E315 | EUVC | Rodrigo Ferreira, Investment Director at Vinthera on co-investing & building strong LP relationships

0:00Welcome back to another episode of the EUVC podcast. Today, I am joined by Rodrigo from Vinterra. He used to be with BFP, which I'm sure you know, BlueShit Your Partners, a global funder fund, thumbs out here in Europe. But now he's with Vinterra, a spin-out fund together with Philip, who came from BFP, and a new joining partner who comes with the operational background and founder background. Today, we're going to talk only about how Rodrigo thinks about diligencing emerging managers, but also specifically with the angle of co-investing, because that is a big focus of him and Philips at Vintara.

0:41Hope you'll enjoy the episode. If you do, do drop us a review, go on EU.VC and subscribe. Here's a few words from our beloved sponsor. This episode is part of a series dedicated to raising venture funds across Europe and and come together with the launch of the European VC Fundraising Bible. Together with our friends at Isma Capital and Flow, we've spent the winter digging into the past nearly 300 episodes, as well as the latest market data and Isma's vaulted data treasure to uncover how the tech reset impacted the fundraising market in Europe and how leading VCs across the continent have changed their strategies, tactics and operational handbook.

1:19Filled with graphs, beautiful narratives and video interviews, providing an entirely new and engaging experience. The fundraising Bible promises an experience only surpassed by the actual Hitchhiker's Guide to the Galaxy. Don't miss it. Go get it now at flow.io forward slash raise. That's F-L-O-W-W dot I-O forward slash raise. And the revelation doesn't end there. Join our live roundtable with venture capitalists apostolies, Speed Invest founder Daniel Kuyper-Kanor, and supersedes very own Dan Bauer, alongside disciples of LP Investing, Christian Hortz-Pedersen from IIP Denmark and Joe Schorge from Isma Capital.

2:02Sign up for it via flow.io forward slash raise as well. Your venture journey, redefined.

2:13Tear down this wall. It's more than just an alliance. This is a union of values. United and determined we can serve as a model for other regions of the world. The nature of a problem requires a European response. Europe is a story of new beginnings. Let's start acting. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Rodrigo, welcome on the European VC podcast. My pleasure. We've been friends for quite a while and have been, of course, meeting around Europe. But to all the people that don't yet know you and who maybe only know you from the BFP context, I would just invite you to just give a really short bio of yourself and Vintera.

3:09Yeah, of course. Yeah. So, I mean, I've been in venture for a number of years now, always kind of on the Yelke side. So, as you mentioned, I used to be with the BFP. So, an early stage emerging manager global fund. and have recently joined Vintera to basically launch Vintera. So we just announced about last month the new strategy. So it's, again, still on the LP side. So it's hybrid funded funds that will invest basically in early stage VCs and growth stage companies alongside those VCs. And, yeah, primarily U.S. and Europe. Let's say two-thirds U.S., one-third Europe. Yeah, I think that's really it in a nutshell.

3:47That's all people need to know. yeah and maybe uh important to say as well it's it's you you and philip uh and yeah so yeah so me and philip that came from all that came from the bfp side and then we partnered up with um thomas falk so he's a serial entrepreneur in germany you know his first company out of high school or something uh and he was one of our investors at bfp as well and he has always been kind of a very active early stage investor out of his family office and so that's kind of the the idea to merge. So him being the direct expert, you know, 20 years of experience, the direct investor and like, you know, then Philip being kind of the fund of fund banker background guy.

4:29So that's really, you know, kind of the, the match made in heaven type of thing. And then, you know, we have like a whole team that we're still building up and to, to just get going. Yeah. Beautiful. Beautiful. All right. So now investment today. Yeah. Okay. Okay, congratulations on that. Today, we're going to talk all about how you diligence performance with emerging teams. And I was thinking, let's start out by asking you when you see a first time fund, and you want to check what is performance like here? What's the track record there? Obviously, typically, it's not too much. So when that's the case, what how do you go about it?

