Having started out as a founder himself, Oliver Holle, knows firsthand that working with an investor can dramatically reduce pain points and help navigate challenges. With this in mind, he set up Speedinvest, an early-stage European venture capital firm.
The VC firm now has +40 investment pros working from London, Berlin, Paris, Munich, Vienna and San Francisco, investing capital into world-class tech startups, and also providing them with full-service HR, growth marketing, business development, and US expansion support.
We spoke with Oliver to find out his perspective on the current state of the European funding landscape, his predictions for medium- and long-term future changes, and his advice for startups thinking of raising funds during the pandemic from cautious investors.
Thank you for joining us Oliver. Could you shortly tell us the story behind Speedinvest?
Thank you for having me. Speedinvest is built based on my own experience as a first time founder, struggling for years before finding success and eventually selling to one of the most ambitious Silicon Valley tech companies of the era. A lot of my pain could have been shortened or avoided if I’d worked with an investor that understood what I was truly doing and what my challenges were as a founder.
The combination of the struggles I endured as a founder and the success we had in the US convinced me that European companies can be successful all over the world, but that they need a different type of venture fund to help them get started. We built Speedinvest around the belief that seed-stage founders require much more than just capital; as an early-stage investor, you need to earn the trust of your founders by adding true, immediate value for the business – that is our ambition.
Do you have any stats about your deal flow, and how this has changed over the years?
Our deal flow has been steadily growing over the years, as we increase our presence in the market and expand what we’re able to offer to our founders. Our first fund was just €10 million, which we raised in 2011, but we now have over €400 million assets under management and have partnered with +140 of Europe’s most visionary and bold startups.
Last year we saw more than 7000 new startups across Europe, this year we are – despite COVID – on track to see 8000 or even more. This is a number that is pretty unique in European VC.
What big trends/changes have you seen over the last 5 years?
The main change over the past five years has been the general maturity of the market. We have seen a real investment boom in European founders and startups, which has led to the most competitive funding landscape the continent has seen. As a result, the quality of European technology is incredibly strong, especially as we see more and more founders with huge ambitions and experience to match it.
Inevitably, certain sectors and industries will develop in waves, and there will be quieter periods in between times of rapid disruption. The development of deep tech, such as ML and NLP, is incredibly exciting at the moment, as is the huge boom in marketplaces technologies, which have expanded rapidly over the past couple of years in particular.
Since coronavirus hit, many VC deals have slowed down or fallen through. Have you noticed a rise or a fall in campaigns as a result? What’s the feeling?
As a matter of fact, our deal flow actually increased slightly during the coronavirus lockdown. According to Dealroom, we were the most active VC during the pandemic (February – May), with 16 deals in that time. Of course, many investors have become more cautious, and they are right to. Nobody knows how long this crisis will last, so founders should also be looking for ways to ensure their capital stretches further.
That said, we’re confident that the European tech sector will come through this in a healthy state, and we’re already beginning to see the volume of deals across the market pick up again.
What medium-term changes do you foresee the pandemic having on the way funds are raised by startups in Europe, in the ‘new normal’?
In the short- to medium-term, investors will want to see that any founders they invest in are prepared to adapt and react to any of the many potential scenarios that the coronavirus might cause. Fiscal prudence and a disciplined focus on the core of the business will also help founders persuade VCs that their business is strong enough to withstand any unforeseen circumstances the future might hold.
On a practical basis, founders and investors alike will need to get used to the concept of relationship building through video calls and virtual networking. Pitching over video is a very different skill, but one that will need to be a core capability for founders for at least the next year or so.
Do you see any long-term changes or shifts on the horizon in the next 5 years?
Long-term predictions are always a difficult game but one thing is for sure – digital will be the big winner out of this whole crisis. We focus on five core investment areas: fintech, industrial tech, consumer and health, network effects and deep tech, each of which has a handful of emerging technologies that we expect to make a difference over the next five years. Digital health in particular will see a lot of investment in the medium- to long-term, so that could be a trend we’ll see develop fairly quickly.
What advice would you give to startups thinking of raising funds from cautious investors during the ‘new normal’? What are you looking for?
The main thing for founders to consider is keeping it simple. Investment decisions are still going to be based upon the core fundamentals of a great team, a strong market and a viable product. What has changed is that these days investors want to have both a massive upside potential and a realistic and not-too-distant path to profitability (or at least healthy gross margins) if funding dries up. Investors are worried about a future where capital is less abundant as it is now and they want to see founders prepared.
This sort of two-pronged thinking is critical nowadays. Pitch the upside and the vision you have for your business – in the end, VC investors are looking for outsized returns – but also have a plan for the worst case scenario. Investors will appreciate your efforts to adapt to the current market situation and will be able to see through simplistic optimistic projections.
What are your thoughts on VC firms setting up specific funds to reach ‘overlooked’ founders from BAME, LGBTQ, disabled and other minority groups?
I believe this is a smart move as there are many ambitious founders with brilliant ideas in parts of our society that are chronically underfunded. Reaching this untapped potential could lead to huge financial reward for both founders and investors. Also, it’s important for venture capital to differentiate, so having this clear focus will be beneficial for the success of these funds.
What is Speedinvest doing to tackle this topic, both in terms of expanding your portfolio, as well as your internal team?
As many other firms, we are taking the right steps in hiring and investing in more diverse talent. And, as with many others, it feels that we are moving too slowly. It can be extremely difficult, particularly outside of the core hubs like London, as this industry has been so historically dominated by white, male graduates. So you need to break this pattern by building and growing your own talent. This is not a task for the impatient, but true diversity will only make us stronger.
What’s on the cards for Speedinvest for the rest of 2020 and 2021? Any exciting projects we should look forward to?
Nine years in, we have found our strategic sweet spot – offering a unique combination of sector-focused investment teams and a super-charged professional services unit that supports horizontally. Personally, I am enjoying this part of our development very much, as now it’s all about scaling and optimising – a task that is far easier than “building the product”, as my startup founders can attest. And yes, this will mean new funds and new initiatives, but all moving in one clear direction.