9 VCs in Madrid and Barcelona discuss the COVID-19 era and look to the future

Part one of a two-part survey that polled 18 active investors in the region

Spain’s startup ecosystem has two main hubs: Madrid and Barcelona.

Most observers place Barcelona first and Madrid second, but the gap appears to close every year. Barcelona has benefitted from attracting expats in search of sun, beach and lifestyle who tend to produce more internationally minded startups.

Madrid’s startups have predominantly been Spain or Latin America-focused, but have become increasingly international in nature. Although not part of this survey, we expect Valencia to join next year, as city authorities have been going all-out to attract entrepreneurs and investors.

The overall Spanish ecosystem is generally less mature than those in the U.K., France, Sweden and Germany, but it has been improving at a fast clip. More recently, entrepreneurs in Spain have moved away from emulating success in pursuit of innovative technologies.

Following the financial crisis, the Spanish government supported the creation of startups with the launch of FOND-ICO GLOBAL, a €1.5 billion fund-of-funds in 2017, which put €800 million into the market that year. Three years later, the fastest-moving sector is tech. In 2018, Spain counted 4,115 active startups, reported 150sec. Barcelona has seen a boom in startups and support systems, with companies based there raising €2.7 billion between 2015 and 2019, almost doubling Madrid’s figure (according to Dealroom).

In the first half of a two-part survey that asks 18 Spain-based startup investors about the trends they’re tracking, we reached out to the following VCs:

Marta-Gaia Zanchi, managing partner, Nina Capital

What trends are you most excited about investing in, generally?
Infrastructural needs of the healthcare industry.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We see opportunities in data liquidity, in silico trials, biotech manufacturing … for which enabling technologies may already exist from the information technology and semiconductor industry.

What are you looking for in your next investment, in general?
What we always do: Great unmet need, deep understanding of healthcare stakeholder ecosystem, the right technology solution, a team we love to work with.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Telemedicine.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Local ecosystem: 10% Rest of the world: 90%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
We only invest in healthtech. So, the answer is: healthtech :)

How should investors in other cities think about the overall investment climate and opportunities in your city?
They all think we have a wonderful climate. After all, it’s Barcelona. Regarding the investment climate in particular, I believe too few international investors appreciate the full spectrum and significance of the opportunities that this city affords for starting and scaling a company.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Not really. I think most companies will continue to have HQs in the major hubs, but their teams are going to be more distributed. And hubs that were traditionally at disadvantage over the usual suspects will find themselves less so.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
We are specialized healthtech investors. All our investments to date are B2B companies selling to healthcare organizations.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We decided to increase our reserves, to have more capital to support our portfolio companies in follow-on rounds. For more, see here.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
My team is amazing. With them by my side, I never lost hope.

Any other thoughts you want to share with TechCrunch readers?
I know 2020 is a tragedy but … Isn’t it something to see everyone finally engaged in the conversations that matter (healthcare, science, public health, politics, equality, diversity).

Marta Antunez, director, Wayra Barcelona

What trends are you most excited about investing in, generally?
Enterprise tech, AI, cybersecurity, AR/VR.

What’s your latest, most exciting investment?
Proppos.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
More edtech startups.

What are you looking for in your next investment, in general?
Ambitious team that can scale their business globally.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
E-commerce.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More than 50% in local ecosystem.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Floorfy, Citibeats, Tappx, Proppos.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Very dynamic, a lot of good opportunities (mainly in early stage), amazing talent, growing the number of serial entrepreneurs.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
No.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel tech is getting weaker Entertainment, remote working, edtech and [health tech] are sectors that are coming out stronger.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Biggest worries: cash and delay of POCs, contracts with customers. Advice: Secure a safe runway by decreasing costs or increasing funding. Focus in areas less impacted by the crisis and that are growing.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes! Momentum for all startups digitalizing massive industries like real state (Floorfy) or hotels (iUrban).

