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Carlos Espinal: visiting Estonia has been built into the DNA of Seedcamp

Seedcamp has invested in over 250 companies. Many of their most successful investments have been into companies founded by Estonians.

9 min read

12 years ago, a group of European investors started the seed fund Seedcamp with the aim of finding the best European startup founders and helping them to build global businesses.

Seedcamp has invested in over 250 companies. Many of their most successful investments have been into companies founded by Estonians. One of them was FinTech unicorn TransferWise.

Many of the founders that Seedcamp first backed have joined with Seedcamp in their seed fund to invest in startups with the potential to become unicorns.

Carlos Espinal, the managing partner of the fund, talked to ‘Life in Estonia’ about how to manage the fear of failing, why they have backed many Estonian companies and whether Seedcamp would even exist without TransferWise and GrabCad, which have been two of Seedcamp’s most successful investments.

A guy that gives advice

Honduras-born and US-educated Carlos Espinal describes himself as the guy that founders call when they need advice. Now Espinal, just like the fund he manages, is located in London. To help answer many of a startup’s questions around the fundraising process he wrote a book called ‘The Fundraising Fieldguide’.

Seedcamp has invested in many Estonian startups. To name a few: TransferWise, GrabCad, Teleport, Monese, Erply and Nevercode. The last time Espinal visited Estonia was back in April, his next visit will be to Tartu in the end of January.

“When we started off, it was designed to be a platform where we could find the best European founders, no matter where they are, and help them build global businesses. From day one of Seedcamp, we travelled all around Western and Eastern Europe, we met a lot of different companies all over. That’s why we have one of the largest founder communities of people from everywhere; people from Romania, Finland, Estonia and Latvia.”

According to him, Seedcamp hasn’t limited themselves to just one location. In the early days, they clicked into various different communities and the Estonian community was one of the strong and early ones. Espinal says that is due to the success of many Estonian startups.

“All those relationships made a strong ecosystem. We nurtured that relationship. Estonia is the area that is constantly pushing the boundaries of innovation and there are very ambitious founders, so we love going back.”

Two of the biggest Seedcamp success stories have been TransferWise and Grabcad. Espinal is very aware that a huge part of the success of the European ecosystem is due to Estonian companies but just being from Estonia does not give a startup founder an advantage.

Does being from Estonia help a company out?

“It works differently. Just to give an idea. We have multiple investments in Estonian companies. If you look at how we have invested in them, it is not just because they are Estonians. The community is small enough that people can say: “Hey, a friend of mine was number two or three in this successful startup company. He is building something new; would you like to meet them?” It’s not so much that if you are from Estonia.”

Many of the startups that he has backed have had a connection with a previous company that he backed, some of the connections have not been the strongest and according to him it’s not a requirement to know someone who has taken part in Seedcamp.

For startup founders thinking of how to get in touch with a potential investor, Espinal sees that the best way would just be to get in touch directly. He sees that there is a fear when reaching out to a potential investor but at least he himself tries to be as available as possible. The utmost thing not to do would be to stalk an investor.

“The best way is through a common person and doing research. If the investor Tweets or blogs about the future of healthcare and you are working on a healthcare company, then it’s perfectly acceptable to reach out to them. Don’t stalk. There are times that is inappropriate. Most people know that there are times where it’s not socially acceptable. Know the focus of the investor or fund you are contacting. People have reached out for a series A or B round but our brand is about seed, it is difficult for me. Not our area.”

Failing is just a step in a journey

Although there are a lot of startups in Estonia, failing is still something that the general public does not aspire to. Espinal sees that failing should be looked at as merely a step in a journey and, in the last ten years, the negative stigma of failing has been fading. Nowadays.

“Estonians are very good at looking at something, putting their ambition toward it and getting it done. Being to the point about it and not trying to dress it up. Being direct about it. If you look at failure it’s a step in that journey. If you look at failure as an end point, I can see where it could generate fear. But if you look at it as a step you are less intimidated by it. I have seen in the last 10-12 years there has been a huge shift. I remember going to different countries around Europe, there was a lot more hesitation and fear. It came with a negative stigma, family and social pressure. But now that is changing. It’s gone down in my opinion. If failure is just a step in the journey it probably changes things.”

