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Thrive was set up by Funding London, a venture capital company bridging the finance gap for early stage businesses based in London. With over a decade’s experience in supporting the startups of London through a variety of funding vehicles, Funding London sensed a need to illuminate the ever-evolving scenario of London’s early stage businesses.

Thrive features interviews with and opinion from budding entrepreneurs, investors and industry experts. A mix of contributors from all areas of the industry is desired in order to spark genuine discussion about ongoing critical issues. While it showcases the effectiveness of successful ventures, it also encourages sharing lessons learned from missteps and unsuccessful projects.

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Understanding the VC game

About

Alex Dunsdon has two lives - in one he is an operator entrepreneur @Bakery London, a corporate accelerator for companies and in the other he is an investor @Saatchi Invest, funding early stage tech companies like Dojo, CityMapper, Endource, Everythng and many more.

6 July 2016

Tell us about your experience of meeting start-ups at Saatchi Invest & The Bakery London?

So my life is in 2 parts, I am an entrepreneur and an investor. I am an equity partner at SAATCHiNVEST, where we back early stage tech companies founded by obsessed people with huge visions for the world.

At The Bakery, we run corporate accelerators for companies. Think of it like a second stage accelerator that gets start-ups actual revenues which solves a real market inefficiency.

What is your view of the early-stage ecosystem in London?

I think we are in a really noisy place right now. I recently heard a quote that said ‘we are living in the biggest era of fake entrepreneurs, ever!’ where technology is so cheap and money so plentiful that there is a glut of start-ups looking for money. I remember not so long ago when ‘entrepreneur’ was code for ‘unemployed loser’! and the truth is that the real entrepreneurs with a cockroach mentality are hard to find.

Having said that, it is clear that we’re a few decades behind Silicon Valley…so getting a bunch of people starting companies who will be great at the second or third time of asking is a great thing!

What trends are you noticing in the investment market?

I try not pay too much attention to what everyone is doing because it’s insane how it becomes herdish.

You endlessly hear about Blockchain, AI, VR etc…they are buzzwords for sure, but the only way to be contrarian is by switching off the noise.  So much of this game is also about timing, so I am really focused on stuff that solves a real human need right now to ensure that the company can survive past the ‘product market fit’ stage.

What will early-stage investment scene look like in 10 years?

There will be more founders with money which will help recycle money back into the ecosystem. In my experience entrepreneurial makers think differently to investors – they take more risks, have greater empathy with founders and fall in love more with projects and products.

What makes you invest in a project?

The very first thing I ask people is ‘’why’’.

I don’t want to see a deck, I want to know why you do it.  Everyone thinks entrepreneurship is sexy, but it’s actually really hard. I want to know their driving force – the insane psychological wiring that makes them get up every morning put themselves through the grinder.

Also someone once said that the best description of the fund is ‘a need to be seduced’. We fall in love with the idea or the person’. I like that description.

“I think the best brains are linear and non-linear. They not only think creatively of a big vision but they also execute. ”

What are some of most common reasons you don’t go ahead with an investment?

The process of selling when raising cannot be understated. If they don’t treat the whole thing like a sales process it is easy to lose excitement.

What would be your advice for the start-ups looking to raise VC money?

I see a lot of companies getting killed taking VC money too early. I saw a company the other day that was smashing its metrics BUT their lead investor won’t follow on. It will kill the company.

The other thing is to not believe the hype; founders read all these companies getting funded in TechCrunch and get freaked out. But the truth is that the odds of hitting a billion dollar company are low. To illustrate, only 1% of US funded companies in 2008 have become billion dollar companies and, in the UK, only 6% of funded companies even get to the series A round.

I also think there are plenty of good business that don’t have to keep taking VC money and can grow using revenue instead. Founders need to know that they have a choice, because many a time they assume taking VC money is the only way and don’t learn how to make money until it is too late.