E270 | ACT | On building good founder-investor relationships with Naza Metghalchi, Principal at EQT Ventures

0:04Hi everyone and welcome to another episode of At The Cap Table where we dive into untold stories of amazing VCs all over Europe. And today I've got the wonderful Nasa Metgarhchi from EQT Ventures to kind of talk to us a little bit about her amazing career so far and a few things around kind of founder investor relationships and a little bit more. So Nasa has got an atypical background for a VC And in fact, she mentioned to me that it wasn't really kind of her intended career path. So after a number of biz dev roles at some amazing startups and also at other funds, Naz has found herself on the investing side of the cap table, focusing on seed, but mainly kind of Series A plus founders at EQT Ventures.

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1:52So Nasa, welcome today. I'm really looking forward to chatting with you. Yeah, great to be here. Thanks for having me. I would love to hear in your own words about EQT ventures and a little bit about your personal focus there. Yeah, sure. So I'm happy to get started. So I'm Naza. I'm French-Irvani and I'm based here in London. I've been here for 15 years. I started investing at EQT now close to four years ago. Three things to know about us. We're one of the largest early stage VC funds. Globally, we invest out of 1.1 billion US dollar funds, investing in leading seed series A companies across Europe and the US.

2:34We also tend to invest when we miss the seed and series A at series B stage. We're generalists, we're sector agnostic. And then the second thing is everyone in the team is an ex-operator, ex-founder. That's the ethos of the firm. When we came together to build this firm basically three funds ago, So it was very clear from the get-go that we wanted to basically be a bunch of people that have been on the other side of the table. And the ethos there is that it's really hard to teach people that haven't been on the startup side just empathy and EQ when it comes to understanding what it takes to build businesses.

3:08If you've been in a business yourself, you understand that at some point you focus on growth at all costs and at some point you focus on just like quest towards profitability. So goals and focus change all the time. And just the empathy that you need with those founders is really important. And then we're part of EQT. And then EQT is now a 250 billion AUM business, multi-strategy globally. So just having access to the knowledge of the teams here and having access to the advisors that they have is definitely an accelerant for all of our portfolio companies. In terms of focus, I do a lot of fintech and software.

3:43so spending a lot of my time in just like software right now whether it's horizontal vertical spending a lot of time on vertical AI especially looking at healthcare for the last couple of weeks as I think that healthcare is definitely an early adopter of AI so I'm pretty excited about the businesses that are popping up in the last couple of quarters and the future ones that will happen in the next couple of years and in specific verticals where NNM can act as an accelerating to those businesses. Amazing. Really, really great to kind of hear a little bit about your personal focus there. And I wanted to pick up on something you mentioned about, you know, if you haven't been an operator, you can't have that EQ and that kind of empathy with founders.

4:24So I know you're at kind of one fine state and doing lots of different areas of the business, or, you know, your role touched lots of different areas of the business. And would love to hear a little bit from you about how you know that role in particular impacted the way that you work with founders now yeah sure so for people that were not in the UK basically 10 years ago um one fine stay was um and is like a consumer marketplace joined them at pre-series a so I was jack of all trade as you mentioned it yourself um at some point basically um uh worked on the sales side and then helped on the product marketing side of things.

5:03So when you go, when you're part of a business from series A all the way to exit, you go through like all the different stages of a company's life cycle. So it's an opportunity for you to understand how quickly things change. And every single week you're reaching new goals, but it feels like a new milestone. So just the pace of execution is just really fast, which means the pace of learning things is really fast. So if you've been on that side yourself, you kind of understand what is expected and it gives you some sort of insight as to how you can kind of navigate the communication with the founders now that you're basically on the investor side.

5:41So it's definitely very useful, I would say. But, you know, if you want to be a bit provocative, we can talk about the fact that whether, you know, having been an operator six years ago is still very relevant today. Even if you've been an operator for years ago, is it still relevant today? The way that businesses are building their businesses today with AI is going to be fundamentally different from the way we've done it, whether it was a year ago, two years ago, or 10 years ago. So I even wonder if any investor can now blame or just say that they have some sort of insights to company building if they haven't done it in the age of AI.

