20VC James Cameron @ Accel on Building Great Startup Communities and The Rise of Enterprise and Cyber Security Software

In this episode of the 20 minutes VC, host Harry Stebbings interviews James Cameron, an early-stage investor at Accel, who shares insights on his journey from a corporate lawyer to tech banking and eventually venturing into the world of VC. Cameron discusses the significance of global outlook, the prepared mind initiative, and the value of building relationships with founders over time. He also explores the evolution of the tech ecosystem in various regions, like Israel and Spain, and the rise of cybersecurity and enterprise software. Cameron's approach to investing is shaped by his belief in the importance of supporting founders through both triumphs and challenges, and he emphasizes the need for investors to periodically step back and consider long-term industry trajectories.

• Harry Stebings introduces James Cameron, an early-stage investor at Accel.
• James Cameron has a background in founding a SaaS company and experience in tech banking and corporate law.
• Accel's team in London and Mattermark are thanked for their support of the show.

Hello and welcome back to the 20 minutes VC with your host Harry Stebings. And following our episode with the awesome Fred Destin, we are back in the land of Excel.

This quote sets the stage for the episode, highlighting the return to discussing Accel and introducing the guest.

Firstly, I'd like to thank the entire Accel team in London for being so fantastic with the show.

Harry Stebings expresses gratitude to the Accel team for their support, indicating a positive relationship between the podcast and the investment firm.

And then a huge thank to Matamark for providing all the data and analysis for today's show.

Mattermark's contribution to the show is acknowledged, suggesting the importance of data and analysis in venture capital discussions.

• James Cameron is an Aussie who started his career in law, working with tech companies in the UK.
• He transitioned from law to tech banking, then attended Stanford's business school.
• Founded Bipsync, a research management software company, before joining Accel.
• His first interaction with Accel was as an entrepreneur pitching his business.

I started off in Australia. I'm an Aussie originally, growing up in Australia, when you feel like you're 10,000 miles away from everything that you really want to get out and see what's going on the rest of the world.

James Cameron's Australian origins and his desire to explore the world beyond are highlighted, providing context for his career journey.

But I realized that pretty quickly that the law wasn't for me.

This quote explains Cameron's shift away from law, indicating a search for a better fit for his interests and skills.

Asked for some money and wound up with a different type of job at the end.

James Cameron humorously describes how his attempt to get funding from Accel led to a career with the firm instead.

• Accel covers a wide geographical area, including the UK, Russia, Israel, Australia, and New Zealand.
• They use a "prepared mind initiative" to methodically identify market spaces and themes.
• They also take an opportunistic approach, being open to unexpected opportunities.
• Examples include investments in the API economy, such as Algolia and CartoDB.

London, Accel, London. We look at anything from the UK to Russia to Israel. We spent time in Australia and New Zealand even.

The quote outlines the extensive geographical scope of Accel's investment interests, emphasizing the firm's global reach.

We try and identify these areas and we try and get to know everyone we can who knows anything about these areas, really sort of get to know inside out.

Cameron explains the detailed and network-oriented method Accel uses to understand market spaces thoroughly.

We were seeing software being eaten by APIs. Effectively, you'd see APIs becoming as ubiquitous as websites.

This quote highlights the trend Accel observed in the API economy, which informed their investment strategy in companies like Algolia and CartoDB.

• VC investment strategies are heavily relationship-driven.
• Close connections with founders and other investors, including angels and regional VCs, are crucial.
• Meeting companies early, before they seek VC funding, is a key tactic.
• Maintaining visibility and approachability through office hours at incubators and events is important.

"We spend a lot of time thinking about how we can maximize our ability of being in the right time at the right place."

• This quote emphasizes the strategic focus on timing and positioning for investment opportunities.

• A typical period for knowing founders before investing is upwards of twelve months.
• The extended timeframe allows for observing founders in various situations and understanding their operational style.
• Quick investments can happen, but they are exceptions.

"But I think overall we probably know our founders for upwards of twelve months. Sometimes before we make an investment..."

• This quote highlights the general practice of building a relationship with founders over a year before investing.

• Incubators are seen as effective for connecting with numerous companies quickly.
• They are recognized as valuable for sourcing deals, not just for angel investments but also for Series A and beyond.
• Specific incubators across Europe are identified as standout contributors to the investment ecosystem.

"And so there's some incubators out there right across Europe that are really sort of showing themselves as being fantastic feeders into... investments."

• This quote points out the role of incubators in Europe as significant sources for investment opportunities.

