A lot of work and not much time. That is a typical day for Carlos Blanco (Barcelona, 1968), who will only have lunch with an entrepreneur on a recommendation. "If they send me a message from LinkedIn, it will be just one of 20 emails I get every week with proposals for projects. Time is money and it is limited, you have to be selective."Blanco has been investing in startups for 10 years, mainly Spanish firms at a seed phase, the earliest stage of a project where sometimes there is no more than a PowerPoint presentation and a good team. In 2015 he sold Akamon, the startup he founded in 2011, for more than 23 million euros. "For the first two nights I could barely sleep," he says.
To his distinction as best entrepreneur, this year Blanco has added that of the business angel who invested the most money in startups in 2016, specifically 925,000 euros in 24 startups. "It is much more than I should have invested and if I had shown more restraint I would have been more selective," he confesses in an interview with VIA Empresa.
For how long have you been a business angel?
Since 2007. I set up the first startup in 1996 and made the first investment 10 years ago.
Why the transition from entrepreneur to investor? Is it a natural evolution for an entrepreneur?
It is the natural path for a successful entrepreneur. In the end it is a natural trajectory that appears when you begin to make money and you see business opportunities around you. It is when you decide to invest some of the money you make in the opportunities you like. Some 90% of entrepreneurs who sell companies end up investing in startups, or in a direct way as business angels or setting up funds or investing in funds.
Do you remember your first investment? No doubt it was in a friend's project...
Yes, the first six failed; they were very bad. At the beginning you make mistakes, one of which is investing in friends and projects you like. Gradually you discover that if you are wearing an investor's hat, you have to think from a financial and analytic perspective and not such an emotional one. Perhaps you have to invest in projects or sectors you don't care for, while when you are wearing an entrepreneur's hat you never start a project you don't like. The currency business does nothing for me and yet Kantox is going great guns. In other words, it would have been difficult for me to have set up Kantox, but I am delighted to be an investor in the company since its first investment round.
Don't you need special knowledge and to be an expert in the sector?
Not necessarily, it is impossible to know about all the sectors. I have participated in 70 companies, I can't know about all the sectors. However, you begin to specialise; I have invested in five companies from the world of accessories, for example.
What do Carlos Blanco's 70 startups have in common?
That when I invested there were teams I trusted 100%. You invest in talent and people.
Shouldn't we debunk a little the idea that the team is the most important thing? Sometimes it is more important that a car is fast than to have a good driver...
I don't agree. The team is key, even though a driver who is not in a good vehicle won't get anywhere. A good CEO without a team does not work out. A good CEO with a good team makes money. But the truth is that a good team in a business with a quality score of 6 is more profitable than a bad team in a business with a quality score of 9.
What requisites does a project need to comply with to get your money?
What I look for is a good leader, a complementary team with different profiles and that all of them are committed to the project. In other words, I will first invest in someone who has asked for an extension on their mortgage to put 50,000 euros into the project or who has gone two years without a salary so as to make software, than someone who is a millionaire and does not care if the project ends up working out well.
Do you stop listening if an entrepreneur claims not to have any competition?
Not normally. I give him a couple of verbal clouts to see how he reacts and if he still says he has no competition, there's no way I invest in him.
The entrepreneur and investor, Carlos Blanco. Jordi Borràs
You are the business angel who invested the most money in startups in 2016. Is 900,000 euros a lot or a little?
The most active business angels invest in 3, 4 or 5 companies a year, and invest 100,000, 200,000 or 300,000 euros, which is what I have done until now. Why did I invest more last year? Because I was fortunate enough to sell Akamon in November, I had money in the bank, you see projects you like and so you dive in. At the same I was calculating, 400,000 euros of the 900,000 invested was in companies I had identified in 2015. Also, a large part of the investment was reinvestment, as with Glovo, Deliberry or Heygo. Until now I only invested in opening investment rounds.
How many investments do you need to make to get one good one?
There is a standard proportion in the venture capital industry in general. For it to be a business with profitability of 20-25% annually, you have to achieve a really good return out of every 10, and two to three good ones. You have to multiply the really good one by a minimum of eight and the good ones by two or three times. That allows for 6 out of 10 to turn out badly, and the numbers to be profitable. I have been investing for 10 years: some 20% of the startups have failed, they are dead, and 10% are in intensive care with a poor prognosis.
What happens with the projects you invest in but don't work out, for example Viuing, which is in administration?
You forget about them. It is very important as an investor not to spend any time on the deceased. Put your time into projects when they are alive. The personal sphere is another matter, as in the case of Viuing, who I have breakfast with occasionally, and I offer my help. But when a company is doing badly, the most serious mistake an investor can make is to put money into rescue funds. In my experience most rescue funds do not do anything and the companies die off all the same.
When should you turn an investor down?
When you have enough money in the bank to carry out your business plan, either because you have turnover or because you have savings and the investor will not contribute anything more than capital. If you have money from the banks or turnover and this investor can contribute more than just money, I would let him in. In other words, you should never say no to smart capital. If I am setting up a business in the housing sector, I want Jesús Encinar, the founder of Idealista. If tomorrow I set up an accessories company, I would hope to have Lucas Carné (Privalia) as an investor, if necessary I would even invent an investment round just for him.
Where is 2017 going?
It is moving into a venture capital fund stage that I have set up together with Oriol Juncosa, Encomenda Smart Capital, a fund of 20 million euros to be invested in early startups and even early-seeds, in other words a startup with no more than a PowerPoint presentation and a good team. It is true there is more risk, but the evaluation is also lower. Right now we are at the stage of raising funds and we already have 50% committed. From July, which is when we hope the fund will be in operation, we will invest in some 15 companies this year.
Creating your own investment vehicle was one of the objectives for 2016. Is that also a natural path for a successful entrepreneur?
Yes, it is a natural path for a successful entrepreneur who was a business angel before. For example. Luis Martín Cabiedes had invested in 30 to 40 companies; it made sense that he would end up setting up a fund. All of us who have invested in dozens of companies, when we have got more money, both in the United States as well as in London and here, generally we have set up a collective investment vehicle.
