Ophelia Brown: How We Raised $432M in a Pandemic; What's New in European Venture Capital | E990

1. 0:00 – 2:47

   Ophelia’s Journey into Venture

   1. OBOphelia Brown0:00

      Venture is a very transparently competitive sport. (instrumental music)

   2. HSHarry Stebbings0:05

      Ophelia, I am so excited for this. Thank you so much for joining me today.

   3. OBOphelia Brown0:09

      Thank you so much. I'm thrilled to be here.

   4. HSHarry Stebbings0:11

      No, I mean, honestly, the patience that you all have for putting up with this schedule, I'm very grateful. But I wanna start with you. So I always start with the wonderful world of venture in the entrance, but how did you make your way into venture and come to found Blossom? And, you know, short three to four minutes.

   5. OBOphelia Brown0:24

      I always say that Blossom is long in the making and short in the making. Long in the making, in that I think I always knew that I wanted to have my own company or build my own thing. My parents kind of taught me in the early days of, like, paying your own way, and I started with a side hustle trying to wash car windows at, you know, our house before my mum put a stop to that.

   6. HSHarry Stebbings0:44

      (laughs)

   7. OBOphelia Brown0:44

      And then the big idea when I was a teenager was that I wanted to be a restaurant-owning DJ. Again, my parents put a stop to that. Went off to university, and when I started my MBA, uh, went off to INSEAD, I thought that was finally my journey into being an entrepreneur. And then I realized I had this pattern of bad ideas.

   8. HSHarry Stebbings1:01

      (laughs)

   9. OBOphelia Brown1:02

      And the latest one that I was working on was a peer-to-peer car-sharing startup, like Zipcar without the assets.

   10. HSHarry Stebbings1:08

       Mm-hmm.

   11. OBOphelia Brown1:08

       I was beaten to market, and I thought, "Okay, we've gotta kinda stop this." So-

   12. HSHarry Stebbings1:12

       That was, that was the only reason you failed. (laughs)

   13. OBOphelia Brown1:14

       Yes. (laughs)

   14. HSHarry Stebbings1:15

       Just beaten to market. (laughs)

   15. OBOphelia Brown1:16

       Yeah, that was... so, and I started thinking about venture, thinking, "Okay, if I'm gonna build something, I may as well learn the investment side and hopefully come up with a much better idea next time." And I was very fortunate to get a job at Index, uh, in their London office, and I just fell in love with the investing side. Like, I just loved enabling entrepreneurs, working with them, and I realized I, I was much better suited to that than building a company. But the passion to start something never really left, and that's why I say Blossom was short in the making, in that I kind of returned to being an entrepreneur and decided to raise my own fund.

   16. HSHarry Stebbings1:49

       You said there about, um, enabling entrepreneurs. Totally agree. I, I would say, like, where you're world-class is bluntly winning. Like, no, really, you are unbelievable in terms of winning the most competitive deals, um, and so I'd love to understand just, like, when you think about your own hustle in terms of what it takes to win, why, why, why do you think you win s- such competitive deals, and what do you do to do that?

   17. OBOphelia Brown2:10

       When I want t- something to happen, I just focus on something making that thing happening. When it comes to working with an entrepreneur or wanting to support them or partnering with them, it's just relentless focus on achieving that, and I think I bring a lot of passion and just making things possible. Bluntly, I don't think I hear the word no. (laughs)

   18. HSHarry Stebbings2:32

       (laughs)

   19. OBOphelia Brown2:34

       So, um, and I think probably the passion and the commitment and the dedication, I mean, it comes across. I think it's, you know, real. It's genuine. I'm not just doing it for the sake of doing it, like...

   20. HSHarry Stebbings2:46

       Can I ask one

2. 2:47 – 7:02

   When do you know someone is special?

   1. HSHarry Stebbings2:47

      weird one? How quickly do you know when someone's special? 'Cause often, I worry that I'm taken in by the salesperson. How quickly do you actually get excited and lean in versus it takes a bit of time to see how special someone is?

   2. OBOphelia Brown2:59

      I think about this a lot, and I think during a meeting, if you were kind of, if there was, like, a radar of, like, "I'm in, I'm out. I'm in, I'm out," I'm constantly trying to test myself. Like, "Okay, I've fallen in love within the first five minutes, but is this love, like, real? Are they just too much of a salesperson? Am I caught up in the pitch? Or, like, should I be more cynical here?" And the constant questions are kinda going through my mind, and I think the, I mean, I hate pitches, right? Whenever I meet with a founder, I'm always like, "Tell me your journey, and I want to understand why you're doing this and what your ambition is and what your drive is." And I think I come with a lot of questions 'cause I'm just trying to understand. I would say within, you know, the first meeting, for sure, I come out with a decision of go, no-go.

   3. HSHarry Stebbings3:44

      How fast do you move post that? Because I think this is another thing where our industry's quite lethargic, and I, you know, I say this to Kieran, my partner. It's like, you know, "If it can be done today, it's done today. A reference call tonight? Let's do it tonight." Like, how do you think about the cadence post that?

   4. OBOphelia Brown3:57

      I think it's a balancing act, actually. Uh, I don't love moving super fast. Like, I think that actually becomes a perpetuating myth in the marketplace, like, "Blossom signed a term sheet within 48 hours." But actually, (laughs) like, from first meeting to 48 hours, that's not a reality. So I did the analysis. Now we're a few years in. I think we normally know founders for six to eight months pre-investment, sometimes a bit longer.

   5. HSHarry Stebbings4:23

      Yeah.

   6. OBOphelia Brown4:24

      Because I love to get to know them, like how they work, how they execute, how they hire. Like, the investment thesis and decision whether or not to be inves- whether or not to invest is actually made pretty early.

