The Exchanges

Q And then what's your favorite book, and why?

A Well, a book that I've read a few times that I really like is The Amazing Adventures of Cavalier, which is about, ah, a couple of kids in New York in, I think it's the thirties, and they're, they start a comic book company. Uh, and it's a really, really good story about entrepreneurship in a completely different industry, but when you read it, you realize, you know, a, a lot of startups, whether they're tech enabled or not, uh, or tech focused or not, they, they face a lot of the same problems. And, you know, they, in the book, the guys get, uh, like a terrible deal from their investors. Uh, it just takes advantage of them because they're young and inexperienced. Uh, they have, you know, they're trying to create a product, which is a comic book. That, you know, users love, but at the same time, they don't want to compromise on making it too mainstream. Uh, and yeah, anyway, it's just, uh, it's just a really well-written book about a lot of different things, but, but particularly about entrepreneurship.

AI assessment note: “a book that I've read a few times that I really like is”

Q Now, can you take us back to your early days entering the industry? So how did you make your move into VC?

A Sure. So, uh, out of university, I, well, first I spent a year, uh, teaching English in, in South Korea. But then after that, I spent three years in investment banking in the U.S., which is where I'm, I'm from. And so I worked for a bank called Broadview. And, uh, Broadview at the time was a technology focused mergers and acquisition bank. So they, they worked entirely with tech focused, uh, startups and larger companies, uh, Uh, in terms of buying and selling companies. And so I got to know the venture capital industry pretty well, uh, through that, uh, as most of the clients we had were venture backed at some point in, in their, in their history. Uh, and I realized after a couple of years that I, I didn't really enjoy being a banker very much. I actually realized that after a year, uh, but I really liked working with the companies. And so my, one of my favorite things was, you know, during the process, they'd spend time with the potential acquirer. And I'd sit in on the meeting and they, they always talked about the history of the company and especially the early days and starting out. And I always found that to be the best part of the process is hearing how they started out and the very early days and, and, you know, all of the difficulties they faced. And, and I realized that I really want to be more involved with the, the, the journey the company went on rather than the ki…

AI assessment note: “I realized I wanted to be in venture, or at least try it out”

Q And then with those criteria, does that differentiate you from the large amount of sources of capital for businesses in the seed stage? I mean, do you think there's too much capital chasing too few deals?

A Right, so I think the thing with capital is always, uh, if you just view capital as sort of this, there's a whole lot of money, then maybe, although I think actually in seed, yeah, there's, there is probably enough capital for all the seed companies out there, but capital isn't just one giant bucket, right? There is, there's different flavors of it, and, like, some people really care about e-commerce companies. Some people have a lot of experience with ad tech, um, Uh, and, you know, depending on what company you are and what kind of founder you are and what you're building, you know, most founders care a lot about the experience or, or the, the thesis of the, the investors that they're, that they're going to work with because it, it aligns you, right? So, so, so you want kind of what the VC wants kind of longer term. So for us, we, the product in UX is, is, is what differentiates us, right? So we, We care a lot about product and user experience, and we look for founders that care a lot about it as well, and then we help them with everything else. So we, we like to back founders that are very good at user experience, and CityMap is a good example of that, but so is Typeform, Marvel, uh, there's, there's a lot of them in our portfolio where, where that's the focus, and then we help them with, you know, everything from, like, pricing, business model, company culture, hiring, et c…

AI assessment note: “for us, we, the product in UX is, is, is what differentiates us”

Q What do you think has driven that change then? Because now, obviously, Europe is a huge tech hub. What do you think has taken that change from the kind of unknown Skype birthplace to what it is today?

A Uh, I mean, the, the single biggest driver is there are just more and more great companies coming out of here, right? So if you look at, you know, over the last 10 years, uh, it's not just, you know, the gaming companies. I mean, there's a number of sectors, right? So there's gaming, there's financial technology, there's, uh, music and content, uh, there's advertising technology, although that's probably less interesting at the moment and, and, and probably in the future. But there's, there's a lot of different industries where Europe has produced Really big, growing companies. Those are expected to be, kind of, in the future, very, very large companies, and if you think about 10 years ago, there wasn't really this, you couldn't point to, you know, a dozen or two dozen companies that were already large and growing and, and on, you know, really high growth paths, but now you can, and, and that change has happened over the last few years, and in terms of what's driven it, I think it's, it's a number of things. I think there's, Greater ambition level among the, amongst the founders. There's been more cross-pollination between the US and Europe in terms of ambition level, founders moving to the US, founders moving back from the US and starting companies, and there's been a change in the venture capital scene, you know, in terms of the ambition level of the VCs funding the companies…

AI assessment note: “in terms of what's driven it, I think it's, it's a number of things.”

