investment-strategy2

We are a Spanish independent Venture Capital firm specialized in high technology ventures in the IT arena or closely related areas.

We invest in software, electronic systems, microelectronics, photonics, and medical devices.

The most relevant competitive advantage of our investees is having breakthrough technology which is the result of a previous R&D effort (years or even decades), and profound expertise in their industry.

This know-how is difficult to achieve by third parties (even big players with plenty of resources and access to human capital), sustainable over time and (desirably) legally protectable through patents.

With our current fund, we can legally invest only in companies originated and based in Spain.

No.

We are not interested in consumer internet projects. What we look for in the companies in which we invest is scientific innovation and disruptive, groundbreaking technology.

Our understanding is that internet related projects (such as vertical social networks, e-commerce sites, collaborative platforms, membership sites, web forums, marketplaces, catalogs, aggregators, etc.) are “users” of technology but their core value proposition is not technological.

No.

Although these projects have a strong scientific component and may be highly disruptive, we do not invest in areas totally alien to us and that we don’t understand.

There are projects on these fields where electronics, photonics and software are the core components. We do invest on these sort of projects.

There are also new materials or nanotechnology projects focused on other expertise areas, and here, as it is the case with biotech companies, we don’t have neither experience nor knowhow to understand them, so they are outside our areas of focus.

Probably not.

If the project is clearly content oriented and the value relies strictly on the content, the answer is quite clearly “no”.

We have invested in videogames companies in the past but not because of the content or the specific titles they wanted to develop, but due to the underlying technology (graphic engines, portability among platforms, etc.).

Bullnet Capital I was established in 2002 and closed with a size of 20 million €. Its investment term ended in 2007. The fund has been completely invested and we have made five investments with it.

Our second fund is Bullnet Capital II, established in 2007, and closed with a size of 30 million €. Its investment term ended in 2012. The fund has also been completely invested to date, and we have made six investments with it.

Bullnet Capital III was established in 2015. The fund is still open and we are in the fundraising phase until December 2017. We expect to close it with around 45-50 million €.

Our typical investment with our two first funds was a series-A of about 2 million € (more or less as we consider each case individually).

We reserve a certain amount of money for follow-on investments and to keep supporting the project.

In our third fund we have started to make some “proof of concept” investments, in the form of convertible loans of less than 500 K€, that will eventually be converted and complemented with more funds in a series-A round. In total, we could invest up to six or seven million in a single company.

Yes.

In fact, we have co-invested several times with other funds (both national and international) and business angels.

However, we always want to be the lead investor, devoting enough time to study the project.

No.

We believe the founders should be fully motivated and lead their projects during the first development stages and, if possible, beyond. Moreover, keeping control of their companies from both the corporate and operational point of view is not compatible with an investor having majority stakes from the beginning.

No.

We only do capital increases taking minority stakes.

Not necessarily.

Lack of commercial traction and/or profits is not a deal breaker for us.

In fact, if the company has already strong sales, is internationalized, or profitable it may be too mature for us, as we are an early stage investor.

We ideally enter when there is a tangible prototype or proof of concept that proves the technology is feasible, but it is still relatively immature to be called a “commercial version” of the product.

If the company has started to sell or do “trials” or “pilots” with some customers it might be a plus, but not a requirement for us.

For our typical series-A, our due diligence is relatively long as we devote several months to studying the project so that we understand it to the full. From our experience the whole process usually lasts around 10 months, without taking into consideration that there may be vacations in between and potential delays, and in this case, it could take some more time to completely close the round.

For a convertible loan of less than 500 K€ (our “fast track”), our aim is to be able to close the deal in about four months.

Once we decide to move forward with a project and enter into a due diligence process, we like to approach it “as if we were already partners”.

We try to add value to the project right from the very beginning, providing feedback to the entrepreneurs on the weak points or areas of improvement that we may see, and introducing them to people who could provide valuable feedback (experts in their field).

Our approach resembles a consultancy service “for free”, as we do that regardless of the outcome (the deal may not be closed in the end).

We follow a “hands on” approach to the management of our portfolio, going beyond the “formal” communication channels (board and shareholders meetings).

The relationship we try to establish includes frequent meetings, conference calls, and exchange of information with the management team, with the intention of being helpful (not a burden).

This support is particularly critical (and highly appreciated by the entrepreneurs) during the first stages of the development of the company.