest or don’t see the potential in a specific startup – you need to be aware that in the end, you don’t know for sure, and only the future will tell if your decision was right or wrong. Moreover, you always need to acknowledge the incredible work entrepreneurs do by pursuing their startup’s vision. However, confidence is also important, as you need to be able to defend your position and protect the interests of the investors you represent. Therefore, the balance between humbleness and confidence is equally important as curiosity.

What personal qualities do you look for in a founder?

Founders need to be determined to solve an important problem with their startup: the visionary aspect. Building a successful startup is challenging, so they must show grit and determination in the face of adversity. I also look for a certain kind of humbleness and coachability; I’m looking for founders who know what they don’t know. Therefore, proactively work on closing those capability gaps by bringing more experienced people on board or actively seeking specific advice. Large founder egos can get in the way of making a company successful. Unfortunately, we regularly see great businesses missing windows of opportunity or significantly slowed down by the learning curve of the CEO and founders. However, in the end, the most important thing is mutual understanding and respect between investors and founders, which means that we are all working towards the same goal – the company’s success.