[Raised $1 Billion] Ep.51 - The First 100 with Daniel Keiper-Knorr, the Founder of Speedinvest| Venture Capital | Fundraising

Daniel Keiper-Knorr is a general partner and one of the founding partners at Speedinvest, which is a leading pan-European seed stage VC investing in Fintech, Marketplaces, SaaS, DeepTech, Climate & IndustrialTech and Digital Health, established in 2011 with around a billion now AuM from multiple funds and more than 300 startups in 30 countries.                               

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Let's do it. Let's do it. Broadcasting from around the world. You're listening to the first 100. A podcast on how founders acquired their first 100 paying customers. Here's your host, Hadi Rodwan. Good to have you on the show, Daniel. How are you doing today? Thanks, Harry, for the invite. Doing fine. Hope you are doing fine and everybody out there as well. Looking very much forward to the next hour. It's a pleasure to have you on the show. Let me just start with a quick introduction for our listener. Daniel Kuyper Knorr is a general partner and one of the founding partners of Speed Invest, which is a leading European seed stage VC deep tech, all the interesting industries. And it was established back in 2011. And now you have more than a billion in assets under management. And what's impressive, you also have more than maybe 300 startups in 30 different countries that you invested in. And I think you also have few unicorns that are out and there's also future that are coming. And so it's going to be an Before we start, tell us the story of Speed Invest. How was it founded? Well, super happy to take that time leap once more. As said, it's now 2023. It's over 12, including the preparation time over 13 years ago. It's very far back. The journey we set out to back then, we had no idea where we would be in three, five, let alone 10 years. years, we started Speed Invest because we felt that would be the next logical, natural step after having been tech entrepreneurs for the year 1999 slash 2000 up to 2006 when we finally managed to trade sell our company to an ASTAC listed tech firm followed by a three-year earn-out period took us into 2009. expired and we sat down together say what would be next so is it with all that we've learned launching starting a tech company in the midst of the burst of the Nasdaq bubble I don't know how many listeners out there they remember what happened back then also many probably can tell my age now haha so that taught us a lot right and with all that learning and the learning curve we We said, this cannot go to waste now. We knew there was a way how venture should be built in order to 110% serve your assets, which is the founders and the company that you have invested in. It's not about protecting the investment, it's about protecting the assets. That is, to me, a very important differentiation. An asset and an investment is not the same. is the amount of money you put in and the asset is what you get for this. So the investment pays the price and the asset represents the value that you get. So you can take in all sorts of, you know, financial engineered risk protection, but that's all defense play. That's all defense play. And my belief, our belief venture is not an asset class that shall be defined by defense play. forward, building new things that haven't been there, facilitating talented and ambitious entrepreneurs, setting out to their journeys, achieving their goals. And our role is basically an auxiliary role. And conventional PE or financial management is always about protecting the investment. Our approach was protecting the asset and ensuring with everything that we have and able to do make sure each of our assets that we hold has the best of its chances realizing its full potential. Knowing that the vast majority will not work out because this is what statistics tell us and data tells us over the years, over the decades. But then these few rare gems in the portfolio, we should not and no VC fund ever should lose them for the wrong reasons. And this is more than just putting capital into those companies. This is about giving the fact that by the time in 2010, 2011, when we started to fund and the tip, the average age of founder that we invested in was like 10 to 15 years younger than us. So we had that advantage or that gift of just being older to share the experience, being there, done that, seen it, having an idea, not knowing. knows future, but having an idea of what might be around the next corner. And just narrowing down the field of eventualities that might hit a found and if we were unprepared back in 99, 2000, when you know, a NASDAQ bubble burst and tech shift came, starting the week, we had no idea how it's going to finish on Friday. But now having gone through that, the full cycle, starting academics been out, being company went down and every single week we were on the brink of bankruptcy. Every single week for like three years. But we just always believed in the potential of technology and eventually it turned out to be so. And when All Stars aligned, we went from about being bankrupt to having a treasury issue in taught us so much and now it's about collecting capital, providing such capital to entrepreneurs who also deserve it. To be very frank, not everybody does. Not everybody should pick up venture capital because it