Backing the best immigrant founders in Europe: Ramzi Rafih on resilience, adaptability, and investing in founders with migration backgrounds with No Label Ventures

Robin: So we're going to jump straight in with you and your childhood. What was it like for you growing up?

Ramzi Rafih: Yeah, that's a great question! So I grew up in Saudi Arabia with my parents, who were Lebanese immigrants who had left Lebanon in the ‘70s. I was born in the ‘80s and from 0 to 12 I was living in Saudi Arabia. I know people hear all sorts about Saudi Arabia, what a conservative place it is - and it's all very true. But the reality we lived as expats. It was a lovely period growing up there, I have lots of great memories. I spent a lot of my time outdoors playing with friends and on my bicycle, and all in all, it was a pretty nice childhood.

When I was perhaps 12 years old, we returned to Lebanon where my parents and I are originally from. This was post-war Lebanon in the ‘90s and post-war Lebanon was a crazy place in the sense that you had lots of very ambitious, very hopeful people who wanted to do great things - but you had a reality on the ground that was very different. Lebanon in the ‘90s was a broken country economically, socially, and politically and people were struggling daily, so coming from an expat community in Saudi Arabia to a country that was in ruins was a challenge.

In Lebanon, I went to a pretty strict school, pretty conservative, and this was a culture shock. I went from a French school in Saudi with 20 or so students where I could wear whatever I wanted, to Lebanon where I was one of 35 in our year group. This is I think what made me feel “foreign” – that process of leaving from one place to another and enduring the challenge of getting used to a more difficult environment that was less familiar and sometimes more hostile. I think all of that was very helpful in terms of preparing me for the future.

And then I went to university, and my university years in Lebanon were pretty interesting. I studied between 2002 and 2006, and these were very political years in the sense that we had a revolution called the Cedar Revolution which started on the campus of the University. I was part of that student movement that protested the Syrian occupation of Lebanon which culminated in an amazing revolution with people on the street people demanding more freedom. Unfortunately, things didn't pan out the way everyone hoped and in 2006 there was a war between Israel and Hezbollah. I was there, and it was thankfully quite brief. It was very violent, but was very brief – it only lasted 30 days –- and at the end of it, I decided to leave Lebanon and go to France to further pursue my studies. So that's my childhood, I guess.

It must have been crazy straddling these two worlds.

It was crazy. I think my childhood was split into two halves; the first half was very calm, living in a very flourishing and nurturing setting, and the second half living in a place that was very tense politically, socially, and economically. It's been difficult at times for sure - adapting to those different environments - but it's been very helpful in terms of teaching me how to adapt quickly to different environments, how to be comfortable in unstable environments, and how to see some more opportunities. I mean, when I look back (on my university years) being part of that revolution - even though it failed - was one of the best things I did (in terms of learning how to) see opportunities to make change and do something better amid chaos and amid uncertainty.

You must have learned a lot from a very young age about being adaptable…

You don't realize at the time but the experiences that you go through teach you how to be resilient. A good part of growing up in unstable places is that you have to make the best out of what you have. But I think the sad reality is that there's also a lot of talent that goes to waste – there are a lot of people that because they aren't able to thrive, are forced to learn skills like adaptability and a gritty kind of resilience to survive. So for the Lebanese people – and also when you think about some developing areas of the Global South – I think while you learn to be resilient as you grow up and how to be resourceful, it tends to limit potential and unfortunately there's a lot of unfulfilled talent. I'm quite fortunate to have landed in Europe where, whether it's Paris or London and the UK, which is my country now, I’m lucky to have been provided a very stable environment for me to pursue a professional career, build a family, and pursue my dreams.

What was your experience like studying and starting your career in private equity in France?

It was back in 2007 when I did my internship at JP Morgan. Back then, I was still studying at HEC and we had this gap year where we could do whatever we wanted. It was an interesting period; it was literally during the financial crisis which made it the best and the worst time to begin an internship in finance. I remember there was this highly confident atmosphere at JP Morgan. Some of my senior colleagues and bosses displayed quite a bit of confidence in themselves, in the environment, and the outlook – which made it very interesting to compare this with the last few weeks of the internship when the financial world was collapsing and JP Morgan was buying a few other banks.

