1Mby1M Virtual Accelerator Investor Forum: With Harald Nieder of Redalpine Venture Partners (Part 5)

Sramana Mitra: In the other two parts of the portfolio where things are coming by referral, is there anything specific that’s interesting that you would like to discuss?

Harald Nieder: What’s interesting there is that there are a lot of different factors between the networks. If you look at our fund investors, that’s actually quite a broad range of people. We like to have entrepreneurs in there. We like to keep that entrepreneurial spirit throughout our whole structure.

It’s quite a broad base of investors that are very close to the topic of early-stage investment. That allows us also to leverage our investors for the benefit of our portfolio companies. They also help us along the whole value chain from deal flow to exit. That’s another very special part of our model.

It’s great to bring these people on one hand and the founders on the other hand. It’s great to have that range in the investor base. That’s for the benefit of the founders, but it’s also a mutual benefit that our investors appreciate the love.

Apart from that, the portfolio is an incredibly important aspect of the network. They’re really very central. They’re well-known among young founders and often are the go-to point to get advice. It’s a very good source of deal flow for us. That’s something that, again, comes back to that geographical focus which is a big advantage there.

Sramana Mitra: Are you chasing unicorns?

Harald Nieder: We have, on purpose, chosen to keep the fund size limited. That has a very huge impact on what you can invest in. With a smaller fund, you’re obviously in the position to invest in a broader range of companies.

If you look back, we have N26 with a unicorn status in our portfolio. But the fund would have a great performance record even without N26. We can take advantage of a very broad range of outcomes with exits.

But with any unicorn performance among the portfolio companies, it’s a very nice add-on. That’s the big advantage that you have when you’re investing with a smaller fund. You actually have a lot of exit cases that are somewhere in the $200 million to $300 million. They do have an impact on our funds, and they contribute to a very good performance of the fund. We had that in the past.

A lot of times, people say that it’s an interesting case. We don’t think that this will have enough impact on the fund size that we have. These are bigger funds than we have, but we had very successful exits with these investments and they had a high impact on our funds.

So it’s a very conscious decision that we took in terms of how we position ourselves with the fund size. That lets you take advantage of a much broader range of company performance.

Sramana Mitra: Yes, if you want to go after non-unicorn opportunities, you have to make a deliberate decision not to raise a very large fund. If you raise a very large fund, then you can’t go after the smaller opportunities. That’s just the reality of how the business works.

Harald Nieder: Absolutely. That’s just pure math. So we always look at the cases that have an impact on our fund size. We don’t get around the math that connects, essentially, the share that we have in that given portfolio company and our fund size. It allows us to invest in a bigger range of companies.

Sramana Mitra: All right. I understand what you’re doing. I would love to work together and see what comes up. We have a partnership around digital health and healthcare IT in Europe with the EIT Health Organization, which I’m sure you’re familiar with.

We do have quite a bit of insight into what’s happening in Europe especially in the digital health arena. I’m sure there will be opportunities for us to join hands on some of that.

Harald Nieder: Sounds good.

Sramana Mitra: All right. Thank you for your time.

This segment is part 5 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Harald Nieder of Redalpine Venture Partners
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