UNIIQ Fund Manager reveals the biggest pitfalls for founders & startups

In an open interview, Jasper Geselschap, the Fund Manager at UNIIQ, the successful early phase fund, shares the important pitfalls that block new entrepreneurs from being successful. With more than two decades of experience in managing companies in various phases of growth, Geselschap explains why letting go of control and building the right teams are essential for start-ups to be successful. The conversation is during UNIIQ’s 10-year anniversary celebration, which has. UNIIQ has already made a hundred investments in early phase innovations.

You have supported companies in different phases of growth for more than 20 years. What are the most important challenges that founders face?

“What you see in both SMEs with turnovers of 20 million and in start-ups is that the founders find it hard to let go and delegate responsibility. People who built a company right from their initial idea are used to doing everything themselves and in their own way. The biggest pitfall is that they then do not take the time to explain to someone else how it works. As soon as your company starts to grow, you should pass on the tasks and delegate. This changes your role. Many founders find it hard to employ experienced CFOs or sales team managers.”

“Something else that often goes wrong is that founders with technical backgrounds often concentrate on product development. They assume that if the product is sufficiently developed, the market will buy it. But apart from product development, you also need market development. And this is just as detailed a process as continuing down the technical route. And the outcomes of market development are far less clear. You do not have a physical piece of equipment that works, but need to gather information from interviews with customers. And this takes a lot of time. In all honesty, one major pitfall for start-ups is that they often do not have enough contact with their target group.”

So what can go wrong if you do not have enough contact with your target group?

“If you do not have that contact, you continue working on developing a product and put a lot of money into it. But after a couple years or so, while you may have a wonderful product, nobody wants to buy it. In the meantime someone else may have come up with something far easier that solves the problem too.”

Also read the full interview with Jasper Geselschap on UNIIQ.nl.

What do you most enjoy about your profession?

“As an early phase investor, you experience a lot of different technologies. You see useful up-and-coming products. At the same time you see experienced and less experienced entrepreneurs really going for it, doing what they want and standing behind something they believe in. That’s really great to see. Entrepreneurs are pleasant people.”

If you had to generalize start-up founders …

“… yes, they are stubborn people. People who do not like having a boss above them, and who have issues with authority.” He laughs. “They are people who want to change the world and just do it despite most people telling them that it won’t work. This is very special. You sometimes see this quality among top athletes or people who have gone through very strange survival experiences.”

Did you ever want to be an entrepreneur yourself?

“I think it must be very satisfying, but also very heavy. I would only do it when the children have left home.”

Venture building is a hip term at the moment, but what does it actually mean?

“The basic meaning is helping entrepreneurs move their companies forward. It depends on the phase in which a company is. In terms of start-ups, they need to develop their technology a bit further, and also need to assess their product-market fit. For UNIIQ it means bridging the riskiest phase, that of moving from concept to promising company.”

What role do you then play as an investor?

“As a coach/sparring partner for the founding team, you hold up a mirror to them, building on your experience of more than 100 companies in the UNIIQ portfolio. As you have seen countless companies struggling with the same issues, you can add a lot of value as an investment manager.”

Then you do need to know a lot of things …

“Yes, and this is what makes working as an investment manager so enjoyable. Not only do you need to know how founding teams, companies, and financing works, but you also need to know about technology and how the market sees it. This makes the work very challenging.”

If you look at deep tech proposals, in which UNIIQ invests a lot, the entrepreneurs really make their way into new markets. Just try to assess this in discussions with clients and if there may be someone in the future who would be prepared to pay for your basic technology …

“Yes, it’s really hard! This is unbelievably hard. So you do this through carrying out a huge number of interviews with a huge number of people. And by always adapting your questions and sharing all the information from the interviews with the founding team, you can create a vision of where the world is moving towards.”

Do you have an example of a company that is doing very well?

“One example is Samotics (Leiden) which is doing this really well. The company has a clear vision about the market adoption of their solution and about how SME companies will buy their products. They managed to do this by endlessly visiting their clients and walking around there. The understanding they attained about problems, decision-making systems, and sales opportunities helped them make their commercial approach scalable and reliable.”

You used to work as a banker at Rabobank before moving into venture capital. What can venture capital learn from the banking sector?

“In banking, there are very clearly defined frameworks that determine when you do or do not provide financing. In the venture world, those frameworks exist as well, but they are much less clearly defined. Decisions are often made during informal discussions between investment managers. As a result, you can lose a lot of time in venture capital on conversations with founder teams, or discussions among investment managers. By structuring those processes and procedures more tightly, it becomes easier to decide together: if it falls outside these criteria, we simply don’t do it.”

What role does UNIIQ play in the financing landscape?

“As a proof-of-concept fund, UNIIQ has a special place in the financing landscape. It gets involved at a very early stage and often also finances hardware deep tech companies. Over the years UNIIQ has built up a very good name on the market. There are a lot of entities, including commercial ones, that want to invest in UNIIQ companies. The UNIIQ stamp says it all.”

What does a UNIIQ stamp say?

“That the company in question was carefully assessed and is well managed by the team. The name UNIIQ gives credibility to companies. This should not be underestimated. Assumptions are checked, plans honed, and there is access to knowledge and experience that help bring the innovation forward.”

Under your predecessors, UNIIQ grew into one of the most important proof-of-concept funds in Europe. What is the next challenge for UNIIQ after 10 years?

“After UNIIQ’s 10 years we know what works well in the early phase. The core task remains reaching the right start-ups and giving them the right support at the right time. This means that we will continue positioning ourselves as the specialist in proof-of-concept financing. UNIIQ is now a recognized name and, with financiers and partners in the region, we are working towards growing the fund.

It is a privilege to be at the start of so many amazing companies, and an added value is that more and more companies will survive. Examples are VarmX, Smart-Ship and Quantware. We also want to make more follow-up financing available for our current portfolio of companies and will draw on our network to the utmost for this. This could include follow-up financing from the other three InnovationQuarter funds – where I also have good contacts of course – but could also be in collaboration with commercial funds which UNIIQ has close ties with.”

InnovationQuarter has four funds. Does having four funds under one roof have added value?

“I think it does. InnovationQuarter is of course more than just the four funds. We also have business development and internationalization under one roof. We talk to a lot of entrepreneurs and know the government very well. As we have a lot of people and a lot of contact with the market. More so than one fund with a couple of partners.”

Just a private question. You love sailing flat-bottomed boats. What makes being on the water so enjoyable?

“I just love being outdoors. And sailing is a wonderful way to experience nature, to experience the Wadden Sea or Friesland’s nature without an engine or noise. Sailing is a relaxed yet intensive way of being outdoors. You need to think hard and plan ahead, but sometimes you just relax at anchor.”

And finally, as a senior investment manager you could of course do a lot of deals. As a Fund Manager you also manage a team and manage stakeholders for stakeholder management in the community. How do you feel about this?

“For me, doing deals is a great part of our profession. I did a lot of deals during my Rabo Bank time at ENERGIIQ and the Rotterdam Energy Transition Fund. So I think it would be very enjoyable to coach other people in doing deals. And I draw on the experience I accumulated in RvC roles, where I worked a lot every day on stakeholder management for the great UNIIQ fund.”

Are you looking forward to the next 10 years?

“Enormously.”

From idea to the first market use

In 10 years’ time UNIIQ grew into the foremost specialist in early-stage financing in both Zuid Holland and The Netherlands. The fund invests in start-ups in the riskiest phase of their development: from idea to the first market uptake.

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