Berlin-based fund, Fly Ventures recently closed a $41 million fund, and is working on an artificial intelligence tool to hunt for investments. The firm is headed by co-founders from blue chip venture capital and technology backgrounds and a software engineering team of ex-Googlers, which places it in a unique position to disrupt venture capital.
Fly Ventures is using AI and machine learning to identify, evaluate and support investment targets.
Fly Ventures’ three partners, Stephan Seyboth, Gabriel Matuschka and Fredrik Bergenlid created the company to disrupt the early-seed venture capital industry in the way that artificial intelligence is predicted to disrupt other sectors that are heavily reliant on repetitive tasks, data gathering and processing. Using its technology Fly Ventures is able to find and approach startups with a digital footprint, long before they go out to fundraise for the first time.
Fly’s software currently finds more than 1,000 new companies a week. About 60 per cent of the start-ups that the firm speaks to have been approached cold by Fly. So far, the fund has invested in 11 companies, taking stakes in businesses that are raising between $1 million to $2.5 million. The ultimate ambition is to create a company that can bring scale to early stage investing in the way that artificial intelligence and machine learning are bringing scale and automation to all other sectors.
Fly Ventures’ latest fund has attracted LPs including the European Investment Fund, Korelya Capital and several family offices from Europe and the US.
“Venture capital investors preach innovation and disruption and tell us that software is eating the world yet when it comes to their own industry they believe that it is exempt. We believe there are significant opportunities for automation here as well,” Stephan Seyboth, co-founder and general partner at Fly Ventures, said. “We think that artificial intelligence will remove the mundane parts of many jobs and that includes sifting through vast numbers of leads, to find appropriate startups to invest in at seed stage.”
Fly Ventures takes a thematic approach to investing and is strongly focused on artificial intelligence companies that have a high degree of automation through software. The vertical sectors Fly has invested in including finance, HR and recruiting, mobility and health. It is also investing in enabling tech and platform businesses.
Gabriel Matuschka, co-founder and general partner, believes that automation can plug a lot of gaps in the sector. “There is a funding gap in Europe at the seed-stage which causes problems for entrepreneurs,” he explained. “They spend too long trying to raise funding when they should be concentrating on making their product work. By using technology at this point to get through a lot of sifting and evaluation, we can scale the seed-stage and help bring entrepreneurs to a successful series A fundraising with a top-tier venture capital investor.”
“Traditional early-stage investing relies on four guys sitting around a table, which limits the portfolio size to around 30. However, by using technology effectively we can handle a much larger portfolio. With more data, we can make better decisions and that means a better outcome both for founders and for the limited partners who invest in us.”
Recent investments made by Fly include Finiata, a financing company for SMEs, freelancers and the self-employed, which this week raised €18 million. They’ve also backed an AI-powered patient recruitment start-up, Inato, and Bloomsbury AI, which is developing technology to read legal, insurance and financial documents and answer questions on them.
The founders have worked at some of Europe’s biggest venture capital investors and tech companies. Matuschka, for one, headed up the Berlin office of Partech Ventures for three years. Before that he was co-founder of venture-backed TripHunter, which was acquired by brands4friends and eBay. Seyboth was formerly product manager at Google for seven years, leading products in Maps and Search. Before that he worked as a software engineer, engineering lead, and co-founder and CTO in different start-ups.