Entrepreneur First has built over 120 companies so who built EF?
“Enabling the most ambitious individuals to become founders” has been the continuous and consistent call to action from the Entrepreneur First (EF) team, which in July 2017 celebrated five years of operations. Now with over 120 companies created over eight cohorts in London and two in Singapore, this call to action has become a reality. The model is also proving financially successful: EF has generated $270M in exit value from the early cohorts and has seen numerous companies successfully raising A and B rounds. A further impact of this mission to enable ambitious individuals to become founders is the 500 individuals who would likely not be entrepreneurs today had they not joined the EF programme, but are now contributing to the European and Asian start-up ecosystems.
On 16 July 2012 I first met EF founders Matt Clifford and Alice Bentinck in a utilitarian office at UKTI’s No1 Victoria Street. This meeting took place thanks to an introduction by the very capable Christopher Hopkins, as he and I were tasked with establishing the UK government’s relationship with a new generation of entrepreneurs and venture capitalists with a goal to show global investors the exciting opportunity for investment in UK innovation. Matt and Alice’s vision was a gift from heaven as it enabled us to highlight to global investors that following the financial crisis, the UK’s most talented individuals were thinking about entrepreneurship rather than corporate careers. Matt and Alice offered a great example of this as they themselves had left a large organisation to build EF. We made a simple verbal agreement whereby they would share their vision with the overseas investors that we invited to the UK, and we would do all that we could to support the development of EF. In the following years that took the form of ensuring that everybody knew about EF by building relationships with VCs, particularly with Octopus Ventures where I was a venture partner and helped with the investment in the now famous EF3 company Magic Pony Technologies. I was also able to help in a more direct manner as one of the initial EF venture partners, and today as a co-founder of Isomer Capital, where my Partner Joe Schorge and I have helped construct and invest in the core EF and next stage funds.
This past July as we all enjoyed EF’s sixth birthday celebration and hundreds of people whom had benefited from EF chatted excitedly about their companies, a question came to my head. If EF had enabled the most ambitious individuals to become founders, then what or who had enabled Matt and Alice to start EF and navigate all the pitfalls along the way? In essence, were Matt and Alice born entrepreneurs, or did they create an enabling ecosystem? In truth I do not know the answer to this question but it has motivated me to write this blog and highlight a few of the early stories of EF, which I think will lead you to gain an even greater admiration for EF and its founders.
The following are a few of the entrepreneurial factors that we consider as investors at Isomer Capital when assessing VC teams and that are useful to catalogue some of the special elements of the early days of EF.
Vision, Mission, Passion
I suspect the ratio of EF8 applicants to places at 1:50 is similar to the ratio of applicants to graduate placements at McKinsey. Yet Matt and Alice decided to leave their roles at the large consulting firm — with less than full support from their colleagues — because they were passionate about their vision. This was a vision with very few proof points; not many consultants left McKinsey to build startups. Even more critical was the fact that their mission was to implement a completely new way to build companies. Underlining the uniqueness of this approach was the bewildered reaction we encountered with Matt and Alice in meetings with VCs in Silicon Valley when we discussed the model. Why would you need to encourage entrepreneurship, they asked? So many of the start-up models emanate from California, yet the EF idea did not resonate, as this kind of approach was not needed in the region.
There was also a fair amount of perplexity on this side of the Atlantic as Matt and Alice pitched their idea. They were told that it was simply not possible to enable entrepreneurs, that European entrepreneurs have no ambition, that the only good entrepreneurs come from America, that no graduate would turn down a well-paid job in return for a small stipend and job insecurity, and hundreds of other reasons why the model would not work.
With a huge amount of passion and not a lot else the first cohort of EF was launched. The founders decided the best approach to building EF was to get on with it and test it out with some initial companies where they took no equity. This was a bold and smart decision that had and will continue to pay huge dividends in the wider ecosystem.
People: Building the Network
There is something uniquely British about the founding EF team’s sense of earnest honesty manifesting itself in comments such as “we really do not know if this will work but we have 31 people starting in two weeks.“ This humble approach was well received, and within the first year of existence a supportive ecosystem grew around EF. Three examples of the power of this network come to mind.
The early cohorts consisted largely of graduates whom were being offered a small stipend to start EF and whose parents, not unreasonably, questioned the financial logic of this career choice. Rohan Silva, at the time the senior policy adviser to David Cameron as well as the architect of the TechCity initiative, became an early advocate of EF. He suggested that the initial EF cohort team meeting should be held at No10 Downing Street so that the graduates could comment to their sceptical parents that there seemed to be a lot of people behind EF to enable their success, and by the way guess where the kick-off meeting was…
Energy and passion go a long way, but in the end the subject of capital needed to run the programme had to addressed. One the key early supporters, Silicon Valley Bank, understood from its own heritage the value of a vibrant entrepreneur ecosystem. The great god of luck played its part in that whilst Matt and Alice were getting to know the bank’s Head of EMEA and President of the UK Branch Phil Cox, SVB received their UK banking licence and hence was able to support future EF companies directly.
