Founder-market fit is one of the most crucial factors for a startup’s success, and operators (someone involved in a startup’s daily operations) turned founders have an almost unfair advantage in finding that fit. Data shows that founders’ lack of experience and business acumen contributes to the failure of venture capital investments.
The same principle applies to some extent to venture capital operators (companies typically launched by former startup founders). While there is no definitive evidence that VC operators make better investors, recent research indicates that founders and operators who become VCs are significantly more successful in backing companies than traditional venture capital investors.
Venture capital operators have a long history in Silicon Valley. Still, its adoption is less widespread in Europe and Africa: Only 8% of venture capital firms in Europe and Africa are run by former operators, compared to almost half in the United States. OpenseedVC is applying the model in Africa and Europe with a new fund.
The firm, which plans to be the first check in startups launched by operators in both regions, reached the first close of its $10 million angel-style seed-stage fund. General partner Maria Rotilu said “the first close is in the millions and fundraising is still in progress,” without specifying how much. OpenseedVC expects to reach final closing within a year, she added.
Support operators with financing… and operators
Rotilu founded OpenseedVC with a clear vision: invest early in experienced operators eager to launch their technology companies. In a statement, OpenseedVC said it would provide these founders with not only early-stage capital and conviction, but also the support of a community of experienced operators, currently comprising more than 50 people.
“If you are supporting operators who have identified a problem and are taking the leap towards developing their technology, you have probably recognized a common challenge: the need for capital and guidance from other experienced people. To address this, we are focused on improving the operator’s network in four key areas,” Rotilu said in a conversation with TechCrunch.
“In the early stages, software engineering experience is crucial. You would need someone who has recruited technical talent, built teams, and understands infrastructure design, offering invaluable first-hand experience. So if that’s the common thread, I would say first-hand experience is what we optimize across software engineering, product, marketing, people and talent.”
Most of the people in the OpenseedVC operator network are people Rotilu has worked with or received referrals for. Some are also limited partners in the fund, although they don’t get carry now. Rotilu also mentioned that other LPs include founders and professionals of traditional and technology companies and high net worth individuals in Africa, Europe and the United States.
Supporting pre-seed startups in Africa and Europe
London-based OpenseedVC is targeting at least 60 startups over the next five years. The early-stage fund, which says it operates with an open application process and allows founders to apply with no introduction required, will provide checks of up to $150,000 to startups focusing on the future of commerce (including B2B software, intelligence artificial and financial technology). , future of work (productivity) and digital health.
“We look at the early stages; That’s our ideal point. Openseed is interested in doing pre-seed investments, but the early pre-seed stage because the later pre-seed stage is more where traditional VCs are. We tend to act independently and quickly, and we don’t necessarily need a founder to get a lead investor or anything like that before investing,” Rotilu said. He added that the fund is interested in specific founder profiles within its broader operator-focused lens: domain experts (operators of high-growth tech companies, including first-time founders) and second-time founders who started and left. a startup.
So far, the early-stage fund has made two investments: one in a UK-based stealth AI-enabled supplier dispute resolution software and another in Intron, a speech-to-text transcription model for underserved accents , starting with Africa.
“We chose Africa and Europe to apply our thesis to work in these regions. Our thesis is that by backing experienced traders in the early stages of their journey with adequate capital and support from peer traders, a diversified portfolio can be built that generates incredible returns for investors and provides crucial support to ambitious traders when they need it more,” said Rotilu. , who before OpenseedVC, invested in multiple regions with different funds.
Before launching her fund, Rotilu was an operator in various roles, including country manager at Uber and general manager at Branch in Nigeria, where she helped both technology companies scale to millions of users. She subsequently completed an MBA at Oxford, where she served as managing director of the Oxford Seed Fund, one of the largest student-run funds in Europe.
Striving for a diversified portfolio
During her MBA, the trader-turned-investor with a background in IT interned at Hustle Fund, an early-stage fund in the US, where she gained experience investing in startups in the US, Latin America, the Southeast Asia and sub-Saharan Africa. Africa. After joining Octopus Ventures, one of Europe’s largest funds, as director and fund manager of First Check Fund, the firm’s £10 million seed fund for European startups in the B2B software, fintech sectors and health.
Rotilu said that at Octopus he realized the need to focus more on Africa, a market in which he had made several angel investments during his professional career. The London-based venture capital firm offered little scope for that, and Rotilu, who also wanted clarity and autonomy to develop a strategy that she thought suited her experience as a trader and investor in Africa and Europe, saw that as an opportunity. opportunity to launch your venture capital firm. .
The growing number of female-led venture capital firms globally is a positive trend (although it is still difficult for women, especially women of color, to seek funding or raise funds). As more women participate in venture investing and more LPs and companies support them, this trend will increase funding for women-led startups, setting the stage for success for all stakeholders. Most women-led funds are aware of this importance, so it’s no surprise that OpenseedVC is also actively looking to support female operator-led startups.
“There are very few female-led funds globally and we have a specific perspective on what a diversified portfolio should look like. We focus on geographical, industrial and gender diversification,” said Rotilu. “There is a lot of work going on around diversity and, as a fund, we apply a gender lens to our portfolio strategy. Our goal is to achieve a truly diverse portfolio, striving for a 50/50 balance across co-founding teams,” she said.