The Exchanges

Q Frank, welcome to the 20 Minute VC. It's a great pleasure to have you here. Now, I'm really curious to find out about how you got into the technology industry, and then later made your transition into the world of venture capital. Can you tell us a little bit about that?

A Sure, Harry, yeah. So, I mean, I started, um, coding on, um, when I was like, 11 or 12, um, because dad was bringing home pretty cool computers all the time, and, um, and then I ended up, uh, going to Sweden, To do my last year of mechanical engineering. I grew up in Australia in Sydney, and then ended up going to Sweden, ah, to do my last year of NJ. And, um, and then after that, got my first job, which was as a coding, actually, and as a troubleshooter in, um, Ericsson in Sweden, and they sent me around the world, um, troubleshooting equipment, which was great fun, and then I got into mobile in the early days of mobile, then headhunted by Hutchison to be part of the engineering management team At three is we built the very first three G networks, which was great fun. And we, it really was a nightmare because we had to try and standard didn't really work. And we had to try and pull it all together, um, and, and really make it work. And it was, it was, you know, very, very hard work, but it was great. And then I ended up, um, working for the VC, um, of leak hushing, which is, uh, horizon ventures.

AI assessment note: “ended up, um, working for the VC, um, of leak hushing, which is, uh, horizon ventures.”

Q And, and you want demonstrated growth or demonstrated interest in it already, correct?

A Yeah, I mean, like, we, we won't invest unless there's other very top tier investors in it, be that is, you know, private individuals or firms, um, because you've got to get the collective validation. I think, you know, there is, as I said, once or twice a year, there will be something come along which the other guys have missed, um, And you think, yeah, you know, this is either going to go, is going to be amazing or not. And it's only because you've got very deep understanding of the sector that you can pick those. Um, but otherwise, you know, if everyone else is not going for it, it's generally a sign that it's, you just leave it. Because the problem is, is that you'll end up being one of those, going back to my earlier point, you'll be one of those one or two people who are pushing the company and you're kind of pushing it uphill because there's not enough people behind it.

AI assessment note: “we won't invest unless there's other very top tier investors in it”

Q And, and talking of growth then, and investing in startups requiring growth, how early would you say is, is too early to invest in a startup for you? Do you, do you invest in the idea stage, or does it have to be validated application in front of you stage?

A Um, a couple, a couple of times, once a, once or twice a year, you will invest in an idea stage just because the combinations are amazing, where the team is incredible, um, they're being very, very smart about it, um, They're not, um, overdoing it, not raising too much money, um, which is the, you know, the Achilles heel of, of investing in an idea stage startup. You know, you get things like Clinkle, where for some reason, investors invest in it, uh, in an idea which isn't fully formed in a prototype that isn't built, and of course, you know, it ends up being a, they invest too much, and it ends up being a disaster. So I think you, um, you know, it's the combinations of a very smart Founders, very sensible, practical, uh, founders who also work really, really well together and complement each other, and a strong idea that, you know, they're going to hustle their way forward to, you know, once or twice a year that comes up where the combinations are perfect. Otherwise, I prefer a seed where, you know, someone's built a prototype and demonstrated, potentially launched and demonstrated something.

AI assessment note: “once or twice a year, you will invest in an idea stage”

Q And would you encourage all aspiring founders that coding is fundamental if you're to be successful?

A Oh, I think, I think that's, uh, I don't think that's necessary. I think an understanding of it so that you can have, um, an understanding of how things work and an understanding of the principles of the technology behind it is, is, is actually probably even more important so that you can have the proper discussions with your CTAs, um, that, you know, you can make decisions, inform decisions. Otherwise, you know, you'll find the tech team will be running rings around you. And I think that's the only, uh, the only thing there, but I don't think that's necessary because I think, you know, design skills and business skills are super critical as well. So, um, and, you know, just an understanding of, of how the world is moving, you know, it may be more important for you as a founder to know the deep ins and outs of how blockchain technology works, um, than actual coding.

AI assessment note: “I don't think that's necessary. I think an understanding of it”

Q And, and talking of growth then, and investing in startups requiring growth, how early would you say is, is too early to invest in a startup for you? Do you, do you invest in the idea stage, or does it have to be validated application in front of you stage?

A Um, a couple, a couple of times, once a, once or twice a year, you will invest in an idea stage just because the combinations are amazing, where the team is incredible, um, they're being very, very smart about it, um, They're not, um, overdoing it, not raising too much money, um, which is the, you know, the Achilles heel of, of investing in an idea stage startup. You know, you get things like Clinkle, where for some reason, investors invest in it, uh, in an idea which isn't fully formed in a prototype that isn't built, and of course, you know, it ends up being a, they invest too much, and it ends up being a disaster. So I think you, um, you know, it's the combinations of a very smart Founders, very sensible, practical, uh, founders who also work really, really well together and complement each other, and a strong idea that, you know, they're going to hustle their way forward to, you know, once or twice a year that comes up where the combinations are perfect. Otherwise, I prefer a seed where, you know, someone's built a prototype and demonstrated, potentially launched and demonstrated something.

