Paulina (Jänsch) Vogel - Managing Director at JVV

Welcome to another CEO Wisdom Podcast. We have Paulina Vogel with us today. She's in a family office, a VC, she's a PhD student while being a mom and a speaker in Germany. Her company is called JVV, the managing director at this one, also founding partner at Lenox Impact Capital. Uh, so Paulina, welcome to the pod. Tell us a bit more about yourself and what you've been up to.

Yeah, thanks, Charles, for the intro. Yeah, you've, you've said all the, uh, all the titles, let's say, all the things I'm doing. I guess it's fair to say that I'm quite adventurous. I like to do many things. Um, at one time, quite entrepreneurial. I was raised that way in a family office, to which I have returned to, um, 1.5 years ago, which was a great blessing, I have to say. I was able to do my own, um, yeah, entrepreneurial endeavors before, run my own impact fund, and then eventually merge that with the family business. And that has been a great experience so far.

So what was your first entrepreneurial experience?

Uh, Linox Impact Capital. I think the entrepreneurial mindset— there's many like childhood stories or so where I used to organize things very early onwards. I, I was annoyed with things, I was like, okay, let's change this. Like, this kind of determination, I guess, was always there, but my first entrepreneurial company was Phenox Impact Capital, and that is a fund that has invested in 11 startups, um, in Europe and the States, all that solve an environmental or social problem at its core. That was our definition of impact, because impact is so broad. It's like, okay, it can be anything and nothing, kind of. But for us, the, the meaning was the founders that we invested in, they really had to come from an industry that they knew and that they they said, hey, I saw this problem live and in action and I wanted to solve it. And if I solve it, it improves this world and its people at its core, at the solution, let's say. So that was kind of our investment thesis.

Yeah.

And that we're doing now since 5 years. We were to raise a $40 million fund. That was our goal. And then quickly realized actually right now, sadly, the momentum has shifted away from impact. There's other topics that are getting funded better. And we were— we came to the very sober conclusion that it's very hard right now to raise an impact fund, and maybe it's not, not the right timing. So we focus on supporting the, the fund that we have, the startups that we did invest in, and yeah, postpone the impact fund because it's just sadly not, not the momentum right now.

And you described the impact funding, and also can you describe the performance of the startups you funded so far?

Yeah, for sure. The performance was, um, with some really good, with some mediocre, and with some not so much. So just like, just like any other fund, I think what we've seen really is that impact absolutely can outperform. And it doesn't matter how accurate you are with your— we did financial models and we, we did so many things because we're like, okay, you know, we both come— me and my partner, my who's also my husband, we're both coming from a financial background. So we're like, okay, let's hack the system, let's put it into numbers. And that's all great. And it really helped us to, to ask the right questions and to, to understand the business model and to understand the industry, which was important since we invested agnostic. Uh, but in the end it stands and falls with the people, the founders, and, um, and those that were really, really exceptional are still exceptional. They, perform exceptionally, and I think in the end we're gonna have like a 3 or 4x, um, return on the, on the fund, which would be great. Of course, in the beginning when you set up your fund, you're going to be like, okay, we're going to do 10x, 100x on the fund or something. Uh, yeah, that realization also— everyone you invest in is exceptional, and then out of those exceptional people, only a few also have the circumstances to, to carry their, the hard work that they do put in forward, right? There's also, you also need You also need all of those other things. So yeah, we, we realized that it's not only, um, uh, you can invest in only great people, but not all of those great people will in the end, uh, make it through. But I think we can be quite proud with the performance that we do show.

And what's your role in the fund? What's your husband's role? Uh, how do you get the adult supervision as well, like of the older folks, uh, that have seen a lot of business start and fail, I guess, like the dad of your husband or your dad, whoever. Um, how does the team mix up together between old generation that has the, the wisdom, the maturity, the experience, and the younger folks that understand truly the, the actual trends?

