Puzzle Ventures’ Gloria Bäuerlein on Navigating the World of Venture Capital Solo

Embarking on a solo venture with her own fund – Puzzle Ventures – Gloria's journey highlights the challenges and triumphs of carving a niche in the startup investment landscape. With a keen eye for collaboration and a knack for building lasting relationships, Gloria shares the many ways that she is navigating the evolving dynamics of early-stage investing. Join us today as we find out all about Gloria’s life abroad, life as a solo GP, and her plans for the future.

What does it take to make it as a solo GP today? Gloria Bäuerlein shares her insights from her first 2 years.

Robin: It’s great to have you with us today, Gloria. Could you start by telling us a bit about yourself, both professionally and personally?

Gloria: Yeah, sure. I grew up in a small town with 2,000 people in northern Bavaria, Germany. Until I was a teenager, I did not have a passport or travel to countries beyond the DACH region. As a child, I was intellectually bored, prompting me to read extensively, which made me realize the vast world out there, sparking my curiosity to explore it further. When I was 16, my cousin and I spent a weekend in London and I loved everything about it. I was fascinated by the vibrant city life — a stark contrast to how I grew up — and the diversity of people around me. I promised myself that regardless of what I would end up doing in life, I wanted to live in London for a few years.

When I graduated from high school, I was looking for an analytical degree — math had always been my strong suit — and at the same time allowed me to spend time abroad and pursue a career that was universally applicable, unlike law or medicine, which would limit where I could live. I am an only child and my parents wouldn’t allow me to study abroad, so I eventually found a program that required me to do several internships and spend two semesters overseas - A great backdoor! I applied and got accepted, and looking back, it marked a major shift in my life. Unbeknownst to me at the time, this university, WHU, was the breeding ground for many German founders, and I probably would not be working in the technology industry today if I had not studied at WHU.

That sounds like an influential environment. Can you tell us more about that experience?

Definitely. I was able to have so many different experiences by spending time abroad and exploring different passions and potential career paths during my internships. After my second semester, for example, I moved to Mexico City for an internship, which was scary and exciting at the same time. I interned at an investment bank just before Lehman Brothers filed for bankruptcy and experienced firsthand how fast financial markets can turn. I spent semesters abroad in Singapore and Madrid and visited more than 10 countries during those two semesters — All treasured experiences that I still remember today.

WHU is located in a tiny town in the middle of nowhere, so we all became a close-knit group. I met an incredible group of people and I still count them as some of my closest friends today.

It is also an incredibly entrepreneurial university — Lots of students worked on startup ideas or organized large student-run conferences. My year was a small class of 85 students, yet four of those ended up co-founding unicorn companies (2x HelloFresh, 1x Raisin, 1x Forto). Other graduates started companies such as Rocket Internet, Zalando, SumUp, or Enpal. It was at WHU that I realized that technology would change the way we were going to live and work and that founding a startup was a possibility.

After you graduated, what were your next steps? How did your career progress from there?

When I graduated from WHU in 2011, I felt I needed more formal training. I was hesitant to choose a poorly paid job in a startup, considering the financial sacrifice my parents had made to pay for my tuition fees, and I did not want to disappoint them. After trying out various jobs during my internships, I found myself drawn to the intensity and steep learning curve of investment banking, so I decided to join Morgan Stanley's mergers and acquisitions team.

I initially joined the Frankfurt office and ended up transferring to the New York office for my third year. I had wanted to live in New York City since a brief stopover on my way home from an internship in Mexico, so I worked very long hours during the first 18 months at Morgan Stanley and got the offer to relocate. In 2014, I had the chance to move to London and as I wanted to live in Europe in the long run, I decided to do it - Finally, I lived in London, a city that I had wanted to live in since my trip as a teenager!

On my second day in London, they asked me to work on the Adyen fundraise. Adyen, a payment provider that is now one of the most valuable European tech companies, was raising €200 million at €1Bn+ valuation - Back in 2014, unicorn companies were quite rare in Europe! I spent a lot of time with the team in Amsterdam to help prepare the fundraise and completely fell in love with the Adyen team and the company — The Adyen founders and CFO were incredibly passionate entrepreneurs and operators with a clear vision for the company who deeply cared about building a sustainable business. I asked myself “Why would I work with corporates that are fighting to stay relevant if I can work with inspiring tech entrepreneurs that are changing the way the economy works?”. They later offered me to join the company and not accepting it has probably been my biggest professional regret.

