After 24 years, nine fund generations and 200 plus investments, German multistage VC firm HV Capital is succession planning for the next 25 years, having made a series of senior promotions across the firm.
But while some of its female investment managers have been promoted to senior roles, the firm still lacks a female partner after nearly a quarter of a century of making investments. It now has nine male partners plus four male founding partners. HV, however, is not alone in that regard: across Europe, only 16% of GPs are women, according to a 2023 report from European Women in VC.
The topic of succession in VC has traditionally been quite taboo in Europe, with many senior VCs reluctant to let go of the firms they founded and led for decades. And, unlike the US where the venture ecosystem is older and more developed, Europe has few examples of firms that have already gone through the process.
However, planning for succession is necessary for firms to think about early on to stay competitive long term and create opportunities for investors to climb the ranks, says HV general partner Rainer Märkle.
And as firms — and their founders — mature, it’s not a topic that VCs can ignore forever.
So, who’s being promoted?
HV’s leadership shake up
Felix Klühr and Barbod Namini, both former partners, have been promoted to general partners — joining existing GPs Märkle, Christian Saller and David Kuczek in managing the firm. Klühr focuses on B2B marketplaces and vertical software, while Namini’s focus is fintech and B2B software.
HV Capital declined to mention how the succession will impact the distribution of management fees and carry, but did say that the firm is an equal partnership, where all general partners receive an equal amount of carry.
Principals David Fischer (who focuses on consumer investments) and Fabian Gruner (who focuses on deeptech) have been promoted to partner.
In addition to the change in leadership roles, HV has promoted five former investment managers to principal: Manal Belaouane, Zuzanna Czapinska, Said Haschemi, Jannis Fett, and Maxi Pethö-Schramm.
Martin Weber and Christoph Jung — former GPs who transitioned to founding partners in 2018 — will continue to manage HV’s continuation fund and existing portfolio. HV declined to comment on who owns the management company.
No woman at the top
HV is, like many of Europe’s VC firms, male-heavy at the top; but it says it wants to change this.
“We know that there has still not been enough done in the venture capital industry in Europe to provide opportunities for women to join the leadership of firms in a consistent manner. While we may hire a strong performing female partner externally if the right fit comes along, our clear priority is to look within our own firm to develop our talent,” says Märkle.
Despite that, HV does not have specific policies for helping women to progress in the firm — although it says that its commitment to “push(ing) talent within the firm” is demonstrated by the recent promotion of three female investment managers to the principal role. A third of its investment team are female.
Planning for succession
Märkle says HV has been planning for its succession for almost 10 years, and that the topic of who would eventually take over the firm has been a “continuous discussion”.
A lot of VCs, he says, fail to effectively evolve their leadership structures which leads to firms shutting down, or talented investors leaving firms to start their own funds as they lack opportunities for promotion.
A plan for succession is something that LPs want to see too, says Märkle.
“As an LP, when you enter a fund commitment, it’s technically a 10 plus year commitment to the fund, and in most cases it even takes a bit longer. So you need very good visibility on who is running the shop — not just today, but who will be the key people in five, seven, ten years time that you bank your long-term investment on.”
HV Capital, like most other funds has a standard “key man clause” baked into its agreement with LPs where if some of the key investors — typically partners and general partners — at the VC leave the firm, the LP can withdraw funds. It declined to name which investors this clause is attached to.
While LPs want to see the best and most highly ambitious dealmakers get to the top, Märkle says that HV, aside from an investors’ track record, also considers who the most capable leaders are when considering who to promote.
If you only have top deal makers at the top of the firm and nobody cares about building the firm, then you have an issue.
“If you only have top deal makers at the top of the firm and nobody cares about building the firm, then you have an issue,” says Märkle. “You need to strike the balance (between both).”
25 years — and more to come
HV Capital — whose portfolio includes success stories such as Zalando, HelloFresh, Delivery Hero and Depop — is coming up to its 25th birthday next year. And while its leadership has changed, its investment thesis won’t.
The firm will continue to back companies from early stage to growth across sectors, with a specific focus on fintech, B2B marketplaces, enterprise SaaS, mobility and sustainability, and it will be going out to fundraise again next year.
In 2023, HV raised its biggest fund yet of €700m split into early stage and growth pots.
“When I joined VC 20 years ago, there was almost the notion that there’s no chance you will ever get to a partnership position in VC, because those senior guys will hold onto their positions forever,” says Märkle.
“And I think we’re showing that we not only promote people with a long track record, but also the young generation too, which sends a very strong signal to the industry.”