Javier Avellaneda on the importance of network collaborations and funding for start-ups

Javier Avellaneda is Portfolio Manager at Mobile World Capital Barcelona. Most of his career has revolved around the venture capital industry, working for companies such as Active Venture Partners, Inveready Asset Management and Strands. Javier talked to us about his experience and responsibilities and highlighted the importance of The Collider’s ongoing support for tech-driven start-ups.

What does your current role as Portfolio Manager entail?

My work as Portfolio Manager starts when we begin the process of creating a start-up.

Various actors are involved here: from entrepreneurs and scientists to research centres to universities. I deal with the founding of companies and ensure that the structure of partners and their pacts maintain a balance. I also help with tech transfer and coordinate the legal procedures until the company is up and running.

 

Once a company is up and running, we at The Collider offer different lines of support to help them move faster and face fewer difficulties. For example, we have an interesting offer of advantages and perks that come from our extensive network of collaborators, which we channel to the start-ups. These include free or discounted services from IT platforms, consultancies, public grant consultancies, and marketing and communication services, amongst others. In addition, we connect start-ups with corporations so that they can continuously validate improvements in their products or services as well as their value proposition.

How long does The Collider’s collaboration with a start-up last?

This is an ongoing process, which usually lasts from three to six years. At the beginning, start-ups are very small entities which do not have the necessary resources and, at times, are lacking in experience – two things that are needed in order to grow rapidly. Our mission is to fill this existing gap in terms of funding and experience, in addition to providing them with access to our entire network of collaborators and contacts. We become partners with a start-up throughout its evolutionary path and exit once the company is mature.

How did your time at Inveready and Strands in Corporate & Strategic Alliances involve working with start-ups?

I joined Inveready in 2008, when there was only one committed investment. In fact, excluding the founders, I was the first worker to join the team. I dealt with the company’s financial, administrative and legal aspects, in addition to working in investor relations. At first, the workload was low, so I was also able to continue carrying out analysis and investment in companies.

 

In 2014, we were involved with about 50 companies. This gave me contact with different business models in a wide range of industries, particularly in the field of start-ups. During this period, I was able to consolidate my network of investors while having the chance to co-invest with many well-known investors in Spain. This has facilitated my position as a manager at The Collider. I know exactly what type of company profile each investor is looking for, as well as their selection criteria and the best time to present a project to them.

 

My experience at Strands was different since it is a Fintech company with offices spread out around the world. Our goal was to find a partner who wanted to acquire most of the company and help us consolidate its international expansion. Using a seller’s point of view, I was in charge of presenting the company to investors and multinationals. Thanks to this, I had the opportunity to have contact with an extensive network of American, British and European venture capitalists and multinationals.

Now you have decided to work mainly with SMEs, rather than large multinational companies. What led you to make that decision?

In 2005, the venture capital industry was consolidated in Spain and investment in early-stage companies began to grow. Back then, the word ‘start-up’ wasn’t as fashionable as it is now, and working with them wasn’t so encouraged either. However, investment in these companies appealed a lot to me, and I was fortunate enough to work with Active Venture Partners, an investor specialised in start-ups.

 

Working with start-ups allows you to be in contact with many technologies, innovative products and business models, while also being able to live in an extremely dynamic culture that continuously adapts to change. In its entirety, it is a very enriching experience. Furthermore, knowing that you contribute to the creation of a new product or service that can improve society provides a lot of satisfaction.

What do you think is the biggest challenge currently for the tech transfer industry?

Tech transfer is easy when you develop a product to cover a particular market demand. And that is why I believe that part of our research must try to address the needs that currently exist in our society. The biggest challenge we have is to better connect research with the market.

 

The second challenge is financial. Many of our private investors do not have sufficient knowledge on how to invest in newly established technology companies. Many of our country’s investors focus purely on business metrics – such as good sales growth – when they have to decide on an investment. However, these metrics are non-existent during the first few months of a technology company’s lifespan, and as a result, they find it difficult to identify the right private investment. Our challenge is to look for expert investors who are willing to invest in technology companies in their early stages of life while ensuring more and more resources are invested every day.

How would you suggest that start-ups go about their initial funding, and what is your most important advice for someone looking to form a start-up?

I believe there are three main pillars to succeed as a start-up. First, you should focus on creating an MVP before looking for funding. The most important thing is to have a product that works and to be able to prove that they have created a product that is very relevant for their customers. Forty percent of start-ups fail because the product is not interesting enough for its customers.

 

Second, you need a team that works full-time. At first, the teams are small: they only include the founders who take care of all the company’s main tasks. That is why it is essential that they are passionate about what they do, and are fully committed to the project. If not, the chances for failure are very high.

 

The third pillar is to have a minimum initial investment, perhaps from family and friends or a business angel – complementing it with as much public funding as possible. There is a lot of funding programs for start-ups that are of great help in the early stages of life.

What has been a highlight for you during your time at The Collider?

Since 2005, I have been involved in seed funding, expansion capital and the sales of different companies. However, I have never been in this early phase of venture building, and I find it especially rewarding to work with colleagues specialised in this area. I am also glad that I can transfer my knowledge and offer practical advice to both foresee and resolve problems.

What would you say to start-ups and investors that are thinking of collaborating with The Collider?

The Collider offers a great opportunity to invest in deep technologies and companies. We dedicate at least six months to each project before creating a company. In this process, we conduct research and an in-depth analysis of all aspects of the business – from the technology and the team to the tech-transfer agreements it has with universities. We are improving every year and work with top technologies and entrepreneurs. In short, The Collider offers companies a seal of approval that provides security for corporations and investors who are interested in investing.

 

Also, Barcelona has a robust entrepreneurial community with plenty of international funding opportunities. There’s a great deal of talent in the digital sector, with our universities and research centres acting as a hotbed for new technologies. We also have a lot of support from the national, regional and local governments. Plus, the cost of living isn’t as high as cities such as London or Berlin, and the city is very well connected.

Deep-tech start-ups are disrupting the traditional innovation paradigms of multinational and well-established companies. What do you think this disruption consists of?

Although start-ups – and their eagerness to disrupt the market – have always existed, it has now become more noteworthy. Every day, there are many more entrepreneurs and start-ups releasing new products that compete with those of established and multinational companies. Generally, start-ups are faster at launching products in part because they don’t require agreements that need to go through multiple departments before reaching a final decision. On the other hand, especially in digital companies, products from start-ups can better compete with costs because they often work with smaller teams with lower wages than corporations.