Robin: Hello, this is Robin Wauters and I'm joined by Elise Stern, a venture capitalist and a founding member of Syndicate One. Can you tell us a bit about your background, Elise?
Elise: Sure, I was born in Boston but my family was there on vacation. I only lived there for the first 15 days of my life and I was raised in Paris and Brussels. My nationalities are American, French, Belgian, and my parents are from Romania and Algeria.
Robin: I saw that your first internship was in Washington DC, can you tell us about that experience?
Elise: I was supposed to intern for a US Congressman but he ended up resigning early. However, his chief of staff allowed me to stay and work for his new congressman. I ended up working there for three months and it was a great experience.
Robin: You also worked at investment banks like Morgan Stanley and Roco. Why did you decide to leave investment banking?
Elise: I went into investment banking to gain some professional experience but quickly realized that I was not passionate about mergers and acquisitions. So, I decided to move on.
Robin: You went back to politics and worked for the French Minister of State for tech. Can you tell us about that experience?
Elise: It was a great experience. I worked with the Minister's advisors on the formulation of tech policies and it was a very interesting time, especially because the year was 2020 and it was all about Covid. I really enjoyed working for the French Minister as it showed me how France supports its tech environment.
Robin: Why did you leave politics after such an enjoyable experience?
Elise: I don't see politics as a permanent job but rather as an experience that one can have to bring something to the public good. I believe that working for a minister is an even more temporary job as the minister is a temporary position. I believe that politics should be done for a specific purpose, not as a career.
I don't see politics as a permanent job but rather as an experience that one can have to bring something to the public good.
Robin: So, you ended up at Eurazeo, one of the top firms. How do you pronounce it?
Elise: It's pronounced "Yur-a-ze-o."
Robin: The name is great because it's a conversation starter in meetings. Almost two years at the firm now, can you tell us about it?
Elise: I'm part of the venture capital team that invests from seed to series B all over Europe in all sectors, as long as the entrepreneurs are exceptional. Our firm, Eurazeo, is a private equity fund with 30 billion under management and different teams that follow companies at different stages of their life. The DNA of the fund is to be long-term with the companies and we have a growth fund that invests from series C up to pre-IPO, as well as private equity buyout teams. It's a unique mix in the European market.
Robin: You must meet a lot of entrepreneurs and startups at different stages.
Elise: Yes, definitely a wide SRE spectrum.
Robin: What's your exact role at Eurazeo and has it changed since you joined two years ago?
Elise: My role has evolved, but at the same time remains the same. I'm a junior investor and my job is to source companies, conduct due diligence, and analyze them with a senior partner to see if we want to invest. If we do invest, I follow the company as a board observer and try to convince them that they want us to invest in. My daily life hasn't changed much; I still meet entrepreneurs every day and try to understand which ones we want to invest in.
Robin: Can you give us an elevator pitch for Syndicate One?
Elise: Syndicate One is a group of 30 people, who are either founders, operators, or investors, and who all share the common goal of helping the Belgian tech ecosystem reach the next level. This means being a believer in Belgian founders who want to launch companies with the ambition to change their industry or the world on a global scale. Our belief is that there are many talented people in Belgium, such as engineers and businesspeople, but not enough global-scale companies have emerged. Syndicate One aims to help fill that missing part by surrounding ambitious people with equally ambitious individuals who can help them scale their journey.
Robin: How did you end up at Syndicate One?
Elise: Serendipitously. I reached out to Laurens, the founding member and idea originator of Syndicate One, while I was working at Eurazeo. He was covering the Benelux ecosystem for his previous company and I was covering the same ecosystem for Eurazeo. We had a chat and he told me that he was launching Syndicate One in Belgium and that it could be a good fit for me. I ended up meeting other members of the team and that's how I joined.
Robin: Fantastic. We're a year in and have made four investments so far. Three are disclosed, and one still to be announced. How has the experience been for you?
Elise: It's been a mix of interesting and challenging. The interesting part is that we have confirmed our assumption that there are many talented Belgian entrepreneurs. In Belgium, we are willing to find them and support them to the best of our ability. There have also been great moments between members, both on the business and social side. Ending the year with four investments is a great accomplishment.
The interesting part is that we have confirmed our assumption that there are many talented Belgian entrepreneurs. In Belgium, we are willing to find them and support them to the best of our ability.
The challenging part is that we still need to be closer to the Belgian ecosystem. As a remote team with members living in different places, it's difficult to be in touch with the Belgian ecosystem as much as we would like. This is something we hope to improve in the coming months.
As an investor, I can't wait for the next investment and would love it to be in the climate sector. We've already invested in FinTech, cyber, and HR tech, so a climate investment would make 2023 even better.
Robin: I agree with everything you said. I also joined Syndicate One as a learning experience and to meet new people. We all share the belief that the Belgian ecosystem has potential and we hope to fill the gap in the pre-seed stage.
One question that comes up often is how we manage 32 people on the team and properly conduct due diligence. Can you walk us through the process?
Elise: The short answer is we just go with the flow. The longer answer is that we all have day jobs and are doing this in our spare time. Despite this, it's amazing how much work we get done on these investments.
Compared to later stage investments at our day jobs, we do not skimp on due diligence for Syndicate One. We go into almost the same level of detail as we would at a later stage, with the only difference being that we have less data at the pre-seed stage. The level of diligence we put into assessing companies is very high and important for supporting them at the next stage.