What happened after the Adyen fundraise?

During the fundraise, I met the partners of a fund called Technology Crossover Ventures, or TCV. They reached out to me afterward, wanting to grab a coffee, and a few weeks later, that coffee turned into a job offer. TCV has been a partner to industry-defining companies such as Netflix, Spotify, and AirBnb and was one of the first West Coast funds to open an office in Europe. I was intrigued by learning from them what it takes to build an enduring, category-defining, global business and that’s how I ended up joining the team in spring 2015.

About a year in, I caught up with a former Morgan Stanley colleague who had since joined Index Ventures and he invited me to interview with them as they were looking for someone to help them partner with growth-stage businesses.

I had talked to the Index team in the summer of 2014 and I still remember a breakfast I had with one of their partners, Dom Vidal, during the process. Dom was a very successful ex-entrepreneur who probably did not need to work any longer, but I could tell how passionate and excited he was about partnering with founders and how much he loved his job. He was interested in learning more about me and my motivations and didn’t see me as yet another junior resource, which was very different from what I experienced in investment banking. I knew immediately that he was someone I wanted to learn from and work with and that I would do everything I could to get the chance to work with him one day. He was the first person who believed in my ability to become a great investor, and I will forever be grateful for that. Unfortunately, the team ultimately decided to make an offer to another candidate. When I got the chance to work with Dom and the rest of the team in the spring of 2016, I accepted the offer without hesitation.

At Index, I mainly focused on partnering with growth-stage companies and I had the privilege to work with incredible founders of companies such as Revolut, CultureAmp, KRY, Collibra, Nexthink, and SafetyCulture. It was a great opportunity to spend time with successful founders, understand what makes them unique, see the challenges that they are facing, and experience firsthand how exceptional startup executives operate. I would say that my time at Index shaped the way I look at investing in startups. Most importantly, I learned to ask myself, "What if things go right?" rather than focusing solely on potential pitfalls and reasons not to invest. While this initially made me uncomfortable, especially when investing large amounts in Series B and C companies, this mindset is absolutely crucial at pre-seed and seed now.

How did you end up joining the startup side and becoming an angel investor?

A few years in, I was wondering whether I wanted to do growth stage investing for the rest of my career and how I would be able to build up credibility with late-stage founders as I was the youngest person on all my boards and didn’t have any operational experience. At the same time, I caught the entrepreneurial bug and started asking myself whether I would enjoy starting a company myself. After talking to a few ex-VCs, I saw mostly upsides in joining the other side of the table (and potentially rejoining later). I ended up relocating to Stockholm to join one of my portfolio companies, KRY, the largest telemedicine provider in Europe, to lead their strategy efforts. I loved the company’s mission to build better and more accessible healthcare, had a deep admiration for the company’s founder and CEO Johannes, who had started KRY at the age of 26, and felt that the company was at an interesting inflection point after securing a Series B funding a few months earlier. Despite my enthusiasm for the operational side, I found myself deeply unhappy with life in Stockholm as it was impossible to build a social life, and the darkness in winter didn’t help either.

While I lived in Sweden, three of my ex-colleagues from Morgan Stanley and Index Ventures, started companies in New York, Mexico City, and Paris (Datapeople, Sofia Salud, and Pigment). They reached out to ask for advice, and while I didn’t have huge savings at the time, I asked to invest. And that’s how I made my first angel investments.

