Digital Horizon wants to support up to eight start-ups this year through its $50 million seed venture fund.
The VC, which has offices in London and Tel Aviv, as well as a technology development team in Moscow, calls itself one of the first multi-stage investment funds.
Indeed, it also manages a $110 million co-investment fund that can invest in Series A to Series D rounds in companies already backed by its seed fund.
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Digital Horizon was launched in 2018 by former Gazprombank Deputy CEO Alan Vaksman, who has also worked for PwC and KPMG and is currently a board member of the ANNA corporate account app.
Its $50 million seed fund, which closed in late 2021, aims to invest in six to eight start-ups a year in the fintech or B2B SaaS space.
It invests up to $3 million per startup in exchange for 60% equity, dropping to 25% in later rounds.
To date, it has invested in 32 companies across Europe, including four in the UK, as well as in the US and Asia, including Ably and Bolt.
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Vaksman explains that the reason he created a larger evergreen fund was because his investors — mostly high net worth individuals, small asset managers and family offices — wanted a second-stage fund to keep them going. to invest in start-ups supported by the seed fund. . This second stage fund can invest tens of millions of dollars.
Too often when talking to founders, says Vaksman, the team has a different idea of what they’re building.
Vaksman says, “Concentration is a huge problem. The focused founder is the successful founder. And what you are looking for is resilience. You need to have technology and a compelling founder working alongside it.
Vaksman thinks that when it comes to fintech, all the easy problems have been solved, but the hard ones – like bringing the way banks assess credit scores to a time when people are digital nomads and half the population active is self-employed – are still yet to be resolved.
He is particularly interested in how banks and other financial institutions respond to self-employment, where traditional credit scoring methods are redundant, and where self-employed income is volatile. Financial inclusion for the self-employed — who have credit needs like everyone else — is a pressing issue, he says.
“We never fail, we learn”
Meanwhile, Digital Horizon also has what it calls its business builder arm, acquiring start-ups — at least in the short term — and growing them with their original founders.
It invests between $1.5 and $3 million in each of these start-ups, in addition to offering support for technological development and, given the team’s financial background, its network of contacts.
Venture Builder wants to co-found two or three companies a year, either in fintech or, increasingly, in digital marketing.
Digital Horizon hands over ownership once the startup leaves to secure Series A funding.
To date, he has co-founded six start-ups and has already left four, including Monday.com and Lemonade. The average multiple for sale was 10 to 15 times after about three years.
As for what it’s looking for, Digital Horizon wants startups that already have a founder and team in place, with a first big customer on their books.
Vaksman said, “We’re trying to steer the business into a proper Series A cycle and we’re controlling the business to that point.
“Our difference is that we don’t just analyze decks, we get involved in your business. We understand how to code so we can help you develop.
“We work with mature founders over 35, those who are past the stage of life on garage floors. By coming with us, European founders appreciate the security we offer.
“Building businesses is a very difficult business,” sighs Vaksman. “You’re still at high risk and you’re still building from scratch. And you have to go to the bottom of the details. That said, we have slogans on the wall: “We never fail, we learn” and “Fail fast, fail cheaply”. »
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