E426 | Sarah Finegan, Antler & Emma Phillips, LocalGlobe: Backing unconventional founders and the future of AI-driven work

0:04Hello and welcome to At The Cap Table, the podcast spotlighting Europe's top venture investors. I'm your host, Sarah, and today's guest is Emma Phillips, investment partner at LocalGlobe. Emma specializes in B2B software with applied AI, focusing on the future of work, business automation and climate solutions. She began her career at LocalGlobe as an operating partner, supporting founders in operations, talent and global market strategy. Logal Globe, now part of the Phoenix Core Group, is a London-based VC firm investing in pre-seed and seed-to-day startups. And since 1999, it's backed in nearly 300 companies, including 17 unicorns and five IPOs.

0:50Before venture, Emma worked at Viola on renewable energy recycling and launching operations in Australia's mining sector.

1:07Emma, thank you very much for joining us on today's podcast. It is awesome to have you joining us. Thanks for having me. Great to be here. All right, let's get this discussion started. We have a lot to cover, but again, I would love to reel back the years and go back to your early journey. Your journey is an absolutely fascinating one. Mining operator turned VC. I think that's the very first one that we've had on At The Cap Table. I would love if you could walk us through your early career and the key moments that led you into venture capital? Yeah, it's not the most traditional route into VC, which I think is great because it shows you that you really can come from anywhere and somehow get access to this industry.

1:47But I studied chemistry. I did my master's in environmental chemistry, so a mix of inorganic and organic for the chemists out there. But I started working during my master's with Veolia on a couple of projects, methane gas extraction from landfill sites of all things sounds boring I loved it and through that experience ended up doing grad scheme there and during my time working with Fiona in London we acquired a business over in Australia to launch a mining operation facilitating industrial services to companies like Woodside and BHB and some of the really big mining companies over there and switched when roles when I was over there for more of a chemist based operator to more of like a GM operator sort of managing larger scale operations, building teams, facilitating customer needs, etc.

2:41When I then finally came back to the UK a few years later, I decided to have a bit of a career flip. Mining was incredibly fun, but very heavy regulated. And I guess innovation and progress once you've done the setup was very hard to make like meaningful change to over short periods of time and yeah all my friends that love their careers and we're doing a really interesting thing we're now working in technology sector so initially I was going to try and hustle my way into a sort of COO ops lead at an early stage startup but was extremely lucky to meet Robin and Saul Klein the local globe co-founders at the point a few months before they were transitioning in out-of-index ventures where they were working at the time to really institutionalize the sort of family office setup that they had as Local Globe.

3:32So met Saul just as he was a few weeks away from that journey and he was looking for a sort of a generalist operator to support him in the operational side of starting his VC. Was very lucky that he took a chance on me and said, why don't you come and help us for a bit? We need a generalist operator to get us off of the ground. So I started my career within VC not as an investor, but spent the first five, six years as the sort of operating partner for a VC, initially sort of setting up and operating infrastructure here through legal, finance, accounting, office management, etc. and then really deep diving after that into working with the companies that we're investing in and supporting them in their sort of operational setup and scaling and helping them on their go-to-market strategies and everything else pre-seed and seed companies need outside of you know products and customers and that then transitioned me into an investor role sort of four or five years ago now but yeah very non-traditional route into venture that's for sure Absolutely.

4:36And Emma, I guess if you reflect back on your experience today, what are some of the key learnings that you took away from your time as an operator that really influenced the way that you operate as an investor today? Yeah, that's such an interesting question. So especially in the mining world, when I got there, we were really sort of setting up from scratch. And we had to set up and build a lot of different operational arms and productizing what we were doing to try and serve our customer. And one thing I learned through that role is that initially, you have to just do things in a very unscalable way to see if they work at all.