comes with a lot of expectations, a ton of burden. It's not for everybody and venture capital is not for everybody as is not every company raising is for venture capital. than many people would think, where there is a true match between who is actually able to take on venture capital and who is actually right to take on capital and who actually should. And all those almost now two and a half decades of experience combined on both sides of the table, the first one and a half decades as an entrepreneur, the second one almost one and a half decades as a VC investor. experience and learnings and first-hand learnings that just need to be shared to help these much smarter entrepreneurs and much better educated entrepreneurs than we have ever been to bring their ideas and products and businesses to life. What were the early key ingredients for you guys to be able to raise your first 10 million? Because that was your early fund. It is correct. 2011, a 10 million small boutique, now in high-end site, it was not a fund. It was a friends and family and everybody who we had in our close network that we could ask for a check. It was an SPV for friends and family. It was in a weird setup, horrendously expensive, given the fact that we were only able to collect 10 million in AUM. late 2010 when we went out to raise, able to do a first close in late 2011, took the second closing to 2012 for 10 million only. But frame it as it was, it was a year and a half after the blow up of Lehman Brothers and the global financial crisis, a break and lose. And we set out from Vienna, a place where private equity as a general venture capital was just not in existence. We broke into a complete vacuum there. And so we could only raise from literally friends, uncle, dad, siblings, best friends, tiny checks, people who worked with us prior company, the tech team, who were our clients, who knew that we could deliver on our promise. These people wrote us checks. That fund is now nearly 9x. of the raised capital, one asset alone. We did 20 investments out of the 10 million fund. We learned a lot. Very early on, we spotted kind of, well, not on purpose or like by plan, but because it just came logical. And we've been B2B software entrepreneurs ourselves. So that naturally built a large part of the portfolio. And then we started to branch out into FinTech and SaaS and marketplaces. three of the core investment topics that we still work on. But over the time now fast forward 13 years, we develop new topics. It's so important also as a venture want to constantly from the inside reinvent yourself. Yeah, you must never stand still. 100%. Standing still one second is the first step backwards. Exactly. So if we go back to that time, how were you able to find startups and leads? Because today it's easy, right? one is one second away. I can go to LinkedIn, I can ping that startup, I can see them on YouTube, I can see them on TechCrunch. Back in 2010, probably it was much harder. So what were your early acquisition strategies to get those leads in? In a way, a fund is a two-sided marketplace. On one hand, you speak to interested investors, the supply of capital. On the other end, you talk to interested entrepreneurs, interesting entrepreneurs, where's the demand of capital? And if you manage that right, you get a marketplace and a network effect business model eventually flying. So how did we acquire the first investors? I just let out this was, you know, very opportunistic people who we knew, who we knew, know us, who we knew, trust us, and who we knew had money. Full stop. That was it. No strategic plan who to talk to. We like chose 20 investments out of a very meager deal flow, probably a couple of hundred, two three hundred a year. Now we're screening 10,000. We've been back then in 2010, 2011, as said, we broke into a vacuum over here. So out of the 20 companies, 13 have been Austrian. And interesting thing is from the three major value drivers that we still hold to our Austrian. And then also the fund had an average entry valuation, pre-money of 1.8 million euro. That is now about the size of the ticket that we write. So in a way the whole market like quintupled over those 10 years. How did we source? Having been tech entrepreneurs ourselves obviously helped because we've been in the ecosystem, but you need to go out in precedence seed stage. are in the dark. These are side hustles, night gigs, weekend and holiday and off time gigs. So you need as a fund in pre-sit-seat and into a serious day even, you need to be very visible. So you need to go out, you need to communicate, you need to be present, you need to hit every single meetup that was back then organized. It involves a lot of travel, physical time consuming. All those features that we are using now like Zoom, Teams, Hopin, they just did not exist. It was the phone and not even a video call. To a good part, it still is like this. You just got to be out there, be visible, have a clear message to market, the message that it's quickly understood, a clear cut value proposition. Don't try how early stage founders launch their companies and win their first customers, regardless if it's B2B or B2C. Be out there, have a clear value proposition, address a clear and present problem. Obviously, in post-financial crisis, having 10 million, you just by being there, address the clear and present problem because you have 