E598 | Florian Schweitzer, b2venture: Building Angel-Led VC That Actually Works

0:00Today, we sit down with Florian Schweitzer, founding GP at B2Venture, one of the absolute OGs who've helped shape Europe's early stage VCC. From start global to 65 plus seed investments with seven unicorns in the portfolio, and now a 25th year anniversary to celebrate, we thought it was about time to bring on Florian to talk about his journey in one of the absolute hottest places in the world, Europe's tech scene. In this episode, we'll dig into the student-born ecosystems, mentorships across generations, sector deep dives in AI and logistics, and what long-term excellence in venture really means.

0:42This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. First, before we start all the way back 25 years ago, tell me, what does it feel like to be here today, looking back, thinking about how the ecosystem has evolved? So, so many, so many things have changed. I mean, when we wrote our business plan, it was the absolute peak of the dot-com bubble. So there was a lot of heat all around. And within the 12 months after that, you know, it was just a bloodbath all around. And from 2001 to 2004, 2005, there was just nothing. Very few investors.

1:41So I would say the biggest thing which changed back then and compared to today, you know, The early stage investors felt like they all felt like the emperor in the arena in Rome saying, oh, thumbs down or thumbs up. That has totally changed now. And sometimes I do see angel investors who still think this is the emperor type style and time. And it's not. We all investors have to work hard to get into the best investments, the best ventures, the best startups, the best teams. building great companies. And I think that's a good positive change. I had a funny experience at the EBAN Congress. When everyone went to Superventure, I went to the EBAN Congress because I had committed to helping them put together a stage.

2:36I quite provocatively went in the face of the prevailing way of probably angel investing in the EBAN organizations. So that was fun. But one of the things I asked to the audience was, how many of you have been in a competitive round over the last six months? And then there were kind of two groups. There were the people that didn't feel super at home in the E-BAN group because they were basically operators from startups and micro VCs that more or less I had invited into the group. Many of them were, of course, on stage speaking as well. And then you had the rest of the group that did not raise their hand and to whom it was a complete, something that does not exist almost, a fable that there would be competitive rounds.

3:31And thus, I want to tie this back to what you said with the emperors, whether they will take their thumb up or down, because the fact of the matter is that I think that if you're a VC or one of these super angels or whatever you want to describe it as that are in competitive rounds, you definitely say Yerb is no way where it was 20 years ago. There's now a hard competition to get into rounds. The founders are leading the charge. We're just here to support. They are picking who they want with them. But there is definitely still a part of the ecosystem that still operates in the old way. Could you maybe reflect a bit on that?

4:11Because I think it's something that we don't talk about too often on this podcast, as an example, because we always talk venture, venture, venture. But venture is a bit for the in crowd, so to say, the founders that have already achieved it or who, for some reason there's built traction around and then everyone is pursuing them yeah great great question and i i thank you for having come to eban because i think they they do need support and and i think it's also important to think of where they come from my view is that eban like the german band for example they really come from 25 plus years ago when there was just nothing around and the first angel networks in different cities in Europe organized themselves and created this federation.

5:06And typically those groups meet on a monthly or quarterly basis around dinner and next to dinner there is entertainment in form of startup pitches. So yeah, the kind of operator angel and active younger, I would say angels, you were alluding to and I'm thinking of, that's the kind of angels we work with, is a totally different species to the one meeting, I don't know, at dinner and having dessert and then startups. There's also a positive on, I think, those networks because if we also look at industries, not all industries are in the situation where startups are oversubscribed from the beginning on.

5:54So hardware, biotech, all those things, all those areas, we would need more angels. And the reason is either they are too early in the cycle, there are no angels in that industry yet, or not enough like in biotech. You're making a great point. And you're absolutely right when you say that these groups are incredibly important. In Denmark, the Danish ban deployed 40 million euros in 2024. That is a lot of money in Denmark. That is more than the VCs. And that goes to show we really need to get these groups operating in the right way. And I'm curious, and I might be putting you a bit on the spot here, but I'm curious if you have any view to how do we kind of help get this?

