Today Bilbao-based All Iron Ventures is announcing the launch of a new €30m fund of funds, to invest directly into other European VCs. The money has been raised from private individuals and family offices, with no public investment involved, and is a fully separate entity to All Iron’s direct investment vehicle. All Iron Ventures launched their first fund in November 2020, which makes investments at Seed and Series A stage (writing cheques of €300k-€3m).

So far, the fund has already invested in Hoxton Ventures, Left Lane Capital, Speedinvest, Crane Venture Partners and Firstminute Capital, contributing an average of €2m per fund.

So why would a VC fund want to put time and effort into lining the pockets of its rivals? 

Intel

Having invested in these funds, All Iron will now get access to information on what they’re up to, including quarterly progress reports and the funds’ annual LP meeting. 

Diego Recondo, partner at All Iron Ventures, also told Sifted that the closer relationship to leading funds like Hoxton and Speedinvest will also increase All Iron’s exposure to high quality deal flow around Europe. 

“We think that there are synergies between both funds,” he says.

Conflict of interest?

But with that opportunity, there’s also the chance of a conflict of interest between the two funds. All Iron Ventures’ direct investment fund from 2020 invests in the same kinds of companies that the likes of Hoxton, Speedinvest and Firstminute Capital do. 

Given that it’s run by the same people as this new fund of funds, is there a possibility that All Iron Ventures could get intel about a deal from one of the portfolio funds, and then try and compete to join the round?

“That’s a good question and it’s what all of the general partners [from the funds we invested in] asked us. We are in the very early days, but so far there hasn’t been a specific opportunity that we’ve known about through the funds we’ve invested in, that we’ve then invested in later on,” says Recondo. “If that were to happen — and this is a message that we have already made very clear internally — we want to handle things very gently to avoid any kind of issue or misunderstanding. So whatever we do, we will always funnel it first through the managers [of the portfolio funds] and that’s super important because, at the end of the day, this is a trust relationship.”

Recondo adds that a bust up with portfolio funds is unlikely, given than All Iron Ventures never leads investment rounds outside of Spain, meaning it would only over be helping to top up an investment to get it over the line.

“That potential conflict of interest is actually one of the key value propositions that we bring to managers,” adds Ander Michelena, founding partner at All Iron Ventures. “As we don’t lead, what we offer is that we always share deals, we are constantly sharing whatever we see with other funds and helping them to get to deals. And we also expect them to help us get to deals too. Now we’ll have an even higher collaboration with these funds, and we’ll keep sharing. But All Iron will never steal a round, because we don’t lead rounds.”

The Spanish opportunity

Both Michelena and Recondo also emphasise that the funds they’re trying to invest in are oversubscribed, and not massively in need of the small-ish cheques that All Iron is going to be writing (“We’re not going to be moving the needle with €15, 20, or 30m cheques”).

And given that it’s normally more work and admin for a VC to add large numbers of smaller LPs to its own cap table, the reason for taking All Iron’s money comes down to the team’s Spanish access to Spanish startups.

We don’t see everything that happens here, but we see pretty much everything,” says Michelena. “That access to Spain is gaining importance in the market and it’s something that funds really value because we give them access to deals here. That’s a key component of the value proposition.”

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