Europe’s solo GPs have to add one more seat at the table: Finn Murphy, a former partner at Irish VC Frontline, is raising a $20m fund.
Called Nebular and based in New York, it’ll back a roughly equal number of startups in the US and Europe.
Murphy hopes this somewhat unusual set-up will help him stand out — but also believes the US has to be a part of every European startup’s game plan.
“If you want to build the kind of company that has a big venture outcome, you have to eventually come to the US — and win in the US,” he says.
Murphy did a first close of $15m at the end of last year, and has done five investments since January. So far, two are in the US and three are in Europe.
Amongst the investment ‘themes’ he’s keen on are: dev tools for non developers; ‘local AI’ (small models on portable devices); and startups tackling the “second order effects of demographic change”.
“Europe will feel this very acutely — the working population is getting smaller and smaller, and that has a bigger effect on specific industries,” he says — like healthcare.
One of his first investments is Teton, a Danish startup which helps nurses monitor patients. It raised a $5.3m seed from Murphy and VC firm Plural in April.
Murphy says, “literally no-one wanted to do [that deal] with me” — “it was healthcare, hardware and two first-time founders… but eventually I was chatting to Ian [Hogarth] and he said, ‘Oh, I think Taavet [Hinrikus] might like this.’”
It’s now one of the fastest-growing companies in his portfolio, he says.
Nebular has also backed Co:Helm, another healthtech, which raised a $3.2m seed led by Sequoia last week. It hopes to reduce the admin burden on qualified nurses.
And no, he didn’t just invest because it was a Sequoia deal. “You can be an OK investor and make money by investing in every deal Sequoia invests in,” he says. “But the way to make real venture returns is through having differentiated opinions.”
He plans to invest in just 16 companies from the fund — fewer than most early-stage funds.
“I want to run a pretty risk-on strategy,” he says. “If I’m right once this fund is a really great fund.”
(If he’s not, the reverse is true.)
He plans to be the first cheque into pre-seed startups — investing $500k-$1.5m per deal — and reserving 20-30% for follow-ons. He’s targeting an average ownership stake (across pre-seed and seed) of 10%.
Then, he says, his job is to ensure a founder’s “next round is as big a success as it could be”.
“Wish I’d take more of my own advice”
LPs in the fund include several partners from other VC firms (Taavet Hinrikus), founders who Murphy previously invested in (like Hanna Asmussen from Localyze) and institutional investors including Untitled, Ninja Capital, RSJ and K8 Capital. Roughly half are based in the US and half in Europe.
At first, he says he was trying to wow investors with his finely-tuned thesis. Then he realised that wasn’t what was needed.
“I thought raising money for a fund was very different from raising for a company,” he says. “I wish I’d taken more of my own advice that I’ve given to founders.”
“In reality, it’s all about getting them to the point where they’re excited — and sometimes that just means driving a bit of scarcity.”
Raising as a solo GP is very relationship and reputation driven, he adds. “A lot of it is you and the way you work; you are so much of the product.”