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#1 Iñaki Arrola: from struggling as student to building a car e-commerce, exiting to Banco Santander and founding €285M VC K Fund
Founder of coches.com (sold to Santander) and co-founder and Managing Partner of K Fund (Spanish early stage VC with +€285M AUM)
We are Pol Fañanás and Gerard García, two friends passionate and curious about tech, startups and VC sharing bi-weekly high value views from people creating the future. Thanks for reading !
Iñaki Arrola is the Founder of coches.com (cars marketplace sold to Santander Consumer Finance in January 2020) and Co-founder and Managing Partner of K Fund (Spanish early stage VC with +€285M AUM). Additionally, he spends time mentoring Seedrocket projects, the leading start-up accelerator in Spain. He has been involved in several deals including early stage Carto through Vitamina K (+$31M in funding by Accel & Salesforce) and Factorial through K Fund (+€18M in funding by Creandum & Point Nine).
Summary
👤 Brief intro: husband, father, founder, exit, VC
🥇 Win: trying things out, taking care of people, treating everyone well
🚫 Fail and lesson: lack of focus, bad hires, slow fires, business with family
🚀 Ideal founder: it changes but a good person, not just a good professional
💸 Ideal investor: do not interfere, genuine interest in the company
📈 Markets: agnostic, as many as your team’s valuable knowledge
🦄 3 startups: Bob.io, Mailtrack, La Gran Familia, Savana, Bloobirds
👍 3 investors: Samuel Gil, Staffan Helgesson, Beatriz González, Big Sur
📖 3 books: "Zero to One", "Delivering Happiness", "Venture Deals”
And now, let’s take a closer look !
Could you give us a brief intro about you and your origins?
I am originally from Madrid, married, and with four beautiful kids. I did attend a normal school (not fancy) and I have to say I was not a good student and struggled quite a lot with my grades. Eventually, when things started to get serious at university, I did all kinds of jobs to help myself make ends meet - from helping my dad to shooting photos at random weddings.
While working with my dad, he mentioned the idea of buying cars online (which sounded crazy back then). I thought it could be worth it to try and launched autodescuento.com , a car marketplace. Then one day, I casually came across a random post from Carlos Blanco mentioning the domain coches.com (cars.com) was for sale, a great one with significant potential. After advice from Marek Fodor (one of my early investors), together with my cousin we decided to contact Christian Chena, the seller, and try to get it without even knowing if we were going to receive an answer nor having the money to buy at the demanded price. But we wanted to build something better. Finally we got it and we did so. Fun fact, still today you can check the mentioned post and see that I wrote the first comment complaining about the domain being so great but not being able to pay for it.
It's important to say that I've been very lucky in life, even though I have failed a lot. Anyway, since coches.com was performing and delivering good results I decided to start investing in others' companies (2010) via Seedrocket before deciding with 12 friends to launch a private investment vehicle named Vitamina K (2011), where we managed ~€5M.
Five years later (2016) I launched K Fund together with Carina Splizka where we currently manage 3 funds (2 seed and 1 FoF):
K Fund I (€50M) and K Fund II (€70M) = €120M
FoF co-managed with Bankinter and Martin Varsavsky = €165M
Long term vision is to have funds in all categories to help entrepreneurs surpass all the stages in a business cycle (growth, venture debt, etc)
What would you say has been the biggest win in your life?
Trying things out. Even in spite of oneself. As simple as that. Would I be here if we hadn’t tried to buy a great domain that we came across at Carlos Blanco's post at a price we could not pay from a seller we didn't know anything about? Probably not. Back then we thought buying that specific domain was impossible but looking backward I believe that's when I learned we have to take chances. To succeed with your ideas we can’t forget there is an important factor of luck.
On the other hand, I would say that continuously taking care of the people in your network, treating everyone well and being polite, is an absolute must.
Related to the above, and your biggest failure?
My main failures have been not having enough focus, not knowing how to hire carefully and fire quickly, and doing business with family members. I could continue as I have a long list of failures.... I really like a phrase that Extremoduro said during a concert "I am going to speak to you with wisdom gained through failure" ("os voy a hablar con la sabiduría que me da el fracaso").
What is your ideal founder profile?