5:16So a lot of the operational models we were building was just off of like documents and spreadsheets and throwing people at certain issues that we were hoping to, you know, solve with more of a productized approach over time. And it's definitely what I see now with a lot of early stage founders that we work with. Often they really try to build like that finalized sort of MVP product that's beautiful in appearance before they've even tested if it actually is going to work in the market. it. And so I'm such a huge fan of like, just throw an unscalable solution at, you know, your given customer, see what bites, see what works, and then spend time actually like building the infrastructure around it.

5:57Yeah, I definitely think there's a lot of overlapping insights into early stage company building through that. Brilliant. And I guess switching topics is something that you've already touched upon to LocalGlobe, right, where you are a partner and is a fund that has significant entrepreneurial DNA. It's one of the oldest funds in Europe. It's been around since 1999. So we're 25 years and I've invested into some really exciting companies. CityMapper, Improbable, Y, Zoopla. The list goes on. I would love if you could bring us back to the early days of LocalGlobe and provide a kind of broader introduction into the fund.

6:34Yeah, absolutely. So I touched on earlier, like when I met Robin and Saul, are co-founders and they were sort of introduced nice look like which was almost a decade ago but like you said they initially set up local globe in before before the 2000 era right before the millennial hit um when soul was co-founding video island that he then merged with love film which is now everyone knows as amazon prime when amazon acquired it and they set up vehicle local globe initially to invest into that business. So that was between Robin and Saul. The sort of pre-seed seeded ecosystem in London at that time was nascent.

7:11There was not anyone doing the type of investing that they set up LocalGlobe to do. So even that in himself shows what like an entrepreneurial edge they had, both by being successful entrepreneurs themselves, but also like through an investment lens as well. And then when it came to institutionalizing 10 years ago, Their portfolio, I can't remember the exact number, somewhere between 150 and 200 companies that they had put small checks into at the super early seed stage. And so when we then institutionalized 10 years ago to build on the great work that they were already doing, we already had that very entrepreneurial DNA that they had built their model with.

7:53And, you know, it's such a credit, especially to Saul, who's the son of Robin. he always wanted to build a VC that was doing something different in the market to whatever a nurse was doing and so we really had to listen to the entrepreneurs that we were serving like what was it about working with partners like we really see ourselves as like supportive partners to the entrepreneurs and what was it about that relationship that we could sort of really build services to facilitate them to allow them to do their best work and realize their true potential as founders and so yeah it's um it's been a different journey like we've tried a lot of different areas of support over the years and different ways to sort of build our brand and not everything works not everything sticks but we really like want to ensure that we keep building in such a unique way and part of the reason like we're even situated where we are so we're based in a in summerstown which most people would call king's cross but we call it summerstown because between Kings Cross and Houston.

8:54And it's one of the most underserved areas in London in terms of access to like health opportunities here, you know, GP services, the life expectancy here is lower than the rest of London, educational levels are lower than the rest of London here. And Saul really wanted to be based here so that everything we did really kept like a societal lens on what we were doing. So really embedding sort of profits with purpose into the foundations of our business here. And yeah, since doing that, we've put a huge share of the profits that we make into a charity arm, a trust that we've set up through our foundation here to invest in sort of locally led projects to support real people on the ground in this underserved area of London.

9:42And in doing that, it's really helped us to then sort of transition that knowledge into building really sustainable businesses in the companies that we back as well. So I guess just wanted to kind of dive deeper a little bit more into Local Globes focus. And I guess on the topic of kind of evaluating founders at the seed stage. In your experience, what makes a great founder, especially at the early stages of the seed stages? And are there specific characteristics or patterns that you look for? Yeah, I mean, I love this question. Obviously, given our day job, it's what we spend 80 percent of our time thinking about and talking about.

