Breaking Norms: Identity VC Invests in LGBTQ+ Founders

20. Feb.37 Min. Lesezeit

TilKlein, Founding Partner of Identity VC, a venture capital firm investing in LGBTQ+ founders

Management Summary:

Till Klein, founder of Identity VC, discusses his firm's unique investment thesis focusing on LGBTQ+ founders, the challenges of building a VC firm, and the evolving landscape of venture capital. He shares insights on what he looks for in a founding team, common mistakes founders make when pitching, and how Identity VC supports its portfolio companies.

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The Untapped Potential of LGBTQ+ Founders

Identity VC is a venture capital firm that stands out in a crowded market. Their focus? Investing in startups with at least one LGBTQ+ co-founder. The firm's thesis is that LGBTQ+ founders are inherently disruptive, bringing a unique perspective and a drive to challenge the status quo. This focus on diversity is not just a matter of social responsibility; it's a strategic advantage that Identity VC believes will lead them to the next generation of unicorns.

Startupland

We had the pleasure of meeting Till at Startupland by Deutsche-Startups. You can now book a ticket for the next event in November here: https://startupland.de/ - There is still an early bird discount available!

Building a VC Firm and Navigating the Landscape

Till Klein's journey to founding Identity VC is anything but conventional. From a background in consulting and a brief stint in fintech, he saw a gap in the European VC market for a fund specifically focused on the LGBTQ+ community. He acknowledges the challenges of building a VC firm, especially in a competitive environment, but remains optimistic about the opportunities.

What Identity VC Looks for in a Founding Team

Beyond the numbers, Identity VC prioritizes founders who are mission-driven, passionate about solving real problems, and willing to take risks. A strong team, a clear vision, and a hustler mentality are key ingredients for success in their eyes.

Common Mistakes Founders Make When Pitching

Till Klein highlights some common pitfalls founders face when pitching to VCs, such as being too creative with their pitch decks and not focusing on the core information investors need. He stresses the importance of doing your homework, understanding the VC's focus, and presenting a clear and concise pitch.

How Identity VC Supports its Portfolio Companies

Identity VC goes beyond just providing capital. They leverage their network and expertise to help startups with fundraising, operational support, and strategic guidance.

The Future of VC and the Role of AI

Till Klein shares his vision for the future of Identity VC, aiming to be the European leader in LGBTQ+ and diversity funding. He also discusses the role of AI in VC, seeing its potential in automating tasks but not yet replacing human judgment in investment decisions.

Question to you:

What are your thoughts on Identity VC's unique investment approach? Share your comments below and let us know!

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Automated Transcript

Narrator [00:00:05]:

Welcome to startuprad.io, your podcast and YouTube blog covering the German startup scene with news, interviews, and live events.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:00:20]:

Hello, and welcome everybody to StartUp Break dot a o. Today, we're diving into the world of venture capital with Identity VC. Joining us is Till Klein. Hi. How are you doing?

Til Klein | Founding Partner identity.vc [00:00:32]:

Hi. Hi, Joe. How are you today?

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:00:34]:

Doing good. Thank you. You are the founder and managing partner of Identity VC, a VC firm redefining investment in early stage startups. In sixty seconds, Tull, can you share what sparked the idea for Identity VC and what problem you're most passionate about solving?

Til Klein | Founding Partner identity.vc [00:00:54]:

Sure. Happy to. Yeah. Identity VC invests in LGBTQ led companies. And the thesis behind that is that innovation, thrives when we break from the norm. And, for the LGBTQ community, breaking the norm is part of our DNA. So I our thesis is that LGBTQ founders are born to disrupt. And, this is a great untapped opportunity as an investor.

Til Klein | Founding Partner identity.vc [00:01:27]:

Full stop. That's why we do it and what we do.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:01:33]:

For our listeners, what's the biggest challenge you think early startups face when securing funding? Let us know in the comments down here. Talking a little bit about your journey, your origin, your story, your vision. We before we got into recording, we talked you already had a successful career before founding identity VC, working, for example, with BG BCG? What was the catalyst that led you to launch this venture fund?

Til Klein | Founding Partner identity.vc [00:02:08]:

Yeah. It's kind of you need to go back to, so I start actually, I wanted to work for a bank. When I was at university, I wanted to work for a bank. But, I finished university in 2022. There was no jobs available in banks. So that's how I ended up with BCG. I never regretted it. And I had a good time and, I stayed there, for more than twelve years.

Til Klein | Founding Partner identity.vc [00:02:32]:

And, but I've always focused on financial services. And at some point when left and right, the fintech wave started, I saw my clients doing nothing and got a bit frustrated. And, so that, triggered me to to start my own company, fintech company. And, so that's also how I met my now cofounder, Jochen. He is a family office investor out of Berlin. And, we both came across, an organization called Ganges in The US. That's, initially an a gay for investors who invested into diverse founders. And, I came across them as as, when when looking for for funding.

Til Klein | Founding Partner identity.vc [00:03:20]:

And, Jochen, as a as a investor, as co investor, he did a lot of co investments with them. And we ask ourselves kind of why is there nothing similar in Europe? And, so that was back, five, seven years. And, then kind of we didn't find a reason why not. The only reason is probably nobody did it. So then we were waiting for a while, if somebody does it and nobody did it. And after I closed down, my start up, we then said kind of let's give it a try. Now I've got some time. And, obviously, it's on us to to start that idea in Europe.