6:44Because you called it before you tied, and I sometimes do as well. The best angels, you can almost see them because you'll vibe with them very quickly. You'll realize they're like you and they're not coming from some distant past. And they're also typically younger. But those are completely ridiculous, stupid characterizations because it should be about how we approach investing. It just happens to correlate with those things. But my vision is that we solve that it doesn't correlate with that because there's no reason. These guys are smart people. They've made their money working hard either as lawyers or as accountants or whatever or as SME owners.

7:26But they just have ended up for whatever reason on a path that has taken them to a different approach of investing. So I'm trying to figure out how do we solve this? Because if we could get those 40 million in Denmark, change them to being only a force for good, that would be incredible. Yes, yes. I think it's exactly what you did, going there, bringing the other type of angels to the table. And that is exactly the intergenerational approach I'm talking of or we are talking of at B2Venture. I mean, the wisdom and industry contacts and sentiment about timing on the timeline of a 70-ish angel and a 30-ish angel is a totally different world.

8:15And they are very complementary. All right. So now we already went down one path. And I was a bit too early because I would just ask you, Florian, just to anyone that might not know the B2 Venture brand in your own story. Maybe you could, before we get into the starting point with the student movement, maybe you could tell me, just give the highlights, the key highlights of fund generation, amount deployed to date, something like that. Number of investments I shared, 65. That's me, 65 and 7, that's me. The firm in total. Sorry, it's 160 in the portfolio right now. Incredible. And fund size? Yeah, and fund, we're at early stage fund number five now.

9:05And we actually grew from being an angel platform only in the year 2000. And we switched from online to offline syndicates in 2003. and since then have built on a parallel track, serving angel investors and syndicates and building our own funds. It took us four years, so 2007, to raise the first fund, which was a 27 million fund. And then every four years, another one. So we are at number five now. And the fund and the angels co-invest. If there's enough room for the angels to join, Sometimes our colleagues, we call them the direct investment part of the platform. They also may invest at much later stages, as we have invested in Facebook in 2008, when it was a 3.6 billion company already, or SpaceX.

10:02but normally we go in together at very early stages with small initial tickets and then end up with the largest single round commitment we have done so far with 40 million. So we have deployed much more than 100 million. It's around 100 million per year with very small initial investment. and sectors any the fund team focuses on everything which is related to digital which is quite broad and our colleagues from the direct investment practice are much much broader they go into life science doing biotech and medtech space tech to explore and build up new competences within our network and explore new areas to VTOLs.

11:01We've invested in Volocopter, for example. We can talk about it later, what that meant and why we did that. And finally, there's some areas where we joined the angels and ourselves, a team of 32, whom we are, build up knowledge to go into new industries like right now, for example, in tech bio, which is somewhere in between AI and biotech. Yeah, it's incredibly interesting. I just did a small on-conference here in Denmark, bringing together those two spaces. That was incredibly interesting to see. All right, now let's get into it. Now we heard kind of what you've done over these 25 years. Let's go all the way back then to 25 years ago when you started something called Start Global.

11:49Tell me a bit about how that came about, student-run organizations this many years ago. yeah so actually it starts before my studies because i did an apprenticeship in geneva and um i read about the the internet in 95 um during christmas vacation i thought oh if that is true and and and if it is what i think it is um it will disrupt our industry the logistics industry, where I was doing this apprenticeship. And I wrote a one-pager on a piece of paper, a business plan for the CEO, which we discussed on January 3rd. She's an excellent businesswoman. She made a buyout in that company. And she told me, Florian, look, this is great, fantastic, and smart.

12:40Someone else will do it. We do focus on our business. I was totally frustrated and thought, okay, I have to build something myself. But small parenthesis, she was right in the sense that it took the industry 20 years to build Flexport, which was the business plan. 20 years. We could talk about logistics later. But I moved on to university and wanted to learn about venture capital and entrepreneurship. And I, by design, went to St. Gallen, where student initiatives were very much supported by the university. And when I realized that there was no course on venture capital or entrepreneurship, I found other friends at university and we created the courses ourselves.