6:17So I wonder whether that discourse is going to be relevant in the future anyway. I don't know what you think. Well, you know, that's really interesting. I often think that advice has got an expiry date. And I reflect on this a lot sort of in my own role as well. And the way, like you say, the way that things are built now is not how they were even kind of four or five years ago. And what will they be in the future? One thing I think about is that, you know, any investor, particularly junior investors, should think about going back into startups and kind of having that hybrid career of dipping in and out if they want to become a stronger investor.

6:54But on the other hand, I also think about that it was on the Frex and Union Square Ventures. It's got a really great post which talks about, you know, two different types of investors. One's kind of this operator type, and then the other is kind of more of the, what you might think of as a typical late-stage investor of, you know, someone who's got a finance background or has come from a consultancy and how there's kind of value there as well. I guess there's a third profile that we might see. And, you know, you raised the point there about how AI will change things. Well, I think there'll be kind of more of those product-focused builder type of investors in the future who can, I think, probably really help move the needle for some companies, particularly at an earlier stage, if they've built those products?

7:47I don't know what you feel. Yeah, ultimately, I think the most important when you're setting up a VC fund and you're thinking about who you're bringing around the table, you need different flavors. You have a thousand different type of flavors when it comes to founders. By definition, you will need 100 ,000 different types of investors as well. We can't just look at one mold and basically say that's the type of investors that we want to hire. You have amazing investors out there that I respect that haven't done anything else besides just investing, that joined basically a VC firm right after college and have built a tremendous portfolio and tremendous reputation.

8:24And any founder out there would love to work with these people just because they managed to spot some amazing founders really early on and they helped those businesses grow over time. So I think that's really exciting. And then equally, you have some investors that have had a career as founders or operators that have basically now become VC. And maybe they're really exciting to work with as well with founders. So I think my view is we need a mix of those. And everyone is bringing, you know, that one thing that they're really strong out around the table. And if some of your audience today is like aspiring investors, try to think, you know, what is your superpower?

9:04What is the alpha that you're bringing to a VC team? When you're interviewing with VCs today, try to figure out, you know, around that table today, who is already kind of owning what? and try to understand what's their gap and whether you can fill that gap, whether it's with your experience in a specific sector, let's say FinTech, or whether it's with a functional background, if you have a product background as an example, or if it's that maybe you're very well connected and you have a network that they don't have access to, whether it's a network in a specific geography or it's a network with alumni of unicorn businesses where we think they're going to grow out and they're going to grow some businesses.

9:43So what's your edge? What's your superpower? I think these are really important questions, regardless of what's the career path you want to take. I love that way of thinking about things. You know, I think we often say that founders have to have an edge, but so do VCs. And you can sharpen that and change it over time. And, you know, obviously you've been kind of on the, to take it back to sort of your career, you know, you've been on the startup side. You've also kind of been in a biz dev at some kind of really big funds, you know, EQT being one of them. And then before that kind of index. Did you have an end game in mind when you were kind of choosing these roles?

10:26Yeah. So in terms of like career planning, I think the main criteria behind every single decision for me has been people. Ultimately, it doesn't really matter where I work, what's that brand. For me, what's the most important is who am I going to spend my time with? Who is it that I'm going to learn from? And that person specifically, you know, what is their superpower? What is it that I can grasp as much information basically from? Like for me, that was the most important. So when I think about what led me to move to the investing side of things full time, it was this man called Lyle Fung. And he was a serial entrepreneur.

