Manuel Silva Martinez, GP at Mouro Capital: BREAKING: Mouro Capital closed $400m fund

0:00Manuel Silva Martinez:Hello and welcome back to the Scaling Europe show. I'm Sir Johnson. Today I'm coming by Manuel. Manuel is an amazing VC from Moral Capital who has got some great news to share this morning. The news is just broken. Take it away. What's going on? Yeah, listen, as you say, the news is out there. So we just raised$400 million to invest in hopefully the best and brightest fintech entrepreneurs across the globe. So, you know, we've been investing in, you know, at the intersection of financial services and technology for over 10 years now. quite successfully, I would say, in the US, in Europe, in Latin America.

0:32And we're very excited to have more money to deploy because the opportunity is just getting bigger and bigger.

0:37Manuel Silva Martinez:Amazing. And this is Fund 3? This will be the third fund, yes. Amazing. And can you talk a bit about the history of maybe the first fund and then the second fund? And then I also want to get on to thesis, size, stage, and then also some successes as well because you've had a great portfolio. Yeah, no, listen, happy to. So we've been doing this for 11, 12 years or so. So starting 2015, obviously the world was very different. Fintech was very different at the time. We started with$100 million in 2015, backed by Banco Santander, which has been our partner ever since then. Then we raised another$300 million to$400 million in 2019.

1:19That's where we moved into the more capital brand. So for those of you familiar with it, it feels like a newer brand that we've been doing. And this would be our third fund. I mean, the thesis hasn't really changed dramatically. I mean, we know financial services. We like financial services. Obviously, our affiliation with Santander helps us be very close to the industrial transformation. And for the past 10, 11 years, we've been trying to be where the conversation is, right? And that's really what we've been doing. Backing typically early stage founders that are still experimenting with new concepts, new ideas and have them then grow and seen them grow within our portfolio.

1:57So thesis hasn't really changed. Obviously, the world has changed. If you look at our initial portfolio, so to say a while back, it was all about business model innovation. We invest in the likes of Ripple, who are trying to change effects. We invest in the likes of Trulayer, who are trying to change open banking. So the world was really reinventing themselves through kind of the then technologies and the business models that were rather than then. Now it's probably a little bit more about deep tech and AI and how that is changing the industry. But, you know, other than that, again, we go where the conversation is.

2:33Manuel Silva Martinez:And, yeah, I guess what does that mean? Because I saw one of your recent investments was 11 Labs. Another one was like another, I think it was a Japanese agentic AI company. And so we're seeing, you know, it's hard to imagine probably 10 years ago that that would fall under the thesis. How are you thinking about fintech today that enables you to kind of access those companies or to make those companies fit the thesis? Well, for starters, I would say the space we invest in, again, financial services meets tech is really everything, right? When people ask me, what's your time? What's the market?

3:08Well, it's really everything because financial services at the end of the day are the flip side of the real economy, right? And ultimately, the way we focus our investment lens in that respect is looking for technologies that are just changing the way banks operate. So as you say, Eleven Labs is one of our latest investments. Obviously, nobody would think about it as a fintech company, but it's certainly doing a lot of things in the way banks think about their conversational assets, the way they work with clients, the way they understand clients, they use information, and they create relevance.

3:38that way. Similarly, you were mentioning Sakana.ai, which is very exciting, offers Japanese investment. Sakana is an AI studio that's effectively trying to verticalize use cases specifically for regulated industries in particular banks. They already work with some of the largest banks in Japan, and we're trying to help them work with non-Japanese banks elsewhere. In everything we do, there's always a connectivity into financial services, but again, because now the innovation is coming from more horizontal companies that are approaching financial services as maybe one vertical, you start to see a lot of these companies also in our portfolio going forward.

4:16Manuel Silva Martinez:And talk to me about the fundraiser itself. How did you find that process of going out to market to raise the third fund? So it's probably important to mention that to date, even the 400 million we're announcing are all from Banco Santander. So we have been closely linked to them for the past 10, 11 years. They see us as a conduit to innovation. Hopefully, we contribute humbly to their understanding of the world. And so ultimately, we've been mostly dealing with them from a fundraising perspective. Now, we're going to be opening up the fund to third-party LPs, to other LPs in the market that have a keen interest also in both the returns we have.