It was interesting because the experience taught me at a very young age that in financial cycles some ups and downs and sentiments are very cyclical. The lesson is that you cannot base your investment strategy or whatever you're doing on the current sentiment because the current sentiment and the market will change – and that's gonna be more fundamental than just the market sentiment.

So I did keep working at JP Morgan for a few years just after school and then moved to private equity at Silver Lake. That’s where I noticed that as much as I was learning a lot at JP Morgan, I didn’t want to do that forever. I wanted to be an investor.

I started reading about Warren Buffett and Charlie Munger and found what they were doing very interesting. They weren't hiring and I told myself that the closest thing I could do to what they were doing is probably private equity, although I'm sure they will disagree. And so I ended up interviewing with a few private equity shops and got an offer from Silver Lake which I joined in 2013.

It seems like an interesting move considering that you studied mechanical engineering before you went into finance.

Yeah, this is a very ‘immigrant thing’. When you're growing up in this part of the world – and I expect it's the same, for example, in Asia – your parents give you three choices: you're either an engineer, a doctor, or a lawyer. So as much as I love mechanical engineering and I was obsessed with cars and things like that, I think a big part of being part of me studying engineering was influenced by my parents. It eventually became clear to me, after several years, that as much as I loved engineering and mechanical engineering I probably wasn't going to be brilliant at it. I was more driven by relations, people, and businesses - thinking about business models and things like that rather than engines. That’s how I ended up applying to business school.

You went from Silver Lake to KKR. And KKR is huge - investing huge amounts of money. What was your experience like there?

It was good. I chose to leave Silver Lake and go to KKR because I thought KKR was more focused on Europe, was more bullish on Europe, and had dedicated capital for Europe. I also wanted to live in Europe – a place where I could invest with purpose.

The move was interesting because Silver Lake is a much smaller organization. Getting absorbed into a bigger organization like KKR you learn a ton. KKR is where buyouts and private equity were invented. The founders of KKR are the ones that invented that industry and so you're learning from the best. You’re learning from the innovators of the finance industry.

As well as being big, it's a great place to evolve - it’s a very entrepreneurial place compared to some other funds, and you end up having quite a bit of responsibility. For me what was important was learning what a great company looks like. The companies that KKR invested in are the big ones - the more established ones. I spent my time between private equity and growth equity and that helped me develop the pattern of recognizing what a great company looks like both on the founder/management side of things and on the company side of things. That turned out to be very helpful, especially now when I'm looking at early-stage startups. Of course, you can never know from the very beginning if they are going to be successful or not, but those late pattern recognition skills that I developed at KKR come in handy when working with early-stage founders and trying to understand them, their vision, and what they're building.

You’ve gone from growth investment to more pre-seed and seed investment… What's that transition been like and how do you now spot the winners at that very early stage?

The transition has been very interesting. The reason I transitioned is because a few years ago I started investing in early-stage startups in a personal capacity and I loved it. I loved it so much that I decided at some point to quit my job – which I also loved – to do this full-time. So for me, I was pulled towards it. It's not something that I had to learn or push myself to learn. I was attracted to it. It didn't feel like work; I was on calls with founders, I was generally curious. I spent a lot of time engaged with investors understanding the nuances between the late and the early stages. It’s been helpful for me to spend time at the late stage; it’s very different and there are things that you need to learn and know when you're investing at the early stage.

Ultimately, the only thing that matters at the early stage is the founder and the founding team. Of course, the market matters, but good founders typically find good markets as well. Of course, you need to understand the market, you need to understand business models, and you need to be able to tell whether a business idea can make money and whether that idea can scale or not. Because a great founder will always find a good answer to all of those questions. It took me a little time to understand that. It took me a little bit of time to take off my late stage hat – which was very numbers-driven – and put on a different hat that can assess how good the founder is and understand the motivation of the founder, their own history, their own upbringing, their own challenges, what they've learned and assess their potential. So those few years as an ‘angel’ was an interesting transition in terms of understanding and honing in on some of those skills. It never felt painful, it never felt hard because it was always fun investing in the early stage.

