Fly Ventures, a relatively new VC operating out of Berlin, has closed its first fund at $41 million, capital it will use to invest at seed-stage in startups across Europe. LPs in the fund include the European Investment Fund (EIF), Korelya Capital, and a number of unnamed family offices from Europe and the U.S.
Specifically, Fly Ventures will be writing cheque sizes of $400,000 to $900,000 into seed rounds of between $1 million and $2.5 million. It is targeting the whole of Europe, but I’m told that Berlin, Paris, and London will be a key focus. In terms of investment thesis, the firm is planning on investing in automation.
This includes vertical applications where the customer doesn’t really care about or notice the use of AI and machine learning in order to deliver a service, and horizontal AI technology that is more explicit and can be put to multiple uses.
Noteworthy, however, is that Fly Ventures itself is attempting to punch above its weight and scale by using what it claims is machine learning and AI to help generate deal flow, and in turn discover burgeoning tech startups, often before they’ve even begun fundraising. Using its technology, Fly Ventures claims it is able to find and approach startups with a digital footprint, and says its software currently finds more than 1,000 new companies a week.
Supported by a software engineering team made up of ex-Googlers, the Fly Ventures’ tech is currently focussed on automating sourcing i.e. identifying potential investments. “Our platform pulls data from hundreds of sources including blogs, job boards, accelerators, and databases like CrunchBase,” Fly Ventures co-founder and General Partner Gabriel Matuschka tells me.
“Our algorithms then use a combination of structured and unstructured data derived from these sources to rank and filter the companies we find. The results are presented to the investment team in a Tinder like interface that lets us quickly decide whether we want to speak to a company”.
I’m told that so far about 60 percent of the startups Fly Ventures speaks to are approached cold, meaning that the VC firm reaches out to a team without a deal coming in via its own network or via founders approaching them.
Companies in its current portfolio that were discovered via cold outbound search include Side, a job-matching platform for students; and EF alumni Bloomsbury AI, which is developing technology to read and answer questions on legal, insurance and financial documents.
“We’ve found that founders are very receptive to us reaching out to them. Not once did it happen that founders didn’t want to speak to us, especially after we told them how we found their company,” says Matuschka.
The vertical sectors Fly has invested in to date include finance, HR and recruiting, and mobility and health. Recent investments include Finiata, the financing company for SMEs, freelancers and the self-employed, which this week raised €18 million; and Inato, an AI-powered patient recruitment platform for clinical trials.