SuperAngel #189 Joe Cross, Ex-operator Angel on thesis development, building networks and adding value

0:00Hi, and welcome back to the European VC, the go-to-podcast for everything European VC. If you love the show, share with your friends and join our newsletter at eu.vc. All right, everybody. Welcome to the third episode of the Super Angel Podcast. As you may have heard by now, we're rolling the Super Angel pod into the EVC platforming, meaning it'll air right here on your beloved pod to keep up to date with who's who and what's what in European venture. Absolutely. Fucking Lutely. And today we're welcoming Joe Cross, ex-wise and full-time early stage angel and also an LP and our dear co-host of this episode's fund, Kakoa.

0:42And that's also part of what we'll get into in this episode, how Joe leverages his VC network to become a better angel. Of course, a topic very close to our hearts here at EUVC. So David, I'm very curious to ask you, what were your main takeaways? ways? I have two. First one being how founders know how to use their own investors. I think that's incredibly like a such an interesting topic that many talk about, but it's I still think it's very under kind of developed. And I also think of it in our perspective of when we do our LP investments. It's really interesting. Some GPs know how to use this really well.

1:19Others are still kind of understanding how to use their LP base. That's really kind of transdisciplinary kind of learning of sorts. And then the second core learning, which is somewhat easier to pronounce, is it was really interesting to hear our guests talk about the fact that he's shifting in his own kind of angel investing thinking from kind of moving into thesis driven investing and how he builds his own portfolio and so on. And this is someone we look up to quite a lot, Andreas, but it's also interesting to just hear this kind of continuous learning and improvement mindset. Super cool. And I will leave you all on the cliffhanger of Joe's investment thesis being good, big, and fast, and how he thinks about impact investing.

2:03So from now on, we'll just shut up and enjoy the show. As usual.

2:13Is this a dream? No, it's not a dream. I'm an angel. Why would God send me an angel? Because God knows that everyone needs a little coaching now and then. I'm loving angels. I saw an angel. All angels say for a long day. Please say it's me an angel. The smile on her face. We're here now to get that little angel. I'm being judged by an angel, girl. Hi, and welcome to the Super Angel Podcast. The go-to podcast for angels backing the next generation of European unicorn founders. If you love our show, do drop us a review, share it with your friends and join our community at eu.bc. Today, we're happy to welcome Joe, early stage angel investor with a portfolio of around 25 companies thus far and LP in Kokoa.

3:06He focuses on companies with the potential to make a positive impact at scale and helps founders on growth and marketing challenges across a whole mix of sectors. Previously, he was employee number 12 at TransferWise, where he wore various marketing and growth leadership hats from 2012 to 2020. If you're an angel listening in and wanting to get closer to the European angel scene, do not hesitate to reach out to us. We'd love to connect and see how we can play together. And now, some words from our beloved sponsor.

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4:33Welcome to the Super Angel Podcast. Anthony and I are so excited to have you with us, Joe. Thank you. Thank you for having me. Excited too. Pretty pumped to have you in the pod, Joe. Thanks so much for joining. I truly believe you're one of the most brilliant marketing and brand minds in the tech scene. So very excited to get digging. That's too kind, but thanks for having me. So let's get started. Tell us a bit about your story and what brought you into angel investing. Yeah, cool. So my story starts kind of as a marketeer, really. And I kind of fell into working on the internet, I guess. How old are you when you're saying the internet?

5:07that exactly well that's that's it this was like 20 2007 so like i started working on like for internet companies doing marketing and then 2012 was when i joined what was then called transferwise which was then a tiny company i was employee 12 in into transferwise so it was a real like oh okay here we go early stage this is like this growth growth growth working on one of the most exciting well it was definitely one of the most exciting times in my life for sure and being part of that early stage world is something i that kind of later craved for to be honest which which is partly why I'm here now.

