Note: This article is the fifth in a series of interviews highlighting the work of interesting fund investors.
Daniel Ibri has over 10 years of experience as a venture capitalist, international management consultant, angel investor, M&A advisor and mentor for startups. Daniel has closed over 100 deals across 6 different countries and founded 3 VC funds. He is a professor of finance and entrepreneurship at INSPER in São Paulo, and member of the Entrepreneurship, Innovation and Seed Capital Committee of the Brazilian Association for PE & VC. Daniel is the Co-Founder and General Partner at Mindset Ventures, which invests in early-stage startups from Israel and USA.
Daniel, thank you for participating. When was the fund established, and is this the first fund you have managed?
Mindset Ventures started in mid-2016. I’ve been investing as a VC since late 2011 when I established my first fund under a different name and thesis.
What is the thesis of Mindset Ventures? Do you focus on any particular type of founder, company or industry? Are there particular types of startup companies you steer away from?
We generally invest in B2B software companies based out of the US or Israel. We look for companies that are early-stage but already have some kind of proven traction or revenue, normally around Series-A stage. We like investing in companies founded by at least two co-founders with complementary experiences and skills, preferably with previous experience and track-record in their industry or as former entrepreneurs.
Tell me a little bit about your fund size, stages you focus on, and your typical check sizes when investing in early stage companies?
Our most recent fund, the third one, is US$ 52M. As it’s only about one or two deals left, we have kicked-off recently raising our US$ 100M fund four. We can invest anywhere from Seed to Series-B, but Series-A (or around it, like bridges, extensions / convertibles, etc.) is our sweet spot as we look for companies with some revenue traction or proven product-market-fit. Check sizes usually go from US$ 500K in Seed to US$ 1.5M to 2M in Series-A / B plus follow-ons double that size over time.
What would you say are the main things that differentiate you from other similarly-sized VC funds?
We try to be very fast and entrepreneur-friendly, but I’d say our main difference is our strong connection to Latin America, especially Brazil, where we have a local team and have been helping foreign startups expand, hire and do business. We also have a dedicated Value Creation / Platform team, which is very uncommon for funds our size. The team is dedicated to help entrepreneurs from our portfolio with introductions to potential clients, fundraise their next rounds, hire executives, general mentoring on strategy and, of course, expansion to Brazil / LatAm. The team has also put together an online platform with almost 40 partners and service providers that offer software, services and other useful perks to our portfolio startups with discounts and special conditions.
Tell me a bit about yourself; what makes you good at what you do? Is there a particular experience or set of experiences in your personal history that you feel especially helped prepare you to be an investor?
First thing is experience. Startup investing is very tricky, and you could be easily taken by the hype and excitement for a given sector or industry. You actually learn by making lots of investments and mistakes, of course. By doing this for almost 12 years and having done 100+ deals in several geographies, I think I have a good eye to pitfalls and what could be really interesting and promising. Given my business formation and past experience as a strategy consultant, I normally can be more helpful on strategy, business models and growth strategies (other than tech or other highly technical matters).
Tell me a little bit about your LPs?
It’s a mix of high net-worth individuals, multi-family offices and corporations, mainly from Latin America.
Do you lead rounds or do you tend to follow other leads? Do you have a preference and, if so, why?
We always follow / co-invest with funds we know and trust. This is a good way to leverage our efforts and also reduce risks of adverse selection since we are operating in very competitive markets (US and Israel). We usually take an observer seat on the Board – we want to be there, know what’s happening and eventually be heard, but not have the burden of the formal board seat. We like to build our relationship with founders based on trust and value provided, not by contracts or formal board structures only.
Would you consider your fund an especially “active” or “value-added” investor?
Yes, even not leading the investments, we try to be very value add and dedicate a big part of our time in supporting our companies. As mentioned before, we have a dedicated value creation team that works only for our portfolio companies full time.
Are there some portfolio companies you are especially proud to be working with or simply would like to highlight?
I always like talking about Brex. Not only because it’s a highly successful and valuable ($12.3B) company now, but because they are amazing Brazilian founders whom I had the chance of meeting very early on and being their first investor in the previous company (Pagar.Me, another Fintech, in Brazil). After we sold Pagar.Me they moved to the US and started Brex, where we also ended up investing, even though a bit later on. We have other interesting successful cases that have expanded and built great teams and traction in Brazil with our support, like PayJoy, for instance, another great Fintech. Our first investment from the recent fund is a US company called Turing, which has also recently become a unicorn and has delivered an outstanding growth by solving a huge global problem of talent shortage in tech.
What are the most important ways you would say the investing world changed during your time as an early stage investor? Looking ahead in the area of early stage investing, what are you most excited about? What keeps you up at night?
The ecosystems have evolved a lot. There is much more info, data, best practices and education available now than 10+ years ago. Founders and funds know the standards of the market and move much faster, especially as the amount of money available for early-stage investments has grown exponentially over the years. I’m very excited about new technologies that could be potentially disruptive, like blockchain or Web3 related companies. What keeps me up at night – normally hype, crazy valuations and some bad stories we hear on the market. Startup investing is amazing and has a clear potential to impact lives, generate lots of jobs and change the world. But every other time you hear about a crazy startup that grew too fast and exploded (with lots of investors losing money and lots of employees losing their jobs), or even cases of harassment / prejudice / issues with diversity, which are still real problems in this industry.
What tips would you pass on to someone getting started/raising their first fund/making their first investment?
Be more afraid of losing a great deal than investing in a bad company.
What's the greatest advice you received about early stage investing?
You will only learn by losing some money first.
If you could give entrepreneurs one piece of advice about working with you or your fund, what would it be?
Know exactly what you are looking for, how we can help, and optimize the time on the relationship. Don’t waste time with things that aren’t important or where we can’t clearly add value. We would be happy to contribute and help the company grow, but a clear strategy is key.
Stay tuned for additional interviews as The Seraf Compass continues to profile interesting small funds, impact investors, women investors and family offices.