One of the greatest things to witness today is not just an entrepreneur accomplish a successful fundraising round or exit, but to then evolve into becoming an angel who gives back to the startup ecosystem. Ander Michelena is one of this new breed of investors who has been through the full cycle themselves. In a fresh episode of the Alejandro Cremades hosted DealMakers podcast, Ander reveals the process his own startup went through, and how its acquisition turned him into a $100M VC.
In this episode you will learn:
- How to control yourself during negotiations
- The rollercoaster of emotions
- Going from corporate banker to entrepreneur
- Giving back to the ecosystem
- How to approach the fundraising game
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
The Ultimate Guide To Pitch Decks
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Ander Michelena:
Ander Michelena Llorente : Graduated in Business Administration and Finance in the Universidad Pontifica de Comillas ICADE (Madrid). He start his career in Morgan Stanley London, where he specialized in merger, acquisitions and IPOs of European financial institutions. In 2009 he left the Bank to create Ticketbis.com, a market where fans can buy or sell tickets, with his partner Jon Uriarte.
In 2014, Ticketbis became the leader in South Europe and Latam with presence in 30+ countries and over 300 employees in 14 offices around the word with revenues of Eur 60m. Ticketbis has recently started operations in Asia with a special focus on the Japonese market throught Ticketbis Japan
After the acquisition of Ticketbis for $165 Million, Ander launched the VC fund All Iron Ventures.
Connect with Ander Michelena:
* * *
FULL TRANSCRIPTION OF THE INTERVIEW:
Intro music playing….
Female: Welcome back to the DealMakers Podcast Show with serial entrepreneur, Alejandro Cremades, bestselling author of The Art of Startup Fundraising and cofounder at Panthera Advisors. In this podcast, we ask our guest about their successful acquisitions and financing rounds.
Alejandro: Alright. Hello, everyone and welcome to the DealMakers Show. Today, I have someone very, very exciting, a founder also from a place that is close to my heart, which is Spain. And what he has been able to do is really remarkable, keeping in mind that he’s out of the US, right. So Ander, welcome to the DealMakers Show.
Ander: Thank you, Alejandro. A pleasure to be here.
Alejandro: So tell me a little bit about yourself and your story. How did you get started with the entrepreneurial bug because I see that you were in banking before everything started?
Ander: Yeah. Unfortunately, when I quit university I first joined banking, investment banking. I did three years on Morgan and Stanley. And actually what happened is during on my third year, being on my third year, I actually went to my hometown in Bilbao in the north west Spain and when I was coming back, I saw my dad saw another guy and the other guy say, “Hey, Pedro Luis.” “Hi Pedro Luis.” Both of these guys were named Pedro Luis.” And he start asking so, “What are you doing here?” “Oh I’m here to bring my son.” Okay, so I was with my dad and this guy were talking. “Okay, so well your son, where is he going?” “To London.” “Oh mine too. And where does he work?” “In the bank.” “Oh mine too.” “And in what bank?” “Oh in the Morgan and Stanley.” “Oh mine too.” Okay. So that’s when I met, so it was Jonan. Ander Jonan, that’s what I made my cofounder. That was a very funny story. And once we met there, we realized that both of us wanted to get out of the investment bank work so actually we started getting together quite often. We start looking at ideas so what we can do outside of that and we’re investment banker, right. We didn’t have a single clue about internet, about the commerce, about market, you know line marketing, nothing. So what we did is do as what an investment banker would do that is analyze. That’s what we knew how to do. So what we did is look at the US, the model, how to be successful in the US and we put through regularly [0:02:18] how to be successful in the US that could be anything similar, anything similar launching in Latin America. There was something similar in Europe. [0:02:25]. So with those [derivative 0:02:27] we went ahead and look at potential businesses. We came up with a shortlist of business models that we like and ideas by starting them we came down to this one, that is what the German of Ticket Biz. Basically what we did is it’s inspiring the model of [stuff having 0:02:45] in the US so basically a website where you can buy and sell tickets. At the time, I’m talking about 2009. At the time, we were doing this there was nothing similar. There were a couple of companies in Europe that were expanded in the UK but nothing very big and there was nothing like that in Latin America. So that’s where we decided to go do the business.
Alejandro: Got it. So what was the business model with Ticket Biz?
