The solo GP’s rise in Europe: Why venture capitalists go solo

Venture capitalists tend to search in groups. NSSometimes, investors detach themselves to raise money on their own — and they’ve come to be called VCs are the lone wolf.

Solo venture capital in the United States has gained prominence in recent years due to its agility and speed, and unlike the Super Angels – to participate in the rounds of the late stage.

Now, the “one-person venture capital party” is gaining traction in Europe, buoyed by a competitive funding environment.

Earlier this year, he was a British podcast maker turned investor Harry Stebbings Raised $140 Million NS His fund, 20VC, has created the largest single general partner (GP) account in Europe. Among the other single capitalists in Europe Rodrigo Martinez (formerly ninth point) in HelloWorld and Nico Wittenborn (formerly 9th Point) in the vicinity.

The latest to join to break ranks and start a solo fund is Manu Gupta, a former partner at Lacstar, who recently founded Blue Lion Capital, he confirmed to Sifted.

While Gupta has a partner who manages the operations side of the portfolio, Gupta will be the primary investment and fundraising mindset.

Gupta confirmed that Blue Lion will be a small technology fund focused on Europe and the United States. He declined the stake raised but said that high-profile potential investors were in the process of completing due diligence.

Gupta announced his new fund at an event in Germany last week

Gupta is not alone. Sifted confirmed that there are many individual funds and smaller funds in the works across Europe. However, for legal reasons, they remain in disguise and cannot be named yet.

We look at what is driving the VC boom and what that means for the ecosystem.

The new generation of lonely capitalists

Individual investing is not new; Super angels have been doing this for years. These seasoned individuals started investing their own money and then raised outside capital, effectively becoming small capital firms.

However, superangels tend to stick to small rounds – before entering traditional venture firms – and even hire multiple general partners on the investment side, which means they are no longer strictly single.

Today lone capitalists They pierce higher and make things tighter than their predecessors.

“Through these single small businesses with venture capitalists, experienced founders are able to speak with the decision maker in each case.”

Lone Wolf VCs are experimenting with new structures and larger funding sizes. Most raise funds in excess of $50 million as well – with top US officers raising funds together $300 million – Seeks to invest in subsequent rounds and even lead it.

In this regard, today Solo capitalists are more like an alternative model of venture capital than supercharged angels.

Having individuals who can unilaterally decide to invest a €5 million check is something of a game changer. It can also put individual venture capital into direct competition with larger conventional funds – at least before the Series C phase.

The perks of going solo

Gupta says the biggest advantage single doctors have is their speed and intensity.

The founders now realize that in some of the major venture capital firms, they have to deal with many layers. The vice president, then the partner, then the partner, and then – even above them – there is the decision maker.

“With these founders with little experience, they can talk to the decision maker in every situation. They give you very specific value.”

Not only is this a bonus to the founders, Gupta explains, it also makes life rewarding for the solo doctor. Despite working for a prestigious fund like Lakestar, he realized he wanted something “independent and smaller”, something closer to the ground.

Investor James Pringle agrees, explaining that single GPs can move quickly and often have a unique advantage if they have prior experience as entrepreneurs or operators.

“A single GP has a better chance of joining [a good] They transact because they have their own personal brand and can move quickly and can usually speak the language of the founder.”

Pringle, who was himself an entrepreneur before securing the exit, was considering taking on associate roles at venture capital firms. But he realized he wouldn’t have as much input as he would like there. So he started his investor network, Pringle Capital, which has invested in 20 companies and is in the process of launching Goldsmith Ventures as a solo GP.

Startup Warmly, which helps provide context for people during Zoom meetings, lifted from singles GP Harry Stebbings in 2020

Going solo also has the advantage of overlooking the administrative hassles of running a venture capital firm, which is similar to running a corporation.