   7. HSHarry Stebbings4:35

      Yeah.

   8. OBOphelia Brown4:36

      And then there's a period o- of time. So-

   9. HSHarry Stebbings4:39

      Can I ask a hard question? Um, well, I mean, ............................ Can I ask it? I'll just ask them anyway.

   10. OBOphelia Brown4:44

       Just ask the question, Harry. (laughs)

   11. HSHarry Stebbings4:45

       Yeah. All right. Um, a lot of founders are like, "I'm heads down," especially the ones who've got, like, great seed investors or, like, are hot. They're like, "I'm heads down, and I'm not meeting investors." What do you do then when you wanna build the relationship, but their head's down?

   12. OBOphelia Brown5:00

       I get it from a founder's point of view. Like, "I've got better things to focus on," but, I mean, you and I know this from fundraising ourselves. There is so much to be said for the relationship that you build.

   13. HSHarry Stebbings5:10

       Mm-hmm.

   14. OBOphelia Brown5:10

       I don't know how people would decide on a VC that they want to work with within, you know, 48 hours or a week, right? You want to know how that person's going to be able to support you, how they're gonna work with you, challenge you, open doors, and so I try and explain that to a founder who's heads down. It's like, "Okay, I would like, you know, 30 minutes of your time. I'm not gonna come with the bog-standard questions. I'm actually gonna use this to show how Blossom can bring value or how we can help and kind of earn my seat at the table for the next, you know, four, six, eight months."

   15. HSHarry Stebbings5:40

       Sure.

   16. OBOphelia Brown5:40

       And most of the time, that works. There is also a flip side, I think, where, which I think has become more prevalent in the market recently, where founders have raised a lot of capital very early on and actually realize that they do need to build some product (laughs) and execute for a bit before they have more investor conversations. So it's also understanding where they are on that journey, whether, you know, you are six, eight months off a fundraise or you, whether you're 18 months off a fundraise and what the right time to engage is.

   17. HSHarry Stebbings6:09

       Fundraising, actually-... can be fun if you're good at selling it because people just tell you you're great. And I think founders see this and it's like, it's enjoyable, but actually like cap it. So I always say like, have five names of partners in firms and actually meet them once a quarter for a year, and then you'll have a lot more data points where you can make a decision.

   18. OBOphelia Brown6:25

       Yeah. And I think the different thing about Blossom as well is, you know, when we're reaching out to s- uh, speak or spend time with founders, we're partners only at the firm. So it's not like you're wasting your time with us. Like, we try and give as much to the meeting as we can get from it.

   19. HSHarry Stebbings6:41

       No, I, I totally get you. We mentioned kind of the joys of fundraising there, um, I obviously love it because I'm insecure and egotistical.

   20. OBOphelia Brown6:47

       You're very good at it as well.

   21. HSHarry Stebbings6:49

       (laughs)

   22. OBOphelia Brown6:50

       (laughs)

   23. HSHarry Stebbings6:50

       Um, thank you.

   24. OBOphelia Brown6:52

       (laughs)

   25. HSHarry Stebbings6:52

       Um-

   26. OBOphelia Brown6:52

       (laughs)

   27. HSHarry Stebbings6:52

       ... but it, it, honestly, a lot of it is like, it, it's a desire to be liked. Um, (laughs) -

   28. OBOphelia Brown6:58

       (laughs)

   29. HSHarry Stebbings6:58

       ... and they like me. Um, but my point with that is, like, what

3. 7:02 – 9:37

   What are you running from and towards?

   1. HSHarry Stebbings7:02

      are you running from? I think it's such a powerful question that reveals a lot.

   2. OBOphelia Brown7:06

      Oh, we're going deep.

   3. HSHarry Stebbings7:07

      Yeah.

   4. OBOphelia Brown7:07

      Okay. Okay.

   5. HSHarry Stebbings7:08

      I did, I did the softly, softly ideo dynamics now it's like-

   6. OBOphelia Brown7:11

      (laughs) You're asking the hard questions now, we're going to the deep, deep philosophical ones. So I actually did study a lot of philosophy when I was at university. It was part of my, uh, undergraduate degree. So, and I say that because, uh, it teaches you enough to know that from what you're running from, or everything about your life is basically trying to escape from the very reality of mortality. That life is finite. Um, so that's why we busy ourselves, that's why we seek enjoyment in things is because if you were kind of per- uh, paralyzed with nothing to do, you would then end up worrying about that.

   7. HSHarry Stebbings7:45

      (laughs)

   8. OBOphelia Brown7:46

      (laughs)

   9. HSHarry Stebbings7:46

      Wow, we went, we went deep there, it was not expecting that, we went to mortality. Uh-

   10. OBOphelia Brown7:51

       Which is more about an enjoyment of life. Like you, I'm trying to take every minute that I can and make the most of it.

   11. HSHarry Stebbings7:58

       I love that. I, I totally agree. There's a brilliant quote from, uh, About Time, um, which is about kind of making every day like truly wonderful. Which I love, but that's like very soppy, uh, movie choice. (laughs) Uh, I'm losing all streets-

   12. OBOphelia Brown8:11

       But there's truth to it.

   13. HSHarry Stebbings8:12

       ... right now. There is truth to it. And Mickey Malka, because I spoke to him before and he's obviously a mutual friend of ours, and he said that you got some advice when starting Blossom. And he asked me to ask, what was this advice and how did it impact your thinking?

