Nicolás Goulet (Mallorca, 1965) considers himself a full-fledged entrepreneur: he left his job as a well-to-do consultant to set up his own investment fund in the venture capital sector. He did it in the field of deep tech (entrepreneurship based on a scientific innovation with deep change potential) and in full bubble of the dot com. Adara Ventures is, almost 20 years later, a consolidated investment vehicle that has just finished the investment period with two funds totaling 95 million euros and a third that they are already raising.
Managing partner and co-founder along with Alberto Gómez de Adara, Goulet has been a member of the board of directors of 25 companies. The most common, says this entrepreneur, is to fail when it invests in companies in its early stages of development with technologies and business models that are yet to be tested, far from the typical investments in websites and apps aimed at consumers. "Venture capital is the business of making money by failing." That is his bet, with the sights set on Europe, cybersecurity and data science.
We saw that Spain compensates to invest in technology because there is a very high quality engineering and the cost of engineers is five times lower than in Silicon Valley. This is a competitive advantage to create companies in their early stage. If they are able to develop and attract foreign investment, they can compete globally, like AlienVault [una de sus invertidas]. Our thesis is cheap engineering as a mechanism to create value for our investors.
What is the profile of these investors?
We have recurrent investors, particularly institutional investors, such as the European Investment Fund. This is contributing between 20% and 40% of the fund. Institutional money represents approximately 75% of the total. The rest are private investors through family asset management offices. 40% of them have Spanish residency and the rest is shared between Europe, the US, Latin America and Asia. It is new foreign capital that enters Spain.
In Spain the 'I told you' persists before the ruling. Although 99% of entrepreneurs fail
Is it difficult to raise capital for this type of investment?
The concept is difficult to sell. It is required to retain capital for many years, with the promise of multiplying the amount invested. The risk is high, since a significant part of the investments will not have a positive result [en términos de retorno] and therefore the traditional conservative investment logic does not work. It is an alternative asset that is designed to be a small part of the estate with a possible high return. It requires, in the first place, a high level of confidence of the investor in the manager. They are also businesses with a high level of technical complexity and uncertainty about how it will work in the market, with other possible risks such as regulatory decisions. These externalities can impact a business in a brutal way, as is happening in Spain with Cabify. You can disappear from the market for a reason completely unrelated to you being the best in yours.
Is it more expensive to sell this type of investment in Spain?
Here is the addition that the concept is not yet fully validated. You have to get to the point where people are comfortable with this type of investment, which is more prevalent. In other countries, the choice is not whether to invest or not, but on what: to choose the best managers. It would also be convenient to eliminate some regulatory obstacles, such as those that investment funds have to choose this type of asset. Increasing the allocation of pension funds to this area makes sense because they are investments with a long horizon and with several generations. Investing in a single generation is more risky. It can go well or badly: even the best wine cellar can have a bad vintage.
What else could encourage risk investment?
A good measure would be to imitate the English model, with programs that allow the individual investor to allocate money to this class of assets and have tax benefits. The idea is to make money flow where you think is necessary for the development of the country. That is very clear and therefore deduct up to 75% of the tax bill to those who invest in small companies regardless of whether they have a lot of assets or little. In Spain, as in other countries, there is a psychological barrier; a social blockade of justification before the electorate for the fact of encouraging people to invest in what later appears in the media as pelotazos. Luckily this is changing. Everyone recognizes the dynamising capacity of these companies and the value they bring. Each euro placed in a company in the portfolio of a venture capital fund in technology is multiplied by six.
What criteria govern your investments?
We see between 500 and 600 projects per year and we take into account several factors. To begin with, the market has to be big and the technology has to be scalable and defensible. Defendible does not mean that it has patents but that that company with that equipment and that product is able to maintain its competitive advantage through a continuous process of innovation. It is not about having a very strong shell but about running very fast and maintaining the advantage. However, the most important evaluation for us is that of the team. There has to be a very powerful and inspiring vision that goes a long way to make a disruptive change. It must also have the ability to execute, attract the best and grow very fast to be a company with 100 million billings and thousands of employees.
A CEO must know how to delegate and have the capacity to self-criticize. It is not enough to be a genius.
What is the profile of the ideal CEO?
Must know how to delegate and have the ability to self-criticize. It is not enough to be a genius. Courage as a resilience is also fundamental, given the uncertainty in this type of company and process. People who are capable of making mistakes and transform it into learning, overcome it and go for the following. That they understand that success is not the product of a brilliant idea but of having tried many things. Knowing how to face risk knowing that you are going to make a mistake. The probability of doing it when you start is close to certainty.
Why invest in cybersecurity and data science?
10 years ago, talking about cybersecurity was talking about the Panda [un conocido antivirus]. Today it has developed and complicated in such a way that it has fragmented into several areas, each of which is a multi-billion dollar market in itself. It does not run the risk of being irrelevant and the ease of small businesses to create disruptions is enormous. The same happens in data science: the value of the data is increasing. As a trend is settling everything that is around you develops and needs to create industry and technology, business models … Even the RGPD (General Data Protection Regulation) creates need for new technology for its application.
And what about artificial intelligence (AI)?
AI is fashion now. It is a natural extension of data science and it is important that it be further developed to simplify the vast mass of data we have. But do not confuse having a lot of data with being intelligent. We have machines capable of answering almost as if they were intelligent, but they are not capable of extrapolating it to other areas. The AI is a fundamental element of automation of many processes that we are leaving in the hands of machines but they can not do everything. Even if they could, we would not leave them. We would not put our children in their hands.
How developed is the R + D + i ecosystem in Spain?
Besides that there is a lot of technical talent, the loyalty is much higher and the rotation that there can be in Silicon Valley here does not exist. On the other hand, the large Spanish corporations have a global footprint, especially in Latin America and the rest of Europe, and that helps a lot. There are not so good things. I would emphasize that we must learn to deal with failure. There is still that "I told you" before a failed venture, something that has no merit because 99% of entrepreneurs fail. They rely on their circle of trust and need to be encouraged to get up and continue. They have a fundamental function for society and we have to support them.
- The startups to follow, according to Goulet
Intelligent geolocation software that helps companies make business decisions. Goulet emphasizes that he has "a very successful concept and focus", in addition to good growth and "a very good CEO". "They are killing it", it states. [O, en castellano: están arrasando].
Artificial intelligence solution in the tourist area that helps hotels maximize their income according to demand. "We like their technology and they have very good customers. They have taken a niche and have managed to create a product that applies very well to it. They have the capacity to grow on a global scale, "says Goulet.
Data operations platform that offers real-time operational analytics and historical data to help companies drive sustained performance and growth. Goulet points out that it is a "very cutting edge" area. "We like its technology and it has a very interesting route," he says.
Company of data analysis in the area of advertising to maximize value for advertisers. "It's a spectacular company. It manages 4,000 million photos a month and does it in real time in a very sophisticated way. It has had a great and rapid growth since 2015, "says Goulet. It is one of those invested by Adara Ventures.
Product for the digital transformation of companies based on data and artificial intelligence. It is also invested by Adara and Goulet emphasizes that "it is a leader in technology in the field of big data"