20 VC 047 4 Ways Investors Find Great Startups with Rob Moffat, Principal @ Balderton Capital



In episode 47 of the 20 minutes VC, host Harry Stebings interviews Rob Moffat, a principal at Bulldog Capital. Moffat discusses his accidental foray into venture capitalism after a background in statistics, consulting at Bain, an MBA from INSEAD, and a strategic role at Google. He emphasizes the importance of flexibility of mind in venture capital, challenging assumptions, and adapting to the competitive VC landscape by investing earlier. Moffat highlights the shift towards a more service-oriented VC model, like that of Andreessen Horowitz, and the integration of crowdfunding platforms such as Crowdcube with traditional VC funding. He also touches on the value add of VCs, the evolving structure of VC firms, and offers advice to those aspiring to enter the venture industry, suggesting a blend of analytical experience and a passion for tech.

Summary Notes

Introduction to Rob Moffat and Bulldog Capital

  • Rob Moffat is a principal at Bulldog Capital, a leading venture capital firm in London.
  • He specializes in fintech, Martech, gaming, and marketplaces.
  • Rob sits on the board or observes six portfolio companies: Qubit, Wooga, House, Trip, Carwow, Rentify, and Nutmeg.
  • He has been involved in investments with Citymapper, Top Ten, Scoot, and Archify.
  • Before Bulldog Capital, Rob worked for Google in London, managing European strategy and operations.
  • He transitioned from Google to venture capital and joined Bulldog Capital in 2009.

"Rob is principal at Bulldog Capital, one of London's leading vc firms. At Bulldog, Rob specializes in fintech, Martech, gaming and marketplaces and Rob is currently a board director or observer with six portfolio companies including Qubit, Wooga, House, Trip, car, wow, rentify and Nutmeg."

This quote introduces Rob Moffat, his role at Bulldog Capital, and his area of expertise. It also lists the companies he is involved with, providing insight into his portfolio and influence in the VC space.

Rob Moffat's Career Path

  • Rob Moffat has a background in statistics and initially considered a career in that field.
  • He worked for Bain consulting for five years, focusing on financial services.
  • He completed an MBA from INSEAD.
  • Rob transitioned to Google, wanting to work in the internet sector.
  • At Google, he experienced rapid company growth and the global financial crisis.
  • He found the big company environment at Google frustrating, leading to his move to venture capital.

"So I started my career, I did a statistics degree, looked briefly going into that area, decided against it, went to work for Bain consulting and spent five years there doing a lot of work with financial services, as you tend to do in London, MBA from INSEAD and then went to Google."

This quote outlines Rob Moffat's early career decisions, his educational background, and his work experience prior to entering the venture capital industry. It shows a progression from consulting to the tech industry, leading up to his involvement in VC.

Transitioning to Venture Capital

  • Rob Moffat describes himself as an accidental venture capitalist.
  • His profile of consulting experience and working at a major internet company was attractive to venture capital firms.
  • He joined Bulldog Capital in 2009, convincing partners of his understanding of entrepreneurship and venture capital.

"So I was lucky enough that in 2009, I sort of started looking elsewhere. And for some reason, that combination of Bain, consulting, plus a big Internet company was a profile that a few vcs were looking for."

This quote explains the circumstances that led to Rob Moffat's transition into venture capital. His unique combination of consulting and internet company experience made him a desirable candidate for VC firms.

What Makes a Good Venture Capitalist

  • A good VC is someone who challenges their assumptions and avoids relying solely on pattern recognition.
  • Rob emphasizes the importance of flexibility of mind in the venture capital industry.
  • The ability to adapt to changing standards, such as understanding new business models like Zendesk's, is crucial.

"What is it that makes a good vc? I think the ability to a lot of things. So in terms of finding interesting deals, I think the ability to keep challenging your assumptions, I think it's easy to get in VC to talk about pattern recognition, and you have a bunch of sort of simple shortcuts in your brain on what a good entrepreneur should look like and what a good business should look like."

This quote discusses the qualities that distinguish a good venture capitalist, highlighting the need for continuous self-challenge and the avoidance of over-reliance on pattern recognition. It suggests that successful VCs must be open-minded and adaptable to recognize potential in evolving business models.

Flexibility of Mind in VC

  • Flexibility in thinking is essential for venture capitalists to identify and understand innovative business models.
  • Rob Moffat suggests that the best VCs are those who can see beyond past trends and are open to new ideas.

"Flexibility of mind. I think that's what it comes back to, sort of a mind that's not fixed."

This quote reinforces the theme of cognitive flexibility as a key trait for venture capitalists. It implies that a non-fixed mindset is necessary to excel in the VC industry.