Ander: So similar to Stuff Up. So basically you’re in the marketplace where you can buy and sell tickets. So if you have an extra ticket for an event that you want to sell, you can sell it there. And if you haven’t been lucky enough to get your ticket on the on sale, you can find tickets there to buy [0:03:29] or alternatively if the event hasn’t been sold out, you can find cheaper tickets in this platform that you will find in there with other seller because people are selling them for cheaper. So it’s basically a marketplace with a price ranges in terms of demand, offer and demand. And that’s what we did. And it was funny because it is something if you think about it there is everywhere in the world there is shows, there is sports. In Europe, there is a – especially for example in Europe [0:03:56] all this time it’s so loud but there wasn’t any solution that actually allowed people to do that. So people are actually buying and selling tickets before we arrived. They were buying and selling tickets in the street and without the security and that’s why the business model was one [0:04:12]. We were quite successfully [0:04:15].
Alejandro: Got it. So what was the capital structure of the company because I see that you guys went from C all the way to Series E and you raised a little over 20 million. So what was that capital structure?
Ander: So it’s interesting because at the time we were doing this in Spain, the VC industry wasn’t that developed and there wasn’t that many entrepreneurs and there wasn’t that many business angels. It was a strange period. [0:04:46] financial crisis so the capital was very scare. But we came up, we were able to get capital from private investors. We didn’t get a single VC on at the beginning. And then we got on VC involved before the end and he used to formula euros, so very small participation from VCs on all the structure. And that’s, what happened with that is when we did it, we didn’t have any big VCs in the structure. What we did is [premark 0:05:17] to a capital increase every year more or less and used money as a capital increase to match the financial needs for the year. We were very scrappy. We were doing things the cheapest way possible. And that was with this 20 million is something at the moment we sold the company was still over 50% of the shares between me and my partner and apart from that the company was already doing 100 million in revenue. It was present in over 40 countries with 400 employees so we managed to do something quite big with a very little amount of money. It was due to the constraint that we’ve been having at that time. I think that has changed a little bit [0:05:59] massively in Europe especially in Spain since then. Now there is a lot more money. There is a lot more VCs. Now there is second time entrepreneurs [0:06:07] invest it back in the ecosystem. But at the time it was actually we did this because it was the only way to do it.
Alejandro: Got it. And you know, it’s just fantastic that the ecosystem is developing now you know in Spain and I agree with you. It has come a long way in the past, for example, 10 years. With all these founders exiting in and being able to like put back the money in to all these companies that are now starting to flourish. So I guess in hindsight, how do you feel about how the business was capitalized?
Ander: Well, I think from my perspective, I think it was actually the concept was on the need that there was in the market but I think there was the smart move, right, because we never had the big round. The maximum [0:06:49] was 4 million euros and we weren’t doing it constantly. We have a higher risk because you never have enough money to actually over spend but you have used enough money so you don’t dilute yourself too much. So it’s on the balance I think at the end if you look at the performance that we finished, 50% of the capital, it was the great decision although it is true that the [0:07:12] some distraction because every year basically we’re in the capital raise mode so every year we have to go out again and talk to our shareholders to see how much sales they want to grow and then go on and find your shareholders at that [0:07:25] right from growing the business. So it worked for us but you never know what will happen [0:07:30] professional VC earlier we have diluted [0:07:35] we will have something bigger. I don’t know. I will never know that. [Inaudible 0:07:41]
Alejandro: Got it. That’s fantastic. So I guess being in a place like Spain, right, and you were saying that you know when you guys were starting out, it was still not mature enough the ecosystem. What was the process as you were looking at the valuation of the company? I mean how did that come about?
Ander: Well, it is [0:08:02] multiple so that we were seeing another places, [0:08:07] right because the valuation that you got in the US are like two or three times what you get in Europe. So in a seed round in Europe, right now in the Spain right now, you can value our own 2 millions in the US, we’re talking about 8, 10 million, right. So it’s even more right now like four or five times more. So that was the situation and not the same in every round but that was the situation. So we look at US companies so we look other comparables in Europe and while we did this at the end we value the company [0:08:38] so one time to sell that we’re having. That was the valuation [0:08:43] while we were valuing the company. That was it. But as small and as [0:08:50] as that, we were growing 100% and people feel that it was a fair valuation for what it was. So that’s how we make the valuation.
Alejandro: Got it. Got it. And I can say now that we’re talking about you know the Spanish market now developing for example like—and also comparing with your interactions with other VCs that were a little bit more in the international side like, how did that lack of sophistication, perhaps we’ve been known you as VC say how did you experience that?