Til Klein | Founding Partner identity.vc [00:03:58]:

Mhmm.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:03:59]:

Mhmm. That already kind of gets my next question. Which gaps you saw? It's it's a special DLBGGQ founders that you are looking for. From our discussion before, my understanding is that, at least one of the members needs to identify as LGBTQ. But everything else, is just a normal start up. You're also looking at the normal business projects there and stuff.

Til Klein | Founding Partner identity.vc [00:04:33]:

Absolutely. Absolutely. So actually, there was no, fun focusing on on the LGBTQ or queer community. It's sometimes easier than the the acronyms. So but the opportunity is huge. So we estimate that 18% of the startups, do have an LGBTQ cofounder. And this is even growing given the fact that in younger generations, more people are identifying as queer. So this is a huge untapped opportunity as a VC.

Til Klein | Founding Partner identity.vc [00:05:05]:

And, if you compare that, that's almost that's that's, more or less the same size as the fintech market. So it's a huge, huge opportunity. Mhmm.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:05:18]:

You you you came from BCG, then you tried fintech, and then you started a VC fund. I I I think that's that's quite an interesting, journey you have behind you. But what was the biggest challenge in building a VC firm that stands out in, like, a very competitive industry? We do get, I would say at least once a week mailings from some new fund that was either raised or completely new VC firm launched. So it gets more and more competitive, which by the way is for Europe, very good thing, because there's a lot more startups that need funding than there are VCs right now. But what we say kind of stood out as, like, the one, two, or three top challenges you face there?

Til Klein | Founding Partner identity.vc [00:06:10]:

Yeah. Let's say kind of I wouldn't have started if if, the opportunity wasn't, so so obvious. Because, honestly, starting a journalist fund, in Europe at the moment, I wouldn't do that. Or I do not recommend it. But here was really an opportunity that was very obvious, and nobody has taken it yet. And, on the other hand, we also were a bit naive when it came to the to the fundraising environment. And, coming from 2021, '20 '20 '2, where capital was available, easily. And, so we we were overoptimistic.

Til Klein | Founding Partner identity.vc [00:06:52]:

At the end, so fundraising was just a bigger effort than than we thought. At the end, if I look left and right and how many funds I saw who started earlier than we and, who or and I'm now behind us or who have given up. So I'm pretty, satisfied with what we've achieved so far. But that definitely was in that environment, to raise a fund, is is a tough cookie, coming all with what comes with a fund. So it's it's kind of you need to build the organization. You need to build a network, and all that comes. And all that without having an income, that's also kind of that's a that's a big structural problem, for for VC. And that prevents a lot of, let's say, uncommon, people to get into VCs because at the end, you need to be able to afford it.

Til Klein | Founding Partner identity.vc [00:07:53]:

And because fundraising takes two years, and there's during those two years, there's no income but a lot of costs. So, that is kind of so Johan and I, we we are a bit older and and, so so we could afford it, but that's a big challenge, particularly for for, younger VCs. And, that, prevents probably quite interesting VCs I would love to see in Europe, for

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:08:26]:

before we get to my next question, do you have any idea how one could encourage such VCs?

Til Klein | Founding Partner identity.vc [00:08:35]:

Oh, pretty pretty sure. So honestly, European, VC is primarily public funding. So it depends on the vertical, but, overall, across all, it's, over 30% is public funding. So that always we need to keep in mind. And, so the the question is kind of behind the public funding, what do you wanna achieve? And if public funding would be kind of, focused on that and would drive new unconventional VCs to come up, that would work because, they could put their money there. They don't do that, to be very honest. They, prefer to to throw their money after those who are already big. But that's a political decision.

Til Klein | Founding Partner identity.vc [00:09:24]:

A wrong decision from my perspective. But, that that could change. How that could work, you see, it's about, defense tech. So defense tech was not big. And then there was a lot of public money turned towards that direction, and that immediately shifted the whole industry, in that direction. So they do have they could play, given the fact that they are so strong, play an important role. Unfortunately, when it comes to new VCs and new ideas, they're not really open. They prefer to sit in the board of the established, VCs or on the, advisory board.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:10:07]:

Mhmm. When you've been talking about starting identity VC, you talked about you would not start a general VC fund right now in Europe. That got me curious. What kind of VC fund would you start right now except for identity VC?

Til Klein | Founding Partner identity.vc [00:10:25]:

What kind of we see fund I would start? I that I haven't I haven't thought about. Honestly, this was kind of these kinds of things are very opportunity driven. And, honestly, if there would not have been the opportunity and there would not have been Jochen to do that together, I would not have done it probably. Yeah. So it's kind of have the have the the idea, the opportunity, and the team. And, honestly, there is none. So I don't, think, I need to start a second fad at the moment. So I'm still busy with the first one.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:11:07]:

I do believe so. Let's talk about a little bit of industry market landscape, the competitive edge. You are described as investing in startups with a strong market fit and unique identity. What defines a strong identity in a start up?

