There’s an increasing number of solo VC managers focused on Europe — and a new one joins the ranks today: Hypernova. But the $25m fund, founded by investor Tugce Ergul, is unique in that it will invest in both startups and other funds. Ergul is best known as the founder of Angel Labs, the "world's first investor accelerator", which she's scaled to 44 countries.
Where will Hypernova’s money be spent?
- Hypernova will put 40% of the fund into other funds (i.e. be a fund-of-funds) and 60% into direct investments in startups.
- Half the investments will be made in the US and half in Europe, reflecting the fact that Ergul has been in the US for 11 years, but also lived in France and Italy and is originally from Turkey. “I've always wanted to act as that bridge,” she says.
What does the fund-of-funds strategy look like?
- Hypernova wants to write cheques of $500k-750k into emerging managers; in other words, VCs that are raising their first fund or who don’t have a significant track record yet. Ergul says she wants to back people with different backgrounds like journalists, angel investors with a good track record, former operators or investors coming out of larger funds.
- Emerging managers will get support on the tech needed to run a VC firm, LP introductions, branding support, access to coinvestment opportunities and — for those based in Europe — help finding US VCs to back their portfolio companies. That’s important because Ergul says US VCs often aren’t looking at the earlier stages where she wants to back managers. She also wants to act as a “feeder for bigger LPs” who want to add emerging managers to their portfolio.
- “We want to create a positive signalling effect for all those emerging managers that are struggling out there. And in Europe, it's much more difficult,” Ergul says, mentioning that many accelerators and training programmes for emerging managers (like JP Morgan’s Projet Spark) that exist in the US haven’t yet made it to Europe.
What kinds of startups does Hypernova want to invest in?
- Hypernova will invest in automation and process innovation in sectors like retail, finance, logistics, transportation and shipping. Ergul says the investment thesis has been shaped by its LPs — half of which are from industry and half B2B SaaS founders.
- The fund will be writing $250k-500k cheques into pre-seed and seed-stage companies. It won’t take board seats.
What's next for Hypernova?
- Ergul says that she’ll do more investments in other funds as she starts to deploy Hypernova’s capital, given that returns from other funds take longer to come to fruition than returns from directly investing in startups.
- She’ll also be bringing on one to two partners.
Getting more emerging managers in Europe is critical for the health of its VC ecosystem, especially if they are from non-traditional backgrounds like those Ergul is targeting (and represents herself, as a solo female GP). They’ll bring diversity and new perspectives that are sorely lacking. They’ll likely bring returns, too; emerging managers — regardless of geography — outperform their more established peers.
Ergul’s international LP base — she has investors hailing from Mexico, Guatemala, Indonesia and Malaysia — shows strong interest in Europe. She also tells me that some US VCs have signed on as LPs to get access to European dealflow. At the same time, the fund highlights how far there is still to go in bringing together US and European ecosystems. Emerging managers and smaller funds in Europe often face geographic constraints on their investments because they take public money, so smaller cross-Atlantic funds like Ergul’s are rare.