• A significant amount of time is spent in the enterprise software and security sectors.
• Observations include a shift to using docker and container ecosystems in IT infrastructure.
• Such shifts are viewed as generational changes with potential for valuable company emergence.
• The security space is highlighted as particularly exciting due to high-profile breaches and increased budgets for cybersecurity.
• Innovation is noted in cloud-deployed security solutions and machine learning for attack detection.

"And we're firmly convinced this is one of those rare sort of developments in IT infrastructure that's sort of a generational shift..."

• This quote underscores the belief in the transformative nature of the shift towards docker and container ecosystems in IT infrastructure.

• High-profile security breaches drive attention and investment in cybersecurity.
• Budgets are shifting towards cybersecurity vendors.
• There is a trend of next-generation approaches to security, including cloud deployment and machine learning.
• Investments are influenced by the constant evolution of security needs due to infrastructure shifts and new vulnerabilities.

"There's not a boardroom at a public company in the country that's not absolutely terrified of this stuff happening to them."

• This quote reflects the widespread concern about security breaches at the highest levels of corporate governance, influencing investment in cybersecurity.

• Big data and analytics are considered overhyped, with many players targeting horizontal use cases.
• Vertical-specific applications of analytics in industries like manufacturing, construction, healthcare, and insurance are seen as underhyped.
• There is a belief in the potential of analytics platforms that provide insights without the need for extensive data science expertise.

"I think what's an underhyped area in the same general ballpark is sort of these vertical specific applications of analytics."

• This quote identifies the gap and opportunity in the market for analytics applications tailored to specific verticals.

• Tech ecosystems have numerous verticals where companies can be highly profitable.
• Specific areas of technology are being targeted for investment and company growth.

's a ton of sort of very vertical, specific areas that you can make a ton of money for these companies.

The quote emphasizes the potential for profitability within specialized areas of technology. It suggests a focus on niche markets within the tech industry.

• Israel has a strong presence in cybersecurity and technology despite its small size.
• The military service in Israel contributes to the expertise in cybersecurity and tech innovation.
• Israeli companies think globally from inception, often moving CEOs to international markets early.

You got this country that's got what, like 8 million people, and it's got more Nasdaq listed companies than all of Europe plus China plus Japan combined.

This quote highlights Israel's significant impact on the global tech market, with a high number of Nasdaq listed companies relative to its population size.

The largest unit in the Israeli defense forces is called the 8200 unit, which is effectively the same as GCHQ or NSA.

The 8200 unit is mentioned to illustrate the high level of cybersecurity expertise developed through compulsory military service in Israel, comparable to top intelligence agencies.

The classic Israeli model is keep your R&D base all in Israel and know even pre-series A, sometimes pre-seed, move your CEO out to the valley or on the east coast and build out the go-to market team there.

This quote describes the business strategy of Israeli startups, which involves maintaining research and development in Israel while establishing a go-to-market team in major tech hubs like Silicon Valley.

• Israeli companies adopt a global outlook from the start due to the limited size of the local market.
• The UK has cybersecurity successes but lacks the critical mass seen in other tech hubs.

It's a fundamental piece of it.

The global outlook is identified as a crucial element in building a successful enterprise software business, especially for becoming a leader in the U.S. market.

• The UK government aims to build a cybersecurity hub, investing in startups and innovation centers.
• There is a talent shortage in cybersecurity, and hands-on experience with real threats is necessary for learning.

The government here has made no secret of the fact that it wants to build a cybersecurity hub in the same way that UK is a fintech hub.

The UK government's intention to develop a cybersecurity hub akin to its fintech sector is highlighted, indicating a strategic focus on this industry.

It's important for there's a massive talent shortage, not just in the UK, but everywhere really, when it comes to this sort of stuff.

The quote points to the widespread talent shortage in cybersecurity, underlining the need for practical experience and exposure to actual threats for startups.

• Secondary tech hubs like Ireland, Denmark, Portugal, and Spain are experiencing significant growth.
• The recession in Spain led to a new generation of entrepreneurs who are globally oriented and unafraid of traditional barriers.

We always used to talk about these primary tech hubs in Europe, your Stockholms, your Londons, your Berlins.

The quote reflects on the traditional focus on primary tech hubs in Europe but acknowledges the rise of secondary clusters.

We just kept meeting these great founders and it was kind of idiosyncratic.

The serendipitous discovery of great founders in Spain is mentioned, indicating that investment decisions were driven by the quality of entrepreneurs rather than a deliberate strategy.

You get this new generation of Spanish entrepreneurs coming through that sort of don't give a damn about these sort of traditional roadblocks and just want to get out there and start great companies.

The quote captures the entrepreneurial spirit in Spain, where the recession has spurred a wave of founders who are overcoming traditional challenges to start successful companies.