Ander: What do you mean? So lack of sophistication of VCs?
Alejandro: Like for example like have you at the beginning for example when you were engaging with Spanish VCs that you see like any perhaps off market clauses, subscription agreements for term sheets.
Ander: The problem is at the time we were doing Ticket Biz there wasn’t many VCs in Spain. You could count them with your hand and they were very small in the sense that the [0:09:49] for a small companies there was no follow on capital. There wasn’t a scale up capital [0:09:55]. At the same time, we were lucky enough that we didn’t have to go even to talk too much to them because our number was so great that we were able to finance ourselves with private money and our vision with that was if I can finance myself with private money, the VCs are not bringing anything layer to the table. I will [0:10:13] feel that way that they weren’t bringing anything extra to the table. [0:10:18] you’re not going to make me have a board of directors and the board of directors the only thing I want to execute and have somebody put the money and leave me alone. So [0:10:29] wasn’t smart capital out there that will help us otherwise we went for capital that won’t even try to help us. Just put the money and let us alone execute. And that’s why we decided to go as much as possible for private money. There was a point where one VC approached us and it wasn’t even asked when we have one VC on the capital table active [0:10:52] but that VC came to us, we didn’t even go to them. And they came to us and they said, “We want to join you, guys.” I’m like, “Okay. That’s great. We’re happy for you to join but if you join, it’s going to be on certain conditions. There’s not going to be a board of directors. You’re going to have preferred shares. You’re going to have common shares like everybody else. And this is the terms in terms of valuation. Do you want to join? Great. If not and perhaps some other private investors that will take the place.” At the end of the day they were so interested they join and we agree on the condition. It was a little bit not very normal but that will happen and that’s what we have at the end of the day we have a VC in place. The consequence of that was, sorry, the reason behind that was that we didn’t feel there was this smart money. If we have failed at some point that there was VC that pulled out, it will be more helpful than just bring in the money and helping us all the way in the process, we would have open to actually getting them on board.
Alejandro: Got it. Got it. Makes sense. The fact that they came in with common stock, I mean that’s amazing. Because normally all these, we see all types of investments. This is around having the preferred shares and being first money, first money out, no?
Ander: Well I think we were in the strong position that we didn’t need the money. We have a balance of people who wanted to invest. Fine if you want to invest but these are the conditions and at the end of the day came down and they agreed with the conditions so we agree on getting them on board.
Alejandro: That’s amazing. So I guess now that you’re taking a look back, I mean were you always planning to sell the business and if so what was the trigger?
Ander: Well, if somebody tell you they create the business and don’t even think a second about seling the business on point, I think they’re lying. I mean everybody you don’t run the business to sell it so you don’t do what they call decision that’s what you’re thinking about to sell [0:12:48]. But when you say create the business, you also think about the potential exit [0:12:52]. You never know when that’s going to arrive. Maybe they never arrive but you only think about those. So I guess we did the same. At the end of the day is copy our model that was very successful in the US, copy from Stub Hub. Stub Hub has been acquired, was acquired by eBay a little bit later when we started looking at it. It was acquired for over S360 million. So we looked at it and we were like okay, this makes sense. This model makes sense. And hey, potential buyers [0:13:22]. Stub Hub is the one to go international. They’re going to move out to US at some point. They can be our potential acquirer. And of course, there was no [0:13:29] but that was the main one that we have [0:13:32]. These are the guys who actually, that makes more sense at the bias. And like you know for us, it happens. It happens six years later, seven years later but it happens. But we didn’t do—one thing we didn’t run the company for use for them to acquire. We run it where it makes sense so we were actually expanding in the market where there was nobody. We were the first market advantage. We were the first mover but we’re the first one in the market and getting all the user very cheap because we’re not competing with anybody. [0:14:03] operation in a bunch of these markets. We’re spending very little in marketing. Always investing [0:14:08]. So we all did what we should do without thinking about them and then of course when they start looking at how we’re expanding international, they did have two options. It’s rather okay I’m going to go and buy this guys who have done very, very extremely efficient job and is present in 40 markets. I’ll go in five markets per market. So at the end of the day they came to us and make us an offer and it took us a year and a half after the first offer because we did the first offer and they took us out [0:14] agreement but at the end of the day we agreed and we sold it to them.
Alejandro: And I guess this is public. So what was the amount of the transaction?
