Tips for building a successful VC career in Europe

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A couple of weeks ago, Eileen Burbidge, co-founder and Partner at Passion Capital, and the Head of our Europe Ventures fund, Davor Hebel, hosted a breakfast for women interested in building a career in venture capital. They shared their experiences of moving into VC and chatted about the challenges and opportunities of being an investor and the differences between investing in early-stage vs. later stage companies.

What’s a good background for a career in VC?

  • There is no perfect mould but a passion for entrepreneurship and technology with a dose of optimism will get you a long way. These traits will protect you from cynicism when the market turns or when an investment thesis doesn’t pan out the way you expect
  • Operational experience will set you apart and make you a valuable addition to any VC team, particularly as the landscape in Europe gets more competitive and VCs think of how to differentiate by providing value-add support to their portfolio, “I started a company in business school, which gave me some great experience and understanding of the founder mindset” Davor said
  • Eileen shared her experiences of working in Silicon Valley for companies like Apple in the early days, to being Head of Product for Skype in London, then transitioning into VC “accidentally” — working with former Skype engineers on investments before co-founding one of the most successful early stage funds in London, with companies like Monzo and Tide in its portfolio

What makes a successful VC investor?

  • The building blocks of being a good investor, at any stage are: strategic thinking, getting into the nitty gritty of how companies grow and most importantly — thriving from working with people. At an early stage the only thing you are investing in is the founding team, at a later stage you need to build very close relationships with your founders (likened by Davor to a marriage) to help them navigate various growth hurdles
  • VC odds will always be skewed towards failure and as VC investors you need to be optimistic and support a founder’s ambitions. You also need to develop a skill for unearthing teams and companies who have the potential for exponential growth, this has to go beyond what the data tells you — particularly because at an early stage you don’t often have any!
  • You have to be discerning and decide to have a thesis and then stick to it. It can sometimes be difficult to spend money, as you can always find a reason to say no to an investment. And if you come from a consulting background: “you are trained to spot the holes, which is something you have to unlearn” Davor. On the other extreme, you say yes to everything because you don’t want to miss out, fear of missing out kicks in… “can you handle being the only fund that didn’t invest in an e-scooter company” Eileen.
  • At an early stage, sometimes you have to take a bet on a team and their ability to achieve the vision they have set out and you should be comfortable that the company may change course after you first invest: “more than 90% of the time the business model and idea you are pitched is not what the company becomes — some even make the full switch from B2B to B2C” Eileen.
  • At a later stage you have more data to analyse and the decision becomes: are you going to back the jockey (the founder), or the horse (the market)?Although often it still comes down to a gut feeling about whether you can build a great relationship a founder and you trust in their ability to operate

What’s the best part of the job, and the hardest?

  • It is as much about the journey as it is about the destination: “If, heaven forbid, Monzo went to zero tomorrow, I’d still feel really good about having backed that team” Eileen. Getting to work with founders is a privilege and you learn a huge amount from every investment. As in investor you should always respect the sacrifices (often both personal and professional) that founders have made to build their companies
  • You may also decide that you only want to work with founders you respect and feel like you can build long lasting relationships with. Eileen has publicly said before that she has a policy of never investing in “jerks”…“life is too short to work with people who are objectionable, offensive or rude. We want to work with people with whom we enjoy spending time in order to sufficiently challenge, press and work through issues.”
  • Time allocation between portfolio companies is always a challenge. And human nature is to try and fix things: “if something feels like it isn’t going right you want to lean in and make it better especially if you’ve invested and had a thesis that this was going to be amazing.” Eileen. Later stage funds tend to make fewer investments, so investors can split their time across the portfolio to spot any problems early on. Early stage funds, making a higher volume of investments, often have to make the difficult decision to spend more time with the winners in the portfolio to increase the upside, rather than with those that aren’t doing quite as well
  • Timing your exit is critical…if you decide to exit too early then you might leave money on the table. Earlier stage funds have fewer opportunities to exit and tend to be led by other funds. At a later stage, you work closely with founders and other board members to find the right time and approach for the exit — “we push our founders to focus on building a great company before they start worrying about the exit” Davor

What’s the outlook for European VC over the coming decade?

  • The European VC industry has changed beyond recognition in the last 10 years. Not long-ago there was tonnes of scepticism and people were still questioning whether there was a venture capital market in Europe. Now Europe is regularly building billion-dollar businesses.
  • Though the European ecosystem still has some growing up to do (and it doesn’t have the benefit of a central hub like Silicon Valley where everyone can meet-up and compare notes over drinks on a Friday night) the outlook for the next 10 years is very bright. More young people than ever before are choosing entrepreneurship as a career and if we can increase the diversity in the community and get creative on finding ways to share ideas — this ecosystem has every chance of continued success.

We’ll be hosting more careers events and workshops in the coming months, please email if you’d like to be interested in attending.

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