PLAYBOOK 2025

The elusive VC edge

“What’s your edge?” No question has been asked by VC (Venture Capital) managers as often as this. And with good reason. Just as any business, if you want to attain market dominance, having a clearly defined edge that aligns with every action and feature of your business is essential.

But in venture, the question often prompts answers that point in thousands of directions. Managers may point to their value-add, their track record, their unique thesis, or something else. From speaking to more than 350 VCs on the EUVC podcast, investing in a few of them, and collaborating with Floww, we’ve come to believe that the best answer encompasses all of these elements and more.

The answer to “what’s your edge” can take anything from 5 minutes to 60 minutes – or rather, 60 days of deep due diligence. Because this is exactly what any LP (Limited Partner) is looking for to define, test and underwrite. So, in the LP meeting, the art lies in knowing how deep to go, where to focus (which can vary greatly depending on the LP) and knowing how to effectively articulate your narrative. For this whitepaper, we’ve partnered with our good friends at Floww and Foundamental to draw a roadmap to defining and testing your edge.

For this whitepaper, we’ve partnered with our good friends at Floww and Foundamental to draw a roadmap to defining and testing your edge. We cover:

1 — The roadmap to defining and testing your edge
2 — The meta discussion of the roadmap
3 — The application of the roadmap in two podcast episodes with two European VCs – one newly minted manager, the other a well-established rising star and exit of the year winner in 2024 at the European VC Awards

Before diving in, let us caveat. Many LPs have been taught to ask this question, but few know exactly what answer they’re looking for. When fundraising, you’re often the most prepared person in the room – at least when it comes to venture capital. So don’t go all meta and describe this framework in a fundraising call, rather, use this to inform how you build your narrative.

1 — The roadmap to defining and testing your edge

Before diving into the full whitepaper, start with our cheat sheet for a quick overview of the key points. Then, explore the following pages for a deeper dive into each topic.

For a more interactive experience, go to section 2 and check out our podcast episode where the authors—Patric from Foundamental and Andreas from EUVC—discuss the framework and its practical applications in detail.

1.1 Unique empathy for an underserved market

Knowing your market in depth is more than just a nice-to-have; it unlocks unique insights that inform every action in your firm. Whether it’s a framework like Mike Maples Jr.’s at Floodgate, centred on inflection points & insights, or the philosophy of our co-authors at Foundamental around project-based industries such as construction, the key is having enough knowledge to cultivate a unique perspective that founders value—so much so that they choose you.

And this is only the beginning. A clearly defined, intimately understood market allows you to shape your firm in perfect sync with what that market needs. More on this in the next chapter on building the experience required to win.

Unique empathy: When I speak with new managers and LPs seeking venture allocations, I often start with a straightforward, perhaps even provocatively simple, statement: I look for managers where I can draw a direct line from their experience to running a VC firm with their specific thesis and strategy. VC is tough; the numbers speak for themselves. Most managers don’t generate returns that justify the risk. To outperform, a manager must bring unique capabilities; if they’re not top-notch in this regard, the fund is likely a trivial pursuit for both manager and allocator.

For professional LPs, 99% of VCs are accessible. These LPs benchmark managers not against local peaks but global standards. Managers aiming to build a lasting firm should hold themselves to this level—otherwise, VC is simply a low-fee business built on empty carry dreams. In venture, hope is not a strategy.

Am I being too hard? I don’t think so. Venture has a problem: a long tail of managers who simply don’t perform. If these managers could self-identify, both LPs and VCs would benefit. How would this impact founders? Short-term, it might reduce available funding, but long-term, it could lead to a gold rush as VC—appealing even to less sophisticated LPs—would outperform and expand in reach.

What does unique empathy look like at the emerging manager stage? It’s about highly relevant operator or founder experience, a track record of on-thesis investments, a powerful and relevant network, and enough expertise to not only be contrarian but also right. Europe has several managers who exemplify this. For established funds, this alignment grows more complex, but you can see how the most successful firms evolve strategically to serve their target founders exceptionally well. Great examples include, Seedcamp’s latest publicly shared fundraising deck or our episode with Will Prendergast, founding GP of Frontline.