11:05He had this entire career basically in the U.S. He started a bunch of different businesses, some consumer, and the last one was an enterprise software called Lithium. He raised money from the likes of Benchmark, and then he sold his business. So I thought to someone that has U.S.-style thinking and investing, someone that has been a founder, someone that has seen the whole life cycle that started businesses but also sold businesses, and that is bringing a very refreshing eye to the European ecosystem, it would be very stupid of me to not follow this person and basically go around town and fly to all these places in Europe to find the next big thing.

11:45So that's just one example of the last time I made a career decision and how I was basically dictated by the person that I would be spending my time with more than the brand specifically, I would say. Given that Nile was so kind of instrumental in your career and your thinking. How did that influence your personal thesis when it comes to investing in startups? Yeah, I think that takes time, right? You can't start in this role thinking that you know it all. Everyone's growing and learning. Even my most experienced colleagues that have the longest tenure basically in the job are still learning. You need to have a beginner mindset in this job.

12:25Pattern recognition doesn't really work. Every single company is different. Even if in hindsight, you're trying to justify why you invested in this business that became a unicorn and that succeeded, it's fake in my view. Every single company is different. So his way of looking at businesses was not necessarily my way of looking at businesses. And my way of looking at businesses also evolved over time. And I think that's totally natural. There's three vectors that you spend a lot of time on as an investor when you look at businesses is the founders, so the founding team. Second is the market and FUD is traction.

12:59And obviously these are like three factors as a series A investor. Probably it won't be the same if you're a pre-seed investor and you're first to get in. There's barely any traction anyway. And it's probably also not the same exactly when you're looking at later stage growth investments. I spent a lot of time on founders when I started. And obviously like my framework has developed over time and has sharpened over time. I now look at basically like four, five attributes very carefully and spend a lot of time on those. I'm happy to develop on that if you think that's exciting. Yeah, yeah, please.

13:32Yeah, no, no. That would be brilliant. Sure. So I think from like what are the attributes of like successful founders or at least what I've learned in the last four years, A, I think it's how determined they are. You know, however smart you are, if you're not determined and if you're not ambitious, you're just not going to achieve as greater things as the person next door who is very ambitious and very determined. So for founders, the way it's reflected is like, what is it that they're trying to prove and to who? We have the saying, which you perhaps already have also, which is like, what is your chip on your shoulder?

14:06And it can be anything that is related to their upbringing, you know, whether it's overcoming like poverty, divorce, moving around, whatever that is, or it can be something more recent. And an example of that is just backing founders that have really strong knowledge of an industry, having been in the incumbent and being very frustrated at the speed of execution of that incumbent and think that there's this new approach that they can take that will revolutionize how things are being done in that industry. And they feel very determined and they just want to prove their ex-employer wrong. That's one example of chip on their shoulder.

14:42And when you talk about determination, like another example of that is I was listening to Brian Chesky on a podcast recently. I don't know if you listen to Lenny's podcast. It's so good. I think actually we were speaking about it a couple of weeks ago and I listened to the whole thing and I've gone back and listened to the excerpts. But no, go on, carry on. I don't want to interrupt you. I think, I mean, there's a lot of things to unpack from this podcast for sure. But one of those that made me react on the spot was when he was telling the story that he was having dinner with Sam Altman. And he was basically telling Sam Altman, I still feel like I have a lot to prove and that I haven't made it.

15:23And I thought, how absurd is this? This is basically the founder and the CEO of a company that has basically a$90 billion market cap. it's probably one of the most well-known consumer brands out there globally and this man is telling us that he still he hasn't made it yet so I'm looking for someone that has that big inner mindset and that is so hungry and that can't even define when they will be able to let it go just because they're so hungry to achieve something great that's point one the second is the sense of urgency I think I mentioned that so many times just in the last couple of minutes we're talking After doing what I do for like the last four years, what I noticed is the companies that get out of the pack are those that really execute faster than the rest of the pack.