Ander: It was not public at the time but now that I’m out of the company, [0:14:56] we can say. It’s 165 million euros. That was the amount of the transaction.
Alejandro: Got it. Got it.
Ander: So at the time, that was around $200 million, something like that.
Alejandro: Fantastic. And the structure of that was cash or equity?
Ander: 100% cash. 100% cash with [0:15:12] part of the money. Part of the deal is what they were acquiring was [0:15:15] the business. What they were acquiring was the team that has been able to do that very efficiently, right. I mean we’re pretty much [0:15:23] so for them part of the team remain, so me and my partner Jonan had to remain in the company for the next three years, that was part of the agreement. But actually two months so the company was sold in 2016 but actually two months ago, the second anniversary of the sale we reached an agreement and we just exited the company. So I’ve been two months outside of the company already.
Alejandro: Got it. Got it. Got it. And we’ll talk about that in a minute. So I guess talking about now the actual transaction, did you get any competitive offers after receiving the interest from Stub Hub?
Ander: We got the interest from the Stub Hub and we didn’t at the beginning, [0:16:11] player but we didn’t even open up anything. The other thing that happened there is that both me and my partner were investment bankers so we thought we could run the process so we never selected an investment bank. So that was the big offer. And then we were talking to other guys but we never got an offer, a serious offer from any other – although we’re talking to some other guys, we never got a serious offer from the others. Stub Hub was the most serious one. It was the one who was pushing for it and once we got the last offer that they make, [0:16:48] ask for exclusivity so at that point we couldn’t go and open our process. There was so many requirements and the price was, to be honest the price was we thought it was fair and the price was fair, we’re like okay, it’s fine. I’m not going to, even if I open a competitive process now and I try to negotiate this, I probably won’t get that too much that higher price and it’s going to delay everything. We under risk what we’re losing, losing the transaction. So we decided not to open up a competitive process and to go ahead and give the exclusivity with them and close the deal.
Alejandro: Got it. So I guess before you actually got that initial interest, for how long were you guys building the relationship with Stub Hub?
Ander: Long time. So it was almost two years before. So they contact us in 2014. They contact us, “Oh we learn about you guys. You did a great job. Why don’t you call us and then I’ll buy you to Wimbledon.” So I’ve never been to Wimbledon so okay, I want to go to Wimbledon.
Alejandro: That’s great.
Ander: So I went to London and I went to a match and bring me to a box so it was amazing and it’s a box in Wimbledon. I can’t even think how much those tickets were. The [0:17:57] was there and knowing the team. It was very funny because I came back and [0:18:02]. My partner called, “How did it went?” I said, “Great.” [0:18:07] But did they say anything? Did they offer anything? No, we were basically talking about whatever. Basically they were just knowing us better. [0:18:16] like 4 o’clock time inviting us to different events, coming to Madrid, have dinners to know the team a little bit better before actually going and saying, “Guys, we want to buy you.” So from the first time they met us to actually they told us, “we want to buy you,” was almost a year and then from that point to our first offer, it was another six months process and that first offer, we rejected it. It was a ridiculous price. And then three months later, what happened after that is we rejected the first offer, I mean the middle of October 15, and as we rejected the first offer, what we thought is what they want is to get all the information about us, about where conflict, where we’re doing better, our GNV per country, what our marketing strategy, etc so what they want is to get all the information and the price they offer was so low that we thought they really didn’t wanted to buy us. What they wanted to do is to get information and use it to expand themselves. So we were afraid that it was going on. Also while we did this we start looking for a big round and actually I got a couple of term sheets for I think $3 million round from VCs at that point and I was actually and I mean now I’m in round 15 and I was in the middle, I was in San Francisco. I go checking with a couple of local VC there and I received an email from Stub Hub saying, “We know you’re in town. Why you don’t come to our office?” I was like okay. I don’t lose anything. Okay, I will go to your office. That was three months later after we rejected their offer. And we went there and it’s…
Alejandro: And how did they know you were in town?
Ander: Actually I don’t know. Maybe a little bit… I don’t know. I never asked.
Alejandro: They were stalking you.