10 million. But very similar to and create content around this. Be open. you do it, why you do it. In whatever order. Is the why first, is the what first, is the how first. That's not so important then. Just be there, be approachable, do not hide away. That's totally different from investing in later stage growth pre-IPO because by then the companies have all the media attention, the visibility, they can be Googled. In precedency even LinkedIn, GitHub, that gives a bit of a help, but then again, no, not sufficiently. Very interesting. Go out, have your story reduced to the max. As I always say, a product is perfect, not when you cannot add any more features, but when you cannot strip any more features. That's a great story and history of how you've done it. that has showed you their early acquisition strategy on how they got a few of their first paying customers and you said, okay, this is very interesting. I haven't seen that before. Is there anyone that stands out that you could recall or tell the story about? Good question. Difficult to answer for quite some reasons. First is, unfortunately, given the growth of our company, having 300 plus portfolio every single story of them. This goes by the organization of our firm, how we have set up Speed Investor. We run by six more or less autonomous investment teams covering their sector. So as you mentioned before, ranging from FinTech, Marketplaces, SaaS, Climate Tech, Digital Health and Deep Tech, each of the six sectors is covered by a specialist investment team in the range of four to 10 people, and they do their thing. So in a way, is not one fund, it's a bouquet of six specialist funds. So these six teams, they get capital allocation, and within that capital allocation, they can build their own portfolio by themselves. The six teams decide autonomously on which companies to choose. They get capital allocation when we tell them that the Powerhold partnership needs to last for three years. Spend it wisely. obviously, and wanted competition among the portfolio. So this setup works very well, but the disadvantage of it is that not every single investment is able to know every single company. But coming back to your question, there is definitely some founders who are impressed by the customer acquisition strategy. marketplace, consumer, whatever else business model you can imagine, those who really stand out are communicators. Being able to really nail the core value proposition and knowing who to bring this forward to. And that is, I don't know if this is a natural gift or it came to a certain extent trained? Well, let me rather say it can be refined. If it's not there, you're just not that communicator. You may have tons of other talents, even in our firm. We have all sorts of different personalities, personality structures, and then talents that come along with it. The combination of this makes the secret formula. Also, this is what we look very much at when and very complimentary teams. So typically that's a three-legged team, one who takes care of product and tech, another one takes care of promoting and sales and going out the whole thing, and another one who takes care to run the whole shop. And each of the talents and personalities shall be equally represented in the core team because only this guarantees you the necessary resilience of all the roadblocks and bumps and potholes and that come up out of the fog on the way forward, where you're always going at above speed limit. Perfect. Thank you for sharing this, Tania. I like the fact that the VC world has what I call almost a perfect feedback loop. What I mean by that is you receive a pitch, you that feedback you bring it back to your strategy. Even the pitches that you passed on, you also have a perfect feedback loop because you can see if that in hindsight was a good decision, bad decision. So it's very interesting that that's one of the rare maybe industries or let's say jobs that you can get the perfect feedback loop there. So having said that, what common characteristics or blueprints that these are things that would allow me to predict in the future that a founder is going to make it big or not. Anything that stood out with all the investments that you've done? Again, specifically seed stage and pre-seed stage, you're predominantly dealing with people and there is no black and white. It's not natural science where two and two makes four and it never makes three and it never makes five. It only makes four. This is a social science, as all economics are, and business is social science. And that is more than everything else true in the very, very early stages of company creation. A company itself is a society that makes it the society of science. So what is a common trait that separates the successful from the less successful ones? As always, it's never one thing alone. It's a combination of multiple factors and personality characteristics. It's also often a very, very thin line. Let me first probably start with numbers. So as I said before, we screen 10,000 cases a year. We pick 30. So in 99.7% of all times, we end up saying no. And as you said, we give feedback. We're not just saying no, that's not for us. We say thanks for reaching out. that did, but we decided not to invest because of. It's then can be a ton of reasons and we always try and I think a good venture capital, specifically in seed stage, is it