Til Klein | Founding Partner identity.vc [00:11:27]:

A strong why. A strong mission. Why are you doing this?

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:11:32]:

Mhmm.

Til Klein | Founding Partner identity.vc [00:11:32]:

What's the mission? And founders who really know they want to change something, they want to build something, except from getting rich, which is not, from my perspective, a very strong, mission, at least kind of, in terms of pushing a start up through.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:11:48]:

Mhmm. We've been talking about your main investment focus, but there are also, of course, different industry, different trends. Think about like all the things we've seen in the past, e commerce, FinTech, quick delivery, drones, and so on and so forth. How does identity TVC position itself in this evolving landscape? Are you looking on a deal by deal basis? Or are you already, seeing what could be the next trend? What could be the next interesting wave of start ups?

Til Klein | Founding Partner identity.vc [00:12:21]:

Lots of buzzwords. So which is kind of yeah. Very kind of that characterizes the VC industry. Kind of there's lots of trends and fashions, and then everybody is chasing that. So, typically, the most VCs are not very good in risk taking and, taking new opportunities, which doesn't make any sense because that's a job of VC. But, I was I've never understood. So, you wanna go for the stuff others don't look at. And honestly, if you look at the history of VC, that's also how, big VC friends grew because they took a decision that was against the market.

Til Klein | Founding Partner identity.vc [00:12:57]:

But, so, to to answer your question, what we do is, we are generalists and decide, deal by deal. So we are open for plenty of opportunities. And, so that that also comes with a challenge in terms of you need to have the expertise, you need to have a great, network. But as we have that kind of very narrow focus on kind of what type of founders we're looking at, we decided, okay, we need to be a bit broader when it comes to industries. And that allows us to, see very, very interesting stuff, particularly for a guy who has a banking background, which is, like, very boring, very kind of always the same, a very simple industry. And, now I, I have the chance to look at, quite exciting startups who have really impact and and can make a big difference, to people.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:13:57]:

Mhmm. You guys are investing in early stage start ups. What would you say is, especially from the, from the side of the founders, the biggest misconception about early stage VC investments?

Til Klein | Founding Partner identity.vc [00:14:14]:

It's one thing that jumps to my mind is when they asked me to sign an NDA, which is like and that shows is there's no lack of ideas. And I and an idea is worth nothing. It's all about the execution. I've seen so many ideas that never happened. And this is and this is quite often you see that from unexperienced, founders. They come and say, kind of, can you sign an idea? And this is, honestly, you we're just talking about a brainchild, and, there's nothing. If you are not able to execute on that, it's worth nothing. So, this is doesn't make any sense.

Til Klein | Founding Partner identity.vc [00:14:54]:

So they learn that very fast because no VC would ever sign an NDA at that stage. But, it always gives me a smile when they come up and say, can you sign an NDA? It's like, no. I I was the same when I started my startup and you're an unexperienced founder. I did exactly the same.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:15:14]:

Mhmm. I see. So we're all learning. Hope hopefully, a lot of future founders listen to this episode and already learn from the mistakes of others. The I want you to close your eyes and imagine something. Imagine identity VC has backed the next generation of unicorns. What key industry shifts would have made this possible?

Til Klein | Founding Partner identity.vc [00:15:39]:

I would say it's clearly AI at the moment. It's kind of not industry specific that will impact across industry. That's really, like, having even a broader impact than Internet had thirty years ago or twenty five years ago. So oh, thirty years. So shit. So that reminds me how old I am. But, this will have such an impact on so many industries starting from financial industry, health, but production. This will be very fundamental, and we are just at the beginning.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:16:17]:

Mhmm. Actually, about being older, just, the a friend of, my wife, she has a a girlfriend, and the kids are teenagers. And I told them I'm older than Google, and they said, no way. And I said, yes way. That is really old. Jill, we will be back for our audience with your investment thesis and startup selection deep dive after short ad break. Direct ad insertion. No? So okay.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:16:49]:

Next step. Hey, guys. Welcome back to the interview with Till from Identity VC. We are now talking about investment thesis and startup selection. Till, what are you the top three criteria that determine whether Identity VC invests in a startup? We already heard it's not the idea. It's the execution, but what else?

Til Klein | Founding Partner identity.vc [00:17:17]:

It's pretty clear. It's there needs to be a real problem. You need to solve a problem for somebody. Secondly, there needs to be a market and a big enough market. If there's no demand or nobody is paying for a solution for the problem and or it is too small, it doesn't work. And thirdly, it needs a great team that executes it on it and and, solves the problem.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:17:42]:

That is great. It seems like you have seen my next question for because beyond the numbers and be honest, in early stage VC investment, the numbers are not that important here because, the real revenues will come in at in the future. What are some intangible qualities you look for in a founding team?

Til Klein | Founding Partner identity.vc [00:18:07]:

That's what I miss mentioned before. It's kind of mission driven. I think that's very, very what's the motivation? Why somebody started the startup? So I think that's a very, very interesting, question to understand the startup. And, why are you so crazy to go through all the pain? Yeah. So you need to have a very strong motivation. Second is risk taking. You need to be willing and able to take crazy risk. And everybody around you will advise you not to take that risk.