VC Role Evolution and Time Allocation

  • The role of a venture capitalist (VC) involves continuous evolution and self-challenging.
  • A significant part of a VC's role is to deeply understand and address the unique issues of portfolio companies post-investment.
  • The ability to prioritize and guide entrepreneurs towards crucial aspects of their business is essential.
  • Time allocation for VCs changes with experience, shifting from mostly deal sourcing to a balance with portfolio management.

"I think that's a really big part. And the ability to sort of really go on a case by case basis with portfolio companies after you invest and really sort of go deep and understand their issues, I think is really important."

This quote emphasizes the importance of personalized involvement with portfolio companies to understand and solve their specific challenges.

"So the longer you spend in VC...started off with probably 10% of my time on portfolio companies and now it's probably more like 50%."

Rob Moffat indicates that as VCs gain experience, they allocate more time to managing and assisting existing portfolio companies, reflecting a shift in their role's focus over time.

VC Deal Sourcing and Investment Strategies

  • VCs use different strategies for deal sourcing: hunter, trader, farmer, and trapper.
  • New VCs often start as hunters, actively seeking new investments without relying on reputation or networks.
  • Over time, VCs may evolve to become farmers (sorting through inbound opportunities) and trappers (attracting entrepreneurs through thought leadership and content).
  • Rob Moffat started as a hunter and farmer and has worked towards becoming more of a trapper by blogging and engaging on social media.

"So I think when you start in VC, you have to be a hunter because you've got nothing to trade with."

Rob Moffat explains that new VCs begin by actively seeking out new deals due to the lack of existing assets or reputation to leverage.

"And so yeah, getting people think, okay, Rob actually does sort of think carefully about some of the issues in growing a business and he's someone who would be worth talking to if I am looking for VC down the line."

Rob Moffat describes his approach to becoming a trapper by establishing himself as a thoughtful and knowledgeable figure in the VC community, thus attracting entrepreneurs.

Competitive VC Market and Adaptation

  • The VC market has become more competitive, requiring VCs to adapt their strategies.
  • VCs now need to identify and invest in promising companies earlier than before due to increased competition.
  • The role of a VC has shifted from selecting from incoming deals to proactively seeking and securing investments.

"I think the VC market in general is becoming much more competitive and I think that's true in Europe to a lesser extent than the US, but it is true."

Rob Moffat notes the increasing competitiveness in the VC market, necessitating a change in how VCs operate.

"And so, yeah, it's much more of a kind of a need to track down the really interesting companies and be willing to invest earlier than you would have done three, five years ago."

Rob Moffat discusses the need for VCs to proactively identify and pursue investment opportunities earlier in a company's lifecycle due to the competitive landscape.

Enhancing VC Value Proposition

  • To stand out in a competitive market, VCs must enhance their value proposition to portfolio companies.
  • Utilizing resources such as office space for events can add value to portfolio companies.
  • Providing a range of support services, including marketing, finance, talent, technology, product management, and CEO mentoring, can differentiate a VC firm.

"And so really using that to do events across all sort of disciplines. So marketing, finance, talent, technology, product management, CEO mentoring."

Rob Moffat describes how his firm, Balderton, leverages its resources to provide comprehensive support to its portfolio companies, thereby enhancing its value proposition and attractiveness to entrepreneurs.

Portfolio Company Interaction and Learning

  • Portfolio companies in the VC firm benefit from interacting and sharing ideas with each other.
  • CEOs and management of portfolio companies lead the learning process by being ahead in practical experience.
  • The value of joining the VC firm's portfolio is highlighted as an asset due to the network and support provided.

"So allowing them to keep learning from each other, I think is a great format to have."

This quote emphasizes the importance of peer learning among portfolio companies within a venture capital firm's network, suggesting that this collaborative learning is an integral part of the value the firm offers.

Internal Support and Talent Management

  • The VC firm has hired a new talent director from Amazon to enhance internal support for portfolio companies.
  • The talent director's role involves improving recruitment strategies, employee development, and retention across the organization.

"Senior sort of talent role at Amazon has helped our portfolio companies really kind of get smarter in how they recruit, but also how they develop and retain and talent across their organization."

This quote explains the role of the new talent director in helping portfolio companies refine their talent management processes, indicating the firm's commitment to supporting companies in building strong teams.

Evolution of VC Firm Structures

  • VC firms are adopting different models, from Benchmark's partnership approach to Andreessen Horowitz's service-based model.
  • Benchmark maintains a small partnership and low public profile, while Andreessen Horowitz offers extensive operational support to its companies.
  • Rocket Internet tries numerous ideas and brings in business-minded individuals to run them.
  • Different models require VC firms to make clear decisions about their approach.

"I think every VC has to look at those and work out what makes sense for them."

This quote suggests that VC firms must evaluate various operational models and choose the one that aligns with their philosophy and capabilities.