has to give constructive feedback. It's also what I tell my people, we never decline with a three line email. It's a three paragraph email. Because you never know, people develop, companies develop, ideas develop, two years from now they may have learned. They come back. they built in the feedback or not or pursue the different path. But specifically in venture you always meet twice. So the no answer is the one that's got to be really thought through and worked on. Saying yes is easy because then the work starts. But saying no is in many times only a not now but maybe in a year's time or when you have achieved x, y and z or whatever. What is the common personality traits in founders that we look for? So it's a combination of ambition, of course, of necessary deep sector insights. So if any of our team or hopefully any of our peers in the market speak to a founder, the founder needs to be the smartest person in the room. Honestly, it happens quite often that very soon during a pitch or a phone call or video do a Google search on the site, you outsmart the founder. This is so disappointing. Along all vectors, right? When, Guy, what are you doing here? You're not just wasting my time. My time is to be wasted, but you're wasting your time. That's not something you should pursue. It's of course expected the smartest guy in the, or person in the room on a given sector or a topic, resilience, ambition, but then also openness to feedback and not being strong and stubborn about its own ideas because that can lead you straight into the brick wall. So having a far-reaching idea and ambition, but also the necessary being in touch with reality to being able to take the right steps one after the other. I know this is very proverbial now, but I simply don't know how else to phrase it. How you know to get up to the top level when you can't take the first step on the staircase So resilience, ambition, still being in touch with reality, being able to communicate again, and being able to communicate to different audiences. Because a person that cannot communicate in a language or in a way that the addressee understands, it's not about delivering the message, it's about making sure the message arrives. That's a very different thing. Ensuring that the message arrives and is understood in the correct and right way, that is the key art. And that is about communication. Someone who cannot communicate cannot sell, coming back to the first 100. It's about communicate, addressing the issue. Someone who cannot communicate, cannot hire, cannot raise money, will inevitably fail. But of course you can only properly communicate. understood or live and breathe the product, live and breathe the company, but then again be able to translate it into the language and phrases that the addressee is open to, right? And also knowing when you're about to over communicate, you know, take yourself back, allow the other to digest, allow the addressee to digest, think about it, and eventually come back with the question. Once you got that to that point, you're halfway through. advice. There's a lot of listeners that are on the show that want to be an entrepreneur or a founder. So if they're listening to this show, what trend or startup idea or let's say thing that you're looking to invest in today that you haven't seen yet? Well, first advice, don't go by trends. Once the trend is there, the train has already left the station. Identify or pick a problem. Again, coming back to selling to the first 100. You don't sell a product. You sell a problem. You need to address a problem that the client or also a potential investor in a fund has or an opportunity. The flip side of problem is opportunity. It goes hand in hand. of this. This mistake also we made in our early days 20 years ago, we tried to sell products. Nobody's interested in products, really. It's always about people. People are bothered by problems and people look for solution or ease of such problems. The product is only a means to ease the pain or facilitate something else. It's never about selling products. through further down the way, growth stage, later stage companies, then it's probably when it comes more about execution and not about creation. Once you got that in fundraising terms, that is probably post-series C, typically five years into the existence or eight years into existence of a company. All the half decade before, you were thinking should be around the problem or the pain or whatever you call it. the product. From a VC point of view, I always say when also discussing team internally and also with investors, I always say products are for clients. Investors buy the problem. And also in your very, very early days, your clients, they invest in you. If you really speak of clients, you know, exchanging money for a thing, they invest in something. They're off the shelf. The first 100, they invest, they don't know what they get. They invest in you and you need to team up with them. And in the very, very early beginnings, all sales to my very, very firm belief is B2B sales. No matter if you have a B2C product, but the first 100 clients or users or customers, they buy into you. They don't know what they get. where on earth it's always the same only the price changes but the product I know what I get as a first 100 customer of any given company I don't know what I get I know I have an urge of pain a