In early 2020, I moved to Berlin to join Back, an early-stage HR tech startup that a friend had started. I was eager to experience the "zero to one" journey firsthand and get my hands dirty across all business and ops functions before launching my own venture. 5 weeks after I moved to Berlin, we went into COVID lockdown and I suddenly had more free time to speak to founders, and my angel investing activity increased significantly. The network I had built up during my VC days helped me tremendously to get introduced to amazing founders, and in return, I was a good source for deal flow for many VCs as my “filtering mechanism” as an ex-VC was similar to theirs. Multi-stage funds that would have never shared great companies with me when I was at Index were more than happy to introduce me to great founders as I was no longer competing with them. I also saw a really interesting trend emerge: As the size of seed funds increased they became more strict with ownership targets and as the multi-stage funds started investing at the seed stage, they often could not collaborate any longer. Most of the time, however, there was a 5%+ allocation left for value-adding angel investors and I loved teaming up with them and writing small angel investments. At the same time, I noticed many of my friends who were startup operators wanted to angel invest but didn’t have the network or the skills to evaluate companies and build a diversified portfolio. This made me wonder whether there was a way for us to team up and jointly invest in startups, bringing different skill sets and networks to help these companies. I looked into setting up an “angel operator syndicate” but after talking to three lawyers and tax advisors, I realized quite quickly that it would be very painful to administer and quite risky from a regulatory perspective. In total, I ended up investing in 27 startups across 12 countries between the end of 2018 and the beginning of 2022.

By mid-2021, I was working on some startup ideas in my free time. It saw the biggest opportunities in the CFO stack space - I had worked on a lot of finance topics at KRY and Back and invested in lots of companies in the space - and conducted at least 30 discovery calls with finance leaders. There was just one “problem”: I realized quite quickly that I was more energized by talking to amazing founders about helping them build exceptional businesses than solving a business need for CFOs. I couldn’t get the idea of an angel operator syndicate out of my head, and when two friends suggested that I should start my fund, it felt like a logical conclusion. I had never even considered starting a fund before but when I talked to a few people about it, the feedback was overwhelmingly positive and supportive. I remember asking myself “What would I do if I wasn’t afraid?”. The answer was “Start a fund”, so I just did it. With no ideal partner in sight, I decided to go it alone and founded Puzzle Ventures as a solo GP fund.

Tell us about your fund, Puzzle Ventures.

I started working on Puzzle at the beginning of 2022 and began fundraising in April 2022. I was aiming to raise 10-12 million euros from operators, founders, and VCs that I was close with, as I believed this was the “minimum viable fund size”.

My core belief was that a small fund size would allow me to optimize for having access to the very best founders in Europe by being more flexible on ownership targets and acting like an angel investor. After all, an average ownership of 2% in a 20 million euro fund is equivalent to a 200 million euro seed fund owning 20% on average!

Almost everybody I talked to about the fund was incredibly supportive so I managed to hold a first closing of the fund in August 2022 and a final closing at 21 million euros in March 2023. Puzzle is backed by an amazing group of founders and operators from companies such as WhatsApp, Personio, Deliveroo, SumUp, Stripe, and KRY, investors from some of the leading VC firms that I admire, and a handful of institutional investors. I ended up raising a lot more capital than I expected, so I extended the investment period to keep the pace of investments almost the same.

What I do with Puzzle is essentially what I've done as an angel investor, just with slightly larger tickets, a more professionalized setup, and support from my LP network. I invest in pre-seed and seed-stage companies across Europe and European founders in the US, typically investing anywhere from 200,000 to €700,000 initially, with the capacity to invest more over time. I exclusively invest in B2B companies - I don’t believe I am great at identifying consumer trends early and find it hard to invest across different consumer categories. Within B2B, I focus most of my time on software companies that form the backbone of companies’ daily operations - They either build core infrastructure, digitize physical processes in traditional industries such as construction or energy, or automate digital back office processes. I collaborate quite closely with micro funds or major angels like Robin, seed funds, or large multi-stage funds, depending on which setup the entrepreneurs prefer and how much capital is required to build the business.

I aim to become the trusted confidant and sparring partner for my founders and try to keep the interactions as informal as possible. I am only one WhatsApp message away and I want them to be comfortable reaching out to me with questions that they might feel uncomfortable asking their lead investors - Whether it’s a tiny operational question that they need help with or something they want to brainstorm about. I try to help them structure their thoughts so that when they do approach their lead investors, they are more confident and their ideas are well-organized. This role involves pushing and probing them to refine their strategies before they consult their lead investors. I also assist them with fundraising, helping them craft an equity story and leveraging my VC network to facilitate introductions and navigate the fundraising landscape. Lastly, my founder and operator LPs are an amazing resource for operational advice and customer introductions.

That’s a good place to position yourself, isn't it? It's a real place of trust.

