Are solo VCs the most viable new seed funding option?

Solo VCs are becoming a popular source of funding for European startups due to their agility, personal touch and industry expertise, says Jenny Fielding, general partner at the Fund.

The solo VC phenomenon has existed in the US for many years. However, this funding model is now making its way into European venture capital markets, with its popularity expanding widely. But why are solo VCs becoming such a sought-after source of funding?

Solo VCs offer many of the perks of working with angel investors, albeit with the financial muscle of a VC (ie with accessible funding of up to US$50 million). Benefits include agility, speedy deal-making, the ability to lead Series rounds, and a personal touch.

Startups get the best of both worlds, while also getting to work exclusively with a domain expert in their industry.

A more democratic spread of wealth

Jenny Fielding, general partner at the Fund, welcomes the move towards a more democratic spread of wealth in the world of venture capital: “I like the democratisation … and want to see a lot more solo GPs in the coming years.”

“Whether it’s a solo GP or 25 GPs in a trenchcoat, who cares? If they’re offering money on fair terms so you can build your business, that matters.”

– Sarah Kunst, founder and managing director at Cleo Capital

Sarah Kunst, founder and managing director at Cleo Capital, is also supportive of solo GPs’ involvement in investment: “Whether it’s a solo GP or 25 GPs in a trenchcoat, who cares? If they’re offering money on fair terms so you can build your business, that matters.”

The concerns, though, are the same as those when attracting angel investment or standard VC investment.

This may seem obvious, but ensure that you are working with the right entrepreneur from the outset. Define the type of person you want to do business with, assess which areas of expertise you could supplement with an experienced investor, and determine the level of control you wish to retain over operations.

Eva Ho, co-founder and general partner at Fika Ventures, recommends talking to other founders in your industry before signing with any partner so you can determine who has met whom, and decide whether a given solo VC will be a cultural fit with your business.

“You’ll be working with these people for a long time,” Eva warned, and you don’t want an additional challenge in an already competitive startup landscape.

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Main image of Sarah Kunst, founder and managing director at Cleo Capital: Cody Glenn/Web Summit (CC BY 2.0)