So let's talk about the kind of ugly side of U.S.
The ratio of opportunities presented to to White Star, but also to a number of other funds that have said it publicly.
And the number of deals that will do is 100 to 1. I will say no to an investment 99% of the time.
So just keep that in mind as you eventually, someday do a pitch to A, B, C, and you get that.
No, it's not you, it's me. It's just simply it's a I mean, it's a it's a funnel issue, right?
If you have a thousand companies pitching you every year and you have a capacity to do the deals,
finding the right one at the right point in this kind of growth cycle where you actually believe in the
team and you actually believe in the market where you actually don't necessarily already have a conflict.
Another company in the space where it's the right timing because you're not doing three other deals
in parallel and your headspace allows you to go focus on that deal and do the due diligence.
All those things coming together will only happen one in 100 times.
And this this actually this stat has been reported by a number of funds in the U.S.
Passion Capital in London. Seedcamp has similar stats.
So it's not it's not only us, it's in general. That's the gist of it.
Most of the opportunities that come to us come directly through our website, and we have never invested in a company that came through a website.
Too much noise. I'm getting too many emails from opportunities for me to actually in a way signal that that email's important.
It might be that I actually missed a couple of opportunities that way, but is the reality, if anything?
Another entrepreneur that I know referring a Start-Up, an angel investor that I respect,
referring a Start-Up is somebody that another investor, they might have done it earlier around saying, Hey, this company is rocking.
You should look at them for the next round.
Those are the signals that I need to actually check out that email from the thousands that I got that year and say,
actually, let me go deeper and look at it. So when you're thinking about approaching because leverage the heck out of LinkedIn,
figure out which connection path can get you closer to the right person and which firm to have a at least a warm lead.
And there's plenty of blog VC bloggers will attest to this.
A cold lead is usually going to lead to an almost immediate no.
It's just a signal to noise ratio of like how we can interpret the amount of requests coming in and in Europe.
What is that?
Even less early stage funding is even more acute because the amount of people trying to raise and number of people that can fund them is even less.
So let's go inside my head for a sec and share with you the things that are going through my head.
As you give me your pitch deck and you're massively passionate about your idea, I can see it in your eyes.
You've been living this idea for the last year and you can't wait.
Tell me about it. And as you flip the slides, I'm thinking.
Is a market big enough. There is an example here of a company that that I not my not my speciality no have a pets but there's a
company in the US called Dog Vacay that that is some friends of ours actually funded at the early stage.
I don't have a pet. I didn't know.
There's a so much pain when you go out of town to get somebody to sit your dog and how much money actually gets spent on the dog sitting dog.
Vickie's doing pretty well. They raised $12 million last year. They've created a fantastic marketplace of pet owners.
And people are willing to take care of your pet for a couple of dollars and massively undercuts the professional market.
And it's created a vibrant community actually around around people who want to lend their pets out and people wanted to kill them.
I didn't think it was big enough. What do I know? Can this team pull it off?
And this is probably the most critical piece, especially at early stage, right?
You're as much betting on the team as you're betting on the business.
Do they have the complementary skills between technical and business across the Cofounding team to actually go pull it off?
Single founder. Single Founder Start-ups are really hard for me to get comfortable with.
There's too much risk in one individual, so I usually like to see a business.
It can be two technical co-founders or business founder in a in a technical co-founder,
but somebody can at least bounce off each other and scale out the business because
the guy who's coding is not the guy who's supposed to be selling or fundraising. It doesn't work.
He's supposed to be coding or she. He had had this scale of business before.
The answer to this is usually no for for early stage start-ups. Most of them are first time entrepreneurs,
but that will actually be a very positive signal of actually scale out of business the owner of somebody else's in the past.
Can they build what they're trying to build? Can they have the technical chops to pull off the vision they have?
I'm fine with outsourcing development at early stage of finding a design studio
or some guy in Poland or Ukraine to actually build your minimum viable product.
But at some point, you need to own the tech inside the stack. You need to actually be able to control the destiny of your product.
So at least give me guidance as to the path and how you go.
Hired a technical team once you get funding. Are there other better funded competitors out there?
Probably the answer will be yes. So help me feel comfortable as to why you have an angle and an edge.
