Before he became one of the few Black fund managers in the EU, Fabrice do Rego had quite a long career in finance. He started off with Lehman Brothers, before moving to stints at Morgan Stanley and Credit Suisse, and eventually founding M&A advisory firm Valmeon Corporate Finance.
But during all his years analyzing M&A deals and corporations, do Rego rarely saw people who looked like him in that industry. That realization, he tells me, inspired him to start The Blueprint VC with Ibrahim Ouassari to back founders from under-represented backgrounds in France and Belgium.
For do Rego, the logic behind launching The Blueprint is simple: Mixed teams with diverse backgrounds are known to perform well, yet capital allocation to such teams is still low. “There’s a lot of money being left on the table,” he said. So, he decided, literally, to go get that money.
Launched in December 2021, The Blueprint started raising a €25 million fund last January, which the founders hope to invest in 30 companies within the next four years. They’ve already backed two.
The firm likes to invest in mixed teams of diverse origins, mostly focused on gender and ethnicity. The Blueprint focuses on seed and pre-seed rounds, writes checks ranging from €100,000 to €400,000, and has a reserve for follow-on investments. It’s sector-agnostic but does not invest in deep tech or biotech at the moment.
I recently caught up with do Rego to talk about his work with The Blueprint, surviving the venture downturn and the best way to cultivate the next generation of talent in the EU.
(Note: The following interview has been edited lightly for length and clarity.)
TechCrunch: You’ve been raising this €25 million fund for about a year, with a diversity-focused investment thesis on a continent with noted issues regarding equity and inclusion for marginalized groups. What has the process of approaching limited partners been like?
Fabrice do Rego: It has been much more difficult than what I expected.
We have a great team, and I thought with such a team, it would be easy. But we faced some odd times raising the fund, especially with institutions. Their first question was the “pipeline problem” [asking if there was enough diverse talent to fund in France and Belgium].
Another thing that was difficult is the difference between continental Europe and the U.S. or maybe even the U.K. — we don’t yet have a super strong and wealthy community of Black people who are connected to each other. That is something we lack, and when you want to raise the first fund [for something like The Blueprint], that’s the type of LP you need to have for your first millions.
The minimum target size of our fund is €25 million. Anything below that threshold, it’s super hard to have a professional fund. We wanted our first close to be €12 million, and we will probably reduce it to €10 million because we want to deploy as much as possible, fast.
For now, we’ve committed around €6 million, mostly from institutional investors. We have €1.5 million from family offices and high-net-worth people who have allowed us to deploy already. But we still need to find at least €4 million to make our first close.
Why are there so few Black fund managers throughout the European Union?
It is hard to raise a fund when you are a diverse founder. There are no other examples. It’s easier to start thinking about doing something if you have role models but to be honest, I didn’t have any role models in Continental Europe. So I think that’s a problem. It’s a problem of representation.
I know a few Black managers who work at funds, but there aren’t many. I can almost count them on one hand in Belgium. People just don’t think about it. They think it’s not for them, and most of them also think they need to be super wealthy before starting to think about raising a fund.
I can understand that, because it’s super costly to do it and you need to be able to go at least two years without any kind of revenue. That’s one of the reasons why there are few emerging Black fund managers.
The ecosystem has become more vocal about diversity, but it is not yet that diverse. Gender diversity is getting better and that’s a good thing. But regarding diverse origins, there’s still a long way to go.
We started raising when the market was really, really bad, and I think it’s even harder for people to raise money when the market conditions are hard because investors want to rely on things they know, and the things they know are how to invest in white, male founding teams.
It’s even more difficult to raise now for diverse founders than it was before.
You said you’re industry agnostic, but which sectors do you find the most appealing to invest in and why?
We have a proactive approach regarding two main sectors. One is everything related to climate — green mobility, clean tech and climate justice. The other is everything related to health tech and medical tech.
We also like all consumer tech, but we don’t have a proactive approach for that because we manage to get easy deal flow from that sector.
Is there really a pipeline problem, or is it just an excuse for investors in the EU not to invest in as many diverse entrepreneurs?
As you say, it’s a sentiment. The proportion of founders coming in from outside the traditional founder path is much bigger. As an investor, you need to look for them when other people don’t. Most established investors are simply selecting deals, because they have a lot of incoming deal flow from homogenous types of founders. But our job as investors is to look where the new superstar of startups can be.
Most new founders don’t know how the ecosystem works or what to look out for. They just know how to solve a problem, and at the end of the day, that’s what we are looking to do — we’re just looking for people who know how to solve a problem.
Founders from diverse backgrounds often don’t know the traditional path to raise money. They don’t know what type of deck to build, which kinds of connections to have, or what they need to say. Many don’t know how to do that, so it’s part of our job to look for them, not the other way around. VC firms need to take that effort if they want to have more diverse founders.
Education is also critical. It’s important to let diverse students from business schools know that they can have a professional life in VC. Most of them just don’t think about it because they think it’s not for them.
I have trainees at my firm. I will also start teaching them in my old business school [in September]. I’ll teach finance, M&A and investing, and I will be super vocal about the fact that everyone can look at this type of career.
People talk about the financing gap, but most of the time, the most important gap is the information gap. You need to inform people.
France does not track diversity statistics, making it hard to prove that racism is even real in the country. What is a way around this?
My thesis is: What you’ve experienced in the U.S. and U.K. — we have the same problems here. But getting that data in Continental Europe is complicated because, in some countries, it’s not even allowed to have ethical statistics.
Some people tell me, ‘Okay, what you’re tracking is a problem specific to the U.S. or U.K., but we don’t have those problems in France.’ I find that stupid because if I just asked a VC here to show me their portfolio companies that have diverse teams, they would struggle to do that.
If you don’t have data, you cannot track, and if you cannot track, you cannot evolve. But it’s touchy in France, and when we say we want to tackle this problem for some people, they take it personally and say, ‘You mean that we are racist?’ That’s not what I’m saying, and we need to change that mindset.