   14. OBOphelia Brown8:23

       I love Mickey. Um, Mickey's one of the people that I respect the most in venture, um, and certainly someone I went to very early on because he had started his own fund, and, uh, I think he's done tremendously well. There's a lot of advice that Mickey gave me and some you can only follow if you're Mickey and then-

   15. HSHarry Stebbings8:39

       (laughs)

   16. OBOphelia Brown8:40

       ... some (laughs) you can't follow if you're a mere mortal. (laughs)

   17. HSHarry Stebbings8:43

       I got, I got that too, and I was like, "Ah, maybe not for me." (laughs)

   18. OBOphelia Brown8:46

       I mean, the one thing that, uh, really resonated or I took away from was that, you know, he told you, you have to really follow your own judgment and believe in you and do things your way. And I think that serves a lot. Like, in the beginning when you're starting something you're so unsure of what's right and what's wrong, or whether you do it one way or whether you build for one LP, et cetera. Uh, but he was very fixed on like, you just do it like that. And my big thing was whether I started as a single GP, and obviously Mickey is a single GP. His piece of advice that I couldn't quite follow, which, you know, hats off to anyone in venture if they achieve this, is you know, do one and done close as a first time fund.

   19. HSHarry Stebbings9:24

       I love that and I think that's so true o- on the GP side, I think it's kind of like knowing your strengths. I, I do want to dive on kind of Blossom itself because, like, speaking of knowing your strengths, I think you're a phenomenal picker and when we think about portfolio construction,

4. 9:37 – 14:32

   Portfolio Construction

   1. HSHarry Stebbings9:37

      like, how do you think about how many companies, the right level of diversification, and how many is enough?

   2. OBOphelia Brown9:44

      So this is where we differentiated the model quite a bit. Um, so we said we wanted to build a new fund specifically for early stage in Europe, and our general view is that Europe is a growing ecosystem and there's a lot of promise here but it's not the size of Silicon Valley.

   3. HSHarry Stebbings10:00

      Sure.

   4. OBOphelia Brown10:00

      So that means there's going to be a finite number of companies that are built every year in Europe, and we just want to be the best possible partner to those companies, uh, and adequately support them as we can as a team. Um, and so rather than try and build a fund of 30, 40 companies, and then, you know, build that over two, three years, we said the, you know, the number of quality companies that we can be great partners to is actually probably smaller than that, and let's be super concentrated. So 15, 20 companies per fund, and try and be the best possible partner to those teams.

   5. HSHarry Stebbings10:34

      So when we think about that, sorry I'm just running through the numbers now, so you have like 475 million, and then you have 15 to 20 companies. So that's like 20 million per check?

   6. OBOphelia Brown10:43

      Yeah, so the 475 will be more like 20 companies rather than the 15. So fund one was 10 companies, fund two is 15 companies, and fund three will target 20.

   7. HSHarry Stebbings10:52

      Okay, so we've got-

   8. OBOphelia Brown10:52

      So that kind of grows in line with the growth of the European ecosystem.

   9. HSHarry Stebbings10:56

      Goshies, we've got 20 companies. Do we have, like how do we think about reserves and reserves management?

   10. OBOphelia Brown11:01

       So we actually don't reserve the standard. Uh, and this is something I think I learned from previous venture experience when I was working for other funds is that, I think actually like the follow on can really damage fund returns, in that, you should buy your ownership at the lowest possible cost, which is the initial cost of seed or Series A. And then especially in the growth market that we've been on where, you know, the follow on is done at 4 or 5 X, and not a lot... I mean you're somewhat de-risked but you're definitely not completely de-risked to the point of a growth investment. So you could be spending an additional... You know, say your initial cost was five or 10 million, and you were spending an additional five or more in pro rata, but at a much higher valuation, then your blended average suddenly looks a lot worse than having just bought your ownership at a lower cost. So we said we're just going to do initial investment with a very small amount of follow on if our companies need help getting to an exit or struggle to raise. And so 90, 95% of our investment will be for initial.

   11. HSHarry Stebbings12:03

       So I, I totally get you and I, I agree with you. The difference between our structures is like, in my current fund structures, I generally do it with a co- like a lead investor.

   12. OBOphelia Brown12:12

       Yeah.

   13. HSHarry Stebbings12:12

       And so blindly I'm not on the hook for it when there's a bridge round needed or like now when even you can have great companies, but Series B investors are kind of few and far between if you're not in AI. Are you worried that your reserves...... ratio or lack of will actually suddenly be very needed by a generation of Series A ambassadors, uh, or Series A founders that don't have the Series Bs as readily available as they were in the last few years.

   14. OBOphelia Brown12:35

       No, because the ... And this is where I'm actually quite proud there are, uh, you know, how we've supported founders and how we've thought about capital efficiency in the way that you spend capital actually hasn't changed between like the boom of 2020 to 2022, to from before that and to now. In that, we've always said to founders, "Be in control of your own destiny. Manage your runway and your burn, and don't expect that a raise is just, you know, automatically 12 months out."

   15. HSHarry Stebbings13:04

       Yeah.

   16. OBOphelia Brown13:04

       Like, you have to be able to control how fast you grow or not. And when we fund them at Series A, we say, "You know, here's enough capital of a 24, 36 months post our investment." And let's be honest, if you can't raise capital after that point, you probably aren't building a viable business, and we feel that that's enough runway for you to really give it your best shot, and we'll work with you all efforts beyond that. But if you can't after that and you've run out of cash, you know, it's not our ... We shouldn't be investing more to extend your runway. I think we just have to be honest. At that point, there wasn't a viable business to be built.

   17. HSHarry Stebbings13:41

       I know. Listen, I, I, I do agree with you there. I guess my question is, so on the sell side, when you're selling an entrepreneur, often I get founders that say, "Ah, I have a, you know, X multi-stage fund. They can do the B, they can do the C, they can continuously reinvest." How do you kind of combat that argument when you're trying to sell a founder?

