E330 | Giulia Van Waeyenberge, Sofina Group: Why you need talent, money, and network to build a great ecosystem

0:00Welcome back to another episode of the European VC podcast. Today, I have Julia van Weyenberg with us. She is a managing director at Sofina Group, an investment holding company that manages more than$9 billion in AUM. They're headquartered in Brussels with offices in Brussels, Luxembourg, and Singapore. They're a global investor. They invest in Europe, US, and Asia, and primarily at the venture and growth stages. So that means all the way from Series B to B and C up until IPO and beyond. They also do a lot of fund investments. They've invested in funds since 1978, venture funds since 1978. And they've invested in famed firms like Sequoia, Iconic and Lightspeed.

0:42And in Europe, they've allocated to some of our most outstanding companies or outstanding funds like Point Nine, Moonfire, Atlantic Light, Seedcamp, Visionaries Fund, Stride and Hoxton. and also firms like Blossom Capital, St. Gallant, Alvin, and also the platform firms that we all know like Northstone, Baldur's Anatomico, Dawn, Phoenix Court, and Felix Capital. So an absolutely exciting episode that we're about to go into. So Fina and specifically Julia have accepted to be on the judging panel of the European BC Awards. So I'm looking very much forward to feature her as she is quite the thinker in European metric.

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2:36Tear down this wall. It's more than just an ally. This is a union of values.

2:51The 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. Julia, thank you so much for joining us for this episode. First of all, I want to ask you to just share a little bit about why you decided to join us as a judge in the European VC Awards. And thank you so much for doing so. Well, it's a very honor to be here. And thank you, Andreas, for the invitation. First, the European venture ecosystem is very important. and so to be able to be here is for me a way also to support and then to contribute to the ecosystem.

3:44I always strongly believe in that and give back, give back to our community, give back to our ecosystem. And so, yeah, I also want to continue also to encourage and support also emerging venture capitalists firms in Europe and hence I was very happy and thrilled when you asked the question. We're just happy that we got you with us Because as I just said in our intro, you've backed many of the leading funds in Europe and you've backed many leading funds across the world. So I think your perspective is incredibly important to us. And I also love that you're coming on the pod here because it's too often that we don't shed enough light on the family offices that we have moving the needle in Europe.

4:26So I'm happy to have you with us. Julia, let's get into how you first got into venture. So FINA is an investment holding company and we invest globally in Europe, Asia and the US. And we like to back entrepreneurs. Our mission is to back entrepreneurs with patient capital and supportive advice. And in particular, those entrepreneurs that are wanting to change the world, make the world a better place. And so with that strategy, actually the venture world, the venture ecosystem is a great place to be able to find those entrepreneurs with that kind of mission and with the aim also to build potentially legendary companies or disrupting companies or companies that are changing the world.

5:14When you're a VC, you have picked a model. You have to back power law potential companies. How do you think about the different opportunities that are in the private market space and private company space specifically? Do you follow a pure venture style strategy when you're in Est, or do you also do more private equity type investments? Sofina has been around for more than 120 years, and we are family-backed. So our majority shareholder is a family, but we're also enlisted. So yeah, you can buy your shares if you want to. And indeed, in our strategy, we're really focusing on venture and growth.

6:00We're always investing as a minority shareholder, and we also really embrace the idea of being that diversified. And so diversification is a big theme. And then when you look at diversification, it is across different geographies, because US, Europe and Asia. It's across different sectors. We look at consumer health care, digital education, and also the sustainable supply chain. And it's also diversification across the lifecycle of a company. So indeed, we invest into funds, a seed early stage. We also invested on platforms, some also on the growth side. We don't have a lot of exposure to the buyout side, though.

6:43So on that front, we invest into funds, but we also invest directly. With our direct strategy, we invest from a CREB, BC, and onwards. But we have a very flexible mandate. And we can invest between$20 million up to$200 million,$300 million. And that's actually both into venture-backed, but also growth-bootstrapped or more mature companies. But always minority shareholder and always banking entrepreneurs. When you go direct, do you typically lead or do you typically co-invest? We can do both. For us, it's important to be an active investor. So we always have a board sheet. We have had situations where we lead, correlate, follow.

7:27It really depends on the situation. I'm trying to, you know, kind of uncover how you think about your investing, right? So now we know how you invest or how broadly you invest. How do you think about the allocation? Because you said you do have a very wide mandate. You could do$20 million or you can do$100 million. How do you make that decision as a firm? As we like that diversification, we also like to have a vintage diversification. So we like to invest on quite a steady investment base across the different years. And we manage around$9 billion. And so our portfolio has a natural rotation. And then we try to maintain that steady investment base.

