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Included VC

The Art of Being a Wholesome and Authentic VC with Sophia Bendz

Sophia Bendz is one of the strongest role models for any early-stage investor in the European start-up ecosystem. Coming from a marketing background, she started her career at Spotify, where she successfully led the marketing department through hyper-growth and relocated from Stockholm to the NYC offices for them.

Later, she moved back to Europe, where she joined Atomico as an Executive in Residence and later on was promoted partner. During the years at Atomico, she created the Atomico Angel Program, which provides outstanding diverse individuals the opportunity to scout and invest with Atomico on underrepresented founders at the seed stage. The Angel Program is already on its third cohort, and Sophia remains involved as an advisor. In 2020 Sophia moved to Cherry Ventures, a Berlin-based VC focused on pre-seed and seed investing, in order to support founders from an even earlier point.

As a truly multifaceted person, she has served in several roles and worn many hats. We felt incredibly lucky to host Sophia for an AMA session with the Included VC fellows, where she shared several learnings and advice as we start our VC career.

😇 First steps to becoming an effective angel

Most angel investing starts organically. In Sophia’s case, her first angel investment came from an ex-coworker she used to work closely with. When that ex-coworker started a company, she was asked to join as an angel investor and an advisor. At that point, she committed a few hours per week to support him and got stock in compensation.

Reflecting back on the experience, Sophia advises — in a very VC like fashion — that you should build relationships with other angel investors to not only learn but also to create better deal flow and get access to small rounds. The usual ticket size for beginner angel investors is around $10–20k per company, which if invested in 4 companies, will already show a track record and that will help you get into further deals.

In regards to how to add value as an angel, Sophia mentioned that it is crucial to have a diverse network and be able to connect people with different skills to founders. With her network coming from her operator days, it shows everyone inadvertently builds one whether they are aware of it or not. Being an important asset, your network helps you create value as an investor so it is advisable to be thoughtful before making introductions. Since your network tends to be based on repeated interactions it is important to use it in a good way, so that it provides value to all parties (the founder and the connections), and to expand it constantly.

One key skill for people who are looking to become angels is to be a good listener. Being a founder can be a lonely job and having a person to bounce ideas with can be greatly appreciated.

When she first started investing, she did not imagine that there would be so many opportunities to invest. Now, after a few years she has been able to refine her strategy and identify opportunities in which she can truly add value, as well as identify that there are different approaches to angel investing.

🌟 How to differentiate yourself as a VC

In the increasingly competitive space of early-stage investing (Sophia’s fund Cherry Ventures does pre-seed and seed), building relationships over time can help you win the best deals to support exceptional founders. An excellent example of this was one of Sophia’s latest investments in Carbo Culture. Sophia met Henrietta (Carbo Culture’s founder) three years before making the investment and she was able to support them through the successes and struggles as well as provide a helping hand when needed. There was mutual trust between them and that helped in creating a match between what the founder wanted and what the investor could provide.

Creating a good reputation is key. A reputation is based on repeated interactions and long-term relationships.

Thus, one of the best ways to show that you provide value as a VC is through “testimonials”. If other people can recommend you and testify to your value that means that you are doing things right. This is especially helpful in responding with speed to over-competitive deals.

👀 How to spot exceptional early stage founders before others

While it is harder to build a relationship and conviction in front of a screen, it is important to invest in founders that are mission-driven. Drive is something that can be transmitted even through a screen. Investors look for people who want to build a company with potential to become a unicorn and for that it is important for founders to be mission-driven and not cash out at the first opportunity. To figure out a founder’s drive, you can ask personal questions to the founders, such as what their beliefs are, how they met and why they do what they do. Ideally the best founders are usually obsessed with solving a problem.

Sophia mentioned Daniel Ek (Spotify’s founder) as an example. He was truly obsessed with making content available to everyone. At some point he even created a room in his apartment where he recorded a whole year of television content to make it searchable for people. While he did not go on to build something related to TV, content was his thing and that ultimately led him to build Spotify. Find those problem obsessed people when looking for early-stage founders.

When covering a new market there are several ways to start. A good option is to map out who are the movers and shakers in the ecosystem — the founders, the c-suite employees of top companies, the international funds covering the region, some local VCs and active angels. After mapping them out, you can follow them on Twitter, Medium and LinkedIn, set up monthly catch-up calls, share deal flow and so on. It is also helpful to figure out who invests in the same sector and stage, and you could set it as a goal to co-invest in the future.

📢 How to transmit messages effectively

Many founders are set on insights that solve a solution and make the product better. However, far fewer have distribution insights, which could be a differentiating factor in their journey. Sometimes companies have brilliant technology, but if they cannot communicate to the audience how brilliant it is, no one is going to use it.

Sophia has created her own framework that helps her analyze companies in marketing terms but sometimes that can be challenging because many early-stage startups haven’t even made their first marketing hire. This is definitely an area in which many founders could get support from their investors — something that hasn’t been fully utilized so far.

In addition to that, a key differentiator for excellent founders is their ability to tell stories. Becoming a good storyteller needs practice. Even the best storytellers, authors, actors spend so much time preparing for it, and there are no clear shortcuts for it. Rehearsing stories, especially for public speaking, in both founders and investors’ case, is extremely important, and you must set aside time for it. A good book that Sophia recommended on the topic is TED Talks: The Official TED Guide to Public Speaking.

🔨 How your personal brand can become a key asset

Sophia’s background as a communicator before joining Spotify really supported her later career, since she already had solid base concepts in place and understood the importance of building a personal brand from early on.

Personal brand is something that stays with people even as they move across geographies and jobs, and it is a crucial element in the VC industry.

She encourages people to identify the right channel to start building their personal brand, some options can be podcasting, writing, tweeting, and/or attending conferences. While not all the channels might suit you well, choosing a couple can help steer the narrative of what people think of you and link it to what you can bring to the table.

Furthermore, one of the best ways to demonstrate your train of thought and expertise is to be vocal about the things you care about and identify a channel to express it. Sophia herself is active on both Twitter and Medium — platforms that she uses to share her learnings and insights with others. Her content can help founders that are interested in similar areas and also let them know that they can reach out if they already share similar interests.

When giving advice on what message to transmit across platforms, Sophia recommends choosing two or three things you identify yourself with, and making sure to consistently repeat them across platforms. It will help the message stick. People will then associate you with a certain message and that will help build your brand.

Again, a huge thank you to Sophia for all the learnings and time devoted on the session, here is a picture of all happy fellows who attended the session with Sophia:

👉 Follow Sophia on Twitter and Medium

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