13:27And out of those courses or conferences, if you like, StartGlobal emerged and out of Start, then our company. How did you manage to, right out of university, pull off the transition to actually building an angel organization? in BC. That was flawless. During my last year, half year before graduation, I got approached by five angel investors and they all asked me the same question. Florian, you know all those startups in Europe, I have a millionaire to tell me where I should deploy that capital. And after the fifth, we thought about making a business out of it and that the rest is history. So here the core message to the audience is start your firm out of Geneva or St.

14:23Gallen. Yeah, University of St. Gallen really helped us a lot. You know, they entrusted us with the letterhead of the university to organize those conferences. And it's something totally different if you write, you know, to a sponsor or so with the letterhead of the University of St. Gallen. So I really, really owe our alma mater a lot. Yes. Do you support your alma mater today then? Oh, yes. Oh, yes. I think it's the only currency we have to thank all the mentors we had. Absolutely. Yeah. No, I think it's important. I think it's something that we should do all as much as we can. I also continue doing a bunch of advancing things with my Odin's ecosystem, which is a bit weird because it's, you know, you just got to give back to the people that help make you.

15:13What advice would you give to student entrepreneurs or students that want to turn VCs in today's market? I mean, becoming a VC today, why? Why do we want to become a VC? Why not building a company? I think it's much more fascinating to build a company instead of going into a VC as a young professional, unless you really see yourself being a trustee for capital ideas and know-how over decades. If you have that gut to build a portfolio over two or three decades or four or five, even better, welcome to the club. If you're in a hurry, I would say build your company. Yeah, that is very true. Do you think that there's a skill set that a very young person can bring to venture even without experience that is worthwhile?

16:19Or do you think that there's also something about maybe go on your stripes first? I think both are legitimate approaches. If young people want to become VCs, I think a lot of humility at one end side, listening and observing the angels we talked about at the beginning, if you're doing early stage, is key. If you do late stage, it's Excel sheet and different things or growth. So venture is not venture anymore. That's also a great thing. Very early stage, pre-IPO, totally different business. I mean, pre-IPO investing today is what mid-cap market investing was 20 years in the past. So that's also a very different skill set now.

17:09I actually just researched the other day a bit the pre-IPO market because it seems like there's a big change in how pre-IPOs work compared to in the past. yeah so just thought about okay wonder if the fund structures have evolved and the holding periods have evolved compared to what you're used to or because this venture mindset to a pre-ipo actually makes a ton of sense if you can pick the winners especially in the time where we right now probably going to see a bunch of legacy companies being completely toppled and that not being factored in yet fully in any way at the ipo stage so yeah that's very interesting okay now let me ask you about your model because the B2 Venture model is very different from many.

17:56And I think it's in many ways kind of what many would want to aspire to. And I put it like this because I think the best model to build a venture firm, if you're not coming out of index or something like that and can go right into just raising your own fund, is typically that angel syndicate model into then being able to raise a fund. Tell me how you think about this model of having both angels and the fund working in connection to each other. It's super tough to do this in a way that interests are all aligned. When we raised our first fund with an institutional investor, that was fund number three, they really urged us that we would split both investment modes.

18:46And I do understand that from the institutional perspective. But I think most organizations which are pushed into that give up on the angels. I do understand that because, yeah, you take away a part from your DNA. what we did was to invest heavily into that angel business. We have eight full-time employees working only with and for the angels. And those eight are interlinked into the fund teams and the operations teams. And also, of course, you need to have an open dialogue with the angel. And there's not one angel type. There's angels who like to invest early and then maybe pre-IPO. there's also different phases in life of an angel.

19:36They may be active now, but not in five years. So all of this has to be orchestrated. And it's more jazz concert than something like Beethoven. So tell me a bit about how you deal with these angels, so to say. You've created a team of eight people. you have a very strong acknowledgement of the fact that all angels are different and they should be treated as such and they all are on some type of journey i met and then i imagine that you also do the bulk of your volume on the angel side you do that in the later stages am i am i correct in that assumption or at least in in volume of dollars euros yes but um actually that the time commitment is very different.