Ander: Exactly. I don’t know what it was but they knew I was in town so maybe a VC tell them. I don’t really know. I see a bunch of people back then in San Francisco. What happen is they buy me for lunch and what happen is, what really happen to the big company. First it was a team that was doing the transaction and then a completely new team appear, all new faces, nobody from the first team that were talking to us. Went to the lunch and they start—there were story. They didn’t see enough the value of the company and that they wanted to try again. Help us reach an agreement. All I did, I’m from the northern Spain from Bilbao and people are very proud so they say we are very proud. I don’t know if it was proudness or stupidity but [0:20:55] look, you offer this three months ago. You either put a price three or four times what you offer or there is no deal. That’s what I did. I told them that and basically finished lunch and I walk away and like then I’m never going to come back, right. I go back to Spain. I was talking to microphone there. We’re preparing the round and then a week later, I received a call from them and we’re ready to offer what you ask. I’m like wow, okay.
Ander: I guess there is interest and there’s an option here so we negotiate a little more of the price and we reached an agreement and that’s how reached an agreement on the price and then at that point is where the nightmare start in the sense off due diligence.
Ander: They reach the price was high enough in eBay and they did a full due diligence and a diligence that we open at that time in the data room for [0:21:48] there were seven of us. We didn’t hire any advisor. [0:21:51] lawyers. We were running everything internally between [0:21:56] director, CPO, pretty much it. But on the other side, eBay had a bunch of advisor. So many there was 230 people on the other side from [0:22:05].
Ander: So it was 230 against seven. Investment bank seems like walk in the park. Oh my gosh, it was ridiculous. It was ridiculous. It was a very, very [00:22:18] period. And that lasted for almost nine months because [0:22:27]. We were, as we say, we have [0:22:29] 40 countries. We have 14 officer on the wall but we have 20 something different companies all over the world so they have to look at all of that and the process was really long, over nine month process.
Alejandro: And how many employees did you have at this time?
Ander: Almost 400.
Alejandro: How did you manage for nine months seven of you guys I mean to keep it on the low key? Did you keep it in the low key for [0:22:58] or did everyone knew that you guys were going through this process?
Ander: We kind of keep it low, right, because we are cofounders and we were really in to the business pushing making everybody grow, making new strategy all the time, launching countries and all the [0:23:16]. We were not present anymore because we’re fully deep in to this process, right. So while we’re at it, we needed to tell there was rumors so we needed to tell something to our team so we told them, “Look, we are looking to close a big round and big round 40, 50 million so like if you are going for the VC round and that due diligence is going to take some time, so this is the current situation.” And people at the beginning believe us for the two, three months. But then it start again. They did another round around that would take this long, there’s something else and there was a lot of rumors. There was a rumor in there I remember there was. There was rumor after that. It was Amazon who was buying us. Alibaba. There was a bunch of rumor in that. In the office and even in Madrid there was rumor. There was people [0:24:09]. So there was a lot of rumors. And well, some people and some of the rumors [0:24:18] the selling in 2016.
Alejandro: Yeah. Got it. And during this process as well, how, I mean if you did or not, keep the existing investors in the loop?
Ander: Well, that’s a very good question. So what we did there is instead of we needed 90% of the capital. We needed to actually get 200%. We have a rule inside the company that everybody, all the sign that with 90% of the capital everybody has to sell. So it was even [0:24:51]. It was over 80% of the capital, right. So what we did is between me and partner, our familes control over 60 something percent of the company. We got on the loop the VC and a couple of other big shareholders and that was enough to guarantee that we have this over 80%. So those were the cash that were on the loop. The rest of the shareholders were not on the loop.
Ander: Basically because it was [0:25:15] also from the eBay part, right, eBay company, we need to be extremely careful with leakage. And that was the reason why we did it. And it was, I think it was the right decision. So we only put them on the loop actually two days before we sign. We told them, “Guys, the transaction is going to be announced in a couple of days. And it’s very good for everybody. It was great to everybody and be ready because we’re going to need to sign in the next 24 hours the documents.”
Alejandro: Got it.
Ander: That will happen.
Alejandro: Well, I mean I imagine that for example the earlier investors were thrilled because the multiple, no, on their investment was say probably very exciting.
