Ernest Sanchez (Edition # 5)
Ernest Sanchez (General Partner at Nekko Capital)
(Ernest Sanchez, General Partner at Nekko Capital)
We are excited about today’s Edition of The Takeoff. Today’s interview is with Ernest Sanchez, General Partner at Nekko Capital. Nekko Capital is a European-based venture capital firm with offices in London, Madrid, and Barcelona (You can check out the firm’s portfolio, here). Ernest is based in the Barcelona office.
Ernest was an entrepreneur, himself, prior to joining the world of venture capital. Ernest was also previously a member of the board of directors at Glovo, a “unicorn” delivery startup founded in Barcelona in 2015. The interview took place via a phone call between Ernest and Michael Spiro (Founder at The Takeoff) in early April.
We hope you enjoy today’s Edition.
Michael: To start, what exactly is Nekko Capital, and what type of companies does the firm invest in?
Ernest: Nekko Capital is a venture capital firm with offices in Spain (Barcelona and Madrid) and London, so we have the capacity to manage funds. We are currently managing our second fund, which is fully invested, and are actually about to launch a third fund. We invest in companies based predominantly in Spain and the UK. We try to focus on five verticals, but we have a part of the fund that is opportunistic. We focus mainly on FinTech, TravelTech, Mobility, PropTech and InsurTech.
Michael: How large are the checks that the firm typically writes?
Ernest: We normally do from pre-Series A up to Series B, so we can say that the minimum ticket is around half a million and the max ticket is around two or three million.
Michael: Awesome! What was your background prior to joining Nekko Capital?
Ernest: I was an entrepreneur at the beginning of my career. I set up my first company when I was very young, right after leaving the banking industry because I decided that wasn't for me. I was an entrepreneur for about 12 years and helped set up several companies.
Right after that, I had the opportunity to jump into private equity. I was managing business opportunities in Latin America, particularly in Brazil, where I lived for a year and a half. I then moved to London and started working in venture capital for a London- and Israeli-based firm called Entrée Capital.
Michael: Do you have any favorite parts about being a venture capitalist? I'm wondering if you can maybe trim it down to one or two things?
Ernest: Being close to the entrepreneurs is amazing. I love to be an entrepreneur, and being able to help the companies with my experience, not only from the investment side, but also from the operational side is incredible.
Helping our companies reach their goals and, of course, bringing the perspective of the investment needs, too, is a very useful combination.
I also enjoy seeing a lot of industries and gaining a bit of knowledge about everything, which is very interesting because as a venture capitalist you see a lot of innovation around you in a variety of industries, so you're not just backing one single project. Rather, you see a lot of teams, innovation, and new technologies, which is something that I like.
Michael: Great! Are you on the board of directors of any companies? And if so, what exactly have these board experiences been like?
Ernest: We are about to launch a new fund, so I am currently just holding board observer positions in many companies. We currently have ten companies in the portfolio, some of which are in the TravelTech industry. Some of these companies are struggling a bit because it is tough times for the travel industry. I hold an observer position, not a permanent position as a board member, at a few of these companies.
The last company where I was a permanent member of the board of directors is Glovo. Glovo is a “unicorn” that is based in Spain but operates in a bunch of countries. Glovo is a delivery company, like Postmates.
Michael: I used Glovo all the time during my few months in Spain. You kind of touched on it there, but I'm wondering if you have any advice on how founders can best navigate today's markets with everything going on in the world?
Ernest: It's difficult right now. I have been reading a lot of reports and studies, but it is difficult to know what is going to be here to stay. I saw an interesting report about the industries that have been destroyed by this situation and the industries that are going to stay for even longer when things pass.
I think online groceries, EdTech, cloud gaming, anything that is logistical, such as last-mile logistics, healthcare, etc. are going to be here to stay. But, some of the companies that will struggle are in industries such as advertising, hospitality, retail commerce, and travel. These kinds of industries will struggle with the situation, but I don't know what will happen when it passes. It depends on how fast the market recovers.
Michael: I really like your insights there. What advice would you give to a student who is interested in either starting a company while still in school, or maybe starting a company after graduation?
Ernest: Starting a company, even when you are in school, is tough because you have to keep working on your homework and studies. That said, having the ideas and doing some collaboration is very good because it can help you know what the real business opportunity is once you graduate.
We have great examples of some very successful American entrepreneurs who left school because they launched their project. This could be an option, but I wouldn't recommend someone to leave their studies to pursue an idea full time because there are things that you may learn in school that can be very helpful down the road and helpful to articulating your own business.
It can be helpful to get involved with some projects and internships while you’re studying, and then post-graduation, maybe you can try to set up a company. Obviously, you can start a company at any time. It doesn’t need to be right after graduation.
Michael: I really love the advice there. For a student or recent graduate who is interested in eventually getting into venture capital, how important do you think it is to either start your own company or gain operating experience at a startup?
Ernest: I think it’s helpful to have experience in the venture capital community through an internship. As an intern, you can do a lot of research and gain an understanding of what is happening in the industry and what is happening in innovation. You wouldn’t be on a board or working on a potential investment, but you can learn a lot through an internship. Having the opportunity to scout or see a lot of deal flow is important because it can give you an idea of how companies struggle and how companies succeed.
Michael: These last few questions are on a little more of a personal level. Do you have any favorite books, movies, podcasts, or anything of that nature that have been a big influence on your life as a whole or on your work?
Ernest: One book that I like is Re-Imagine! Business Excellence in a Disruptive Age by Tom Peters. Re-Imagine! is a very good book and helped me imagine what a new way of work could look like. Another book that I like is Disciplined Entrepreneurship by Bill Aulet.
Michael: I'll try to give those books a read in the next few weeks as I have some free time in between online classes. The final question is, how do you stay physically and mentally fit given the high demands of your job at Nekko Capital?
Ernest: You have to stay mentally fit all the time. It is important to balance your personal life and business life.
Being in a fund is time-consuming. It's like doing a lot of different sprints, and it’s not necessarily constant. There are times where you are mainly just meeting with a lot of entrepreneurs, but then from time to time, it's a couple of weeks where you are absolutely overloaded, working on deals. Maintaining your physical and mental health is very important.
Michael: Thank you so much! Best of luck with everything!
Ernest: Awesome, take care!
** Please note that our interviews may be edited for length, content, and clarity **
Moderator: Michael Spiro (Founder at The Takeoff. Junior at Washington University in St. Louis. Incoming Summer Analyst at JMI Equity)
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