What happens when you place 200 founders in a room with 20 venture capitalists? Rob Carter reviews Capital On Stage 2012.
Last week, in law firm Norton Rose’s conference theatre, a couple of hundred European tech start-up entrepreneurs gathered to hear twenty venture capital firms wax lyrical about how their outfit was the shrewdest, most successful or experienced, with a view to attract the brightest and smartest entrepreneurs to their stable.
If London Web Summit was Britain’s Got Talent then Capital On Stage was The Voice; all attendees were invite-only and there were no commercial breaks in the form of service providers or consultants.
Sponsoring the event, apart from the VCs themselves, were PayPal, Google and Amazon Web Services; their presence confined to logo-splashes with no accompanying spiel. Partnering the event, whatever this means, were the incubators Seedcamp, Startup Weekend and Seed Lounge, as well as support from the unlikely pairing of TechHub and this very publication. Again, contributions were confined to branding. Capital On Stage, on its first outing in the UK, certainly confirmed its credibility.
I arrived at lunchtime; the morning had been devoted to pre-booked tête-à-têtes between entrepreneurs and VC representatives. The day had attracted many attendees from outside London and the UK: good. The four hours of pitching before the event had taken its toll; energy in the room was low and there were some very blank faces. Thankfully, the selection of sandwiches and sugar over lunch returned the buzz and smiles.
Seeing the names of all the VCs lined up on the site did bring to mind The Apprentice. As an experiment, I took the team names from the first eight series of the Apprentice (UK version, although this works perfectly well, if not better, with the US names) and then added “Ventures”, “Capital” or “Partners” at random: Impact Ventures, First Forte Capital, Invicta Partners, Velocity Capital, Eclipse Partners, Stealth Ventures, Alpha Capital, Renaissance Partners, Ignite Ventures, Empire Capital, Apollo Partners, Synergy Ventures, Logic Partners, Venture Capital (perfect!), Phoenix Partners and Sterling Ventures.
In many ways, these were similar, if not superior, to the actual sponsor list for the day: 360 Capital Partners, Amadeus Capital, Balderton Capital, Delta Partners, DFJ Esprit, Doughty Hanson, EC1 Capital, Eden Ventures, Fidelity Growth Partners Europe, Hanse Ventures, hardGAMMA, Index Ventures, MMC Ventures, NorthZone, Passion Capital, Piton Capital, Prime Ventures, Qualcomm, and Swisscom Ventures.
These firms can be broken down into five categories: bloody-nosed veterans of the first boom, now onto their third or fourth fund; well-respected “tier two” London operations; new entrepreneur-backed-and-run upstart funds with eyes on the big boys; euro-family funds and mega-corp investment arms. I’ll leave you to allocate.
The main event started and it quickly became apparent that this was a pissing-contest, just as I’d hoped. Perfect. I’ve seen plenty of VCs pitch at many different events; and they always have the same format: “We know how to achieve success because we were started for entrepreneurs by [experienced entrepreneurs/investment professionals with years of expertise], we have a great network of [experienced entrepreneurs/seasoned advisors with years of expertise], we have deep enough pockets to ensure that you won’t be orphaned later on when you need follow on capital and we are experts in achieving the best exit for the entrepreneur as well as us with our concentration on early identification of potential acquisitors through our extensive…” etc.
The smarter representatives had cottoned on to the fact that the faithful copy/paste presentation wouldn’t cut it today, that everyone would end up saying the same thing. With just five minutes to impress their quarry, the partners, principals and associates needed to concentrate on something special, or at the very least be more memorable, witty or even cool. The ante was upped when organisers Arjen Strijker and Scott Phillips introduced an audience vote to pick a winner from each set of presentations.
In general, the VC pitches were very good; the industry attracts its share of brains, charm and charisma. We had the geek-cool of Alex Van Someren of Amadeus Capital, who casually dropped that he helped invent the BBC Micro, and Chris Barchak of Fidelity who sold his first piece of software at thirteen years of age.
There were also grizzled entrepreneurs who’d been there, sold the company and bought the T-shirt, in the form of Eden’s Charles Grimsdale (who put me in mind of Roger Daltrey) and DFJ Esprit’s Richard Marsh (do check out his portrait on DFJ’s site complete with Ferrari Enzo).
Even the lesser-known corporate funds did well, particularly the “red-neck in a pin-stripe”, as Jason Ball of Qualcomm described himself.
Plucky presentations, too, were received well from Jon Coker, investment lead at MMC, who was keen to point out their simple approach and lenient terms for entrepreneurs; and Piton’s tanned and turtle-necked Andrin Bachmann, the only presenter to bring a prop in the form of the piece of mountaineering equipment that became his fund’s namesake.
The most interesting part of the day was the impromptu panel formed by the audience-voted section winners: Jeppe Zink (Northzone), Sitar Teli (Doughty Hanson), Charlotte-Anne Swerling (Balderton) and the inimitable Stefan Glaenzer (Passion).
Glaenzer’s pitch was the least corporate of the day, focusing on his own rollercoaster of timings, luck, experiences and his twelve years as a DJ in Hamburg; he only devoted 20 seconds of his five-minute presentation to Passion. Swerling reminisced about her time at last year’s Capital On Stage event in Amsterdam, which she’d felt had gone well, until she reviewed the comments on Twitter that evening… perhaps it hadn’t. Her witty musings bagged the most laughs that day, and she too was voted through.
The panel proved that there is almost no consensus among VCs when it comes to their industry. Those that had recently-closed funds were keen to emphasise the enduring appetite for venture risk amongst institutional investors.
Those that felt that fundraising in their arena was getting harder assured entrepreneurs that this shouldn’t be something for businesses to worry about. The ever-quotable Mr Glaenzer’s advice to entrepreneurs is to always be “the prettiest girl in the room”; to be the investment that all of the VCs want to have for themselves.
This is a lesson that the extremely impressive George Berkowski of Hailo, one of the UK’s biggest fundraises so far this year, had clearly taken to heart. He explained just how it’s done.
Take three entrepreneurs who have proved themselves in relevant markets, add a lot of homework, get 150 taxis signed up before you’ve launched a beta product, throw in a comparative business going great guns in the US with a huge raise (Uber), walk into any European VC office with evidence and spreadsheets, and name your price. There is no doubt that VCs were falling over themselves to invest in such a great looking opportunity.
One of the common topics of discussion at the after-drinks was the absence of Index Ventures from the afternoon presentations (associate Martin Mignot was kept busy all morning at the open hours) and well as the absence of Wellington Partners, Accel Partners and Atomico entirely. Perhaps these power players, enjoying great attention and very active investment periods don’t need to augment their deal-flow.
From the entrepreneur’s point of view, it’s easy to think that the VCs have it easy. As DJ Glaenzer pointed out, “you raise money once and get paid for ten years”. A simplistic point of view, perhaps. Without being seen to have made recent smart investments – the bread and butter of most tech blogs – the line of great entrepreneurs knocking down a VC’s door quickly shortens.
VCs are in competition with each other and the list of players in the game is growing. With fewer good options coming through the door, the fewer good “newsworthy” deals you can do. This is a fickle and competitive world, and VCs need to remain high profile or the Hailos, Moshi Monsters and Wongas just won’t call when it’s money time. The VCs have to work hard to stay on top of their game; they have to be pretty and rich.