“The problem with teams is that you need to create a culture, you need to manage, do individual processes, do reviews, give feedback… and whatever takes me away from my next Stripe or Hopin interview, that time can be used in corporate meetings,” Harry told Steppings Sifted earlier this year.

However, the burden can be difficult for those who also balance personal responsibilities such as family. Perhaps this partly explains why there are so few single common women.

Former solo GP gave birth to Videesha Böckle while she was a solo GP. Birthing and caring for a child in such a role “requires a great deal of forward planning, a forward-thinking LP and a base of portfolio founders and colleagues who will support you through this time,” she says.

push the epidemic

The broader question here is why individual investing is becoming so popular.

United States VC Nikhil Basu Trivedi It is assumed that it may be the result of a boom in scouting programs. Instead, he suggests, it could be a reaction to the similarity of venture capital, the founders’ disillusionment with the services they advertise to offer or the increased focus on individual partner brands.

Gupta has a different theory. He says the pandemic has fundamentally changed the venture capital model.

“Venture has changed drastically during Covid…the founders are more experienced than before. They’ve had to build a culture remotely, they’ve had to do mass layoffs, it’s just a level of maturity,” he says, adding that founders are now demanding Various qualities of investors exceed their capital.

Additionally, LPs had a wake-up call. LPs want to be involved a lot more. It’s a lot more digital [since Covid]. I think the youngest [micro or solo] Firms are more amenable to having a direct dialogue between GPs and LPs,” says Gupta.

“The founders are more experienced than before. They had to build a culture remotely, they had to do mass layoffs. It’s just a level of maturity”

The first wave of solo GPs has also proven valuable, sharing their specific expertise or personal brand to promote other entrepreneurs.

This is especially true for creative entrepreneurs, who increasingly want to have other creators at the table capped for advice on networking and marketing, says Sasha Kalitsky. This has proven a tailwind for the creation of single, more specialized GPs.

Kaltsky quit his job in September at a private equity firm to be a full-time general practitioner, and co-founded creative collective capital With entrepreneur and creator Caspar Lee. They have raised more than $15 million for the fund and plan to launch it in early 2022 to invest alongside creatives and celebrities.

Undoubtedly, it helps those who raise that first venture capital investors have had a good track record so far. A recent analysis by AngelList found that Seven of the top twenty outside investors On their platform were single capitalists.

New support system

Aside from Covid, another factor that could boost the presence of individual doctors in Europe is the arrival of new administrative and legal support.

Until now, Europeans did not have proper access to AngelList, which helps individuals to co-invest in US startups along with venture capital firms, due to Regulatory fragmentation, which made the creation of the fund a much greater burden on him Europeans more than Americans.

But a new generation of full-service fund managers is emerging, such as Brightpoint Group in Hamburg and online fund management services such as based in London Vauban.

Vauban has 100 customers and added 1 new customer every day in October

Vauban is a SaaS company that helps investors launch online venture capital firms, providing support in fund structuring, banking, management, reporting and legal documentation. Users can also choose from many different fund structures, from angel consortia (groups of angels investing together) to full venture funds.

So far, Vauban has 100 clients and added one new client every day in October. The $1 billion raised on the platform went to companies like Revolut, Darktrace and SpaceX.

“35% of our clients are individual GPs, versus 10% on average in the EU, which shows that by reducing the cost and complexity of launching an investment company, we are helping to grow the trend,” says co-founder Remi Asti.

Kalitsky of Creator Collective Capital says the minimum commitment for investors in his fund is a penny because Vauban makes documentation and compliance so straightforward. For similarly sized funds, it’s usually in the hundreds of thousands of dollars.

This removed many of the obstacles preventing individual GPs from starting – other than raising capital.

Now all individual venture capital firms have to do is stand the test of time, and show that they can. Group leadership.

Isabel Woodford is the Sifted Financial Technology Reporter. She tweets from Tweet embed And co-author of our newsletter. Register here

Eleanor Warnock is the assigned editor for Sifted. She tweets from Tweet embed

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