And now you have a new fund, No Label Ventures and you are specifically looking for founders with migration background…

No Label Ventures is an early-stage VC fund – like you, Robin, I’m a solo GP. My fund is focused on investing at the earliest stages. In most of the cases, most of the investments I’ve made have been a case of No Label Ventures being one of the first, if not the first, investors. We typically come in before elite VCs are in place, typically backing founders unconditionally and then raising more from other bigger VCs. We’ve done nine Investments so far, and out of the nine investments, some of those companies ended up raising funds from the likes of Sequoia Capital and other top European and US funds. The idea is that we have at least one founder who has a migration background. It's a very personal thesis. I mean by now, you know my background, but more importantly, if you look at things from a financial and economic perspective, 55% of unicorns in the US have been built by immigrants. That's more than one out of two businesses that have been built by immigrants. I don't think we are there in Europe, but we're getting there. If you look at the UK for instance, 40% of unicorns have been built by non-European immigrants and then you have those that have been built by European immigrants.

Germany’s interesting as well: the last time I counted, 25% of unicorns in Germany were being built by at least one founder who's a non-European immigrant. So, the European ecosystems need to attract more and more international talent. International terms or immigrants on average perform well for many reasons especially because the act of leaving your country, the act of immigrating is very entrepreneurial in itself.

Do you think that it's a specific type of person that chooses to go and live in a different country that gives them an entrepreneurial edge, or do you think that it's being in a completely different environment and having to recalibrate that gives them that edge? Or both?

I think it's a little bit of both. It takes a lot of entrepreneurial ‘guts’ to be able to leave your country in the first place. Now, some people are forced to leave that country, sure, but it generally does take entrepreneurial ‘guts’ to be able to leave. I think there's an automatic filtering of the more entrepreneurial people when it comes to immigrants. But as you said, I think sometimes you land in a country and you don't know anyone – sometimes don't speak the language.

I think it takes a lot of entrepreneurial guts to tell yourself, I'm going to a country and it might not be the most international city but I’m going to make it work. I think other people would find that choice very difficult and perhaps wouldn't do it, while other people are more comfortable with their choice. On the other hand, I do think you end up developing those survival skills and, in a way, once you've gone through that experience I think you can then build that self-confidence and say ‘I didn't know I could do this, but I did!’ and become more confident in your abilities and think, maybe I can build a company. I can be even more ambitious.

So that’s one element of it – the act of migrating. Then there's another element to it and I think we have to give credit to our European ecosystems. Whether it's Germany – you know, Berlin or Hamburg or Munich – or Paris or London, I think those ecosystems 10 years ago were unable to attract the best talent, at least from the tech perspective. Or, if they were able to attract the best talent, they probably weren't able to channel them into entrepreneurship and that's changed over the past five years. I think now, we’re attracting great talent from anywhere in the world to come to Paris, to come to Berlin, and this wasn't the case five or ten years ago. One has to give credit to those European countries that are now able to attract the top 1% globally. If you can attract the top 1% globally, then you're gonna get a lot of smart people - you're tapping into a global market. That being said, there are a lot of very smart people in very rural areas for instance in China or India or Africa that perhaps aren't capable of leaving, even if they wanted to. But I certainly think Europe has become a very important magnet in tech for a lot of global talents, which wasn't the case probably five or ten years ago.

There are a lot of psychological aspects as well. I think there's a little bit of that mentality of ‘I need to succeed’ because I am not going back to that country. In my case, as much as I love my country of birth and Lebanon, there's no way I'm going back there and so there's a lot of pressure that pushes you to perform and not give up. Without trying to generalize or judge, I think it's easy to say, ‘I don't have that pressure so I don't need to push myself that hard’ because there’s less of a survival mode. As a result when you’re constantly surviving you're putting 100% of your effort into that and I think it pushes people up. It's really bad for mental health, but otherwise, it's a productive strategy.

