Scaling Europe
00:11:10 · Sebastian Johnson
[00:11:10] S0: And so it's, I think it's an amazing thing to do. Right. And I'm personally super excited to come in and check it out and have a look. Why was this something that was like that you wanted to do? And why not? Know, because you're right, this is in your first fund relatively small compared to how it could get some of other funds. Why was this the right time? And why would you why did you want to do it?
00:11:32 · Carlos Trenchs Sainz de la Maza
[00:11:32] S1: So this is a good question. So two things though. First is people think that venture capital is finance. And this is a people business. So where where relationships matter matter a lot. And this is a business built on trust. And and I have, it's very important, no, especially for a model like us, that is a more community driven fan, Having a space where people can meet, can discuss, can socialize, no, and can, and can do things together. So, we started and I think that you you came to our old offices, we had a nice building, with a with a good, meeting room, no? And we started organizing small breakfasts, and small meetups. And we realized that that was something really useful. Be able to put people that matters in the same table is something that adds a lot of value. So, so we decided, okay, if Masia is doing really well, no, and this is our playbook, no, and we think to fundraise our second fund, no, in in Couture. So our, I will say, moat, no, needs to be, you know, in this case, a physical physical space. So we have the community, you know, we have the portfolio, we have the connections. But having the physical space that helps, no, to to, I would say, have the clue, no, to to put all together, it makes out.
00:13:03 · Sebastian Johnson, Carlos Trenchs Sainz de la Maza
[00:13:03] S0: It's amazing. I can't wait to come see it. Talk to me about the future then. So you've already invested. I think you said 45 checks. You're gonna get to 60 or 65. So you've already deployed a lot of the first fund. Are you thinking about a second fund? What does that look like? Are you gonna stay stay small, stay early? Is there an opportunity to raise, you know, like a follow on fund? What does that look like? [00:13:24] S1: So for second fund, it will be more or less the same. So probably we will grow now from 18 to 25, but no more than that. I think that, in this busy world, especially for LPs, size matters. And depending on your size, it conditionates your strategy of investment. And size matters in our case because we want to be in all the great companies. But we don't want to compete with anyone. So we are able now with this size of fund to write a small cheque that is able to fit, no, in in this very competitive round, no, without competing with with others. If you are... So our typical cheque is something from two hundred, two hundred fifty thousand euros. So if you raise a seat round of 3,000,000, so having room for $202,115 is something that, okay, you can you can you can you can fight for. But if you are writing 500, no, 700, so probably, no, there is not room for you. Or you need to compete or you need to lead, no, in this in this case. [00:14:34] S0: So
00:14:34 · Sebastian Johnson, Carlos Trenchs Sainz de la Maza
[00:14:34] S0: So [00:14:34] S1: I think that if our strategy is to to to have, no, continue having this collaborative approach, not to participate in this in this good companies, You need to have a fund size, no, that that that fits with with this strategy. And the second thing is, if you have a fund size, of this order, your fundraising process is, I will say, faster, than if you want to raise a figure fund. And second, our model also is similar to an angel ticket. As we invest in proceeds and we take, let's say, 1% ownership of a of a company, and we don't have enough money, not to do a lot of follow ons, we are able, not that, probably put a little bit more of money at seed stage, but not in series a. If we are doing this, when the company is growing so fast, no, probably in Series A plus or Series B, I can raise my hand no, and try to liquidate part of my owners, no, to sell through secondaries. So it's similar this strategy than a Business Angel, than a traditional venture capital that needs to be until the company is sold, no, or until the company is. So I think that having this this model also helps to have DPI's, no, earlier than traditional funds. So for me, it's it's the sum of these three things is merging this in this in this strategy.
00:16:02 · Sebastian Johnson
[00:16:02] S0: And you spent a lot of your career out there kind of judging or allocating capital to emerging managers. How much did that influence the strategy on the other side? Right now, you've got this fund. You spent a lot of time allocating capital to emerging managers. The strategy that you've spoken about, how much did that come from being sort of like an LP looking at it the other side and yeah, thinking what would be compelling from from that perspective.
00:16:28 · Carlos Trenchs Sainz de la Maza
[00:16:28] S1: Yeah, totally. So I had I was lucky, you know, to to map around 400 presidency funds in in Europe, know, and to talk with so smart people, you know, building building different funds. And we finally choose, no, with our first fund, 23 managers and with the second, we probably choose 20 more or less. So we realise different things. Try to back people that have a certain characteristics, no? And these were the winners, no, of the of the of our portfolio, no? And we try to replicate this, no? And for me, the winner is if you are able, no, to have, proprietary deal flow. So you you you need to have something, no, that makes you unique. No? There is people that are creating funds and they have, I would say, content related thing, no, and and it's well known and they have access. No? Or they are really, really specialists in certain technology or thing that people realise that, okay, I want to have him or her because he is or she is a specialist. Especially in proceed, you need to differentiate yourself. No? And and you need to build where you are unique and you are the best doing that. So we realize that we are generalists. We don't have a large pocket. No? But where we can be the best is the best investor, in in in South Europe in Brazil. And try to connect them. So try to be focused on that. And and I think that by doing this, if everyone, every year, no, there is a two, three unicorns that are emerging from this ecosystem, no? And Masia is there, you are doing a great job, no? Because you are realizing that.