“ We are the only european flavored pre seed / seed stage VC fund building a conduit for large brands and retailers to US commerce tech innovation.”
This fund knows how to source and pick. This excellence has made Interlace Ventures, in under five years, the preferred channel for major European brands and retailers to access U.S. commerce tech innovation.
How does the fund operate? Who are its standout founders imagining commerce?
Who are the partners involved, and their strategic gains beyond financial returns? On its 5th anniversary, I met with Vincent Diallo, general partner, and Erik de Stefanis, partner, in San Francisco. Read to discover a fund that works hard to ease founders and investors journeys.
WHAT YOU ARE GOING TO LEARN
How did this venture become the only European pre-seed/seed stage VC linking large brands and retailers with US commerce tech?
How privileged access to brand/retailer roadmaps is crucial for its success
What limited partners benefit from their investment, in addition to financially?
What are for them the four themes defining the Commerce in the next decade?
INTERVIEW
Vincent Diallo, Erik de Stefanis
Laurence Faguer:First, do you want to introduce yourself?
Vincent Diallo: I started my career in Paris as an Auditor. Fascinated by China I quickly left Europe to…work in a factory in the middle of Guangdong. A memorable human experience to say the least.
Fast forward I ended up at Deloitte Shanghai and after a few years of quite exotic assignments, mainly in retail, I became the CFO of one of my clients. Importing and distributing western food products. Thanks to fast growth, we managed to sell that business to a listed company and I got invited to invest in tech by the founder. It was in 2015 so 9 years ago, after spending 10 years in China.
Observing a digitally-underserved American consumer vs the Chinese equivalent in Tier 1 city convinced me to focus on commerce tech.
Erik de Stefanis:My name is Erik. I joined Vincent in 2019 when Interlace was an even younger firm. Before that, I had spent some time within early-stage tech investments in New York with a boutique family office. We invested across the spectrum, but I found my curiosity drawn towards commerce and marketplaces at the time. Prior to that, I founded and operated an ecommerce company in Sweden. We produced, distributed, and sold high-end custom eyewear. Today, I’m based in NYC but spend a lot of time in the Nordics keeping track of the exciting developments in those tech-ecosystems.
LF: There are so many funds - and that is great! How Interlace Ventures differentiate itself?
Vincent Diallo: We are the only european flavored pre seed / seed stage VC fund building a conduit for large brands and retailers to US commerce tech innovation.
Our differentiation comes purely from our backgrounds, our experience, and our intentionality when it comes to choosing who we want to work with. To put it simply, with regards to portfolio companies, we want to work with the absolute best entrepreneurs reimagining commerce. And when it comes to limited partners, we’ve been very intentional about building relationships with partners who can benefit strategically, in addition to financially, from our learnings and insights. These partners typically fall into specific categories that have strategic value to our portfolio, which is how we’ve been able to attract and convince the best entrepreneurs to work with us.
We’ve been working on this since 2019, and even longer back if you consider the pre-Interlace days. All these efforts have enabled us to establish a brand and presence in the US technology ecosystem where top founders and co-investors know our name and want to work with us.
LF: What is your Investment thesis?
Erik de Stefanis: Consumers’ expectations and behaviors evolve along the adoption of technologies and following social and demographic trends. We are looking for technologies that will enable brands and retailers to cater the experience that will best serve consumers, knowing the largest segment by category or channel are technologically underserved.
And it’s not just about eCommerce and convenience. It touches supply chain, fulfillment, brick and mortar stores, and recommerce just to name a few.
LF: And what is your investment process?
Erik de Stefanis: Our size enables us to stay agile, which is critical in the early stage venture landscape, especially in the US.
We prefer to get to know entrepreneurs over time and work with them prior to committing capital to their fundraising rounds. Investing is partnerships, and prior to investing, we want to be sure that it will be a mutually fruitful partnership between us and the entrepreneurs.
Typically, we spend time developing a thesis on a particular topic or problem-area. We do this by conducting in-depth research, speaking with decision makers at enterprise brands and retailers, and through sessions with our limited partners to learn about their strategic priorities.
We then digest these learnings and consider the types of entrepreneurs and startups that could potentially address the opportunities we’ve uncovered, and we meet with the entrepreneurs building in these categories.