1.2 Building repetitions

LPs seek firms that raise from a position of strength and build towards market dominance. When you’re raising, it’s essential to do so with a foundation of experiences that have given you significant reps within your focus area. But it’s equally important to structure your firm to accelerate your expertise and installed base in the areas that matter most to your founders—and faster than your competitors.

This is where Floww’s data-driven approach comes into play. Floww provides a powerful infrastructure that allows investors to track and measure key performance indicators, automate fund administration, and gain real-time insights into portfolio health. By leveraging Floww’s platform, VCs can not only define their edge but also continuously refine and validate it against market realities.

A great example of how VCs are using Floww to enhance their operations is the Pages feature. This tool allows a VC to create a single space to share updates with their investors, build a more transparent narrative around their portfolio’s performance, and ensure they remain aligned with their key stakeholders. Additionally, built-in analytics offer VCs valuable data about investor engagement, helping them refine their approach to communication and reporting.

In the episode accompanying this White Paper, Patric from Foundamental shares how every activity they undertake is designed to build repetitions within the project-based industries.

Source: Foundamental

Ultimately, VCs who succeed in today’s landscape do so by combining deep market insight with real-time data intelligence. With Floww, investors gain the ability to benchmark, communicate their value proposition effectively to LPs, and build a truly differentiated investment strategy.

1.3 Distribution flywheel

VC is a game of reach—reaching founders, co-investors, and LPs. Yet, for most firms, resources are limited, making operational efficiency critical. That’s where creating flywheels between core activities and marketing efforts becomes essential. For a true deep dive on Flywheels in venture, a great reference piece is Jake Singer’s analysis of “Not Boring”-author and VC Packy McCormick’s flywheel

Another great example of how a distribution flywheel can be built and communicated to LPs is Seedcamp’s as they describe it in their fundraise deck for Fund IV (publicly accessible on slideshare). The section opens with a simple statement encapsulating everything:

“The more we invest, the stronger our reach.”

This message is supported by powerful visuals (see the carousel below). When assessing “reps done,” this is the kind of alignment you want to see across the firm. Every activity—whether reviewing deals, meeting founders, or closing LPs—should sharpen your edge, driving you from a position of advantage to one of market dominance.

Source: Seedcamp

1.4 The Arena

It’s ironic how many VCs expect founders to deliver a precise grasp of market size and timing but then turn to their own fundraise decks with a generic “we’re investing in B2B SaaS across Europe” and call it a day.

If you’re a 10x angel, decacorn founder, or an Index alum, that might slide. But for most, you’d be far better off showcasing a well-founded, contrarian view of the market backed by data and insights—something that builds real conviction that you just might be right.

There’s no universal formula here—what makes a compelling VC thesis varies by investor. Generally, though, the sweet spot combines an external market opportunity (mixing verticals, geography, tech trends, and timing) with an internal advantage (a unique blend of empathy, expertise, and distribution).

In Play Bigger (2016), Al Ramadan, Dave Peterson, and Lucas Ramadan introduced the “6-10 Law,” which outlines a common trajectory of startups moving from idea to IPO within 6 to 10 years. It’s a pattern that aligns with the venture model, almost as if validating it—though any deviation can significantly impact our industry.

Inflection Theory

Another influential VC author, Mike Maples Jr., further explores this in Pattern Breakers (2024), where he dissects how Inflection theory drives VC outcomes. In my humble opinion, one of the most important reads you as a VC can read when building your thesis. Not to apply his framework, but to inspire a similar verbalization of your own.

Inflections, along with Insights that harness them, empower startups to develop Pattern Breaking ideas that radically change how people live. Founders discover these powerful insights by Living in the Future.

Mike Maples Jr.

Floodgate

Foundamental exemplifies this in the chart to the left, where they show how project-based industries, such as the construction market, are mirroring the trajectories of more established venture capital sectors—illustrating how a new wave is primed for them to ride. As an LP, seeing hundreds of VC decks all describing similar looking career trajectories, investment strategies and track records, insights like this may just be what piques my interest enough to want to know more.

1.5 The Players in the Arena

VC is a team sport. We take minority stakes, so taking a company from inception to IPO alone isn’t possible. That’s why demonstrating to LPs that you understand the players, know how to navigate the arena, and have earned respect among peers is essential. Sophisticated LPs scrutinize this closely, using it for benchmarking, references, and to identify alternative investments—your competition for their capital as they seek the top contender.