   18. OBOphelia Brown13:59

       But the reality is, even for a multi-stage fund when they could theoretically do the B, C, D, they're still underwriting that new investment. It's not like they blanket just give you-

   19. HSHarry Stebbings14:11

       (laughs)

   20. OBOphelia Brown14:11

       ... the B, C, D.

   21. HSHarry Stebbings14:12

       (laughs)

   22. OBOphelia Brown14:12

       Like, you have to perform in order to get that capital. And actually, by us not investing at that stage, we are so aligned with the founder in trying to get them the best possible raise at the next round. So w- we're just trying to focus them on building a viable business. And so it's actually never been an issue with a founder when we're talking about investing.

   23. HSHarry Stebbings14:31

       Can I ask,

5. 14:32 – 20:30

   How to Give Founders Bad News

   1. HSHarry Stebbings14:32

      how do you tell a founder that you're not gonna reinvest? It can be a difficult one. If they just even expect a little bit, but say a company's not performing, how do you del- deliver news that actually I'm not gonna invest again?

   2. OBOphelia Brown14:43

      Well, I think because our default upfront is, you know, we're not investing at the B, C, D, and this is why we want our ownership at the A, it's not actually a hard conversation. And also, we work so closely with the teams that I would say, you know, founders themselves normally know when it's working or n- not working. It's not coming as a surprise. Like, we're working through, like, you know, there's a project, there's a business plan, these are the KPIs that we're working towards. Every month, we're talking about what's working, what's not working, if not, like, beyond, uh, more frequently than that. And so I don't think it ever come. Like, the relationship, it should never come to a founder as surprise as what you're thinking.

   3. HSHarry Stebbings15:18

      Yeah.

   4. OBOphelia Brown15:18

      That's my philosophy. Like, then you've misled them somehow.

   5. HSHarry Stebbings15:22

      I, I find that happens a lot, though, especially in Europe, where it's like, "You're doing great, Ophelia. You're doing great." And then three months before fundraiser it's like, "We're not actually in a position." And it's like, "Really?"

   6. OBOphelia Brown15:31

      I think a lot of funds have earned a really bad reputation that way, where founders have come back and thought this whole pitch, oh, they underwrite all of the next rounds, and then they turn up at these investment committees where a bunch of partners also have no idea what's going on in the company. And they're like, "I turned up at this partnership meeting and, you know, no one knew what we were doing or how we were performing, and suddenly I don't have a term sheet."

   7. HSHarry Stebbings15:52

      I, I think IC is the most inefficient decision-making processes ever (laughs) . Like, genuinely, you turn up in a space where you're not ... You know, you often have these big general partnerships, like, you know, the fintech partners, like, chiming in on the consumer social deal. They don't know, they don't know the bandage marks well. They haven't really met the founders more than once other than the partnership meeting. It's like, "Uh, yeah, I agree."

   8. OBOphelia Brown16:08

      That's why we did away with the IC at Blossom. It just didn't make sense when your, uh, uh ... From what I saw before is that there would be a subsection of the team or one partner or two partners that spent an incredible amount of time with a company, built a thesis, and then, as you say, a lot of other partners come to it fresh with 45 minutes. Like, how can you judge from that time?

   9. HSHarry Stebbings16:29

      Sure.

   10. OBOphelia Brown16:29

       So much goes into building a business. Like, it just became ... I feel like the IC formed a very political environment.

   11. HSHarry Stebbings16:35

       I, I, I totally agree with you. Do you agree with signaling? A lot of people say, "Oh, there's incredible signaling risk," and then, uh, (laughs) a lot of other people say, "Ah, it's actually over-exaggerated." Do you agree with signaling risk and how do you advise founders on it?

   12. OBOphelia Brown16:48

       There is signaling, but it ... A good investor doesn't necessarily pay attention to those signals. You know? You shouldn't be worried about whether X is investing or not investing or this or that. Like, you should have the courage of your own conviction. And this is why we talk about high conviction investors.

   13. HSHarry Stebbings17:04

       S-

   14. OBOphelia Brown17:04

       Like, you have to decide whether or not you want to make that investment. You have to decide what the inputs are that you place value on. The rest of the signaling, don't worry about it. And think about how many great outcomes have been where the journey has not been straightforward, you know?

   15. HSHarry Stebbings17:19

       I, I don't think it's ever straightforward, like ever in any great company. I think you've ... I, you know, I've seen many times before it tweeted, but, like, every single company that you see today up and to the right, it was so not up and to the right. Uh, can I ask, you know, we, we spoke about that decision-making process and, you know, working with the founders. I take the view, honestly, that I can help you hopefully be greater than you are. But honestly, the best founders do not need me. Uh, do you agree with me in terms of saying the best founders do not need our help?

   16. OBOphelia Brown17:46

       The best founders will still be best founders, they'll build great companies. I think there are ways that you can find to be helpful.

   17. HSHarry Stebbings17:53

       Totally.

   18. OBOphelia Brown17:54

       Like, you know, if I take, uh, Guillaume at Checkout. Guillaume's going to build a great business whether or not Blossom has invested or not, but I can earn the right to feel like I contributed something by working incredibly hard-

   19. HSHarry Stebbings18:06

       Sure.

   20. OBOphelia Brown18:06

       ... for him in the business. So, I think that the best founders see how they can draw on help and how they can kind of make people y- be valuable to them. But, of course, like, a great entrepreneur will always be a great entrepreneur.

   21. HSHarry Stebbings18:21

       No, I, I totally agree. I think the thing that I see when I look at, like, the companies that work and those that don't for me is speed of execution.... it's the biggest determinant of success for me when I look at companies that work. Do you agree with me on speed of execution being the most important thing when you think about what's worked in your portfolio?

