It’s always interesting when a new venture capital firm with a new team of partners emerges. And with Yellow it is interesting in several ways. Founded by Oscar Pierre and Sacha Michaud, the founders of Glovo, and Adam Lasri, a former investor of venture capital giant Atomico, Yellow is a new €30 million pre-seed fund that aims to invest at the earliest possible stage (that’s $32 million at the current exchange rate).
In addition to this unique founding team, the focus of the VC firm is also very different. While most venture capital firms operating in Europe focus on Britain, France, Germany and the Nordic countries, Yellow wants to put more emphasis on Southern Europe – and especially on some key markets in the region, such as Spain, Italy and Portugal.
Last week I spoke with Adam Lasri about the new fund and the team’s investment thesis. Yellow will be an opportunistic technology fund, meaning it does not intend to focus specifically on any vertical sector. The company will invest in both B2B and B2C startups across industries.
“Over the years I have gained more and more access to early-stage deal flow. Often at Atomico I spoke to companies that were in the idea phase, in which we could not invest,” Lasri told me. “And I found that frustrating, because a few months later you could have Index or others make investments, while it was not part of our thesis to invest at entry level.”
Later in the conversation, he also added that he has no hard feelings towards his former team. He only wants to invest in the seed (or pre-seed) phase.
“Founders like to talk to another founder who has successfully sold their company” Adam Lasri
And yet Yellow will not be the lead investor, as it plans to invest €200,000 to €500,000 per deal. Instead, it thinks it can be the first believer, attract other investors and provide advice at scale. “We are never leaders, but only collaborators,” Lasri said. According to him, many early-stage companies face the same problems: how to set up a team, how to set up a pitch deck, how to navigate the VC ecosystem, etc.
And of course, Glovo’s founders also know a thing or two about setting up a startup. “Founders love to talk to another founder who has successfully sold their company,” says Lasri. This could be why Atomico, founded by Skype founder Niklas Zennström, is so successful.
“Oscar, the CEO [of Glovo], spent a lot of time with entrepreneurs. He didn’t know how to scale the time he spent with them, but every time he invested in a company he talked about all these aspects: how to go from 0 to 1, how to scale your team, how to think about hiring, all that,” Lasri said.
“Last year they sold their company to Delivery Hero for just over €2 billion. And they thought about how they could professionalize their investment activities. I was already thinking about my next steps, so we started talking a lot,” he added.
While Yellow plans to invest in startups in France and Southern Europe, it also plans to invest in companies looking to quickly expand into Spain, Italy and Portugal. In that case, Yellow can act as a strategic investor and unlock a host of issues that entrepreneurs may face in these new markets, such as talent support, regulatory hurdles and introductions to large enterprises.
Yellow’s team will be split between Paris and Barcelona, while Oscar Pierre and Sacha Michaud will remain in Barcelona. They will retain their leadership roles at Glovo, the on-demand delivery company acquired by Delivery Hero. But Pierre and Michaud have already been quite active as angel investors. Yellow is just a way to take this activity one step further.
Adam Lasri will be mainly based in Paris and another team member will soon join the fund. Victor Navarro, a venture capital investor who worked for K Fund, also joins the Yellow team in Barcelona.
From €0 to €30 million in five months
Interestingly, the Yellow founding team managed to close this initial fund in just a few months. They started their fundraising in June and managed to reach their goal in less than five months.
Behind the scenes, more than a dozen European unicorn founders are investing in Yellow, as well as a dozen family offices from Spain, Italy and Portugal. Some of the wealthiest individuals from Southern Europe are limited partners in Yellow’s first fund. The company has not received any government money for this fund.
It seems to indicate that there is some demand for more venture capital funds in Southern Europe. Certainly, there are numerous funds in Spain alone, such as K Fund, Nauta Capital, Kibo Ventures, Seaya Ventures and Inveready – this list is not exhaustive.
But looking at the numbers, a recent report from Dealroom highlights the discrepancies between the three largest European countries when it comes to startup funding – and the rest. During the first half of 2023, UK-based startups raised a total of $11 billion. Germany and France followed suit with $6 billion and $5 billion respectively.
In Italy and Spain, startups raised “only” $1 billion and $744 million respectively during the same period. Portugal is not even among the top 15 countries.
Does this mean that there are fewer startups in Southern Europe? Or does this mean that there is still untapped potential in the region?
Spaincap’s annual report shows that international venture capital firms are increasingly looking at opportunities in Spain. In 2022, Spanish funds invested a total of $430 million in local startups (€400 million), while foreign investors invested $1.7 billion in Spanish companies (€1.6 billion).
Some foreign investors might look for opportunities in underserved markets, as their local market may become overheated and too many venture capital firms are fighting for the same deals. And this disruption between local investors and foreign investors could explain why family offices from Southern Europe are willing to back a new local fund.
This VC gap confirms Yellow’s positioning. Now let’s see if the venture capital firm can leverage this capital into successful startups and turn a thesis into return on investment.
Natasha Lomas contributed reporting.