5:37So I stayed with TransferWise for eight years, left in 2020, once the company got of reasonable scale, and then kind of just got straight into angel investing straight after that, really. It wasn't really a grand plan, to be quite honest with you. My plan was, okay, I've been doing this for eight years. I need a bit of a break. But also, I didn't want to just completely fester, you know, and like remove any intellectual thinking from my life. So angel investing really plugged that gap quite immediately. And also, I was pretty aware there was like a kind of moment in time where I was starting to get outreach from VCs and other people sort of saying, oh, hey, I see you left wise.

6:12We'd love you to be like an advisor for our portfolios and that kind of thing. So there was, for example, Seedcamp asked me to be an expert in residence. And I was like, well, I can't say no to this. I need to just, these aren't things you can kick down the line. Essentially, I could, but I didn't want to, you know, so bang. So a few months later, I realized, OK, I'm doing this now. And then I really enjoyed it. And so here I am. You know, looking back, how many angel investments have you done to date? What would you say are some of the memorable ones as well or some that you're happy to share with us?

6:39Yeah, so I'm on about 25 investments so far. At the beginning, I didn't really have much structure or strategy, I'd say. The very first investment I did was Lightyear, you know, the investing app. It was guys I knew really well from early transfer-wise days. It was one of those where they said, we're doing this, are you in or not? And I just, I knew the guys so well. and I said yes and I sort of planned to be an investor and I thought well I'm going to actually have to do one then if I'm going to start being an investor so it started that way and then I also joined the Atomico Angel program which I highly recommend by the way it's been awesome as a way of like meeting a bunch of other people and learning stuff in a fast way so anyway so at the beginning I was pretty broad and I've kind of racked up 25 investments which all precede seed or a couple of series A's a couple relatively small checks and then since then I reckon about half have had an up round since i think i'm at about 3.5 to 4x return ish which uh so pretty comfortable in what i've done so far but now i'm really thinking i need to be way more structured about this some of which is like diving deeper into the sectors i've already looked at and some is more like kind of changing mindset to how i would approach stuff going forward in terms of sectors just before we go even there like i don't know are there any stories of maybe a funny one or something you had to really kind of struggle yourself into or share?

7:59The first time I ever tried to do an investment in Germany was pretty fun. I just had absolutely no idea what level of paperwork was going to be required and presumably you know all about this. Joe, we literally had Roxanne for our first episode to say that when we asked her about international investments. She said, well, I did a deal in Germany and ours was pretty ridiculous. And basically, it was a company it was called VAYU, which is since gone on and raised a really great Series A and it's a climate software basically and they're doing really well. Basically, I held the entire roundup because I got a notary who it turns out was part-time and didn't really know what she was doing either.

8:39And I was there, literally, the fact that my notary was part-time was the reason the whole deal wasn't close. I was like a small check angel. It was really awkward but thankfully it happened and I then immediately went out and found a really good notary that I know works full-time so like yeah you gotta have a good notary if you're gonna do German investing I like that another really memorable one was uh Timberhub which I know you know a fellow Greek founder and uh so that was memorable because I think that was one of the first where in the really early months and even now to some extent you know it's quite easy to look at who else is investing in this deal and kind of being part of it as a result of the diligence done by others whereas timber hub i think was the first time i really felt like there's something here that i think others have missed and specifically came to me through seed camp and seed camp had passed and uh but i was quite like no i think there's something here and um it was the first deal where i really brought in another angel as well who so the first time i was kind of selling a deal to a fellow angel and yeah and since then they've done an up round it's gone well it sticks in my mind because it was that first time i really went okay, I'm actually, I'm kind of pushing this because I believe rather than saying, oh, no, it's good because they believe.

9:49Full personal conviction. Yeah, yeah, exactly, exactly. I'd love to hear now, Joe, is angel investing the main activity? How much time does it take up in your life, really? Is it you're all in everything? One of the beauties of angel investing is it's like as much or as little as you want it to be. So it dials up a lot when, like, for example, when my kids are at school in the winter, where there's like less other stuff that you could be doing. but then it can dial down quite neatly when needed. So I do a few other things, but it's certainly my main professional focus now, yeah. Very cool. And portfolio support-wise, how do you think about that and your capacity to be able to support the company as well?

