VAUBAN was a premier partner for the “Startup to Scaleup – the Role of Business Angels” congress in Paris, 8 and 9 March. This innovative UK based company is looking to redefine venture capital investing throughout Europe – and we got an exclusive insight on what’s going on. We spoke with Gabriel Shin, Partnership Lead at VAUBAN about their ambitions, and how VAUBAN’s offer is a powerful tech stack to the operations of Business Angels Europe’s member networks.
What is VAUBAN?
VAUBAN is an investment platform that helps pool capital together from your investor network via SPV or VC fund to invest in the best early-stage companies while being able to earn carried interest. Invest in the private markets in a matter of clicks – the easiest way to launch an angel syndicate or venture capital fund online.
Removing the traditional barriers of entry
VAUBAN removes the traditional barriers of entry for European business angels looking to professionalize their venture capital investing. There has been an increased demand for European investments in early-stage start-ups leading to top opportunities becoming extremely competitive. As a result, founders typically prefer to have strategic investors and don’t want a collection of smaller cheques from several angels. By pooling capital together with other Business Angels into an SPV, angels can increase their fire power and get access to top deals that they couldn’t’ access unless they had a personal relationship with the founder. Angel networks have played an integral role in early-stage investments and are an extremely powerful resource to pool capital but also for sharing knowledge and experience to support the founders.
VAUBAN brings technology, legal, and financial expertise to bring great user experience to invest in the private markets while being able to earn a performance fee or carried interest like a venture capitalist. (Notably one of the sexiest job in the market). This activity has been predominately deterred due to high legal cost, as well as manual and administrative processes.
As a result of COVID and the push for digitalization, their automated platform has accelerated decision making and efficient capital deployment, which ultimately helps founders get back to building their business. This all serves as the driving force for innovation and growth in the EU start-up ecosystem.
Their view is that investors want access to the private markets and no longer want the traditional 60/40 stock/bond investment portfolio. They provide accessibility of capital to early-stage start-ups through their infrastructure that caters to a global investor base.
Across Europe’s myriad of borders
They are already very active in the European market especially in the DACH region. The DACH region has been extremely popular predominately due to the onerous process of having notaries, which has been extremely painful for both founders and investors.
Their SPVs are tax-transparent, which means any realized gains or losses generated from the start up investment will be taxed based on the investor’s personal tax jurisdiction rather the jurisdiction of the investment vehicle. This is great for the Pan-European investor base. Their goal is to focus on core jurisdictions such as UK, Luxembourg, and the US, which will enable them to serve a large volume of investors and cross border investments.
Adding value to existing networks
Vauban transforms traditional angel syndicate groups by providing a digital tech stack, which enables them to focus on more important aspects of investing such as sourcing quality deal flow, conducting due diligence, and managing relationships.
The platform allows Lead Angels to split carried interest in a number of ways to really leverage and incentivize their investor network from angel scouting to incentivizing domain experts to help with due diligence.
Business angels already have a great network of investors & deal flow but never explore the opportunity to be a Sponsor to their deals. The platform provides them with the infrastructure to earn carried interest and the upside for structuring deals. Additionally, the SPV model - allows them to diversify their portfolio and get access to higher minimum ticket opportunities without the high and onerous legal and administrative costs.
Lastly, they’re seeing a trend in the EU market, like the US, where founders want to maintain a clean cap table – which is fundamental to raising institutional capital especially in Series A and beyond.