10:19the framework that we've had to evaluate founders has definitely changed quite a lot over the over the years as well you know you learn from every single founder every single business that you invest into we sort of have a framework and we we assess across a few different buckets so first is definitely like the intellectual rigor like is the founder really highly curious and do they do they have possessed like this first principles thinker like in terms of like being customer obsessed self-aware will they avoid making the same mistakes twice all those types of things um you know is there like a real growth mindset from the early days which makes you really believe they're on like this steep personal trajectory and they're not sort of fluctuating too early in their career and then I guess like what is the mentality that they have like are they relentlessly persistent at what they're doing but at the same time operate in a adaptable manner you know often great founders we always say often great founders have like a real chip on their shoulder like they're really out to prove something and like it's on us to really try and unpick that and find out what it is it's like really driving them personally yeah I mean there's so many characteristics but another one is like the demonstration in their execution so are they going to be like relentlessly resourceful operating at pace but while also taking care of themselves which is such a hard such a hard balance to get right and part of that is really displaying like an owner's mindset whereby they've probably under promised a lot of what they are then actually able to deliver and hold themselves like accountable for not just for their successes but obviously for the failures as well and then like a key one that we see straight away through an investment process is the communication ability often it's not 10 out of 10 in the early days especially when you're doing it for the first time I think it takes a long time to really understand the art of like storytelling and communication in the business that you're building but a founder that can you know move the people around them but beyond their their internal logic is so critical both for obviously fundraising to us but we know they're going to be able to win us over in what they're saying that's also going to be replicable against the customers that trying to speak to in the early days and then the a-star team that they need to hire and build around them um so yeah all of those are of equal weighting and often no one founder has all of them but it's really to us to try and like gauge what i'd like the strengths within that set and then what do we think like are the missing components that they can be supported by a team or through their own personal growth and their own personal journey.

13:05Yeah, absolutely. And if you look at the opposite of that question, so this is something that I literally just finished discussing with Anthony Dowden and Dan Beavis, who joined us for a fundraising session at Antir. Are there any red flags that might deter you from investing, even if the idea seems promising? I'll have to ask them what they answer to this question. We do a lot of work with them. But I mean, yeah, I mean, there's so many. There's a handful of like instant red flags and there's a million ambers, I'd say. But a lot of the ambers can be worked upon. I guess a couple of specific red flags.

13:43And then there's a personal chemistry point as well. I'll mention that in a minute. But, you know, like the execution point I mentioned, if you have a founder that is blaming others around them for the lack of execution, instant red flag. Like, you know, they need to be able to see that it's like a management style on their point or, I don't know, a KPI setting on their point that's not been set right or something. If, you know, they're blaming others around them for mistakes in the early days, that's an initial red flag. It has to be, you know, it's you and the customers in the market at the initial point in time.

14:18And you've got to take ownership for what you're building in the early days. Absolutely. I agree with you. So you have often mentioned that exceptional can come from anywhere. I would love if you could kind of share some examples or stories where you've seen this in action. You know, part of, I'd say, credit to the team that Robin and Saul have built here at Local Globe. Like they really built diversity into their hiring process from day dot. You know, I don't think there's many other funds 10 years ago that would have taken a risk on a profile like mine when you've got some people so embedded in the weeds of like local tech and VC.

14:57So they really always like emphasize that great can come from anywhere. Like it's you've got to find the balance of IQ, EQ and like hardcore drive. And if you balance all those three, you know, you can basically learn anything within that. And, you know, don't get me wrong. Some people who do extremely well in the school system can, you know, lead to be great entrepreneurs. I think our founders here are credit to that. but that's definitely not always the case you know we've even got founders that we work with that have dropped out of high school early because they didn't feel like they were getting the challenge and the creative creativity flair that they needed from from the schooling system and like I mentioned earlier you get a lot of founders with like deep chips on their shoulder that probably had a rough upbringing and didn't have access to like early opportunities like another a lot of people didn't and I think it's a very like common consistency in our in our industry now that, you know, immigrant founders often become the best entrepreneurs because they've struggled through school systems and bullying and their accent might have been, they stood out in a way they didn't want to, et cetera.

