#RemoteVC
Meet Proximity Ventures
Around two years ago I was part of a judging panel for an accelerator. When one of the investors asked a founder why he should invest in his startup and not one of the competitors, he just replied: “Because we are here” — not the best reply. The investor cracked a joke about his firm not being called ‘Proximity Ventures’ and everybody LOLd.
Today, I feel like there is something very true to what that founder said. Having spent time and invested $s in most major (Western) tech hubs over the past few years, I have noticed over and over again that there are strong biases towards the respective local ecosystems. This is especially true in San Francisco, London and New York City (where I am currently based).
Pros and Cons
Now you might say Duh! and I agree that there are plenty of advantages for VCs to invest on their home turf:
- A stronger network with both entrepreneurs and investors
- Local reputation and brand helps with sourcing and closing deals
- Being closer to founders allows to spend more face time
- Better understanding of the ecosystem
- Lower risk of adverse selection
All good arguments of course, but I still find it irritating to assume that the best of breed solution will spawn in your neighbourhood. In today’s connected world and especially in the verticals that we focus on — SaaS, networks and mobile — I believe that winners will be global, no matter where they were started.
Yet in these competitive markets, it often seems like VCs are following the same trends, chase the same companies and know exactly what their peers are up to (and talk smack about it). This seems somewhat risky to me. Firstly, because it naturally limits deal flow and secondly, because it makes you vulnerable to group think and other biases. I am starting to understand why Warren Buffet runs Berkshire Hathaway from the middle of nowhere and the Foundry Group is based out of Boulder of all places.
A VC in the Cloud
Although we are based out of Berlin and love investing there, we have always had an international focus at Point Nine. Besides investing across Europe and North America we also have portfolio companies in Japan and New Zealand.
As Pawel has pointed out before, we often get asked how we create deal flow and manage our portfolio in so many places while being based in Berlin. Here are a few things that help us to do this:
- Eat our own dog food by working 99% in the cloud
- Set up regular update calls and Basecamp projects with all our founders and have frequent email exchanges with them in between
- Being active on social media, frequent blogging and a monthly newsletter (with up to 70% of opens in the US)
- Spend time in the US: Christoph was in SF for 3 months the past two years and I am spending 3 months in NYC this year, plus we hosted two of our SaaS Meetups here (the last in SF 2014)
- Bring together the P9Family through offline events and online tools
- Use 15Five and regular 1–1s for staying engaged internally
- Have physical team off-sites twice a year to discuss strategy and set OKRs
- Travel a lot the rest of the time :-)
The Future of VC?
Now I don’t want to make us sound like pioneers as I am sure that we are not the only fund operating like this, but we are probably part of the first heat (with 500 Startups being one of the leaders). And given our global world, increasing mobility between the EU and US and intense competition in the big tech hotspots, I am positive that more investors will take a global perspective on investing going forward.
Let’s see where it takes us!
🌐🚀