16:10And that's a topic that I talk a lot with a founder called Sammy from Hoffie. He always says building companies comes down to two things. One, making decisions and two, executing on them. His view and a lot of people's view is that speed is more valuable than accuracy. almost all wrong decisions can be fixed, but the progress compounds with speed. So as an investor, it's really important that we dig deeper. At least we have the opportunity and the luxury of doing that at Series A. Asking the founders, show me the thought process when it comes to making decisions and how you execute on them. You know, show me all your product releases in the last year.

16:50I want to see basically velocity, right? And I don't care whether you failed after you released those new features or any decision you made. The most important is you manage to gather new data, and that new data is learning, and you just need to carry on with that speed of learning. I think that's something that I noticed. So that's number two. And then three is they're magnetic. And by magnetic, for me, it's they're amazing storytellers. When you think about it, at pre-A stage, you don't really have much to prove, you know, to show people that joining their company is a safe bet, or at least it's a bet worth taking.

17:29So some of the best founders out there are just amazing storytellers. They manage to convince people to join their journey. So whether it's employees, whether it's investors, whether it's advisors, whether it's anyone that is basically in the extended team, they manage to do that. And here the test is, if I have one shot, one introduction that I can make to the operator that I respect the most, would I make that introduction to that company? Would that CEO be able to convince the most trusted person that I know that is an operator to join that company? So I think that for me is a test. Do you have an example of kind of that founder magnetism that you can share with us?

18:15Yeah. So Joel from SANA is, I think, one of the most magnetic leaders you would meet. And when you meet him, and I don't know if you met him, but I mean, Swedish based, but spending a lot of time in London and in the US now. It's a series C stage company, enterprise software around the learning space. He's just very magnetic. People want to follow him. and he does it in such a natural way. It doesn't feel like it's rehearsed. People want to help him quite naturally, organically. He doesn't need to ask for help just by being himself. People want to help him. So I think that's an amazing attribute because it can, again, act as an accelerant to your business.

18:55You get amazing people good at their own craft that want to help you. So Joel is definitely one I would recommend you to check out and ideally meet one day. Yeah, absolutely. So you get the magic. And then the output is like the best founders know their superpowers. So Joel's superpower, he's magnetic. But they also are very aware of where they're weak. They're not scared of hiring people that are much better at them in those specific functions. So way of looking at it is they're not insecure. And, you know, there's this famous saying, which is like A players hire A players. but as soon as you hire a B player, then they go out and hire C players.

19:36So they know that they have to surround themselves with people better than them, and they're not scared of it. So I think these are a few attributes that I think I've honed on a lot, and that is just based on my own self-reflection and data of just investing for the last four years. And I tend to spend a lot of time digging into these attributes when I spend time with a founding team. right one thing i can absolutely resonate with is that final one just around um around kind of hiring great people and you know trying to seek if you don't know kind of your own strengths or weaknesses seeking out help so that you can do that work and and realize it and then the other one is something uh that you mentioned earlier on which i guess i can sum up in a in a in a phrase that we used to use when i was an entrepreneur first which is productivity is traction for teams where you know when there's nothing to measure there's kind of output and then you know learning and you know even if even if kind of that week has been a week of old failures well what can you take from that and how can you how can you kind of move forward it's a step it's a step in the right direction even if that step feels like a misstep yeah it's something I I can totally get on board with.

20:52One thing that we spoke about earlier, you know, before we started recording, was this idea around founders constructing their cap table and the importance of sort of diversity to that. I've seen time and time again how useful a set of angels can be for a company. I would urge any founder to spend time thinking about who they need around the table. So So just think about it. You're a coach and you need to set up basically like the best team. Think about it like a sports team. You need all sort of attributes around the field. So you need to be very intentional about it. So who do you want to have that is top 1 % in the things that you're not great at and that you would need over time based on the type of company that you're starting?

21:42It takes time. You will need to hustle to get to the right people. But I think it's worth the exercise. And when I think about one of our latest investments, a company that is called Kota, so they enable any business to source and manage financial benefits like pension insurance and other products for an API. When these guys came together and they thought about their cap table, who they could bring as angels in addition to institutional funds, they brought together unicorn founders or senior execs of unicorn founders that have scaled successful businesses in that specific category. So HR and finance.