16:00So we try and like overlook what is, you know, the logos on a person's career past or schooling past and really try to look for like, what is it that drives and motivates them? And do they have the intellect to deliver on that? And I don't know, example of an amazing founder we know is is mike hudak ex-cto of deliver at one point and monzo and a few great sort of tech stories before that in his in his portfolio but also he's now gone on to found his own company he was actually a high school dropout himself and taught himself to code you know in evenings and weekends and has turned out to be one of the greatest ctos that we've seen here in in the uk and i think anyone that you speak to this work with him talks about what a talent magnet he is and that they would absolutely run to work with him again.

16:49So yeah, I mean, there's hundreds of great examples, but I think he was the first one that popped into mind, like incredible technical leader that just didn't fit into that traditional school system. And I guess I would say a related question. How do you ensure that you're not just looking for the next Silicon Valley style entrepreneur, but are open to diverse and unconventional founders? What are you doing at Longwood? Yeah. I mean, again, it's not to say that you can't find great founders in in that in that fit but I think it comes back to you know the first principles way in how you build the team around you at the VC you're working at right so with our with our sort of DNA at LocalGlobe we have a couple of ex-founders we do have a couple of ex-bankers ex-consultants like definitely not ruling them out from from greatness but then we also have someone that like myself that worked in mining we have someone that worked in Israeli government here you know someone that worked in HelloFresh once upon a time, like all these different roles that have sort of guided them into venture.

17:51And like I was alluding to earlier, if you've got the high level sort of IQ, EQ, the investor role can be learned. Like there's some great programs now. Or if you work for a great VC, you could definitely be taught like the more technical aspects of the role, like, you know, go through a level of financial training that you may have not received in a previous job. You can definitely unpick the ways like early stage startups need to operate and how you can best sort of form support around what founders need. And so to me, it really goes back to the DNA of like how you build your team. And if you hire, say, women, they will naturally gravitate towards other women.

18:30Or if you hire people from non-traditional backgrounds, again, you sort of have a bit of a natural net for casting other people that come from a similar background and similar mindset to you. So I think as long as you're looking for a team with a good DNA, then you're setting yourself up initially for success beyond then purposely trying to find like different pools of talent as well. Yeah, I absolutely agree. So I guess if you look at kind of founder investor relationships, we'd love to kind of get your thoughts on what you believe is the most important aspect of the relationship between a founder and a seed investor.

19:04Most important can allude to different things, right? So it can allude to a successful business. It can allude to whether, you know, after the end of a working relationship, you sort of have a two way, you know, great reference on one another. So a successful relationship can mean many different things. But I think for me personally, building trust and openness with a team, hopefully before you've made the investment or spending time focusing on like fostering a trusted relationship shortly after an investment is absolutely critical if you're an early stage investor. so for us at Local Globe we will only invest we only provide a lead investment into your sort of pre-series A round so whether that's seed or pre-seed or seed we sort of don't differentiate between the two but what we believe that gives us is like long-term alignment with the founders that we back because we're never going to be able to price their you know funding rounds in in the future beyond their seed round and so if we're able to really build that trusted relationship that you know ensures you continue working together it's really well not through the great times when everyone's your best friend but through like the really tough challenging times that every single business will go through at some point it just ensures that you've then been able to give like two-way feedback you're able to have the hard conversations that are going to be needed so many times over and over again and I think yeah spending as much time fostering that into the relationship in the early stages is absolutely key.

20:36And I hope every founder that takes investment from any VC sort of pre-seed and all the way through to exit or pre-exit is doing like good due diligence on where their money's coming from, like who are the people that you'll be working with, have they referenced well with other founders that have gone not just through the good times where it's easy for everyone to get on and be friends, but really toughed out in the hard times as well. And yeah, all these things feed into that, like trust building in the early days. So I wanted to move to a topic that I'm personally super passionate about and really kind of is democratizing access to the VC industry.

