A bit late, but last week Pietro wrote a pretty cool two part piece up on Venture Village. It's about setting up a new venture capital fund in Europea and the steps required to do it. You can read Part 1 here and Part 2 here.
A few months ago I left DHTV, the venture capital firm where I'd been for seven years and I was conflicted about what to do next. On the one hand, I loved being a venture capitalist, both the highs and the lows - meeting lots of passionate entrepreneurs, difficult board meetings when a product or a hire isn't working out or a market isn't developing, playing with products in their embryonic stage and watching them develop, fighting to get into an investment I was passionate about, working on product and business strategy, and seeing lots of different industries transformed by technology. On the other hand, I had a craving for doing something more entrepreneurial - establishing a business focused on something I'm passionate about, working with co-founders who shared the same passion and vision, sleepless nights worrying about funding and lugging around office furniture from Ikea - all of it!
I advise entrepreneurs to start a business that builds a product in an area they love. After grappling with my conflict for a while, I realized I should take my own advice and do something entrepreneurial within venture capital. Luckily for me, Bill and Pietro were already doing exactly that and were looking to add a third partner to the team. As soon as we started discussing the possibility of me joining Connect Ventures, I knew I'd found what I was going to do next. Connect has all the characteristics of the venture capital firm I would design if it didn't already exist:
✓ focused on early-stage product-led Internet and mobile investments
✓ partners that are passionate about and engaged with technology
✓ a partnership with both investment and entrepreneurial operational experience
✓ lead investors that take an active role in the companies they invest in
✓ a single office and all partners work in the same city
✓ the fund runs on the same technologies it seeks to invest in and is always experimenting
✓ based in the vibrant heart of the east London tech scene
✓ committed to supporting tech ecosystems across Europe
So I’ve joined the team and it's all systems go! In between fundraising with potential LPs, portfolio work and internal fund management, I will be working on figuring out what kind of apps and services we'll use to run the business (please send suggestions!), developing our marketing and community, looking for larger office space (and building lots of empathy for homeless east London startups along the way)…and visiting Ikea. I will also be doing what I love most about being a VC - meeting awesome startups…so get in touch!
Sitar
Caption: Worship Street on a Map
When we were ready to pick an initial location for our offices, deciding to look for somewhere in the heart of startup-ville (aka Shoreditch) was a no brainer. At Connect, we want to be where the action happens, hence close to entrepreneurs. We like the idea of being walking distance from startups and meeting founders during coffee breaks. That’s a much more relaxed and delicious version of a standard elevator pitch.
At the time, we were looking for something flexible where we could quickly move in (our team was not yet that big, we are now looking for a bigger spaceJ) and the serviced offices @City Arc in Worship Street seemed just right. It turned out to be perfect as we got a great office space in front of the terrace (forthose rare London sunny days!) and just one block away from Google Campus.
Caption: Our beautiful terrace
Aside from the indulgent and practical reasons, one more intriguing reason makes Worship Street a great spot for me.
The street itself draws the perfect border between Shoreditch (left) and the City (right). In other words, it is the thin red line that ties dichotomies: Technology and Finance, Innovation and Tradition, Creativity and Rationality, Idea and Capital, Future and Past, People and Money, Investee and Investment.
This dichotomy represents in a nutshell what being a VC means. That is to be comfortable between Ideas and Capital and to connect them together.
In more practical terms this entails access to both worlds and the ability to understand in depth different dynamics, to speak different languages and to relate to different personalities and lifestyles. Most importantly you need to act as a bridge between them.
This part is kind of magical!
We raise capital from different types of LPs. Some of them are very involved in the digital scene, some of them have no connection to it whatsoever (like food entrepreneurs in Italy). With our actions, we manage to bring old industry capital and put it in the hands of 20 year old visionaries who want to disrupt the way people live. Quite a cool thing, right?
However at Connect, we aim to go one step further ahead. We want to connect the old and the new to exchange knowledge, provide reciprocal mentorship and create new business opportunities in an increasingly convergent environment between digital and brick + mortar.
I am personally discovering that being a VC calls for both right and left sides of my brain. Screening investment opportunities and making decisions requires me to be analytical, detail oriented, rational and to focus on the ‘past’ (eg track record, pattern recognition and benchmark). At the same time, assessing an internet startup that is 9 months old with a disruptive business model and nothing but founders to really bet on requires our decisions to rely much more on gut feeling, grasping of a vision and strategic thinking.
This way of thinking appeals to me especially. Since the beginning of my career I have always been attracted to both demons of Creativity and ROI. As a matter of fact, in all my positions I have been capable of playing both games. At Kraft Food I was responsible for new product development and innovation and at BBDO as a planner my role was to route creative minds in conceiving outstanding yet brief campaigns. In my own bootstrapped company, I dealt all the time with the great developers and product managers to design innovative applications in the mobile entertainment sector with a key eye on the bottom line.