Ander: Yeah, no, first. I mean firstly it was the 70x multiple so the first run investor made an amazing multiples so they were very happy. Yeah, of course, they were very happy. They invested that 2 million valuation and there hasn’t been many dilution over time because we were very capital efficient so for some of them it was a very, very good exit. So nobody complained, nobody complained about it. So we’re lucky enough that no one other single investor was saying, “Oh you guys should resell. I’m going to sign documents.” Everybody was on board with it, that the [studio 0:26:27] was the best for the company and that’s why they do it. In terms of us thinking about why we sell and I think it’s interesting because if you just think about it, you have a company that’s doing 100 million in sales, that’s going over 100% every year, a lot of people ask me, “Why you sell? So you have that that moment, so why you choose to sell?” And it’s interesting because for us it was a life changing event, that’s what it was to be honest. We have everything from the company that [0:26:59] for the last seven years. Yeah, the company was going very well. We’re almost break even but you never know what’s going to happen, right. So for us, it was okay. It’s our first company. Probably if I will be having my second company I will not sell. I will go for a much bigger outcome. But at that point for us it was like okay, it’s going to change our life and from then on we can choose to do different things. We will have to spend another company we want or become investor or do whatever we want. So that’s why we say it’s time to sell.
Alejandro: And I’m glad that you mentioned that and this kind of like segues very nicely to something that just came to mind, you know. You were talking about like you, your family members say all owning 60% and you also have like these investors, so I guess when it came to the actual price, right, that you were getting from Stub Hub, how align were you all in terms of valuation internally?
Ander: So I think the price is good enough so everybody agree because the round has been at the low price so it was maximizing the price in every round but the last round of Ticket Biz was before we sell Ticket Biz was valued at 15 million euros [premoney 0:28:17]. We got 4 million, so 54 total. So this was three times six the money that we got one year ago, the one the offer came. So everybody was happy. The valuation was heard. The company was going very, very well but they understood that everybody was supportive of that. Everybody was—the message was pretty much for system, “You guys want to sell? We’ll support you.” And we’re very grateful for our shareholders to have think on those terms especially to Jose Marina [0:28:47]. They were investors from the first round. And these guys are amazing. They were the most helpful investors that we had and there was so much support there. I remember the conversation I had with Jose before selling and I told him, “What should we do in this situation? What do you think we should do?” And he told me, “Guys, whatever you decide, we’ll support you. If I will be in your shoes, me right now with the money situation that I have and everything, I will not sell because you did this really well and you can go for a much higher outcome later, but I will totally understand if you guys decide to sell because you have everything there. These are life changing events. You take the money [0:29:33]. Hey after that, your life will change completely and then you can decide what to do. You win another one, probably you will go for a much bigger exit.” That’s true. And that’s an advice I will not forget and at the end of the day, we can always – we’re talking about it and we decide to sell that was a reason. That was an advice I will do. Okay, let’s just do it. And then potentially when we build another company I will not settle for that amount. I will try to go much higher.
Alejandro: Got it. And you know it’s amazing that you got that advice because typically the investors are going to push you for a sell to be able to give returns to their LPs, no?
Ander: Yeah, I know. I mean these guys are amazing. So the advice was very good and also the truth is going to be there no matter what, right. We are not [0:30:26] on the first round and they had been investing the other rounds so they got a very good return. They can maximize it and go for higher yes, but they prefer to be on the side of entrepreneur than doing it and I’m very grateful that.
Alejandro: Got it. So now let’s talk a little bit more about the present. So you were mentioning that a couple of months ago, you gave your notice and you went on to be on the other side of the table and you started All Iron Ventures. So can you tell us a little bit more about this new initiative?
