Europe’s crowd of solo GPs has been gradually growing over the years — and angel investor Edoardo Ermotti is one of the latest to join the pack.
His Switzerland-based fund 14Peaks Capital has closed $30m to invest in B2B SaaS startups in Europe and the US, with a specific focus on fintech and the future of work.
The firm has already made 11 investments from the fund, including US-based HR payment platform Rain and Swiss data collaboration company Tune Insight.
Before starting his own solo GP firm, Ermotti worked as a VC and growth investor for US family office, W5 Group, and began angel investing in 2019.
He’s backed 25 companies to date as an angel, including ETF management platform Tema ETFs and speech AI technology company Aiola. He’s also invested in two VC firms, one of which is US early stage VC Motive Ventures, and a private equity firm, but isn’t disclosing all the names of the funds where he's an LP.
Ermotti joins other solo GPs investing in B2B startups such as Gloria Bauerlein, who closed her fund last year, and Robin Haak, who has raised €3m of a new fund that’s targeting €10-20m in total.
The strategy
14Peaks Capital's new fund will invest in 25 companies from pre-seed to Series A.
Ticket sizes will depend upon how much annual recurring revenue (ARR) a company is making:
The fund will invest:
- $300-500k in businesses in the pre-revenue stage or up to their first $150k of ARR (pre-seed)
- $500-750k in companies between $200k-$1M ARR (seed)
- And up to $1m for businesses with $1m or above ARR (Series A)
Cheque sizes will also vary depending on whether the fund is leading, co-leading or following.
The firm is saving 30% of the fund for follow-on rounds.
In terms of what the fund will invest in, 14Peaks is — on the fintech side — interested in tools for the financial services industry, such as cybersecurity and fraud detection, investment and cash management, compliance, embedded finance and insurance and payments.
For future of work, Ermotti defines the sector as “any software tool that is disrupting the “traditional” way of doing business or allowing traditional methods to be more efficient and effective.”
Within this area, 14Peaks wants to invest in data management and collaboration, HR management, privacy and, of course, generative AI applications.
Straddling Europe and the US
14Peaks Capital plans to have a “balanced portfolio” across Europe and the US — and it says it can help founders across both continents expand outside of their domestic markets.
The firm currently has three team members in Switzerland — Ermotti, plus an investment director and an operations manager. It plans to establish a US-based investment team in the second half of 2024, intending to make two hires in the short term: one to oversee investments and one to handle operations.
The firm’s LP base reflects its geographical strategy. It has 10 LPs, half from the US and half from Europe, that are entrepreneurs or executives in global companies in real estate, tech and financial services. Ermotti declined to mention specific names citing confidentiality reasons.
Ermotti specifically chose to have a small, close-knit group of LPs backing the fund instead of getting many cheques from many different investors.
This is because it’s difficult to “maximise the full potential, network and value-add” of LPs if there are too many, as it’s challenging to have frequent and close interactions with them, he tells Sifted.
Ermotti adds that there will be a shift in the next decade in the ways in which LPs and GPs work together, with LPs demanding “higher transparency and involvement than before.”
“I see and hear more and more family offices that are investing in funds with the purpose of also receiving direct deal flow and co-investment opportunities, and so also using funds as a “sourcing tool” to help build direct portfolios,” he says.
“I think moving forward, funds that are predominantly backed by family offices or non-institutional high net worth individuals that don’t offer something beyond capital appreciation will suffer competition.”