5:00You know, historically we've always been top 10 % of the industry, which is, you know, which is great. We're very happy about that. But also the substance of the fees that we're investing under, right, which is very relevant to anybody who has connectivity to financial services, but also to retail, to commerce, et cetera, et cetera, because of the financial services powers everything. And our companies certainly have a lot of different applications to many other industries. So we're really excited about also that phase, which really starts now. while at the same time we keep on deploying the fund that we're announcing today.

5:32And do you have a target in mind of what you'd like to raise? Nobody will allow me to tell you that. So we'll leave that for another podcast in the future.

5:40Manuel Silva Martinez:The answer is you do have a target, but you're not talking about it just yet. But you've raised 400 million from Bank of San Linder, which is amazing news. And you touched on being in the top 10 % of funds of the vintage. Can we talk about that? because you're in the world of VC, I guess, still relatively young, you know, 10, 11 years is sort of when you would first expect to see first returns coming through. And it still feels quite early, right? Like, you know, when you talk about the time frame for VCs, you would expect at least 10 years to even see maybe some of the first unicorns or the first big successes.

6:15Manuel Silva Martinez:I mean, it looks like your track record, I think you've seen, was it like a bunch of exits, right? This isn't just paper as fast. I think it's like 20 exits. Is that right? Yeah, I think it's 24 and counting, I would say. And some of them are partial. So it's not 24 companies exited. We have roughly 17 companies in our portfolio to date. But yeah, I mean, I would say liquidity to some extent is a holy grail in VC, right? Anybody who's been fundraising knows that at the end of the day, your thesis can be great. You can be very empathic about it. but ultimately your investors want to see their money back.

6:54And we've done that successfully. I mean, on average, I would say for every dollar we've divested, we've returned four times the money, which is great. And ultimately, part of the new fundraiser also comes from the trust that will keep on doing that at scale. And I would say, broadly speaking, we also have, at least we take a very proactive way of thinking about liquidity in our portfolio just because of the importance, but also because, you know, being a specialist VC, we feel we have an understanding of market dynamics that is probably quite differentiated and that also helps our companies think about their own exits in a way that's more informed, right?

7:33So we spend a lot of time with our entrepreneurs trying to think through what's their next phase of growth, what's their strategy, who drives it to creating some of those connections so that when they're ready for it, you know, they're in the best possible place to do so.

7:47Manuel Silva Martinez:It's amazing. I mean, yeah, 20, 25 or whatever it is, 25 out of 70 is a really high exit ratio within a relatively short time frame. Yeah. Can you talk about, was that always part of the plan to try and be strategic about partial exits when the time arose? You know, some VCs will take the, you know, some VCs don't want to exit anything until there's like whatever markup. Has that been a very strategic approach to try and do partial liquidity on the way up? I would say so for, I would say for a number of reasons. The first one is, I mean, as I said, you know, 40 % of our historical portfolio is in the U.S.

8:24and the rest is in Europe and Latam. I mean, in the U.S., the exit market is very prolific, right? And at the end of the day, you can kind of rely on the market dynamics to just ride the wave and see what happens, right? Whereas in Europe, where that is not the case, and, you know, hopefully in the future will be the case, but certainly to date it hasn't, You need to be way more creative and you need to be way more hands-on in creating liquidity. Just because if you just wait for it to arrive, it may never arrive, right? And yeah, I mean, you know, for us, I mean, it has always been part of our strategic or our strategy more so to create liquidity.

9:05We also feel it's part of our value to companies, right? At the end of the day, when you invest in an entrepreneur, you're aligning yourself to their own interest. and you know as much as entrepreneurs love to be building their company they also are financially motivated and at some point in time they also want to get something creative for themselves and exit etc etc so that's why we also think it's just part of our value add to be to be

9:27Manuel Silva Martinez:liquidity driven so to say and the the team is split across europe and then also the us and you say your portfolio is pretty split across both of them yeah have you seen the portfolio performance vary both on paper and liquidity across the two regions? I mean, the U.S. is probably a more liquid market, as I was mentioning earlier. I would say from a fundamentals perspective, from the perspective of building company fundamentals, I think Europe and the U.S. are pretty equivalent. I mean, obviously, each market has its own challenges and opportunities, and especially in financial services where regulation is a big piece of market dynamics.