20:28And we do have very engaged angels across all phases. And very often they really help us assisting or being of help for the founders to go from zero. They are like starters, maybe students at university creating the company. And then from angel round to the first institutional VC round. We look at this as a triangle, founders, entrepreneurs as one, and then the angels and B2 Venture as a hinge between those two and the capital markets or later stage investors. How did you convince the institutional investors to accept that you want to continue with the angel model? The data speaks a clear language.

21:22If you look at where our best investments come from, you earlier spoke about competition and I was smiling because some investments are just not on the market. So if we look at statistics or research done on investments, I think we should be much more granular because some investments are just not on the market. I think it's due to the fact that exceptional founders find their way to exceptional angel investors. Yeah, and thus it becomes a self-serving thing, which is why, and that is a bit like, that's a bit why everyone would want it, but most end up not being able to run the model. Many end up continuing to have their strong angel relationships, but just not in a structured manner.

22:19What do you think it is that has allowed you as one of the few, honestly, teams that have been able to stick with it and not just end up making it an informal network of peers slash friends of earlier investors that you then source deals from? I think it's several aspects. One, the most important probably, is that at the very beginning, we thought about what would be the rules for that community. It was not a club. It was not a formal association. But we said that for each new angel we would work with, we would need a motivation letter and a CV. And we would share that with the existing community.

23:11and each and every member had a veto right. That was one. And two was that we said we aim for two things. Earning a lot of money. And second, have a culture of the honorable merchant. And that is so easy to say and so hard to live. We made no compromise on this. And I think this is the cultural part, which is the foundation of our company. And people realize when they come to our events that it's much more than about IRR, making money. It's about the long-term generational approach. We do it for the next generation. We care about our reputation, our personal reputation and not optimizing or maximizing our financial returns on the back of others.

24:09That's also the problem with angel syndicates. It's about maximizing. And especially in the US, when we went there with 2 ,000 of our angels, they looked at us and said, hey, why do you share the best investments? Yeah, the angels see that if they give something in, they get something out. However, not everyone shares the best opportunities. And if you only have an allocation of 200K and you want to do 150, okay, you do 150 and you tell your friend you can share 50. But in most cases, we have more to share. Just one stat here on the angel community. How many angels do you have today? So we grew from five in 2000 to 300 in 2003.

24:58And then we reduced because we said, let's focus on quality to five again. And they invited their friends. And now we are at 350-ish. And out of those 350, there's a subgroup of 80, which we do know extremely well, sometimes 10, 20 years. And other venture firms would call them venture partners. So they are closely working with us. Can you share a concrete case, concrete story? You shared just before that the best deals actually kind of come from this type of network. So I'm sure that one of the seven unicorns fit this story and narrative. Could you share a story around how the angel network has truly proven valuable and how you've interacted throughout the journey between the angel group slash the direct side, you as the fund, and then the founders and their journey?

25:52Yeah, so there's, I mean, all seven unicorns I have seeded or I was a partner from B2Venture's side, all of them came from angel investors from the network. Some others in our firm have been sourced through younger colleagues of ours directly. But in my case, it's all from the angels. And there have been some like Deep L, for example, where Jörg Reinbold said, oh, this is a fantastic team. We should back them. Even if they go against Google, they will find their way. So that's a great example. Another one is, I think, Philipp Schroeder from 1.5 Grad, 1.5 degrees. Michael Hinder had been his mentor for quite a while and out of that mentee-mentor relationship Michael became chairman although he told me 20 years ago he would never become the lead investor of one of our syndicates and then he ends up with 70 plus being the lead investor with full dedication and a lot of enthusiasm and professional know-how bringing you to the table in terms of buy and build, et cetera, et cetera.

27:18You dropped another knockout there on the internal workings of the angel community because you said that one of the angels was the lead investor. So that means that your team are not the leads. You are not the lead as Florian or as someone on your team, but it's actually one of these core 80 angels, I guess, that are then prevetted to be leads if there's something that everyone commits to or for whatever reason goes through the funnel and is actually invested. So if the direct investment team with the angel syndicate invests without the fund, it's exactly what you describe. It's one of the angels being in the board and taking the lead for the entire group.