21:16Right. So I know that this is something that is a big focus at Logan Globe, and it's also something that we're really, really passionate about at Adler. So I'd love if you could kind of speak a little bit more about why democratizing access to the VC asset class is important to you personally and also to local level as well. I guess to me personally, I didn't come from this world at all. As I mentioned, I grew up outside of London. I didn't have any role models around me in the sense of very entrepreneurial people or people that worked in finance roles. so learning how to make vast sums of money or any meaningful money didn't come from that sort of startup ecosystem it would be a real shame to me given I've been able to sort of enter into this into this network if I then didn't sort of showcase how you can gain access to and and be a huge participant it within it not just for the financial gain but also for like the rewarding work that you're able to embark upon either is like a VC that's like has a very privileged role of you know working with the most exceptional founders out there and spending their time like really digging into like what they believe the future of technology might be and then also working within startups as well you know you people join startups like early stage startups for only a handful of reasons but one is even you find like a vision to really align yourself to and really sort of hash out how to productize support in that market from the early days.

22:50Or, you know, the financial upside. You may be able to take a huge equity piece in a business, knowing that you're taking a very low salary at the start. But, you know, you're really working towards the future. And I just hope that that message can be given to people, you know, as early in their school career as possible, so that it's really open to all walks of life in the industry. So that's personally why it matters to me. Like, I just didn't have that access as a kid. And I was just very fortunate to get the right intro at the right time into this industry. But I hope now, especially through like not just democratization of the VC asset class, but also through like availability to content, like incredible job that you guys are doing, building these podcasts so that anyone can get insights into what it's like to work within tech and VC and be an entrepreneur, I think is excellent.

23:37And that was part of the reason why I've been working with Robin and Saul for so long. They've always been off the mindset of like, make the ecosystem within not just the UK, but sort of Europe as strong and as, you know, favorable as it can be and keep ourselves in a great position to keep taking advantage of it and keep returning money to our LPs. and so they've kept building different vehicles to really showcase what this industry does and one of those that they embarked on was building Newton Venture Programme which is a course that we sort of co-built with LBS it gives anyone access if they want to learn about what it takes to work in venture capital and what it actually means both from like a very high level understanding but then getting in the weeds of like the technicalities of making investments and working with founders as well and yeah just just one of the many initiatives that we've sort of worked on and built to try and make this ecosystem as open as possible that's great really cool to hear about the initiatives that you guys um are kind of spearheading as well and to broaden that access to to opportunities in the industry so would love to to jump um topics slightly and really um hear about kind of the investment themes that you are personally responsible for the future work and AI.

24:56So again, let's start with the future of work. Significant theme in today's investment landscape. How is LocalGlobe approaching this theme and what are the trends that you're particularly interested and excited about? It's definitely not a new area of investment. I think future work, I mean, it's as old as the VC industry itself. But what we really find exciting is that with every new technology trend opens up a whole new set of doors to what can be done and within I've sort of bucket future work in in two ways one is how you build a workforce and what sort of opportunities are created within the actual workforce so for the people and then two what are like the product productivities and productivity businesses that are like really improving how a business can run and operate.

25:47And I think, you know, not only do have we seen sort of technology trends being extremely disruptive within future work, also business models have been disruptive within future work as well. So like the first SaaS businesses, an example, sort of came about through future work type businesses. And so although it's not a new investment area it's one we believe will consistently be a huge investment area over over time and you know we're very lucky within our portfolio to work with companies like multiverse here in here in london companies over in the us such as just works that are providing sort of a professional employer organization and product ties and what it means for smbs to sort of access uh best in class hr uh applications they wouldn't otherwise be able to receive sort of in line with with much larger corporates and so yeah all sort of businesses that are being built and products being built to really service the way people conduct their their work and how those people are effectively accessing opportunities within the workforce how they're fairly compensated one way we're particularly excited about the minute is sort of workforce within health care and you may have noticed during COVID area there was a huge wave of all these telemedicine health facilities being built and launched sort of not just within a region but sort of globally as well and there's been a huge lack of like vertical infrastructure to support how those businesses are set up and operating so if I'm a clinician here in London and I'm servicing you a patient and you may be on the east coast of the USA, I need specific licenses to operate in London, service you over in the US, and then there's a whole new sort of scheduling software that's required in order to ensure the right people are working at the right time to facilitate patient needs.