Q And then deal sourcing, how do you approach it?

A Uh, so deal sourcing. So we have kind of two main prongs. So one is referrals. We get a lot of referrals, primarily from entrepreneurs, both entrepreneurs we've backed and then entrepreneurs we just know and haven't necessarily backed or, you know, even entrepreneurs we've rejected. I think we, we, we have a reputation for rejecting well, or at least rejecting quickly and, and generally entrepreneurs, uh, respect that. And so we found that actually a lot of the people that we've said no to recommend us to other entrepreneurs, which is nice. Uh, and then the other is, you know, we, there are industries that we just like, you know, areas that we get interested in, and when you start getting really deep into an area, you, you just, you're, you're trying to form a thesis, and part of forming a thesis is seeing what our startups, not large companies, but what our startups doing in that space, and so you, you, you find a lot of companies that way.

AI assessment note: “we have kind of two main prongs. So one is referrals.”

Q And do you think VCs, uh, use social media effectively?

A It depends, I think. You know, a lot of them, so what, what, what I see a lot of, uh, is like VCs where the firm has a Twitter account, and I don't think that's very effective. Um, Because I think for, uh, for entrepreneurs, right, your relationship is with the investor, the specific person that you're going to be working with, not with the, with the firm. Uh, so, so I think the, the VCs that use it really well are the ones who use it to build a personal brand, right? They use it to, they use the social media as a reflection of themselves. Uh, I'm sure it's filtered, but it, hopefully it's not like super filtered. So they show that they're, uh, A human being, right? And they have interests outside of work, and they have interests within work, but they, they show kind of what their interests are.

AI assessment note: “the VCs that use it really well are the ones who use it to build a personal brand”

Q Why was that? Why hadn't you considered London? I mean, when was this? Was this eight years ago?

A It was 2005, so it was 10 years ago, and, you know, the, the New York scene was, was sort of very quiet then, right? So if you can imagine how, how lively New York is now, and, and, you know, how London's sort of kind of catching up at New York, but it's still a ways away from, from where Silicon Valley is, you know, think 10 years ago what it was like. Uh, it was just not, you know, I know we considered kind of the, the, a very lively industry here, uh, but also I just, you know, and, and, I was born and raised in America. I lived there my whole life, and so when I thought about venture capital, and when I spoke to people, um, At Broadview and other VCs, it never really came up on the radar. Things are very different now. But back then, you know, Skype was probably the only product people had heard of. And even then, in five, Skype was pretty small, right? So there weren't really these big companies coming out of there. And so the VC industry wasn't very big then.

AI assessment note: “It was 2005, so it was 10 years ago”

Q And then what's your favorite book, and why?

A Well, a book that I've read a few times that I really like is The Amazing Adventures of Cavalier, which is about, ah, a couple of kids in New York in, I think it's the thirties, and they're, they start a comic book company. Uh, and it's a really, really good story about entrepreneurship in a completely different industry, but when you read it, you realize, you know, a, a lot of startups, whether they're tech enabled or not, uh, or tech focused or not, they, they face a lot of the same problems. And, you know, they, in the book, the guys get, uh, like a terrible deal from their investors. Uh, it just takes advantage of them because they're young and inexperienced. Uh, they have, you know, they're trying to create a product, which is a comic book. That, you know, users love, but at the same time, they don't want to compromise on making it too mainstream. Uh, and yeah, anyway, it's just, uh, it's just a really well-written book about a lot of different things, but, but particularly about entrepreneurship.

AI assessment note: “a book that I've read a few times that I really like is”

Q And do you think VCs, uh, use social media effectively?

A It depends, I think. You know, a lot of them, so what, what, what I see a lot of, uh, is like VCs where the firm has a Twitter account, and I don't think that's very effective. Um, Because I think for, uh, for entrepreneurs, right, your relationship is with the investor, the specific person that you're going to be working with, not with the, with the firm. Uh, so, so I think the, the VCs that use it really well are the ones who use it to build a personal brand, right? They use it to, they use the social media as a reflection of themselves. Uh, I'm sure it's filtered, but it, hopefully it's not like super filtered. So they show that they're, uh, A human being, right? And they have interests outside of work, and they have interests within work, but they, they show kind of what their interests are.