Totally. It's quite interesting when you do not have any formal corporate governance over the founders, like when you can't replace them or when you're not on the board, etc. This makes me less intimidating to the founders and they open up more easily. I try to be as non-threatening as possible so that they always feel comfortable coming to me with any topic. They know I will give them unfiltered advice, but I’ll also be on their side and push them. They can trust that I’ll remain loyal to them, and they have nothing to worry about. That's the kind of position I aim to maintain.

Tell us about this first year. What's it been like to take the plunge and just go for it?

Overall, I’ve been loving it. The first few months were insanely hard but I got so much support from the ecosystem. Many people have introduced me to incredible entrepreneurs, vouched for me in investment rounds, or helped me figure out operational questions, highlighting the collaborative nature of the ecosystem.

When you are a solo GP, it’s all about time management as there are so many things going on at the same time that all need your attention. Until the first closing, I decided to concentrate on fundraising and only sporadically spoke to founders (luckily, it was over the summer). After the first closing, I went back to spending about 70% of my time evaluating investment opportunities. However, a lot of the most promising founders held back on fundraising in Q4 2022 due to the uncertainty in the market, so I only made my first commitment in February 2023, about 6 months after the first closing. Since then, I've made seven (unannounced) investments, and I couldn’t be happier with the founders who chose to partner with me.

I feel very comfortable with the access I have — it allows me to see nearly all the opportunities I want. Adopting a strategy of being small and optimizing for access to top founders rather than focusing on ownership has proven effective and I cannot wait to see how things will evolve.

Building Puzzle has been more stressful than being employed by another VC fund, but seeing everything come together as I hoped has been incredibly satisfying.

Yeah, 100%. And you said it's a collaborative environment, but do you think you have to be a certain type of personality to sort of get people on your side and build a community?

I think one thing that was important for me from the beginning was that people felt I was truly collaborative. And I think I wanted to be very strict about it. Meaning, I don't believe that you can be sometimes collaborative and sometimes competing because people just won't trust you. And so even when I was able to lead a round, I decided not to do it to gain the trust of co-investors. I think it’s important that you do what you said you would do.

It's crucial for me to establish strong foundations and ensure that both my founder and co-investor NPS (Net Promoter Score) are excellent—that's what matters most to me. If this approach means I miss out on investing in a company, that's completely acceptable because there are simply too many great companies out there, and it's impossible to invest in every single one. Instead, I focus on how I can provide the highest possible value to founders, even in cases where I decide not to invest.

Sometimes you might not personally resonate with the founders, have a bad day, or simply do not fully understand the industry they operate in. Despite these challenges, I always strive to make the most of the time I spend with them. For instance, if I decide not to proceed with an investment, I spend 25 to 30 minutes writing a thoughtful and comprehensive rejection email. I believe they deserve this effort; after all, they've allocated 45 minutes from their busy schedules to speak with me.

Could you tell me a bit about how you decided to invest in pre-seed and seed companies? What is the thing that you're looking for at that stage?

Throughout my career, I have talked to thousands of companies and by now, I can usually tell after 10 to 15 minutes whether I am going to consider an investment. Sometimes you just get that spark, and you can't even explain why or how. But you just know that you get that kind of spark maybe ten times a year and it’s a great sign. And so you just know that you should dig deeper. Often, it's a conversation where I learn something new, where the founders make me see a space or a problem in a very different light because they have unique insights into this particular problem or space that I had never heard of before. This usually happens because they've felt this pain that they are solving themselves before or they have talked to many experts. In the ideal scenario, I have spent some time looking at this space before and came with a “prepared mind”. I know what I am looking for or can at least tell whether the founders are real experts and deeply care about the problem or have only done high-level desktop research.

The number one thing I look for is founder-market fit. I ask myself ”Was the founder destined to build this company? Is there something that drives them beyond just the market size or the VCs’ perceived interest in the space? Do they have the character traits that I believe are necessary to succeed in this market?” Once or twice a year I come across founders that I would be back more or less regardless of what they build but it’s really rare. I might be biased but I have hardly ever seen successful hard pivots, especially after the product is already launched. Hence, I usually need to like both the founders and the broader space but I am comfortable to disagree on the initial wedge.