5:10I mean, I think in general, like regardless of, you know, being a fund one or not, like there's like, we always focus on the same three pillars. So one being a strategy. So, you know, what's your unique USB to founders? You know, how do you get access to the best companies? Why should founders take your money? Are you a specialist? Are you a generalist? If you're a specialist, then do you have a background in that specific field? What's the value add you provide to the founders? will you being on the cap table have a meaningful impact in the founders' chances to build an enduring and solid business?

5:46So that's one of them. Then the other one that's, I'd say, almost very often overlooked by GPs. And I know you guys had, I think, last week a training on that or something. Someone mentioned it, which is portfolio construction. I'm a portfolio construction geek myself, so I really like to discuss that with the GPs. And again, I would say we don't have a preferred type of portfolio construction. Obviously, I personally like more concentrated portfolios, but we within the team don't really have any kind of bias. But we do like to see that the funds we invest in understand the different dynamics that play there, how much ownership has an impact, the size of the portfolio.

6:27I mean, I've seen very good funds that require like six unicorns to return their fund. And I've seen funds that with a 500 million exit return, you know, multiple times their fund. So all of these different concepts play a crucial role in what will ultimately be the performance. And so for us to believe that the GP truly understands how all of this, you know, mathematics, almost things kind of come into play and where you need to play out, I think that's for us like super, super important. And again, we have funds that are ultra concentrated, like, you know, wealth for team Portugal companies that are incredibly good.

7:02And we also have funds that have, you know, 60 plus portfolio companies, but they're also some of my favorite investments. And also, it really depends on what's the right strategy for you. But it's super important that you understand that that's a big, big part of building an enduring fund. And then the third one, which is basically track record. And I always like to think of it as track record and team. So, I mean, for me, the two are the same. And I think that's, you know, kind of going into your question about fund ones. is i mean the track record obviously i always say we invest in first-time firms not first-time investors so it's important to see that you've made it already whether it's you know as an operator as an angel investor at a you know big brand name fund and you're just spinning out so we don't really have a preference using the background for the funds we invest in and obviously it becomes a lot easier if there is track record to assess you know you deployed 50 million at Basimer and have a 10x DPI or something.

8:01That's very easy. But if you were a founder or you have a small engine portfolio, then the multiple itself won't really tell you much. And that's why I like to see it as, you know, kind of an extension of the team, because there it really plays a bigger role, you know, kind of your CV. I mean, what were you doing before? What's your motivation to be doing this now? I mean, are you in it for the long run? you know what's ultimately driving you to do this and why are you going to be better than others I mean there's you know hundreds like thousands of funds out there I think I meet around 400 500 each year so what makes you stand out of the you know the pack you know why is our intro call the one that's going to that I'm going to like be thinking on the way home you know I think that's really important and then again on the more you know financial thing I mean when the track when there is some track record you know but there is very early to assess I mean And we look at things like, I mean, who are the co-investors in the realm?

8:55We do look a lot at inter-reliing companies. So we actually go, do I actually like to have exposure to this company? What's the business model? What's the growth rates of the companies? Again, as I mentioned, co-investors. And then also, how did you deploy the strategy? So you should tell me you are going to do pre-seed investments and have the portfolio that being seed and series A. then regardless of me liking or not the questions, the companies, it means you're not really kind of delivering on what you promised. So it becomes a bit more subjective than just looking at the financials and really seeing how everything kind of comes together and really trying to get to the bottom.

9:31Are these fundamentally good businesses that I'm happy to have exposure to or not? I don't want to talk too much about the edge, right? Because I think that is the one that we typically gravitate to and talk about the most. But if we look at the two other pillars, the portfolio construction and understanding of VC dynamics pillar, and then afterwards track record and dive a bit deeper there. If we look at that understanding of the VC dynamics, I think we all understand, of course, that's important. But maybe if you could enlighten me a bit on how you think about the different strategies. If one chooses to be very concentrated, how does that then change what you're looking for versus if they go more standard, more broad?