   22. OBOphelia Brown18:37

       Uh, def- definitely speed of execution. There's, uh, courage in the conviction of ideas, um, and how to move on things. Um, you know, there's no analysis paralysis, et cetera. Um, the, the best founders, like, there's something a bit difficult about them as well. Like, the, the, you know-

   23. HSHarry Stebbings19:03

       Do you always get that pre-investment?

   24. OBOphelia Brown19:05

       No. (laughs) You-

   25. HSHarry Stebbings19:06

       You just see a post? (laughs)

   26. OBOphelia Brown19:08

       You, you... No, I mean, I mean, as you know, it's, I mean, incredibly hard being an entrepreneur. You have to make 100 decisions a day. Some of them are not gonna be favorable, some of them are gonna be difficult, and sometimes if you decide to go down one path, you can't be fazed by every decision. You just have to be, you know, cross the chasm, go for it.

   27. HSHarry Stebbings19:28

       This is a bit of a deep one, but I mean it applied to investing. How do you think about your relationship to regret? Naturally, you make a bad investment and you regret making it. How do you think about that relationship to regretting as an investor?

   28. OBOphelia Brown19:43

       I don't have regret, I have learning. Uh...

   29. HSHarry Stebbings19:46

       (laughs) Sorry, that was brilliant. That was like I worked too hard in a job interview. Okay, you have learning. And so you then reflect on it? Like, do you actually, like, do a session and think, "What did I learn from that?"

   30. OBOphelia Brown20:01

       Absolutely. I remember o- one of the first investments that I made, uh, when I was at Index and t- the company was performing so-so and Neil asked me, he said, "What's your learning from that?" And that really stuck with me. I was like, "You must take something away from a bad investment." Like, it wasn't just bad picking. Something happened afterwards as well. So what did you learn and what, wha- I, I do fundamentally believe in never make the same mistake twice.
6. 20:30 – 31:56

   Biggest Mistake You’ve Made

   1. HSHarry Stebbings20:30

   2. OBOphelia Brown20:30

      So, there was always things to be-

   3. HSHarry Stebbings20:32

      What do you think is the biggest mistake you've made? I'll be honest with mine too.

   4. OBOphelia Brown20:36

      In a, as in picking investing or...

   5. HSHarry Stebbings20:38

      As in when you reflect over your track, you're like, "I made this mistake." So I invest in a company and on paper everything was great. Numbers worked, cohorts worked, economics worked. And there was enough data and it was at a stage where you could actually make that assessment. But the geography was one that I was not familiar with. (laughs) And, uh, th- there were things that happened in that geography which I was totally not accounting for in my very rigorous, but academic assessment of a not real world.

   6. OBOphelia Brown21:08

      And I think that's really important. So, I think investors can get fooled into thinking something is a great investment thesis and ignore the practicalities of the ex- execution and execute some risk, et cetera.

   7. HSHarry Stebbings21:22

      Yeah.

   8. OBOphelia Brown21:22

      So I think a lot about that. Like, you can build a beautiful investment thesis around why a piece of software might work, but if the team isn't right, or the geography isn't right, or there's something wrong with the market, then you'll still be wrong.

   9. HSHarry Stebbings21:33

      Totally.

   10. OBOphelia Brown21:33

       So, I'd take away a lot from, you know, was it team, was it market?

   11. HSHarry Stebbings21:38

       So what was your biggest mistake?

   12. OBOphelia Brown21:41

       I've definite- I think the biggest mistake is team, always.

   13. HSHarry Stebbings21:45

       Where you made sure-

   14. OBOphelia Brown21:46

       Misjudging something on team.

   15. HSHarry Stebbings21:48

       You thought they were better?

   16. OBOphelia Brown21:51

       It comes back to execution speed.

   17. HSHarry Stebbings21:53

       Yeah.

   18. OBOphelia Brown21:54

       And this is why I love to know teams before investing.

   19. HSHarry Stebbings21:58

       Yeah. No, I, I-

   20. OBOphelia Brown21:59

       I think the other thing, um, uh, is e- and I learned this early on, is that you can kind of, uh, suppose that y- you are going to do the building. So you can throw a lot of ideas at a founder and say, "Oh, but if you do this and do this." But they have to want to do it. Like, the, the ambition, the drive, the ideas. So that I learned very early on.

   21. HSHarry Stebbings22:23

       It was funny, when, you know, when I was working with Fred at Stride, I always had the Fred test. Fred is a brilliantly smart, uh, operational mind, um, and I always have, would I rather back Fred as the CEO or the CEO? And, like, 98% of the time I would rather back Fred as the CEO, and we'd come out of meetings together, I'd be like, "Uh, can I invest in you as the CEO of this business?" And we were like, "All right, done. That's it." Um, and so that was a big thing. Y- y- you said there about kind of learnings. Um, I have to ask, um, you know, we see a lot of, uh, scout programs. I think, you know, every big fund has a scout program. Y- you did the Blossom scout program. Uh, they didn't work. Why didn't it work and what were the learnings from that?

   22. OBOphelia Brown23:03

       So we were really trying to innovate on this concept of scout program and taking what has worked in the market and what hasn't. And so, uh, Blossom wasn't doing pre-seed well seed and there were lots of founders that we thought deserved to raise capital, but they just weren't for us. And so we wanted to, on one hand, kind of enable some, enable them to be successful in their fundraising, and on the other hand, there were loads of operators in Europe that were starting to think about angel investing and they might have a deal flow, but they wouldn't have time in terms of judgment or they didn't have the capital, et cetera. So, we said we'll create an angel program where I think it was 15 angels, operators, and some really great names. And we said, "We already have the deal flow. We're gonna bring you the ideas. You as a group form the IC and decide whether or not you want to invest, and then we'll facilitate the administration and the capital, et cetera." Uh, it was meant to be 250,000 per investment and it was a great idea, but it was just as, as I said, all these angels was, uh, all these operators were starting to be angels and actually what founders wanted was a 10K check from one angel and a 10K check from another angel. They didn't want a group at 250.