8:14and at the same time also we're looking at maintaining a certain diversification across the different geographies and strategies and so on. So it's kind of a whole puzzle that falls into place. When you have$9 billion under management, then what is a steady investment pace? What's it like when you're investing out of a balance sheet? You then need to think about what's the rotation of your portfolio. We also have additional levers as well. if you hold your assets for 10 years, or let's say 9 years, it's$1 billion per year. If the rotation rotates faster, then it's more. Certain strategies in each rotates faster, more at 5, 6 years.

9:00Others are maybe more at 11, 12 years. How much do you allocate to a venture and how did you decide on that? I'm asking this because this is one of the things I'm always, like there's so many schools of thought. You used to say it's a quite small percentage. And then we've had some years where some US foundations or the organizations behind the universities, endowments, where you've had very good returns from venture. And for that reason, the allocation to venture has grown significantly. What has it been like with you. You've been around for 120 years. How has that moved and where is it today?

9:45We have started to invest into private funds in the 70s and TA Associates is one of our long-standing relationships and we are invested with them since 1978. So when we stay long term, it is long term. And we have been investing into the venture ecosystem for multiple decades. so we've been around and building into those long-term relationships with a lot of the U.S. VCs. And so, yeah, we have been investing in venture quite a lot for a very long time, one could say. As I mentioned, for us, it's really core to our belief that we like to back those entrepreneurs that are building and those companies that are for the future.

10:33And so it's really embedded into our strategy. So it's a big part. Could you share with us a bit more about what you look for when you say partnership? What exactly is it that you look for with the funds that you bank? For us, the first thing, it's a long-term game. We have been doing that since the 70s. So we really strive to build those long-term partnerships. We know the space. We know the great things you can do with ventures. We know also the challenges. When we build those partnerships, it's through several ways, and it's never always the same, but we like to compare notes, we like to exchange on certain insights, investment trends.

11:16We sometimes help them. We have a very large network, a global network, a large network, so often they ask us for introductions if they see we're very well connected. On the other hand, sometimes we ask them for an introduction in a portfolio company which we are interested in, So it's on that side in both ways. We have been also comparing notes on the ESG and sustainability journey as it's something that everyone is learning. And so, yeah, it's really on multiple fronts. When you meet a new manager, first of all, maybe if you could share a bit on that, how many new commits you do per year and also when you meet them, what is the typical thing that you look for there?

12:04Because yes, the partnership, but how do you diligence it? How do you figure out if this is the right one? Today we have run, like if you take the European example, we have run 20 relationships, which we believe is a good number. Because also for us, as we want to build those partnerships and so on, and also we want to get a good exposure across the region and Europe is small and big, depending on how you look at it, into the different stages and sectors and so on and so on. So we believe that 20 is kind of maybe a good number. We back also, we have more emerging managers. What we like then is also often the people that were at a certain established firm before and then want to create, start up their own thing and kind of carve out.

12:55Those people, they have experience, they have track records And then also the motivation and inspiration of being themselves an entrepreneur and launching their own initiative. These are things that we like as well. Do you have any special affinity for specific sectors or specific strategies? Do you prefer them to be at least three people teams or that would be an EIF criteria, someone would say? We are in general invested in quite a lot of multi-sector funds. And the idea there behind is that it gives the GP the possibility to make changes and to find the best opportunities at that time in the ecosystem.

13:44And it's what broadens the scope. But we have some also more specialized funds as well. So it's a combination, but as such, multisectories make sense. Our aim is to build long-term partnerships. So it's true that we like to see a progress of that this person is going to really build a firm. It doesn't need to exist already today. And we know also it's not easy. and there might be a lot of reasons for things that might be changing down the line, which is of course fine, but it's true we like to, if you know from the start, this is always going to be an angel, angel funds with just one person, which is working great and can work very well and can generate great returns and so on, but there's never a sense or an aim or an objective to really build out a firm that could last.

14:46We might be less keen in doing it. When you say sustainable supply chain, specifically ESG, could you talk a bit about why that's important to you? Is it from the purely financial or is it from the purely good-hearted side? It's quite embedded. And ESG of ES and G. So it's quite a broad platform. The G of the governance, of course, we care a lot. I think without the governance, it can get you into trouble. So it's not a guarantee for a great success, but it lowers the risk of big, big failures, one could argue. And then indeed on the E and the S are two things that are close to our heart. on the social side as well like anything around talent we have philanthropic initiatives where we that are all centered around helping building talent and making a good future for a lot of people and then on the environmental side it's yeah we live on one planet and we like it to last we're long term so we don't look for the quick wins and we strongly believe that the companies that are active and proactively implementing it at the forefront on sustainability or however you want to call it, ESG will be the winners of their industry.

