1. ’Tech founders need to be treated like athletes to avoid burnout’ (FT 10.07.23),’Some tech investors are now realising that putting entrepreneurs under too much pressure can be bad for businesses well as the founders themselves…’
How do you balance the desire for return and profitability against the health of the entrepreneur?
It’s important to note that pressure is essential to a founder’s success. Using the example of elite athletes, they perform under incredible pressure, pressure is a real catalyst for improvement and success – one of my favourite cheesy lines is “pressure makes diamonds”. However, there certainly needs to be a balancing act where the pressure is reasonable. Now with regards to returns vs health of the entrepreneur, there should be no compromise. Unfortunately, there is an antiquated and toxic mantra within the start-up sphere whereby founders feel they must sacrifice everything, take a miniscule salaries and eat beans on toast every night to be a success. This is wrong. In my opinion, there is no balancing act between returns and the health of the entrepreneur – the two are positively correlated. If you want a founder to succeed, then you must provide an environment for them to do so – paramount to this is their mental and physical wellbeing. This is why we have Harry Jameson, CEO of Pillar Wellbeing, on our Advisory Board – he’s a world leading fitness professional who has spent his career training and coaching C-suite execs to enable them to perform in their careers better. Harry is working with us to design a framework that we can give to our founders to ensure they are looking after their own wellbeing as much as possible.
2. At Verb Ventures, the fund is strategically pitched at late seed and early Series A businesses with high potential. What is the right level of diversification in terms of sector and how many companies should funds hold positions in with this criteria?
At Verb Ventures we do not believe in the right-skewed distribution, where the success of one company covers the losses of numerous others, as this is akin to chasing improbable unicorns. Instead, our strategy involves focus on functional model and it’s applicability to different business segments and building a concentrated portfolio of companies that demonstrate proven monetary traction in those, which are often characterized by being opaque, distributed, and lacking a dominant market leader. We can invest up to 25% of the fund in a single name, but in best case we aim to have 20 names in our portfolio.
3. ‘Silicon Valley start-ups explore sales as funds run dry and buyers return..’(FT 15.07.23)..’Start-ups are shutting down left and right, and you need to grow or cut your way to profitability now (because) you’re not raising funds anytime soon’ said California based Adam Jackson..’ Are we really witnessing Gary Tan’s prediction of ‘an extinction level event’ for US startups being fulfilled?
We know that the venture industry has gone through significant turbulence (particularly the bigger, later stage funds) in the last couple of years which has led to less investment from institutions into the space – down 49% YoY. This of course has had – and will continue to do so – a knock on effect of less capital being available for start-ups. However, I think it’s more of a correction than an extinction event. I’ve spoken to a number of industry colleagues who have said that they are now focussing more on unit economics in light of the market – which is mental that they weren’t already – but this shows that greater levels of DD are returning, which is good for LPs and will in turn will be good for the industry as a whole. Also, good businesses will always prevail, and a bear market brings incredible opportunity.
4. What were your biggest learnings from your time at Marks Sattin and your start-up advisory Wesseldine.com?
Marks Sattin was a fantastic experience, in particular because of who I worked with. David Harvey, who runs the financial services division, taught me how to manage different personalities effectively, how to be agile in approach and how to look after relationships and the transactions will take care of themselves. Sunil Basra, another Director, showed me the importance of being yourself within business – no one wants to work with a robot and letting your true personality shine through yields closer relationships and ultimately is more fun!
The biggest lesson I learned from my start-up advisory business is that the customer is not always right! For example, Natasha Zone at onezone, Ben Camara at Remote Coach and Kane Wise at HYTN, are all brilliant at identifying when feedback is worth listening to and when it is not. This is really important, particularly at Seed stage, where a founder is inundated with feedback and dragged in different directions. It’s a great skill to be able to focus on a goal whilst also filtering feedback effectively.
5. How do you advise smaller and mid sized businesses gain a competitive edge in hiring the best talent?
Before hiring, founders and team leads should be building strong and trusted relationships with specialist head-hunters. They can provide benchmarking, market intel and advice on process – this is worth it’s weight in gold when a company needs to hire quickly and effectively; and when it comes to hiring, you are paying a head-hunter not just for the search but to free up the team’s time to focus on what they do best – their job. Understandably, some SMEs will not have the budget for a 3rd party and in this instance I would say the best way to be competitive is: run a flexible process that is no longer than 2 weeks, be humble about your company (don’t expect people to want to work for more reasons than salary) and be very clear with messaging about the company and role – it should not be over sold (else there will be problems later down the line).