It’s always interesting When a new VC firm emerges with a new team of partners. And with yellowIt’s interesting in multiple ways. Founded by Oscar Pierre and Sacha Michaud, founders of Glovo, as well as Adam Lasry, a former investor at VC giant Atomico, Yellow is a new €30 million seed fund that wants to invest at the earliest possible stage (i.e. $32). million dollars at today’s exchange rate).
In addition to this unique founding team, the venture capital firm’s focus is also quite different. While most venture capital firms operating in Europe focus on the UK, France, Germany and the Nordics, Yellow wants to focus more on Southern Europe – especially some of the key markets in the region, such as Spain, Italy and Portugal.
Last week I spoke with Adam Al-Asri about the new fund and the team’s investment thesis. Yellow will be an opportunistic technology fund, meaning it doesn’t plan to focus on a vertical sector in particular. The company will invest in B2B and B2C startups across various industries.
“Over the years, I’ve had more and more access to early-stage deal flow. Often times, I would talk to companies while I was at Atomico that were in the ideation stage, and that we couldn’t invest in.” And I found that frustrating, Because after a few months, you could have an index or others making investments, whereas investing at the seed level was not part of our thesis.”
He also added later in the conversation that he has no hard feelings towards his former team. He only wants to invest at the seed (or pre-seed) stage.
“Founders love talking to another founder who has sold their company.” Adam Lasry
However, Yellow will not be the lead investor as it plans to invest between €200,000 and €500,000 per deal. Instead, it believes it can be the first underwriter, bringing in other investors and offering advice on a large scale. “We were not leaders at all, just collaborators,” Al-Asri said. According to him, many early-stage companies face the same issues – how to set up a team, how to format a pitch, how to navigate the venture capital ecosystem, etc.
Naturally, Glovo’s founders also know a thing or two about building a startup. “Founders love to talk to another founder who has successfully sold their company,” Al-Asri said. This may be the reason behind the huge success of Atomico, founded by Skype founder Niklas Zennström.
“Oscar, he’s the CEO [of Glovo]He spent a lot of his time with entrepreneurs. He didn’t know how to scale the time he spent with them, but every time he invested in a company, he would talk about all those aspects — how to go from 0 to 1, how to scale your team, how to think about hiring, all of that,” Al-Asri said. “.
“Last year, they sold their company to Delivery Hero for just over €2 billion at the time. They were thinking about how to professionalize their investment business. “I was already thinking about my next steps, so we started talking a lot,” he added.
While Yellow plans to invest in startups based in France and Southern Europe, it also plans to invest in companies that want to expand quickly into Spain, Italy and Portugal. In this case, Yellow can act as a strategic investor and solve a range of problems that entrepreneurs in these new markets may face, such as talent support, regulatory hurdles, and dealing with large institutions.
The Yellow squad will be split between Paris and Barcelona with Oscar Pierre and Sacha Michaud remaining at Barcelona. They will retain their executive roles at Glovo, the on-demand delivery company acquired by Delivery Hero. But Pierre and Michaud were already active as angel investors. Yellow is just a way to take this activity one step further.
Adam Al-Asri will be primarily based in Paris, and another team member will join the fund soon. Victor Navarro, a venture capital investor who used to work for K Fund, is also joining Barcelona’s yellow squad.
From 0 to 30 million euros in five months
Interestingly, Yellow’s founding team was able to close this seed fund in just a few months. They began their fundraising efforts in June and were able to reach their goal in less than five months.
Behind the scenes, more than a dozen European unicorn founders are investing in Yellow as well as dozens of family offices from Spain, Italy and Portugal. Some of the richest individuals from Southern Europe are limited partners in Yellow’s first fund. The company did not receive any public funds for this fund.
This seems to indicate that there is some appetite for more venture capital funds in southern Europe. Of course, in Spain alone there are a lot of funds, such as K Fund, Nauta Capital, Kibo Ventures, Seaya Ventures, Inveready – and this list is not exhaustive.
But if we look at the numbers, the latter Report from Dealroom It highlights the contrasts between the top three European countries when it comes to startup funding – and the rest. During the first half of 2023, UK startups raised a total of $11 billion. Germany and France followed suit with $6 billion and $5 billion, respectively.
In Italy and Spain, startups raised “only” $1 billion and $744 million, respectively, during the same period. Portugal is not even part of the top 15 countries.
Does this mean that there are fewer startups in southern Europe? Or does this mean that there is still untapped potential in the region?
Spaincap annual report It appears that international venture capital firms are increasingly looking for opportunities in Spain. In 2022, Spanish funds invested a total of $430 million in local startups (€400 million), while foreign investors pumped $1.7 billion into Spanish companies (€1.6 billion).
Some foreign investors may look for opportunities in underserved markets as their home market may be overheated with too many venture capital firms fighting for the same deals. This distortion between local investors and foreign investors could explain why family offices in southern Europe would want to back a new local fund.
This VC gap validates Yellow’s positioning. Now, let’s see if a venture capital firm can deploy this capital into successful startups and turn the thesis into ROI.
Natasha Lomas contributed reporting.