It’s a common refrain that VCs invest in founders as well as the businesses they are building.
Do they trust that these leaders can keep their startups on course in times of uncertainty? Can they adapt to changing headwinds and develop a fledgling idea into a sustainable business for the long-term?
London-based BACKED VC, which has just raised another €150 million fund to champion seed entrepreneurs in Europe, takes things a step further.
“For most of us, there are one or two people in our lives we would unconditionally back,” managing partner Andre de Haes tells TechBlast. “Identifying ‘genius’ is about developing the instinct to recognise those people very rapidly, without needing years of shared experience with them.
“We keep an open mind because genius manifests itself in different ways in every person. It’s the spikes that matter most: does a founder have a true edge that gives them a right to win?”
Partner Alex Brunicki explains the six traits it reflects on when speaking with founders. “We look at founder-market fit: why are you uniquely placed to execute this idea, and build this company, in this market, right now? What’s giving you a disproportionate competitive advantage?
“Grit: a lot of what goes into building a healthy, strong, successful company isn’t sexy. Do you have the resilience and commitment needed to keep this thing moving day in, day out?
“Speed: in so many of life’s scenarios, timing is everything. Do you think and execute at laser speed when needed?
“Ambition: there’s nothing wrong with a lifestyle business, but that’s just not what we back. How far do you want to take this thing?
“Political quotient: can you motivate the talent, customers and investors you’ll need alongside you on this journey — without resorting to some kind of Faustian pact?
“And growth mindset: do you have the self awareness to know your own strengths and weaknesses, and the hunger to keep developing yourself?
BACKED’s new fund is split between a €75m second seed fund and a €75m follow-on fund to invest in existing portfolio companies. This portfolio has an aggregate value of €10.7 billion, with three existing investments already unicorns: Thought Machine, Sky Mavis and Immutable X.
One of its earliest investments, Hutch Games, was acquired by MTG Group for $375m in November 2020, while it invested in early rounds of leading UK entrepreneurs such as Emma Sinclair MBE (Enterprise Alumni), Andy Shovel (THIS) and James Field (LabGenius).
“We wouldn’t be anywhere without the dedication and ambition of the founders we’ve backed. They bring the magic, day-in and day-out… we’re merely a supporting act,” says Brunicki.
“We’ve pushed ourselves to be an entrepreneurial fund. We’ve not always got it right, but we iterate, listen and test at pace. I couldn’t be more excited about where we stand today and what lies ahead: we’re developing deeper edge in frontier markets like BioTech and crypto; we’re bringing nascent communities together – such as Coin-Op – in a meaningful way; and we’ve built an exceptional team to support founders at scale.”
The emphasis on community has informed the fund’s event strategy – hosting over 30 events annually from founder dinners to a 1,000 person party at the Finnish tech conference Slush, and co-hosting conferences such as Coin-Op, a global blockchain-gaming summit held at the London Science Museum.
Co-founded and launched in 2016 by the duo, today BACKED comprises 10 people, 60 venture scouts, an 18-month proprietary founder support programme and over 30 brand-hosted events annually.
“Our venture scout network consists of 60 leaders from across the European tech and venture ecosystem,” explains de Haes. “They’re responsible for sourcing qualified deal flow, assisting with due diligence, supporting our portfolio founders through domain expertise and creating content.
“In return, they get access to BACKED’s professional and personal networks, a range of proprietary venture tools we’ve developed, aspects of our founder support programme and commissions from scout-sourced deals that we’ve invested in.”
BACKED runs an 18-month founder support programme offered to all early stage founding teams. It contains 24 features across startup fundamentals with a special emphasis on people-related factors, including situational leadership training, culture and values workshops, hiring support via an in-house recruiter, access to mental health services and an in-house executive coach for founders and leadership teams.
“We believe in the human-factor: as a seed founder, you are your company’s most valuable asset. It’s the reason we take bets on genius even when faced with huge technical and market uncertainty,” says de Haes.
“It’s also why we focus our offering on supporting entrepreneurs to scale as leaders – personal growth and company growth are directly correlated.
“From day zero our dream has been to build a community, not just a fund. Today there are more funds than ever in Europe, but still very few communities uniting the most talented founders through deep friendships anchored on mutual support, a shared hunger for self development and truly bold ambitions.
“Our aim is to offer the most comprehensive and effective founder service offering of any seed fund in Europe. This is one of our core strategic priorities, and it’s as important to us as ‘seeing’ and ‘selecting’ the best possible founders we can.”
Describing the programme’s three ‘core advantages’, he adds: “An extensive curriculum of masterclasses, playbooks and wikis covering all core operators skills. This enables our founders to rapidly absorb the techniques and habits of the best operators out there.
“A database of documents and service providers to overcome the common administrative hurdles of building and scaling a successful company. This lets our founders focus on the things that only they can do.
“A mutually supportive portfolio community. Our entire portfolio is connected via an internal network. This means that all our founders and their teams — regardless of stage and sector — can connect with one another to share know-how and hard won lessons from the field.”
Given the modular nature of the programme, he says even more established portfolio companies such as ThoughtMachine can benefit from this.