10:21Yeah, so I think obviously like having a very concentrated portfolio, it's like definitely to pull off. I would say you need to already be a lot more senior in the industry to actually be able to pull off that type of strategy. Because obviously you have a lot less shots on goal. And so then when you concentrate, you concentrate even more on the follow-ons and all of that. This is more common in seasoned investors, let's say your 40-year-old plus industry professionals in the industry for 20 years that worked at big funds and sold multiple cycles. It's not super common, but it's more normal to see that kind of background going after that.

10:58And now you say that it's more normal, but that can also be translated into if Rodrigo looks at a young firm, a young team that wants to do a very concentrated strategy, they would have to have very strong arguments. Yeah, exactly. The most important concept for me is like concentration around the company. So like, you know, because I want to look through ownership in the end. And this is something that even on a fund-to-fund level, it does play a role. So you need to have the meaningful part of your fund allocated to the winners and on average to every single company. So that if you do hit one outlier, it does move the needle.

11:41Even on a fund-to-fund level, I think on a BFP's first fund, for example, which is the more mature one. So the one that I can already kind of comment a bit more about. I mean, I think we had around 8 % to 10 % concentration in our core fund positions. and so if you hit the 10x that returns your whole fund of funds 1x you know in our look through ownership in some of the companies I mean I'd say like the top 10 companies return something like 80 % of the returns even on a fund of fund level and that's because of the concentration that we put on the funds and then the concentration the funds put on the companies you know and so I think that's really really important I think some of the larger the larger funds that I've seen that work really well are for example imagine a network player or something where you do 60 shots on goal, for example, and then you really concentrate a lot on the follow-ups.

12:29So imagine a 50 million fund that does a couple of 200, 300k tickets, pre-seed seed to get into the companies. And then they do, I mean, it's not even super parata, you know, it's, you know, hyper ultrasonic parata where you then put, you know, two, three, four million into five to six companies. And that's kind of a good, something that I've seen work well for some emerging managers. You know, you give yourself enough opportunities to work with a lot of companies and see that kind of break out. But then you still concentrate enough around those winners. And I mean, some of our, it's more common in the US than in Europe, this type of model, to be honest.

13:06Or do you see there, could you be a bit more detailed on the ownership percentages that they then target in their follow-ons? and also the number of bets. If we say that you have this situation, 50 million euro fund, 300k tickets, 60-ish tickets for the first round, is what I heard you said, then what would be the thing that you've seen work doing afterwards? I mean, so that's the thing. So it's not so much about how much ownership you actually get in the company. That can depend a lot, depending on each round dynamics. I think as long as you have enough exposure to a company, the ownership actually comes second.

13:43again it's also obviously a super important metric but it's about having enough money at work in a specific company so uh again imagine like 60 deals of like 200 300k and then you actually do a couple of three to four million tickets uh into a handful of companies so you actually so you have a 60 company portfolio but let's say you have 50 of your money concentrated in, you know, eight companies, 10 companies, you know. So you are actually very, very concentrated around companies that you are super, super ultra bullish on, even though you started off, you know, with a big opportunity set. So I think that's what I've seen working really well is really doubling down.

14:24And I mean, there are funds in the US, like 776 from Alex Johan and like the Reddit founder or Scribble Ventures, both of them that we've invested. So Scribble is a kind of operator, third investor type of, like a female solo GP fund. And it's really like that. So they basically start off with, you know, a quite broad portfolio. And then the logic is if you provide enough value to the founders, they will give you like the allocation that you want, that you deserve, you know, because they also want you to be more engaged. So in both these situations, very often we see that they are, even though they started off as, you know, a kind of a smaller ticket in the beginning, they then are sometimes, you know, the largest follow-on ticket behind the lead that's coming on or something, you know, at the Series A or something like that, you know.

15:11So, again, you need to fight for that. You need to work for that. It's the same also with that. We need to, I mean, for us to co-invest with the funds, we need to show that we have enough value add and also for us to grow allocations with the really oversuscript funds. We need to build that relationship that the funds want us to invest in them as much as we want to invest in them. And it's the same logic with these type of funds where you really fight to get X amount of numbers you have to rock them to really triple down in the companies. Let's dive a bit further into that co-investment angle because that's, of course, why at least many say they want to do LP investments.

