First Closing, update and working with founders

A meta update

Hey there!

Great, you are around! After many weeks of working on things I could not share, I am finally ready to write my newsletter again. I have missed you and learned quite a few things about myself and what I am doing. The past few months were intense:

• one twin figured out that he wanted to study in Amsterdam, and the other one is happy in Zurich

• we raised funds for our new fund, HEARTFELT_ and did the first closing

• in all my different roles, there were changes in senior management we had to support and make happen.

Most of the things worked well, and I learned a lot. A lot of material for future newsletters. I learned that focusing only on one work dimension is unhealthy for me. I need to (and can) work on multiple things simultaneously. And I need time to reflect, and writing this newsletter is a crucial way to do this.

First closing of HEARTFELT_

We have done the first closing of our new fund, HEARTFELT_. I am super happy about this (see my LinkedIn post). We have started investing, and I look forward to building HEARTFELT_ over the coming years.

I will share more about how we built HEARTFELT_ and how our fundraising worked and is working over the following weeks.

How are HEARTFELT_ and APX connected?

I received many questions about how both funds and roles are connected, and it is pretty simple and a bit complex in the details. As you all know, APX is a joint venture of Axel Springer and Porsche. The team of HEARTFELT_ will manage the APX portfolio in the coming years. According to our investment strategy, APX invests in portfolio companies and has stopped investing in new companies.

All new investments are made by HEARTFELT_. HEARTFELT_ is a regulated venture capital company that “belongs” to the general partners, and the HEARTFELT Fund belongs to all Partners (general partners, partners, and limited partners). Both Axel Springer and Porsche are limited partners of HEARTFELT_, and they are anchor investors. More than 30 more investors have invested in HEARTFELT_ already, and for the following months, more investors will most likely join HEARTFELT_ as limited partners.

Comparing the whole setup to a “normal” VC makes a lot of sense: APX is the first fund focusing on portfolio development, and HEARTFELT_ is the second fund being built. In the future, there might be more funds coming.

The general partners of HEARTFELT_ are Henric and me, our Partners are Daniela, Onur, and Teddy, and I am super happy working with the team.

Working with founders

We get to work with many founders at APX and HEARTFELT_. And we are with them in good and in bad times. Luckily the founders of the APX portfolio are doing pretty well, and we see many financing rounds in our portfolio. But not all companies will make it. Statistically, more than 80% of startups are supposed to fail. So there is a challenge for me - and, more importantly, my young colleagues - in dealing with founders going through rough periods. I sometimes compare the attitude we should have with that of journalists: you need to have a certain distance to report on the most challenging topics. Our role is more active at times. Especially when we are the team’s first investors, we have to switch between different support modes quite often: Sometimes, we are operative supporters by connecting the founders with resources, and sometimes we are the governance body that helps the founders to do/ remember all the strategic initiatives and But we are always the investor and not the founders. I have looked deeper into how to systematize better how we work with the founders and how we can do this by keeping our energy level and balance intact. I think there are two main areas in how this can be achieved:

1. The allocation of our limited resources to be as impactful as possible
   We are working with more than 180 companies. Luckily not all of them need our support simultaneously. We use clustering to allocate our resources. More on this in another post.

2. Concepts to stay motivated, resilient, full of energy, and happy (vital to me and most of my colleagues) I have used an AI tool to summarize my notes I took over the last months:

   1. Emotional Intelligence (EI): This is the ability to understand, use, and manage your own emotions in positive ways to relieve stress, communicate effectively, empathize with others, overcome challenges, and defuse conflict. As an investor, having high EI can help you navigate difficult conversations with founders and provide support without becoming overly involved.

   2. Resilience: This is the process of adapting well in the face of adversity, trauma, tragedy, threats, or significant sources of stress. Encouraging resilience in founders can help them bounce back from failures and continue to strive towards their goals.

   3. Cognitive Behavioral Therapy (CBT) Concepts: CBT is a form of psychological treatment effective for various problems, including depression, anxiety disorders, alcohol and drug use issues, marital problems, eating disorders, and severe mental illness. The principles of CBT can be applied in dealing with founders, particularly in helping them to identify and challenge negative thought patterns and develop more positive and productive beliefs and behaviors.

   4. Mindfulness is the psychological process of purposely bringing one's attention to experiences occurring in the present moment without judgment. Mindfulness can help founders focus on the present rather than worrying about past failures or future challenges.

   5. Self-Determination Theory (SDT): This theory of motivation suggests that people are motivated to grow and change by three innate and universal psychological needs. These are the need for competence, relatedness, and autonomy. As an investor, understanding these needs can help you support founders in a way that aligns with their intrinsic motivations.

   6. Stress Management Techniques: Techniques such as deep breathing, meditation, and progressive muscle relaxation can help founders manage their stress levels during challenging times.

   7. Growth Mindset: This is the belief that abilities and intelligence can be developed through dedication and hard work. Encouraging a growth mindset in founders can help them see failures as opportunities for growth and learning rather than insurmountable obstacles.

These short blurbs could be posts in the future on how I (and we) apply them in daily life and work. Are you interested? Let me know.

What I read and watched

As I wrote initially, I did not have much time to read and watch over the last few months. On the weekends, I spend time outside with my family and camera(s). When I read or watch things, I watch many Youtube videos on photography (an old and new hobby) and read many contracts and other materials regarding my different roles. Here are a few topics I enjoyed reading and learning about:

• I read about OpenAI, ChatGPT, and Google Bard. And I played around with them and used some features to get things done and do some research. I figured it is essential to have a basic understanding of the fields I use them in as they tend to hallucinate quite a bit. And I see massive potential in their application.

• Many newsletters and pieces about the chances and dangers of AI and its application. Summary: no one knows what to expect and what will happen. And it is one of the most important and exciting topics around us. I am learning every day.

• (Re-)Learning analog photography after I bought an analog camera.

Thank you for reading this far, and looking forward to sharing more in the future. After this meta update, I will be more specific with more links in the coming weeks.

Have a great week

Joerg