pressure a problem and I think sense hope believe that company XY and said might be a remedy to this but they invest in you and your firm and not in your product amazing advice a switch and talk about Daniel, what is the principle that you live by that has made you successful? Never thought about that, but good question. Probably make sure you surround yourself with the right people. Nobody, almost nobody is made of material to be able to solve everything by himself. So make sure you surround yourself with the right people and that goes from talents they have, personality they are, then in the end you spend a lot of time with those people. Make sure you like to spend time with these people and then again do not be too much friend with those and always have an open communication with everybody. Always starting with the joint solution to a challenge. I mean I have one motto maybe, this comes, I don't know if everybody out there will understand, Alpine's gear. So my main motto is, and that's totally not business related, it's better to be off-piste than pissed off. But in any principles, you know, like principles like Ray Dalio is publishing, I read those and I take advice from many of those. I don't have a motto for itself to run my things. What I do enjoy a lot from the founders and entrepreneurs in our portfolio. It's very profane learnings and advice. One guy some years ago told me the day or night before an important pitch, he looks to get at least 10 hours of sleep and not work on the pitch until 3 o'clock in the morning and then set out on the plane for 6 o'clock and see the client or investor at 9 o'clock. course. Smart. Yeah, actually never thought about this, but that is actually smart. And it's such, you know, simple and profane ideas that you pick up and when you hear or see them, they make total sense. They make 110% sense. But you never yourself, you would have never come up with that idea. True, true. If you could be remembered for one thing, I actually having help to create a venture firm that outlasts me. Short and simple. In other areas of life, you know, family, friends, honestly, there's much more I want to be remembered for. But in business, if one thing you should strive to achieve is build something that outlasts you. Makes a lot of sense. What are you the most proud of? Again, in business, first of all, it's good to be proud of things of all sizes. Small client wins, large client wins, successes. should be celebrated, deserve to be celebrated in a modest way. Proud of in business. Well, actually, back then, honestly, having taken the jump over from a corporate career in business banking to the tech ecosystem, not dropping it during the early 2000s post-NASDAQ bubble burst Now in hindsight, now with a 25 year long career, there's a ton of things that you're proud of. The weird thing with humans is in short term you only remember the bad stuff, in long term you remember the good stuff. So the long routes, and this is what makes humanity go on, the things you are proud of, they outnumber and eventually completely extinct the bad memories. this one that just mentioned and then of course taking that step to actually set out and create a venture fund. I think that has on a daily basis working with it but I think we might stand the chance to make a mark in the industry. We hope so. We hope so. Daniel one last question what's next for Speed Invest and Daniel? Well for Speed Invest the only thing that we could not year cycle of fundraisers. So the bigger the firm gets, the more you are constantly out raising, selling the proposition, winning over new investors. And this is also what I mean while do with a hundred percent of my time in the small team of three, constantly being out in the market, ensuring the capital supply to the business. So translated what is next for speed invest. We are now at speed invest fund number four. Next, obviously, fund number five and hopefully six, seven, eight, nine and ten. But again, this is only numbers. In the inside, the company constantly needs to reinvent itself, create new topics, never stand still as mentioned earlier on. For myself in business, next step is obviously getting speed invest on the menu for the large institutional piece, building, we understand ourselves being a both from an investment side. So as you said, our portfolio spends 30 countries. We also want to raise capital, not only from our closer vicinity, but from across the continent, from other global regions. That's clearly the goal. Privately, it's raising family and getting back a bit more of the work-life balance. That has suffered a bit in the past, say, five to 10 years, but there is a goal. of the show. We wish you best of luck. How can people reach you? Yeah, it's pretty easy. Daniel at SpeedInvest.com. Super easy. We're not hiding. We cherish every incoming email. Find me on LinkedIn. Thank you so much for the invitation. That was a really pleasure. Thanks for the questions. They will keep me thinking. Also wish you all the best for your direction. Arie, congrats. Thank you, Daniel. Thank you. Have a great evening. Thank you so much for listening to the first 100. We hope it inspired you in your journey. If you're enjoying the podcast, please subscribe to our podcast on Apple iTunes, Stitcher, Google Play or Spotify and share it with a friend starting their entrepreneurship journey. more viewers.