It's really hard to answer this question as founders evolve over time. You invest in someone who is 25 years old today and as they grow personally and professionally their approach changes. At K Fund, we do a lot of analysis of the persona. We try to understand their personal background in detail rather than make judgments exclusively on professional experience. We have taken decisions on people that turned out to be really bad... At the end of the day, maybe there is no ideal founder, each one of them is unique on their own.
What is your ideal investor profile?
We tend to overthink the ideal investor. To me, the ideal investor is simply someone that does not interfere with the founder’s decisions, has a genuine interest in the company, and does not put their interests over the project. Someone that helps what she/he can whenever it is needed. When you think about the life-changing events that are associated with a particular company, those are rarely triggered by investors but rather by the founder itself or the market.
What present and future markets are you most interested in?
I would define myself as an agnostic investor. I must be honest here and say that I think you tend to like those industries in which you have more experience. However, I try to add luck to the equation and relativize market preference.
Luck plays out a significant role. For instance, one friend of mine told me the other day about their smallest investment in a company, in which they got in randomly, becoming the portfolio company that was returning 1.5x of the fund.
As an investor, dealflow sourcing (picking the right opportunity) is crucial, but so it is fund dynamics (managing your money properly). Even though there are tons of us actively looking for deals, it's impossible to be experts about everything. Our job is to have enough knowledge about as many industries and technologies as possible, not otherwise.
Could you share with us 3 startups you like and why?
The companies we tend to like more are those that are changing how things currently work. LPs trust us to be contrarians, to invest in markets that modify how we behave in our day-to-day. For instance, Bob.io is a company we invested in that reinvents the way people travel by checking in your bags from home so you avoid airport queues. When you bet on contrarian companies you really have to time your investment decisions to match people's behaviour changes - if you invest too early, they can die before succeeding. Still, if you get in too late, you probably won't have a fund returner.
I also like the job Eduardo Manchon is doing with Mailtrack, which envisioned the need to control and track our email in a CRM-like platform and followed up with top-notch execution. On the other hand, La Gran Familia Mediterránea is a good one to follow. In our first fund, we had an investment in the same industry that didn't go well but we still think companies in the healthy food space are an interesting market and the founders are great. That's where we all, as a society, are trending to - a healthy lifestyle.
Additionally, I would like to highlight Savana, healthtech backed by Seaya and Cathay that uses AI and Big Data to improve health records processes, an exciting market. And Bloobirds, sales prospecting platform backed by K Fund that I think can bring a significant differential value to the sales game in case of succeeding.
Could you share with us 3 investors you like and why?
Nationally speaking, I really like Samuel Gil from JME Ventures. He is always committed, very analytic with numbers, supports the company and does not disturb. I guess that kind of shared values is what has lead us to co-invest in different companies.
In Europe, we enjoy working with Staffan Helgesson, General Partner at Creandum. I've seen them through thick and thin situations and their behaviour has always been exemplar. As an example, we wanted to learn from the best so we asked them to get together in their offices. Once there, we had the chance to meet the team and learn with full transparency. We were thankful and happy to see that other investors helped create a healthy ecosystem regardless of not doing specific deals.
Back to Spain, not just 1 more but 2 VCs I also like. First, Big Sur Ventures even though is a less known investor, always has the right advice and gives a lot of support to their companies. Second, Seaya Ventures is doing big things on later stages, I really like the work Beatriz, one of the founding partners, is doing and I hope their investments in Glovo and Cabify continue going well. We do need more significant bigger funds in Spain.
What are the 3 books you feel everyone should read and why?
To start with the basics and dig into the mindset necessary to build successful companies I would strongly recommend reading both "Zero to One" by Peter Thiel, which is conceptual and easy to read, and "Delivering Happiness" by Zappos CEO Tony Hsieh, which provides a robust framework on why we do things and how that helps people to become happier.
If you want to join the war-game of raising money and dealing with governance, two books come to my mind as a must, both from Brad Feld. First, "Startup Boards: Getting the Most Out of Your Board of Directors" shows the reader how to hire board members, manage successful meetings and emphasizes on the importance of providing and receiving feedback; second, "Venture Deals: Be Smarter than your Lawyer and Venture Capitalist" explains how to prepare an investment round and describes what you will face as an entrepreneur.
Big thanks Iñaki for sharing your views with us !
Big thanks to you, reader, for your time and interest !
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