As the returns of startup investments are predominantly determined by a few rare successes, getting access to the best opportunities is quintessential. This is more difficult than it sounds. Compared to public equity markets, venture capital is an intransparent asset class, and many attractive deals are competitive and hard to get access to. For private investors, Verve Ventures offers access to such financing rounds that are usually only available for institutional investors.

Getting access to the best startups - Verve Ventures
Eugen Stamm
Startup Journalist

Eugen Stamm joined Verve Ventures in December 2018 and works as a Startup Journalist. Before joining Verve Ventures, Eugen worked as a financial journalist for Neue Zürcher Zeitung. He has a Master’s degree in law from the University of Zürich.

The problem of access

Getting exposure to listed companies isn’t complicated. Retail investors can invest in the same stocks that the most sophisticated financial institutions own (perhaps with the exception of a few expensive stocks such as Berkshire Hathaway which trades at a hefty USD 350’000). There is a problem of choice, with several hundred thousand stocks available worldwide, but in general, not one of access, unless you want to invest small amounts in more exotic stocks.

Investors that would like to diversify their holdings by investing in startups often encounter the problem of access. Because returns in venture capital are distributed according to the power-law which means that the best outcomes are orders of magnitude higher than the average and many startups fail, you want to make sure that you get access to the most promising startups. But that isn’t easy.

Business angels are usually the first outsiders that invest in a company. In this first financing round (Seed Round), which usually isn’t much bigger than, say, one or two million, business angels might put in investment amounts of roughly EUR/CHF 20’000 to 200’000 each. An entrepreneur doesn’t want (and shouldn’t) have to deal with hundreds of investors, which means that you need a certain sum to put on the table.

High-potential startups can choose their future shareholders.

But even if you do have this kind of money, there is no guarantee that you are aware of the Seed round of a given high-potential startup. And if you are, that doesn’t automatically mean that the startup has enough investable space in the round to accommodate you. High-potential startups can choose their future shareholders.

Some of the startups that get financed by business angels are successful enough to raise later financing rounds (called Series A, B, C, etc.) that amount to several million, or tens of millions, and this money comes mainly from venture capital firms. If you have been a Seed investor, you get a chance to invest again in these financing rounds. However, if you missed the early entry point and you’re an outsider, there is usually no way for you to get into such a financing round. The reason is that entrepreneurs want to get financing rounds done in an efficient way, which means talking to a few venture capital firms that are eager to contribute millions and also play a significant role in follow-on rounds. This is why business angels seldomly play a role in these transactions. There are notable exceptions such as people that are strategically relevant for the startup, e.g. a new board member with industry expertise, or those that can write really large cheques. If you can chip in 5 million, people will usually hear you out.  Download our free eBook to learn more about startup investing.

What sets Verve Ventures apart?

For the mere mortals that might want to participate with just EUR/CHF 10’000 or more but missed the Seed round of a startup, Verve Ventures offers access to later and bigger financing rounds. On several occasions, entrepreneurs gave their friends and family who didn’t want or couldn’t contribute earlier access through Verve Ventures. The reason why Verve Ventures has access to these investment opportunities and can hence offer them to private investors are:

• As one of the most active investors (Nr. 21 in Europe, Nr. 3 in DACH), we have strong visibility in the market.
• With an investment team of 15 people in different countries, we identify promising startups early and build a relationship with them.
• We combine the financial firepower of our private and institutional investors and are able to invest from EUR/CHF 0.5 million up to several million in a single financing round.
• We’ve partnered with several leading venture capital firms in Europe to share our deal-flow which ensures that we hear about upcoming financing rounds.
• We have proven that we systematically create value for our portfolio companies which makes us an investor startups want to work with.
• We’ve become the investment platform of choice for many successful entrepreneurs who refer investment opportunities to us.

Invest in Startups

As one of Europe’s most active venture capital investors, we grant qualified private investors access to top-tier European startups. With investments starting at EUR/CHF 10’000, you can build your own tailored portfolio over time and diversify across stages and sectors.

Conclusion

Investing in startups poses several challenges that we have described in more detail earlier (see articles at the bottom of this page). Among them are the lack of information about startups, the difficulty of assessing them, the time constraints investors face, and the challenge of getting into a financing round. Verve Ventures helps investors gain access to investment-ready financing rounds. Verve Ventures’ platform provides a constant stream of opportunities that have passed extensive due diligence by investment professionals.

This solves several problems that investors face when venturing out on their own:

• Lack of a complete picture: Our systematic screening process based on our custom-built IT infrastructure allows our dedicated investment team to screen thousands of startups every year, more than any individuals could possibly do on their own.
• Lack of experience in assessing startups: Our structured investment process by professionals who have screened thousands of startups ensures that only high-quality startups will be presented to our investors.
• Lack of information: Our specialists will prepare comprehensive and comprehensible documentation about these startups and the investment process and answer any questions you might have.
• Not enough time: Our setup ensures that you can reach an informed decision about an investment in a short amount of time. Some people have very busy professional lives already and cannot or do not want to put in the number of hours you should put in to be a business angel. For others, namely the very wealthy, it’s about a reasonable relationship between the share of mind and share of wallet. They want exposure to venture capital but spend their time mostly on other things.
• No access: Because we’re a very active and helpful investor and can contribute millions per financing round, we get access to later financing rounds that are typically closed to private investors.
• Remoteness: With our digital platform and the remote investor meetings with the founders that we organize, you can invest in European startups no matter where you live.

All this means that even novice investors get the best possible access to investment opportunities as well as the choice to invest in a combination of startups from different industries and several countries. We give you the opportunity to build a well-diversified portfolio while still retaining a final say in which companies to invest (unlike in a fund). This makes it possible to tailor the exposure to specific investment criteria (e.g. stage or industry) while minimizing the administrative work for each investment. Investing in startups is hard, but not if you do it with the right partner: We are the leading pan-European startup investment platform that allows you to invest in an attractive but intransparent asset class with confidence.