Yeah, I think those people that, uh, that did trust us, that did invest in us and in our fund, they understood that we bring something to the table that they could not. And of course, you, if you have experience, you've seen things, you're, you know, you're ahead in ways, but not in all ways. And I think for us, what was really key was the access to the founders. So we connected with them on a different level, and it was really easy for us to kind of— I hope it's okay to swear— but to kind of cut through the bullshit and be like, is it? Yes?

No?

You were drinking in the moment? Okay, sorry.

Of course, of course.

I went ahead.

Also in my decisions, and I need to be moderated, sort of. You said like talking to them, there's like emotions and, uh, pieces of data you can catch through conversations. Uh, is that your part? Who looks at like the actual numbers? Because numbers speak a lot, right, when you make an actual decisions. But talking to a human being, asking them questions, also like a super important source of data. So, uh, who looks at the numbers as well? How do you make your final decision on the founder?

Yeah, yeah, I forgot to answer that part of the question.

True.

So you could say that Ettore, my co-founder and husband, runs the internal ministry and I am the external. So I was very much on the outreach, finding the startups, getting to know them, and, you know, being the fun person, if I'm allowed to say that about myself, to kind of get them in. And then he was the one that asked the the, the tough questions during the due diligence. And, uh, it was a good cop, bad cop, a little bit. Yeah. And I think that's, I think that's good. I mean, um, I'm definitely more extroverted, he's definitely more introverted, and that's, that's a superpower. Um, when you have that, uh, when that comes together, it's like having someone younger and someone more experienced. Um, I think that also you will find a lot of founders through your partner that you might have not found in the first place, because he might, or she might know them from, from, uh, their network, right? In your case, for example. And for us, that was the same. So we both found founders in different ways. And yeah, in the end, we looked at the numbers together, but he was definitely the person that prepared the analytics. And we put everything, every detail that we knew, we put into an Excel and we tried to quantify it. But we did look at the numbers, and in the end, it was like, okay, all the numbers that we get from a startup are straight from Hogwarts, like what they expect to have in revenue in the next 5 years. It's their approximation. And all it shows us is how far do they plan ahead. Some startups don't even have a financial plan. Some startups have a 10-year plan and it's very, it's very granular. And they're like, okay, and then this is going to happen. This is— so it just, it tells you a lot about the people behind and it allows you to have a starting point about where to talk and to, to ask them smarter questions than hopefully other VCs. And yeah, for us, it's a starting point. And in the end, it's okay, do we believe they can crack on or not?

Question asking is such an art, right? Because even if you ask the right question with the wrong tone at the wrong moment, you're not gonna get the answer you're looking for. And also looking for an answer is not even the right mindset because that means you're like imposing a vibe on someone while you just want to objectively write down data and make a decision after that, right? It's such a— I think it's still like a top 5 skill to have as an entrepreneur. Um, you said you deployed already a bunch of investment and that impact, uh, investing is sort of losing feathers nowadays. What do you think is that? And I mean, in Europe it's losing less feathers than in the US, right? Were you raising from US investors or it's still mostly European investors? And also, were you investing mostly in German companies? I know I asked a bunch of questions, but yeah, there was 3 in there.

Yeah. Um, starting with the last one, it was always, um, raising money from German— from, from Europe, simply because it's easier regulation-wise, um, if you're BaFin registered, um, or UVECA. So yeah, it was always that. And then investing, we could do Germany, um, we could do Europe, and we've done the States as well in the past. I do have to admit though that it's really hard, um, I think if you're not there, if you don't have the biggest network there. And we do have a network, but it's very stage, uh, or see, like Series B onwards, um, Silicon Valley focused and not so much in the early stage. So we did two investments there, um, which we're still happy with, but it's just hard, I think, it's very hard to find exceptional founders. If kind of like, if they make it over the pond, then either you knew them from before, which was our case, or they have tried it with everyone else. So we realized after those two lucky shots, like, okay, actually, yeah, we knew them from before probably. So it was, we knew them, but let's not try that again. And I know the other people are successful. It just wasn't for us. So then we focused more on, um, on Europe.

