Today, we have with us Stephan Heller, Founding Partner at AlphaQ Venture Capital. AQVC is an innovative, evergreen VC fund of funds focused on small VCs globally and democratizing diversified access to venture capital.
Stephan is a seasoned tech entrepreneur and investor passionate about nurturing the next generation of innovative companies, developing robust platforms, and cultivating thriving ecosystems. Over the past 15 years, he has been deeply involved in the entrepreneurial landscape.
Stephan also co-founded five companies, including a leading deep-tech startup accelerator for one of the largest high-tech corporates in the world and establishing a successful and innovative VC fund of funds.
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This episode is part of the State of European VC Fundraising Report 👀
Together with our good friends at Isomer Capital and Floww, we’ve made a report filled with graphs, beautiful narratives, and video interviews, providing an entirely new and engaging experience on the topic that has us all traveling across the world ✈️
Chapters:
00:13 Diving Deep into AQVC's Approach
00:35 Stefan's Unique Framework for Evaluating Funds
03:24 The Criteria for Evaluating Emerging Managers
03:38 Alignment and Uniqueness in Funds
04:14 Evaluating First-Time Funds: Challenges and Strategies
05:09 The Hustler Mentality in Venture Capital
05:59 Building a Firm with a Vision
06:37 Technical Aspects of Fund Evaluation
08:26 The Journey from First to Second Time Funds
09:03 The Role of Reference Calls in Due Diligence
10:46 Deep Dive into Track Record Validation
11:27 The Challenge of Investing in First-Time Investors
18:39 Evaluating Fund Performance and Strategy Execution
21:18 Understanding DPI Creation in Third Time Funds
24:04 Closing Thoughts and Future Plans
Key learnings from the conversation
Alignment with thematic mega trends
Stephan Heller emphasises the importance of aligning with AQVC’s identified mega trends, ensuring that the emerging managers they consider investing in are working within these long-term trends and not short-term hypes.
Portfolio construction and geographical fit
AQVC seeks to avoid overlap with their current investments, meaning a new fund manager must offer something different either in terms of thesis or geographic focus.
Uniqueness and expertise
There is a significant focus on the uniqueness of a fund’s thesis and strategy, with a preference for those that truly understand their sector, such as climate tech, rather than simply following a trend.
Hustler mentality and long-term commitment
Stephan highlights the necessity for fund managers to possess a hustler mentality and a long-term view, underscoring that venture investments often take longer to mature than the average marriage.
Firm-building vision
AQVC is interested in managers with the vision to build a lasting firm, not just a one-time fund. This indicates a commitment to growth and evolution in the venture space.
Fund modeling and ownership
For first-time funds, Heller looks for evidence of strategic discipline, such as maintaining ownership percentages and leading or co-leading investments, as opposed to following big names into deals.
Appropriate fund sizing
Starting with a right-sized fund is crucial for new managers, with AQVC preferring those who demonstrate the discipline not to overextend on their first fund.
Execution on promises
For second-time funds, AQVC pays close attention to whether managers have executed on what they promised, both in terms of investments and firm-building efforts.
Liquidity creation capability
By the time a manager is raising a third fund, Heller expects to see some capability for liquidity creation, suggesting that successful fund managers should engage in intelligent capital velocity practices like partial secondaries or early M&A.
Deep due diligence with references
AQVC conducts thorough due diligence, including detailed reference checks, to validate track records and understand the real impact the manager had on successful deals.
For first-time managers without track record
Heller states that AQVC does not invest in first-time investors and suggests that aspiring managers build their track record within an existing VC firm.
Expectation management
For third-time funds, Stephan explains that while a 1x DPI towards the end of the fund’s life cycle would be acceptable, a complete lack of DPI might raise concerns, particularly if the underlying assets are heavily hyped with complex financial structures.
🎓 Upcoming Academy Sessions
🌍 Virtual | 📅 Thursday, May 16 | 🕰️ 11:00 AM - 1:00 PM CET
An advanced session on creating a VC fund model assumptions sheet, focusing on defining Core Assumptions, Asset Development, and Equity Valuation Dynamics. Attendants will receive a template and work with this based on their own fund and learn how adjusting assumptions influence fund performance.
👋 Upcoming in-person events we’re hosting
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Fund Modelling Workshop & Mixer | 5th of June | 🌍 Berlin, Germany | Join waitlist.
European VC Awards | 4th of June | 🌍 Berlin, Germany | Get tickets.
📅 Upcoming virtual events
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🏆 Firesides with the winners of the European VC Awards
Fireside with the Newcomer of the Year Winner | 13/6, 12-1:30 PM | Register here. Hundreds of new VC funds come to market every year. But only ONE will win Newcomer of The Year. This is your chance to meet the winner firsthand.
Fireside chat with the Winner of the Hall of Fame | 25/6, 12-1 PM | Register here.
Hear firsthand from a true giant upon whose shoulders the European tech ecosystem stands tall.
🗓️ The VC Conferences You Can’t Miss
There are some events that just have to be on the calendar. Here’s our list, hit us up if you’re going, we’d love to meet!
0100 Conference CEE 2024 | 📆 14 - 16 May | 🌍 Prague, Czech Republic
Iceland Innovation Week | 📆 15 - 16 May | Reykjavik, Iceland
EBAN Congress Tallinn 2024 | 📆 20-22 May | 🌍 Tallinn, Estonia
SuperVenture | 📆 4 - 6 June | 🌍 Berlin, Germany
Nordic LP Forum & TechBBQ | 📆 September | 🌍 Copenhagen, Denmark
North Star & GITEX Global | 📆 14 - 18 Oct | 🌍 Dubai, UAE
GITEX Europe 2025 | 📆 23 - 25 May 2025 | 🌍 Berlin, Germany
Trying to get in front of European VCs and LPs? The 2024 EUVC Media Kit is out - check it out here, and let’s talk. 💌
On picking & diligencing emerging managers with with Stephan Heller, Founding Partner at AQVC