10:27It, again, inflects as much as you want. I mean, that's definitely one of the biggest sort of learnings I've had is how much you sort of sometimes have to actually push yourself onto the portfolio companies. Like, they don't all come and ask for advice a lot. And then, obviously, with some, like, once you build a really good rapport, or then it becomes like a really organic, ongoing, you're talking to the lots. But with others, it's not like that. And someone needs to sort of make that become the way you work. But definitely, as I get more and more investments, I do feel like I need to think about, am I actually fulfilling on the promise of being useful?

10:56Because that's the whole point of an ex-operator angel. And if you can't deliver on that, then you may as well just be any other investor. And how do you think about that, Joe? Because it's always the, as you said, that constant tension of whether you're forcing yourself on the founders and thus being, you know, sometimes that's good because it, of course, makes the founder realize, okay, I can get this much out of my investor that I didn't know. But other times it's a bit, you know, get out of my hair. How do you think about how to keep yourself in check? Yeah, it's true. It's true. It's definitely one of the things I've learned most is like the variation in how much a founder knows how to use their investors, I think.

11:34Because like, you know, we are a massive resource that should be maximized. But actually, it does take time and effort to maximize it. And there are definitely times when I've met with a founder and obviously they're very busy and they haven't done much prep. And so the meeting can sometimes feel like, I think we've both just kind of not wasted an hour, but we definitely didn't maximize the hour. Whereas there's other founders which, you know, they'll always say, okay, here's the topic. This is what we're going to be discussing. Here are the specific thoughts. Here's where I need your help. And at the end of those conversations, then like you both sides leave feeling like, yeah, that was like, you know, potentially a transformational conversation about like where we're going and what we're doing.

12:12So I definitely think there's a level of like understanding how to really maximize your angels that founders themselves don't naturally have always at all times. Do you think about yourself before investing, optimizing for that, meaning, you know, optimizing for working with a founder that you can see, okay, they will actually, they're ready to take me on, they're ready to understand what they can use me for. Or is it more, I'm looking at the opportunity and then the other part is either it'll come after the investment or it won't? I don't necessarily look for like, do I think this person knows exactly how to maximize their angel network?

12:43It's a nice plus, but it's not like part of my must have. What is, is like, well, I enjoy spending time on this subject matter or this problem space and with this person, which, you know, what I don't want to do is rack up a load of investments in sectors that I'm not interested in that might be good returns. But I'm just, I don't want to spend the time thinking about it. My most common sort of, I'm really sorry, but I'm going to pass reason in email is generally like, I just don't feel it. I just don't feel passionate. There's nothing I can point to that's really wrong here. I just don't think this is, with my limited time, that's what I want to spend it on, you know.

13:17And then if, you know, obviously the founder is passionate and if I'm passionate too, then that's when good conversations naturally happen. No one needs to force it. Final question before we go on to our segment around investment thesis is, I'd love to hear, what do you feel that angel investing has given you both on a personal and on a professional level? If you should say one or two things for each, what do you really think? Professionally, I wanted to stay kind of connected without being actually part of a company. Why? So I wanted to actually make sure I was still part of the scene kind of intellectually challenged.

13:49So I've pretty quickly, because I've put loads of time and effort into it, built a pretty decent network of people like like Anthony for example who I met a year ago and it's a network that obviously is really great now but also if I were to go and do something else in future it would be really really great so like I don't know whether I would start a company or start a fund or join a company or you know join a VC being a pretty active angel is a really good place to stay while you're making that decision so like professionally it's like huge optionality while also right now being rewarding and hopefully there would be some return on capital as well that would be nice and then but personally it's really like it's just it's that like kind of learning mind expanding you know when you're eight years in one company working on one problem space yeah you develop all kinds of skills and things that you don't as an investor but you're stuck in that one problem space and it's quite it can be very narrow and so I really like the quick like context switching and having to really, really engage your brain in an intellectual way to understand what this person is talking about and what matters to the world.

