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Silicon Valley-inspired Aldea Ventures completes €60m first close

The fund will use a hybrid model, backing micro VCs and growth stage startups

By Tim Smith in Barcelona

Seed investment in Europe is due for a shake up, according to Aldea Ventures’ managing partner Carlos Trenchs. 

As innovation becomes more focused on deeptech fields like artificial intelligence and blockchain, generalist investors without specialist expertise could get left behind, he believes.

Aldea’s answer? Back the specialists.

Today the firm is announcing the €60m first close of its hybrid model fund, which will target a total size of €100m.

Aldea Ventures will make two kinds of investments. The first will be up to 20 investments into specialised “microfunds”, smaller funds that back seed stage companies, often with a focus on a particular region or tech sector.

The second kind will be direct, Series A investments into startups, picked from the portfolios of their partner microfunds, which they estimate will number around 700 young companies.

Funds investing in early stage VCs aren’t new in Europe Isomer Capital and Draper Esprit are just two examples but Trenchs believes that Aldea is the first to adopt a truly pan-European approach, with a strong focus on specialised microfunds.

“Seed capital in Europe, until now, has been a very local market, and not a very sophisticated one, but things are changing quite fast,” he says.

Trenchs says Aldea Ventures took inspiration from Silicon Valley’s hybrid “fund of microfunds” Cendana Capital, which has invested in more than 40 micro VCs. 

“We are adapting that Cendana model to Europe,” he says. “Having a more European perspective, being on the ground in 18 different tech hubs. We are probably the first movers.”

Think small

Aldea’s strategy is, in a way, an admission of ignorance. 

Trenchs points to its investment in Air Street Capital, a €20m artificial intelligence microfund founded by Nathan Benaich, formerly of Point Nine Capital.

“To understand deeptech you need true specialists,” he argues. “Nathan is a well known individual with a lot of knowledge in artificial intelligence. We believe that he has the right network and knowledge to pick the best artificial intelligence investments all around Europe.”

Aldea has also already invested in London-based Moonfire, Luxembourg-based Helloworld, Munich-based Inventures, Lisbon-based Mustard Seed Maze and Nina Capital in Barcelona. 

Trenchs says that, in addition to deeptech specialist funds, it will also invest in local specialists in less developed European tech hubs.

Cherry picking

Aldea’s team says the advantage of this model is that it will also allow them to directly invest in Europe’s best young companies at Series A round, due to their micro VC network.

One example, according to cofounder and managing partner Alfonso Bassols, is the firm’s investment in Podimo. 

The Copenhagen-based podcast platform was backed at seed level by Aldea’s portfolio fund Inventures, which was founded by Chris Hitchen, who later approached Aldea.

“Chris basically told us that there was an extension of the Series A happening, and that if we were interested there might be an allocation available for us,” he says. “We were coinvesting with the top investors like 83 North, NFX in the US, e.ventures in Germany. It was a very good example of the kind of companies that we can get access to that probably nobody else in southern Europe would have access to.”

Bassols says that the Aldea team’s southern European investing experience also makes them an attractive partner for startups like Podimo, which are eyeing expansions into emerging markets like Latin America.

Through its portfolio of hundreds of portfolio seed companies, Aldea will also have access to company data and metrics that outside investors won’t, allowing the firm to make more informed decisions.

Risky business

While it might all sound like a no-brainer, investing in seed stage companies is, of course, risky. Investing in micro VCs is no different, as they are often set up by former founders, with no established track record of investing.

According to Trenchs, it’s all about a feel for people.

“This is a people business. So, especially in the first fund, you are betting on the person. So, we are doing deep due diligence on who is leading the VC,” he explains. “We are doing a lot of reference calls with different people that previously worked with them looking at their previous track record. You are putting your money in their hands. So you truly need to know them.”

With risk though, comes reward, as Trenchs sees it. Smaller funds, he says, are much more likely to yield big returns on investment, than larger, more established ones.

“A return of 3x or 4x is something that’s achievable in different geographies with a €30m–€40m fund,” he argues. “Targeting a return of three to four times your investment, with a €120m firm is much harder in certain geographies.”

Aldea’s team is hoping that this US-inspired funding model will kickstart a much-needed transformation of Europe’s early stage investment landscape. And with plans to help back some 700 European startups, it’s quietly optimistic that there’ll be a few winners in the pot.

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