10:10We keep a close eye to the way the US works from a regulatory perspective and Europe, which again is quite different, Latin America, which is different for other reasons. But listen, we're big fans of European entrepreneurship. We're big fans of US entrepreneurship. I think they can look at each other and feel equally proud of what they're building. And the world, if anything, is becoming increasingly more complicated given that now the bar to build a company has gone down with AI and with funding being available. And so now great companies can appear anywhere in the world and become global from day one.

10:45So VCs have a tough life these days to find the right companies to invest in and to partner with. And to some extent, geography is less and less of a defining factor as opposed to team or ambition.

11:00Manuel Silva Martinez:Yeah, that's interesting. And what about growth? A lot of the VCs I talked to are saying that their portfolio growth is in a different league to what it was maybe five years ago. Revenue is growing, their portfolio is growing, rounds are moving quicker. Are we seeing that in the area that you're interested in as well? Are we seeing, for example, adoption of AI happening in the financial services world as quickly as maybe we are in consumer? What's your take on that? Yeah. I was certainly we're certainly seeing growth across the board and we're certainly seeing, I would say, more quality growth than maybe a few years ago.

11:40I mean, I think, you know, entrepreneurs are not chasing growth just for the sake of showing numbers. They're looking for profitable growth. They're looking for sustainable growth. You know, growth is qualified by quality of clients, by, you know, retention rates, the like. So I feel everybody's trying to build those long-term fundamentals of themselves. And we're seeing that across all the markets we invest in. I mean, again, if you're being the right winners, hopefully you find the same trends behind that, right? You were mentioning retail. I mean, financial services, the way you sell to banks or the way you sell to regulated industries is always much more complicated than a retail business model, right?

12:19And so that's certainly something we look at and we spend a lot of time discussing with entrepreneurs when we underwrite. the new transaction is how well do you understand enterprise sales to regulated industries, which again, it's a different ballpark. But even with that, I mean, certainly the financial services sector incumbents are increasingly interested in adopting those technologies. I think there's obviously an acknowledgement that lots of things are happening in the world. And if you're not doing that as an incumbent, or if you're not trying to understand and bring those technologies in-house, you're probably missing on something.

12:53And certainly that's creating You know, nice headwind for a company. For a field of fire.

13:00Manuel Silva Martinez:And what about InsurTech? InsurTech has been, it feels like it's been through some waves, about some tougher times. It's always, I think, struggled maybe with that low gross margins. How are you thinking about that as an industry, especially now that we have all these new agentic tools? Yeah, well, that's a real question. We have a bit of a low-fledged relationship with InsurTech. And I would say primarily because we'd love to have been done more in the past. but it's an industry that certainly comes with a lot of its own complications. Having said that, we're kind of excited about the future because we see that, as you said, AI and a number of evolutions there may just be creating the brink for way more interesting companies in the space.

13:46So, I mean, yeah, I would say insurance has always been like 10 years, you know, later than banking, so to say. and in our case, some of the learnings we've had from transforming banking over the past 10-15 years is something we're trying to apply to underwriting of insurtech. And then also with AI, the new risks are opening up new markets for insurtech that today are not covered by the incumbent. So it's worth a combination of new tools and new technologies that applies to insurance, but also the new risks that are emerging in this new world that are exciting and that could be the opportunity, I think.

14:24Manuel Silva Martinez:That's really interesting. I'm actually, that's the first time I've heard of somebody talking about the new markets that are going to arise as a result of the inherent risks of the new tools that we are now creating. Are you seeing companies on the ground building for that already? Or is that just a thesis that you think that we'll see that develop and grow? No, we're seeing that, you know, it's already starting, especially, I would say, less only for individuals, but more on the company and enterprise level. I mean, ultimately, you know, if you think about the new cyber risks or you think about, you know, even in a geopolitically complicated world, you know, third party or counterpart risk, right?

