With over two decades of hands-on experience in investing in startups, Evangelos Simoudis currently holds the position of managing director at Synapse Partners. His responsibilities include investing in early-stage startups and developing horizontal and vertical enterprise software AI applications.
Please tell our readers about your journey in the industry.
My journey in the industry has been a long and interesting one. I have over two decades of investing experience. Also, I have worn the hat of an entrepreneur and served as a corporate executive at IBM.
At Synapse Partners, we invest in early-stage startups working on enterprise applications that combine big data with AI and advise global automotive, telco, and financial services corporations on new mobility, AI strategies, autonomous vehicles, software-defined vehicles, and startup-driven innovations. We also leverage our knowledge of AI and expertise to solve strategic problems for corporations and help accelerate their AI initiatives.
How would you describe the current trends and development of the venture capital sector?
Over the past decade, there has been a significant increase in angel investing due to the wealth created from technology and an expansion of venture capital firms.
The venture capital industry is becoming more diverse, with new entrants such as family offices and other limited partners making direct investments. Corporations are also becoming more involved in venture capital, both in number and in the amount of capital they commit. This has resulted in a broader set of participants in the venture capital market, making it easier for entrepreneurs to secure funding.
In the venture capital industry, four trends can be observed.
“We leverage our knowledge of AI and expertise to solve strategic problems for corporations and help accelerate their AI initiatives”
First, the emergence of single GP large funds, where individuals can raise sizable funds and invest not only their own wealth but also other people's money. Secondly, limited partners make direct investments and require co-investment opportunities in their agreements with venture funds. Thirdly, VCs become multi-asset class managers, investing in multiple stages of a company's lifecycle, from the seed stage to the public. And finally, VCs with a broader geographic coverage investing not only in their local area but also in other parts of the country or internationally.
What are the factors that you look for before making an investment decision?
When investing in early-stage companies, we focus on the ethos and culture that the founders aim to build. Among the factors that we consider are the strengths of the founding team and why employees join the company. In particular, the first 10-15 employees beyond the founding team are crucial, and we insist on interviewing each of these employees before they are hired, as they create the company's core.
What will be your advice to your fellow peers and colleagues?
I have observed that the global economy was doing very well in the past ten years, and wealth was created in large quantities. A lot of people wanted to join the venture community. However, these individuals in the venture community have focused on deploying capital than generating returns for their investors. This leads to a situation where inexperienced individuals with limited financial expertise are investing without considering the value they can create or the return they can generate.
It is important to emphasize that those in the venture industry, especially those new to the field, should prioritize creating value and returns on their investments and working closely with their partners in the venture firm to achieve these goals. They should always remember that deploying capital is easy, but generating returns is difficult.
