CTIVE Venture Partners is the Barcelona-based venture capital firm composed of a diverse group from around the world who are dedicated to the digital start-up industry. Focused on investments in Europe, the firm uses its ‘ACTIVE Value Building’ to do more than just investing in start-ups, ACTIVE aims to foster sustainable growth and make an impact on society through its investments. KITE Invest looked at ACTIVE’s more engaged venture capital approach with Founding Partner, Ricard Söderberg.
KITE Invest: ACTIVE was formed in 2002, can you please talk to the origins of the firm and briefly account a few of the major milestones and achievements over the last decade plus.
Ricard Söderberg: When we started ACTIVE we were pretty much the first independent VC firm to start in Spain, and as we were all foreigners in a very local market it was difficult to win the confidence of the local investors for our first fund. However, we managed to get 9 family offices predominantly from Spain and half of them were among the top 10 family offices in Spain. This was probably our first big milestone.
The second one was when we managed to sell one of our portfolio companies, BuyVIP, to Amazon. It was the first time Amazon bought a company in Spain and shortly after that it spring-boarded from the deal to launch amazon.es. This transaction won the award for the best VC transaction in Spain and boosted the Spanish tech industry as outside investors started to look at Spain as an attractive market.
Our third milestone was the launch of our second fund in the middle of one of the worst recessions in Spanish history. We started to fund raise in 2009 with a target of a €45 million fund, and it was blood, sweat and tears as we fought to reach our target. We surpassed our original target and had our final closing at €54 million with institutional investors like the EIF and Telefonica, as well as local government agencies that backed us along with family offices. Several firms closed down during those years due to not being able to raise a successive fund so we were lucky to survive that period and, overall, came out much stronger from it.
KITE: The firm has a coined its investment strategy as ACTIVE Value Building. Please describe this strategy and what in particular makes it stand apart from other VC strategies?
RS: Over the years the VC industry has changed and its business model needed to be improved. There has been a lot of money around but the key is to get smart money that helps companies to maximise their growth potential. This is what we have focused on over the years and identified the key areas where start-ups need the most help in order to reach their full potential. As companies grow there are several areas of a business where you quickly encounter bottlenecks, such as HR, tech development, financial control and so on. On the other hand, many founders become leaders of many employees for the first time and need to focus on hundreds of different things simultaneously; this is not an easy task if you are not a seasoned executive. Also, you need to have the experience to market your company’s equity story in the press so it is highly regarded in the start-up world as well as among other big international VC firms. These are some of the areas where we can help with experts in each field as well as coaches for senior management. That is what we call ACTIVE Value Building.
KITE: The investment focus of ACTIVE is in digital and within Europe. Why is ACTIVE centred in this industry and geographic location? Does the firm have plans to expand its reach and industry scope?
RS: We invest in the space where we have expertise and where we also see high growth potential in the coming 5 to 10 years. The digital space is still very broad and we still see an immense opportunity to support this industry.
When it comes to our geographical focus, Europe is perhaps lagging the US in terms of matureness but it is growing fast. European companies tend to be more boot strapped than their US counterparts and have a longer cash reach with their funding rounds. Furthermore, the valuations tend to be more conservative. This is probably a natural development as the VC industry in Europe is smaller and more fragmented. Also, we know how to expand in such a complex range of cultures such as Europe, and we see this as a competitive advantage. There is still room for emerging VC firms to rise in Europe and this is where we see opportunities.
KITE: Focused in digital, please explain how ACTIVE’s investments merge digital with sustainability and social impact.
RS: What we mean is that we are looking for companies that can have sustainable growth during a long period of time and that it is not only an idea that translates into a short term trend that may become obsolete in the near future. We also try to combine it by investing in smart and innovative solutions that can disrupt an entire industry or niche sector by providing a much better solution. By doing that we will eventually make a positive impact on society, through our companies offering more efficient solutions, new ways of doing all types of daily transactions and also stimulating the economy and creating employment on the way.
KITE: Generally speaking, how many investment opportunities does ACTIVE review yearly? What is the best way for a start-up to meet the eyes and interest of an investor?
RS: We reviewed around 600 companies last year and it is now growing every year by 100 or 200, so it shouldn’t be long before we reach 1000 projects per year.
There are no real rules on how to reach a VC. If I look at the companies that we have invested in there is no particular pattern, they have all emerged from various sources. What is important is to be able to present the company well and clearly, as well as having a clear plan. The founder is the most important person. In the end one is taking a decision very much based on the people behind the project. One needs to be able to see the passion glowing from the entrepreneur when they talk about their vision; this is a key trait in order to survive a marathon of hurdles and setbacks, which are inherent in the life of an entrepreneur.
KITE: ACTIVE Venture Partners also hosts the Venturepreneurs’ Organization with the aim of bringing together angel-investing entrepreneurs. Why did ACTIVE form this Organization and website? What is the future aim and goal of Venturepreneurs’ Organization?
RS: In the first years as we were establishing our network around Europe, we met some very interesting and successful entrepreneurs that had started to invest their gains in other start-ups as well as continuing creating new companies themselves. Somehow they are like champions in their home turf and are continuously approached by local start-ups to get guidance from them. We met several very similar profiles around Europe and thought that by putting them together they would benefit immensely from knowing each other so we created this network to foster these relationships that are also very helpful to us. This is how the Venturepreneurs’ Organisation came about and we meet twice a year in a European city to help each other in business and brainstorm around future trends to invest in. We also make sure that the people we invite to join are like-minded and have a firm set of shared values.
KITE: The Organization has its 14th Summit this May. Please speak to the focus and takeaway from these events.
RS: The way these 2-day gatherings are structured is typically in three main parts: 1) we have a session where each one can present their 3 biggest needs and the rest of the group gives advice on how they can help with real commitments; 2) we have a session talking about future trends and sometimes also inviting trend experts to give a talk about the topic; 3) we invite keynote speakers on topics or new technologies that we all are keen to learn more about. Besides that it is a lot of fun with sports and fun evening events.
What we have all gained from this is a very tight group of people committed to help each other around Europe, which is very helpful when one needs to understand the cultural differences between all the European countries, as well as getting thorough local expertise. This has also been a great advantage when it comes to help our portfolio companies expanding to other countries for example.