The venture market is in the middle of a recession, but there are still plenty of emerging fund managers out there. Seedstars International Ventures, the investment firm that supports high-growth startups around the world, announced today that it has launched a platform called Seedstars Capital with Swiss-based investment holding company xMultiplied to help new fund managers around the world launch and manage funds. develop their investment firms.
Seedstars Group co-founder and Seedstars Capital managing partner Michael Weber and Seedstars Capital partner Benjamin Langer told businessroundups.org in an email that “Seedstars’ mission is to impact the lives of people in emerging markets through technology and entrepreneurship.” Over the past decade, it has supported various stakeholders, mostly tech entrepreneurs, through entrepreneurial programs.
“We have seen so many talented entrepreneurs grow their businesses very quickly, by US or European standards, but unfortunately too many entrepreneurs struggle to raise capital to grow even faster. To continue our mission to support them, Seedstars is now supporting the next generation of VC fund managers in emerging markets who will support these promising entrepreneurs.”
Seedstars Capital looks for sector and industry-specific strategies in regions and countries such as Brazil, Nigeria, Indonesia and India. It is looking for funds that pre-seed target Series A companies as they see the largest funding gaps and potential there.
“Ideally, we want to support gender-diverse teams because we know we need a more inclusive industry,” said Weber and Langer. “We are confident that this will have a huge impact at the portfolio level and enable more women entrepreneurs.”
The platform will incubate, accelerate and invest in new venture capital funds in emerging markets such as Latin America, Africa, the Middle East, Central and Eastern Europe and Southeast Asia. Managers usually have raised a micro-fund, already have experience as angel investors or worked at larger investment firms, and are in the process of launching their first institutional funds of between $15 million and $50 million.
Many fund managers are those Seedstars has known for a long time “and despite having relatively little track record themselves, we knew they had the necessary skills to become top performing managers,” said Weber and Langer.
In fact, this is how Seedstars International Ventures started. Working with co-founder Charlie Graham-Brown since 2014, Weber and Langer launched their first global emerging markets fund in 2019, focusing on the pre-seed stage. Last year it launched Fund II with Patricia Sosrodjojo, which is now supported by the IFC, the Rockefeller Foundation, Visa Foundation and Symbiotics, among others.
Seedstars Africa Ventures, which invests across the continent, was also founded in a similar way. Seedstars knew Tamim El Zein and Maxime Bouan since they worked at Blue Orchard, with a focus on Africa. They hired a third partner, Bruce Nsereko-Lule, and now the fund has LBO France as its anchor investor.
“Over the past year, we’ve met many exceptionally talented teams who are working very hard to build their ecosystems and invest in outstanding entrepreneurs in emerging markets,” said Weber and Langer. “We want to work with them and empower them to develop their strategies and make a powerful and positive impact.”
Seedstars Capital is committed to the United Nations Sustainable Development Goals and intends to use ESG and impact considerations in the selection of a diverse group of fund managers. It also plans to serve as an investment catalyst with the goal of getting fund managers a total of more than $500 million in new funding. Seedstars Capital says this will create more than 10,000 new jobs and generate more than $20 billion in additional GDP in emerging markets over the next 10 years.
Challenges Seedstars Capital will help emerging VC managers solve issues such as access to international finance. Since most of them have assets under management of less than $50 million and focus on a specific country or sector, they often rely on local individual investors, family offices and development finance institutions (DFIs), which can lead to fundraising periods of up to 18 to 18 years. 24 months.
Many emerging managers also lack access to infrastructure, even though they are good at investing in high-growth startups. That means they don’t have the resources to build the right support infrastructure for their portfolio companies and businesses, including marketing budgets, tech stacks to manage deal flow and investors, tools and framework to leverage the positive impact of portfolio companies or a network of mentors to support their founders.
They also don’t have access to a community of people, including mentors, investors and other managers, who can help them share best practices, deal flow, market trends or informal events, Weber and Lager said. “These are essential parts of building a brand that allows managers to select the best opportunities and attract the best talent.”
Weber and Langer said Seedstars can help solve these problems because it has more than 10 years of experience in emerging markets and has accelerated or incubated more than 2,000 ventures. It also has a network of more than 1,000 experts and mentors and is therefore “in a great position to become that partner that can help emerging managers thrive in the industry and institutionally develop their investment ventures.”
In terms of investments, Weber and Langer said Seedstars Capital has tested several models, including investing in the management company, providing storage facilities or serving as an LP.
Going forward, it will work with managers throughout the fundraising phase and provide access to the Seedstars network and relationships to help funds reach their initial or final close more quickly. It will also become an LP across all funds and plans to invest between 3% and 5% of the fund size, aiming to increase that allocation to a maximum of 10% in the future.
“That said, we do not intend to become an investor and our goal will always remain the same, to partner with the most talented emerging managers as partners in the development of their investment ventures,” said Weber and Langer.