Consolidate Barcelona as the largest technology hub in Southern Europe and help local startups grow in their earliest stages. These are two of the objectives of Yellow, the investment fund created by Glovo co-founders, Óscar Pierre and Sacha Michaud, in alliance with Adam Lasri, former executive of the venture capital firm Atomico. The challenge is to invest 30 million euros to acquire stakes in 40 to 50 emerging companies in Spain, France, Italy, and Portugal over the next three years. These will be technology-based startups, which will receive initial funding of between 200,000 and 500,000 euros to help them launch and validate their business model.
"We will only invest in stories, in projects, that we believe can become unicorns, that is, companies valued at more than a billion euros. That's why it's key to know the founding team very well and the characteristics of the market the startup is targeting," says Óscar Pierre in an exclusive interview with The New Barcelona Post. These are Pierre's first statements after having managed to raise the 30 million euros Yellow had set out to raise in a record time of just five months. "The fund has been oversubscribed; we have had to say no to quite a few investors, although in the end we will expand it by two or three million more," he explains. According to the successful Barcelona entrepreneur, Yellow's goal is to invest the fund's resources "as soon as possible," at a rate of one new investment in an emerging company in Southern Europe every month.
"Every week we are already analyzing about five or six projects. We will build the portfolio in three years, making an investment, approximately, every month. We have already agreed on the first three operations," Pierre anticipates, although he does not yet want to reveal the names of the first three startups that will be part of Yellow's portfolio because the transactions have not yet been completed. "In a month we will have them closed, but I can say that they are two companies from Barcelona and one based in Paris," he reveals.
"We will only invest in stories that we believe can become unicorns, that is, companies valued at more than a billion euros"According to Glovo's CEO, approximately50% of Yellow's capital has been subscribed by investors from Barcelonaand the rest by other partners, mainly from Europe and the rest of Spain.Óscar Pierre and Sacha Michaud have contributed 20% of the capitaland the remaining 80% is made up of a mix of founders and executives from successful companies in Barcelona's entrepreneurial ecosystem such as Privalia, HolaLuz, and Travelperk, and by entrepreneurs linked to more traditional industries, such as some members of the Puig family. "We wanted to take advantage of thefundraising to create a network that brings a lot of value to the entrepreneurs in whom we invest. In the end there are manyfoundersand also executives from the maintechs Barcelona-based, and furthermore, we have invited large families that own more industrial companies. We believe all of this is very synergistic, because many of thesestartupswhat they do is develop software for these large companies," he explains.
There are several reasons that have led Pierre and Michaud to create this investment vehicle, which, through the company Yellow Partners, will have offices in Barcelona and Paris and will be managed by the Barcelona-based management company Talenta, chaired by Jordi Jofre. "When we started Glovo, one of the problems or obstacles we encountered was that in Barcelona there were no professionalized venture capital investors who had experienced large-scale success stories. This meant that, at the beginning, we didn't have enough ambition, no one inspired us to think big. We gradually incorporated this ambition over time, when we saw and believed that, from here, we had the potential to create a global winner," reflects Pierre.
Among Yellow's investors are the founders of Privalia, HolaLuz and Travelperk and the Puig familyIn this sense, the entrepreneur now wants to give back to the ecosystem the success achieved with Glovo ---a platform that was acquired by Delivery Heroin early 2022--- and serve as an inspiration to new founders ofstartups, who wants them to feel accompanied in the most initial and weakest phase of their project. "Our vision with Yellow is to be the first call for founders from any country in Southern Europe. We want that when they consider carrying out their first round, they call us so that we can accompany them and also help them find financing in other European funds," explains Pierre.
"Glovo has done very well. We have worked hard and we have also had a bit of luck. Nobody believed it could be a global winner. That's why I believe that we, to entrepreneurs, can provide this extra inspiration and make them realize that in Barcelona we have talent just as good as that of Silicon Valley; probably here we work even more than in Silicon Valley, London, or Berlin. I sincerely believe that we have the same opportunities as them to build a global-scale project. There is nothing to stop us!", emphasizes the creator of Yellow.
According to Pierre, about four years ago, he and Sacha began to dedicate one day a week to receiving entrepreneurs and responding to the dozens of requests they received from all kinds of startups, interested in having their advice. "We started looking at companies a bit for the love of art and also with the desire to give back to the ecosystem everything it had given us, but we saw that there were many projects that we loved and we also started investing. Unintentionally, in a short time we built a portfolio of 40 startups, most of them from Barcelona, in which we have invested as business angels", says Pierre.
However, this model was not sustainable and became increasingly difficult to manage. For this reason, Pierre and Michaud have chosen to professionalize their investments outside of Glovo by creating Yellow Partners, where Adam Lasri is their partner and will be the general director and will pilot the Paris office. Victor Navarro, with previous experience in investment firms KFund and Galdana, has joined the Barcelona team, and a couple more people will soon be hired who will also work full time in Yellow's two offices. "Sacha and I will continue to be one hundred percent focused on our executive positions at Glovo," emphasizes Pierre, who highlights the great value that Lasri brings to the new investment company. "Adam was part of Atomico's initial team and was responsible for investments in Southern Europe. He brings us a brutal investment methodology that we didn't have until now; the synergies that we, as entrepreneurs, can generate with him as an expert investor are very important," he points out.
The availability of local capital, key for entrepreneurship
The other major reason that has led them to create Yellow is the need to strengthen the availability of local capital in Barcelona's investment ecosystem. "The world of entrepreneurship and startups is a very local world; having venture capital coincide with the entrepreneur in the same city has many benefits. Meeting via Zoom works up to a certain point, but the result of being able to meet directly with the entrepreneur over coffee is far superior," highlights Pierre.