Til Klein | Founding Partner identity.vc [00:18:38]:

But that's then you are exactly on the right way. If everybody is disagreeing with you, go ahead. You are on the right way. And that combined with a hustler mentality.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:18:50]:

Mhmm.

Til Klein | Founding Partner identity.vc [00:18:51]:

At the end, it's like, there's nothing to delegate. There's just get roll your sleeves up and go create results and create them fast.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:19:03]:

By the way, mission driven, that make me smile because, being rich quickly is not a mission here.

Til Klein | Founding Partner identity.vc [00:19:15]:

It is honestly, that drives some founders.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:19:17]:

Yes. It does.

Til Klein | Founding Partner identity.vc [00:19:20]:

Is this not a company I would invest in. Yeah. So the the getting rich is all good. And, honestly, we're not good in Europe. So that's kind of for all the pain and all the risk you take, there needs to, be a proper reward. And that's a big problem in Europe that, the reward, particularly not only for the founder, but kind of for kind of the management team, is not enough. But it should be not to to build that's not enough to build a great company and to solve a real problem.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:19:56]:

Mhmm. I was smiling because I found when you have, somebody in the team who wants to get rich quick, he take he or she takes the earliest possible exit, doing semi retirement or something, that is not the people who who really want to build a unicorn to the end. How do you balance investing in visionary founders versus proven traction?

Til Klein | Founding Partner identity.vc [00:20:25]:

I don't balance. % vision.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:20:27]:

Okay. What role we we talked about this before. You and your team, obviously, like I do, use AI. And what role does AI play in your investment decision making process? Do you leverage AI to analyze deal flow or market trends?

Til Klein | Founding Partner identity.vc [00:20:47]:

It would be a lie if we don't. Can we do more? Honestly, we can we can do more More systematically, more to kind of the routine task. So kind of what, honestly, what what's, in previous times an intern did or so, that's all stuff that you can do or an assistant that you can do, with AI. At the end, AI is not yet there that it can take an investment decision from my perspective because AI, can do a lot, but it's not intelligent yet. And, I always have the discussion with the team to say kind of this is all good market research. But, honestly, to nail that to the point and draw a conclusion, a business and an really an investment decision, this is missing. And this is what you cannot yet get out of AI. That's where the human factor comes in.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:21:43]:

I was smiling when you talked about the intern because if you can describe a to do in a way that an intern would get it, you could also delegate it to an AI.

Til Klein | Founding Partner identity.vc [00:21:53]:

That's I I like that's a very, very good point. And, honestly, I see that, and I've experienced that so often that you get something and you think, what the fuck is that? And then you just, have to to hold your own nose and think, shit. This is what's the briefing I gave. I gave no briefing, so bullshit in, bullshit out. And that's exactly what's happening in much faster pace. So you get more, faster feedback. But that also happens if you don't give proper briefing to your team. And the more junior they are, you get nonoptimal results.

Til Klein | Founding Partner identity.vc [00:22:35]:

Yeah.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:22:35]:

Mhmm. I see. I see. Let's talk a bit little bit about business model and growth strategy here. VC is evolving. How do you see traditional VC models changing over the next five years? As we already talked, AI will have an impact. I do believe there's some overvaluation in AI, but we're just at the start of learning how to really apply it, and the development is already in the future here. So how do you see the traditional VC model changing?

Til Klein | Founding Partner identity.vc [00:23:07]:

First of all, I would challenge your your point that VC is is evolving. This is a very conservative industry, which has not much evolved over time, and has not much changed. So it's dominated by white old men and public institutions. And they are typically not very the change drivers. And, so is the industry. The only shifts we've seen is kind of what I mentioned a bit earlier is kind of when there was a shift by public funders, kind of Defense Tech is a good example. So they shifted their money. That was like a big boom in both direction, and everybody is running behind them or following them.

Til Klein | Founding Partner identity.vc [00:23:52]:

But at the end, if you look at things like women in VC, this is ridiculous what happened the last last ten years. In kind of if you look at top ranks, the share of women in VC has grown from 2,011 to, twenty twenty one from nine to 12.5%. This is fucking ridiculous. If you project that in the future, it would take another hundred and seven years to get to parity. So this fucking industry is not changing at all. And this is all lip service and kind of we get more diverse. No. You're fucking not.

Til Klein | Founding Partner identity.vc [00:24:35]:

So you are at lower double digit number of of female and not talking about other diversity dimensions, but there's, for obvious reason, more more data available. And that's also true to other stuff. So this industry is ready for disruption as well.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:24:57]:

And when you talk about public investors, one should keep in mind that you're not only talking about, the legal entities here involved in Europe, but also you should keep in mind that a lot of the big VC funds in The US are basically backed by something like the teachers' retirement fund of California, Ontario pension fund of public employees, or something like that. You should always keep that in mind.