Take Isomer Capital, a leading European early-stage Fund of Funds, as an example of diligent “arena” assessment before (re-)committing to a fund as described in a past episode we did with them.

For them, it’s not just about past performance—it’s about dissecting the conditions that created those returns and assessing whether they still hold. They dig into questions like: Have market dynamics shifted? What’s changed in the early-stage pricing environment or in the strength of founder networks? Is the original team still in place? For Isomer, these aren’t just routine questions but essential in ensuring they’re investing in a team that still has what it takes to perform.

Moreover, Isomer believes that private markets require an exhaustive, forward-looking approach. They meet and speak with as many market participants as possible, recognizing that backward-looking data can only serve as a guide, not a guarantee. Their diligence goes deep, balancing every promising new team they meet against rigorous standards to ensure it’s not just a good fit personally but genuinely strategic for their portfolio. They ask themselves, Is this fund truly unique in the context of our current exposures, or is it redundant given our geographic or sectoral coverage?

Isomer’s approach also involves a retrospective lens, analyzing gaps in their portfolio. They reflect on what they might have missed in certain regions or sectors over the past 5-10 years and evaluate who could cover those areas now. For Isomer, understanding the competitive landscape, potential new players, and previously overlooked areas is key to refining their strategy and ensuring they’re partnering with the best possible funds.

Why blue ocean strategies are tough in venture: VC thrives in sectors that are not only growing but also have competition. In a slow-growing market, opportunities are scarce. In a fast-growing yet under-competitive space, LPs lack benchmarks and worry about the financing risk of your vertical. This dynamic is a big reason we see such persistent herd behavior in the industry.

1.6 The Path to Returns

This isn’t the place for an in-depth dive into investment strategy, portfolio modeling, or track record—entire books cover these topics, and, of course, there’s an excellent series of masterclasses by your EUVC friends 💖. However, it’s worth mentioning that the ultimate measure of your edge and approach is your ability to maximize the probability and minimize the time to high DPI. And demonstrating as part of your fundraising materials that you master this.

As Fred Destin put it in a past EUVC episode:

“Just be a student of venture and portfolio construction and know what a Montecarlo simulation is or whatever method you want to use to talk about portfolio diversification. But you have to be a student of that stuff because if you don’t demonstrate to LPs that you’re a good money manager they won’t give you money.”

Even with all the characteristics discussed earlier, lacking a solid understanding of this aspect makes you a risky bet for any LP.

So, what’s the “right” strategy? There’s no universal answer. Concentrated portfolios work; broad portfolios work. Zero follow-on strategies work; 70% reserve allocations work. The key is knowing what aligns with your target opportunities, investment approach, and firm goals. It’s about making thoughtful, consistent decisions with the capital entrusted to you by LPs.

To attract LPs, prove through your track record, strategy, and edge why you’ll secure exposure to alpha.

A critical aspect of this is ensuring thoughtful exposure to your outliers. In a 2024 study, Primary analyzed Stepstone’s data, finding that “Great Funds” (10x+ returns) allocated 38.7% of capital to 23.1% of investments that delivered 5x+ and 23.9% to those yielding 10x+. By contrast, “Good Funds” (3.53x average) only allocated 18.6% of capital to 14.4% of their 5x+ investments. The takeaway? A primary driver of great funds’ returns was their concentrated capital in winners. If the “Good Funds” had similarly allocated, they’d have achieved a >8x MOIC.

In the end, you need to demonstrate a thoughtfully designed investment strategy aligned with a track record of investments and exits aligned with it.

1.7 Investment Discipline

A well-known business proverb says strategy is less about what you do and more about what you don’t do. In venture, this means staying in your lane—doing deals that leverage your edge, build your reps and flywheel, and fulfill the strategy LPs backed you to execute.

That said, venture is deeply FOMO-driven. Logo hunting is tempting, can grow AUM, and places you among the top names. But what does a small check in a massive round at the edge of your thesis really deliver for LPs? Often, not much.

Then again, even the smallest stake in the next Facebook could be transformative, and many top investors champion being price-disciplined but also knowing when to break that rule.

The takeaway? It’s complicated. That’s why you need clear principles and parameters for handling edge cases and big opportunities. Many LPs want insight into the thinking, processes, and actions you’ll take when those pivotal moments arise.