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Almost all VCs continuing to invest in new startups and startups pivoting to adapt to these times.

Jaime Novoa, associate, K Fund

What trends are you most excited about investing in, generally?
Nothing in particular at the moment. We recently made a couple of investments in preventive healthcare and aging, but this is not as a result of COVID-19. We’re business model and sector agnostic, and not a thematic investor. Verticalisation of video is an interesting area where we’ve seen several deals in the past few months.

What’s your latest, most exciting investment?
Melio and Abacum.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Overlooked: Looking deeply into the education and health stack and building companies that cater to their different layers (data, B2C, B2B, infrastructure, etc.).

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Saturated: analytics.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
90% focused on Spain, and mostly Barcelona and Madrid.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Not long term: travel. Excited in our portfolio: Melio, Abacum, Hubtype, Bdeo.

How should investors in other cities think about the overall investment climate and opportunities in your city?
I think it’s a great moment to invest in Spain. Probably better than 12 months ago.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
We’re not seeing this yet, but we’re seeing a bunch of founders and employees moving to cities such as Malaga or Valencia, which will definitely spark entrepreneurial activity in such cities, to the (slight?) detriment of Madrid and Barcelona.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel is the most obvious one.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
It hasn’t impacted much of our strategy, besides probably thinking harder about investments in the travel sector. Biggest worries: Finding ways to extend runway. Advice: Focus on what you can control (product), and do next quarter what you expected to do two to three quarters from now.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yup! Companies such as Hubtype or Bdeo are being benefitted by the current situation.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
March and April were super tough, but we’re as positive as we’ve ever been about our portfolio and deal flow.

Any other thoughts you want to share with TechCrunch readers?
We’ve seen record levels of deal flow in June and July. Our most active months ever to date :)

Andy Areitio, partner, TheVentureCity

What trends are you most excited about investing in, generally?
(1) Emerging ecosystems: great founders starting global companies outside Silicon Valley (e.g., Lisbon) (2) New technologies (e.g., edge computing, AI, ML) allowing founders to create new business models and products (e.g., autonomous driving) (3) sociological/demographic changes demanding new solutions (e.g., remote working becoming mainstream) (4) Technologies/products reducing the cost of starting a company (e.g., tools for developers) so founders can solve new problems at a lower cost! We love innovation that solves problems.

What’s your latest, most exciting investment?
SimpliRoute.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
I would love to see more female founders that are backed by VCs. I think female founders are solving problems that are sometimes overlooked because many VCs cannot relate to the problem being solved.

What are you looking for in your next investment, in general?
A mission-driven founder building an extraordinary company that can deliver VC returns.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Oversaturated: SaaS and B2C marketplaces. Concern: Maybe I am wary about the macroeconomic outlook and the impact a recession will have in the VC industry as a whole.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
50%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
My region (Spain) has a strong technical talent in data science, yielding great startups like Geoblink or Nextail. Also, Spanish founders are more and more ambitious becoming international founders willing to play in the big leagues (e.g., Glovo, Cabify).

How should investors in other cities think about the overall investment climate and opportunities in your city?
Iberia (Spain and Portugal) is a very attractive ecosystem. Founders in this region are super capital efficient and are more and more ambitious.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes, especially if the COVID-19 situation goes beyond spring 2021.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Challenged segments: travel, real estate, retail. Opportunities: digitalization, healthcare, remote working tools, e-commerce tools, outdoors travel, fintech.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Impact: Overall, quite positive with digital transformation being accelerated. Worries: Cash management. Advice: Save cash and be ready for a long battle.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes. As said, digital transformation has accelerated!

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
July. One of our portfolio companies is having 3x year-over-year growth because of COVID-19. Also, in June, I asked my girl to marry me (she said yes). We will make it through this situation.

Any other thoughts you want to share with TechCrunch readers?
Great companies can now come from anywhere. Stay tuned.

Christophe Primault, partner, Elaia

What trends are you most excited about investing in, generally?
Deep tech, medtech, AI.