As an outsider, it can be very challenging for your mental health. Is this something that you struggled with when you were working in finance or did you always find a new way to present your ideas to your peers?

Being aware of your mental health was not necessarily something that was thought or talked about. I wasn't aware of my mental health. I think for a big part of my stay here in the UK, maybe up until recently, I took my mental health for granted. I didn’t even question it, and that doesn't mean that I had good mental health, that doesn't mean that I'm a balanced individual. But there wasn't even space to think about all of this and it was a mentality of I need to step forward to work, I need to perform, and I need to give my 100%. Yes, your mental health takes a toll, but you're not even aware of it. I didn't even stop to reflect at some point on whether things were going well or not and I think that's probably the case for most immigrants – whether they’re founders or not – is that they're often not conscious of their mental health. They don’t know what the right balance is or what it should be.

I’m not saying it’s a good thing – I wish there was a lot more done in that space – but that's the reality, and that's also why people push themselves so far beyond what they probably should. It’s also probably why they end up succeeding very often, but I mean to answer your question: there wasn't any moment where I could pause and ask myself, what am I doing here or am I doing the right thing or am I being accepted - all of this was sort of secondary, there was just no time for this.

Is it true that the three founders of KKR gave you money as an anchoring to start your fund?

One of the founders of KKR passed away so I didn't even meet him – he left KKR a very long time ago – so he certainly didn't give me money. It was one of the founders, Mr. Roberts who is indeed one of the biggest investors.

Generally, I think the KKR team has been tremendously supportive, and when I left a lot of my old colleagues, and my old partners were my first investors and frankly, without them, I think it would have been really hard to raise this fund. They account for an important proportion of my fund and I'm glad they backed me I think it would have been really difficult to do it without their back.

So they gave you a good anchoring to get started?

Yeah, it’s a really tough business to raise the fund and I think it's even tougher without having that first group of supporters that know you and have been working with you for a long time. So it's been really helpful to get their endorsement.

I would say about a third of the fund was related to them. But I think beyond just the money, a lot of friends at KKR introduced me to other investors, and a lot of friends at KKR continue to introduce me to founders, and so I think it's friendships that have been built. And by the way, people at JP Morgan, and people at Silver Lake have either invested or introduced me to amazing investors. So I've been quite lucky in the sense that I've been around people who have been very helpful. The people who help you at the very beginning of your journey – you never forget them, and I think I owe a lot to every single person who was taken bet on in that first fund. I think I owe them a huge debt of gratitude.

You just closed your first fund in December, how much did you raise for your first fund?

Yes, indeed. I raised 11 million, which is within the target and is a very good amount for a pre-seed fund which is what I am, writing $150k or $200k checks for 35 companies. The size works well.

And what is your average ticket size?

The average ticket size has been around $150 or probably a little bit less than under $150k.

What are the verticals that you're investing in?

It's pretty agnostic. I try never to say no based on the sector. I find amazing founders and I just want to back them. I've got a biotech business, I've got a Medtech business, I've got a few software businesses, I've got a platform consolidation business in the music industry that I have backed. Obviously, AI, whether it's machine learning or generative, is a very dominant theme in the portfolio as well. So (what we’re trying to do is) really try to be led by founders rather than teams or sectors.

How long did it take you to get $11 million? Did you fundraise for 12 months or longer than 12 months?

12 months. So from the first close to the final close, it was about 12 months. The initial push was quick: it was at the two-month mark when I got most of the KKR folks that wanted to invest invested, and then through them and other people got to meet more LPs that ended up committing so we very quickly went from zero to seven and a half million in two months. And then it took about 10 months to get the rest. So it's been slower, but it's also been slower because I wasn't focused fully on fundraising, By then, I had started investing and so my attention shifted from 100% fundraising to I don't know maybe 30 or 40% fundraising and 60-70% investing.

How many markups have you had so far?

Out of the eight Investments that I’ve closed – there have been four markups. My angel portfolio is bigger than those eight and has more markups of course, but that's the sort of investment size that started doing when I raised the fund.