15:50Not everyone is geared to then follow up on that afterwards, but obviously a setup like yours is. So how do you, when you meet a team that has this component for you, how do you diligence that how do you make sure that this is this will be a partnership because if we take 776 there's probably a good queue that we want to have those co-investment rights yeah again i think it's really about building the right again so in terms of the setup so i completely agree i mean i think it's very tough to actually execute on that i mean we ourselves like you know in the past have tried to execute on that but it just didn't work because the timelines are so short and everyone tells me one of the investments but then you reach out to me hey, there's like, you know, you have three business days to make a decision.

16:34And even if I've known the capital for two years and I already made up my mind, it will take some time for me to actually get, you know, to then reach out to my investors and try to get them on board. So it doesn't work. You need to have like full discretionary power over the capital. And that's why we decided to sit in. So this is the same vehicle. So basically we have the same ICC and diligence. We don't need to ask anyone permission to deploy. And that's why we think that works. in terms of you know they get the access i really think it's relationship based uh yesterday i was in london for example and during a meeting someone asked me when if we give you a side letter for uh you know giving you preferential rights for the coin investments is that is that something that would be appealing is that something that could move the needle for you and my reply was i mean yeah i would take it you know i wouldn't say no but it's not really something i would ever ask from you you know because if i do a good enough job building this relationship and i add enough value as one of your LPs, you will give me the access, you know?

17:30So it would be more like, okay, if someone else has it, then I would also want to have it. And it's just as much about the processes that you have internally. And it's not about that right when the opportunity comes, but it's about, it's about having a close enough relationship with the GPs that they feed you the information that you need to be on top and that they care enough about the relationship to you to maintain that close of a connection? Because as you just said, if an opportunity comes up and you only start to really pay attention when they tell you that you've got three days, that's not going to be a fun series A or B round that you would be able to participate in.

18:11I mean, it depends. I mean, the way we look at it, we put a lot of work, you know, we do a lot of our own homework before. So imagine if we have 800 underlying companies, we will have our short list of 100-ish. you know and every single time we have a catch-up call with one of our managers i mean i will always go with you know oh these are my favorite five companies in the portfolio and this is in my favorite would be your your five favorite you know because everyone has different tastes and i always like when i'm in the catch-up without asking about it without saying anything he actually started the people the gp starts talking about those same companies for me that's a huge validation because we are on the right track by you know following these companies and so So once a series comes along or something, we've already known the company for two years.

18:56We've already felt comfortable. We like the business model, the metrics, co-investors, everything. It's really more just about the actual round dynamics. Do they match where the company currently stands with what we're trying to raise? Maybe doing some sense check on the founder. A lot of founders we also already met before. I mean, not only at HGMs, but I was in the US last month and I ran into a bunch of our founders because I recognize the company. So I'm Shana. So, hey, how are you? Like, nice to meet you. Yeah, I'm invested. Hey, that's invested in your company. Oh, yeah, we're friends now, you know?

19:30So it's really, it's about building relationships. If you have that in place, you can actually act on the deals quite quickly because it becomes more about the actual financial transaction and the terms of the transaction rather than having to do a lot of diligence on, you know, market sizing, customer basis, growth metrics, you know, all of that stuff that you already done in the past, you know. I want to ask you a final thing before we close, and that is how you diligence that potential relationship. How do you diligence the partnership fit with a manager? I mean, it's tough to say. I mean, it's a very subjective thing, you know.

20:08Like, even within the same month, you know, you can have two GPs, you know, and you can completely, you know, vibe and have rapport with one, and you can hate, almost hate the other, you know. it can be tough and I have actually like funds in our portfolio that I love I have good friends that would never invest in them because they just they acknowledge this is a great opportunity but I just cannot get comfortable with the individual managing the thing for whatever reason it doesn't make them bad people it's just different types of personalities so it's very tough I usually say you need to you need to pass the dear check which is would I be happy just grabbing a coffee or having a beer with you and not talking, you know, without me being an investor in your fund, you know.

