20 VC 062 Shaking Up London's VC Scene with Fede PirzioBiroli, Founder @ Playfair Capital

Summary Notes


In episode 62 of the 20 minutes VC, host Harry Stebings interviews Fede Persio Biroli, founder of Playfair Capital, a significant player in London's seed-stage tech startup scene. Biroli shares his unconventional journey from working in the NGO sector in East Africa to becoming an influential venture capitalist. His experience in the NGO industry led to a realization about the importance of entrepreneurship for economic growth, prompting his shift to investing. Biroli discusses Playfair's investment approach, including an average ticket size of 200-250k, a focus on seed-stage ventures, and an openness to Series A investments. He highlights the value of Warner Yard, Playfair's co-working space, in fostering a vibrant community and supporting portfolio companies, particularly through recruitment challenges. Biroli also touches on the importance of founders' resourcefulness and grit, as exemplified by portfolio companies like Appear Here and Dojo. Despite the evolving seed funding landscape, Playfair differentiates itself through hands-on support and a unique fund structure, where Biroli serves as both the managing partner and sole LP, allowing for flexible and founder-friendly investments.

Summary Notes

Introduction to Fede Piersio Biroli and Playfair Capital

  • Fede Piersio Biroli is the founder of Playfair Capital.
  • Playfair Capital has made a significant impact on London's investment scene, particularly in seed-level technology startups.
  • Fede began investing in December 2010 and rapidly expanded the portfolio to 20 investments by the end of 2012.
  • Notable investments include DueDil, Appear Here, and On Device Research.
  • Fede served as an angel in residence at White Bear Yard with Stefan Gleinser and later built the Playfair Capital team.

"And on today's incredible episode of the 20 minutes VC, we are welcoming Fede Persio Biroli, founder at Playfair Capital, to the show." "Fede founded Playfair Capital from his first investment in December of 2010, and the portfolio has grown quickly to 20 investments by the end of 2012, including the likes of due deal appear here and on device research."

The quotes highlight Fede's role as the founder of Playfair Capital and the rapid growth of the company's investment portfolio, emphasizing its influence in the startup ecosystem.

Fede's Background and Transition into Venture Capital

  • Fede did not have a traditional venture capital background; he worked in the NGO sector for about four years in Uganda, Kenya, and Tanzania.
  • He was involved with UNHCR on refugee repatriation and worked with Oxfam and Médecins Sans Frontières (MSF).
  • Fede's frustration with the NGO sector's inefficiencies led him to become an aid transparency lobbyist.
  • He lobbied for increased transparency in aid expenditure from organizations like the Department of Financial Development and USAID.
  • Fede's realization that NGOs were inadvertently discouraging entrepreneurship among local youth in emerging economies led him to focus on the importance of entrepreneurship for economic growth.

"I had actually spent pretty much a total of, I think about four years working in various different jobs within the NGO industry." "I realized that actually, this is trying to solve a problem from the inside. And actually, without taking a step back to look at how kind of the effects this industry had had on the economic environment of the countries they were operating in."

These quotes detail Fede's extensive work in the NGO sector and his critical perspective on its long-term effects on local economies, which influenced his pivot to venture capital.

Fede's Investment Philosophy and Approach

  • Fede's experience in the NGO sector informed his investment philosophy, emphasizing the role of entrepreneurship in sustainable economic development.
  • He believes that every potential NGO worker could instead be an entrepreneur contributing to the GDP and job creation in their economy.
  • Fede began as an angel investor, deploying capital in the UK with a long-term view of becoming operational in Sub-Saharan Africa.

"And so that's what made me start thinking about entrepreneurship." "Every single one of them that gets kind of attracted to going to work for an NGO, comes at the opportunity cost of not becoming an entrepreneur."

These quotes express Fede's belief in the transformative power of entrepreneurship over traditional NGO work, which guided his investment strategy.

Fede's Early Investments and Collaboration with Passion Capital

  • Fede's initial investment was in DueDil in late 2010.
  • Soon after, he met the team at Passion Capital and co-invested with them.
  • Passion Capital offered Fede a desk at White Bear Yard, where he sat next to them and invested in 21 or 22 companies over two years.
  • Fede's investments were made from his own funds, which he obtained from selling shares in a family business.

"So I invested in Judy in late 2010, and very soon after that, I was very lucky enough to meet passion capital." "I ended up investing in 21 or 22 companies."

These quotes outline Fede's early investment activities, including his collaboration with Passion Capital and the number of companies he invested in, showcasing his active engagement in the startup investment space.

Evolution of Playfair Capital

  • Playfair Capital evolved reactively, adapting to the growing needs of an expanding portfolio.
  • Initially, support was required in finance and legal, which later grew to include a head of talent.
  • The growth was not planned years in advance but was a response to the increasing demands of the portfolio.

"everything's been built reactively and not proactively."

The quote explains that the development of Playfair Capital was a response to emerging needs rather than a premeditated strategy, highlighting the importance of adaptability in business growth.