The level of support we give to the founders is also very high. The platform team, made up of 30 members of Syndicate One, has done an impressive job and is on par with big fund platforms elsewhere.
Robin: Can you explain how due diligence works at Syndicate One?
Elise: Sure. Our process starts with a member of the investment team identifying an investment opportunity either from their network or from inbound applications through our website. We carefully review each application and then reach out to the members of Syndicate One who are best suited to help with due diligence. We usually have at least one investor and a few operators involved in the due diligence process. This can include product and go-to-market discussions. If we reach a certain level of confidence, we prepare a memo of investment and present it to the IC. All members then review the video recordings and IM, and make a decision based on a majority vote.
Robin: I see one of the risks of the way we work at Syndicate One is that we have professional investors on the team, but mostly at a later stage. Do you think this affects the way we analyze companies?
Elise: That's a good observation. Most of the investors on our team, myself included, come from a background of later stage investing. So, it took some time for the investment team to adapt to the way we look at companies in the seed or Series A stage. However, we still prioritize the founding team, market macro trends, and the company's assessment of the market and its business model. We don't usually spend too much time on metrics, as the investment decision is based more on the founding team's vision and expectations than numbers.
Robin: Syndicate One is involved in pre-seed investments. Do you think we should get more involved in policymaking and policy amendments in the Belgian tech ecosystem?
Elise: In my view, politics involves everything related to how people live together in a society and make decisions. Syndicate One is inherently political as we are a group of people with responsibilities who impact the ecosystem at our small scale. However, to develop the Belgian ecosystem and take it to the next level, it will require the involvement of multiple stakeholders, including politicians. We need to take a stance on important topics and be the link between the entrepreneurs and decision-makers. Our role is not to be active politicians or lobbyists, but to voice what we hear from the ground up and act as a conduit for what the entrepreneurs need.
Robin: So, we have a diverse team of people with their own expertise, perspectives, and experiences. It will be helpful if we can bring all of these opinions together. By the way, have you had a chance to read the Atomical report on European Tech released two days ago on December 9th?
Elise: I've gone through it but I haven't read it exhaustively.
Robin: I did have access to it a week before the release, so I went through the whole thing. It was a task with 450 charts, but I stayed up all night to get the highlights. They always do a good job of analyzing the current sentiment and providing data to support their findings. The main takeaway is that funding is drying up, especially in the late stages.
As someone in your position, how do you look at what's going on?
Elise: It's obvious that there has been less funding this year, but it's not necessarily a bad thing. It impacts the later stages more than the early stages. At the early stages where I invest with Syndicate One, it doesn't really change the way we do our job. We still do the same due diligence and we still have investors and money to put into the companies we believe in.
to develop the Belgian ecosystem and take it to the next level, it will require the involvement of multiple stakeholders, including politicians. We need to take a stance on important topics and be the link between the entrepreneurs and decision-makers. Our role is not to be active politicians or lobbyists, but to voice what we hear from the ground up and act as a conduit for what the entrepreneurs need.
Robin: I want to point out, with respect, that you are still young and haven't experienced a financial crisis like we did in 2008-2009. Do you find that your more senior partners in the team are expressing caution and advising companies to be more cost-effective?
Elise: Yes, we've seen that sentiment everywhere, but what's interesting is that the sentiment towards the current situation is pretty unanimous. Everyone agrees that we don't know what's going to happen, so we need to be careful. The biggest challenge is the uncertainty about the downturn, how high, how low, and how long it will be. So, in this context, it's better to be prepared and have money in the bank. The investors still believe in the companies, but they just say that they will need more time.
Robin: Earlier you mentioned that you talk to a lot of first-time founders and early-stage entrepreneurs. What are some of the most common mistakes they make when talking to investors?
Elise: What are the most common mistakes made by startups? Our belief at Syndicate One is that these mistakes usually stem from a lack of preparation. This is why we aim to help startups get ready and have all the advantages they need when meeting with investors.
One common mistake is not having a good understanding of the market. Often, entrepreneurs come to meetings with investors and claim that they have no competitors and are the first to do what they do. This can indicate that they either have not thoroughly assessed the market or that there is no market for their product.
Another important factor that we look for in founders is honesty. When launching and building a company, it's important to be honest about the strengths and weaknesses of the business. Being out of touch about your company and claiming that everything is perfect can also be a red flag for investors.
A final mistake is having poor dynamics between the co-founders. We want to see a strong team, and if during a meeting one person is doing all the talking while the others are not participating, this can be a big red flag for us.
Robin: I completely agree. I find that the main reason for startup failures is poor product-market fit and not being able to make enough money in time. The second reason that is often overlooked is founder dynamics and how the relationship between the founders can change and evolve over time.
Elise: To make the ecosystem better, the only thing that is lacking is time. Building an ecosystem takes time and patience. If we look at France as an example, what made the difference in their success is having experienced and successful founders who have seen how it's done and have the conviction that they can do it as well. Belgium needs more role models and success stories to inspire and develop the skills, ambition, and grit needed to launch successful global companies.
Robin: We can accelerate bits and pieces of the ecosystem, which is what we're doing at Syndicate One, but at the end of the day, building an ecosystem takes time.
Building an ecosystem takes time and patience. If we look at France as an example, what made the difference in their success is having experienced and successful founders who have seen how it's done and have the conviction that they can do it as well.
Elise: That's right, we need to be patient. Syndicate One is working to aggregate talent and provide access to knowledge at an accelerated pace, but building an ecosystem is a long-term process.