The limit to failing is right when it does not teach you anything new, says Espinal. He has had experiences with entrepreneurs that have failed with a business but have pushed on and have had successes later on. He can remember only two examples from the last 12 years where they have not been happy about how things were handled.

A lot of the times, failure can be attributed to a certain reason, for example, there wasn’t a market yet or the business was not monetisable; it does not automatically mean the founder did something bad.

Failing, social pressure and the sheer excitement of starting and running a startup has been documented in the movie “Chasing Unicorns” (‘Ükssarvik’), directed by successful startup-entrepreneur and investor in his own right Rain Rannu. Espinal hopes he can watch the movie while in Tartu in January during the Baltics’ biggest business festival sTARTUp Day 2020.

When values ​​coincide, business is done in both directions

Sten Tamkivi, the president of the Estonian Startup Leaders Club and Chief Product Officer of Topia (previously Teleport), a company that helps to move and manage global talent, sees that Espinal has great influence both in European and, more narrowly, Estonian startups.

As an ex-Skype employee and head of Skype Estonia, Tamkivi knows the backstory of how Seedcamp was founded and sees that Skype played a big part in Seedcamp’s beginnings.

“One of the cofounders of Seedcamp was Saul Klein (ex-chief marketing officer of Skype), which means that in the beginning a lot of early Skype people out of Tallinn were advising Seedcamp startups, investing in them etc. This, in turn, meant that from the outset, a disproportionate number of Estonian companies were on Seedcamp’s radar through our networks. Including TransferWise, which has been one of the best investments in the fund ever.”

According to Tamkivi, what makes this network special is that when values ​​coincide, business is done in both directions.

“I have been an investor in several Seedcamp funds, but when I started to raise money for Teleport, they were also the only European fund I called to invest in my company, because I wanted this collaboration to continue. The decision was probably 24 hours for them, if any.”

A few years later, Tamkivi was at a crossroad of several possible business lines.

“Spending a few hours with Carlos in London was what led directly to the partnership with Move Guides, and indirectly to their purchase offer and, what today, is Topia. Perhaps in this story alone, Carlos has “channelled” millions of euros and dozens and dozens of new jobs to Estonia. Some other investments like TransferWise or Monese have hundreds of these people.”

Tamkivi assures that Carlos is still a humble and warm Honduran guy you want to spend as much time with you as possible. For founders interested in him, he recommends reading his book on raising money.

“Then you do not have to repeat this base when you meet, but you can dive deep into the content right away.”

Being from Estonia is good but not necessarily an advantage

With the help of Seedcamp, Nevercode, a Google-partnered continuous Integration & Delivery service provider for mobile app developers, managed to raise 1.5 million dollars last year. The co-founder, Triin Kask, got her foot in the door thanks to a pitching event run by Seedcamp in Finland a couple of years ago where they won the event.

“Seedcamp is not an accelerator but an investor program. They are focused on helping you to find an investor and raise money. They help to make the business attractive for an investor. You still need to do a lot of the work yourself. You need to consult with people and ask help from mentors but they don’t offer a three-month-long accelerator program. For us it worked. Thanks to Seedcamp, we found an investor in London who has made follow-up investments.”

Kask got many contacts through Seedcamp and directly from Espinal. She sees that getting an investor without the help of Seedcamp could have been possible for them but they would not have managed to grow as fast as they did.

“Carlos has advised me greatly on different tactical choices for what to do when raising money. He has been of great help.”

Kask has recommended other Estonian startups to Espinal and is planning to introduce another really soon. She does not want to reveal the name yet.

“Many companies have asked whether they should contact Seedcamp and I have definitely recommended it. They have managed to keep the core very small, so that makes approaching them very simple. Another good thing is that there are a lot of other startups that have been in Seedcamp and are successful now and are helpful for new joining startups.”

As Espinal has said: being from Estonia is good but not necessarily an advantage.

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