AI assessment note: “VCs that use it really well are the ones who use it to build”

Q What do you think has driven that change then? Because now, obviously, Europe is a huge tech hub. What do you think has taken that change from the kind of unknown Skype birthplace to what it is today?

A Uh, I mean, the, the single biggest driver is there are just more and more great companies coming out of here, right? So if you look at, you know, over the last 10 years, uh, it's not just, you know, the gaming companies. I mean, there's a number of sectors, right? So there's gaming, there's financial technology, there's, uh, music and content, uh, there's advertising technology, although that's probably less interesting at the moment and, and, and probably in the future. But there's, there's a lot of different industries where Europe has produced Really big, growing companies. Those are expected to be, kind of, in the future, very, very large companies, and if you think about 10 years ago, there wasn't really this, you couldn't point to, you know, a dozen or two dozen companies that were already large and growing and, and on, you know, really high growth paths, but now you can, and, and that change has happened over the last few years, and in terms of what's driven it, I think it's, it's a number of things. I think there's, Greater ambition level among the, amongst the founders. There's been more cross-pollination between the US and Europe in terms of ambition level, founders moving to the US, founders moving back from the US and starting companies, and there's been a change in the venture capital scene, you know, in terms of the ambition level of the VCs funding the companies…

AI assessment note: “Greater ambition level among the, amongst the founders. There's been more cross-pollination”

Q And then with those criteria, does that differentiate you from the large amount of sources of capital for businesses in the seed stage? I mean, do you think there's too much capital chasing too few deals?

A Right, so I think the thing with capital is always, uh, if you just view capital as sort of this, there's a whole lot of money, then maybe, although I think actually in seed, yeah, there's, there is probably enough capital for all the seed companies out there, but capital isn't just one giant bucket, right? There is, there's different flavors of it, and, like, some people really care about e-commerce companies. Some people have a lot of experience with ad tech, um, Uh, and, you know, depending on what company you are and what kind of founder you are and what you're building, you know, most founders care a lot about the experience or, or the, the thesis of the, the investors that they're, that they're going to work with because it, it aligns you, right? So, so, so you want kind of what the VC wants kind of longer term. So for us, we, the product in UX is, is, is what differentiates us, right? So we, We care a lot about product and user experience, and we look for founders that care a lot about it as well, and then we help them with everything else. So we, we like to back founders that are very good at user experience, and CityMap is a good example of that, but so is Typeform, Marvel, uh, there's, there's a lot of them in our portfolio where, where that's the focus, and then we help them with, you know, everything from, like, pricing, business model, company culture, hiring, et c…

AI assessment note: “the product in UX is, is, is what differentiates us, right?”

Q Now, can you take us back to your early days entering the industry? So how did you make your move into VC?

A Sure. So, uh, out of university, I, well, first I spent a year, uh, teaching English in, in South Korea. But then after that, I spent three years in investment banking in the U.S., which is where I'm, I'm from. And so I worked for a bank called Broadview. And, uh, Broadview at the time was a technology focused mergers and acquisition bank. So they, they worked entirely with tech focused, uh, startups and larger companies, uh, Uh, in terms of buying and selling companies. And so I got to know the venture capital industry pretty well, uh, through that, uh, as most of the clients we had were venture backed at some point in, in their, in their history. Uh, and I realized after a couple of years that I, I didn't really enjoy being a banker very much. I actually realized that after a year, uh, but I really liked working with the companies. And so my, one of my favorite things was, you know, during the process, they'd spend time with the potential acquirer. And I'd sit in on the meeting and they, they always talked about the history of the company and especially the early days and starting out. And I always found that to be the best part of the process is hearing how they started out and the very early days and, and, you know, all of the difficulties they faced. And, and I realized that I really want to be more involved with the, the, the journey the company went on rather than the ki…

AI assessment note: “I realized I wanted to be in venture, or at least try it out”

Q And then talking about the, the entrepreneurs and the startups there, what do you look for then in a founder? And to you, what makes a great product?

