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How Telefónica-Backed Tech-VC Fund Leadwind Is Planning to Invest

  • Leadwind is a tech VC fund, launched by K Fund and Telefónica in September 2021.
  • It recently announced that it closed its first fundraise for 140 million euros.
  • Miguel Arias, a partner at K Fund, spoke to Insider about the plans for the fund.

This is an edited, translated version of an article that originally appeared on April 20, 2022.

Leadwind is a venture capital fund that K Fund and Telefónica launched to invest in growing technology startups.

The two groups launched Leadwind in September and recently closed its first funding round, securing 140 million euros.

“We are now open for business, the fund can now invest and is already operating. Entrepreneurs should know that they can now access an operational scale-up fund that has a group of corporations and the ICO (Instituto de Crédito Oficial) behind it, “Miguel Arias, a partner at K Fund, told Insider.

This is the fund’s first step toward its goal of raising 250 million euros, according to Telefónica. The telecommunications giant said in a press release that it has committed 35% of the total investment, with another 35% coming from Spain’s Official Credit Institute (ICO).

The ICO will be the largest public investor in the fund, while Telefónica is the largest private investor.

Other investors include multinational finance servicer BBVA, tech consulting firm SATEC, and water-utility company Global Omnium, according to the Telefónica press release.

The fund wants to invest in “enabling technologies,” Arias said.

“These are technologies that help you develop a new business model: It can be a client platform, a blockchain platform, a connectivity platform, or a data platform — an infrastructure layer on top of which you build a business,” he added.

Arias said that his team has spent “months looking at companies and talking to founders” and has an “important pipeline” of startups to invest in.

“We hope to have the first investment in the next few weeks,” Arias said, adding that it will probably be a Spanish company, since the fund aims to have local companies make up half its portfolio.

Leadwind intends to invest between 5 and 10 million euros in companies that are valued at more than 40 million euros, Arias said. The company wants to lead the funding rounds on such deals while looking to collaborate with large funds on bigger investment rounds, he added.

Its other focus will be Latin America, where it’s already found “very interesting projects in Brazil,” Arias said, adding that Leadwind plans to set up an office in the country.

“In Latin America, we’ll most likely be coinvestors with a local partner,” Arias said.

Leadwind’s announcement is the latest in a series of large new funds in the Spanish market: Seaya Ventures closed its third fund for 165 million euros in December last year, while Nauta Capital closed its fifth fund for 190 million euros in November, according to the business -information platform, Crunchbase.

“I think this is great news because it means that the ecosystem has matured,” Arias said, adding that the funds complement one another.

“Seaya’s fund is more clean tech, ours is enabling technologies, Nauta is bigger but it is for an earlier stage. Brand personality, company stage, technology focus, and geography are important,” he added.

The fact that there are larger funds that can make larger investments presents K Fund’s managers with new challenges, Arias said.

It’s no longer a question of identifying the most promising companies, but of gaining access to those already showing a solid business model, he said.

“In the early stages, you have to distinguish between the genius and the madman. Not here, you can identify the companies that have technology as a differentiator, that have traction, and the key is to get them to let you invest,” Arias said.

“And for that, you have to have a good differentiating role, which for me is marked by proximity to the founders. This is a fund of operators, of people who have set up companies before. The other is access to revenue, which is why partners like Telefónica, BBVA, SATEC, and Global Omnium are so relevant,” Arias added.

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