Ander: So yes, basically our venture is VC creative arts Jonan, me and my partner. We did this, it came on naturally because when we sold the company we started receiving a bunch of projects. People wanted us to invest in their projects so we start to do investments and then at some point we say, okay, we need to professionalize this so we decided to allocate 30 million of our money euros, our whole money to use investing the startups. Then an institution came, the European Investment Fund came and ask us, “We like what you guys do. We want to back you up so we’re going to give you for every euro you invest, we’re going to give you another one to invest in every company.” So all of a sudden we have 60 million to manage. So we decide to, we’re still inside eBay so it was time to hire a couple of person, professionalize the business a little bit, [0:31:44] and then while we were already on the way out we decided, “Okay, we have 60 millions, we’re going to expand it with additional 40 millions from the family and family office and other entrepreneurs that were asking us to join because people are liking the investment that we were doing. And we have opened another 40 million fund and now it’s all together 100 million VC. And we invest in very agnostic stage so we invest from seed to B or C. We don’t care. We put tickets from 100k up to 8 million so extremely we can put out to a millions in a company, so from one side to the other. And for us we are also agnostic in term of sector we prefer we like. We only invest in company that we understand and technology that we don’t really understand, we only invest if there is a specialize VC that goes there. We’re very, very flexible in this. What we bring to the table is expertise from an entrepreneurial side point of view. We’re entrepreneurs. One of the things we do is why we didn’t think of this, we didn’t like the board meetings. It’s not a good use of anybody’s time. So for example we don’t have board meetings in the companies we invested. No matter how much we’re going to invest we allow the entrepreneurs to run their company and what we’re out is here for help. If they need something, they have my number, they can call me. I’m happy to stand an entire day helping them internationally, if it’s an expansion with the business plan for whatever country or whatever it is, if they need to hire somebody, I’m there. I have a big network. I can help them to find that person. But I’m there to help. I’m not there to take time out of the business so that’s for [0:33:30]. So that’s the big difference. And with that approach, we already make 32 investments in companies. Geographically, a lot of it in Spain. We have invested also in the US and five companies in the US but everything we do in the US come directly through [0:33:48]. We have very good relation with them. They’re amazing investors. We have made some investments already in the US with them and they have made investments in Europe with us. So they have made an investment with us in Europe as well. So that’s a summary of what we are doing.
Alejandro: Well, that’s fantastic and I’m glad that you’re using that approach and I think the VC world needs more people like you, guys, that have the operational experience. So I guess now with that in mind, you know, given your experience as a founder, what patterns do you typically recognize in those founders that you think have potential?
Ander: Well, that’s a very good question. When you are not first time entrepreneur, from the first one you always learn so that’s always something very nice to have but know what’s possible. First, personal connection always with the person that you are in the other side with because you are going to be there to help and it need to be good engagement. I think that’s very important. And then what we look out more is the business model in terms of how it’s growing. We like to put the money to get the business. We prefer business that are extremely capital efficient. Actually the money is there to grow the business but without marketing the company will still be growing instead of hundred to hundred, 300% will grow 20, 30% at a healthy rate size. So we like to invest in companies that can be profitable if needed although they probably not profitable is because they’re growing very fast but it can be profitable if needed. So that’s what we understand. While we like less, so we don’t understand that much is companies with zero revenue or no expectation on having revenue in the future. So there is a lot [0:35:42]. For example, I will say, [0:35:43] probably we’ll invest in the first activity or it can be because there was use activity that was not in there so we’ll probably not be [0:35:53] will not be normally the first for check but happy to be the second check and follow up on the companies with those requisite and although we’ll make exception of the same. There is something very unique that we see in a company that will give her revenue. We are happy to invest there. So it’s not a fix rule but it’s more like guidance.
Alejandro: Perfect. So I guess now looking back with all these experiences, with the ups and downs, with being put to the emotional limits, what piece of advice will you give your younger self about fundraising and also about getting your company acquired?
Ander: A piece of advice about giving my company acquired?
Alejandro: Yeah, so for example, if you have to do it all over again, what piece of advice would you give to your younger self?
Ander: Well, first of all, I wouldn’t change too much in the sense of how we did the things but probably at the end of the process, I will simplify as much the structure. It was very painful [0:36:56] diligence, for the closing, so probably I’ll get a bank because at the end of the day with those old [0:37:06] process was delayed by so much when we sold the company actually we’re pretty much one more out of running out of cash. We didn’t go, we’re pretty much in breakeven but we haven’t raised money for a year and a half and with the last round was 4 million euros so we’ll be out of money. So probably [0:37:22] that could have been avoided with the faster process. So even if we have experience as investment banker, probably I will go for a bank for professional advice that would have done most of the heavy work and we’ll have a lot [0:37:34] to keep on the business by keeping growing the business and having alternatives in case the transaction didn’t go through. So that’s probably one of the things I want change.
Alejandro: That’s fantastic. So I guess for people that are listening, Ander, what is the best way for them to reach out and say hello.
Ander: Well, yes, so they can whoever want I’m in LinkedIn under Ander Michelena. I don’t think there is too many of us. So I live in Madrid. That’s an easy one. You can send me an email at [email protected].
Alejandro: Wonderful. Well, thank you so much, Ander. It’s been a pleasure to have you on the DealMakers Show.
Ander: All right. Thank you, Alejandro. Take care.
Female: You’ve reached the end of another episode of the DealMakers Podcast. For free resources and materials, head over to alejandrocremades.com. Thank you for listening and see you at the next episode.