In parallel, managing LP relationships and keeping your investors updated on your journey is more important than ever. This is where Floww comes in, allowing you to seamlessly share content, updates, and even manage investor reporting—all in one place. With built-in analytics, you can track engagement and see the real-time impact of everything you share with your network. Keeping investors informed and staying connected is paramount, using effective tools helps to build trust and demonstrate transparency.

2 — Hear from the Authors: Patric and Andreas Dive Deep into the Whitepaper’s Framework

Play

0:00

Full Screen

Watch Andreas Munk Holm from EUVC and Patric Hellerman from Foundamental delve into the Edge framework—pay close attention, as while we co-developed this framework, we each have our own perspectives on its finer points, just as any LP you meet will. In VC, there’s no single truth. So watch, reflect, and come to your own conclusions.

Patric Hellerman

Foundamental

3 — The application of the roadmap in two podcast episodes with European VCs

3.1 Jörg Binnenbrücker on EUVC: Applying the Edge Framework to Capnamic Ventures

In this episode of EUVC, we welcome Jörg Binnenbrücker, Founding and Managing Partner of Capnamic Ventures. With a €190 million Fund III and a core focus on seed and Series A investments, Capnamic is a leading player in digital tech across Europe with a particular emphasis on the DACH region (Germany, Austria, Switzerland). Known for backing high-growth startups like LeanIX, Staffbase, Adjust, Getsafe, dexory, Accure, and Marktpilot, Capnamic has become a trusted partner for founders and LPs alike.

We’re excited to dive into how Capnamic embodies the Edge framework, which combines a deep understanding of their market, strategic portfolio construction, and disciplined investment practices. Listen in as Jörg shares his insights on building a high-performing VC firm that delivers real value to founders, co-investors, and LPs alike.

Play

0:00

Full Screen

Jörg Binnenbrücker

Capnamic Ventures

Capnamic’s edge is rooted in deep empathy for the DACH market, which Jörg and his team understand intimately. With a strong focus on B2B digital tech, Capnamic leverages a vast network of local founders and corporate LPs, bringing unparalleled insights and connections to its portfolio companies. Jörg’s approach combines discipline with empathy, allowing Capnamic to foster long-term partnerships that go beyond capital.

“We’re not just investors; we’re partners committed to helping founders thrive in a challenging market.”

Capnamic’s understanding of the unique dynamics in the DACH region gives them a competitive edge in identifying and supporting companies that might otherwise be overlooked by larger, global funds. This commitment to regional expertise has positioned Capnamic as the go-to partner for founders in Germany, Austria, and Switzerland.

“Hold on—is a regional focus and a broad B2B digital tech thesis really enough?” you might wonder. And it’s a fair question. The market has come a long way since Jörg and Capnamic first launched. Back then, this focus was more than sufficient, and Capnamic built a leading position and finely-tuned machine to deliver on it. But precisely because of firms like Capnamic, simply replicating this approach today often falls short. This shift is a major reason behind the increased influx of more specialized firms.

Capnamic’s journey has been about executing on and refining its approach through consistent repetitions. As Andreas points out in the episode, Capnamic’s competitive edge isn’t just about market focus; it’s about leveraging years of experience and cumulative knowledge that few can replicate today. Jörg shared some of the core activities that drive this approach:

Track Record of Success: From the outset, Capnamic has delivered standout results. Fund I produced three unicorns and several significant exits, establishing a strong foundation for the firm’s future. Fund II brought multiple high-performing investments, and now Fund III benefits from the team’s proven expertise and established industry connections.
LP Integration: Capnamic’s network of 85 executive LPs, most of whom are seasoned entrepreneurs, enables a culture of continuous learning. This network gives Capnamic unique market insight and decision-making guidance, sharpening the firm’s competitive edge.
Talent Development: The Capnamic team prioritizes growth from within. Many analysts progress to critical roles, and former team members often go on to found their own startups—some even backed by Capnamic. This approach creates a robust internal network and ensures a consistent, culturally aligned talent pipeline, reinforcing Capnamic’s foundation from analyst to partner.

This cycle of experience and growth has positioned Capnamic as a resilient, high-performing firm. With each deal, every LP interaction, and a commitment to developing its team, Capnamic continuously sharpens its edge, staying deeply connected to both founders and LPs.