16:15And as we're there for the long term, we underwrite it. Now, Julia, I'd love to ask you a bit about your views as a global LP on Europe. So you've shared that you invest across the globe and primarily US when it comes to venture, but you do also do quite a bit in both Europe and Asia. But I'd love to ask you about how do you then, as a global LP that has such broad exposure, think about Europe. Where are we? Yeah, venture as such, it's a long, long-term game. And I think that that's very, very important. When you want to build legendary companies, it takes you 10 years or even longer. And so our mission is purpose and patience.

16:57if you get into eventually you really need to have that long term game and that long term horizon is key and yeah there's been always cycles historically and so that's part of the market environment but innovation is not cyclical and I think that's innovation continues and doesn't care about what's happening in the broader micro economics economy and it's about indeed smart people uh or inspiring people coming together and uh and trying to innovate and build something new and and so that that's that's actually not so not so cyclical so and i think it's also great what we today is seeing is well see the seed market remains extremely active so that means that there's lots of seeds really seeds to be be implanted.

17:50So I think that's good. And of course, also on the AI is an additional vector. One can say, is it overhyped, underhyped? But whatever it might be, AI definitely is an incredible technology and also opportunity and will change a lot of things. And it's still hard to know what it all can change, but it will have an important impact. How about when you look at the maturity of the European ecosystem? What's your take on that? Yeah, so we have a global investor, we have a global network. But it has been really great to see how the European venture ecosystem has developed over the past decades or even longer.

18:38And now it has gained the maturity. and I would think what are the key ingredients you need to build a strong ecosystem. And in my view, it's really three. One is talent and I think we can be very proud that we have great universities, great research entities and a lot of very bright and talented people in our region. The second is capital money. and I think there as well it has been great to see also more US VCs being active in the ecosystem, it gave an additional boost, the European VC firms have also gained in maturity and they're learning and that also helps with that ecosystem and the last is indeed this network because you could say it takes a village to build a great legendary company, having that network being developed also the second generation people that already had successful scale-ups and are now giving back to the communities or that have been at the senior role in the scale-up elsewhere and then coming back to Europe and giving back to the ecosystem I think is additionally driving the flywheel that has been created.

19:58So well in today's market it's also a lot about growing efficiently and I think in that respect Europe has an angle of being less expensive than when you want to roll out in the US it was even yesterday, it was somebody who mentioned that there was a US company that was actually moving to Europe because the cost of developing their product and doing the testing and research was much less here than it is in the US so in that respect I think we also have an angle Since you have such broad exposure to many of the leading US funds. You have had a first front row seat to seeing the US investors move to Europe.

20:47And then some of them also maybe moving back. So I'd love to ask you a bit about if you could share some light on how that kind of was relayed to US LPs and kind of what did you see there? What was this narrative around Europe from those leading investors when they relayed that strategy to their LPs? Their perspective on the world is different than ours. For example, a fund that is based out of New York, it's a six-hour flight to London and a six-hour flight to San Francisco. It's equal distance. And so they much look at Transat and to see this one ecosystem, actually. And then, of course, when you build your office here, and then you have others that fly in, but each way has their pluses and their minuses.

21:51If you have people on the ground, it's great. You're close to the entrepreneurs and the ecosystem. On the other hand, if you fly in and fly out, Companies can maybe benefit much more from their network that they have than in the US. And as it plugs in immediately into their own network over there. And most of those companies eventually want them also to scale in the US. So there's not one way. I'd be curious to ask you about that decision to also then move back a bit. Because you've seen many of the U.S. firms would set up shop here. And then now with the tech reset and the tougher fundraising climate, you've seen some of those initiatives be backed up.

22:39I'd be curious if you have any perspectives on that. The ones that opened office or some even have opened recently are still there. and yeah so maybe the ones that were flying in then it's yeah they'll anyway look at but they look at the transat as a whole ecosystem and look at where in that region are the best opportunities so so they will go where their opportunities are and yeah but then it's uh for certain indeed on the war they have the ukraine war but then it's uh europe is big as well did you see that being spoken about differently from the US investors versus the European? There's a difference.

23:22It's always different. Whether you weigh from certain situations, you look at it from a different perspective, and that's on all the topics. But sometimes you look at it as more important for that reason, and sometimes you look at it as less important. Many of the Eastern European funds that I speak to definitely see it as less of a problem than many of especially US but also UK investors as an example yeah no no indeed indeed the closer you are the less you see it as a problem yeah if you have a better understanding of the situation the further away you are the more you see it as a problem because you have actually no idea and you just look at a couple of headlines and therefore I think it's important to travel to be close and to really understand what's happening on the ground because from too far distance, you might be misinformed.