And why does impact investing sort of lose feathers? Is it because of the US like clamping down on all the nonprofits and that caught fire in Europe as well? Or—

yeah, I think like, I think there is a lot of impact coming from politicians right now, specifically the US, but also it's not only the US, right? Like other countries are also kind of SDSR has been lifted and other regulations that have been prominent in Europe, for example. And then, like, yeah, politicians have said, okay, actually we're overregulating, we're taking a step back. And so people are a little bit saying, okay, what do we put our money in or not? A lot of platforms have come up that wanted to do these impact audits and automate that and so on. And then it wasn't a necessity anymore. So where do these startups go if there's so many and there's, you know, so it's like, yeah, I think that happened. And then at the same time, other, sadly, other trends have gone more viral, which is defense. Like, let's be honest, it's right now, it is more easy to raise a defense fund than to raise an impact fund. And that's the sad truth because people are scared and people are, you know, they're like, okay, actually let's invest in that. And especially in Germany, the momentum that I feel is that the Bundeswehr, so our military, we weren't as attached to it as you are in the States. I've lived in the States, I have family in the States. I think I can relate a little bit as to the sentiment there where it's like, you know, you have those days to celebrate the people in the military and so on. And for us, that was not the case at all. And this year for the first time, I'm seeing advertisements for our military everywhere. I'm seeing that there is a national holiday, not holiday, but day to celebrate. And I've never experienced that before. So I think the sentiment is shifting a little bit from feeling a little bit wary about this. Like, yes, we need it. Of course, it's great that people do this, but also like, would I do it myself? I'm like, I wouldn't. And then this was the kind of sentiment that I have felt towards now being like, oh, actually, It's a career path that is becoming more prominent now amongst, um, yeah, amongst younger people. So it's a change in sentiment for sure on so many different levels.

Yeah. A couple of comments here. So, um, the thing with Europe, I, I'm not for like all the regulation and the compliance stuff, because even if you crack it in Europe, you won't be able to crack it in US because US doesn't have as much regulation compliance. And I think it leveling the playing field so that a startup can export their IP in US or Canada or other places is sort of good. I'm not saying that yet what most startups were doing in Europe was like woke and didn't add value to lives. I think it did, but I think Europe was taking it a bit too far. On the defense thing, you're like 100% right with Ukraine. With, uh, Iran, right? Like, the conflict is coming closer and closer to Europe, and I think it's more than just fear, it's like rationality. I think Europe is under-militarized, right? And you've got like a big bear adversary, which is Putin, and if that guy decides to overstep, there's, there's not much, right, that will stop him. Europe has like deep historical trauma with wars, right? Like two world wars. Germany has, uh, bred the Nazi regime, right? But that doesn't mean that you need to like demilitarize and not talk about it and all that. I think, yeah, remilitarizing is definitely a good, uh, thing. But yeah, as you know, defense is really tricky, uh, we're talking about human lives, right? And sometimes eliminating these, which is super bad, uh, but yeah, defense should say it, right? It's like prevention of bad stuff about to happen. So are you pivoting to that, or are you still staying in like, um, the, the impact raise? Like, how does— if, like, uh, yeah, less funds, like, how are you navigating this? Are you just gonna wait and be patient? Uh, what's the strategy here?