Here at Connect Ventures we will continue to look at both sides of our offices: Shoreditch (right) and the City (left) seeking exceptional entrepreneurs that are capable of combining the best of their right and left brains and to turn category changing ideas into great businesses
Pietro
I guess it’s funny that one of the things I love most about my job is also one of the things that is most difficult about my job too.
Every day I get to see pitches for great new ideas and businesses. I usually meet in person with a few teams seeking funding every day. I also get all kinds of emails with pitches attached or sketched out or briefly described or even sometimes just alluded to. Sometimes teams get introduced to me via people I know and sometimes they just cold email, and even sometimes they just cold drop in (please try not to do that though: odds are I’m going to disappoint you and not have time to meet you on zero notice).
So I get to spend a good chunk of every day learning about new businesses and meeting with smart, passionate people all trying to put their own “Steve Jobs ding in the universe”. What could be better?
Well not much, it really is a privilege to meet with people who want to do things differently. But it’s not all rosy and great either. Most days I’m stuck under a flooded inbox. Each opportunity that comes our way needs to be examined and given thoughtful consideration. The arithmetic of venture capital makes this difficult. We receive hundreds of pitches for every company we invest in. So we are in the business of saying no a lot. We’re also in the business of having to follow up with hundreds of companies. I haven’t fully come to grips with being able to interact with every company that comes my way in a way that I’m fully satisfied with. The end result is that balls get dropped…
I’m not trying to excuse my behavior by offering up some self-serving excuse about how overwhelmed I am. Excuses don’t matter but actions do.
So why am saying all this here so publicly?
It’s probably a tenet of self help techniques to say that the first step towards solving a problem is to acknowledge you have one. So this is my rallying cry to myself. I have let my inbox overwhelm me and I’m not following up as quickly or as well as I’d like to.
Here’s my new 6-step plan I’ve come up with for myself:
1.) I read every plan and idea that comes my way.
2.) When things get so busy that 1.) is difficult I will communicate clearly the problem in order to be transparent and properly set expectations.
3.) For things that clearly aren’t going to work for us I will offer quick and specific feedback. I’m also going to acknowledge that I won’t have time to offer further feedback and will leave it at that.
4.) For things that are interesting I’ll set up a meeting either in person (preferably) or via Skype or phone, as soon as is practical.
5.) I will strive for a quick “No” in preference to a drawn out “Maybe”. There’s nothing worse as an entrepreneur than to be in limbo with a potential source of funds. Who has time for that?
6.) When it is a “No” I will offer as much feedback as I am able to but I can’t guarantee an answer that will satisfy every entrepreneur I have to turn down. I hope that I can offer feedback in as constructive a manner as possible. When that’s insufficient I don’t think there’s much more than I’ll be able to do.
What do you think? Does this make sense?
Bill
We were invited to meet up with a group of early stage entrepreneurs in London working hard to build businesses in the mobile space and who had decided to meet up regularly exchange knowledge and practices.
The name of this group is funny (to an Italian) and probably appropriate: Mobile Mafia.
There were nearly 15 teams firing questions at us (Bill and me), another London VC, and to a business angel (no name dropping in this blog!).
The meetup was great, with candid and to-the-point answers. "One of the most down to the earth talks about startup financing given by a VC” (I am quoting one of the attendees).
Many questions were about how to approach VCs, how to get a meeting with them and how to get quality coverage. All very practical and well thought out.
But I believe one key question remained unasked…and that is how important the pitch performance during the actual meeting with a VC is, or in other words, how much importance do we give to communication skills?
After having met hundreds of teams and received hundreds of pitches, I can tell you: how well you communicate matters. Actually, communicating well matters A LOT.
Being able to express your thesis, your vision, and your plan in an effective way makes a difference. Good communication skills reflect a clear mind, the ability to prioritize, good marketing, and management skills. It impacts how you will be able to design your product and whether you will have the leadership skills to execute your company’s vision.
The kind of fast growing companies we look for must be able to involve and engage a large number of stakeholders in a very short timeframe.
Think about it.
In order to scale quickly, a founding team must be capable of engaging and rallying the best developers, product people, and investors. Not to mention business partners, clients, suppliers, journalists and yes, finally, an audience.
In the era of collaborative and horizontal organization and in the era of sharing it is crucial to succeed at organizing your vision and communicating it effectively.
If you as an entrepreneur are ineffective at pitching and engaging potential investors, it is likely you will be ineffective at pitching and engaging your users and your team.
So be confident, organize your thoughts, prioritize your actions, and keep it simple. You want to explain your business in a way (to paraphrase Einstein) is “as simple as possible, but not simpler.”
Pietro
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