As a start-up entrepreneur, one of the factors that you are judged by is team with which you surround yourself. At the very beginning, you probably have some slide ware but no revenue, no customers and no real product yet. However, if you can convince smart people to be your co-founders, angel investors, NEDs and customers, you must be on to something.
Additionally, it’s hard to make progress on your own. Start-ups are a ‘peaks and troughs’ experience so sharing the load makes a massive difference.
As a VC, you spend a lot of time in human capital assessment. Can the founder surround him/herself with smart people? Will he/she listen? Will the team last the course, can they execute well? This is not only an important judgement in the early days, it’s critical at all stages. What’s needed in year four of a business (now 200 people, four offices, founder no longer has a personal relationship with everyone in the company) is usually very different from year one.
At Broadview, we grew the business from 50 people (two offices) to 400 (five offices) in about four years. We held it together but the organization really creaked at the seams. What made the difference was that the whole firm agreed five values that drove everything we did – hired, rewarded and fired. And we enforced it with a 360 degree review process. I still remember them today – Intellect, Drive, Collegiality, Integrity and Humility (not an obvious one for investment banking in the bubble!). We look for very similar traits in the entrepreneurs that we back.
One of my proudest accomplishments at Broadview was that, one year, three out of four partner promotions globally came out of my team. It’s all about finding people ‘better than you’.
Getting the team right is also critical in a VC firm given the time frame needed to be successful. Starting a new fund gives you an opportunity to ‘practice what you preach’. The average life of a VC fund Europe is reported by EIF (Europe’s biggest VC LP) as being 13 years. That’s the average. And, if you consider that it really takes three funds to establish a ‘franchise’, you are easily talking about a multi-decade commitment for the founding team.
My partners in Eden Ventures set a high bar (software engineers turned entrepreneurs turned investors) and we have lasted the course. That’s not easy in this business where hard decisions need to be made. My new partners at Singular raise the bar even further…and that’s exciting.
Singular is my second start-up. But my co-founders have been founders of six other tech companies between them, as well as being in senior management roles of $billion US and UK companies and active seed investors. I’m impressed, and I hope you will be too. Eden was an early European adopter of the US, operator-led VC model and that was exactly the DNA that we wanted for Singular.
So, here is my list:
- Shared ethic – working hard for our entrepreneurs
- Nice people!
- Huge operational experience
- Ability to empathise with founders having been in their shoes
- Overlaid with pattern recognition and experience of “doing it right”
- Deep domain expertise so can spot trends early
- Brave, ability to take risks, wanting to challenge the status quo
- Intellectual horsepower
- Focus on delivering team, not just individual leverage
The opportunity in Europe is huge and right now. At last, the ecosystem can no longer be the excuse. We look forward to working hard, as team, for our entrepreneurs and syndicate partners and, ultimately, delivering great returns for our investors.