Backbone Ventures is raising a dedicated fund targeted at founders in Germany and Switzerland that combine an underprivileged background with a history of outperforming their competition. Today Backbone announced the first closing.
After having invested in 28 start-ups over the past 4.5 years, Backbone Ventures announced today the first closing of its 5502 Fund. The fund with a target size of CHF20 million intends to provide the first financing for extraordinary founders of technology-driven, high-growth businesses in Switzerland and Germany. These founders are structurally underprivileged and have outperformed their competition in the past no matter their gender, ethnicity, or socioeconomic background. It’s an unparalleled focus that can’t be found in any other fund in the DACH region.
“Work ethic, resilience, the ability to inspire others, and a certain degree of boldness are qualities every founder needs to succeed. We see that it’s often those who are used to overcome adversity that have these abilities we look for in founders”, says Miklos Stanek, one of Backbone’s partners.
Why choose this contrarian investment strategy? Firstly, there are too many investments happening based on unconscious bias. And secondly, there is plenty of data telling us why: research shows that in 2022, more than half (55%) of US companies valued at $1 billion or more were founded by immigrants. However, only 18.6% of venture capital funding went to founders with disadvantaged socioeconomic backgrounds. In 2021, 83 out of 595 companies that joined the Crunchbase Unicorn Board were founded or co-founded by women, which is quadrupling that category’s count from 2020. Still, less than 2% of venture capital funding went to all-female founding teams in 2021, which marks a five-year low.
Focus on pre-seed and seed rounds
The fund invests in the best founders at the start of their entrepreneurial journeys and before any other investors. To achieve this, Backbone Ventures leverages its vast existing network and concentrates its sourcing on academic and professional ecosystems where they are deeply embedded. Over the next four years, the fund will invest between EUR 300,000 and EUR 500,000 in 25-30 teams of underprivileged outperformers in Germany and Switzerland.
Why 5502? The fund’s name refers to the postal code of a small village in Chile and is a reminiscence of the origins of one of Backbone’s partners, Dr Jan Claudio Muñoz, and to the shared values of Backbone’s team.
(Press release / SK)
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