   23. HSHarry Stebbings24:16

       Oh.

   24. OBOphelia Brown24:16

       So it just didn't work for the market.

   25. HSHarry Stebbings24:18

       No, I totally agree. I, we actually host, uh, d- dinners here and we had an angel dinner the other day with several, uh, people who were angels and they were scouts and they were like-... the best deals are going in my angel checks. 'Cause I, and, and it's not because I'm being devious, it's just 'cause I turn up with the scout cheques.

   26. OBOphelia Brown24:33

       Yeah.

   27. HSHarry Stebbings24:33

       And they're like, "Oh, no, no, no, we don't want the name of that." Like, w- "No, we take your money, not the fund money." And I thought that was really interesting that actually was a real pushback. Why don't you do seed though? Like, uh, if you look at, um, what, really every big fund now, they've all aggressively moved towards seed, which is why I send you all of my deals. Um, uh, why, why didn't you do seed?

   28. OBOphelia Brown24:54

       So we actually pulled out of seed, uh, I think it was the same time everyone decided to go-

   29. HSHarry Stebbings24:58

       (laughs)

   30. OBOphelia Brown24:59

       ... into seed. We were like, "This-"
7. 31:56 – 35:34

   How to Price Companies

   1. HSHarry Stebbings31:56

      and, yeah, how do you reflect on your own relationship to price and when to pay up and when not to?

   2. OBOphelia Brown32:03

      It comes back to the philosophy of there are only a finite number of outcomes that are gonna matter each year and you just want to be the best possible partner to them. So, and for our fund model, you know, we're pretty explicit that we want 20% ownership because if you're going to be one of 15 or 20 companies, we really want you to matter in the portfolio and we're gonna work incredibly hard to help build value, et cetera. Um, and a function of therefore price is, you know, how much capital do you need to scale your business the next 24 months when you arrive at valuation. If you're, like, plus or minus around the margin and you've decided that one of five businesses you want to partner with that year, it, it doesn't matter that much. If you are moving away so far in price that you can't believe that this company can be material to you and therefore to your LPs, I believe that's stretched too far.

   3. HSHarry Stebbings32:57

      Can I ask, 20%, that, that is, to me, like, a time, uh, gone by that I look at fondly, but I mean a time gone by. Like, do you worry that actually it's a little bit of adverse selection just because, like, I, I, I don't know many funds at all that get 20% consistently anymore?

   4. OBOphelia Brown33:16

      No, I don't worry about adverse selection.

   5. HSHarry Stebbings33:19

      (laughs)

   6. OBOphelia Brown33:20

      I look at, you know, the quality of the founders and the companies that we've partnered with and I think-

   7. HSHarry Stebbings33:24

      Do they push back when you say, "We need 20%?"

   8. OBOphelia Brown33:28

      Not all the time, but it actually becomes easier the more proof points that you have of the how we can support that. You know, if we, if you can point to Pigment and Tines and Checkout and Loompay and Spacelift and, you know, they're great companies in concert with you in c- in, like, in the Blossom portfolio where we've ha- brought in great investors afterwards and, you know, you see the rise in valuations, et cetera, I don't think founders mind.

   9. HSHarry Stebbings33:58

      Yeah. I, I get you. (laughs)

   10. NANarrator34:00

       (laughs)

   11. HSHarry Stebbings34:01

       Does it not make it also harder to construct rounds? 'Cause it is a, a large chunk of rounds. I mean, if you're gonna bring other people in, you're gonna be diluting 25, 26%.

   12. OBOphelia Brown34:11

       So we don't, uh, we lead. We don't work with other VCs. So, uh, we might work with occasional angels that want to be alongside with us but that's at the founder's choice. Like, we obviously make introductions to people that we think are gonna be relevant, but the founder will choose.

   13. HSHarry Stebbings34:26

       Yeah.

   14. OBOphelia Brown34:26

       But, uh, at the EA it's a bit, it's not like seed. There's not room for more than one investor in.

   15. HSHarry Stebbings34:33

       Yeah. I think a generation of investors disagrees. What do you say to them?

   16. OBOphelia Brown34:40

       I would say that proof is in the portfolio that we're building. (laughs)

   17. HSHarry Stebbings34:46

       (laughs) Do you do outcome scenario planning? Because if I were to, like, say we were in the same team, I would say, "Well, actually, if you actually think about how big your true winnings can be, if you have a, you know, $5 billion company and you have 10% at exit, which, you know, you could have with dilution on a 15, 16% initial holding, well, there's your fund return and so actually, potentially the 20% is too aggressive." Like, my question is, do you do outcome scenario planning and how do you think about it?

   18. OBOphelia Brown35:12

       We do and I would challenge that if you started with 15%, by the time of exit, you're left with 10%.

   19. HSHarry Stebbings35:20

       (laughs) Why?

   20. OBOphelia Brown35:22

       Because I think of from A, how many more rounds, the option pools. I mean, to only suffer 5% dilution from the series A to exit would be pretty impressive.

8. 35:34 – 53:10

   European Venture Today

   1. OBOphelia Brown35:34

   2. HSHarry Stebbings35:34

      How do you think about European ventures today as a product? Are you like, "Yeah, actually I think it's pretty adequately served"? Are you like, "Actually, there's quite a lot of mediocre players"?