Til Klein | Founding Partner identity.vc [00:25:24]:

It's important that that's a political issue that, in The US kind of pension money, and that's the biggest pool of wealth, flows also into VC. And that's a big that's a big problem of Europe that that policymakers have not understood that this is a lever. The only who has understood that is Macron.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:25:44]:

Mhmm. We

Til Klein | Founding Partner identity.vc [00:25:45]:

can debate about him, but that's what he did very right. He forced kind of the the insurers to to put more money into BC and kind of look at the numbers that, in the meantime, Paris has overtaken Berlin. That's one of the reasons why.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:26:02]:

Mhmm. What's your take? I mean, as a as a traditional VC, what's your take on alternative funding models, like revenue based financing or, for example, crowdinvesting? Investing. I've we put a lot of hope in crowd investing, but right now, it's more a proof of interest by potential community, by potential audience, like a first step to raise venture capital. I've seen it so far.

Til Klein | Founding Partner identity.vc [00:26:31]:

Yeah. It's good to have them. They never took off. Obviously, they're not the solution. What because what we need is funding below VC level. So we see a lot of great founders with great cases, but they're not a VC case. They might become a company that's worth 80, hundred million or a hundred million, which is fucking successful, which is great, but it doesn't work for the math of a VC fund. This is just kind of, you need to really chase for the unicorns.

Til Klein | Founding Partner identity.vc [00:27:06]:

Otherwise, the math don't work. So what we do need and what is not yet available is really kind of we see like money for kind of this level below VC case, these 50 to a hundred million, companies. And, there's a big gap. And, both models you've mentioned, don't solve that.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:27:32]:

Mhmm. You're a former consultant, so I can already guess the answer. But how do you support your, portfolio companies beyond just capital?

Til Klein | Founding Partner identity.vc [00:27:43]:

You mean I throw slides on that? No. Yeah. First of all, we can yeah. I would say as every other, top we see, we can, help them with funding, with operating support, with strategic, advice. So, Johan brings an incredible experience in in fundraising. So he himself has invested over a hundred million into VC. At the same time, he's now p in, over 20 funds in The US and in The EU. So he has top connections and something that is not so, common also into the family of this world, which is very difficult to get in, for founders.

Til Klein | Founding Partner identity.vc [00:28:30]:

Marie has, very good operating experience. So she was a growth operator, scaled a company over a double digit in in ARR. You mentioned, I I will, have a consulting background and was a founder. So but that's all I would say you could expect from a VC and other VCs have as well. So what we do have and others don't have is, the LGBTQ community. And, so our intention is to help, our founders to make the the community their unfair advantage. And this is a super interesting community because it's huge. It's across borders.

Til Klein | Founding Partner identity.vc [00:29:14]:

It's across hierarchies, and it's across functional silos. So this is a great, great network, which, most foreigners have not yet, properly leveraged and to get access to experts, to mentors, to to corporates. We have in February, we have an event in Amsterdam. I'm super curious how that will work kind of connecting LGBTQ founders, with companies, with the pride networks and the companies. And which is great because typically a company is a black box for a founder and very difficult to get into this huge, black box. But the freight network in a company could give you a great network already in the company that might not exactly the right person, who's in charge of what you need, But they're very open to help you, to guide you, through the organization. And this is a huge opportunity. And, we our intention is and and, or our our mission is also to open that up for for our portfolio companies, but also beyond.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:30:21]:

Mhmm. I see. To our listeners, if you were a start up founder, what would be the biggest challenge in raising VC funding? Let us know. To you, what do you think is the biggest challenge of startups they face when scaling? Meaning they have the first investment, they have the first product, and then they want to go big. They want to scale. What is usually the biggest challenge they face, and how do you help them?

Til Klein | Founding Partner identity.vc [00:30:52]:

It's a very different thing if you're an early stage start up and you are kind of a bunch of friends, a team, and and you do something together. And it's super easy because you just need to turn around and you speak to another department. Building an organiz recruiting, building an organization, building a culture, that's a big challenge, and that's a complete different, animal. And that's something you need to be able to. You also need to like. So for example, I know that's not my kind of thing. That's, consulting doesn't work like that. Also, VC doesn't work like that.

Til Klein | Founding Partner identity.vc [00:31:27]:

So I like to have high speed small teams where everybody kind of is in charge. But to really scale, you need to build structures. You need to build processes. You need to build, a culture that, that makes these structures work as you want that. So, that's a that's a big challenge. What we can do is, we can be a sparring partner. That's and this is anyway kind of how I see also value creation to founders. It's they need to come to us.

Til Klein | Founding Partner identity.vc [00:32:00]:

I don't want to obstruct help, so they need to come us to come to us and happy to give my opinion. I've seen a lot of large organizations. Jochen has seen a lot of startups also growing exactly, and and he has exited large, startups. So he has seen what challenge these, these are. And I would say, it's worthwhile talking to us about it.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:32:26]:

Mhmm. I see. Let us go a little bit into fundraising and financial sustainability, especially for the start ups. You've worked closely with early stage start ups. What's a common mistake founders make when pitching a VC?

Til Klein | Founding Partner identity.vc [00:32:45]:

So it's quite often or sometimes you have to be too creative when it comes to their pitch deck. It's like the pitch deck is something that you wanna look for you look for a certain set of information to do your first screening. Don't be creative. Just have the information I'm looking for. If it takes me too long to look for the information, and if I'm not able to understand the product, the market, it's super simple in a few minutes, then, this is this is not good sign. That does not mean you need to be it needs to be professional and also to get across kind of your branding and it, in the shape. That's kind of I'm able to do that. But sometimes, too tactical, too creative decks.