Value Addition in Specific Areas

  • The VC firm adds value to portfolio companies, particularly in talent management, finance, and legal support.
  • The firm believes it has the best team in Europe for helping companies navigate financial and legal challenges.
  • External legal support is still necessary, but having in-house expertise is advantageous.

"I think we've got the best team in Europe in terms of being able to help portfolio companies navigate the financial and legal sides, which are fundamental."

The quote highlights the firm's confidence in its team's ability to assist portfolio companies with essential financial and legal matters, positioning this support as a key aspect of the firm's value proposition.

Crowdfunding as an Alternative Financing Model

  • Crowdfunding platforms like Crowdcube are hosting funding rounds that are within the realm of traditional VC investments.
  • VC-type funding rounds on crowdfunding platforms often have a lead investor who conducts due diligence and leads the round.
  • Crowdfunding is seen as complementary to VC funding, with potential for the two to work in harmony.

"There's a lot of companies raising sugar, just raised a great round on Crowdcube."

This quote points out that crowdfunding platforms are facilitating significant investment rounds, similar to those traditionally led by VC firms, indicating a shift in the funding landscape.

Competition and Collaboration between Crowdfunding and VC

  • Crowdfunding platforms and VC can coexist and potentially collaborate on funding rounds.
  • AngelList and its syndicates are seen as more direct competitors to traditional VC.
  • The VC industry recognizes the potential for collaboration with crowdfunding platforms to benefit both investors and startups.

"I think they can. I think you look at angel lists, I'm going to be sort of not too sort of, what's the word, polished on this. But I think angelists are more directly competing with VC."

This quote reflects the speaker's view that while platforms like AngelList may compete more directly with VCs, there is still room for crowdfunding and VC to operate synergistically.

Syndicates and Seed Funding

  • Tim Ferriss has a significant following and capacity in the States.
  • US-based individuals can lead VC series A rounds with their syndicates.
  • Kleiner Perkins announced a dedicated seed fund without using AngelList.
  • VCs are likely to have separate seed funding arms, potentially using AngelList for early-stage investments.

Kleiner announced a kind of dedicated seed fund this week and what I found amazing about it was it didn't use angel list.

This quote highlights the unconventional approach of a major VC firm, Kleiner Perkins, in setting up a seed fund without the popular platform AngelList, suggesting a shift in how seed funding may be approached by VCs.

Web Presence and Information Sourcing

  • Rob Moffat spends too much time on Twitter, which he finds not very valuable.
  • He suggests Medium as a better alternative for longer attention spans but notes the challenge of finding time.
  • For tactical information, Tech EU is valuable for European startup roundups.
  • Venture Village is considered the best source for German startup outlooks, despite not being amazing.

I spend too much time on Twitter. I don't think it's sufficiently valuable. I don't spend enough time on medium.

Rob Moffat criticizes the value of Twitter for professional purposes and endorses Medium as a superior platform for deeper engagement with content.

Breaking into the Venture Industry

  • Most VC recruits are headhunted rather than applying directly.
  • Having analytical business experience and a passion for tech is essential.
  • Ideal profiles include strategy consulting, investment banking, private equity, or direct entrepreneurial experience.
  • The VC industry is growing but becoming more competitive with more qualified candidates.

The first advice is don't, because most people who get recruited into BC get headhunted.

Rob Moffat advises against actively pursuing a VC career due to the common practice of headhunting, emphasizing the importance of being noticed for one's experience and passion.

Personal Preferences and Advice

  • Rob Moffat's favorite book is "The Circle" by Dave Eggers for its dystopian view of the future of tech.
  • He would advise his younger self to leave Bain and join a startup.
  • Bill Gates is the first person that comes to mind when he thinks of success, due to his happiness and philanthropy.
  • He believes Bitcoin will succeed but cautions that it will take longer than expected.
  • His most recent discussable investment is Nutmeg, a wealth management platform for the masses.

Leave Bain and join a startup. Good advice.

Rob Moffat reflects on his career path, suggesting that he would have benefited from gaining startup experience earlier on.

Investment Insights

  • Nutmeg took a long time to evaluate before investment.
  • Investing is often a gradual process rather than an immediate decision.
  • The philosophy of "investing in lines, not dots" implies a preference for ongoing relationships and understanding over time rather than one-off impressions.

Nutmeg took a long time, actually knew Nick Hungerford, the founder, for years before we invested.

This quote illustrates the importance of long-term relationships and thorough evaluation in the investment decision-making process.

Podcast Resources and Recommendations

  • The episode's resources can be found on the podcast's blog.
  • Hiring Screen is recommended for finding suitable job candidates, as evidenced by Harry's personal experience with hiring an assistant.

Now for all the resources mentioned in today's amazing episode with Rob. You can find them at the blog at WW dot, the twentyminutevc.com

Harry Stebbings directs listeners to the podcast's blog for additional resources, emphasizing the value of the content shared in the episode.

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