Capnamic’s distribution strategy is all about organic reach and building genuine relationships. Capnamic’s “fanbase” among founders is a core advantage, with positive word-of-mouth acting as a multiplier for their reach. Jörg’s method of fostering trust and credibility with both founders and co-investors forms the foundation of this flywheel, letting Capnamic achieve growth without heavy marketing. In the episode, Jörg explains the pillars of this approach:

Founder Referrals: By cultivating loyalty and a reputation for being both tough and fair, Capnamic ensures a continuous stream of founder referrals. This strengthens their credibility across the ecosystem and helps draw in new high-quality founders.
Co-Investor Collaboration: Capnamic prioritizes relationships with co-investors, frequently involving them in portfolio days and collaborative workshops. This creates a strong network of trusted partners and helps generate deal flow.
Reputation Over Marketing: Instead of investing heavily in promotion, Capnamic focuses on results and long-lasting relationships. This approach not only builds organic credibility but also ensures that their resources are directed toward delivering real value.

This trust-based flywheel amplifies Capnamic’s market presence and influence, allowing the firm to grow sustainably and efficiently through solid, relationship-driven practices rather than costly marketing campaigns.

Capnamic’s approach to maximizing DPI is rooted in a disciplined, carefully constructed portfolio strategy. In the episode, Jörg’s shares his commitment to ensure that each investment aligns with clear return targets, with every deal showing a viable path to a 10x return while also playing into a balanced portfolio mix where only a quarter of investments can be considered the notorious high-risk, high-reward power law bets. The rest have a more solid foundation with a clear path to steady growth and solid returns, thus creating a balanced and reliable foundation for LPs. Jörg explains several key components of this strategy:

Clear Return Targets: Capnamic requires each investment to have a realistic 10x return path, designating at least 25% of investments as potential “fund returners” that anchor overall performance.
Balanced Portfolio Strategy: By balancing high-upside potential with stable growth opportunities, Capnamic builds a portfolio resilient to market fluctuations and capable of delivering consistent returns.
Selective Follow-On Investments: Capnamic only allocates follow-on capital to companies with proven market traction and growth, ensuring resources are used effectively to maximize returns for LPs.
Opportunistic Secondaries: Although the primary focus is long-term growth, Capnamic strategically considers secondary sales when favorable conditions arise, offering liquidity while maintaining alignment with the fund’s overarching goals.

Capnamic’s disciplined, risk-adjusted approach serves LPs well, with the potential for substantial upside through big wins like LeanIX. This strategic balance of risk, selectivity, and growth orientation ensures that Capnamic remains a reliable partner, consistently positioned to deliver strong DPI.

Capnamic’s investment discipline is founded on a set of strict principles and processes that reinforce its commitment to a focused strategy. In the episode, Jörg emphasizes Capnamic’s rigorous approach to maintaining its core thesis—early-stage B2B software within the DACH region—highlighting a preference for depth and expertise over breadth. Jörg explains how each investment is vetted against stringent return expectations and handled through a consensus-driven process, ensuring alignment with Capnamic’s disciplined framework. Key elements of this approach include:

Strict Investment Guidelines: Capnamic operates within a clearly defined framework, concentrating on early-stage B2B software investments in the DACH region, which aligns each deal with the firm’s core thesis and regional expertise.
Valuation Discipline: Each deal is subjected to rigorous financial analysis to ensure valuation discipline, prioritizing entry points that allow for a realistic path to a 10x return.
Targeted Follow-On Strategy: Follow-on investments are selectively allocated to companies demonstrating consistent growth and market fit, optimizing resources to reinforce high-potential performers without overextending.
Consensus-Driven Decisions: Capnamic favors a collaborative, consensus-based decision-making process, striving for unanimous support on deals to strengthen team alignment and disciplined execution.

Capnamic’s disciplined and focused investment approach serves LPs by building a resilient portfolio. With its emphasis on selective follow-ons and consensus-driven choices, Capnamic is well-positioned to consistently deliver value, ensuring each investment aligns with the firm’s strategic goals and high performance standards.