What’s your latest, most exciting investment?
The Hotels Network.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Neuroscience applied to edtech.

What are you looking for in your next investment, in general?
Deep tech early stage, university spin-offs.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Adtech in general, retail tech features.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We invest mostly in France and less than 20% in Spain where I am based.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Travel tech, medtech, biotech. Made of Genes, Ona, The Hotels Network (Juanjo Rodriguez).

How should investors in other cities think about the overall investment climate and opportunities in your city?
Not so mature ecosystem yet. Lots of inefficient actors (incubators, consultants, so-called advisors), but also successful first-time entrepreneurs investing a lot (e.g, Barcelona Tech City) and good support from local government (e.g., Accio) and town hall (e.g., Barcelona Activa).

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Barcelona will remain attractive as it was pre-COVID. I don’t think things will change much for the startup ecosystem. There will be more local “forced founders” as we’ve seen post-2008 and unfortunately most of them [will] fail as they are not prepared.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel tech is hit short term but will come out stronger in the next 12 months as the industry gets digital. Strong shift from retail to e-commerce and medtech will be taken seriously.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Not really, those companies that were the weakest will die but the good ones managed to secure cash and will get through the crisis. More than ever, listening to customer needs is important as they are changing fast.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, especially in e-commerce-enabling technologies.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
People, few yet, realising that it is not the end of the world and that tech companies will come out stronger (K recovery).

Any other thoughts you want to share with TechCrunch readers?
Do not read any media that builds up anxiety!

Luis Gutiérrez Roy, managing partner, Telegraph Hill Capital

What trends are you most excited about investing in, generally?
AI.

What’s your latest, most exciting investment?
Loyal Guru.

What are you looking for in your next investment, in general?
MVP.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Micromobility.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Less.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Digital health.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Promising.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Not really.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?

Travel tech.

What is your advice to startups in your portfolio right now?
Resilience.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Portfolio startups thriving.

Santiago Reyna, founding partner, Keith Ventures

What’s your latest, most exciting investment?
Kenmei Technologies, Skincoach and Kokoro.

What are you looking for in your next investment, in general?
Top entrepreneurs with brilliant execution.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Mobile and food services.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More than 50%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Agrotech companies, mobile companies. I love Nextail, Kenmei, Ec2ce more over genetics companies such as Imegen.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Absolutely.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?
Retail and travel.

How has COVID-19 impacted your investment strategy? 
We will spray and pray more. Looking for rounds with 12 month runway.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The resilence of our sector; it’s very strong.

Carlos Trenchs Sainz de la Maza, founding partner, Aldea Ventures

What trends are you most excited about investing in, generally?
Micro VC and deep tech.

What’s your latest, most exciting investment?
Mitiga solutions.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
More AI/machine-learning product-oriented solutions for the different growing markets.

What are you looking for in your next investment, in general?
We are bullish with solutions for the future of work, education and the growing elderly population.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
E-commerce/digital brand.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
25%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Health tech/food tech /enterprise software/deep tech.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Barcelona is considered an emerging hub with some great successes. Privalia, Wallapop and Glovo have been great examples of B2C companies that are the origin of a new wave of entrepreneurs. New companies are much more related with B2B platforms and SaaS and deep tech are starting to emerge. European funds (Target, Mangrove) are opening offices here or they are having a regular presence.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I believe that emerging hubs in southern Europe will become more competitive as serial entrepreneurs are moving and are able to fully deploy remote work. Quality of life and cost efficiency will become key drivers.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
We believe edtech, agritech and silver tech as three industries with a lot of disruption and with a demand that has not been affected by COVID-19 crisis.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Travel tech was an important industry that is suffering now. We have postponed any investment in this space.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Companies are becoming more cost-efficient. While your focus is growth, costs are not on the radar. With the crisis most companies realized they could operate with a less heavy infrastructure.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Great teams starting up new endeavors during the COVID crisis.