A Uh, so there's, there's three things we look for, uh, when, when we, when we look at a company. So one of them is founders that really understand the market that they're building for. Uh, that doesn't mean they need to be really experienced in the market. Like it's not about age or what you've done in the past. It's how passionate or Are you about it? How much time have you taken to understand that market? If you have experience in that market, even better. Uh, so I'll give you two different examples. Uh, in, in, uh, as Matt's case, as Matt's the founder of city mapper, uh, he loves public transport, right? And like, anytime he goes to a new city, he'll write public transport and kind of try to get a sense for how do people move through the city? What are the problems that they encounter? And how can Cinemapper help solve those problems? Uh, in another investment we have, so that's like, he has a real passion for this. And in another company we have is a Stockholm-based company called Oxy, the founder, Henrik Lemberg, he, so Oxy is a music creation app, and prior to this, he was VP of platform at SoundCloud, and prior to that, he worked at Propellerhead, which is a, a, a, a, a sequencer software. So he spent Most of his adult life working in digital music technology. And his master's thesis was on how you can use digital means to bring music making to a greater number of people…

AI assessment note: “there's three things we look for, uh, when, when we, when we look at a company”

Q And then talking about the, the entrepreneurs and the startups there, what do you look for then in a founder? And to you, what makes a great product?

A Uh, so there's, there's three things we look for, uh, when, when we, when we look at a company. So one of them is founders that really understand the market that they're building for. Uh, that doesn't mean they need to be really experienced in the market. Like it's not about age or what you've done in the past. It's how passionate or Are you about it? How much time have you taken to understand that market? If you have experience in that market, even better. Uh, so I'll give you two different examples. Uh, in, in, uh, as Matt's case, as Matt's the founder of city mapper, uh, he loves public transport, right? And like, anytime he goes to a new city, he'll write public transport and kind of try to get a sense for how do people move through the city? What are the problems that they encounter? And how can Cinemapper help solve those problems? Uh, in another investment we have, so that's like, he has a real passion for this. And in another company we have is a Stockholm-based company called Oxy, the founder, Henrik Lemberg, he, so Oxy is a music creation app, and prior to this, he was VP of platform at SoundCloud, and prior to that, he worked at Propellerhead, which is a, a, a, a, a sequencer software. So he spent Most of his adult life working in digital music technology. And his master's thesis was on how you can use digital means to bring music making to a greater number of people…

AI assessment note: “there's three things we look for... One of them is founders that really understand the market”

Q then other than, uh, having a, obviously, brilliant portfolio that you do, what other ways have been the most effective ways to establish your reputation? Is it kind of presence at demo days, or is it a building a platform around Connect through blogs? What is it for you, do you think, that's been so effective for Connect in establishing you as one of the leading seed investors in London?

A Uh, so I think we're still working on building that reputation, uh, but I, I think if I were to allocate, like, say there's a, a hundred dollars, right, and I could allocate it to a bunch of different activities, I'd probably allocate 99 of them to the portfolio, to just making the investments and building our reputation through the investments and, and how we work with the founders. And, or, or maybe I'd be like 90 on that and 10 on how you reject companies. And that's it, right? Because I think we, we do spend a lot of time going to some conferences. We, we do it less now than we did in the beginning. So we, we go up on stage, and we introduce ourselves, and we say, you know, who we are, but the thing that really gets people interested is what we've invested in. So, you know, I, I could go to as many conferences as, as, as I get invited to, but without a portfolio to talk about, it's not compelling for entrepreneurs. And you said. It's really the, if you think about, like, the, the software a company makes as a reflection of the founders and how they view customer experience and users, I think the investments a VC makes is a reflection of, you know, their thesis on, on technology and, and how, how they view things, and so the, the portfolio really is a reflection of the GPs, and without that portfolio and without consistency in your portfolio, I think it's very hard to, to es…

AI assessment note: “I'd probably allocate 99 of them to the portfolio”

Q Why was that? Why hadn't you considered London? I mean, when was this? Was this eight years ago?

A It was 2005, so it was 10 years ago, and, you know, the, the New York scene was, was sort of very quiet then, right? So if you can imagine how, how lively New York is now, and, and, you know, how London's sort of kind of catching up at New York, but it's still a ways away from, from where Silicon Valley is, you know, think 10 years ago what it was like. Uh, it was just not, you know, I know we considered kind of the, the, a very lively industry here, uh, but also I just, you know, and, and, I was born and raised in America. I lived there my whole life, and so when I thought about venture capital, and when I spoke to people, um, At Broadview and other VCs, it never really came up on the radar. Things are very different now. But back then, you know, Skype was probably the only product people had heard of. And even then, in five, Skype was pretty small, right? So there weren't really these big companies coming out of there. And so the VC industry wasn't very big then.