"As a Barcelona native, what I see is that in all successful cases, the bulk of the investment comes from outside. That is, a lot of value is being generated in the city, but all the financial return goes elsewhere. It would be good if the capital that obtains a return thanks to these investments were also local," he considers. In this sense, he notes that large American funds, such as Index Ventures or Sequoia Capital, do not have an office in Barcelona, but they do in Paris, London, or Berlin. He adds that the large venture capital funds in Spain "almost all are in Madrid" and, furthermore, he says that "they have changed phase," as they have grown older and now manage funds of 300 million to invest in series A, B, or C, abandoning the early stage or seed capital phase. "They have left a gap in the market, which is why we believe there is a very good window of opportunity for Yellow and to ensure that the capital is also from here," asserts Pierre.
In his opinion, Yellow is born "at a very sweet moment" because in Southern Europe a very powerful ecosystem of large technology companies has been configured that are feeding new generations of entrepreneurs and creating new unicorns. "About 40 startups have already emerged from Glovo and in Spain we already have about 15 unicorns, many of them in Barcelona, such as Travelperk, Factorial or Wallbox," he recalls. "We believe there is a very good opportunity. We trust Barcelona and Southern Europe a lot because it is a magnet for attracting talent. With Glovo we have seen it, there is very top talent from all over the world that moves here, with their family, and they are delighted with the city and stay, and that is key for the ecosystem," he states.
Given this reality, the founder of Glovo is very hopeful about the future of Barcelona. "I am super optimistic about Barcelona. It is a city ---he adds--- that attracts international senior talent from all over the world, and not only attracts it but retains it. One of the big barriers we had when creating Glovo was talent. We had to go recruit it from outside and, therefore, everything was much slower. Now it is easier to recruit in Barcelona, that's why, I believe the next decade will be super good for the city and this technology-based economy will grow a lot."
"Barcelona has emerged as the largest technology hub in Southern Europe, but it is still far from London, Berlin, and Paris. Everything is yet to be done, we will see a decade of high growth here," anticipates Pierre, who is convinced that projects can also be scaled from the Catalan capital. "I am optimistic in this aspect too, I believe that very big things can be done from Barcelona, it's a matter of time. There is nothing to prevent us from scaling internationally, we don't have any barriers that those in Silicon Valley don't have. We have seen it with Privalia, Holded, Glovo, Travelperk, or Factorial. The ecosystem is growing and we will see more and more cases," he assures.
"There is nothing to prevent us from scaling internationally from Barcelona, we don't have any barriers that those in Silicon Valley don't have"Pierre explains that Yellow will only invest in projects "that have a very strong technological component" and that are not hardware butsoftware based."We are not going to invest in verticals that we cannot understand or that are very technical or scientific," he specifies, referring to the fact that it is not part of their investment objective to enter, for example, biotechnology companies. One of their focuses will bedisruptive B2B business modelsin very large sectors, that is, that can be scaled and create companies that invoice 100 million euros."The vast majority of things we are looking at are entrepreneurial projects that can disrupt something using artificial intelligence.There are many B2B solutions that can help companies be more efficient, unlocking and monetizing the value they generate, for example, the automation of many processes," he exemplifies.
Bridging with international investors
The founding partner of Yellow anticipates that the firm does not have the vocation to lead the investment rounds of the companies it enters, but rather the idea is to accompany other funds and help international investors also bet on the company. "What we want is to be the first to help and advise the entrepreneur and where we can add the most value is during the first 12 months," says Pierre, who adds that they will not enter the boards of directors of the investees. "Since we announced the launch of Yellow, all the big funds in London have already written to us: they all want to work with us, they are very interested in having a scouter that passes them investment opportunities; we will be a key partner for these powerful investment groups in Southern Europe and thus contribute to more international investment coming to Barcelona," he assures.
The businessman acknowledges that in the current financial context "capital is now much more demanding" and that there has been a correction in the valuations of startups. "What we have seen in the last five years will hardly be repeated. There was a hyperfocus on growth and very little care for costs and expenses. It is true that a startup with unlimited funding develops faster, but I believe that when an entrepreneur has unlimited money it is very dangerous, because you start to make incorrect decisions and hire people you don't need. Having a limited budget makes you operate with more discipline and, therefore, this new context is not necessarily negative," he reflects.
"What we have seen in the last five years will hardly be repeated. There was a hyperfocus on growth and very little care for costs and expenses"As he has been able to verify, new entrepreneurs "already have clear" that they must also prioritize profitability and seek to have good margins from day one. "It is positive to learn to do more with less and to have that pressure to have a healthier bottom line,"considers, insisting that the key is to get it right and know the entrepreneur very well. And what profile offounder is your favorite? "We are looking for a very intelligent person, who has the dream of solving a problem that exists in the world and who has the ambition and obsession to achieve it.The entrepreneur must be very persistent, since in the history of a startupof success there are always ups and downs and, if you are not very persistent, the low moments kill you," he explains.
The profile of a good entrepreneur
Another determining element that Pierre analyzes in young entrepreneurs is their leadership capacity. "You should always ask yourself if that founder will be a good leader. A person can be very intelligent, persistent and obsessive, but you don't create a 100 million euro company by yourself. You have to be able to attract and convince a lot of people to follow you. That's why you must have that point of humility, of being a good leader, because if not, good talent will not follow you," he states. Finally, he highlights as a requirement that the founder "wants to learn" and knows how to listen. "There are entrepreneurs who don't want to listen much and are very closed off with their idea. What is clear is that all success stories have had to pivot, that is, they have had to kill their initial ideas and change to survive," he concludes.
Finally, Óscar Pierre points out that one third of Yellow's resources will be reserved to participate in follow up operations, that is, to accompany the most promising portfolio companies in the second rounds of investment they carry out.