Ertan Can, Founding GP of Multiple Capital on Multiple III & How emerging managers can demonstrate performance from Fund I - III| E298 EUVC

Today, we are meeting with Ertan Can, the Founding General Partner of Multiple Capital, a venture capital fund based in Luxembourg.

Ertan has just closed his third fund with a target of $50M after investing already in companies like NP-Hard, Angular, Airstreet (1), Lunar, Fly, Inflection, Foreword by Declan, and Remote First Capital by Andi Klinger, Nomad by Marc McCabe.

Go to eu.vc for our core learnings and the full video interview 👀

Chapters:

00:54 Deep Dive into Ertan Can's Third Fund and Investment Strategy
04:07 Ertan's Journey from Family Office to Micro VC
06:04 Challenges and Learnings from Raising Fund III
08:13 Navigating the European Fundraising Landscape
13:47 Strategic Shifts in LP Engagement and Fundraising Realities
21:29 Understanding the Micro VC Ecosystem and Fund Size Dynamics
35:42 Evaluating Emerging Managers and Fund Performance
37:50 The Role of Randomness in Fund Success and Investment Strategy
39:55 Evaluating Investment Consistency and Strategy
40:34 The Importance of Building a Strong Network
41:07 Performance Metrics: Beyond Early Success
43:14 Assessing Portfolio Company Progress and Entry Valuations
53:23 The Rise of Fund of Funds in Europe
54:03 The Role of LPs in the Venture Ecosystem
01:03:02 Advice for Emerging Managers and Fundraising Challenges
01:13:42 Personal Reflections and Future Directions

Key Learnings from the episode
Acceptance of Power LawOne must acknowledge that not all VC funds, especially first-time funds, will be outperformers. Ertan works from an expectation that a minority, perhaps 10 to 20 percent, will become outlier funds, with the remainder performing average or below average.
Role of RandomnessErtan Can notes the randomness in fund success, citing that outliers in his experience have come from unexpected places, suggesting a belief in the potential rather than the certainty of each fund being a standout.Assessment
Beyond Immediate PerformanceThe transition from a first to a second fund often does not provide sufficient time to demonstrate real performance in terms of markups or DPI. Early successes or markups are seen as unsustainable for predicting future performance.
Consistency and FocusErtan values the consistency of the emerging manager with their initial strategy and approach. He looks favorably upon GPs who remain focused on their initial thesis and do not chase current market hypes or trends without a well-thought-out reason for any strategic shifts.
Networking and Co-investor QualityThe ability of a GP to build a network, attract follow-on investments from reputable names, and be invited to competitive rounds is viewed as more important than early performance metrics.
Entry Valuations as KPIsAn important KPI for Ertan is the range of entry valuations a fund manager secures. Investing at lower entry valuations, indicative of conviction and an earlier investment stage, is preferred over higher entry valuations that might follow market signals or competitiveness.
Brand Building and RecognitionBuilding a recognizable brand and becoming the go-to GP in a specific region, vertical, or niche is deemed more crucial than first-fund numbers. Recognition in the ecosystem can be a more significant indicator of future success than immediate performance data.

Advice for Emerging ManagersErtan advises maintaining consistency, having a well-defined market thesis, and resisting the urge to significantly upscale the fund size or pivot strategies to follow current hypes....