22:19So basically C-levels and founders of businesses like Personio. And then they also thought about the first leg of the growth of their business will happen with remote companies. So they started thinking, who are some well-known remote companies out there? And again, looking at the founders and the C-levels and just like senior execs of these remote companies that will be practitioners and users of their products. As an example, they brought the founders of remote.com, right? And then they thought, oh, but we're basically building a developer product. So they brought basically the head of developer relationship at Stripe, who is now the head of developer relationship at OpenAI.

22:59So try to look at your business. Try to look at what are the ingredients of your business from who is it that you're targeting, that customer base. Think about the go-to market that you're going to apply. and then think about basically you want to have people that are three, four steps ahead of you from a company building perspective that could help you identify some of the mistakes that you're about to do and make sure that you don't do them because they're really good at identifying those ahead of time. So this is an example of like a company that I feel when you look at their cap table and how they're leveraging their angels to help them, it's a mix of people that is very much suited to the business that they're building.

23:36And, you know, this is a provocative statement, but I was discussing kind of with a founder the other day, and they said that their investors were the most useful at the point in time that they gave, they wrote a check. Like, I disagree with that, but I would love to kind of understand kind of how to make the most of your investors, you know, so that they're people who've got great networks. They can do so much more than just write the check and sort of leave you to it. But how do you kind of milk that? I like the concept of milking for sure. So I think, look, the founder investor relationship is, can be a subject of our conversation for an entire podcast.

24:23But it's like around how do you milk investors? I mean, A, you need to have a great relationship with the investor that is representing the fund, right? And it needs to be a relationship that is based on trust and that takes time. And it requires everyone around that table to be vulnerable. But if you're looking at really tactical help and not just like strategic relationship building type help, think about it that way. At Pre-Series A, we always recommend our founders to put together monthly updates following a specific guidelines. And then happy to tell you basically what's the format of that monthly updates.

25:01And the reason monthly update is exciting is because as an investor, you can then basically easily forward it to the rest of your team. and they can get an update as to what is that that is going on and also get a really good understanding of how they can help. So the formats varies, but I think a lot of people have been writing about this type of format. Always start reminding people of what you do. At pre-Series A company, or quite often pre-product market fits, the company evolves, the product evolves. Every single conversation you're having helps you basically shape what is it that you're building.

25:32And I think it's really important for investors that are not deep into to the business as much as you are to just use the same vernacular that you're using to describe what is it that you're building. They will also pitch your company without you knowing all the time, whether it's to potential candidates or to other investors or just other people in the industry. So it's very important that everyone is up to date as to what is it that the company do and just using the same terminology. And then basically it's a series, you know, show us the series of highlights and then it's a series of lowlights that has been happening in the company for the last month and then it's a number of asks and make the ask extremely easy right if one of the ask is around hey we're now hiring for this person just make sure that you have the link to the JD and even put together maybe like the blurb that you want basically people to use whenever they're sharing that JD to someone else then you always need to share a set of metrics in the company and then there's you know some metrics that are very specific to the company and you have some metrics that are hygiene right it's like your monthly burn and how much runaway you have left based on your burn that's that's very hygiene for a series a for a pre-series a company just coming back to like how to milk if you have that set of requests it's very easy basically to then forward it and i've seen some companies be really good at driving some FOMO with their set of investors by putting in their monthly updates shout outs to people that have actually actioned something.

27:08And investors are just like human beings, which means that, and they're quite just like, or maybe that's all that I know now, but they're very FOMO driven and they're very competitive, which means that if I've seen that my name is not there and other names are there, I will make sure that my name gets there in the next update, I will work very hard for my name to get up there. So that's like a hot tip to get people going at helping you, although naturally you want them to help you organically. But the reality is you got to play on some of these incentives as well. And some of these traits that investors have.