Similarly to the startups we invest in, Eleven is constantly evolving and fine tuning its model. With our second fund we moved away from the accelerator model towards more selective pre-seed and seed investments in somewhat more mature teams and companies. Now that we have started fundraising for our third fund, we are making another important change in our investment strategy, namely focusing on 4 verticals.
We have actually started working in this direction over the last couple of years with our partnerships with Visa in fintech and with Sopharma Trading in healthtech, signifying our interest in these two sectors respectively. What we also came to realize is that the more we invest in a given vertical, the better we understand it and thus the more value we can add to everyone involved, while the synergistic effects among the portfolio companies from one and the same sector improves their overall performance.
VC’s often preach focus to their investees, yet they rarely practice it themselves. Eastern European funds in particular are mostly generalists, citing a relatively shallow market (i.e. only a few interesting companies per sector per country) for a vertical focus to make sense. Yet what we learned through our fintech program is that the moment you start scratching the surface of a particular vertical, hidden gems appear that would otherwise stay obscure and unnoticed. And the more gems you put together, the more attractive you become as an investor for the few more mature regional scale-ups in the sector that would otherwise opt for top name VCs from the US and UK.
Partly due to our corporate partnerships already in place, partly through the concentration of investments we already have in some verticals, and mostly because we truly believe that there is great promise for disruption and change in these sectors over the next decade we shall focus on the following 4 verticals: Fintech, Healthtech, Future of Work and Future of Food. The underlying theme for all four is our desire for a more sustainable future that according to us will be shaped at the crossroads of traditional industries and technology.
Corporate innovation – part of our toolbox
Along our 4 verticals we continue building our toolbox for supporting the portfolio. Although not a prerequisite, we shall try to combine these verticals with our corporate innovation and partnership programs. These partnerships bring closer the startups from a given vertical to the respectives corporates from the sector such as Visa and the local banks in the case of fintech or Sopharma Trading and the hospitals in the case of Healthtech. This approach has proven to be a win-win proposition for everybody involved: the startups get their first big customers, the corporates get access to the most innovative tech, we get to make better investments.
In a nutshell
In more practical terms this means that Eleven shall focus and respectively invest about 80% of our funds in these four verticals, leaving only 20% of our capital for opportunistic investments outside these core categories. Ultimately we shall always strive to offer more to the entrepreneurs we work with and thus create more value for our investors. One way to do so is by carving out a position for ourselves in such niches, as the ones mentioned above. We shall delve deeper in what each vertical means to us and explore each of those separately in our next blog posts.
Author: Ivaylo Simov