414th 1Mby1M Entrepreneurship Podcast With George Spencer, Seyen Capital

^{George Spencer, Senior Managing Director at Seyen Capital, invests in SaaS companies, mostly in the Midwest, from a small fund out of Chicago. The interview contains an excellent discussion on ideal levels of capitalization for good exit prices.}

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1Mby1M Virtual Accelerator Investor Forum: With Spencer Crawley of Firstminute Capital (Part 1)

Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Spencer Crawley was recorded in November 2018.

Spencer Crawley is Co-Founder of Firstminute Capital, based in London and focused on European startups.

Sramana Mitra: Tell us about your firm and yourself. 

Spencer Crawley: We’re a new seed fund. Obviously, that’s what the world needs – more seed funds. We’re based in London. We launched the fund in the summer of 2017. We’re a $100 million fund. We’re backed, predominantly, by tech entrepreneurs. We have about 50 founders of technology businesses invested in the fund. >>>

1Mby1M Virtual Accelerator Investor Forum: With Nihal Mehta of ENIAC Ventures (Part 5)

Nihal Mehta: We like un-sexy industries. I’m looking at a construction company that’s storing construction history on the Blockchain. When people say they’re using Blockchain, more often than not, you can say, “You probably don’t need to use Blockchain for this.” There are some really interesting native use cases of Blockchain that we’re excited to learn about and invest in.

Sramana Mitra: Very interesting. It’s something that has come up in some of the talks that I’ve given recently about this whole automation thing. India’s development, to a very large extent, depended on this massive BPO industry. I think that’s going to go away in the next decade or two. >>>

1Mby1M Virtual Accelerator Investor Forum: With Nihal Mehta of ENIAC Ventures (Part 4)

Sramana Mitra: Based on what you said, I want to provide some commentary to our audience about the team issue. You hear me talking about multiple co-founders and he’s talking about a full-stack team. Those two are mutually dependent. You can only have a full-stack team if you have multiple co-founders.

If you have to hire people and build out a team, you cannot complete a team by hiring at that stage with that little resource. Certain investors would only invest in full-stack teams at the seed stage and the only way to get to that is with multiple co-founders.

Nihal Mehta: There’s one addition is in many cases, you have solo founders. They are technical. They can build and ship products themselves, >>>

1Mby1M Virtual Accelerator Investor Forum: With Nihal Mehta of ENIAC Ventures (Part 3)

Sramana Mitra: Very well. It’s definitely the age of the incumbents these days on the B2C side.

Nihal Mehta: Consumer venture funds are actually going down in size because gone are the days of Instagram, WhatsApp-like billion-plus acquisitions. Google and Facebook will just try to build it or buy it before it gets big enough. The return profile of these startups tends to go down. You have to have a smaller fund size to return your fund.

On the enterprise side, there are so many more opportunities. On the SaaS side, you have Salesforce, SAP, and Adobe competing for the MarTech stack or the CRM stack. There’re still huge gaps where entrepreneurs can grow very quickly. That being said, I read a stat on Facebook recently. 40% of millennials have removed Facebook from their phones. Snapchat is not doing well either. I think there’s a real opportunity for very large breakout unicorns over the next few years. >>>

1Mby1M Virtual Accelerator Investor Forum: With Krishna Srinivasan of LiveOak Venture Partners (Part 3)

Sramana Mitra: How did this entrepreneur find you or how did you find him?

Krishna Srinivasan: It’s the old myth of this business, which is you need a strong recommendation to be able to get to a venture firm. He just cold emailed us with his back story. We brought him in. We introduced him to a few law firms ourselves. Two of them became customers during diligence. We knew we were onto something special. He had many of the great attributes of a great entrepreneur. >>>

1Mby1M Virtual Accelerator Investor Forum: With Nihal Mehta of ENIAC Ventures (Part 2)

Sramana Mitra: Can you double-click down to the point about seed? What is your definition of seed? What needs to be in the venture for this to qualify as a seed investment?

Nihal Mehta: That’s a great question. Typically, the team has been built out and there’s a product prototype. There’s some usage on the product. If it’s B2B, there’s some revenue, but not a lot. If it’s a consumer product, then there’s some user data. That’s really important for us because we want to reference customers. It’s definitely pre-product-market fit. The product is not flying off the shelves by itself. The founders are still pivoting, tweaking, and iterating on the product to make it stick. >>>

1Mby1M Virtual Accelerator Investor Forum: With Krishna Srinivasan of LiveOak Venture Partners (Part 2)

Sramana Mitra: What you’re pointing out about repeat entrepreneurs versus first-time entrepreneurs is interesting. The vast majority of our community is first-time entrepreneurs. I always say this. If you are a repeat entrepreneur with track record, you can get away with a lot.

You can do a fat startup with somebody writing you a check. There are lots of options, but as a first-time entrepreneur, none of those doors are open for you. You’re going to have to do it the hard way. You have to bootstrap to product/market fit at some level. What about B2B/B2C? Are you doing both? >>>