We love pre-seed stage investing in Europe and we are going to do everything we can to support it. (Updated)

The funding gap at the early stage is real, pre-seed and seed are left wide open, as you can read in Flavio Lobato’s article: “The VC unicorn obsession is creating an early stage funding wasteland” both angel and seed round activity has been on target for their lowest year since 2014.

Having VCs moving to later stage doesn’t only pose a funding problem but early-stage tech entrepreneurs are left high and dry when it comes to mentorship and true assistance as explained by John Vrionis in his article: “Venture Capital Is Losing Sight Of Its Most Important Investments: Seed-Stage Entrepreneurs.”

As John, We believe pre-seed and seed-stage investors are making an enormous difference. We, at id4 ventures, strongly believe that early stage is the most gratifying stage financially and on a personal level. We are not alone, we see great micro and seed funds emerging across Europe. We want to do more to support pre-seed investment in Europe.

For those reasons, we have decided to commit more of our resources not only to early-stage investing via id4 directly but also via other funds. We have finalized our first fund investment that will be announced soon and another one is work in progress. Stay tuned.

Why also investing in angel funds? Because we believe to do a great job as pre-seed stage investors, you need to provide not only money but also localized advice, connections, support notably in talent acquisition and business development, etc. Nobody can be good at everything everywhere.

So we decided to restrict our angel investments as lead only to France and invest via angel funds sharing our values in other parts of Europe.

We also believe those funds investments we will help us learn faster by sharing experiences across angel funds and develop our network across borders to better support our portfolio companies and be the point of contact in France for companies of counterpart funds.

We are super enthusiastic to collaborate with other micro funds

Vive the European micro fund’s community

Update 1 (01/03/2019)

Now, we can disclose our first fund of fund investments. We are thrilled to be part of The Nordic Web Ventures Fund II run by the great Neil Murray
More about this : The Nordic Web Ventures raises a second fund and picks up Atomico’s Niklas Zennström as a backer.

All you need is one yes!

The basic of a new startup is to do something disruptive that very few people can see as viable or even feasible. You are here to disrupt the status quo, so what seems an obvious opportunity for you, won’t be for the rest of us.

That’s why fundraising at early stages is so hard. You have no metrics to backup your vision, barely a viable product and a nascent team.

So getting rejected is normal, all you need is to find someone who understands and believes in your vision, not only that but also believes your team is the one who can execute it.
Your job as founder is to get that yes, the one that will make the others follow.

One yes from a respected / credible Angel investor or VC, will make the rest of the pack raise an eyebrow, and start believing as well. It’s always the same pattern.

You will be rejected a lot, but eventually if you have a great project/team and you make good progress while bootstrapping, you will find that yes.

One example of startups with a bold vision and great success that didn’t have an easy start: Robinhood (summarized here). They kept pushing, developing their company, finally they had their first Yes, and now their multi-billion dollars’ companies.

Keep them in mind, work hard, be ambitious and eventually you will get your Yes.

Founder is not a synonym for CEO

Recently, we have seen too many startups putting their existence at risk or destroying their value simply because the founder sees him/herself as a CEO for the lifespan of the company.

As a startup grows, managerial challenges become different. They evolve from vision+product to vision+product+team to vision+product+team+finance.

Founders end up spending most of their time managing PnL, relation with investors, forecasting revenues and dealing with large clients.

Most of them never studied those skills, most of them dislike those activities and more importantly most of them are not good at it.

Because they see the founder as the leader since company inception, they see themselves as a de facto lifetime CEO.

CEO is a key role, a real job. You need to understand finance, management, how to deliver projections. It’s a tough job.

As a founder, becoming a real CEO comes at a cost: being less involved in the product decisions, more in spreadsheets.

So if your investors or mentors start to tell you you should consider bringing a CEO on board, here are a few things you should consider:

1) It’s your company, it’s your decision,

2) You are the founder of the company, nobody can take that away from you. As founders, we look up to Sergei Brin and Larry Page, not Eric Schmitt,

3) You have created this company to solve a real problem most probably not to manage KPIs and finance,

4) You are the or one of the largest shareholders of the company, so your first role is to take the best decisions for the company not for your ego.

5) Your job as founder is to bring the best talents including for the CEO role.

So if one day, you reach this decisive moment, we hope this checklist will help.

PS: Consider appointing a CEO as a success, it means you have created a large company when 99% of the startups fail…

Does valuation matter at early stages?

We always tend to say valuation is a vanity metric.

While the right metric is in fact an equation: Amount of cash + Valuation + Investor smartness + Terms

When fundraising entrepreneurs tend to forget two things:

1) Roughly 90% of startups fail

2) As an individual, there is little difference in your life, if your net worth is $20m or $40 or $100m.

But there is a massive difference between having $0 or $20m+

So your only objective as a founder is to ensure your startup sustainability. The best way to achieve this is to surround yourself with talented people as committed as you to your startup success and it also includes your investors.

Never forget that to make it personally your startup needs to make it first.

It seems trivial but we see too many entrepreneurs completely discounting the potential added value of investors, considering all money equal and therefore focusing only on valuation.

You are building a company and a team. Investors are part of that team. If you have brilliant and well connected angel investors your chance of success dramatically increases.

So, as you have to recruit amazing team members, it’s part of the founders’ duties to also assemble game changing angel investors.

Identify them and hunt them. All startups we have seen with great business angels and seed investors have dramatically increased their success rate.

Once again a great round is the right balance between amount of cash, valuation, investor smartness and terms.

One example, Aaron Levie, Box’s founder and CEO.

I quote him “don’t be too anxious about valuations before Demo Day, our angel round was $80K on $240K pre”.

Box is now IPO’d and valued $2.7bn

Building a startup is a fantastic journey but also a long and risky road. Early rounds are here to help you build solid foundations for your business. It is way too early to pull out your calculator to estimate your future net worth.

Should your startup aim for profitable growth?

Startup’s profitability is a growing discussion these days. It’s a recurring topic that gets more discussed when financial people feel we are at the end of a bullish cycle, and that feeling is here.

Profitable startups have inevitably a higher survival rate during downturns, check 2000–1 or 2008–9.

Now, should your startup aim for profitability? which often means growing slower.

I think there are 2 key criteria to take into account

1) Am I on a “winner takes all” market? or can 2–3–4 competitors coexist in this market. If you are a “winner takes all” market, land grab strategy is key so you have to go fast.

To go fast you need to raise money and focus on market adoption rather than bottom line.

If you are on a market that can sustain several competitors, it’s really worth looking at a slower growth strategy, where you have to raise little money or no money at all (see examples below).

2) Do you need a lot of tech to be developed before being able to get your product live.

If yes then you need VC money.

Profitability discussion is well alive today because a lot of new startups today are more, what we like to call, digital SMBs. They take advantage of the market depth which was not the case 10 years ago. Today, there is 3.5b+ internet users worldwide, e-commerce is $2.5tn+, so finding a $1bn niche with little competition becomes easier.


Keep also Bezos quote in mind “Constraints breed resourcefulness”.

We like to finance digital SMBs aiming to take their market with a very efficient cash burn rate and reaching profitability soon. This is becoming an interesting field for family offices and Angel investors. Even some new VCs are looking at this new type of startups. Check below Indie.vc

Interested about more tips for founders ? sign up to our newsletter here