EUVC #188 Sabina Wizander, CREANDUM on the VC - Founder relationship

0:00I had been drinking the Kool-Aid so much at McKinsey. I thought we were truly having impact on the most important companies. I had an itch in my operating nerve. So then I left VC for half a decade, only to be drawn back. That was Sabina, a partner at Creandum, one of Europe's leading early-stage venture funds with offices in Stockholm, Berlin, London and San Francisco. Creandum backs European enterprise and consumer companies and are currently investing out of a€500m fund. Creandum have made more than 100 investments, including notable companies like Spotify, Plio, Cree, Depop, iSettle, Kahoot, Vivino and Klarna.

0:43At Creandum, Sabina focuses on climate and health in the Nordics and DACH region and has invested in the likes of PassionFruit, Skappin and PreWave. Welcome to the first episode of a brand new format of the EUBC podcast. We put a lot of time and effort into making it an even more exciting listening experience, and we hope you enjoy it. If you love our pod, drop us a review, follow the pod, and subscribe at eu.bc. And now, some words from our beloved sponsors. How are you currently reporting to your LPs? Is fund administration taking hours? Are you getting lost in spreadsheet version control? Well, Flow solves all of these issues and more, allowing you to unlock the power of your fund's data by consolidating your work streams onto Flow.

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2:51is a story of new beginnings, new, new beginnings. Let's start acting, acting, acting, acting. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Hi everyone and welcome to the European VC podcast. As usual, I am David, one of your co-hosts. We're joined by Andreas, the hype man. Sabina, let's start things off with how did you get into venture? Care to share that story with us? So my journey into venture, it's quite serendipitous. I think it's almost the opposite of, oh, I always knew I wanted to do this when I grew up. So I was finishing off my master's in engineering and math, and I actually thought I was going to stay in academia and do a PhD in the math department.

3:37But there was something itching. I realized that this environment was not the most social work environment that you would get into. And I'm a very social human being. I thrive collaborating. So I was at the end of a five-year university program, and I just had no clue what to do. So in lack of other ideas, I ended up at McKinsey, which was great for many reasons, collaborating with amazing people and travel all over the world. And all over the world took me to the San Francisco office. So after having been a management consultant for about three, four years, I ended up in Silicon Valley. And that's when the bubble burst for me when it came to the work as a management consultant.

4:22I had been drinking the Kool-Aid so much at McKinsey. I thought we were truly having impact on the most important companies in the world. And then I just saw this whole new world of tech in front of my eyes. And I just felt very strongly that I had to be part of that journey. so I didn't know anyone in VC I barely knew what VC was but it felt like a very good mix of getting in touch with this amazing industry of tech but at the same time not starting from scratch but leveraging a few of the tools that I'd learn at McKinsey and I had no idea where to start my network and I don't have parents in the industry I didn't have any ins so I took to LinkedIn where I actually cold reached out to, I think it was a handful of people that I saw had done the same transition that I wanted to do.

5:15So they had been at McKinsey for three to five years, and then they gotten into a great VC firm. So it's just pinging them out of the blue on LinkedIn. And one of the people that responded was Lasse Pilgard at Creandum. So it was, it just ended up being a perfect match. They'd been looking for an investment manager for a very long time without finding the right person. So after a coffee with him, I got into the process and then everything was just really quickly into creando for me. Not a lot of people got into VC in that route. As I said, it wasn't a lot of planning that got me into VC. But then I should say I only stayed for a couple of years.

5:56From that point, I had an itch in my operating nerve. So then I left VC for half a decade only to be drawn back without, again, without this grand plan of things, but more just the right people telling me the right things at the right time to pull me back into VC. Very cool, Sabine. I love how your story goes from strategic consulting to VC to founder, back to VC getting real back in. Savina, do you care to share with us a pivotal moment in your career and how that has shaped you as an investor today? Having the guts of going to a social network and just dare to ask for what you want was really not my way of operating at this point in life.