• VC funding is perceived to have the ability to cross borders and invest in startups regardless of their location.
• Startups need to begin somewhere, and VC money tends to flow to areas with promising founders and companies.
• Ecosystems are built around where great founders start, attracting VC investments.

"Yeah, I mean, I think VC money does flow naturally across borders. [...] We invested in a company called Catawiki recently, which is a dutch company, but it's not in Amsterdam, it's in this tiny little town asan, which is, I think there's 60,000 people there."

This quote illustrates the speaker's belief that venture capital is not constrained by geography and will seek out promising startups wherever they may be.

• The speaker enjoys reading history books, particularly about London, which has influenced his personal activities.
• In terms of business literature, "Crossing the Chasm" is highlighted as a classic and a comprehensive guide for scaling enterprise software companies.

"Peter Ackroyd's got a great one and it bores the hell out of my wife because we just walk around London these days and I point out where so and so's happened or such and such thing."

This quote reflects the speaker's personal interest in history and its impact on his leisure activities.

"Crossing the chasm more. I think there's everything you ever need to learn about scaling an enterprise software company is in that book."

The speaker recommends "Crossing the Chasm" as an essential read for understanding the growth of enterprise software companies, indicating its influence on his business perspective.

• Success for a VC can be measured by the return to limited partners (LPs), but this is a long-term metric.
• Short-term measures of success include working with outstanding founders and companies, and maintaining enjoyable working relationships, even during challenging times.
• The quality of interactions with founders and the ability to maintain good relationships are considered important indicators of success.

"So I guess the obvious answer is return to your lps. But I think that's such a long term measure of success that you can drive yourself crazy if you didn't have something to measure yourself against over the shorter period of time."

This quote acknowledges the traditional metric of VC success but suggests the necessity of shorter-term measures to maintain motivation and sanity.

"Am I getting to the chance to work with founders that I think are doing really fantastic things and with companies that I think are genuine game changers."

The speaker uses the opportunity to work with innovative founders and companies as a personal measure of success, emphasizing the importance of the quality of his investments.

• The speaker describes the VC industry as constantly evolving, with new companies and trends emerging regularly.
• Learning is an ongoing process in VC, and it is likened to having "institutionalized ADD" due to the need to constantly shift focus.
• It is important to occasionally step back and take a strategic view to identify exciting areas for future investment.

"I'm still very much in learning mode when it comes to everything with VC. And you learn some stuff every day."

This quote emphasizes the speaker's mindset of being in a continuous state of learning within the venture capital industry.

"One thing I learned recently, that you need to build yourself in time to sort of step back and take a higher level view of things and try to identify areas and things that are really exciting and try to go deep in them from time to time."

The speaker has learned the importance of taking time to reflect and strategize in order to identify and delve into promising investment areas.

• The speaker consumes a variety of content through platforms like Medium, appreciating the discovery features for finding new blogs and articles.
• A colleague's blog, "The Morning Paper," is highlighted for its ability to make academic computer science papers accessible to a broader audience.

"I'm a bit of a dabbler, to be honest. I just dump everything into my feed, leaf feed and it comes out and I read everything."

This quote shows the speaker's approach to content consumption, which is eclectic and driven by curiosity.

"He writes a great blog on a daily basis [...] called the morning paper, and he takes sort of an academic paper in computer science and basically translates it in a way that just makes it very easable and very approachable in layman's terms."

The speaker admires a colleague's blog for its ability to simplify complex computer science topics, indicating the value of making specialized knowledge accessible.

• The speaker expresses admiration for Will Shu of Deliveroo for his ambition and determination.
• The ability to launch successful ventures is highly regarded and can inspire confidence in investors.

"Is there one I think recently you can't really look past will shu over at Deliveroo. I mean, the guy could get anything off the ground."

This quote indicates the speaker's respect for Will Shu's entrepreneurial skills and his success with Deliveroo, highlighting the traits the speaker values in founders.

• The speaker's most recent investment was in a French doctor appointment booking system called Doctolib.
• The decision to invest was based on a strong team, good market potential, positive momentum, and a compelling vision for digital health.

"The last one we announced was Dr. Lib, which is the french doctor appointment booking system. To be honest, it was an easy, it was a great team, great market, good momentum, and the vision was great."

This quote explains the rationale behind the speaker's recent investment decision, emphasizing the importance of team quality, market potential, and vision in the investment process.

• The host thanks James Cameron for his time and insights shared during the podcast.
• Listeners are encouraged to sign up for the podcast newsletter and stay tuned for upcoming episodes featuring other industry leaders.

"And again, I'd like to say a huge thank you to James for giving up his time today to be on the show."

This quote from the host expresses gratitude towards the guest for participating in the podcast and sharing his expertise.