Paris-based VC firm Daphni is announcing its inaugural fund for seed and Series A investments. The team will manage a $165 million fund (€150 million) and try some new things when it comes to venture capital in Europe.
On paper, Daphni looks like many other funds. A bunch of limited partners have given a big pile of money so that a team of tech-savvy people can invest everything in startups. But Daphni wants to work a bit differently with both startups and LPs.
For each investment, Daphni’s LPs will have the opportunity to co-invest with Daphni keeping the lead when it comes to board seats, carried interest, etc. But the trick is that a Daphni LP like Société Générale doesn’t have to pay any management fee for its own investments (obviously).
So let’s figure out the pros and cons of a strategy like this one. For the LPs, the pros are quite simple. It’s an effective discount on management fees if they take advantage of this opportunity. It’s a way to access a part of Daphni’s deal flow and educate your team when it comes to startups. It’s a way of saying that you love startups. And if you make the right investment decisions, it’s a way to financially overexpose yourself to successful startups.
The cons are that you don’t actually have a say when it comes to board decisions because Daphni doesn’t want too many cooks in the kitchen. As an LP, your investments are capped based on the total amount you put in Daphni’s fund. For instance, if Nokia invested $10 million in Daphni (I don’t know the exact amount), they can only co-invest $10 million in total with Daphni.
As for startups, there is one big pro and one big con. The big pro is that you can get more money more quickly, ending up raising more easily. The big con is that you have to be careful when it comes to sharing data with Daphni’s LPs.
On Daphni’s platform, you can choose not to share some info with specific LPs because you think they might compete with you or you don’t want them to know anything about your business. This opt-out feature will be key.
Talking about the platform, like other VC firms, Daphni has developed its own deal flow management platform. This way, companies can apply on Daphni’s website, LPs can decide to co-invest on the same platform, and Daphni doesn’t have to explicitly send emails to LPs for every investment opportunity.
Daphni has been co-founded by Marie Ekeland, Willy Braun, Mathieu Daix, Pierre-Yves Meerschman and Pierre-Éric Leibovici. The typical Daphni investment will sit anywhere between €300,000 and €3 million. LPs include super business angels and big companies, such as Bpifrance, Crédit Mutuel Arkéa, Société Générale, Fnac-Darty, Nokia, SWEN Capital Partners, ProBTP, MAIF, many business angels and more. The team also wants to host tech events and wants to develop a content strategy.
And that’s about all there is to know about Daphni for now. Obviously, the portfolio and the track record will be more important than anything else, but we’ll have to wait on this front. Named after one of Caribou‘s stage names, Daphni wants to try new things with a new LP-VC relationship with some strict rules, a platform for entrepreneurs, VCs and LPs and a colorful branding. In other words: welcome Daphni.