6:45Very early in my career, I wasn't very bold or I wasn't as maybe outspoken or taking up room as I should have been. But seeing that you just ask people and sometimes you're lucky and they actually respond because most people want to help was a very pivotal moment for me in my career. And I think that way of working as a VC, so assuming people want to help and being bold enough to ask them for that help, I think it's a key tool when getting to conviction on a new deal as an investor. So I'm very happy I learned that already on my way into the VC job. So I think also what happens if you're someone that has focused on only your career for a very long time, at some point, private side of life catches up with you.

7:40And I think I'm in my late 30s. I'm in the years of raising family. And I think that maybe not the one pivotal moment, but pivotal part of my career was having my first child and just realizing that if you want to stay passionate about your career, you need to find a way to do more than just your career with life. But I think it's also, it sounds like a cliche, but I think becoming a parent changes you as a human. And I think there's, of course, a true benefit, At least for me, being a very logical person, being very ambitious, being an engineer, to have added a more human and soft side to my way of doing business, not just to the way of life.

8:31Take a start.

8:40All right, Sabina, welcome to the Take a Stand section. This is where we will ask you to comment on quotes by one of our past guests. And today's quote is, there's too little European growth stage capital. You could counter that statement by asking, are there tons of growth stage companies in Europe that should have gotten funding and didn't? and was that because there was no investors on European soil to spend time with them and I think to me as an early stage investor I know growth and growth in investing from having been on the other side of the table so having been on the leadership team of a big health tech company racing a serious C and D and beyond.

9:29And my experience is that growth is very much a global market. And most of the companies that are racing rounds of 50 to 200 million euros, they're already operating on a somewhat global market, or at least not super regional. So I think I find it an odd problem if you think it's a problem that there's not enough European growth stage funds because I think there's enough growth stage capital in the world in general and I do think that there is a lot of attention on Europe since four five plus years. Right now we happen to be in part of a cycle where there's not tons of growth activities but if anything I think it's more heavily adjusted down on the US side rather than the European side.

10:26I think the trends are even stronger, both upwards and downwards in the different cycles in tech in the US than Europe. However, I can see why people think that European growth is more immature because European venture is more immature than the US equivalent. European tech is more immature. So of course, as the ecosystem develops, the later part of the ecosystem will naturally be a little bit lagging compared to their US counterparties.

11:08I'd love to deep dive here a bit with you on this topic. And I'm going to quote you here, which is or partially quote you because it's a written statement not a quote but where you say that vcs don't provide as much value as they think but founders would benefit from listening more to their investors i'd love to hear you reflect on this and share your ins on this topic i see it as a true privilege to have been on the fundraising equation on both sides of it so starting out on the vc side as an investment manager about eight nine years ago then having raised capital on sitting on the management team of CRI and running a big part of that fundraising process, series B towards D plus, and then coming back to be on the VC side again.

11:59And of course, once you've been long on one of the sides, you start to, or the grip of the learnings from the other side are loosening. So I try to remind myself all the time about what the process looks like from the other side. But I think that one of the most, the biggest gap in view of the world between an investor and a founder is how and how much the VC can provide actual value to the company. and I think both sides are right and I think both sides are wrong when they say when an investor thinks that I have a pivotal impact on all of my companies what would they do if I stepped off the board that would be a disaster while I think most founders while they respect their investors they are they would not buy into that statement unfortunately and being a VC and of course spending a lot of my working time with other investors, not only my team, but with other peers.

13:04This is a very sensitive topic, I noticed. And I can see that because it's challenging the very core of your existence as an advisor to companies. But as I said, I think there's truth to both sides of the view here. Many would use that view to say we need more former operators as VC in Europe. And many do claim that very boldly. And so I would agree with you. I think it's neither one or the truth lies somewhere in the middle. But what are your thoughts on the topic as companies mature, right? Because I do think there's a lot to be said about early stage versus late early stage or whatever we want to call it, right?

13:45In terms of the profiles of VCs and the role they play here. Yeah. And to your point of we need more operators as VCs. I love people claiming that because obviously they're banging my drum as an operator gone VC. But I think, and what I've experienced as an operator, people that have only been investors can still be amazingly value-add to the operating side if they just know what questions to focus on and what advice to give and when to stay silent as advisors. So having worked from the operating side, I've had the pleasure of working not only with Creandum, but also with Excel and Index and Project A.