Til Klein | Founding Partner identity.vc [00:33:33]:

Just do your homework, and, that's because it's the first step is very technical in VC. You see we see ten, twenty decks per week. So screening it, you look for certain information. You take a decision. Do we want to talk to that team, or don't we want to talk to that team? If we if it takes us too long to figure that out, it's a default no.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:34:01]:

Mhmm. I see. You've been talking basically about keeping your first pitch deck boring. But what was a standup pitch you've received that really struck you?

Til Klein | Founding Partner identity.vc [00:34:15]:

So far none. I haven't I've seen good pitch. I've seen good pitches. Yeah. So but there was not the I still waiting for the real moonshot pitch with that blows me away. They were all like better or worse, But there was none of this, like, completely, from your way.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:34:38]:

Great. We'll be back with team and leadership after a short ad break. Hey, guys. Thanks for staying on. I'm talking with Till in, I think, more than thirty five minutes already here in the recording. We are talking about now, from till from Identity VC, I have to say, and we're talking now about team and leadership. I would be curious what one leadership lesson is you learned while running Identity VZ, not BCG, not fintech.

Til Klein | Founding Partner identity.vc [00:35:18]:

I'm probably the the wrong person to ask. I'm a really bad leader. So, if you know this LinkedIn thinks kind of good and bad leadership. And then, there's this bad leadership. That's all me. So, I would say, I'm not a role model here and I'm also too too old to to change, fundamental things here. You always learn, but, I would not say that my leadership style is is is a role model.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:35:50]:

I see. So then quickly shift into the culture. What are what would you say are core values that define culture at your company?

Til Klein | Founding Partner identity.vc [00:35:59]:

What sticks out is we are super entrepreneurial, and that's kind of also what aligns Yohan and me. We are very different in terms of how we work, but we are super aligned on where we on the mission, but also on the values, what we what we accept. And part of that is is entrepreneurial. Do not use opportunities. So I'm big fan of don't ask for permission, ask for forgiveness, just do it. Only result count. And, what I often come across in that industry is that they tell yeah. But others do it like that.

Til Klein | Founding Partner identity.vc [00:36:32]:

I don't care about how the bullshit others do. That's not an excuse not to do it better or to do it right. And I hope that's also a bit of the culture we have ident at Identity VC. We not just, and that's what you see quite often in VC, just copy, the bullshit that the whole industry does. We do things differently. Mhmm.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:36:54]:

Yeah. I see this in the news. Of course, always the trends. Yeah. You have like three, four big investment in in one area within a month because they heard, hey. They do it in Get Steel. Yeah. We we also had a startup pitching.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:37:06]:

Let's do also that. Yeah. Mhmm. We've been talking before about the leadership and the team. And how do you assess whether founding team is resilient enough to navigate the startup challenges?

Til Klein | Founding Partner identity.vc [00:37:21]:

That's a very good example for for what we just discussed, because that's what we do very differently. We do, BCG McKinsey style case interviews with the team. So once we've done all our homework, so we looked at the market, we've gone through all the Excel sheets, and, talk to the founders quite often about the company. Then we invite the team to us. They come to Berlin. First of all, we have dinner together not to talk about the company, just to meet the team. What are the hobbies? What's the background? To to meet the person behind because at the end, you invest in the person. And secondly, the next day, we do, interviews and case interviews.

Til Klein | Founding Partner identity.vc [00:38:06]:

And this is nothing you can prepare for. That's really kind of real. We take real life examples, put them in front of the founders, and see how they would solve it. And what we wanna get out of that here is kind of how ready they are to take risk. Do they have a bias for speed and for results? All the capabilities we spoke earlier about, to figure that out. And that works super well because founders stop trying to sell their company. You because they just kind of you confront them with an, question they will come across anyway in the future and see how, they react. And, this is, turned out to be a fantastic way how to evaluate, founders.

Til Klein | Founding Partner identity.vc [00:38:53]:

So I've this is something I took from my from my BCG time, with me and brought it to BC. Interestingly, I haven't seen any other BC who does it. Although although it's very obvious.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:39:06]:

Mhmm. Let's talk a little bit about regulatory and societal impact. Do you see regulatory trends affecting VC investment strategies in the coming years?

Til Klein | Founding Partner identity.vc [00:39:19]:

Very regulatory one, very much so, of course. There's, there's a lot. I would say kind of it's more political even though kind of one level up because we are at a turning point. Trump has terminated kind of the the social contract between nations. So if you if you think, based on on the Swiss philosopher, Jean Jacques Rousseau, his idea of having a social contract, that people agree on rules to gain more freedom. And, that's kind of how society works. That's how a state works. And since World War two, we had that also on an international level.

Til Klein | Founding Partner identity.vc [00:40:06]:

Kind of, you agree on common rules and that gives everybody, all nations more freedom. That is changing. Trump is somebody who said, I don't accept the rules anymore. So he stopped playing by the rule. And immediately, we are back to to what, Thomas Hoppers described as as, man is a wolf, to other men. Yeah. And so the I don't know if that translate to German, but the cards getting reshuffled here. And, that will have huge impact on many industries, on on the society, and with that also on the VC industry.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:40:48]:

I do believe it will also have an indirect impact on the European start up scene made before the VCs from The US directly investing in European start ups as well as the LPs investing in European based funds.