28:04If there's a co-investment, like in 1.5. There is or there can be a lead in the board of a company represented by an angel, like this is the case here. And then secondly, one of the partners has to take the lead for the fund to decide, do we go in or not? So it's a co-lead situation. The fund has to take its own decision. there was an exception in fund one where we said the fund is only a co-investor and i had no right to to you know go to into the companies taking the lead directly and we changed that because that was not the right thing to do that's messy and institutional masters i imagine do not like it and it doesn't make sense very interesting okay now let me ask you and we're coming up on time because we unfortunately had a bit of a technical hiccup so anyone listening in wishing you heard more from Florian today.

28:57We're doing as much as we can. We're covering as much ground as possible. Florian, I want to ask you, you've talked about the valuable focus on chasing unicorn status. That's not the right path for European nor VCs nor company founders. Could you maybe talk a bit about the importance of a sustainable company building perspective? A company in which someone buys one share for a company ending up with a valuation at a billion makes it a unicorn. So chasing this is silly. Also, I think we should not talk about a unicorn as a goal. We should talk about how can we build trillion euro market cap companies in Europe.

29:47One trillion. we are far away from that but if we don't think of it it's not going to happen in the next 10 to 20 years so let's do this exercise and think really really really big and listing a company is not a goal but a milestone on that path and ultimately what all companies in the world has in common is producing profits and you know 10 times if it does probably on in the long term more or less making the company valuation. Tell me, Florian, because you now said the$1 trillion company, is that your view when you personally evaluate a startup at the very early stages? Is this a company that can go that far?

30:33And if they can, you do it. If they can't, you don't do it. And I ask because that's a bit the approach that you have to have when you're a massive fund. One of the beautiful things about not being A16 set is you don't necessarily need a trillion dollar outcome to still make a good dime. I'd love to ask you, how do you think about that? Because you're not that huge and thus you're not forced to have to go in and do these fights head on with those that really need it. And that can then also say, well, founders, you want 15 million on a on a breezy roundfall, good, we're ready to go, that has a bit of a bigger consequence for you if that goes wrong.

31:16100%. And I mean, again, there's a long way for us in Europe to reach for 1 trillion. Seeking for the outliers, the outlier entrepreneurs who are open to that, to say, okay, it's not a unicorn. We think about 10, 100 billion, or maybe even bigger. Maybe we can build something as big as Amazon. That is an attitude thing and an aspirational thing. And it's a thing of being courageous. So we need that in Europe. And in our fund model, we have said that 90 % of the investments we do, we seek for the very big potentials. But then we also allocate up to 10 % into companies where we see, okay, there's a different risk return profile.

32:06And we, with that kind of low risk investment, put ourselves in a position where we can pay back the fund after seven, eight years, which is also very important. I mean, LPs are looking at DPI and, you know, building those outlier companies is not going to happen in two to five years. If you think of the investment period being five years. Tell me about that decision to make it 90-10. because this is where everyone comes down a little bit differently. So I'd love to just hear why 90-10? Is it because you've kind of gone back and said, well, based on our past investments and their performance, we can actually see that we are able to quite certainly or with quite high accuracy pick a company that can at least 1x in seven years.

32:57And for that reason, we're comfortable just doing one or just doing a handful of those. And then the rest are the wild shots. Again, I mean, we owe it to our LPs and we can do it. We have seen it in the past and that's why we build on it. We have forgotten about it in our fund three and four vintage. And it's no good because everyone is looking at DPI widely and asking us, I mean, where are you? So we went back to our formula of fund one and two. I love that. It's a very interesting take. And I think that is a learning that everyone in the ecosystem has had. Luckily, you've had the sustained long-term performance to be able to weather out that you forgot it for a vintage or two, which I think that honestly, anyone who's honest about what they have done over the years, we all got caught up in the same game in 21, 22, I think.

33:53So Florian, thank you so much for jumping on today's podcast. It was incredible. I've been looking forward to this for quite some time. So thank you. likewise Andreas it's been a big pleasure and thank you for everything you do for the ecosystem we do our very best to help thank you man bye bye