   3. OBOphelia Brown35:45

      As in are there too many players in the market?

   4. HSHarry Stebbings35:48

      Are there too many players, one.

   5. OBOphelia Brown35:50

      I think venture is a very transparently competitive sport where the founders ultimately choose, uh, who deserves to be in the ring. Which is quite an exciting industry to be in. Like, you constantly have to earn your place and I think what's exciting about Europe especially is, you know, 10 years ago, European founders felt that they had to go to the Valley to raise capital because there wasn't sufficient capital-

   6. HSHarry Stebbings36:22

      In New York.

   7. OBOphelia Brown36:23

      ... now a founder does not have to leave. Like, everyone's here for them to choose. And the nature of the conversations and the w- way that they've risen to that and wisened up, it's actually incredible to see. Like, I think, um, founders are getting better support, better information because they have suddenly realized that they are in control of who they get to choose to be on their cap table.

   8. HSHarry Stebbings36:47

      I credit podcasts like this, to be honest. But, uh, I agree with the first one entirely. No, I- I- I agree, I agree but I actually just look at over the last three months, I've seen three deals now where US VC's multi-stage have come in and won against seed VC's in Europe. And multi-stage VC's competing at seed, and I haven't seen that before. Three in three months where they're, like, supremely hot deals and they've chosen US multi-stage over European.

   9. OBOphelia Brown37:20

      So I find this really interesting, is ... And I think, like, European VC has an image problem. You can help with this. (laughs)

   10. HSHarry Stebbings37:27

       (laughs)

   11. OBOphelia Brown37:27

       So if we look back at the history of European unicorns that have been built, uh, and look at who supported them at seed and series A, it wasn't US multi-stage firms. So there is something to be said for the European firms at the early stage who have the understanding, the network, et cetera, who support these companies. But there's obviously a lot of prestige with US venture and these brand names. And I think for some founders, that's really important. But I think that if European ventures did a (laughs) better job from a PR perspective (laughs) of how they've helped build these companies at the early stage, founders wouldn't have this kind of ... They feel like it's a lesser depict from a European VC. But it's the ones on the ground who understand who are going to be able to help you.

   12. HSHarry Stebbings38:14

       It's interesting you say about me, by having a role in that, European VC's suck at telling stories. I know often people are like, "Oh, why, why didn't you have more European VC's?" Honestly, they, they really do not articulate stories well and they're not inspiring, exciting. They don't resonate in a way that US VC's absolutely do. Like, it's, it's really interesting. US VC's sell their product better.

   13. OBOphelia Brown38:35

       I mean US, Americans are very good at selling. (laughs)

   14. HSHarry Stebbings38:39

       (laughs) Which we love.

   15. OBOphelia Brown38:40

       (laughs)

   16. HSHarry Stebbings38:40

       To our US audience, we're very, very grateful for your sales ability. (laughs) Um, when do you think, like, actually as an ambassador, I should improve?

   17. OBOphelia Brown38:49

       You should improve?

   18. HSHarry Stebbings38:50

       No, you.

   19. OBOphelia Brown38:51

       Oh. (laughs)

   20. HSHarry Stebbings38:52

       (laughs) This is an assessment on me. (laughs)

   21. OBOphelia Brown38:56

       (laughs) So next. (laughs)

   22. HSHarry Stebbings38:56

       Thanks for that. (laughs)

   23. OBOphelia Brown38:57

       Okay. Here's some feedback.

   24. HSHarry Stebbings38:58

       Yeah. It was B minus. Ah. Do, do you go, "Ah, you know what? I should get better there."

   25. OBOphelia Brown39:04

       I think over the years, I've become to realize there are so many different ways of looking at something and you really have to focus on broadening the mind. I think, like, narrow does not necessarily lead you to good places. It ... You've got to have the courage of your conviction, you've got to be able to have judgment, et cetera, and you should be able to pay attention to what's important or not. But it really does take kind of thinking, "Oh, I wouldn't have looked at it that way," or not assuming that someone just thinks like you. Um, I spend a lot of time focusing on that. And that's really why I like a diverse partnership and having, I- ... You know, if you look at me, Imran and Alex, we're very different backgrounds, very different views on things, but we don't necessarily see to eye-to-eye, and that's a good thing.

   26. HSHarry Stebbings39:52

       You said you don't have ICs but you mentioned three partners there. How do you actually make investment decisions?

   27. OBOphelia Brown39:57

       So a lot of discussion and debate. It's very iterative. Like, we won't just have a company come meet us, present for 45 minutes. We spend a lot of time kind of, uh, thinking about, you know, challenging each other on the investment visas, the market size, where the, the fact team strengths are, where they aren't, and the- the more you go along, you come to realize, like, where you stand on different parts of the investment. And then once we decide to invest, even if we've disagreed over points, because we all support together, we're all committed to this company being successful.

   28. HSHarry Stebbings40:29

       Do you agree with the disagree and commit, as like a-

   29. OBOphelia Brown40:32

       Yes.

   30. HSHarry Stebbings40:32

       ... principle? You do?
9. 53:10 – 55:13

   How do you respond to criticism?

   1. HSHarry Stebbings53:10

      don't. Um, w- how... Does that upset you and how do you respond to that where people think you're abrasive or bluntly challenging?

