What is the future of early stage funding?

This is the question that in the last years a lot of people have been wondering, because no matter how we do the math that is not enough. Written by Antti Rantanen, Venture Partner for Antler Netherlands and Head of European Operations at Avanto Ventures.

antti-rantanen

Author

Antti Rantanen

This is the question that in the last years a lot of people have been wondering. And this is also what we have been discussing a lot at Avanto Ventures, as we have done investments but have never raised an official fund, because no matter how we do the math, we just can't get it to work.

The more successful early-stage funds have already raised and now are raising their next funds, which are usually double or triple the size of their first funds. This automatically means that they now have to write bigger tickets at a later stage. So who is now supporting the seed or pre-seed companies that need that push to get their startup off the ground?

A potential model that we came across which is one answer to this question is a program attracting exceptional individuals with massive scale. This is what Antler, is quietly putting together around the world. I first came across them last fall when they were setting up their operations in Europe and was initially interested enough to meet with them a few more times.

Their speed and commitment that I encountered in those meetings led me to feel that I needed somehow to get involved, and when they offered me a chance to be a venture partner in their European operations I jumped at the chance. As time is the most valuable commodity a person can have, I discussed this opportunity and whether I should invest my time in it with my mentor network, and every one of them agreed that something special was being created in this program, even though it is fairly early days to determine what exactly that was.

The speed and commitment that I encountered in those meetings led me to feel that I needed somehow to get involved, and when they offered me a chance to be a venture partner in their European operations I jumped at the chance.

— ANTTI RANTANEN


However, over the last couple of months, this has started to become a bit clearer to me. First of all, the network effect of systematically creating thousands of companies in 3 years globally is something that has never been seen before. The knowledge base that new Antler startups can tap into with founders of any current or previous programs plus hundreds of global advisors creates an incredible platform for sharing knowledge that makes decision-making so much easier. At the end of the day, the first 100 decisions you make as a new company are usually the most crucial ones.

The second aspect I have realized is how well the Partner Managers of each program understand market conditions based on their previous experience. In my opinion, it should be no secret that a lot of the first hires in different geographical locations are ex-McKinsey professionals and this gives them a real unfair advantage in understanding and accessing market information of the near future.

The third aspect is the funding model, which I believe is one of the fairest that I have seen in these kinds of programs which also breaks down barriers to entrepreneurship by providing a grant for founders from day 1. And based on their first 3 programs in Singapore and Stockholm it seems that their promise of helping with the next rounds of financing is true as many of the initial companies that they invested in have also raised next rounds.

Obviously, the success of the Antler model will really be proven in 5 years’ time when you see how many of these companies actually managed to scale, but I for one am really looking forward to the ride.

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