VC Profile: Speedinvest

Announced in February 2019 with a target of €175m, Speedinvest III closed on its hard-cap of €190m in February 2020. LPs such as the European Investment Fund, Erste Bank and US-based venture firm NEA backed the strategy.

"I was really positively surprised by the fundraising process," says Speedinvest CEO Oliver Holle. "We had a positive reaction to our past performance and the increasing brand awareness we have been able to build, as well as our one pan-European platform for seed investments."

The firm's pre-seed team will write cheques of €50,000-200,000 from the fund, while its seed team will write cheques typically of €500,000-1m, though the fund has a mandate to write initial tickets of €50,000-1.5m. The fund has a management fee of 1.8% per year averaged out across the life of the fund and a 20% carry.

Its predecessor, Speedinvest II, closed on $100m in 2015 and has now been fully deployed. Its debut vehicle has realised 11 investments from a portfolio of 20 companies, and has achieved a 5x gross return, for a 2x distribution-to-paid-in.

Holle says: "Our strategy will not change that much with the new fund. We'll still be focused on seed and pre-seed investments. The main difference is that we'll now be able to deploy more capital in our portfolio companies. In the past, we've been able to do a pro rata commitment to series-A rounds, following our initial investment, and small commitments to series-B rounds. For the winners in our portfolio, we realised it would have been a real opportunity for us to stay more involved."

The firm has reserved €100m from the fund for follow-on capital across 80 portfolio companies to protect its ownership in later-stage rounds.

Vive la France
Speedinvest is also expanding in France, opening an office in Paris this spring – a move that is understood to still be going ahead despite the ongoing Covid-19 pandemic. The core team will be based in Paris, with Speedinvest partner Pierre-François Marteau commuting regularly from Germany. The firm also recently hired Shiraz Mahfoudhi for its Paris office, who will focus on local deal sourcing and building the firm's network.

Holle says: "France is one of the most dynamic ecosystems in Europe, so to fulfil our vision of being a truly pan-European seed fund, we need to be strong in Paris. It is fascinating to see how a change in cultural attitude by a next generation of French founders, in combination with a clear political will to drive the startup agenda, has created momentum that other countries can only dream of."

Speedinvest currently has five investments in France, including Luko, Actionway and Lemondesk.

Headquartered in Vienna, the firm currently operates offices in Munich, London and Berlin, as well as in San Francisco. Holle thinks no other European venture firm can show similar local presence across the continent: "Europe's startup ecosystem is extremely fragmented, and it is difficult to be a relevant seed investor in multiple geographies. Larger funds have been able to do so in later stages as the scope of eligible startups is much smaller."

Holle says the firm's sector specialisations are vital to its success across Europe. The investment team is divided into groups focused on "deep tech", financial technology, healthcare and consumer, industrial technology and a sector entitled "network effects", which is focused on online marketplaces.

"This has proven to be an extremely important differentiation factor when we enter highly competitive markets and has allowed us to enter competitive deals, even if we are not the first people founders talk to," says Holle.

Helping hand
He also attributes the success of the pan-European strategy to the firm's operational support platform. "We have invested more than most funds (certainly in Europe) in an operational support platform that is 100% focused on the needs of seed-stage founders," he says.

In its San Francisco office, the firm has two business development professionals working on assisting portfolio companies that want to enter the US market. The firm also has more than 20 full-time staff dedicated to human resources and recruitment for portfolio companies. Additionally, it has an in-house team to help founders with performance marketing, product marketing and content marketing.

Holle says: "We do this because it helps us win deals, and much more importantly, because we sincerely believe that professional seed investing needs to be extremely closely aligned with the founders, which works best if you actually work together on a daily basis."

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