24:11How do you think about Eastern Europe and venture in Eastern Europe? It's a very interesting ecosystem. I think we are invested into vintage and Rolex. We have a couple of investments in the region on the direct side. There's lots of talented people, motivated people, people willing to go the extra mile. And so, yeah, definitely an interesting ecosystem. I couldn't agree more. So I wanted to hear what you had to say there. I'm curious because now I want to get a learning out from you on that long-term orientation part for the managers listening in. What are the things, since you have such a long-term orientation, what are the things that make you signal to a GP?

25:03Indeed, this needs to be fixed if we are to continue for future fund generations. Are there red lines that you're starting to see GPs sometimes coming close to? And how do you deal with that as an LP? Yeah, we're not the partner that is an activist. Yeah, now you need to invest more in this. No, that's probably not. But no, indeed, we try to be a sounding board as we see so many things. and history does repeat. And so we like to be sounding board when they're thinking about certain strategic decisions. There's been examples of they have one fund and then they want to have a venture fund and a growth fund.

25:46So two different funds. And then there come questions in terms of alignment from the team, alignment from the LPs. And so it creates additional complexity, but sometimes it can also make sense to do it. And so as we've seen a lot of funds going through that journey, seeing the challenges, so we're happy always to be an assignment board on that front. Also on building a team, starting a VC firm is like an entrepreneur. And so one is being a great investor and the other thing is being a great manager. and so not always easy and as we are both actually direct investment and we also invest into funds, there's also lots of parallels because eventually you're also a founder and so challenges that go along with that is done also in incentive plan and then motivation finding the right people their development track and so on and so on what is also particularly strong as we have both so we invest directly as true funds we know also the the pain uh we know also that it's this it's not always easy uh the difficulties of and the trouble that you go through uh building building those companies and so we have a lot of empathy uh and and can also share some experiences and when everything is going well it's a lot of fun but unfortunately that's not true and so in that the journey of more challenging times, it's also where we can be there.

27:20Any learnings in terms of that part, like recommendations for GPs about how to deal with when it's not going well? Well, it really depends on the situation to situation. I think there can be a broad range, but one theme would be the human aspect. I think it's very important when it doesn't go as planned. And then it depends on the situation. It's great if you can find still a home for the company and being proactive maybe and still trying to find a solution is a great way. But it can be also just rethinking the business and getting off. Not all the successful companies often had to reinvent their business model, reinvent their strategy several times, and had to go through often very difficult moments.

28:14The podcast of Sequoia, they call it crucible moments. But yeah, they do happen and then indeed there are those moments where those key turning points, those defining moments where either you can take the right decision and get through it, or indeed it can turn differently.

28:39We are all about sharing love in the ecosystem. So I'd love to ask you to send a shout out to someone that you really love here in Europe. And I think the great thing is that there's so many, so many talented people and the ecosystem has been maturing. So it's a tough question because there's some, So there's a lot of people that stand out to make a difference for sure. But maybe one I would like to call out is Ophelia Brown of Blossom. She's a female founder in the European VC funds. And in just a couple of years, she managed to scale actually from kind of a new fund, new new kit on the block to positioning her blossom as one of the european leading series a investors and i like her attitude of hard working being very passionate and focused and and of course dedicated to win and she managed to back and invest in quite a lot of breakout out companies, check out default paints and so on, pigments.

29:49And yeah, I think she stands out. There's no doubt that she is a tour de force in European venture.

30:02Now, Julie, I'd love to ask you about the biggest learnings for you the last 10 years of your life. There are three things. First is keep in mind that in the more difficult times, you learn the most and you grow the most. So take advantage when you're in there. It's not a lot of fun. But know these are key moments in your life journey. The second is it's all about the mindset. And so build your resilience. Nothing can beat a positive and constructive attitude. and and then the last thing very very important have fun live is too short uh so uh enjoy the ride and then and have fun there couldn't agree more and now the quick fire

31:00so now if you were to give yourself advice to your own 10 year younger self what would those be Yeah, I think on that front is one is trust the process. Life is a journey and it's okay to not have figured everything out from the start. And so, yeah, it's being patient with yourself, with the environment and just keep on going, I would say. The second is take risks. We have analytical minds. We like to think and overthink and rethink. But then at one point of time, you need to decide, you need to be bold and sometimes even take a contrarian decision and then just go for it. And the last thing is, yeah, be determined, but always have plan A, B, C, D.

31:51And so have different fallback options and don't let anyone stand away in your ambitions. Just go for it. Absolutely. So now your top tips to emerging VCs for fundraising. On the fundraising, yeah, it's hard. You need to know if you get into it, if you think it's going to be easy, you're off the wrong track. It's a very, very hard process. So get yourself buckled up for that. I think what's important is build your network, build your track records, be determined, be relentless. don't give up because it is not going to be easy. There will be people that will be pushing back and so on and putting you maybe in doubt.