Laurent Drion is the founding partner of E-Merge, a Belgian venture capital firm that invests in startups in Europe and USA (Cabify, Stormpulse, Spreedly, among others).
After a quick exchange of e-mails earlier this week (in which he also gave me some advices on things I had never thought about), I didn’t lose the chance to ask him to answer some questions on his activity and some new trends. He accepted and answered, …smartly.
FinSMEs: Who are you? What’s your background?
Laurent: I am an entrepreneur turned investor. I started my first company in 1990 at age 21 with my partner Gregory Hédo who was 20. It was a Mac mail-order business (no internet nor e-commerce at that time!). We had $6k of funding and we became profitable since year one. Five years later we reached $10m in yearly sales without having re-invested or raised any capital. We learned quite a bit about bootstrapping in the process.
When we saw the internet arriving in Europe in the mid 90’s we made our first angel investment in an ISP named Skynet. It quickly became the number one ISP in Belgium and was acquired after 2 years by Belgacom, the belgian incumbent operator. We made about 20x our original investment and this first successful investing experience certainly participated in us deciding in 1998 that we would create E-Merge and dedicate all our time to seed/early stage investing.
FinSMEs: E-Merge? What’s your investment strategy?
Laurent: We focus on three sectors: Telecom, e-Commerce Infrastructure (mainly payments) and space ventures related to the open-source CubeSat ecosystem.
We invest mainly in service business models, and we have a particular appetite for subscription based/SaaS models.
We invest as low as $50k per company and as much as $1.5m, generally spread on several rounds.
Up to now we made a little more than 30 investments, 2/3 of them as the lead investor.
In 2012 we started investing in the US where we currently have 11 active investments.
We invest our own funds form previous liquidity events and this gives us a lot of flexibility. And we are happy to stay with the founders as long as they are motivated to grow the business. No exit deadlines.
We like to think that we are among the most founder-friendly investors because of our previous experience as entrepreneurs. We try not to offer terms or make requests that we would not have accepted if we were on the other side of the table.
Patrice Decafmeyer, Grégory and I (the three E-Merge partners) are 100% dedicated to E-Merge so we are highly available for our founders.
FinSMEs: Entrepreneurs, what do you want to see in them?
Laurent: Focus, dedication, passion.
When a 3-4 person startup with 6-figures seed funding tries to take a bite out of the business of the big guys, the only way to have a slight chance of success is to have a team entirely focused on the project, a project focused on solving a limited number of issues, and founders animated by passion to fuel the mandatory months (or years) of day and night work required until they succeed.
FinSMEs: I know you made one of your latest investments – Spreedly – using AngelList. So what can you tell me about this experience? Repeatable?
Laurent: We made all of our 11 US investments thanks to AngelList. It wouldn’t have been possible for us to come across all these great companies without AngelList.
In my opinion, AngelList is the best tool ever to put entrepreneurs in contact with investors. And AngelList has contributed establishing a balanced relation between investors and founders.
Of course we use AngelList as a discovery tool and once the first contact is established trough AngelList we get back to business as usual: emails & conference calls with the founders to discuss the vision, the business plans, the terms of the deal etc.. And we travel to the US every 6-8 weeks to meet in person with the founders of our portfolio companies.
FinSMEs: What do you think about equity crowdfunding?
Laurent: I think that the key issue is how can you make sure an equity crowdfunder who is not familiar with investing can really estimate the level of risk he is taking.
I like the way Kickstarter does it: you pay for a service or a product but you do not get involved in the company. This way you are still somehow funding the company and helping it achieve its mission but you know what you will get for your money (most of the time at least..).
FinSMEs: Quickly, some trends.
Is the app economy over?
Laurent: The widgets excitation may fade out but really useful apps are here to stay.
FinSMEs: Is Bitcoin interesting?
Laurent: We think the regulatory aspects make it too dangerous.
FinSMEs: Are you fascinated by GoogleGlass?
Laurent: Before having laser surgery I wore glasses for 10 years. And I am never going back to wearing glasses !