Founded in 2001, Truffle Capital is a well-established independent European VC firm specializing in disruptive technologies in life sciences (medtech and biotech) and IT (fintech and insurtech) sectors. The fund's mission is to support the creation and development of innovative young companies capable of becoming tomorrow's leaders.
Chaired by Patrick Kron and managed by Dr Philippe Pouletty, Ph.D. and Bernard Louis Roques, co-founders and Managing Directors, Truffle Capital manages €500 million. Since its creation, it raised more than €1.1 billion and has supported more than 120 companies in the life sciences and digital technologies sectors, with half of them exited as of date.
In line with its DNA, Truffle acts as a lead investor in financing rounds and is proactive in terms of governance.
Fund Strategy Overview
Geography: EU
Preferred industries: fintech and insurtech
Investment ticket: €8M-15M
Company stage: from Series A to growth equity
Product type: Big Data, AI & Predictive Analytics, blockchain, Internet of things, mobile & cloud, cybersecurity, deeptech
Product stage: post-product
Revenues: >€5M
Q&As with Bozena Adamczyk, Partner at Truffle Capital
What are the 5 main things you look for in a startup?
The most important thing we are looking for is a very strong team that has diverse skill sets, domain expertise, experience as serial entrepreneurs and a track record of execution. It is important that the management is able to adapt quickly and pivot when necessary. We also look for market opportunities. We check if the market is big enough and growing, with clear demand for the product or service. Of course, we are looking for whether the startup is competitive and if there is a unique and innovative idea that solves a real problem or addresses a significant need in the market. What counts for us is also the execution strategy, meaning if the company has a well-defined go-to-market strategy, business plan, milestones, etc.
What disqualifies a startup as your potential investment target?
We disqualify the startup as a potential investment target if we notice a lack of alignment between the founders' vision and our investment goals, or if we see that the founders do not collaborate with us effectively. Overall, a strong and agile team is essential for us to consider a startup as a potential investment opportunity.
What in your opinion differentiates the best founders from the rest?
The best founders are the ones who have a clear vision for the future, can adapt in constant challenge. On top of that, they are effective leaderships that inspire and empower their team. Additionally, they demonstrate adept problem-solving skills.
What startups should take into account before making a deal with a VC fund?
Before making a deal with a VC fund, startups should consider several important factors such as alignment of values and objectives, assess their value added beyond capital, carefully review deal terms, and evaluate compatibility between the founding team and investors.
To me, the relationship between founders and investors resembles a marriage. So we need to be sure that it works well)
What is your approach to startup valuation and preferable share in the company?
We usually assume the lead or co-lead position in the funding rounds, therefore often securing most of the investment. Regarding the startup valuation, one method, among others, we employ involves examining current market valuations and adjusting them based on the performance of the startup that we are looking at.
How do you support your portfolio companies?
We specialize in the financial technologies sector, boasting a profound expertise in the field. Moreover, we have built the ecosystem of partners, fostering constant collaboration with our startups. This collaborative environment accelerates innovation and facilitates business scaling. For instance, the majority of our portfolio companies have greatly benefited from partnerships or investments from our network.
Furthermore, we actively support startups in their development journey. Our assistance includes various areas such as help with recruitment, market analysis, and strategic planning, among others.
What are the best-performing companies in your portfolio?
We currently have 16 companies in our portfolio. Most of them are performing very well, and we will soon see the results via coming exits.
What are your notable lessons learned from investments that didn’t work out as expected?
One notable lesson learned from investments that didn’t meet expectations is the importance of conducting changes as soon as possible. Upon detecting initial signs of issues, it's imperative to take proactive steps rather than waiting for problems to resolve themselves.
What are the hottest markets you currently look at as VC, and where do you see the biggest hype?
In the last 9 years, we are the consistent investor in the deep technologies applied to finance to drive responsible economic growth across Europe. We consider that this sector remains very attractive for investments.
In an uncertain environment, fintechs stand out and should remain one of the main venture capital investment sectors for the fourth consecutive year. Considering the global macro-economic environment, they continue to offer numerous advantages:
- A recent market: While the company PayPal is often cited as the first fintech created in 1998, the real boom in fintechs is much more recent. According to Accenture, annual investments in fintech firms increased from $928 million in 2008 to nearly $3 billion in 2013, a more than three-fold increase. In 2020, some $105 billion was invested in fintechs.
- Growing companies: According to the Fintech100 Ranking, conducted by Truffle Capital, revenue for companies in the sector increased by an average of 80% in 2022. While the trend is towards consolidation, the standout players now have significant revenues, giving them financial solidity.
- Major innovations to come: Fintechs have disrupted the banking and insurance market. Generative AI pushes financial innovation even further and brings new opportunities. These innovations concern both the B2B and B2C sectors. The market's magnitude is real, offering new opportunities to investors.
- Disruption is mostly carried out in partnership with incumbent players, not replacing them.
- Finally, the single market is fertile ground for fintech to expand across Europe.
In your view, what are the key trends that will shape the European VC scene in coming years?
After a significant decline in 2023, VC financing is expected to stabilize in 2024, though at levels lower than before the health crisis, reinforcing the trend observed across the tech sector more broadly. With interest rates not expected to experience significant upward movements during this year, we believe that financing will start to recover more strongly in 2025.
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