Til Klein | Founding Partner identity.vc [00:41:04]:

Absolutely. Absolutely. Because kind of you see kind of that will, reshuffle what was kind of common practice for for a while and kind of it will stop trends and reverse trends. And, so I don't know if we get to a new level of rules. And, but, first of all, there's somebody who just breaks the the common practice, and, that will definitely have, a huge impact. And I I don't know what the impact is because let's see. And that also depends very much on how the European Union and Europe reacts to that. And I think that's very hard to to predict at the moment.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:41:50]:

Mhmm. I do believe, he it's also important to see he's breaking the rules. If he can do it, other leaders will also try to do it and then they'll figure out a degree to which they can do. And that at one point hopefully may establish some new rules, maybe even some better rules.

Til Klein | Founding Partner identity.vc [00:42:08]:

Yeah, exactly. Exactly. Yeah. Exactly. Kind of honestly, in general, it's not bad kind of to to shake up a bit and to disrupt a bit. But kind of if you if you give out fundamental rules, all others don't feel bound to the rules anymore. And, so this is kind of you're leaving an equilibrium and you need to find a new equilibrium. And, that could be very, very painful, the path to that.

Til Klein | Founding Partner identity.vc [00:42:37]:

I guess there will be one. If If it's better or not, let's see. Let's hope. And the key question is how long will it take to to get to that, equilibrium?

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:42:48]:

Yes. And it doesn't have to be optimal for everybody else. Everybody knows who who, who knows a cash, John Cash equilibrium that basically doesn't have to be optimal for either side. But, getting off our soapbox here again, going back to earth and to VC investment, what industries do you think are the most in need of venture capital support but are often overlooked?

Til Klein | Founding Partner identity.vc [00:43:16]:

Typically, what I was referring before, VC has a herd mentality. Yeah. So they're all moving in one direction or the other direction. And typically, this is overemphasizing one thing or the other kind of that we're all in consumer. Now they don't like consumer anymore. They are all in B2B SaaS, which is also bullshit. So because, there is opportunity, or interesting opportunities, in all industries. But there's industries, I think, they're super interesting.

Til Klein | Founding Partner identity.vc [00:43:51]:

And I don't see them as I would expect it. It's, for example, assistive technology. So, technology that helps, disabled people. Because in my mind, that would be kind of if kind of you have kind of a disadvantage, it would wouldn't it be great if you have technology that kind of jumps in and kind of, replaces the disadvantage, so that you are at par again? And, probably, it has to do with the market and how it's paid for that. But that could be a great, great opportunity and a great impact for people. And I also guess so great, economically also interesting one, because it would solve a big challenge and an unsolved problem.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:44:48]:

Talking about problems here, I I'm sure you encountered a lot of them in the past and you learned some lessons from this as well. Talking about the lessons for for future entrepreneurs here. You know, the typical question is what piece of advice you wish you had received before starting identity VC? I remember from the start of our interview, like almost forty minutes ago, that that you've been talking how long it takes to raise funding.

Til Klein | Founding Partner identity.vc [00:45:19]:

Yeah. One one thing is like, forget about institutional investors as an emerging manager. We've wasted some time, on the institutionals before I learned, forget about them. They're not, committing to, emerging manager. Very, very rare cases. You need to raise your first or second fund. You raise on, high net worth individuals and and family officers. That's known, and others have the same experience.

Til Klein | Founding Partner identity.vc [00:45:54]:

It would have been good if I, would have known that before, then that would have saved us some time.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:46:00]:

Mhmm. I see. I see. Talk about a common misconception of founders about raising venture capital. For me, in the beginning, it is that every VC invests in every company. They are certain focus groups like yours. There are certain industries plus there are also stages like early stage, late stage, pre IPO and so on and so forth. Did you also, by the way, guys, if any of this, terms didn't tell you anything and you're about to raise venture capital, maybe you should talk to check GBT here or do your homework.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:46:42]:

Any other misconception you do you that that strike you?

Til Klein | Founding Partner identity.vc [00:46:46]:

First of all, adding to the homework before you contact the VC, go to the web page and check what they do. Yeah. So, sometimes it's, like, crazy that people do not do the three second check. And what do they do? What do they invest in? And everybody has it on the website and then they contact you. That's a waste of time for both of us. And in terms of misconception, I would say it's a distribution of power. Many start ups or most start ups feel kind of there is kind of the the VCs have much more power, and they completely underestimate how big the challenge for VCs is also to allocate their money and to deploy their money. And, so this is much more at eye level than than many, many founders think.

Til Klein | Founding Partner identity.vc [00:47:40]:

And VCs are desperately looking for investment opportunities, and they have to do a lot to to find good companies. And if you don't get money from a VC or if you, from for many VCs, I would kind of you need to rethink your business model or the way you present it. It's not the lake of capital. There's more capital than is needed out there. So be aware that VCs kind of also need to kind of pitch you and want to. If you don't get money, don't use that as an excuse. Then maybe you obviously did something wrong or something is wrong with your model or you cannot get that across. Or all VCs are wrong, which I would also could be.