AI assessment note: “once or twice a year, you will invest in an idea stage”

Q And, and you want demonstrated growth or demonstrated interest in it already, correct?

A Yeah, I mean, like, we, we won't invest unless there's other very top tier investors in it, be that is, you know, private individuals or firms, um, because you've got to get the collective validation. I think, you know, there is, as I said, once or twice a year, there will be something come along which the other guys have missed, um, And you think, yeah, you know, this is either going to go, is going to be amazing or not. And it's only because you've got very deep understanding of the sector that you can pick those. Um, but otherwise, you know, if everyone else is not going for it, it's generally a sign that it's, you just leave it. Because the problem is, is that you'll end up being one of those, going back to my earlier point, you'll be one of those one or two people who are pushing the company and you're kind of pushing it uphill because there's not enough people behind it.

AI assessment note: “we won't invest unless there's other very top tier investors in it”

Q And can you tell us a little about, then, your most, your most recent investment, and why you said yes to it?

A Yeah. Um, so, you know, one of our most recent ones was a, a very cool, uh, company up in Sweden. A couple of guys, and this is very early stage, a couple of guys have been working on a prototype for building a, a, um, a sandbox for, for developers to offer, um, very high grade mobile security options. Uh, so, you know, you know, everybody's getting hacked these days, and, um, Only the very big guys, the Googles and Facebooks, et cetera, can afford to implement, like, proper two-stage authentication, which I didn't know, but is very, very expensive, so, which is why the only big guys do it, and, and, um, so these guys were like, let's build a very cool sandbox. They're called castle.io, and they, they, um, let's build a very cool sandbox so that in a SaaS model, um, developers can just, um, Put the code in their front end and back end, and have, you know, two stage or, or other different types of authentication systems. Now, it's really cool, um, but also because, you know, I'm very close to, um, Sweden and Scandinavia, and all the key angels that I co-invest with, we all went into it at the same time, so.

AI assessment note: “one of our most recent ones was a, a very cool, uh, company up in Sweden”

Q And would you encourage all aspiring founders that coding is fundamental if you're to be successful?

A Oh, I think, I think that's, uh, I don't think that's necessary. I think an understanding of it so that you can have, um, an understanding of how things work and an understanding of the principles of the technology behind it is, is, is actually probably even more important so that you can have the proper discussions with your CTAs, um, that, you know, you can make decisions, inform decisions. Otherwise, you know, you'll find the tech team will be running rings around you. And I think that's the only, uh, the only thing there, but I don't think that's necessary because I think, you know, design skills and business skills are super critical as well. So, um, and, you know, just an understanding of, of how the world is moving, you know, it may be more important for you as a founder to know the deep ins and outs of how blockchain technology works, um, than actual coding.

AI assessment note: “I don't think that's necessary. I think an understanding of it”

Q Now, moving off slightly on a different tangent, when thinking of success, who is the first person that comes to your mind, and why?

A Um, you know, I think that, um, you know, I mean, over the years, I've been very, very lucky to be associated with some pretty cool people, but I think, you know, look, at the end of the day, Lee Cushing has been incredibly successful, um, and stayed incredibly successful over the years consistently, which is extremely hard for anyone to do, and, um, and he just seems to be able to pick the right things and pick the right deals. You know, one of the things you learn At Hutchison and Horizons was the, was how to concentrate on exits and driving value, very, you know, how to drive value and growth around something to focus on exit opportunities for it. Um, and then, um, you know, look, I mean, you know, you can't argue, I think the other person that comes straight to mind is, is Mark Zuckerberg. You can't argue with, um, what he has done and what he consistently delivers for Facebook. He just keeps blowing everybody else out of the water. Absolutely. You know, so those would be the, the, the top two.

AI assessment note: “Lee Cushing has been incredibly successful... the other person that comes straight to mind is”

Q And can you tell us a little about, then, your most, your most recent investment, and why you said yes to it?