The Future of Venture Capital Capnamic’s structured approach highlights a crucial trend in modern venture capital: the fusion of market-specific expertise with disciplined investment practices. As the ecosystem evolves, Floww is playing an increasingly important role in bridging the gap between founders and investors. Floww’s data-driven infrastructure complements Capnamic’s methodical investment strategy by providing deeper insights, streamlining due diligence, and facilitating transparent investor-founder relationships.

In an increasingly data-centric investment landscape, firms that combine structured discipline with digital enablement will be best positioned to drive superior returns and build resilient portfolios. The future of venture capital is not just about capital deployment—it’s about harnessing the right insights to make smarter, more strategic decisions.

3.2 Lorenzo Franzi on EUVC: Applying the Edge Framework to Italian Founders Fund

In this episode of EUVC, we welcome Lorenzo Franzi, a founding partner of Italian Founders Fund. Focused on building up Italy’s tech ecosystem, Italian Founders Fund combines regional specialization with a dynamic support network, positioning itself as a transformative player for Italy and the Italian diaspora. With six investments so far, Italian Founders Fund targets early-stage founders, leveraging an extensive network of Italian entrepreneurs and industry professionals to drive meaningful growth.

We’re excited to explore how Italian Founders Fund applies the Edge framework, bringing empathy for Italy’s unique market, rigorous execution, and a focus on long-term impact in venture. Lorenzo dives into his experiences and shares how Italian Founders Fund is set up to support a new generation of Italian tech founders.

Play

0:00

Full Screen

Lorenzo Franzi

Italian Founders Fund

Italian Founders Fund’s unique empathy lies in its deep understanding of Italian culture and its potential to cultivate strong, globally competitive founders. Lorenzo, himself half-Italian, grew up understanding the cultural nuances that shape Italy’s business landscape. He explains how deeply ingrained values and influences affect risk-taking and career paths in Italy—insights that help the fund support local founders’ growth effectively. Italian Founders Fund has built a thesis around this empathy, focusing on three main pillars:

Investing in Italy: Italian Founders Fund acts as a lead or co-lead investor for seed and pre-seed stages in Italy, providing both capital and extensive support to maximize founder success rates.
Supporting the Italian Diaspora: The fund backs Italian founders abroad, tapping into a wider network and supporting growth beyond borders.
Empowering Foreign Ventures Entering Italy: For select foreign ventures aiming to enter the Italian market, Italian Founders Fund offers unique local insights and a strong network to bridge their transition.

Italian Founders Fund’s understanding of these cultural dynamics and local networks gives it an edge, setting it apart as a true partner for Italy’s emerging tech ecosystem.

Italian Founders Fund is actively building its repetitions, leveraging Lorenzo’s experience and network. Andreas probes into Lorenzo’s background in investing and entrepreneurship, highlighting how his roles at Global Founders Capital and as a founder himself prepared him for this mission. Lorenzo’s insight from investing in multiple ecosystems helps him apply best practices from abroad to Italy’s tech ecosystem.

Key drivers in building these repetitions include:

Local Focus and Track Record: With five of its six initial investments based in Italy, Italian Founders Fund is building a portfolio rooted in its core market. Lorenzo’s prior experience with 20+ investments globally equips him to bring insights from mature ecosystems to Italian founders.
Engaged LP Community: Italian Founders Fund has built a network of over 120 LPs, largely Italian entrepreneurs, whose firsthand experience in risk-taking and company-building offers valuable mentorship and insights to portfolio founders.
Hands-on Support: Operating with a startup-like mentality, Italian Founders Fund documents every process, support strategy, and commercial introduction meticulously. This builds a system that can deliver impactful support at scale, even as the fund grows.

Italian Founders Fund’s cycle of learning, refining, and supporting founders positions it as a high-performing partner in Italy, staying closely connected with both LPs and founders.

Italian Founders Fund’s distribution strategy revolves around leveraging focused relationships. Andreas highlights Lorenzo’s mention of a small, dedicated team and an engaged LP base as core components of this approach. Lorenzo emphasizes that by concentrating on relationships and setting clear boundaries for their phase and geographic focus, Italian Founders Fund creates an efficient reach with limited resources.

