'In the Next Few Months, We Will be Investing in at Least One Company Per Month Across Europe'
So says the founding partner of Madrid-based VC firm Enzo Ventures.
Written by Stefano De Marzo
Edgar Vicente, Founding Partner of Enzo Ventures, has been many persons throughout his twenty-five years. From a Glovo rider to entrepreneur and founder of DiHola, a startup that had a successful exit back in 2020, to a Gen Z investor seeking to fund the most impactful tech in Spain and Europe. His curiosity has led him to undertake different and successful endeavors. He even had the chance to be an angel investor in companies like Glovo, Cabify, and Badi.
Alongside his partners in Enzo Ventures, Iván Fernández Lucas and Markus Törstedt, Edgar appeared on the list of 30 Under 30 of Forbes Europe. In 2021, the Madrid-based VC firm invested in more than 10 companies. Enzo Ventures made the headlines earlier this year when they announced a €20 million fund backed by Private Equity fund Moira Capital Partner.
Now Edgar is determined to break the rules in the VC industry. He wants to be experimental and fund exciting ideas from young entrepreneurs. He believes that young founders want also young investors to back them up. His energy is dazzling and when he talks he tends to inspire entrepreneurs. Edgar confesses that he never disconnects, not even in the summer, although he tries (apologies to his girlfriend).
Edgar speaks passionately about the startups in which they have invested recently. The last one is Rever, which is the only Spanish startup that entered Y Combinator in the last summer batch. They are dedicated to solving the whole issue of returns for ecommerce. According to Edgar they have a very young team with a lot of experience and ambition, and they have seen great value in them as investors. They have also closed an investment with Dudyfit, a SaaS for personal trainers, with also a very young team. Now, in the middle of the summer, they are closing a new investment on a startup. Edgar believes in very young teams with a lot of ambition, and he is going for more.
Novobrief sat down with him to talk about the investment scenario in the second half of 2022, their plans to open an office in London and Paris, and how everyday life has changed after they started the €20 million fund in February, among other things.
Why don't we see more VCs under 30 years old?
Mainly because of the high barriers to entry that the sector has, both bureaucratically and economically. It is not the same to start an SL selling glasses or any service where the process is very fast and there are many external players that can help you to manage the operations and back office. But when it is the case of Venture Capital you must create a regulated vehicle that is supervised by the CNMV here in Spain and by other entities outside. Something that involves a lot of bureaucracy and has a high cost. We are talking about people who start their fund with years of experience in the industry. People who start their fund at 50, after twenty years of working and gaining knowledge of how a fund is operated and how a fund is constituted. By market standards, the entrepreneur has to invest between 1% and 3% of the fund. If it is €20 million, at least 200K must be invested by the management team. It is therefore a rather high initial outlay.
Given the reduction in VC volumes expected for the second half of 2022, has Enzo Ventures' investment thesis changed? How are you going to face the rest of the year?
We always try to differentiate from what other VCs are doing. I think in this industry this is paramount to have high returns. If the market declines and there is less volume, we will be more active investing because there will be more opportunities, and also the entry prices will be cheaper. So far we have two investments. We want to make twenty-five or thirty more. So in the next few months, we will be investing in at least one company per month across Europe.
What advice would you give to startups looking for funding in the second half of 2022?
Start as early as possible for the mere fact that every day that goes by is one less day of runway you have. I have heard VCs saying that startups that are going to raise a round should wait and see, wait to see how the next few months evolve. In my opinion, nobody knows how the next few months will evolve, every day that goes by is a day lost and a day you spend cash. Nobody tells you that the market could be worse in six months, so start now. In other words, whoever has to raise money, start now and do not despair.
In the last month we have seen many layoffs in startups worldwide, do you think this phenomenon is also happening in the VC sector in Spain and the world?
I have seen a specific case of a fairly important fund at the European level that has had problems in raising a subsequent vehicle, which leads to less revenue and has had to lay off staff, about eighty percent. These layoffs may occur in some cases, but not as massively as we have seen in startups. It is true that some funds may find it more difficult to fundraise and may delay the hiring process a bit. Therefore, perhaps a fund that plans to hire will do so in January, in my opinion.
How are the plans to open offices in London and Paris going?
In the last quarter of 2022, we are already opening an office in London. From there we plan to control a large part of the European market because it is the main hub. In the first quarter of 2023, if everything goes well, the idea is to open an office in Paris, because the French market is a bit more hermetic. To control it, you have to be present there as well.
Do you have plans to invest in startups outside Europe?
Yes, in fact, in the first fund, we have a 10 percent of capital reserved for geographic experiments, and we refer mainly to Latam. Why? Because of our family roots and also because we know the market. We believe it has a lot of potential. With a view to a second fund, the idea is to focus more there.
What has it been like to go from a micro fund to a €20 million fund? What differences have you found in the day-to-day management?
It is very different. In the beginning, the micro-fund, which was one and a half million euros, was managed through a private limited company, it was not regulated. It was a part-time project where the main idea was to get us out of the industry. And it was much calmer. There were a lot fewer back office tasks. You focused much more on the core business, which is investing. But now with a twenty million fund, apart from investing and closing deals, there are a lot of operations, a lot of bureaucracy, and a lot of management.
What does Enzo Ventures look for in the startups they invest in?
Enzo's thesis is very agnostic, it's generalist. We love technology and that's where we invest. At the end of the day, we have a wider range of where to invest and not miss any company that can make the world a little bit better through technology. We look at everything, both B2C and B2B all over Europe, fifty percent of our portfolio is in Spain, but we have invested in the UK, Portugal, Ireland, and the Netherlands. We invest being the first institutional investor and we are not afraid to go super low. Even in the entrepreneur's first round if the team is good. That is our thesis.
What are the pros and cons of being agnostic and not being a specialized VC?
The pros are that you have absolute freedom to be able to invest in any opportunity within technology that you create. That's super interesting and that's our philosophy. The cons are that you will invest in sectors where you have little or no experience. That has more risk. If you specialize, the due diligence of the companies you invest in is much more precise. But in the end, it can also be more boring.