   2. OBOphelia Brown53:20

      I definitely care. I think there's ways that I come across that I don't think people necessarily understand. Like, the abrasive thing, I p- think people don't know that I'm actually much shier than you would think. Like, uh, when we were at university or when we were doing our MBA, like there would be always like, you know, a group of people getting drinks in the bar and being really sociable and I'd be like, "I'm going to go and do my work," and I'm actually c- more comfortable in like a, you know, one to one setting than a group setting but people think that means I'm abrasive. Um, I really do care what other people think, um, but also that doesn't prevent me from trying to be honest and be truthful and direct. So if I need to say something because I think it's important that you hear it, like, as, so long as that message is delivered in the right way, I feel that that's, that's how I should be. Um, but I've never tried to be, you know, rude or et cetera. The whole she's aggressive, uh, you know, she's sharp elbowed-

   3. HSHarry Stebbings54:24

      Do you think they'd say that if you were a man?

   4. OBOphelia Brown54:27

      I don't think people would say that if I was a man. I think that's a comment that people level at a woman-

   5. HSHarry Stebbings54:31

      Yeah.

   6. OBOphelia Brown54:32

      ... all the time, and you know, one of our favorite LPs when they were taking the found- uh, the references and they said, "You know, people say you're aggressive," but w-I like it because I'm teaching my daughter to be precisely like that.

   7. HSHarry Stebbings54:44

      (laughs)

   8. OBOphelia Brown54:44

      V- venture is a competitive sport. If you want to lead deals and you want to be a great partner to your founders, then you are going to inevitably be a bit sharp elbowed.

   9. HSHarry Stebbings54:54

      I, I, I totally agree. Um, I, I, what matters is what the founders that work with you say, which is why I think it's interesting to compare what your co-investors, well not co-investors, but people in the ecosystem say and what your founders say. Um, s- sorry. I had, I ha- I had to ask it.

   10. OBOphelia Brown55:08

       Thank you.

   11. HSHarry Stebbings55:08

       Uh, now that that's done, we, we, we can do a quick fire round. It's my favorite round. Uh, okay.

10. 55:13 – 1:02:28

    Quick Fire Round

    1. HSHarry Stebbings55:13

       What would you most like to change about the world of venture?

    2. OBOphelia Brown55:17

       I don't like the hype. I would love to go back to the art of deal making.

    3. HSHarry Stebbings55:22

       Do you think that's possible? Like, is this not just a, a product of so much cash in the ecosystem?

    4. OBOphelia Brown55:27

       I think it is a product, so I think it depends how the cycle ends.

    5. HSHarry Stebbings55:32

       What's the hardest element of the entire Blossom journey? Do you remember a moment when it was like, "Oh, this is hard."

    6. OBOphelia Brown55:40

       The early days. Again, it goes back, they were brutal. I mean, sometimes the nos came out of places that you didn't expect to.

    7. HSHarry Stebbings55:47

       What did you tell yourself when it's like that, that one, the ones that hurt are when it's like, it's closed and it's a no, and you get that and you're like, "Oh, I thought they were there."

    8. OBOphelia Brown55:56

       This is what I would say to any founder or any person building a fund, 99% of it is sheer determination and perseverance. Like, there was just no option not to get to a first close.

    9. HSHarry Stebbings56:13

       I, I totally agree with you. I think just human nature is you give up, um (laughs) , which is something we-

    10. OBOphelia Brown56:18

        But I think also a lot about, that's also what I learned, um, and this comes from my husband who actually raised a fund before me and he, I mean, I owe a lot of my success, uh, to him. Um, he was like, "It takes eight meetings to close an LP." That was his rough rule of thumb. Uh, and I was like, "Why so many meetings?" And he was like, "You know, they just don't expect you to come back."

    11. HSHarry Stebbings56:43

        (laughs)

    12. OBOphelia Brown56:43

        (laughs)

    13. HSHarry Stebbings56:44

        You're like, "Uh, thing is, I'd do it like eight days in a row." Like, you know, "I'm here." (laughs)

    14. OBOphelia Brown56:49

        "Hey, I'm still here." (laughs)

    15. HSHarry Stebbings56:50

        "Yeah, still here." Um, I actually heard a rumor once, this is off, off schedule, but I just heard a rumor that you like, slept in like, an office waiting room to get a deal? Is that true?

    16. OBOphelia Brown57:05

        Let rumors be rumors. Let the myth perpetuate.

    17. HSHarry Stebbings57:09

        (laughs)

    18. OBOphelia Brown57:09

        Anything to get a deal done.

    19. HSHarry Stebbings57:10

        I was like, "That's kind of impressively weird," but I wasn't sure where I landed. What's the trend that most investors are ignoring right now?

    20. OBOphelia Brown57:19

        Crypto.

    21. HSHarry Stebbings57:21

        I, I, I genuinely think like, growth crypto is like, potentially, no I'm being serious, one of the most interesting. See, you, you've got 1000 companies funded, I'm just making up numbers, over the last two years and actually, listen, 15 to 20 will actually be incredibly strong teams and companies. Who's doing crypto growth right now?

    22. OBOphelia Brown57:38

        I know. Who's even doing early stage crypto anymore?

    23. HSHarry Stebbings57:41

        Me. I, I'm still doing it. Um, Guillaume, uh, said this. "How did you travel during COVID to get a deal done?"

    24. OBOphelia Brown57:49

        We go full circle, we'll do anything to win an investment.

    25. HSHarry Stebbings57:53

        Where did you go?

    26. OBOphelia Brown57:54

        Went to Paris.

    27. HSHarry Stebbings57:55

        Oh, wow. When you weren't allowed to?

    28. OBOphelia Brown57:57

        Well, I was allowed. I have, uh, a lot of thanks to my partner Imran who went into the details of how you could get into another country, and if you were traveling from your primary residence to your other residence, so I, if my Estonian husband could go from London to Estonia via Paris with me-

    29. HSHarry Stebbings58:18

        Huh.

    30. OBOphelia Brown58:18

        ... then you could get to Paris. (laughs)

Episode duration: 1:02:28