And then who else can I partner with to do this? Traditionally,
VCs will actively look to syndicate deals with complementary of VC funds with other people
that can step in and at different value with angels that might have experience that help out.
In a way, it's it's a it's one it's a way for us not to be the only one holding the bag when things are not going well.
And secondly,
it's a way for us to actually nurture the ecosystem jointly by actually bringing people into one deal who might bring us into another deal later on.
It's amazing how clubby we all compete for the same deals. And yes, it's very clubby and how we try to collaborate and actually.
Three of my most recent investments have actually come through through other angels or VCs who brought us into the opportunity.
So let me quickly walk through a couple of examples of of businesses that I've invested in and how I answer those questions as I was going through it.
So first, what's called KAEMI. It's based in the US. I think it's brilliant.
Of course I invested in it. But what you do is you take your phone, they take your key.
You put your key in a white piece of paper.
You take a picture of the key with your phone on both sides, and the algorithm will create a digital version of your key.
It figures out, based on image recognition, the height of the ridges and the length.
So now it knows what your key looks like, and once it knows what your key looks like,
you can order a copy with your favourite Chelsea colours and pay 699 for it.
But more importantly, if you're locked out of your house, it now provides insurance for you to get unlocked.
You can go to a locksmith and show them a factory locksmith code on the app that tells them how to cut the key.
Or you can go to a 7-Eleven in New York City and find this little guy here, which is a robotic kiosk.
The kiosk inside has a magazine full of keys.
It supports 90% of the US keys and house keys and mailbox keys.
So you show up with your app, which has a code, your credit card and your fingerprint,
and you can actually print out your house, give you a locked up. And trust me, you're completely price insensitive at that point.
And New York average lock lock out service is 250 bucks.
And these guys charge $30 for the key to get copied. They have the rolling out 100 kiosks across the US and that has to build out thousands of kiosks.
And the margin on those keys is quite nice.
But what I love about this is it's a massive market. It's actually lock locksmith, lock out and car keys in the US is $8 billion.
Yeah. Massively fragmented. Some guy in a corner shop that's taking my key and copying it.
And no technical disruption. So these guys use image recognition, robotics, price effect.
They lose price sensitivity analysis based on user to figure out what price they're going to give you.
So some cool tech to actually make your life more convenient. So use back to my thesis slide the combination of computing power on the cloud for the
image recognition with this data around the consumer and then just cool robot robots,
robotic cutters to actually make your key and if there's a quid pro quo and convenience and and money putting hands.
So as I went through the questions, I actually found them on a blog. To be honest. I was doing research on 3D printing and I came across them.
Turns out a friend of mine had been an angel investor. He introduced us. We ended up leading the 7 million series that they raised.
Is it market big enough? Yes, and massively fragmented. Can this team pull it off?
Well, the CTO is a Ph.D. in robotics, have employees from NASA, from Lockheed Martin,
from Raytheon, guys with a robotics and data analytics components.
Yes. How to scale a team before? No, never.
The CEO is a former financial analyst and the CTO used to be in the lab.
So that's where hopefully we come in and we can help them scale out. Do they have the technical chops to pull it off?
Absolutely. Other better funded competitors?
Yeah. And there's a couple of other VC funded companies doing similar stuff, but with kind of older technology that haven't haven't innovated as much.
So I'd say it's still a pretty open market. It's pretty darn large.
So it can be two or three competitors there. And then who do I partner with to de-risk it?
And I think the one call that convinced me to do this deal was when I called 7-Eleven.
So 7-Eleven Ventures has a venture arm that invests in companies and 7-Eleven ventures.
The guy who runs the fund was saying, Yeah, listen, they've been inside 711 shops.
We love it. It's performing really well. We look at kiosk businesses all the time.
This is one of the better performing ones we've got. It's really good.
And by the way, who inside 7-Eleven gets to decide how many you buy and which stores you put them into?
Because that would be me.
So the guy who was the side effects of the decision maker for a key partner was also going to pony up a big check to be part of the round.
The other de-risking was there. The the non-executive member of the board created this kiosk business.
He had a business called Coinstar where you took your loose change, you put it into the coin,
starting to give you cash and they kept a couple of cents per transaction.
