Why Investing Internationally is a Full Time Job

‍Authored by Cecilia Lundborg, VC at daphni ventures

This post originally appeared on the daphni chronicles Medium

This is a two part series on Global VC. Part One: Go International. Period.

Since the start of daphni in 2015, we have reviewed thousands of international deals. As a European VC, we invest in Europe and the US and are approached by startups from all corners of the world – including the UK, Germany, Spain, the Nordics, the Baltics, and Italy, among others – on a weekly basis. However, while covering multiple markets different from our own comes with high potential, it also requires a strong commitment on a daily basis.

International coverage for an early stage VC (pre Series B), while perhaps not the same as scaling a startup, nonetheless requires effort, continuity, and a bulletproof strategy. And although many VCs tend to use different strategies to win the ‘international play’, each has a commitment to the hard work and thought process which goes into this approach.

Below are the keys to successfully implementing this international playbook.

Understand What You’re Taking On

To start, you have to understand the markets you are covering. The startup ecosystem or funding capabilities for the market you’re looking at might be more or less advanced than the one in which you are based, meaning that you have to adapt.

In addition, certain sectors might be more dominant than others in various regions, which often means that there exists strong expertise in the field within that region, which doesn’t exist in your own. Moreover, when operating in a different region, you have to be able to take a deep dive into the actors of the market – and work to understand the dynamics between them.

…covering other European markets naturally means that you have to understand their cultures, as this in part defines the startup ecosystem and explains how people behave.

In addition to keeping track of, and getting to know the other VCs in this market, you also have to build relationships with successful serial entrepreneurs, angels, smart angels, incubators, accelerators, hubs, corporations, influential people from different fields, event organizers, and universities in the region — just to name a few. Also, do not make the mistake of only focusing on the capital city in these regions — many markets have smaller hubs based on specific expertise, where rare pearls can be found.

Last but not least, covering other European markets naturally means that you have to understand their cultures, as this in part defines the startup ecosystem and explains how people behave. So, while it is not a criteria to have investors from the respective markets inside your team, doing so can help to transmit smaller cultural differences that otherwise might be  neglected.

Build Strong Relationships

Beyond simply developing an understanding of the region you’re investing within, it’s also highly important to initiate, care for, and grow relationships in these new markets.

When covering markets where you are not based in yourself, you have to learn from people operating in these places and build qualitative and trustworthy relationships with the key actors there. We all know from experience that this takes time, and while it is not surprising that VCs are usually social animals seeking connections, our willingness to collaborate and share might come as a surprise.

At daphni, it is part of the routine to not only meet with angels and other VCs frequently, but to also have frequent update calls with them where we share which companies we have seen, trends that should be considered, which events one should attend, etc. Making intros is at the heart of Venture Capital, and we love to see the ecosystem grow closer and become more dynamic.

Attend (Selected) Events

Over the past three years, we have attended tons of events across Europe, in Asia, and in the US. Slush, NOAH, The Next Web, Web Summit, EU Startup Summit, Tech BBQ, Latitude59, TOA, Startup Extreme, Sthlm Tech Fest, VivaTech, Arctic15, SaaStr, just to name a few!

The beauty of events like these is that they bring together the most important actors from different ecosystems and create opportunities for these actors to meet during an intense period. Thus, not only are events providing you with the latest industry trends and highly interesting panel discussions, they also give you a clear and structured opportunity to network with other VCs and entrepreneurs.

Sound fun? It is — but don’t let me fool you, it’s not that simple. Events require hours and hours of planning, both pre-event (in terms of researching and figuring out who you want to meet during this short amount of time and determining which side events to attend) and post-event planning (following up and maintaining relationships with the people you have met). With this said, you have to find a good balance — not all events are worth your time and effort.

More from daphni ventures: Go International. Period.

Besides the bigger tech events, we are also attending demo days from incubators and VCs, where these firms present their portfolio companies. Additionally, we also host events ourselves and together with other VCs, both in France and abroad, in order to meet with other key players, build stronger relationships, share knowledge and of course, show our commitment to other regions.

One of the more special (and definitely memorable) events we organized this year was Techbikers between Perpignan and Barcelona (yes, through the Pyrenees!). Every year, we also co-organize The VC Bridge event together with Founders Factory and European VCs and host breakfasts, lunches, dinners, round tables, and drinks all around Europe on a regular basis.

In sum, attending events means constantly feeding ourselves with new information. We are open minded and have no certainty about what the future will bring. For that reason, events are great occasions to get a sense of new trends and try to anticipate them.

Be on the Ground, Often

Besides attending the bigger events and demo days, it is important to be on the ground on a frequent basis. Video calls are often are not enough. Not only do you stand the risk of missing out on the natural vibe and dynamics which you get when being based in the market you’re covering, but you are also less available to meet with founders or other VCs quickly.

As early stage investors, getting a feel for founders and their capabilities is of utmost importance, and profound relationships are naturally built when meeting in person. In the same way, founders want the chance to get a feel for you as a VC. On top of this, you have to demonstrate presence, as this shows your actual commitment in the market.

In other words, travelling is a big part of the daily life at daphni.

Be Creative in Deal Sourcing

Thus far, we have discussed several different ways of getting great and qualitative deal flow but if you are aiming for the stars, like we are at daphni, you have to go beyond this.

Our next portfolio company might not be on the radar of other VCs, residing in an incubator, or even attending the event we are attending. At daphni, we put on our creative glasses and find and attract deal flow in other ways, too. Reading newsletters, industry reports, crunchbase-ing, and meeting with industry experts are a few among the many activities we are involved with on a daily basis.

As a cliffhanger, we are also working on a digital tool on top of our platform that will aim to enhance our capabilities to identify startups before they even know that they need us.

Build a Strong Brand

Our content and brand attracts international startups and allows us to meet with companies and people from across the world.

By doing all of the above, we have built and become part of the international ecosystem, allowing us to see great deals across Europe and maintain and nurture relationships with key players in various regions across the continent.

However, being international starts from the inside, too. At daphni, we have worked hard to stand out from the crowd by not only having a competitive platform model with a community of experts that enables strong value-add to and from different players, but also by building and improving our brand on a daily basis.

Besides hosting many events inviting the ecosystem to get to know us better, we produce a lot of content showing our commitment in the field. Our content and brand attracts international startups and allows us to meet with companies and people from across the world. Last, but not least, like VCs typically say — investing into a company is like a marriage, which means that we have to offer outstanding value for startups.

More: daphni chronicles | Cecilia Lundborg’s Blog

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