Once we have met several and find teams with whom we have strong personal fits with as well as conviction in the products they are building, we begin doing deeper diligence. This includes vetting their product and roadmap, speaking with customers and employees, demos, introducing to potential clients, and so on, all to accumulate as many data points as we can before instigating an investment conversation.
I hear you say that you are investing in entrepreneurs who have ‘unfair” advantages. What are “unfair” advantages for you?
We believe that accumulation benefits creating an enduring advantage. It can take various forms and considerations: network effects and/or marketplace effect, access to / development of proprietary data, IP or trade-secret, regulatory barriers, economies of scale.
LF: You are known as a fund facilitating the connections between your founders and your active community of entrepreneurs, brands, and retailers, supporting your portfolio. Hence your name! Is this correct?
Vincent Diallo: Totally. It's about pull versus push. Not just an email. We are actually convinced that success in B2B arises from collaboration with large players and we aim to stay relevant to them.
LF: How do you manage to spot these incredible founders, way before they are well known?
One example: Promoted.ai, a unified search, feed and ads for third-party marketplaces. Interlace Ventures was their first VC to join in Feb 2021, and has supported them on their journey to go to a significant multi million dollars revenue.
Vincent Diallo:We are looking for exceptional people. And we believe there is no pattern for exception. A significant part of the work is just showing up and opening your ears and eyes, silencing the noise. There are many talent pools we tap into (Y Combinator obviously) but they belong to several categories: university, incubators / accelerators, studios, founders communities, social media signals. We intend to consider all inbounds but we have a preference for outbounds and peer recommendations.
LF: I know you are supposed to love every company in your Portfolio the same - as children in the family – but if you have to mention to us key Interlace portfolio achievements, what would it be?
Alloy is an integration development platform for product teams to more quickly launch ERP, CRM, commerce, and other key SaaS integrations.
Drip - Original creations (NFT) dropped weekly. For free. Like Youtube and Solana having a baby.
Promoted optimizes unified search, feed, promotions, and ads for marketplaces. Their customers include Upwork, Wayfair, Outschool and Hipcamp for example. They can increase their profitability by +9% or more.
Rabothas built tools to help ecommerce fulfillment centers save money and increase capacity without changing headcount. Leveraging computer vision on packing stations. And this is just level 1. Level 3 is quite exciting.
Augmodo Just as AI is disrupting knowledge work, spatial computing is disrupting the way physical work is done. Augmodo is building the spatial data infrastructure for the largest physical data industry, retail, where millions of people are moving billions of products worth trillions of dollars.
Erik de Stefanis:Today we are spending time around 4 key themes that we defined as follows:
Sustainability and survivability
Real time commerce / Real time enterprise
Automation at scale
Consumer is the channel
We could write a book about the meaning behind and how to illustrate it. We are working on a manifesto for our next fund. Stay tuned.
LF: Is anyone in global corporates, CVCs, family offices in France can benefit from it?
Vincent Diallo: We love to meet and discuss with any driver of the equation we belong to. We always seek to enlarge our access to our counterparts, peers and potential partners. And even if it is not fruitful, this is the greatness of our job: we are talking with great people everyday.
“Interlacing requires a context, an emotional mindset and the “Experience Series” are designed for it”
LF: I know you have what you call a “Experience series” and this January for NRF you host an incredible evening. What exactly was it?
Erik de Stefanis:The whole idea started from considering our limited partners’ experience. Annual general meetings can be boring and costly for not much, especially for a small fund like ours. So instead, we decided to curate memorable moments around art, spiritually, and sport.
We hope our partners can meet each other in a meaningful way so that they can partner directly. Interlacing requires a context, an emotional mindset and the experience series are designed for it.
LF: Vincent, I am always interested to hear you speaking about how you see the Commerce in France. You told me one day you were very impressed by the French department stores. Recently has something blown your mind in French retailing?
Vincent Diallo: Nothing comes to mind except maybe two things I wish I could try
25 new founding teams that accepted us as passengers on their adventures, our second fund picks.
New Interlace team members.
Exponential returns on our fund 1
Extended love for our mission and craft
LF: How can we contact yourself personally to go much deeper? And perhaps meet you when you are in France?
Vincent Diallo:Erik and I are coming to France to visit some of our investors in the week of June 24th. Happy to meet IRL anyone who wants to interlace with meaning.