Coinstar is now a $2 billion publicly traded company in the US called Outer Wall.
So the CEO, the founder of COIN Stores on the board with us, he kind of knows the the kiosk business pretty well.
That was another kind of nudge that it was the right people around the table to go do it.
It's a hard business. It's difficult. They have to go pay a lot of money to build these kiosks and ship them out.
But it's really it's really appealing combination of real world kind of physical, nitty gritty, ugly locksmith marketplace with brilliant technology.
Another one was a seed investment that we just did in London. If you ever go to London, you want to go to a concert, download the app.
It's called Dice. It's a mobile ticketing app for concerts, and it has a curated set of concerts that you can actually browse through and select.
And everybody well, most people don't know about you guys. Most people hate Ticketmaster.
Ticketmaster charge you 12% booking fees just because the artist doesn't see that it hurts the hurts of the fans.
There's no data shared from Ticketmaster back to the or very little back to the artists.
They're flying blind effectively. And yet a live nation.
And Ticketmaster has a $5.4 billion valuation and they control something like 67% of all tickets sold around the world.
So there's a lot of people trying to disrupt Ticketmaster coming out from different angles.
What we liked about these guys is that they actually came from the music space.
Phil, the CEO, used to manage a bunch of electronic acts. He created it because of his own frustration as a manager.
They launched the app here. It had the biggest TechCrunch write up I've ever seen.
It was five pages long. You can actually download the app now. You can buy tickets.
And their vision is to create a more frictionless way for the fans to go to a concert.
There's no booking fees. There's this kind of convenience services like waiting list.
The tickets are sold out. Do you want tickets? Yes. Get yourself on the waiting list for two or they're working on some other things in which you
could have convenience to actually make sure that you get to go to the concert you want to go to.
And by the way, there's actually a whole bunch of data being captured on you and your music tastes,
which can be shared with the managers in the back end,
which actually give them some insight as to who the heck wants to go to the concerts and where so is the target.
Is a market big enough? Yes, but kind of going up against Ticketmaster as a hard thing.
Can a team pull it off? The other guys behind this is this studio in London called US, too, which is a design studio.
They're famous for a game called Monument Valley on iPad,
which is feature pretty much if you go to the Apple store and you see the iPads with a little game that's Monument Valley.
It's such a design in London, it's awesome. So they actually took a bunch of their best guys and put it into dice and spun it off.
So they have a combination of really good tech team.
The CTO is the only CTO of our Met from Greenland, actually the only tech guy I've ever met from Greenland.
Phil, who came from music space and the design guy from was to have a skeleton before.
Absolutely not. The US two guys have, but Phil used to manage the X.
They had two technical chops to pull it off. Yes, better from the competitors.
We'll start with Ticketmaster, but there's a number of them in the US, a number of them better.
Even here we plan to do something similar, but I think they're coming at it from a different angle.
And then who else do I partner with? The interesting thing is we're the actual only institutional investor in the round.
It's people from the music industry, the Managers for Arctic Monkeys and Radiohead and Robbie Williams Metropolis,
which is second largest promoter, which gives them a huge thing in the ticketing space supply to US tickets.
The hardest thing when you're creating a ticketing Start-Up is to convince the guy who's doing the
O2 show for Radiohead to give you 100 tickets because he can he has the ability to allocate them,
but he's going to put them in the channel. The thing's going to sell the fastest.
So because they're all investors, it also means that their acts are all flowing through the system and some pretty high profile acts.
Most of the acts on dice, I have no idea. I'm totally apparently unhip now, but apparently they tell me it's really cool.
So you couldn't find other other places.
And I'll I'll finish with this one blog loving this one out to challenge me on a couple of the other questions.
Blog loving star in Sweden by a 24 year old who his wife had a fashion.
His girlfriend had a fashion blog. As usually happens, geeks try to impress their girlfriends by coding something.
I actually quoted a website from my now wife at one point she wasn't impressed, so he called it an app to get more traffic for her blog.
And by the way, it's actually the number one blog on blog loving now. And now I'm married, so it worked.
But what it does, it aggregates 1.5 million blogs around the world, mainly in fashion and lifestyle,
and it has a mobile app and a website through which you consume the content a daily basis.