Core pillars of this distribution strategy include:

Founder Referrals: By fostering loyalty and providing impactful support to founders, Italian Founders Fund maintains a steady stream of referrals, reinforcing its credibility in the Italian startup community.
Targeted LP Base: The fund’s LP base is composed primarily of Italian and European entrepreneurs, who contribute industry-specific insights and hands-on support to portfolio companies.
Selective Focus on the Zero-to-One Phase: Italian Founders Fund’s “flywheel” centers around the early stage, where its influence is strongest. They prioritize building Italian companies and supporting their local success before connecting them with international opportunities, consciously ending their active involvement as companies expand.

This disciplined and relationship-driven approach enables Italian Founders Fund to grow its influence organically, effectively reaching core stakeholders and expanding its market presence without heavy reliance on marketing.

Italian Founders Fund strategically focuses on Italy as a venture market at an inflection point. Lorenzo and Andreas discuss how the Italian market is undergoing maturation, with public funding support and foreign capital influx helping create a strong foundation for growth. Lorenzo compares Italy’s current phase to that of France 12 years ago, identifying similar momentum in funding and talent.

Lorenzo points to data showing increased seed and Series A investments in Italy, with significant foreign capital participation over the last two years. This growth trajectory supports Italian Founders Fund’s strategy to capture value at the beginning of Italy’s venture boom, capitalizing on both increased funding and entrepreneurial ambition within the country.

Italian Founders Fund distinguishes itself from other Italian investors by its model and focus. Lorenzo explains that while existing funds often target later-stage rounds or use institutional capital, Italian Founders Fund takes a different approach with private, entrepreneur-driven capital. This unique model allows Italian Founders Fund to be hands-on with founders and collaborative with early-stage players, providing value that larger funds often lack.

Lorenzo notes that Italy’s venture ecosystem is evolving, with more seed-stage players and international funds entering the space. Italian Founders Fund welcomes collaboration with these players, contributing to a more robust and supportive environment for Italian founders.

Liquidity is a primary consideration for Italian Founders Fund, particularly given the diverse backgrounds of its LP base. Lorenzo explains to Andreas that the fund is structured to meet LP needs for both early liquidity and long-term investment. To achieve this, Italian Founders Fund considers secondary sales and is exploring continuation vehicles.

Key components of this liquidity strategy include:

Structured Follow-On Strategy: By reserving 40% of its capital for follow-on investments, Italian Founders Fund maximizes value creation for portfolio companies, enhancing their potential for successful exits.
Opportunistic Secondaries: To balance the liquidity needs of its LPs, Italian Founders Fund is open to secondary sales, offering partial liquidity while remaining focused on the long-term growth of its portfolio companies.

This approach ensures that Italian Founders Fund can serve LPs with varying liquidity preferences, enhancing its attractiveness as a long-term partner in Italy’s venture landscape.

Italian Founders Fund operates with strict investment discipline, focusing on its Italian thesis and building accountability within its team and LP community. Lorenzo emphasizes that this commitment to discipline is essential for staying true to their mission. Andreas notes that such a clear framework helps Italian Founders Fund avoid the temptation to stray from its core strategy.

Key elements of this investment discipline include:

Clear Investment Parameters: Italian Founders Fund has defined specific geographic, sectoral, and stage boundaries to ensure each investment reinforces its strategic goals.
Collaborative Decision-Making: Operating with an open model, the fund includes LPs in deal flow discussions and encourages feedback, maintaining accountability and alignment with its Italian-focused mission.
Direct LP Accountability: With a highly engaged LP base, Italian Founders Fund regularly reassesses its strategy and welcomes LP input, reinforcing its commitment to staying focused on its Italian thesis.

This disciplined, thesis-driven approach ensures that Italian Founders Fund remains committed to building a high-impact portfolio, with each investment reinforcing its unique edge in Italy’s venture landscape.

Italian Founders Fund’s application of the Edge framework showcases a methodical, high-impact strategy for building Italy’s tech ecosystem. With a clear focus on Italian founders, disciplined execution, and a hands-on LP network, the fund is positioned to generate strong returns while fostering Italy’s venture ecosystem.

Leveraging tech like Floww’s, these firms can deepen their strategic capabilities, providing VCs and LPs alike with the tools to collaborate more efficiently, track portfolio performance in real-time, and align better with their long-term goals. This approach ensures that the Edge framework remains as relevant as ever in the current venture landscape, enhanced by the digital tools that define the future of venture capital.