I also spend a lot of time trying to understand what their market thesis is. “What are the insights they have gathered? Why has nobody solved the pain point before? Why are adjacent players not well positioned to compete?”. In most cases, I am not looking for a certain answer but I am rather interested in their thought process. I like to understand whether they are thesis-driven, willing to iterate on their thesis in a somewhat structured manner, and have a clear view of the interplay between product and GTM strategy.

If the founders are in fundraising mode, I almost always ask them to explain to me how the initial product is going to look like, what the main building blocks are, and which use cases the product will initially serve. Interestingly, many founders struggle to clearly explain what they are building and why it matters to their customers. I sometimes receive decks with 10 pages on the market and 5 pages on the go-to-market strategy but they don’t show or describe the product - It’s a big red flag for me unless they are very early in their ideating process. I understand that the product will never look like this, but I want them to have a thesis on what they will build towards in the next couple of months.

The best interactions I’ve had with founders were often not pitches, but real conversations. When people are just pitching me, there is a 99% chance I'll pass. It’s very difficult for me to get to know them as a person and to understand whether they were just well prepared for the pitch or were knowledgeable.

So tell me, what have been some of your biggest challenges so far?

It's the constant context-switching. Today, I might need to help a portfolio company solve a very specific problem. The next day I might be handling some administrative tasks. An hour later, I could be talking to a founder I just met, and afterward, I could be catching up with a prospective LP. It’s the hardest part but at the same time, it’s also the most gratifying part of my job as I never get bored of what I do. If I am low on social energy, I just do some administrative tasks that need to get done anyway. But if I have a lot of energy, I’ll find new companies to talk to.

So how does it feel managing Puzzle by yourself? Does it sometimes feel lonely?

Interestingly not. What has helped me is that I don't need to compete with other funds. This means other VCs are like my extended team because many of them, mostly the principals and the junior partners at other firms, also want someone to discuss potential investments with — someone who has also talked to the founders and with whom they can have a real conversation. I find it helpful to not always work with the same five people; I can talk to whoever I think is best suited to help me evaluate a commitment in a certain type of company in a specific geography.

What's trickier is the decision-making at the firm level. A few months ago, I received a cease and desist letter to stop using the old fund name - It was really scary, especially because I did not want to spend any time on this and could not afford to hire the best lawyers. I'm about to launch my website, and deciding on the brand has actually been quite difficult.

Out of the 100 potential LPs, 95 invested. Can you talk a little bit about your success rate there?

I am a big believer in building long-term relationships and I have spent a lot of time over the years cultivating them. The first 30 commitments came from people who have known me for many years and who I have worked with closely. About 2 weeks into fundraising, I was able to secure an anchor check from a US family office. The guy who led the investment for the family office was a first-year analyst at Morgan Stanley when I was a second year! We worked together on a project back then and stayed in touch ever since. These commitments meant that I had secured 80% of my initial target within 4 weeks of starting to fundraise and I was able to be highly strategic about whom I engaged with. I initially only wanted to raise from individuals. Still, after speaking to GPs who have built leading VC firms I was convinced that it makes sense to have a handful of institutional LPs onboard if I can raise from them with reasonable efforts. Most of the introductions to the institutional LPs came from their close network, which was very valuable. In my view, once you tick the “basic boxes” (fund strategy makes sense, fund size is reasonable, etc.), the #1 decision criterion for them is that you are highly referenceable. “If they ask 10 well-respected VCs about you, will they know you? What will they say? Are you in the right rooms and/or someone whose opinion they respect?” They all look for early indicators of future success and I believe a strong reputation among successful VCs is the most crucial one.

Last question – What are you running towards?

The aspect I enjoy most about this job - and I sometimes have to pinch myself that I get paid to do it - is that I'm surrounded by people who are incredibly smart and knowledgeable in their field. They want to make a real impact and change the way a certain industry works. They don’t take “no” for an answer and believe in their own ability to make a positive change. How can you not be inspired by them and become an optimist?! It gives me so much energy to help them put the puzzle pieces together and achieve their vision even faster. What drives me is the ability to continue working with these entrepreneurs. The more successful companies I partner with and the more they value our relationship, the higher the probability that other exceptional founders will want to work with me.

Thank you so much for your time today.

Thank you!