A Yeah. Um, so, you know, one of our most recent ones was a, a very cool, uh, company up in Sweden. A couple of guys, and this is very early stage, a couple of guys have been working on a prototype for building a, a, um, a sandbox for, for developers to offer, um, very high grade mobile security options. Uh, so, you know, you know, everybody's getting hacked these days, and, um, Only the very big guys, the Googles and Facebooks, et cetera, can afford to implement, like, proper two-stage authentication, which I didn't know, but is very, very expensive, so, which is why the only big guys do it, and, and, um, so these guys were like, let's build a very cool sandbox. They're called castle.io, and they, they, um, let's build a very cool sandbox so that in a SaaS model, um, developers can just, um, Put the code in their front end and back end, and have, you know, two stage or, or other different types of authentication systems. Now, it's really cool, um, but also because, you know, I'm very close to, um, Sweden and Scandinavia, and all the key angels that I co-invest with, we all went into it at the same time, so.

AI assessment note: “all the key angels that I co-invest with, we all went into it”

Q then is if I were to ask you what one sector you're most excited about, what would you say? Would it be the cybersecurity sector or would it be something else? Um, I would, um, I would say, uh, I like cyber security, I like, uh, internet things, I like health, and, um, Do you find you have a natural drawing to one sector over others, or are you quite?

A No, I think you, you've got a pretty good idea of, like, which sectors are, you see, you've got to, you've actually got to be, you've got to, you know, you've got to go with the flow, like, which sectors are hot, and which sectors have the greatest number of investors, and the greatest financial exits around the start-up, So in London, we tend to really only do fintech right from the very start because we picked that there would be a huge group of, um, investors around the fintech space and a lot of great exits. So in Asia, we don't do e-commerce really anywhere except in Asia, but in Asia, e-commerce is so early and so, and growing so fast that it's a fantastic opportunity. While in the US, we were a little bit more flexible. We do quite a lot of different things. And then in Scandinavia, we tend to do health and, um, Um, and, um, uh, kind of sound like IOT, but deeper tech. And then in Israel, it's definitely deeper tech. So, um, you know, it's very kind of like sector and location specific still as to what you do. I wouldn't invest in an e-commerce business in Europe because it's so saturated that it's all about just operations and how much cash you can raise. That's not interesting for me. It's just a brand, a brand play. Sure. But in Asia, it's totally different. It's, it's very, very early. Yeah.

AI assessment note: “it's very kind of like sector and location specific still as to what you do”

Q Um, and as co-founder of Spark Labs, you've invested in 40 companies in the US, UK and Asia. Leading me to question, what do you think makes the perfect Series A?

A Perfect Series A, that's a great question. I mean, we're seed investors, uh, so we have invested in Series A and, and previously in Horizons, you know, which was much more a Series B, Series C, uh, type of investor. You know, there's also been a lot Uh, you know, I learned, I learned a lot there at an amazing, amazing firm. And so when we were doing this, you know, what you look for really is when you're investing in a seed, you're very much looking for who else is in it. Because what you don't want is you don't want one or two investors in it. You want quite a few if you can. And, you know, the best rounds and the hottest companies in the valley now will not have one or two investors in them. They will have a good eight or nine or 10 because it's a network effect. Um, of when you come to the Series A, the more people that are shouting for the company and pushing the company on the way between the C and the Series A is the really the critical effect. It's that network effect of pushing, pushing the company and helping it to grow. Um, and you know, whoever that, you know, if you've only got one or two investors, you know, all investors are super busy. So, you know, it, it's very difficult to get, uh, you've just got a much smaller network and a much smaller amount of time. So I think that's, that would be the, one of the most critical things. And the second thing is exactly what…

AI assessment note: “the more people that are shouting for the company... And the second thing is... growth”

Q Um, and as co-founder of Spark Labs, you've invested in 40 companies in the US, UK and Asia. Leading me to question, what do you think makes the perfect Series A?

A Perfect Series A, that's a great question. I mean, we're seed investors, uh, so we have invested in Series A and, and previously in Horizons, you know, which was much more a Series B, Series C, uh, type of investor. You know, there's also been a lot Uh, you know, I learned, I learned a lot there at an amazing, amazing firm. And so when we were doing this, you know, what you look for really is when you're investing in a seed, you're very much looking for who else is in it. Because what you don't want is you don't want one or two investors in it. You want quite a few if you can. And, you know, the best rounds and the hottest companies in the valley now will not have one or two investors in them. They will have a good eight or nine or 10 because it's a network effect. Um, of when you come to the Series A, the more people that are shouting for the company and pushing the company on the way between the C and the Series A is the really the critical effect. It's that network effect of pushing, pushing the company and helping it to grow. Um, and you know, whoever that, you know, if you've only got one or two investors, you know, all investors are super busy. So, you know, it, it's very difficult to get, uh, you've just got a much smaller network and a much smaller amount of time. So I think that's, that would be the, one of the most critical things. And the second thing is exactly what…

AI assessment note: “one of the most critical things. And the second thing is... it's all about growth”