Q&A, Q&A- Investors / Corporates

7 Questions with Paula Blazquez Solano of InnoCells (Banco Sabadell)

Paula Blazquez Solano is among the investors who will be on stage sharing insights and investment trends in European FinTech at the 12th FinTech Forum, 19th Nov. 2020 in Frankfurt: https://ftf12.eventbrite.com

1. Please tell us a bit about yourself, both at work and leisure.

My name is Paula Blazquez, I lead the Corporate Investment Vehicle of Banco Sabadell, the 4th largest private bank in Spain. At InnoCells, we invest in Fintech related startups across the globe, from seed to series A (tickets between $500k up to $3M). I have worked in venture capital most of my career, having worked for a listed Venture Debt fund based out of Palo Alto, California and later on in a venture fund based in Madrid with a focus on Latam, Spain and India prior to joining InnoCells. I am a proud advisor, investor and Board Member in several Fintech startups.

2. What are your focus areas, overall and within the FinTech space?

 We invest in Fintech and Insurtech startups in the broader sense of the word. That is, we focus on startups that can help fast forward innovation internally within the bank. We look at both tech-startups which are more horizontal from an industry perspective, but whose technology will have a big impact in banking processes (ie. Biometrics, cyber…) as well as fintech startups with a business model that is adjacent to the core business of the bank.

3. Any recent deals that you would like to share with us, and why you invested?

A couple of examples of investments we did during 2019 are:

We did a follow on round in Bud’s Series A together with Goldman Sachs and HSBC (after having invested in their seed stage in 2017). Bud is an Open Banking startup based out of the UK, which helps banks entering the new era of open banking services.

We also invested in a B2B Conversational Banking startup based out of Singapore, Active.ai which is transforming the way users interact with financial institutions.

We also made an investment in Undostres, which is a Mexican Super-app providing a digital wallet and marketplace solution for Mexican clients.

These are a couple of examples in our portfolio, which exemplify what we look for when investing in startups: outstanding team, top-notch technology, proven market fit and disruptive and scalable product.

4. Which are the trends to watch out for in the next 6-18 months, and how do you see the Corona crisis affecting that?

I believe COVID19 will have a significant impact on Venture Capital industry, from the way deals are done (on a remote basis now), to access to capital for startups. We will see capital concentrated in certain deals/startups in specific, less impacted verticals and we will see valuations going down significantly. As for H1 2020 the focus of VCs will be in ensuring runway for the portfolio companies for the next 12-18 months, which is resulting in bridge rounds or extensions at lower valuations and for the less fortunate ones, budget cuts and salary cuts (which again means less growth and product development). VCs will likely shift from a focus on high-growth models to a profitability focus, and this will have an impact on startups’ business model, product roadmap and potentially, overall vision. 

In terms of interesting trends coming up as a result of COVID19, that startups should be aware of (non-exhaustive): unprecedented digitalization and automation of manual processes (both back-end and client facing) which will also result in momentum for cyber startups, a focus on cash management (CFO tools) for SMEs, a change in HR more noticeable in remote working solutions, supply chain management becomes key…

Hence, some of the “winners” of COVID19 will likely be: startups on the B2B space focusing on digitalization (targeting big corporates as well as SMEs); Startups focusing on facilitating remote working (not only video conferencing but also interactive tools for workers or HR startups focusing on productivity management); digital-health facilitators; cyber startups (including cyberinsurance); digital education and training; among others.

5. Your advice to European founders looking to scale up and raise funds?

Firstly, make sure you have sufficient runway for at least the next 12 months. Depending on your case (stage of your startup, VCs backing the cap table, industry, B2C vs B2B, etc) you might have to make difficult decisions when it comes to extending that runway.

Reassess your Business Plan, it might be time to rethink strategy and refocus your KPI objectives to obtain profitability at an earlier stage, and this might come with some tough decisions on growth (specially for B2C), but also it might mean changes in your product roadmap (the sooner you do this assessment the better)

If you unfortunately have to face salary cuts for your employees think of ESOP formulas that can help compensate for their salary reduction.

Start talking to VCs earlier. If you have VCs or BAs in your cap table that can help you make some introductions, use them.

You might have to consider a round extension or a bridge at a valuation that might not be aligned with your 2019 expectations. Think of it this way: With COVID19 future cash flow expectations might have suffered a negative impact and valuations are just a current representation of this uncertainty in the market. This is a long-run game and you will have a chance to recover from this negative impact in the future.  Year 2020 will be, for many startups, a critical survival year, focus on surviving now.

Evaluate those COVID decisions every 2 weeks, as the health crisis develops you might have to make adjustments to it.   

6. What’s on your bookshelf/ reading list?

 The Whistler, John Grisham

7. Your favorite place for a coffee and/ or a drink?

With COVID19 there has been so long since I have been to a bar or Café… so I would say anywhere, as long as it is outside, during sunset and in good company.