AI assessment note: “I was born and raised in America... it never really came up on the radar”

Q Cavalier and Clay. Perfect. And then the most read blog or newsletter?

A I don't really have one anymore. So I used to read them a lot more, and what I've found is over the past couple years, a more, uh, like I, I'll read something that a lot of people that I respect are reading, but I won't actively, you know, seek out a lot of things. I guess one of the things that I do read every week, probably without fail, is Benedict Evans' newsletter. Yeah, it's amazing. Yeah, and I think I particularly like it because he, he, it's, it's, It's quite data-centric and research-centric, so it's not, you know, a lot of times when you read blogs and stuff, they're quite fluffy, right? They're just kind of like opinions and stuff, and he has very strong opinions, but he, you know, he reads a lot of data, interprets it, and then comes up with a thesis, which, and I, I really like that approach.

AI assessment note: “one of the things that I do read every week, probably without fail, is Benedict Evans' newsletter”

Q then other than, uh, having a, obviously, brilliant portfolio that you do, what other ways have been the most effective ways to establish your reputation? Is it kind of presence at demo days, or is it a building a platform around Connect through blogs? What is it for you, do you think, that's been so effective for Connect in establishing you as one of the leading seed investors in London?

A Uh, so I think we're still working on building that reputation, uh, but I, I think if I were to allocate, like, say there's a, a hundred dollars, right, and I could allocate it to a bunch of different activities, I'd probably allocate 99 of them to the portfolio, to just making the investments and building our reputation through the investments and, and how we work with the founders. And, or, or maybe I'd be like 90 on that and 10 on how you reject companies. And that's it, right? Because I think we, we do spend a lot of time going to some conferences. We, we do it less now than we did in the beginning. So we, we go up on stage, and we introduce ourselves, and we say, you know, who we are, but the thing that really gets people interested is what we've invested in. So, you know, I, I could go to as many conferences as, as, as I get invited to, but without a portfolio to talk about, it's not compelling for entrepreneurs. And you said. It's really the, if you think about, like, the, the software a company makes as a reflection of the founders and how they view customer experience and users, I think the investments a VC makes is a reflection of, you know, their thesis on, on technology and, and how, how they view things, and so the, the portfolio really is a reflection of the GPs, and without that portfolio and without consistency in your portfolio, I think it's very hard to, to es…

AI assessment note: “allocate 99 of them to the portfolio... and 10 on how you reject companies.”

Q What is going on, Sitar? No business cards. It's just not going to happen.

A Yeah, like, are you a real fund? And so, it was really, you know, and, and, and because we had no investments, there was nothing for them to look at, right? There wasn't, like, people that could call and say, oh, this is what it's like working with Connect Ventures. So, you're really starting from scratch. So, a lot of the work we did the first year was really establishing that, that reputation and, and, And, and, and just focusing on making investments and working with those entrepreneurs, uh, in the best way possible. You know, for us, we've always played the long game in terms of marketing, which is the, the best marketing we can do is the companies we invest in, and working them really well, and if we do that right, that's how we build our brand, and that's how we build our reputation, and it took years to build it, but, uh, but you know, it's, it's, it's, It's been really good to see over the last year or two how that reputation has built up and how, you know, founders that we've backed have, have, have recommended us to other founders.

AI assessment note: “we've always played the long game in terms of marketing”

Q What is going on, Sitar? No business cards. It's just not going to happen.

A Yeah, like, are you a real fund? And so, it was really, you know, and, and, and because we had no investments, there was nothing for them to look at, right? There wasn't, like, people that could call and say, oh, this is what it's like working with Connect Ventures. So, you're really starting from scratch. So, a lot of the work we did the first year was really establishing that, that reputation and, and, And, and, and just focusing on making investments and working with those entrepreneurs, uh, in the best way possible. You know, for us, we've always played the long game in terms of marketing, which is the, the best marketing we can do is the companies we invest in, and working them really well, and if we do that right, that's how we build our brand, and that's how we build our reputation, and it took years to build it, but, uh, but you know, it's, it's, it's, It's been really good to see over the last year or two how that reputation has built up and how, you know, founders that we've backed have, have, have recommended us to other founders.

AI assessment note: “Yeah, like, are you a real fund? And so, it was really”