Spain has a new venture capital fund on the scene, and it’s already refusing to play by the rules. All Iron Ventures is today closing its first fund of €66.5m, the largest debut VC fund in Spain to date, and it’s done so without any help from public investment institutions.

For most first-time venture capital funds in Europe, winning the backing of the European Investment Fund, or a local public investment body, is crucial to getting a target raise over the line. 

All Iron Ventures decided not to even approach such bodies, as the fund managers managed to persuade private investors to stump up all of the cash. This, says cofounder Ander Michelena, gives All Iron much more freedom to capitalise on opportunity.

Flexibility

“We were able to get a fund that is much more flexible,” he says, pointing to the fact that public institutions often set an investment and disinvestment period, meaning that funds are often forced to sell prematurely.

“They look for certain periods of investment, five years investment, five years disinvestment,” he explains. “Imagine you’re a fund finishing in the middle of a financial crisis, you have to sell and you’re going to get shit returns. That’s one restriction of public money.”

Michelena adds that national public institutions, such as Spain’s Official Institute of Credit (ICO), generally insist that all investment is channelled into local companies. All Iron’s fully private LP base means it will have more freedom to invest internationally, as well as not limiting investments to any certain size of round.

“Our flexibility means we can participate in whatever we want, seed, Series A, B, C, in any country, and that wouldn’t be possible with public money,” says Michelena.

All Iron Ventures will be focussing the fund on seed and Series A rounds.

Spanish tech maturing

Most first-time funds in Spain are around 20-40% private money, according to Michelena, and he believes All Iron’s raise is evidence of a change in thinking from institutional investors.

“Speaking to family offices, we see that something has clicked: they believe technology is here to stay,” he says. “They see the Nasdaq and they see that the five biggest companies in the world are tech companies. They don’t understand it, they don’t understand how to operate in that world and they see us as a way to understand it.”

Michelena believes investors were reassured by the fact that he, his cofounder Jon Uriarte, and other private backers will be contributing a further €43.5m, via a separate privately backed vehicle, to coinvest alongside the fund, bringing the total capital to be deployed to €110m.

The confidence in All Iron is also likely due to the team’s pedigree. Before All Iron, Uriarte and Michelena in 2009 cofounded Ticketbis, an event ticket marketplace which the pair sold to Ebay for €165m in 2016.

The All Iron team also includes venture partner Iñaki Ecenarro, cofounder of classified ads startup Trovit, which he sold to NEXT Co. for €80m in 2014.

Michelena thinks that this experience will help them nurture a new wave of talent in Spain who will hold out from selling for longer.

“When we sold the company (Ticketbis) we were at €100m in sales, 25% margins, we were still growing 100% per year, and we sold to Ebay,” he remembers. “If I was in the same situation now, I would probably not have done it.”

Michelena now sees his role as helping young founders to be both patient and ambitious as they grow their companies.

“Second generation entrepreneurs are finally coming to Spain, and that’s changing the equation.”

“Second generation entrepreneurs are finally coming to Spain, and that’s changing the equation. There are entrepreneurs with much more ambition, they don’t want to go for a small company, they’re ready to wait and make something big,” he says. “Our role is to help them navigate that world and tell them to stay for longer.”

Michelena is keen to present his new fund as a global player, but is proud of All Iron’s roots in Bilbao. The city is beginning to catch up with Madrid and Barcelona, he says, as the local government incentivises tech growth.

More and more you’ll start hearing about startups from Bilbao and the Basque Country.”

“The Basque government put a big bet into the ecosystem, there are a bunch of subsidies for startups, they dedicated an entire building in the centre of the city to the tech world. They’ve made some incentives to bring VCs into town as well. More and more you’ll start hearing about startups from Bilbao and the Basque Country,” he predicts.

All Iron’s debut fund raise is a positive sign for Spain’s tech sector, in a year when a number of new funds in the country have helped calm nerves amid the pandemic. And as a second wave of Covid-19 sends countries around Europe back into lockdown, there’s never been a better moment for some optimism.

Tim Smith is Sifted’s Iberia correspondent. He tweets from @timmpsmith