27:47And there's no software solving for that today. So one of the newest investments we've just made, not yet announced, is really sort of facilitating workforce management within the healthcare vertical, specifically starting with telemedicine as their initial go-to-market wedge. So again, just a new sort of wave of how people are working has really drummed up like how new products can be built to service that. And we think that's always going to happen within this industry and always looking to meet great entrepreneurs that are thinking about, yeah, future of how workforce management should be conducted.

28:23Fantastic. And I guess AI, Another super hot topic at the moment. A specific question for you on how you think AI will impact the future of work and what are the kind of opportunities you're seeing emerge from that intersection? Yeah, it's so interesting. When we sort of institutionalized LocalGlobe, like I mentioned about 10 years ago, we were already seeing then that the best applications that we were seeing within our portfolio or companies that were coming for investments were fueled by companies that had access to a great data set and were using machine learning on top of that. So AI, it certainly isn't a new topic for us.

29:02And we've got, you know, quite lucky to have worked with a lot of companies building what we call AI businesses over the past decade. But I guess what has shifted more recently is real like LLM native solutions that are just starting to unpick like a new wave of opportunities that probably weren't possible with like legacy SaaS solution. And I guess this wave only really took off a year, maybe two years ago, when we were seeing the LLM native solution really beginning to harness like new novel business models and I guess AI first capabilities. And that's been the real shift that we've seen. So what I mean by that is like verticals that may have seen too narrow before for an investment.

29:45These is like I was speaking about telehealth medicine workforce solutions. Like 10 years ago, that probably would have seen like too niche of a vertical for anyone to find interest in. But what's really interesting now with the sort of LLM native solutions is that they're actually increasing the TAMs that are available. So not only are they making like huge productivity savings for their customers, by being able to increase the workflow efficiency, they're actually driving more revenues as well. So you're seeing like not just cost cutting, but also revenue generating businesses that are being built with these sort of vertical AI lens.

30:25And that's what we're finding super interesting right now, not just within future of work, but sort of AI business applications in general. I believe we're just at the inflection point of all of these businesses starting to be formed. So really excited to see what's coming over the next few years. Final question from my side, and it is, if you look at the composition of our listenership, we have founders and investors amongst other kind of archetypes of people. What advice would you give aspiring founders who are looking to secure funding in today's market? A couple of bits of advice I would say.

31:01One, utilise your network as much as you can. we receive a lot of cold inbound but I guess an initial first like cut of companies that we talk to like in order to be a successful founder you probably have to have had some sort of relevant experience within the market like doesn't mean you have to have been a successful founder before but it is so hard to get a business off the ground so I'm guessing most founders would have worked in a startup or a VC fund or had some sort of, you know, entrepreneurial edge in their past that has led them to wanting to start a VC-backed business. And so utilize the network that you've made through that to try and get introductions to angels and VCs if you're looking to raise capital, because that's again, like I said, it's a first initial cut that we can make to make sure, you know, founders have had some sort of network burden experience or startup experience and can use their network effectively, which is a great sign.

32:00And another piece of advice, I think a lot of founders speak to investors once they've got like a really good cut of, you know, a pitch or a business model idea. And I think most people within our industry, we love meeting founders early, you know, well, we're looking to be on the ideation phase with you guys. And we can hash out business ideas and talk about what the what the industry looks like in 20 years, at the point when you're first thinking about starting a business, even if you're still full-time at your existing role. So never be afraid of reaching out early. We love meeting founders as early in their journey as they've started to hash these thoughts around.

32:40So yeah, do get in touch at any point in time, not just once you've got your official deck lined up and ready to go. Emma, thank you so much for joining us on At The Countable. Really, really, really enjoyed that discussion. Thanks for having me, Sarah. Loved it and see you soon. Thank you Thanks for listening to this special episode on the European VC If you love our show, join our community by subscribing at eu.vc