Unique Structure of Playfair Capital

  • Playfair Capital operates as a limited liability partnership and a venture capital firm.
  • Fede Piersio Biroli is both the General Partner (GP) and the sole Limited Partner (LP), with no external capital involved.
  • This structure allows for a disruptive environment and incentivizes the team uniquely, aiming to retain them for at least five years.

"I am both the GP or the managing partner and the only LP."

This quote clarifies the unique financial structure of Playfair Capital, where Fede Piersio Biroli holds dual roles, impacting the firm's operational incentives and team motivation strategies.

Compensation and Incentives

  • The team at Playfair Capital is incentivized through a share of the carried interest (carry), with 80% going to the LP (Fede) and 20% distributed among the team.
  • The carry distribution includes vesting schedules, providing long-term motivation and aligning team interests with the success of the investments.
  • This structure is designed to compete with larger funds and retain talent without matching their budgets.

"80% of the carry goes to me as the LP, and then I have an allocation, or the fund has an allocation of 20% of its carry that gets distributed amongst the team."

The quote details the carry distribution at Playfair Capital, emphasizing the innovative approach to team compensation and the strategic allocation of financial incentives to motivate and retain employees.

Investment Strategy and Preferences

  • Playfair Capital's average ticket size ranges from £200,000 to £250,000, primarily focused on seed-stage investments, with occasional series A rounds.
  • The firm's closed-loop structure provides flexibility in investment decisions, allowing for shifts in direction without external investor constraints.
  • Investments below the average ticket size are typically avoided due to the disproportionate amount of work involved.

"the average ticket size is somewhere between 200 and 250k. We are overwhelmingly investing at the seed stage."

This quote summarizes Playfair Capital's investment strategy, including their preferred funding stage and ticket size, and highlights the firm's agility due to its independent financial structure.

Changes in the Seed Funding Environment

  • The seed funding landscape in London has changed significantly since Fede Piersio Biroli became active in 2011.
  • Initially, there was less competition, allowing new investors like Fede to access top companies easily.
  • The introduction of schemes like SEIS has increased available capital, changing the dynamics of early-stage funding and increasing competition.

"I've seen the seed funding environment change enormously since I started out, which is admittedly not even that long ago."

The quote reflects on the transformation of the seed funding environment over a relatively short period, noting the increased competition and capital availability that new financial incentives have introduced.

Differentiation in Venture Capital

  • Warner Yard as a unique co-working space with 180 desks and a vibrant community.
  • Focus on providing recruitment resources to portfolio companies.
  • Employment of a head of talent with experience from Facebook and Google to help with technical recruitment.
  • Offering services to hire CTOs and engineers at the firm's cost, addressing the hiring difficulties faced by portfolio companies.

"Look, firstly, we have Warner Yard, which is this co working space that I'm in now, where we have 180 desks and we have kind of a vibrant community."

This quote emphasizes the physical space and community aspect that Warner Yard provides, setting it apart from other venture capital firms.

"And we are deploying amongst portfolio companies to hire ctos, front end, back end, full stack devs, entirely engineering focused at our cost, because of the nightmare that kind of so many portfolio companies seem to have in terms of hiring."

This quote highlights the proactive approach in assisting portfolio companies with hiring technical staff, a common challenge for startups.

Importance of Co-Working Spaces for VCs

  • Personal bias towards the importance of co-working spaces due to the speaker's own development in such an environment.
  • The trend of co-working spaces growing as a business model, with WeWork achieving unicorn status.
  • Warner Yard's approach to being selective with tenants to maintain a high-quality community.
  • The dynamic nature of Warner Yard, with companies moving in and out, facilitated by pricing strategy and space design.
  • The presence of Techstars, bringing in new teams biannually, contributing to the community's diversity and vibrancy.

"I think it's very important. I'm biased for a variety of reasons, namely that my entire kind of development in this world as an investor was basically at a co working environment."

The speaker attributes their personal development as an investor to the benefits of working in a co-working space, suggesting its importance.

"We're not looking just to fill the space, we're looking to fill the space with interesting people, because the value of the space very much depends on the quality of the people in it."

This quote underlines the selective process for tenants, aiming to foster a community of high-quality individuals that can benefit from each other.

"It's an ephemeral environment that is always different. And with tech stars in the building that twice a year move in ten teams at a time, it means, you know, I mean, techstars here."

The quote describes the ever-changing environment of Warner Yard, which is kept fresh and engaging through the regular influx of new teams from programs like Techstars.

Investment Selection Criteria

  • Different requirements for various verticals like B2B and B2C.
  • Valuing serial entrepreneurship for its experience with the business lifecycle.
  • Appreciation for founders who can achieve a lot with limited resources.
  • Admiration for traits like determination and a lack of entitlement in founders.

"Investors often pay more for serial entrepreneurs, people who have been through kind of ups and downs, hiring, firing, the pains of having to wind a company down."

This quote indicates the value placed on the experience of serial entrepreneurs, who have navigated the complexities of running a business.

"Making something out of very few resources is definitely an admirable trait and also kind of a lack of entitlement or expectation."