Instead of having to go to 100 blogs, you get it all kind of there.
And I call it fashion porn. People spend 30 minutes per day just browsing the fashion updates from their favourite bloggers, and it's huge.
It's grown from when we invest it to now.
It's now got 30 million monthly uniques from all over the world who actually literally want to just get their fashion fix.
They've actually made some bloggers from scratch,
people that have no traffic that grew because of blog loving and they've spent zero money on user acquisition.
It's all been organic. So we invested as angels and we saw it scale out.
At that point, they were a couple of million, million uniques, over 30 million uniques now.
Can they make money? Absolutely no idea. Nobody really managed to figure out how to make money on blogging.
I mean, Tumblr made money by selling itself, but it never actually created revenue.
Blogger. Blogger made money by selling itself to Google but never really made money.
So I don't know. I mean, there's some ways in which you could think about native advertising, but it's still unclear.
Can the city pull it off? Well, they started from this kind of passion point, write about the girlfriend and trying to satisfy her needs.
And from dad's grew into a very vibrant community. Yes.
And they've actually scale up the team significantly in New York. So we found them in Sweden,
but we knew their market and their exit when the U.S. so they actually moved the whole team to New York
Carrasquillo business before not the for 24 year old guys in Sweden but when they moved to New York,
Matthias, the CEO, said, Listen, I'm the product guy. I want to go build products.
I don't want to be dealing with you investor guys or doing financial reports. Let me build products.
So we actually found a fantastic CEO sheet, actually ran North America for Dailymotion,
had worked at MTV Networks, was an operating partner of the venture capital firm, had worked at AOL.
She knew how to scale up media businesses, and she came on board. And she was such a very passionate user of the product herself.
So she scaled up business before, didn't have the technical chops to pull it off.
Yes. Better funded competitors.
Depends what you call a competitor. Instagram is well funded by Facebook, Pinterest, Flipboard.
It depends of where you think your users will be in the consuming media.
And then who can I partner with to actually pull this off?
Beta Works, which is a company that we invested in and co-invest with in New York.
This focus around the kind of the new evolution of media and the North Zone who the Swedish fund that
was the first backer for Spotify who knows how to build effectively world class global media companies.
And they came in for the round. They raised $7 million with which we actually doubled up with to the fund.
And at that point, they'll just continue to scale up.
So the reason I'm not just showing these deals is go back to the questions that I posed earlier and how I,
I question myself as I'm going through through your pitch.
I did not answer yes to every single question and every investment that I made. Actually, in some case, I answered no to a bunch of the questions,
but enough of the other questions and enough of actually kind of the composition of the deal made me feel comfortable that betting on this,
taking a risk on this opportunity made sense. So try to figure out what the questions that that individual investor is going
to have and try to figure out how you make your pitch in a way personalised.
Right. You should never actually had the same pitch for every investor.
Angel you're going to go pitch. Everybody has their own angle, do some research, read their blogs, read your tweets,
talk to other people that actually might have got an investment from them before. Try to figure out if they're the right investor for you.
Because we see actually taking money from VCs is ridiculous.
It's actually it's effectively Tinder. For like a 57 year relationship.
You have three meetings and you kind of talk to each other. You think you like each other.
He gives you this really big legal document you're supposed to understand and sign in which he says he's going to take 20% of your firm,
sit on your board, have rights over you, have the ability to fire you, by the way.
And you're supposed to decide in two weeks whether you want to be married to this person for next seven years.
Average VC investment takes last longer in the US and the average marriage in the US.
So and so the fact that we do this like speed dating rate is sometimes scary and it's also an information asymmetry.
I've done a lot more deals than you have as an entrepreneur, but I do probably one a month.
You probably will do two or three in your life. So that information asymmetry is actually really hard.
So A get some good advice, a good lawyer. B, read all the books out there about VC funding.
Brad Feld has one of the best ones, effectively demystifies the term sheet for for the on behalf of the entrepreneur
and explains why some things like clawbacks and ratchet are bad words.
And just before you hit the road,
kind of be ready to to to to get to tackle that information asymmetry and this kind of this this speed dating model you're about to enter.