Antler: The Venture Capital that is Driving the Next Generation of Tech Companies
qLegal Students Elisabeth, Elisa and Elga had the pleasure of interviewing Youri Doeleman, Partner at Antler Netherlands. Antler is an early-stage Venture Capital (VC) firm that invests in the world’s most exceptional founders. Find out how Antler is turning brilliant individuals into internationally successful founders, what it takes for a start-up to be successful, and how to address the main legal challenges in the start-up world.
qLegal is delighted to have had the opportunity to interview Youri and learn more about Antler and its unique approach to talent acquisition and business-building.
1. Who is Youri Doeleman and how did he enter the start-up world?
Youri Doeleman was born in Amsterdam and raised partly in Mozambique. Before joining the business world, Youri obtained a degree in Cosmology at the Kyoto University. After completing his studies in Japan, he wished to engage in a field which he felt was more relevant to society. He then dived into the business world in 2011 and joined McKinsey & Co. as an Associate Partner. He focused his efforts on accelerating the digitalisation of large corporations in the telecom and banking industries. After a few years, Youri entered the start-up world and joined Antler in 2018 by launching the company’s Amsterdam office.
2. What is Antler and what makes it unique?
The majority of VC funds look for existing companies to invest in. Although these companies are often still very young, they are already established (e.g., they have a team, a product, customers and revenues). Unlike other VCs, Antler operates at the earliest stage of the business cycle and enables founders to create the defining companies of tomorrow. Antler recruits great individual people, and provides a platform to help them build a team and validate their business model before the company has even launched.
The founders who join the Antler network apply as individuals, as their businesses haven’t yet been established as a formal legal entity. After a diligent screening process, the top 2–3% of founders are selected to join a cohort which is launched every 6 months. In that cohort, an 11-week period of collaboration begins between the selected founders and Antler, during which different configurations of teams are tried out and various market ideas are tested. Both parties work closely together on a full-time basis before joining the investment committee (which consists of Antler’s partners, global Antler colleagues and external capital investors).
This process has shown to be very successful for both founders and investors at Antler. Indeed, founders have a greater chance of finding a relevant and complementary co-founder from the Antler cohort than finding one in their own network. From an investors’ perspective, Antler has the advantage of knowing which people can execute and learn in an effective way before it even decides to invest in the start-up. This allows Antler to make better investment decisions and create high-quality teams at a very early stage compared to other investors. Antler also teams up with other VCs to invest in the selected start-ups.
3. What makes a good team?
Building a good team prior to the launch of a company is essential. According to Youi, a good team depends on both individual founders’ criteria and team criteria.
- On an individual level, a founder should have various skills. This includes not only technical expertise, commercial practice (e.g., sales and marketing or people that have been operational for fast growing companies) and domain expertise, but also resilience, motivation and great communication. During the collaboration stage, Antler observes and gives feedback to founders. It is essential that founders are able to receive the feedback and adapt accordingly.
- On a team level, Antler is looking for individuals with complementary skills. Another crucial aspect is chemistry and dynamics between founders. Team members must get along well. Thanks to its 11-weeks program, Antler is able to observe the teams every day and consider whether good chemistry is present.
4. How can start-ups resolve the funding-traction issue?
Following formation, start-ups sometimes face the obstacle of having a lack of “traction”. This lack of traction is often the reason why start-ups struggle with raising capital. Traction is an initial progress of a start-up and the momentum it builds as it grows. According to Youri, one way to gain “traction” is to speak to customers to gain constructive feedback. Teams working consistently with customers will achieve greater improvement and success, by adopting a customer-centric approach.
Before any investor will invest, depending on the ecosystem, businesses need to have some form of customer validation. So gaining traction will help start-ups raise new capital. Also, timing is crucial in capital raising. It is important to identify which investor is relevant to which stage of the start-up.
5. What are the key legal issues for start-ups at an early stage?
Even at an early stage, start-ups could still face major legal challenges. Generally, there are no mandatory legal checks start-ups need to comply with at their launch. However, for businesses in specific sectors, such as small fintech businesses, specific regulations need to be complied with. More generally, start-ups should be aware of the following early-stage issues.
- Intellectual Property (IP)
From an IP point of view, not all start-ups are aware that they create and own intangible IP assets in their first years (such as their brand trade mark, copyright in software they create, or general trade secrets). So IP is not usually one of the first matters addressed by start-ups.
However, if IP rights are part of a transfer process from co-founders to the start-up, or if the start-up has come up with original work, for example, it is best practice to define the ownership of that IP at an early stage to avoid later disputes between the shareholders. For instance, start-ups can license or assign the new IP rights to investors in exchange for funding. It is also crucial for start-ups to agree on who is going to pay for potential IP expenses, such as an application to register the IP, and who will be responsible for keeping the IP rights valid.
- Transfer of Shares
Another potential issue is the existence of a fragile relationship between the business and its founders. Usually the investors who decide to fund a company want the founders to remain in the company for a few years. So founders must consider the consequences of a transfer of shares to another entity. It is good practice for the termination clause in the company’s Articles of Association or the shareholders’ agreement to make clear whether the founder may leave the company. It is a very delicate matter as the law varies in each jurisdiction and if it is not agreed at an early stage, it could result in court proceedings.
- Employee Shares/Stock Options
Given that start-ups do not yet have the funds available to pay their employees’ salaries, but do need extremely driven and talented people, they often use equity (shares or options) as an additional incentive to hire great talent. Depending on the jurisdiction, the technicalities and especially tax aspects of issuing such shares / options can be complex and disadvantageous. So it is important for founders to take this into account when setting up their company and structuring their employment contracts.
- Company Valuation
A company valuation is usually required in the event of share transfer or issuance of new shares. However, it is very difficult to determine a company’s valuation at an early stage. Share transfers usually include documents confirming a specific valuation for the company. If the valuation is initially determined too high, and does not reflect its potential, investors will be reluctant to complete the investment. As a result, investors need to decide how much they would like to invest in the company.
There is no general rule on valuation. However, according to Antler, a start-up should find a valuation matching the amount it needs to achieve its goals. A start-up should not aim at achieving the highest valuation because it will not increase its likelihood of success. Instead, the start-up should find a valuation which will enable it to achieve its goals and which is sufficiently reasonable to attract investors.
In closing, developing a start-up is never easy and founders may face many challenges. Antler helps founders in their start-up journey by supporting them in developing and launching their company. The VC platform also connects founders to a top-tier network of advisors and experts worldwide.
Are you an exceptional individual looking to start your own business and do you have that extra spike and determination? Antler’s program could be the leap you have always been looking for. Learn more about Antler and their program on their website https://www.antler.co/.
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This article was written by Elisabeth Vleurinck, Elga Subiakto and Elisa Licata, student legal advisers at qLegal. qLegal is an award-winning pro bono service providing free legal advice to start-ups and entrepreneurs on intellectual property, data protection, corporate and commercial law. More details on how to book your appointment are available on the qLegal website. Follow us on Twitter and LinkedIn for regular updates on issues relevant to your business.