Any other thoughts you want to share with TechCrunch readers?
Barcelona has a diverse ecosystem. A combination of local entrepreneurs and international serial entrepreneurs. Talent attraction, cosmopolitan way of life and cost-efficiency are the three main aspects for deciding to launch a startup from Barcelona.

Jordi Vinas, Nauta Capital

What trends are you most excited about investing in, generally?
Nauta Capital has a well-defined investment thesis: We focus on capital-efficient software companies with the potential to become global leaders, with a preference for B2B and SaaS businesses. Within this thesis, there are a few trends that have caught our attention, such as:

  • Data-driven enterprise transformation.
  • No-code and low-code solutions.
  • Collaboration tools.
  • Open-source software.
  • Fintech.
  • Passion economy.

What’s your latest, most exciting investment?
We have invested in three companies (with more to be announced) in other geographies in 2020, however Smart Protection is our latest investment in Spain. Smart Protection is a Madrid-based cybersecurity company that develops software solutions to protect intellectual property (e.g., audio, video, written publications) or branded products and services online. Smart Protection, led by successful entrepreneur Javier Perea (sold his previous company to McAfee) is growing very healthily. In addition, the acceleration of digital services due to the COVID-19 crisis has increased the adoption of their technology as they help clients keep their online assets safe.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We have seen some AI/ML opportunities in Spain but not as many as compared to other ecosystems. We are also waiting for investment opportunities in quantum computing.

What are you looking for in your next investment, in general?
We aim to invest in companies with the potential to become global leaders in their respective industries or, as we call them, global disruptors reimagining large industries. Additionally, capital-efficient growth has always been a core characteristic of our investment thesis: We look for companies that can become global tech leaders by growing at the maximum rate possible whilst being sustainable. We believe that this capital-efficient growth leads to greater long-term outcomes for entrepreneurs and their investors, and probably for clients too as such growth is due to their offering a great value-add proposition. Lastly, we look for an experienced, driven founding team that combines the industry knowledge, the technical expertise and the ability to attract top talent.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Operating in a crowded sector does not prevent a new company from being successful as the market and the industry evolves allowing for new entrants to gain relevance. It is true that a startup competing in those crowded sectors will have to face additional challenges due to the existing competition and will probably need a lot more capital or a much better value proposition to stand out. Several sectors can be labelled as too crowded, for example:

  • Micromobility, especially e-scooters.
  • On-demand delivery.
  • Communication apps (e.g., asynchronous meeting apps).
  • Social networks.
  • B2C fintech apps.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Nauta Capital is a pan-European venture capital firm, with one global thesis and local operations. We have offices in London, Munich and Barcelona as well as investment staff in Berlin and Madrid. Each office has a dedicated investment team for their local and adjacent ecosystems: London covers the U.K. and Ireland (and also serves as a landing platform so we entertain companies born in other parts of Europe that use London as their next step), Barcelona covers Spain and Portugal, and Munich covers the DACH region. Having local and dedicated teams allows us to better understand each of the ecosystems and nurture stronger relationships as well as being closer to our founders so we can provide the active support and advice that is required at early stage.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Some industries are well-positioned to thrive, having become more of a necessity with COVID-19 and the increasing remote working trend:

  • *Low-code and no-code solutions: Landbot (Jiaqi Pan).
  • *Knowledge management: Onna (Salim Elkhou).
  • *Cybersecurity: Smart Protection (Javier Perea), IriusRisk (Stephen de Vries).
  • *SMB transformation: Holded (Javi Fondevila and Bernat Ripoll).
  • *Passion economy: World Mastery (Aniol Brosa), Emjoy (Andrea Oliver).
  • Fintech: Cobee (Borja Aranguren), Hocelot (Antonio Camacho).
  • HR tech: Factorial (Jordi Romero).
  • part of Nauta portfolio.

