Sunny Ray hosts Carol, founder of the Spain based investment fund Backfund, to unpack why most startup founders run into cash crunches. Carol explains that overly optimistic revenue forecasts, built without accounting for already closed deals, routinely leave founders out of money by month six or eight. She shares what she looks for in pitches, favoring founders who show speed of execution and a visible product over abstract market size claims. Carol traces her path from a family of entrepreneurs in southern Spain through Red Bull, Tetuan Valley, Startup Explore, and Google before launching Backfund, which pools capital from more than a hundred backers to invest in early stage deep tech companies and connect them to enterprise clients. She discusses Backfund's portfolio spanning quantum computing to mental wellness, her price sensitive investment approach, and Europe's shortage of large scale startup acquisitions. The conversation closes with Backfund's upcoming second fund focused on energy, AI for pharma, and strategic technology independence for Europe.
A Spanish VC explains why founders' overly optimistic financial forecasts create cash crunches and what makes a pitch actually stand out.
What is the mistake that 90% of founders make?
Founders vastly overestimate revenue and underestimate costs in financial planning. They assume they'll double revenue in a year even without closed deals, then build a cost model on that assumption. When actual revenue comes in lower, they run out of money by month six or eight. This happens because founders are naturally optimistic, but reality eventually catches up with them.
Can you describe Backfund and what it does?
Backfund is an investment fund based in Spain investing mainly in deep tech startups at pre seed and seed stage. We also run innovation initiatives for big corporations, helping them invest in startups and run proof of concepts. Since we know which startups are strong in the ecosystem, we either invest ourselves or introduce them to clients as first customers.
When you're listening to pitches, what two or three things are you really optimizing for?
Most entrepreneurs don't show speed of execution, what they've learned and how they've pivoted over six months. They talk about market size instead of showing the product they've already built. I recently saw hardware startups with physical products they never showed me. Showing traction and adaptation matters far more than describing how big the market is.
How did you get from studying business administration to founding Backfund?
My whole family runs their own businesses in southern Spain, so entrepreneurship surrounded me from childhood. I started at Red Bull, then moved to Tetuan Valley, an accelerator where I went from intern to CEO in under two years. I then joined equity crowdfunding platform Startup Explore, then Google managing their entrepreneurship campus in Madrid, before launching Backfund.
Walk me through how the Backfund model actually works day to day.
We built a platform so people without big tickets can access high quality startups through a small investment vehicle. For every investment we record a ten minute video of the startup and its challenges, shared with our backers. I also maintain a database of backers' expertise, so backers can watch videos and offer help, like an introduction to a contact in another market.
Your portfolio spans quantum computing, satellites, AI, mental wellness, and sales automation. Is there a common thread?
The official answer is full time, highly committed entrepreneurs in attractive markets who execute well. The real answer is that I'm very price sensitive. We built Backfund in 2021 when valuations were skyrocketing, so our entire portfolio entered between one and five million valuation, and lower entry price improves the outcome of the investment.
You've been vocal about Europe needing to invest earlier and take more risk. What needs to change?
The biggest issue is exits. We analyzed four hundred exits in Spain over 25 years, and only three of the top hundred by size were Spanish companies buying Spanish startups. Without established companies acquiring startups, the whole ecosystem misses a multiplier effect that drives new entrepreneurs, reinvestment, and specialized venture funds.
Where is Backfund going next, are you raising a new fund?
We're working on a second fund focused on three thesis critical for Europe: energy production, since Europe needs significantly more capacity for industry and AI data centers, AI for pharma to speed drug discovery, and strategic tech to make Europe more independent in security, energy, and infrastructure from other world powers.
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