20:54And this is something that when I go to the U.S., we have a huge portfolio there. And obviously, if I go to San Francisco for three days, I cannot possibly meet all of them. And it's really funny because I try to meet everyone at least once a year. But if I go there three times, there are a handful of them that I will meet every single time because I just love spending time with them, you know. With some of them, I might go for a walk and we just, you know, talk about life and whatever. and then at the end, oh, by the way, how's the portfolio going? Yeah, I knew I was supposed to ask you something, you know.

21:21And it becomes, in a sense, kind of just the LPGP relationship and you actually, you know, become friends, you know, acquaintances. You have a relationship, you know, apart from that I gave you money, you need to report to me type of dynamic. So it really depends on the personality of each of you people, you know. I think it's important to be open to building these relationships. I think an advice to GPs is the best time to build these relationships is actually when you are not fundraising because you immediately remove the transactional aspect out of the discussion. I was also talking with a friend the other day and he's closing the fund now in May or April.

21:56I was like, oh, are you going to super venture? He's like, no, I don't think so. I just want to start investing. He's like, no, don't be an idiot. This is the best time for you to go. This is going to be your best conference because you're going to come with the best momentum possible, which is I successfully closed my fund. Not first closed momentum. No, I'm done. I don't need your money. I don't want your money. But can we grab a coffee can i pick your brain do you want to give me some advice and people are just so much more receptive for that type of you know conversation rather than can i send you my deck can you hear me talk for 20 minutes and then you know i'll tell you i'll do a follow-up etc it's just very different it's a bit like having a ring on your finger yeah i didn't want it to say because everyone said it and it's true you know the the average lpg relationship lasts long than the average marriage It's the second time today I go for the sentence.

22:48But it is true. I mean, the funds that we dropped, we didn't react for whatever reason. These are over 10 years old even, and we are still sitting on the Alpec. We still have catch-ups with them. So we are still in a relationship. We haven't invested in the last three generations. So even if you drop and even if they don't perform or see how the relationship doesn't work out for whatever reason, you are still in it. So we still join the Alpec meetings. We still have catch-ups with them. We still track the portfolio because we still have our money there, you know. So we cannot just, okay, buy. I never want to hear from you again, you know.

23:20We're still locked in. And again, often for way more than 10 years. It is a very long-term industry. Rodrigo, thank you so much. Lucky that we're both young, by the way, when we're talking about that. Rodrigo, thank you so much for joining us today for this conversation. It was amazing. I would have closed on what advice you'd give to emerging managers, but you just gave it. So for that reason, that's the one I would end up with. Yeah, I wouldn't change that one. I think, again, don't be transactional. Be as personal as possible. Like, if NLP reaches out to you and don't reply, I'm not in the market.

23:56Let's catch up next year when I want to rise. That will come back to buy me more often than you think. Absolutely. Thank you so much for joining us. to everyone who listened in today. I really hope you enjoyed this conversation with Rodrigo from Vintera now, not BFP. I hope you enjoyed it. Do make sure to subscribe on EU.VC and see you around. Here's a few words from our beloved sponsor. This episode is part of a series dedicated to raising venture funds across Europe and come together with the launch of the European VC Fundraising Bible. Together with our friends at Isomer Capital and Flow, we've spent the winter digging into the past nearly 300 episodes.

24:35as well as the latest market data and Iceman's vaulted data treasure to uncover how the tech reset impacted the fundraising market in Europe and how leading VCs across the continent have changed their strategies, tactics and operational handbook. Filled with graphs, beautiful narratives and video interviews, providing an entirely new and engaging experience, the fundraising bible promises an experience only surpassed by the actual hitchhiker's guide to the galaxy. Don't miss it. Go get it now at flow.io forward slash raise. That's F-L-O-W-W dot I-O forward slash raise. And the revelation doesn't end there.

25:17Join our live roundtable with venture capitalists Apostolese, Speed Invest founder Daniel Kuyper-Kanor, and supersedes very own Dan Bauer, alongside disciples of LP Investing Christian Hortz-Pedersen from IIP Denmark and Joe Schorge from Isma Capital. Sign up for it via flow.io forward slash raise as well.

26:03European response Europe is a story of new beginnings new new beginnings let's start acting