Other industries are less attractive to us at this point due to the existing uncertainty around the customer type or the business model:

  • Adtech.
  • Travel tech.
  • Agrotech.
  • Telco-related.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Spain is one of the most impacted regions by COVID-19 in Europe, which has hindered the investment climate in the national ecosystem. Although investment activity has slowed down, the good opportunities have not disappeared. Investors from other ecosystems should keep an eye on Spain as there are very good teams performing very well even in this environment and at very good prices. Those companies that manage to survive and navigate the pandemic will be stronger than ever, with more resilient founders and with the capacity to adapt to any adversity. Despite the lockdown, several Spanish companies have managed to raise relevant investment rounds from international investors (e.g., Onna, Wallbox, OnTruck, Factorial) and we have even seen a few exits (e.g., Freepik, Codice Software).

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
In the coming years we will see a more fragmented landscape, mostly due to the increasing ability to work, operate and close deals remotely. While more founders will be located in geographies outside major cities, technology will advance at a faster pace, enabling a change of mindset and fundamentally imposing a new normal/status quo. This change in the style of work (more remote, more project-based) will impact founders trying to manage their talent, sell their products and services, or create a company culture. Investors will also have to get more used to investing outside the two main startups hubs in Spain (Barcelona and Madrid) as it already happens in Germany (where we see opportunities throughout the country).

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Several industries that have been negatively impacted by COVID-19 and that will be exposed to potential shifts in both consumer and business behavior are:

  • Education: Among other industries highly exposed to potential shifts, we can also point out global education, where the return to school remains a big question mark.
  • Travel and hospitality industry: Sanitary measures and the limitations in mobility have strongly impacted the whole industry. The main players are still trying to adapt to the new reality (i.e., hotels, restaurants, travel agencies) and the sudden recession has brought the entire industry to near collapse.
  • Retail sector: The want for e-commerce solutions was already present before COVID-19, but since the pandemic, it has become an obvious preference for many consumers.

However, the importance of these sectors will not decline in the future and startups may find opportunities digitising them. Companies developing technologies and accelerating digital transformation for both SMEs and large enterprises have an opportunity to thrive, especially if they take a capital-efficient and lean approach to better cope with the existing uncertainty.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our investment strategy, in general terms, has not changed due to COVID-19. Our thesis remains focused toward B2B software solutions with a capital-efficient evolution. Nevertheless, even though at Nauta we are sector agnostic, we have moved away from certain sectors that have been negatively impacted by COVID-19 and that will suffer the aftermath of the pandemic for years to come. The travel industry is a clear example. Even though it might not be a red flag if a company operates in one of these impacted spaces, we would be much more inclined to take a wait-and-see position. Our advice to any startup, and to our portfolio companies is to endure and persist during these difficult times. This year 2020 is about survival and about focusing on product development. Sales and revenue milestones might not be hit, but the objective is to come out of the storm ready to take advantage of the future market opportunities.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
While the COVID-19 has set back many companies, a few have been able to benefit from the pandemic, including some from our own portfolio. Taking a closer look into Nauta’s portfolio, Landbot, the no-code conversational chatbot builder, has taken advantage of the acceleration in market demand for digitalisation software, recording a 3x growth in monthly leads. Another clear example of companies positively impacted by COVID-19 is Emjoy, the audio-based intimate wellness platform; it was benefited by the lockdown and registered a surge in app downloads and sign-ups as well as an improvement in their conversion funnel.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Our founders’ quick reaction to face the crisis head on, making very significant sacrifices to survive and oftentimes grow stronger. It was a wonderful sign of their grit and ambition, and it made us proud of the heroes that we support.

Any other thoughts you want to share with TechCrunch readers?
Now that we have been six months into the storm, our experience working remotely and conducting due diligence from home, is that most entrepreneurs have managed to steer their companies and elaborate post-COVID plans to adapt to the new situation. It has been hard to adopt cost-cutting measures, and some won’t even make it in the end, but it is amazing to see how founders generally see opportunities when market dynamics change and remain optimistic despite all the odds.