15:02Trading risks, stuff like that. Those are risks that historically have never been underwritten, primarily because I don't think insurance companies knew how to deal with them. And so they were left a bit on the, you know, on the client side to figure it out. But now with technology and with more data infrastructure and more data integration, there's an opportunity there, right? So we're starting to see companies built for that, but it's still early days. And at the end of the day, insurance is a very ingrained value chain. And so you need the incumbents to pay their part into delivering those products.

15:39And so that's still lagging a bit. But yeah, a lot to come, I think.

15:42Manuel Silva Martinez:and are there more areas like that the way you expect to almost be new markets so it's not just about taking ai and applying it to a process or automating things but you think there's going to be new markets within this world of you know financial services and tech where there could be you know huge businesses that just in a market that just doesn't exist today uh yes no for sure um i mean one well i guess a couple of areas where we're really excited about have to do with what we call wealth tech or what people know as wealth tech, which is more the asset management side of the industry, and also more broadly speaking capital markets.

16:22I guess in both cases, there's a lot of intrinsic markets that still need to appear. And I'll give you an example. So for example, in wealth tech, right? So again, the wall of banking for wealthy clients, right? Historically, the way the product offering of Moses Bank was designed would only care for the top 1 % or top 10 % of clients. Why? Because it was, you know, you had a human in the loop all the time. You had to, you know, it was expensive to service. It was relationship-based, et cetera, et cetera. Now you can, with the new technologies, you can basically take that experience and bring it downwards to your more kind of classic retail and even to, you know, we've seen in emerging markets, wealth-like, wealth-management-like services being taken to the bottom of the pyramid, right?

17:06So that is not per se a new market, but it certainly creates a much more diverse set of products for clients that up to now were underserved, so to say, by those, right? So we're very excited about those logics, right? In capital markets, just to give you another example, as you know, we've been very big on crypto for a long time, less so the speculative side of things, but more the ability that that technology has to really change parts of the value chain. So in capital markets, you can create new markets just by applying those new technologies and creating fractional assets or creating new slivers of risks or things like that.

17:44So technology allows you to really break the boundaries of your classic products. And in doing so, you have new markets appearing, which we're really excited about.

17:53Manuel Silva Martinez:And what about founders? Are you seeing a new type of founders crop up? When I look at the early generation of fintech founders, they often came from financial services. are you seeing is that staying true or are we seeing a new rise of very technical ai type founders just applying their knowledge and expertise to financial services yeah that's a good question i mean maybe a little bit biased because we we tend to like entrepreneurs that have what i what i always call like a you know very strong uh situational awareness of why what they're building matters and in an industry like banking uh you know that probably only comes with having experienced a problem yourself somewhere else, you know, as a buyer of technology or as a practitioner, right?

18:36So we tend to favor entrepreneurs that have a bit of that incumbent experience so they know what they're talking about. But certainly, I mean, even for more, let's say, tech and generalist entrepreneurs, so those who come more from a technical profile and who are not necessarily willing for financial services, I think many of them are starting to understand a little bit better the where the opportunity lies in an industry like financial services and they're trying to get themselves way more educated on the dynamics of what is otherwise a pretty pretty complex industry so we're we're quite surprised as of late to see yeah more tech entrepreneurs you know engineers turned CEOs who actually have a good understanding of financial services and we're

19:17Manuel Silva Martinez:excited about those too and one last question I guess that more broadly looking back at your portfolio are there any companies in there that you think are maybe underrated or flying under the radar that are maybe performing really well but don't have the big brand recognition that you think they deserve uh that's a good question uh i would say i would say no just just by fear of them getting angry each other uh i'll no i think i think they all have the right position with the right audience uh but obviously you know the audiences change uh depending on where they operate and the history um but no i feel most of them are you know where they should be yeah very um very yeah you're like a parent not being able to choose their favorite child well thank you very much for joining me it's amazing news uh you've got a phenomenal track record you're doing great things it can be really exciting to see how you raise more capital and then start deploying this this first close so thank you for joining me super thank you thanks for having me.