The speaker admires founders who can build a company with minimal resources and without a sense of entitlement, suggesting these are qualities they look for in potential investments.

Entrepreneurial Grit and Resourcefulness

  • Harry Stebbings discusses the importance of resourcefulness and grit in the startup world.
  • Fede Piersio Biroli highlights how founders can achieve significant results with minimal resources.
  • An example given is a pop-up shop during the Queen's Jubilee that went viral.
  • Another example is Dojo's founders, who showed impressive conversion rates from handing out flyers, a method usually with low conversion.
  • The attitude, tone of voice, and personalities of the Dojo founders were key to their success.
  • Resourcefulness and grit are seen as positive traits that translate well once funding is secured.

"And that's what propelled him into kind of, into actually going somewhat viral and having some of his friends say, oh, so what? Know, we want a pop up shop."

This quote exemplifies how an unconventional approach, like a pop-up shop during a significant event, can lead to unexpected viral success.

"And these are guys who were going out and obtaining kind of getting ridiculous conversion out of handing out flyers at a tube station."

This quote highlights the surprising success of the Dojo founders, who managed to get high conversion rates from a method typically seen as ineffective.

"And basically that is to me an admirable example of really creating something with very little, with no money and embracing kind of the true kind of culture of being a founder in the startup world of true grit and kind of versatility despite a lack of resources."

This quote emphasizes the importance of grit and resourcefulness in the startup culture, showcasing how founders can create success from very little.

The Circle by David Eggers

  • Fede shares that his favorite book in recent years is "The Circle" by David Eggers.
  • The book is appreciated for its realistic perspective on the modern world and potential future.
  • The book is described as terrifying, likely due to its portrayal of technology and privacy.

"I think it's just a very realistic kind of perspective on the world today and where we might be very soon. And it's kind of terrifying, basically."

This quote explains why "The Circle" resonates with Fede, as it provides a realistic and somewhat alarming view of society's trajectory concerning technology.

Investing in Africa

  • Fede is actively investing in Africa, with investments in Kenya and Nigeria.
  • Plans to increase presence in East, Southern, and Western Africa.
  • The goal is to become a proficient investor in Africa within the London scene.

"I mean, eventually over the next few years, I'm going to be spending, my plan over the next couple of years is to be in East Africa and southern Africa and indeed Western Africa at least two or three times a year and to really establish more of a presence there and to try and kind of become kind of a proficient investor in Africa within the London scene."

This quote outlines Fede's strategic plan to deepen his investment presence in various regions of Africa and become an influential investor there from the perspective of the London investment scene.

Playfair's Organic Growth

  • Fede appreciates the organic and reactive nature of Playfair's growth.
  • He values the spontaneity and lack of a meticulously executed predetermined plan.
  • Fede would not change anything about how Playfair developed.

"There's something off the cuff and organic and the opposite of meticulously executing a predetermined plan. And I think that I wouldn't actually change anything."

This quote reflects Fede's satisfaction with the natural progression of Playfair's growth, valuing the organic nature over a strictly planned approach.

Favorite Newsletter or Blog

  • Fede's favorite newsletter is Dojo's, which he finds to be the funniest and most enjoyable.
  • He mentions the newsletter's tone of voice as a significant factor.

"Honestly, and I mean, it's not just a plug, but Dojo's newsletter is the funniest thing I read all week. It's fantastic. Their tone of voice and I mean, that's my absolute favorite."

This quote reveals Fede's personal preference for reading material, specifically highlighting Dojo's newsletter for its humor and tone.

Investing Resources

  • Fede is agnostic regarding investing resources but spends time on AngelList.
  • AngelList provides insights into foreign deals and the people involved in them.

"To be fair, I spend quite a lot of time on angel list because it gives me some interesting insights into foreign deals and who's around them, most importantly."

This quote indicates Fede's use of AngelList as a tool for gaining insights into the investment landscape, particularly for understanding the networks around foreign deals.

Recent Investment in Nitten

  • Fede discusses his most recent investment in Nitten, a Techstars company.
  • The decision to invest was based on the quality of their intellectual property and the large, closed market they can tap into.

"The most recent investment we announced is Nitten. Nitten was a techstars company and we invested because the quality of their ip in terms of the code they've written to program these knitting machines and the absolutely massive global market that they can tap into and the closed nature of that market, basically."

This quote provides the rationale behind the investment in Nitten, focusing on the company's strong intellectual property and the potential to access a significant and exclusive market.

Appreciation for Hiring Screen

  • Harry Stebbings thanks Hiring Screen for their assistance in sifting through many CVs.
  • Hiring Screen helped Harry find his assistant, Jackie, efficiently.
  • The service allowed for a quick and relevant shortlisting of candidates.

"And quite simply, I couldn't have done it without them. It would normally have taken me three or four days to go through that many cvs and I did it with Richard and Luke at hiring screen in just 15 minutes."

This quote acknowledges the efficiency and effectiveness of Hiring Screen in helping Harry Stebbings find a suitable assistant, saving him a considerable amount of time.

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