Yeah, no, we're not pivot. Just to be clear, I wasn't advertising that. I'm just— that's what I see in the market, right? That's what I, I see. Impact funds go down and I see, uh, defense funds rise and raise lots of money. So that was just an observation. We're not pivoting. And what we did is we the fund that we, that we did have, we incorporated, um, the brand, so to say, to the family office that I work for, um, to be the VC arm of that family office. Um, and that means that now, as the family office, we are from the family office, we can still invest, but we don't have to fundraise, which is good. And at the same time, it's not my only job anymore. So before I became the managing director at JVW, I spent 100% 100%, 110% of my time on Linux. And, um, and that's not the case anymore. So, um, it has reduced because we're not fundraising, because we said, okay, we have this, uh, we have these investments, we're going into the, um, into the exit phase with some of them now. So there's always work, of course, the startups always, um, are, are thankful for our support, um, but some of them are also just really great and they, they barely need our support. So I meet with them on a quarterly basis and we check up, and if I can help them, I do. But, um, yeah, it's, uh, definitely my time invested in Linux and in the investing, um, scene in startups has reduced. Whereas in, uh, for JVV, what we're doing is, uh, we're— we have 3 different operative parts, and in all 3 of those parts I have, uh, let's say, a minor role or, or project to play. So so it's automotive, energy, and real estate. And, um, yeah, then VC investing is, is another rather smaller part of that portfolio, let's say. So from my, my specific role is overall, um, wealth management, and startup investing has sort of taken the back seat.

But don't you think that investors with convictions, uh, would still invest in impact investing because The fact is investing is very valuable, right? Like, as a multi-billionaire, I can just sit back and not only have a return on my capital, but know that I've saved lives and helped a lot of people, right? So isn't there still a market for people willing to invest in that?

Yeah, 100%. No, definitely. And I mean, we have— there are impact funds that are still raising their next funds and so on. For us as a first or then second-time founder, being both of us were under 30 when we did fundraising. I'm still— I'm 29. Um, so it was— I started this when I was 24. So I think it was the combination of Impact kind of losing momentum, and also people are like, you guys are so young. Usually people get rich by exiting a startup and then they, they start their own VC, whereas we were not rich, didn't exit our own startup, um, and said, hey, but we have the best connection to founders, and I think we can really, um, uh, yeah, get the best founders and, and invest. Um, and then it was a combination, and I also, I think we at some point we had to accept the fact that you cannot force someone to either believe in, in impact or believe in, um, in your thesis. So we give it some time, we continue investing, we can invest from the balance sheet of the, of the, um, family office with larger tickets as well. So that's really nice, um, that we can reinvest and and support along the way. Um, and yeah, I think give it more time and then maybe we'll reopen, uh, a Linux fund at some point. I still 100% am convinced about impact and about our thesis, and it would not be much different than what we've done in the past. Of course, it can also always be more specific. For example, we were very generic. That was something that we've heard— you guys are too generic, you should be more specific, you should be more niche. Um, that is something that I, I could imagine to change.

And how did you surpass psychologically the fact that you were a young woman in very much of a boys' club, right? That sometimes been overlooked. Like, how do you overcome that?

Yeah, I have to say my experience overall were super positive. I think it's up to you to feel welcome in a room full of, full of, and then it's basically blank, like full of people that you think are more experienced, full of, full of men, full of people that— what, whatever it is that, that is your demon, let's say, it's, it's kind of up to you to be, uh, to walk with confidence and be like, hey, this is what I do, and you know, this is— I'm a bus— I'm an entrepreneur, I'm a businesswoman, um, and to kind of not let that get to your head too much. I think that's how I handled, um, because in the end, of course, there is a huge gender gap, and I'm— our whole fund was centered around— we had 50% female founders, um, by headcount in a portfolio. I've spoken about gender parity. I'm writing a doctor's thesis, I'm doing a PhD on the differences of male and female. But in the end, I'm really convinced that what you bring to the table, you have to be convinced about, and you have to be very— not making too much of a problem about it, let's say. I'm almost like, I'm a feminist 100%, but I'm also like, let's take away the words, let's take away the labels, let's take away the the pressure around it. Let's just work together, you and me, as you know, male and female, and let's, let's get on. Um, so I'm trying to kind of change the narrative a little bit about it doesn't have to be the quotas and the rules. It can be, it can be investing in a fund that has equal as many males and females and that outperforms.

Isn't the feminist word charging its reputation tarnished by a bunch of hipsters that just were doing destructive things for the movement.

Yeah, 100%. I think like many, like many things, like the, the word in itself means believing in equality, and I think that's something that the majority of people would, uh, would support and say they, they would like it if, if their daughters have mixed bags with the word equality. Yeah, exactly, exactly.

