It’s always interesting when a new VC firm with a fresh team of partners emerges. And with Yellow, it’s interesting in multiple ways. Founded by Oscar Pierre and Sacha Michaud, the founders of Glovo, as well as Adam Lasri, a former investor for VC giant Atomico, Yellow is a new €30 million pre-seed fund that wants to invest at the earliest stage possible (that’s $32 million at today’s exchange rate).
In addition to this unique founding team, the VC firm’s focus is also quite different. While most VC firms operating in Europe focus on the U.K., France, Germany and the Nordics, Yellow wants to put more emphasis on Southern Europe — and especially some key markets in the area, such as Spain, Italy and Portugal.
Last week, I talked with Adam Lasri about the new fund and the team’s investment thesis. Yellow is going to be an opportunistic tech fund, meaning that it doesn’t plan to focus on a vertical in particular. The firm will invest in both B2B and B2C startups across different industries.
“Over the years, I’ve had more and more access to early-stage deal flow. Often, I would talk to companies while at Atomico that were in the ideation stage, in which we couldn’t invest,” Lasri told me. “And I found that frustrating, because a few months later, you could have Index or others making investments, whereas it wasn’t part of our thesis to invest at the seed level.”
He also added later in the conversation that he doesn’t have harsh feelings for his former team. He just wants to invest at the seed (or pre-seed) stage.
“Founders love to talk to another founder who has successfully sold his company.” Adam Lasri
And yet, Yellow isn’t going to be the lead investor as it plans to invest €200,000 to €500,000 per deal. Instead, it thinks it can be the first believer, bring other investors and provide advice at scale. “We’re never leaders, just collaborators,” Lasri said. According to him, many early-stage companies face the same issues — how to set up a team, how to format a pitch deck, how to navigate the VC ecosystem, etc.
And, of course, the founders of Glovo also know a thing or two about creating a startup. “Founders love to talk to another founder who has successfully sold his company,” Lasri said. This could be the reason why Atomico, which was founded by Skype founder Niklas Zennström, has been so successful.
“Oscar, who is the CEO [of Glovo], spent a lot of his time with entrepreneurs. He didn’t know how to scale that time he spent with them, but every time he invested in a company, he would talk about all these aspects — how to go from 0 to 1, how to scale your team, how to think about hiring, all that,” Lasri said.
“Last year, they sold their company to Delivery Hero for a little over €2 billion at the time. And they were thinking about how to professionalize their investment business. I was already thinking about my next steps, and so we started talking a lot,” he added.
While Yellow plans to invest in startups based in France and Southern Europe, it also plans to invest in companies that want to quickly expand to Spain, Italy and Portugal. In that case, Yellow can act as a strategic investor and unlock a bunch of problems that entrepreneurs could face in these new markets, such as talent support, regulatory hurdles and introductions with large enterprises.
Yellow’s team will be split between Paris and Barcelona with Oscar Pierre and Sacha Michaud remaining in Barcelona. They will keep their executive roles at Glovo, the on-demand delivery company that was acquired by Delivery Hero. But Pierre and Michaud have already been quite active as angel investors. Yellow is just a way to take this activity one step further.
Adam Lasri will be based primarily in Paris with another team member joining the fund soon. Victor Navarro, a VC investor that was working for K Fund, is also joining the Yellow team in Barcelona.
From €0 to €30 million in five months
Interestingly, the Yellow founding team managed to close this initial fund in just a few months. They started their fundraising effort in June and managed to reach their goal in less than five months.
Behind the scenes, more than a dozen European unicorn founders are investing in Yellow as well as a dozen family offices from Spain, Italy and Portugal. Some of the richest individuals from Southern Europe are limited partners in Yellow’s first fund. The firm didn’t receive any public money for this fund.
It seems to indicate that there is some appetite for more VC funds in Southern Europe. Sure, in Spain alone there are plenty of funds, such as K Fund, Nauta Capital, Kibo Ventures, Seaya Ventures and Inveready — this list is not exhaustive.
But if we look at the numbers, a recent report from Dealroom highlights the discrepancies between the top three European countries when it comes to startup funding — and the rest. During the first half of 2023, startups based in the U.K. raised a total of $11 billion. Germany and France followed suit with $6 billion and $5 billion respectively.
In Italy and Spain, startups “only” raised $1 billion and $744 million, respectively, during the same period. Portugal isn’t even part of the top 15 countries.
Does it mean that there are fewer startups in Southern Europe? Or does it mean that there’s still untapped potential in the region?
Spaincap’s annual report shows that international VC firms are increasingly looking at opportunities in Spain. In 2022, Spanish funds invested a total of $430 million in local startups (€400 million) while foreign investors poured $1.7 billion in Spanish companies (€1.6 billion).
Some foreign investors could be looking at opportunities in underserved markets as their local market might be overheating with too many VC firms fighting for the same deals. And this distortion between local investors and foreign investors could explain why family offices from Southern Europe are willing to back a new local fund.
This VC gap validates Yellow’s positioning. Now, let’s see if the VC firm can deploy this capital into successful startups and turn a thesis into returns on investment.
Natasha Lomas contributed reporting.