14:27And I only have amazing experience working with people from these firms, despite most of them having only been investors most of their careers. I think the one thing that operators and entrepreneurs underestimate is the very overused word of patent recognition. I think it's, if you, as an entrepreneur, if you find the right way to leverage this person that is sitting with a helicopter view, looking at your business, but at the same time looking at 10 other or 20 other businesses in similar stages to see what are the decisions that are important at this stage? What are really the pivotal moments to get to the next stage of company building?

15:18I think that's very valuable. However, having seen it from the operating side, I can really see why entrepreneurs sits with the experience that the VCs don't really know the business as well. Because honestly, no one will know the business as well as the entrepreneurs anyways. So that's an easy statement to sign off on. but also that decisions that looks very obvious and very easy from the board perspective they're not as straightforward when you're in the trenches when you're on when you're in the jungle fighting a battle every day i remember one instance when as a ship commercial officer i had the country managers reporting into me and something that looks very easy to say when you sit on the board to say we need to replace this country manager he or she is not performing need to find a new leader it's very easy to sit and say that but when you have a local team somewhere three four hours away on a flight in Europe you can't leave them without the leader you can't leave part of your P &L without an owner and it's going to take you at least nine months to replace that country manager because you're maybe recruiting in an ecosystem where you don't have as many connections.

16:48So I think in this case, for example, while the decision to replace the country manager is probably the only right one, and the sooner you get going on that, the better, there is also the other side of, yeah, but it's not to snap my fingers. I'm going to have to carve out hours every week, not only to solve this, but also to solve the nine months of interim hell that happens because we're going to execute on a decision that actually looked very straightforward to you. I'd love to ask you, Sabina, on the whole issue of managing expectations with founders, because I think in the end, that's a bit where VCs are not always the best and where founders end up getting caught because they expected something else.

17:41How do you go about doing that as an investor yourself? What we always say from the Criandum side when we come on board is we're going to be here. we're going to be your supporters and we're going to be your supporters both in good times and in bad times because having been on the other side you know how many friends you have when your growth curves are pointing the right direction and you know how little support you get when things are actually going south and even if you're building a Spotify or Klarna there's going to be years or quarters when everything looks shit. And the last thing you need on the operating side is investors that keeps reminding you of how shitty the situation is.

18:26Because I guarantee you, the operational team is well aware of the severity of the situation, but you rather need the support. But as a kind of what we vowed for is to say, we're going to be there in ups and in downs, but we're not going to operate for you. Some of us have operational experience in some areas but I think the best advisor is the advisor that knows when to not just give any advice but to say, I'm going to point you to an operator that's done this or I'm going to point you to someone that has seen this 20 times before because I think it's so easy to sit on the VC side you're so used to always giving advice and giving a perspective and you sit there with an entrepreneur maybe the best thing you can do is not to give your perspective because it's very loosely built for example you're used to sounding smart knowing just very little about the topic but when sitting with a portfolio investment I think very often I'd rather point to someone else to give especially operational advice And on that part of pointing to others, on the founder side, that means you'll end up typically with multiple perspectives.

19:49And sometimes the VCs on a board will not necessarily have the same perspectives on things. How do you think about your own role as a VC and as part of the board in making sure that you transfer to the founders something that at least is interpretable for the founder other than just, okay, obviously my board doesn't agree on this. So how do you think about navigating that? Different perspectives is good. I would probably be more worried if you were on a board with multiple investors and 100 % of the time they were just nodding at each other's input and advice. Because building a multi-billion dollar business, it's going to be more complex than just everyone exactly seeing the path in front of them.

20:38But my way of working is I see that a very small share of my interaction and the input I give to a founder actually happens in the board meeting. Of course, it's a very important forum to have bigger discussion amongst many of the big shareholders in the company. To me, the question is not about the board. It's more how do you help the founder manage the fact that they have three, four, five VCs on their cap table, all giving different opinions and sometimes giving contrarian opinions that don't align. How do you counsel founders to manage through that? I never want founders to take my input at face value.

