A company for companies

20th June 2018  

by Vittorio Mauri, Partner at U-Start

Our journey at U-Start is not the same as a traditional venture capital fund. That’s for a simple reason: we are not a fund, we’re a company. And we are not only investors, we are entrepreneurs in first place.

The reasons why U-Start is not a fund are multiple. First of all, we never wanted to be so. Don’t get me wrong, funds are fundamental elements in a healthy tech ecosystem. On a micro-economic level, they can be key for a company success or failure. On a macro-economic level, I firmly believe they are also key for the successful deployment of any national strategy of long-term economic development. Yet, U-Start went a different direction. U-Start was born to bring innovation into the VC industry. But why such a daring idea, to bring innovation into the innovation industry by definition?

Well, back in 2013 we saw (and we still see) clear signs of market inefficiency in the Italian VC ecosystem. First of all, we’ve been living in years dominated by anticyclical measures to overcome the 2008 financial crisis, with abundant capital available for the real economy. Whilst these measures generated a strong growth of all national VC ecosystems in Europe (from hundredths of millions invested in a year to several billions in some cases), in Italy the tech ecosystem never grew that fast, as no or little money eventually landed onto the market, showing a substantial skepticism from global VC operators over Italian tech talent and further accelerating the brain drain the country had already been suffering from in the past decade.

At the same time, abundance of capital in all other sectors also provoked a substantial flattening of financial returns for investors in most of the traditional asset classes. In such a situation, diversification was a necessity and alternative investments suddenly became attractive. But how could you invest in a market so undeveloped to disregard its own talents and let them flee abroad to give life to their business ideas? This was the market opportunity we saw. Investors looking for attractive opportunities in a market unable to meet their demand with an adequate offering. A simple mismatch between offer and demand.

That’s when we decided to build a new model for alternative investments in Italy. That’s when we understood our focus would have been different from a fund. We wanted to be customer-centric and give our investors a new access to human talent irrespective of its location, whether this was in Italy or abroad. We wanted to give them a gateway to access investments out of their native market, out of their inner circle, out of their usual scope.

But let’s leave the reason behind such strategy apart for a moment, and let’s rather focus on the consequence of our entrepreneurial journey at U-Start in the way we do our daily work. First of all, we speak the same language as the entrepreneurs we meet. We share the same dreams, the same challenges and the same emotional roller-coaster that only an entrepreneur can understand. We are familiar with the challenges related to business planning, budgeting, people management, shareholders relations and so on and so forth.

Though, the biggest advantage our journey gives us lies in the human touch. This includes respect, empathy, support even (or especially) to companies we’re not going to work with. Companies that we won’t bring to our investors club, companies with business models we don’t believe in, entrepreneurs we don’t think are ready for an investment, markets we don’t like, etc. Despite all this, we believe they always deserve our attention, our time and most of all our most sincere and transparent feedback.

Ultimately, and most importantly, we are partners in business with our fellow entrepreneurs. Which means we feel the bond with them and we prioritize their needs to our needs. This entails a strong commitment to support them all along their journey, relationally and commercially. Our system, is their system. Our network is their network. It might be worth very little for some, it can be strategic for others.

This is because we know how wonderful and tiresome and exciting and frustrating it is to grow a business. We know the struggle when things don’t go as planned. We know how important it is to find support and advice in people. And we know that our behavior impacts the expectations of entrepreneurs, their choices, their self-awareness and ultimately the maturity of the entire ecosystem. To us, this sounds like another crazy idea, but in a country dominated by selfishness we are working hard to change the paradigm and build a system of vertical and horizontal competences able to generate positive network effects and facilitate the spill-over of talent and skills.

The values that shaped us as a company make us different from typical investors: when we talk to companies we’re entrepreneurs for entrepreneurs. A company for companies. And even though I must admit that this statement seems like an abused mantra in VC, in our case it is just an unquestionable principle.