How Daphni wants to use its new $165 million fund to reinvent venture capital for Europe

Oct 18, 2016   •   2 min read

By Admin

To say that expectations for Daphni, Europe’s newest venture capital fund, are huge would still be understating the case. Hype around Daphni has been building steadily in two years since co-founder Marie Ekeland announced she was leaving Elaia Partners to start her own fund.

At Paris-based Elaia, Ekeland had carved out a successful investing career thanks to her backing of Criteo, Teads and In a country hungry for startup success, she seemed to have the Midas touch. And it doesn’t hurt that she plays a prominent role as the kind of public face of French startups as vice president of France Digitale, an association of VCs and entrepreneurs. Or that Daphni’s co-founders include a host of other notable French startup names: Willy Braun, former general manager of France Digitale; Pierre-Eri Leibovici, an investor at Hardware Club; Pierre-Yves Meerschman, former partner at robotics investment fund Robolution Capital; and Mathieu Daix, former CMO of France Digitale

Over the past year, the new firm, christened “Daphni,” has been increasingly public about what it was building and its evolving approach toward investing across Europe. Today, Daphni officially announced that it had raised $165 million for its first fund.

A few weeks ago, I got a chance to interview Ekeland on stage as part of Innovation Days at IOT Valley near Toulouse. She explained that to succeed as a European investment fund, the firm believed it needed to develop an approach that took some lessons from Silicon Valley, but also adapted them to the strengths and weaknesses of the European startup scene.

In this case, the notion of “VC as a platform” that firms like Andreessen Horowitz had pioneered, in which a firm provides a full suite of services to startups, was intriguing, but also impractical in Europe, she said. AH has more than 150 employees helping with marketing, design, HR, and produce development. And there’s enough concentration of talent in Silicon Valley that a firm like AH can draw from a depth of knowledge across many topics.

Offering that depth and working at that scale would be impossible to match in Europe, where startup ecosystems are growing, but are not nearly as dense or as deep in terms of expertise. To address those challnges, Daphni has developed two solutions.

The first is its own platform that lets startups submit their proposals online. Daphni has invited a large number of influential members of Europe’s startup scene onto its platform to help evaluate those proposals and offer feedback and guidance to the firm.

The second piece is what happens after a startup is selected and funded. Daphni has two full-time community managers whose jobs are to nurture relations and support among the portfolio companies. In a sense, part of the big part of the value Daphi wants to offer is this community approach, Ekeland said. Beyond the money, of course.

The degree to which startups find Daphni’s network and its community valuable may ultimately determine the firm’s reputation among entrepreneurs and whether it can compete for the best deals. For the moment, it’s target Series A investments.

In terms of targets, Daphni is also not focused on particular technologies (IE, virtual reality, Big Data, IOT, AI). Rather, it’s starting at the other end by looking at sectors of either consumer markets or enterprise markets that are ripe for possible disruption. It’s not as concerned with the technology an entrepreneur wants to employ, but rather whether the market or sector being addressed is ripe for transformation on a global scale, Ekeland explained.

Naturally, today’s official unveiling is generating tremendous excitement in France. But now that it’s out of the gate (officially), the real work begins for Daphi if it wants to fulfill its ambitious goal of reinventing the VC game for Europe.

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