21:23I don't think that highly of myself, that knowing that as long as we dance after my music, it's all going to be perfect. I heavily encourage the founders to triangulate and take my input as a piece into the puzzle they are laying. And I think this is what I also tell founders before they bring on a VC or before we invest is to say, you need to be aligned enough with your investor and you need to know that they're going to let you steer. because again, having seen it from the other side, if your investors push you to make a decision that you don't believe in, it's very rarely going to be well executed and fall out the way anyone wants it to be.

22:14So I think that's almost the worst situation you can end up in if you look at company governance. So how do you stop that? One, you bring on investors that you think you are very aligned with in terms of how to build a company, what pace and what risk to take on. But I also, I think as an investor, you need to see yourself as one piece and not the one sole right opinion about how the company is moving. I couldn't agree more. And I couldn't believe more either that this is insight slash approaches to venture that we should try and help everyone in the ecosystem live by. Because it's not necessarily as obvious as you say, Sabina, for everyone to act like that.

22:57But hey, I'm sure it's very easy for me to sit this time around my second VC career. I'm only two years in. So naturally, the companies where I'm on the board have not accumulated big boards yet because we're an early stage investors and I'm two years into this. So I'm sure that give it a couple of years and ask me again. I'm sure I have my way as humble and probably more bitter about having tried to silence what I think is less appropriate opinions about the company's trajectory.

23:41All right, Sabine, and now it's time to give a shout out to Co-Investor Angel or LP for being absolutely awesome. And of course, do share with us the story behind that awesomeness i would love to give a shout out to a woman named gloria bauerlein she runs she's a solo gp she runs beyond capital 20 million euro ish early stage fund out of berlin but investing all over europe and i have the pleasure of knowing her first from the operating side at Kri and then as an angel in the Berlin ecosystem and now being an LP in her fund and seeing her develop this new early stage brand out of Berlin and it's I'm gonna sound very old and me and Gloria were the same age but it's been truly a pleasure of seeing her develop in her career as being a great operator taking all of her best qualities and becoming an even better angel and then taking whatever worked so well for her as an angel to become a fantastic solo GP and having the guts of even embarking on the journey of becoming a solo GP here and I think her superpower is she just has a very she's obviously super smart which is a prerequisite for her superpower she just has a very intuitive way of seeing how business value will be created regardless of business models or industry she's just like a what's called Grandmaster in chess where she can see the company chess board being played out many years in advance and have a very strong view of whether this is a good business or not and it's unlike any of the truly amazing investors that I've had the pleasure of both working alongside as an operator and as and on the VC side.

25:59sabina what have been the three biggest learnings in your career so far number one it's a marathon it's not a sprint it took me many years to realize this two i've seen this over and over crisis actually makes you the most productive and three back to a theme that we touched upon I think you need to be human to be a great leader. You need to be a good human to be a great leader. I love those. Now let's unpack the first one. It's a marathon. You need to find a way to do this all your life. I love this statement because it's very obvious. Once you've tried to burn out, I know many friends who unfortunately have.

26:47But I'd love to ask you to tell us a bit more how you came to this finding and why you hold it as such a centerpiece to you. I'm a very impatient person. And impatience together with ambition, I think, drives you to just fill up, not 100%, but 150 % of your time and your energy all the time. and I think it's natural to come into your career with this mindset of always leveling up and just have to make it to the next level, have to make it to the next promotion or next employment and then I'll find the balance because most of your life, you're in school, always have a natural kind of leveling up process.

27:41you start high school you go on to college you maybe do your master's so you've been trained all your school years to having this natural progression and just pushing through getting done with things and getting to the next level but very early in my career it started to take a toll on my health to run at this truly speed but I kept pushing for a very long time and although I'm a very passionate person I think if you're always running on 150 percent of your capacity you're gonna lose that sense of passion regardless of where you're having your dream job or not so I think it's I think the most of the this is a very strong cliche right it's a marathon and I don't know if it's an advice that someone can internalize without really experiencing it but I think to me I just I reached a point where it was not doable it was either leaving tech or finding a way to do it, balancing it more towards 100 % of my capacity rather than way more than that.