I'm a big fan of your investment and the startups you’ve backed - they're amazing founders. Look, I think having markups is great and LPs like that – it certainly gives a boost of morale and a little bit to the ego as well. But, ultimately, none of those things matter so much – what matters is the outcome, the exit, and returning capital to our investors and backing amazing founders. It’s a good momentum, it's a success, but I try not to get too excited and carried away by that.

I feel like a lot of VCs have FOMO and they kind of follow each other in terms of how they invest but you’re a bit of a Maverick. Do you get FOMO or do you have new ways - or different ways - of looking at potential investments?

I'm still starting in the industry so I think it's too early to tell whether what I'm doing is working or not. I'm confident it is working, and I'm confident that this is the way, but one has to take a step back and adjust things effectively. Having said that, I do think that coming from the private equity world helps a lot. It doesn't help with certain errors, but I think one thing I never forget and I don’t want to forget is that in private equity when you're analyzing a business, when you're backing a business or a team, you're looking at fundamentals: is this a good team, or not? Is this a good business model, or not? I mean when I was at KKR, of course, there was a little bit of FOMO, but we didn't care that much. If we liked the business, we bought it and we only wanted to know who was competing against us at the end to make sure we won. I've tried to keep that same mentality of I don't care who's looking at the business; I don't wanna know. Like, when I meet a founder, I don't even ask them the question and I don't want them to tell me who's looking at their business or who they're talking to because I don't want to be influenced by that. I try to meet founders before they meet other VCs. I try to put my check in before they've had meetings with VCs because I want to be the first person to build that conviction.

And so in that sense, I try to avoid a lot of the formalities. I try not to source from other VCs, although a lot of VCs are very kind to me and send me deals I look at them and I take them very seriously, but most of my sourcing comes directly from founders or angels or operators or even directly on LinkedIn. So I think some of the tactics I use to avoid deals that are too mainstream are to try to back the founders before they become hyped up before deals get too hot. I try to back them early and help them and hope that they bring me on board.

Do you want to stay as a solo GP or would you like to have a partner in crime in the future?

It was never my intention to be a solo GP. The intention was to do it with someone else but it didn't work and I ended up going on my own. I don't mind at all being on my own – I think there are a lot of advantages to being on your own – but I would love to find someone I can build the business with and I'm looking and experimenting with some people. We haven't formalized anything with anyone yet, but I think over time (I’d like to) find someone and add them to the partnership.

What are you running to right now? What do you wanna do more of? What gives you drive and excitement?

I’m excited that I’m done with fundraising and I'm excited that this year my number one priority is meeting founders investing in founders and helping founders. This is what I love; I mean by far, the most beautiful part of my job is meeting people and betting on people early on, and frankly, I’m looking forward to doing more of that. I want to do as much as I can of that this year knowing that fundraising is a sort of recurring theme in the life of an emerging fund manager and I will need to get back to that. But for now, I'm enjoying the moment where I don't need to do it.

What does the future look like for No Label?

No Label Ventures’ mission is to uncover, and back the best immigrant founders in Europe who are building the most epic companies and the mission is not going to change. It may get a bit wider in the future. It will include people who are not immigrants but are perhaps outsiders in different ways. Who knows where life will take us, but for now I'm very focused on that thesis.

I think there's a tremendous untapped opportunity for immigrants in Europe, I think only some of the VCs are aware and are focused on that opportunity. I think in the US it's sort of a known fact now that if you're an immigrant and you're building your business the odds are stacked in your favor, but I think in Europe, it's probably not the case. It's a bit of a question mark whether immigrants in Europe are succeeding or not. And I, of course, have a very defined opinion on that and see a huge opportunity in being a little bit of a contrarian on that topic.

Finally, I just wanted to give a shout-out to you, Robin. I think you’re an incredible guy, you’re just so helpful and so thoughtful and I think every founder should want to have you on their cap table and I think every LP should consider seriously investing in your fund because you’re building something great.

Thank you so much!

It was a pleasure, Robin, I enjoyed the discussion.