Heartfelt — a new early-stage firm launched by the managers of APX, a Berlin-based VC backed by publisher Axel Springer and carmaker Porsche — has raised €40m of a target €80m fund.
The new fund is run by the same team as APX and counts Axel Springer and Porsche as anchor investors. It will make very early-stage investments in Europe and be “the first money” into a company, says Henric Hungerhoff, Heartfelt general partner and a managing director at APX.
Heartfelt is sector agnostic and focused on backing quality founders.
“We always joke that, since we cannot have a data-held conviction, we have to have a heartfelt conviction that this is a good team with a good idea,” says Joerg Rheinboldt, Heartfelt’s other general partner who is also an MD at APX. “We very much focus on the people and their ability to turn that idea into reality.”
Other LPs in the fund include family offices, as well as operators such as Anja Hendel, managing director at diconium, a service provider for digital transformation and Florian Klages, managing director at torq.partners, a consultancy for fast-growing companies.
Investing at the very early stage
Heartfelt will write cheques of €100k to startups and will earmark a high-six-digit amount for follow-on rounds leading up to Series A. The fund’s managers have used this approach with APX, setting aside €500k for follow-ons, and with Heartfelt they plan to set aside an aggregated sum up to Series A of €750k for top-performing companies.
Heartfelt plans to do one investment a week — as APX has been doing over the last two years.
Rheinboldt says that Heartfelt is not short of dealflow and is currently looking at between 30 and 70 new companies a week — an encouraging sign that founders are still starting companies even in tough market conditions.
Heartfelt has a preference for “under-networked founders”, it says. Its connection to APX and the Axel Springer Plug and Play accelerator means it can offer founders a network that spans 287 companies and 900 investors.
“We focus especially on introducing founders to founders as we believe they give each other the best tips and shortcuts,” says Rheinboldt.
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A good gut feeling
When evaluating companies whose founders are usually a mix of first-timers and serial entrepreneurs, Heartfelt says it tries to understand “why you, why this, why now”. Other questions it asks are:
- Who are these founders: what abilities do they have and what do they need to have to execute on their idea? What’s missing?
- How do they work with each other when they align, and when they do not align?
- How do they deal with feedback, and do they learn from and implement feedback they receive?
“If we have doubts on any of these things, we don’t invest,” says Rheinboldt.
The APX/Heartfelt team have also made strides, it says, to increase the diversity of its investment team, as it thinks this is one way to increase the diversity of the companies it invests in. Aside from its two male general partners, the team has seven investment managers, of which five identify as female.
Last year, 38% of the 52 companies APX invested in had a female cofounder, and it says it hopes to increase that percentage across both funds over the next year.
Heartfelt does not work with quotas but “routinely monitors the diversity” of the founders in its funnel, but also in the ones it invests in, it says.