You shouldn’t invest in people and businesses just because you like them – Interview with award-winning business angel Carlos Blanco

The award-winning serial entrepreneur and angel investor Carlos Blanco Vazquez is one of the best-known figures in the Spanish startup ecosystem. In over two decades of experience he has left his signature on more than 75 companies. Today, Carlos Blanco is also the Managing Partner and co-founder of Encomenda Smart Capital, a venture capital firm, while simultaneously being active as speaker, moderator, jury member and teacher at a great variety of business schools, universities, accelerators and events.

This week, we had the opportunity to talk with the winner of the ‘Best Entrepreneur Award in Spain’, and here is what he told us about his entrepreneurial journey and learnings as an investor:

Carlos Blanco is a well-known name in the Spanish startup ecosystem. Please give us a short overview about your journey in entrepreneurship and later on, angel investing.

I started my career in the Spanish digital tech sector in 1996. I founded several companies such as Sports Internet Factory, Grupo Itnet, Akamon Entertainment, which I sold at the end of 2015 becoming one of the most important exits of the year in Spain. I have also founded Conector Startup Accelerator and Nuclio Venture Builder, and, in 1999, I founded First Tuesday in Spain. Furthermore, I am one of the Board Members of Barcelona Tech City, the editor of the blog of reference for entrepreneurs www.carlosblanco.com and writer of the book “The main mistakes of entrepreneurs” (Los principales errores de los emprendedores). In 2017 I launched with my partners Oriol Juncosa and Miguel Sanz, Encomenda Smart Capital, a venture capital fund that invests in technology startups.

Your portfolio is impressive. Since 2005 you have invested over €2 million in 85 startups. What is your investing philosophy?

Frequently, when I analyze projects before investing, I focus on three key elements: the leader, the team and, later on, the market. For me, it’s crucial to get to know the entrepreneur before investing, such as his hobbies and career. My center of attention still being the person who’s leading the project, although it depends on the investing stage. A fund that invests from €300K, focuses on the project’s metrics and business plan, even though for those of us who have a business angel mentality, the feeling and intuition you have with the entrepreneur it’s so important.

Moreover, for me, it’s fundamental how much the traditional market moves, in terms of volume. Also, if the offline market is fragmented such as properties for sale, insurance, …, any business in which there is no leader in the traditional market and is poorly digitized. Here, there are countless opportunities.

Please tell us a bit more about your investment fund Encomenda Smart Capital and its investments focus.

Encomenda Smart Capital works as a Super Angel Fund where we invest in early-seed digital startups based mainly in Europe. Our initial investment ranges from €100K to €300K, with follow-on investments of up to €1.2 million per company. We focus on teams of 2-4 founders with complementary profiles. We don’t have a main focus on types of startups, we analyze both B2C and B2B projects and diversify in sectors, such as technology type and business model. Additionally, we provide our know-how and networks to help entrepreneurs make strategic decisions, scale their companies, create new business opportunities and prepare the companies for international funding rounds.

You are touted as one of the world-class entrepreneurs responsible for Spain’s startup ecosystem showing massive potential. How does the Spanish startup and investment ecosystem compare now to a decade or two ago?

Spain is the only country in Europe that counts two cities that are ranked in the top 10 cities for entrepreneurship: Barcelona and Madrid. Barcelona is ranked as the fifth ideal city for entrepreneurship, and Madrid just below. Moreover, the support of private initiatives, such as Barcelona Tech City, a non-profit association representing more than 700 companies from the digital and technology sectors based in Barcelona, collaborating with agents of the ecosystem: entrepreneurs, startups, corporations, universities, business schools, public and private organizations, consulting firms and investors, has allowed to consolidate the city as a technological hub and promote innovation among the different agents that make up the entrepreneurial ecosystem.

Barcelona is a great equilibrium between quality of life and good conditions to create startups such as low cost of talent compared to other Europeans cities, which makes a good place to develop a digital business. For this reason, countless companies are moving their centers of innovation and digital technology to Barcelona. And, in addition, many foreign entrepreneurs decide to create the base of their startups here.

With Nuclio you have introduced a different approach to venture building. Based on business ideas validated in other markets, you create the “ideal team” to run the projects together. How is Nuclio progressing and what are its major achievements?

Since I founded Nuclio with my partners Maria Hidalgo, Alex Díaz and Marc Torres, we’ve built 4 startups: Eelp!, Housfy, Brokoli and Finteca, and we’ve recently started developing 2 more projects, related to luxury and pharma sectors. Moreover, we’ve already celebrated four editions of the Nuclio Weekend where, as a result of the events, we have received more than 7,000 applications and we have generated over 200 jobs with all the incubated startups, together with the central services. The 177 entrepreneurs who have gone through the fourth editions, 18 have co-founded our companies. Our aim is to create between 3 and 4 new companies each year and generate 600 jobs in the next years, being able to gather ideal talent for each project.

The Barcelona-based accelerator Conector is another attempt to build and invest in digital startups. How is Conector different from other accelerators and what is the plan for this year?

It’s been 4 years since I founded Conector together with Elisabeth Martínez, Miguel Vicente, Gerard Olivé, Marc Vidal, Xavier Verdaguer, Marc Ros and Risto Mejide. We’ve managed to position Connector as one of the reference accelerators in Spain, in part, because of the “real mentoring” model, in which mentors who advise projects choose which startups they want to mentor and vice versa, committing 100% to the project. At this point in time, we have a network of more than 250 prestigious mentors.

Throughout these 4 years, we’ve accelerated 130 startups, which have achieved more than €50 million in financing. All these companies have created more than 1,000 direct jobs in the digital industry. In addition, we have carried out 3 vertical accelerations and 7 corporate accelerations. I have always argued that the model of corporate accelerators is the future and we will continue to bet on this. In fact, we aim to manage between 4 and 5 corporate programs per year.

The goal that we have set for this year is to continue offering horizontal acceleration programs, but also to position ourselves in vertical programs in the Blockchain and Travel Tech sector, with new headquarters in Palma de Mallorca. Note that, this year, we will also start, for the first time, accelerations outside of Spain in search of international talent.

Your book “Los principals errores de los emprendedores”, lists the failures that entrepreneurs often make when they set up their first business. What was the motivation to write the book and are you considering a second book?

“The main mistakes of entrepreneurs” (Los principales errores de los emprendedores) is not based only on my own mistakes, is a collection of the mistakes of more than 50 entrepreneurs who decided to share their failures with me. The main motivation was to transmit to the new generations of entrepreneurs the mistakes we have made over the years.

As a winner of the Business Angel of the year in 2014 in Spain and many more, what would your advice be to anyone who is considering becoming an angel investor?

To someone who’s aimint to become an angel investor, I recommend him starting as a follower, thinking of a minimum of 10 investments in 2-3 years, allocating 60-70% of the capital in those and investing the rest at a later stage in those of the 10 that have better metrics.

What is the main lesson you have learned as an angel investor?

As an angel investor, the main lesson I’ve learned is that you shouldn’t invest in people and businesses just because you like them. You have to be much more analytical, much colder, and when you put on your investor hat, you have to forget feelings, forget friendships, forget that you know people. The fact that it’s a friend’s project doesn’t have to be the starting point of the investment proposal. It should be started by the fact that the business is good. Even though intuition is very important to be a successful entrepreneur, you have to be careful not to let yourself get too carried away by passion.

Are there any memorable investment or outcomes that you would like to share?

My best investments have been Glovo and Exelweiss Entertainment, however, I believe that with Citibox or GOI I will also have a great return. For other investors in startups, investments in Trovit or Ticketbis have been disinvestments with very good returns.