Til Klein | Founding Partner identity.vc [00:48:33]:

That also happens. But first, I would look what I can rethink my business model or the way I present before I would assume, that all VCs are wrong.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:48:46]:

What's the hardest tip for first time founder about securing the first VC check? What would they need as advice? Be more relaxed, be be be aware of the imbalance of power you just described.

Til Klein | Founding Partner identity.vc [00:49:02]:

Yeah. That's more the attitude how you go into it. But at the end, it's kind of what you optimize for. I did the mistake brutally. Kind of don't optimize for valuation, optimize for personal fit. It's kind of this is a one night stand you cannot get out of. You see, this is a marriage for ten, eight, ten years, and they are on your cup table. So really, really also do your due diligence and think about, can I work with this typically, it's a person who represents the firm and and kind of as a direct contact over that firm and for the next five, six, seven, eight years?

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:49:47]:

And always keep in mind this one TechCrunch article that I have in mind, which kind of emphasizes a very important point. More startups have been killed by the investors than actually their competition.

Til Klein | Founding Partner identity.vc [00:50:02]:

It's interesting point of view. I haven't thought about that. I don't know that article, but, it it resonates. Yeah.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:50:12]:

Yeah. It resonates. Now let's go into the closing and looking a little bit ahead, the future of Identity VC. What is your long term vision for the company?

Til Klein | Founding Partner identity.vc [00:50:25]:

It's clearly being the the European leader in in LGBTQ and diversity funding. That's that's one dimension. The other dimension is to to create and be the catalyst for a strong European LGBTQ startup community. That's not there. It's a little bit in The UK. We have that. We see that how that could work in The US. There's organizations like Angels, like StartUp.

Til Klein | Founding Partner identity.vc [00:50:54]:

In in Europe, there's still a lot of room, to really integrate founders, investors across Europe.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:51:04]:

Mhmm. What are you most excited about the next twelve months except the publication of this interview?

Til Klein | Founding Partner identity.vc [00:51:12]:

Along the different dimensions. So, this year, we have, around eight more new investments we want to make. So this is very exciting and a lot of work, but, this is always great to to to invest and and have a new company in the portfolio. So also founders, if you're if you're looking for LGBTQ founders, if you're looking for capital, contact us. Then secondly is we want to do the final closing of the fund, in the foreseen future. And, we have a lot of things on the agenda around the community and, what we want to achieve and what we want to do. So this was, the very short version and just the highlights. So, we have a very long list, Probably more than we can do, but, let's if we achieve part of it, that would be, great.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:52:09]:

Awesome. Last final questions. How can people reach you? You? We link down here in the show notes, your LinkedIn profile. Is this a good way to make a first contact?

Til Klein | Founding Partner identity.vc [00:52:22]:

LinkedIn, email. Honestly, I'm not a friend of, asking for warm intros. This is kind of a big problem of the industry, kind of, that shows we only want to invest in the the friends of my friends. And that's one reason why this industry is not so diverse. And, that's kind of same universities, same background, whatever. We want to see founders who were not part of that communities, who others might not have seen. So, you can find my email on our web page. You can contact me via LinkedIn.

Til Klein | Founding Partner identity.vc [00:53:05]:

And please do me one favor. If I don't answer at the first time, just write a second time. Sometimes things get lost. Sorry for that. I have the standard receipt check since I, had

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:53:20]:

a random idea during the interview with Alex von Frankenberg at the time, CEO of High-tech Khmerfoam. I asked him. He also says sent me an email, and I asked him, would you reply, to an email that only says, yo. We should talk.

Til Klein | Founding Partner identity.vc [00:53:35]:

Would I reply? I don't know. I don't know. It depends. I would say one more keyword would help or a LinkedIn profile or one trigger, that, that maybe I would because this is very rare. I don't reply to emails that are not personally addressed to me, and there's more than you think. This is, hi, comma, blah blah blah. And you can see that was a mass email. This one is immediately delete.

Til Klein | Founding Partner identity.vc [00:54:14]:

Mhmm.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:54:15]:

I see. Also, that would be a good way for people looking to work with identity VC as part of your staff.

Til Klein | Founding Partner identity.vc [00:54:23]:

Best thing is follow us on LinkedIn. That's anyway a good recommendation. Then you're up to date what we invest in, what events we do, kind of we do a lot of community events. So we have upcoming events, across Europe and, also job post. So I would say that's probably the best thing. Follow us on LinkedIn.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:54:42]:

Great. Till, that's had this is a fantastic conversation. I loved it. Thank you very much. And to our listeners, what's a question you would like to ask Till about venture capital? Drop your questions down here in the show notes. Till, thank you very much. It was a pleasure.

Til Klein | Founding Partner identity.vc [00:55:02]:

Thank you. Pleasure was mine. Thanks for having me, and talk soon.

Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:55:06]:

Talk soon. Bye bye. Bye.

Narrator [00:55:13]:

That's all, folks. Find more news, streams, events, and interviews at www.startuprad.io. Remember, sharing is caring.

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Breaking Norms: Identity VC Invests in LGBTQ+ Founders

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The Untapped Potential of LGBTQ+ Founders

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The Future of VC and the Role of AI

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