Sramana Mitra: What are some of the highlights of your portfolio? Tell us about what stage and what condition you encountered when you chose to invest in them. What is it about them that caused you to place the bet?
Spencer Crawley: I have to think through my head about which ones are public and which are not. I mentioned the gaming business in Berlin. It’s a business called Klang. We invested in the A round at the beginning of this year. Elliot, a colleague of mine, sourced that business by trailing through a list of 2,000 names that flushed the conference in Helsinki. He met them there and started to open a dialogue with them. They’re building an MMO.
The business was founded a couple of years ago but its timing had become really interesting. When we met them, they had success with their initial title. We are now looking at funding to double down on the team and work towards their vision on how to create a world that was evolving and is immersive in the experiential sense.
Within about five or six months, they have a strong Series A round. It was led by Northzone – the European VC fund that backed Spotify. There are still some way out in terms of publishing the games that they want to. They have proved a lot by attracting great talent from some of the largest and most relevant players in their space. That was an example where it felt like we’re backing a Hollywood studio to produce a big hit. We really believed in the founding team’s ability. That’s a relatively unusual one. The majority of our investments are referrals from our investor base or the relationships that the team has cultivated.
Sramana Mitra: Give me a sense of how you think about unicorn hunting. In Silicon Valley, most VC’s are unicorn hunting. You happen to have a fund size that allows you to do not just unicorn hunting but you could also invest in companies that could be built in a capital-efficient manner and could have $200 million exits and you could still be making tons of money. What is your perspective?
Spencer Crawley: It’s a good question. It’s not always as obvious as it might seem. We would lean on the side of the accepted wisdom that you want to be investing in businesses where you can see a plausible path to an outcome that would result in returning the fund. That’s going to be a factor of the ownership that you have in that business. I think we do subscribe to that. The businesses that often generate the most heated exchanges are around those that feel like they have a high probability of a lower exit.
We tend to avoid investing in those impressive nugget businesses rather than try to take larger ownership stakes. It’s unlikely that we would do a deal where we would take 25% of a business on the basis that we think it will be likely to have a “smaller outcome.” We would rather lean on the side of picking ambitious and relentless founders going after huge market opportunities. It may not be the most likely outcome but one that we see a path towards.