For the reasons you mentioned, right? Because you said it's your demons. I, I believe that. I believe I had the privilege as well as middle upper class kid, but but it's like, I also, that was also like a burden, right? Because I didn't had the chip on the shoulder that, I don't know, Steve Jobs had from like being let go from his, that although I would never wish that on myself because I would like kill my happiness. But I, yeah, it's like I often have these discussions. What's your thesis on equality? Mine is give proper education, true technology to pretty much everyone, right? And I'm very bullish on apps like ChatGPT, for example. But obviously need to teach people to ask the right questions and dig deep, right? So that they can educate themselves. And after that, yeah, they should be able to go by their own. And I'm not too much for grants, you know, I'm from Canada. And, you know, I think Canada's way too much on the socialist side. I think it's— it makes them very— it gives them a hard time to compete against Silicon Valley, right? That has like almost no safety nets. What's your definition of equality?

Um, in the startup scene, we're far from it. That's just, that's just the truth. Like, uh, 2% of the money goes into all female-funded, um, uh, teams. 16% of the capital is invested in, in mixed teams, and the rest goes to all male teams. So if you just look at the numbers, it's like, okay, for sure there are more, uh, guys running the scene. But then we have to ask ourselves, okay, why? And that is also a little of what, what my PhD is about. Um, how is it that, as you said, more and more support towards female founders is happening also in Germany, in Europe, and so on? We have days and events and so on and so on, but the numbers are getting worse by the year. They're stagnating or they're getting worse. So we're losing women. Women are leaving the startup scene, and this is, is terrible to see, but there has to be, there has to be a reason behind it. So what I'm researching right now is What makes a male founder successful and what makes a female founder successful? Because maybe we're looking at, okay, what, what is it that, that male founders need? And we're trying to, you know, we're creating, um, late night events for women to connect, but maybe that's not the right thing because some people, uh, you know, in, in the majority of families, it's still the woman that take care of, um, of the kids. Um, we do it.

She might not feel safe, you know, like going out at night and stuff like that with a bunch of bros around on a pizza and alcohol sometimes, right? So I think—

Yeah, so it could just be a change of that, like something as simple as, okay, let's try to do it in the mornings, you know, when maybe there is childcare happening or just things like this, like, hey, let's understand the data. And there are great books on how the world that we live in is vastly created by men, and then not intentionally against women, but of course you always think about your own problems. Like, that's what— that's— you live your reality. So to give one example, if you're in a restaurant— I'm asking everyone that listens to, to, to see whether in their country that's the same— but if you're in a restaurant, you walk to the toilet, there is more like— often the male toilet is closer to the restaurant entrance, or like to where you walk in, than the female. And that's the same for like stadiums, football stadiums, and/or concert arenas and so on. And there's, for example, the same amount of male and female toilets, whereas it's— data shows that we need, right, there's always a queue, we need more toilets, or we need to use the bathroom more often, or I don't know what's going on. But that is a defect in design, right? Because if you know that fact, then you could just reorganize and say, okay, maybe we just need more female toilets or unisex or something.

Yeah, the poignant case is like sometimes you see lineups in women's restrooms that is like 10 meters long and no lines at men's. So it's like maybe more toilets for women or like a better design.

Yeah, yeah, this is such a small thing, but there's like, I forgot the name right now, but I can maybe post it in the comments of a book that is amazing. And it just analyzes the whole world as to, okay, this and this and this are just mistakes by design. It's not against women necessarily, but women suffer from it in some way or another. And we would already do great by kind of changing that. So it's not going to change the world, it's not going to create equality tomorrow, but I do believe that we have to be aware and we have to think about those things.

Yeah, for sure. Uh, thanks for being on, uh, Paulina. Uh, where can people find out more about you?

Uh, LinkedIn is probably my most, um, most active channel.

That was Paulina and Charles Cormier for another VC