Yellow, a brand new VC agency from Glovo founders and Atomico investor, is betting on Southern Europe

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It’s all the time attention-grabbing when a brand new VC agency with a recent workforce of companions emerge. And with Yellow, it’s attention-grabbing in a number of methods. Based by Oscar Pierre and Sacha Michaud, the founders of Glovo, in addition to Adam Lasri, a former investor for VC big Atomico, Yellow is a brand new €30 million pre-seed fund that wishes to take a position on the earliest stage doable (that’s $32 million at at the moment’s change charge).

Along with this distinctive founding workforce, the VC agency’s focus can also be fairly completely different. Whereas most VC corporations working in Europe deal with the U.Okay., France, Germany and the Nordics, Yellow needs to place extra emphasis on Southern Europe — and particularly some key markets within the space, similar to Spain, Italy and Portugal.

Final week, I talked with Adam Lasri in regards to the new fund and the workforce’s funding thesis. Yellow goes to be an opportunistic tech fund, which means that it doesn’t plan to deal with a vertical particularly. The agency will spend money on each B2B and B2C startups throughout completely different industries.

“Over time, I’ve had an increasing number of entry to early stage deal circulate. Usually, I might speak to corporations whereas at Atomico that have been within the ideation stage, wherein we couldn’t make investments,” Lasri advised me. “And I discovered that irritating, as a result of a couple of months later, you might have Index or others making investments, whereas it wasn’t a part of our thesis to take a position on the seed stage.”

He additionally added later within the dialog that he doesn’t have harsh emotions for his former workforce. He simply needs to take a position on the seed (or pre-seed) stage.

“Founders love to speak to a different founder who has efficiently bought his firm” Adam Lasri

And but, Yellow isn’t going to be the lead investor because it plans to take a position €200,000 to €500,000 per deal. As an alternative, it thinks it may be the primary believer, deliver different buyers and supply recommendation at scale. “We’re by no means leaders, simply collaborators,” Lasri stated. In line with him, many early stage corporations face the identical points — how one can arrange a workforce, how one can format a pitch deck, how one can navigate the VC ecosystem, and so on.

And, in fact, the founders of Glovo additionally know a factor or two about making a startup. “Founders love to speak to a different founder who has efficiently bought his firm,” Lasri stated. This might be the explanation why Atomico, which was based by Skype founder Niklas Zennström, has been so profitable.

“Oscar, who’s the CEO [of Glovo], spent a number of his time with entrepreneurs. He didn’t know how one can scale that point he spent with them, however each time he invested in an organization, he would speak about all these facets — how one can go from 0 to 1, how one can scale your workforce, how to consider hiring, all that,” Lasri stated.

“Final yr, they bought their firm to Supply Hero for a bit over €2 billion on the time. And so they have been interested by how one can professionalize their funding enterprise. I used to be already interested by my subsequent steps, and so we began speaking rather a lot,” he added.

Whereas Yellow plans to spend money on startups primarily based in France and Southern Europe, it additionally plans to spend money on corporations that wish to shortly develop to Spain, Italy and Portugal. In that case, Yellow can act as a strategic investor and unlock a bunch of issues that entrepreneurs might face in these new markets, similar to expertise help, regulatory hurdles and introductions with giant enterprises.

Yellow’s workforce might be cut up between Paris and Barcelona with Oscar Pierre and Sacha Michaud remaining in Barcelona. They’ll hold their government roles at Glovo, the on-demand supply firm that was acquired by Supply Hero. However Pierre and Michaud have already been fairly energetic as angel buyers. Yellow is only a option to take this exercise one step additional.

Adam Lasri might be primarily based primarily in Paris with one other workforce member becoming a member of the fund quickly. Victor Navarro, a VC investor that was working for Okay Fund, can also be becoming a member of the Yellow workforce in Barcelona.

From €0 to €30 million in 5 months

Curiously, the Yellow founding workforce managed to shut this preliminary fund in just some months. They began their fundraising effort in June and managed to achieve their aim in lower than 5 months.

Behind the scenes, greater than a dozen European unicorn founders are investing in Yellow in addition to a dozen household places of work from Spain, Italy and Portugal. A few of the richest people from Southern Europe are restricted companions in Yellow’s first fund. The agency didn’t obtain any public cash for this fund.

It appears to point that there’s some urge for food for extra VC funds in Southern Europe. Positive, in Spain alone there are many funds, similar to Okay Fund, Nauta Capital, Kibo Ventures, Seaya Ventures and Inveready — this record is just not exhaustive.

But when we have a look at the numbers, a latest report from Dealroom highlights the discrepancies between the highest three European international locations relating to startup funding — and the remaining. Through the first half of 2023, startups primarily based within the U.Okay. raised a complete of $11 billion. Germany and France adopted go well with with $6 billion and $5 billion respectively.

In Italy and Spain, startups “solely” raised $1 billion and $744 million respectively throughout the identical interval. Portugal isn’t even a part of the highest 15 international locations.

Does it imply that there are fewer startups in Southern Europe? Or does it imply that there’s nonetheless untapped potential within the area?

Spaincap’s annual report exhibits that worldwide VC corporations are more and more alternatives in Spain. In 2022, Spanish funds invested a complete of $430 million in native startups (€400 million) whereas international buyers poured $1.7 billion in Spanish corporations (€1.6 billion).

Some international buyers might be alternatives in underserved markets as their native market could be overheating with too many VC corporations preventing for a similar offers. And this distortion between native buyers and international buyers might clarify why household places of work from Southern Europe are prepared to again a brand new native fund.

This VC hole validates Yellow’s positioning. Now, let’s see if the VC agency can deploy this capital into profitable startups and switch a thesis into returns on funding.

Natasha Lomas contributed reporting.

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