29:02And I think if I look at what I want, it's obviously to find a way to do this all my life. But also, if I just look at the pure business perspective, what would my firm want me to do? Would they want me to run at the speed so that after a couple of years, I'm so bitter at my situation, I would just leave and go find other employment? Or would they want me to rather find a way where I can be my best self, but with the right level of input, of my energy, of my time, of myself? We spoke earlier today about you becoming a mother as well. Has that meant something to coming to this realization as well?

29:41I know it has for me as a father, at least. To me, it puts a very clear blocker on my, even my every day, it puts a very clear blocker at 4 p.m. most days where I say, okay, here, now I'm not working for two or three hours because I'm taking care of my kids. Then after that, I might get into it again if I can get them to sleep and so on, but I need to be there for my children. I'm curious to hear if that's also been part of laying the groundwork of this realization. I think becoming a parent forces you to find that balance or at least pushes you really strongly. If you haven't been thinking of it before, something comes into your life and it's obviously going to be a top priority for you that's not work and I think that's probably going to push the most workaholic person into adjusting their their work schedule a little bit I think it does in two ways I think it does because it comes in as a very clear top priority and of course there's going to be weeks where you do a deal and work is all you're thinking about.

30:45But in the long term, it's something that clearly competes about top position of your attention. And I think the second is also, you realize how fast the years flow by when you're in the middle of your life and that and your kids. So you can't say, hey, I'm just going to push through two years until I become this next level of my career. Because then your baby is not going to be a baby anymore. It's going to be a toddler or your toddler is not going to be a toddler anymore. Your toddler's going to be in school. So I think it also puts a pressure on here and now, rather than I'm just going to push through to the next phase of my career.

31:24And now I want to bring in David for the next one, because the next one was crisis makes you the most productive. And to me, David is always the master of disaster. He will drum up a disaster at any time where I'm like, no, we're all good, bro. So David, first of all, I want to invite you to just hear your view on that because I'm sure that you've got a perspective. I'll do something fun, which is I'm on Creandum's website and I'm taking a quote on the page about Sabina, which says, as an entrepreneur, it's essential to find the right balance between infinite opportunism and brutal prioritization.

32:02I would describe our organization as Andreas is the infinite optimist and I am the brutal prioritization. Anyway, Sabina, over to you. We'd love to hear what brought to this realization and give you a deep dive. We are in a time where probably most entrepreneurs that runs a company that's more than 50 people have just gone through a couple of tough iterations on right-sizing their company. Also looking at our portfolio, even companies that have 300 million euros in the bank and are doing tremendously well have been pushed to really look through, okay, how much did we hire during these crazy years?

32:48And do we need to right size? And I don't think I've heard anyone saying that they think their team lost productivity by getting rid of people. But very much the opposite, right? You get rid of 10 % and you become more productive as a company overall, not just per person. And it sounds very harsh because obviously these decisions are having big consequences for the people that are no longer on the teams. And it's very tough decisions in general. But although these periods of taking these decisions or periods of crisis in a company is very tough to go through. my experience is that what doesn't kill you make you stronger is very true in these situations and I think my experience from the operating side I had the pleasure of working in a company where one of our superpowers as a team was we were very good at getting all hands on deck and Cree is an amazing company it's a two billion valuation it's turning over 200 million euro but of course there were many crises along the way with anything from not having enough doctors to staff the service and you start start to train your uncle that's 75 years old to try to use digital tools so he can jump into the service and this kind of everyone leaning in to solve one problem.

34:21I have such a positive experience from handling this crisis and then seeing how you come out on the other side. Another great example from Korea is that if as a company relying on the public healthcare system as a payer, of course, your business models are quite tied to political decisions. So in the blink of a politician's decision, you sit there with a big part of your revenue being shifted or even gone, and you need to solve that. And I think it's terrible when these things happen and you don't sleep. But seeing what you can accomplish in very short time, when you really focus, I think it's truly amazing.