Matt and Alice had also understood from the beginning that EF would only work if they could help truly ambitious entrepreneurs, and a key part of this would be to introduce them to people who had actually done it. The EF founders went straight to one the most well-known European entrepreneurs, a Cambridge University graduate and post doctorate in maths and signal processing (in the cross hairs of the evolving EF talent matrix), who built and sold a company for $12B in the Autumn of 2011. Autonomy founder Mike Lynch climbed the eight floors of EF’s first location on Cannon Street and inspired the entire EF1 audience, including the EF founders.
In the end, the success of EF lies in companies being built and investors supporting them to the next stage of evolution. It felt (perhaps for first time) that EF was there to stay when Matt and Alice held their first demo/investor day. The room at the then office of Microsoft was full of just about every investor in London. Some were just curious about this new company builder, but fast forward four months from that event and EF1 companies had a total valuation of over £20m.
Execution
That first office on Cannon St set a key culture factor in the early days of EF in that the team did not spend what they did not have. This caused moments of frustration such as one team member begged the other for a printer. However this played well with the early supporters who appreciated the dedication and scrappiness. As a result of EF1 company development and the significantly greater number of applicants for EF2, investors started to support the programme in addition to individual companies.
It became clear that the success of the EF1 cohort would be one of most important factors in building EF’s reputations on university campuses. Promising EF1 companies like Blaze, Adbrain, Avocarrot were beginning to prove the model. It was also becoming clear that recruiting founders was a full-time role and that EF would need to hire somebody for that role. With EF1 under their belt, there was a period of reflection on the recruitment criteria as well as the company building and ideation process, including the role of corporate partners. There is lots of detail on this subject that only the EF team really know and understand, but I think three important trends were set then and remain pillars to this day.
Firstly, it is vital to collect data at every stage of the process. Whilst company building is about the collaboration between humans, the metrics of progress against a defined timeline become critical in light of a fast approaching demo day. Clear data points help focus the mentorship conversation.
Secondly there were many discussions on how to deploy and use mentors to the cohort. In 2013 it was common for accelerators to adopt a fairly informal approach to mentorship, which could be described as “if you have time please come and help us”. Techstars London under Jon Bradford’s management implemented the important step of requiring potential mentors to choose companies and more importantly the companies had to also choose their mentors, and were then encouraged to keep to that formation. Matt and Alice soon realised that mentorship was a fundamental part of the EF process, and that mentors should be formally part of the team and contracted to do so. From then mentors became venture partners and would make themselves available for weekly check-in meetings with the cohort.
Thirdly there is something of an art in creating successful EF companies. Every cohort is different in terms of their people and dynamics, but also — perhaps less obviously — in that the companies cannot be grouped into consistent areas or trends. Instead of applying a known recipe, each new cohort became an iterative process and learning opportunity for EF. It was one of the key developments of EF to understand that the company building progress was a combination of data and art.
Rear View Mirrors and Big Ears
The ability of the EF founding team to be self-aware, listen to input and not be afraid to change things that were dear to them have been a critical success factor in their evolution. I remember witnessing a strong early example of this culture that Matt and Alice were developing. They spent the first 12 months telling the world about “Entrepreneur First” and then changed the name to EF. Now, why would they choose that? After a data gathering exercise the team learned that the words “first” did not resonate well with the target talent group. However a proposal like “come and build the world’s best unsupervised learning algorithm for video delivery” had them hooked. So, Entrepreneur First became EF.
I arrived at an airport to find a message to call Matt. He wished to inform me that EF had been offered a significant amount of funding on generous terms. Our discussion revolved around the pros and cons of accepting the offer, a small example of the relationship Matt and Alice continue to maintain with a wide community of advisers. Interestingly this is not a one-way street, and one learns with these founders that on occasions they will politely listen to your advice and then tell you why they are going to do something different. In most cases they have been right.
To the more recent observer EF looks like a rocket ship ascending ever higher. Whilst this is true, there has been a number moments in the last five years where the wrong decision could have resulted in a very different outcome. It is perhaps not surprising that along the way a number of colourful characters offered to partner with Matt and Alice. It is their ability to seek and listen to the advice of a caring community that ensured that these conversations were short lived.
Future Potential
The EF company building progress speaks for itself. The creation of the Next Stage Fund in 2016 has ensured that more EF companies get support past demo day, and provides EF with increased exposure to the companies. In 2017 EF became a truly international company with a team deployed between +8 and -8 GMT. Perhaps of greater significance is the expansion of the EF proposition to Singapore where the team built a similar ecosystem to the one they had created in Europe. EF have proven that the model can be put in a box and deployed with the right ingredients almost anywhere.
Today’s announcement of Reid Hoffman and others involvement in EF’s future is a wonderful testament to the global eco-system that Matt and Alice have created for EF and I no-doubt that this ecosystem will continue to build EF….