14:54There's no other kind of part of my life where I think I feel that in quite the same way I do here. Another thing is just like hanging out with early stage people. They're kind of like dreaming, like what could we achieve here? That's very addictive. I absolutely love those conversations. As a company scales to IPO stage, it just can't be part of every day because at that point, you know, a company is really then all about operating and efficiency and still growing, but in a different way to when you're in the early stage, you know, kind of dreaming and thinking, I wonder what could be. Being able to spend a lot of my time with people that are thinking like that is awesome.

15:26All right, let's cue the music for the investment thesis segment. Oh, no, not about the thesis.

15:37Boom, that was the sound of the investment thesis segment. I hope you all enjoyed it because that is something we have cooked up just for this very special podcast. And I am a huge fan of our weird angel sound.

15:52So now I will ask you some questions about your investment thesis. And you were just about to start, you know, embarking on that journey before. So tell me, if I asked you just to give me your investment thesis, what would you say? I would say that I'm something close to an impact investor, but not with a very hard line around it. So I like stuff to be impactful, but in a positive way, obviously, but I'm not quite as sort of religious about that as others. The way I think about it is, okay, there's three really, really basic words that I use, basically good, big and fast, right? The most basic words.

16:27So I always start with a good one. So like, does the world really need this? if this scales like a billion users is that genuinely a positive step yes or no and it's actually normally a really easy question to ask to be honest like often someone's getting disrupted but perhaps it's something that is broken and the world shouldn't have you know so there's always a sort of someone loses often when a disruptive tech comes along but on balance do I feel like this is good for the world that's like a hard filter and then the second is then around big size scale is it a consumer product which I think can genuinely hit a billion users or is it a b2b product which is horizontal or is it in a huge vertical the fast or kind of urgency i think the more i invest the more i realize that is so important you know like even if it's the world's best idea this execution speed is the fuel for everything it's the whole concept of being kind of a venture investable startup the speed is there and i think that really comes from the urgency of the founder which often loops back is the problem does the world need this problem themselves you know that in itself provides urgency if i feel like those three boxes are ticked then i'll go and have the call and then after that then it's uh it's about specific sectors and things and the obsession right like a founder that's obsessed yeah yeah exactly won't stop can stop like actually for really early stage stuff i realized it's not that dissimilar to hiring early employees into a company so i'd never done any investing before 2020 certainly not engine investing or like what kind of VC style investing but I've done loads of interviewing with with Wise as we were scaling up the team and so I I kind of think of it like for a pre-seed where there's no company to look at or no like no metrics I kind of think of the company the pitch or like what we're going to build a bit like a job spec and then you can go okay is this a good job spec do we need these jobs done or does the world need these jobs done so there's a kind of okay is the job worth doing and then the second thing is then is this person the right person to do that job and it's actually really and a lot of the early stage interviewing that you do in the growth company is not about expertise skills or background it's about like motivations and why you want to do this and like you know stuff that's very similar to what you're looking for in a super early stage founder i noticed that you don't mention software or digital as such or the internet, which is used to where we started.

18:46How come, do you shy away from hardware as an example? Do you say, no, if it fits the three and it's with impact, then I'll actually do it? I wouldn't say I actively shy away from hardware, but I'm not like, I haven't lent into hardware. So most of my investments are software of some sort, but I have a couple of like plant-based food companies in my portfolio, for example, which is definitely not software. Would you mention them? Because I love these. Julia and Bruno is one, which I don't know whether you know, but they're basically plant-based, making dairy products, meats, all kinds of stuff, doing really well.

19:16I've had an up-round since, and they're doing some really good partnerships right now in terms of distribution. And the other is Numi in Germany, which is all kinds of fish products. The reason I'm interested in that stuff is because climate tech is one of my kind of pillars. So basically, I'm looking mainly at fintech, climate tech, B2B stuff where it's like, you know, horizontal mega level up in terms of efficiency, or B2B where it's a vertical, where like Timberhub, for example, where there's just this huge outdated sector that just needs to be like brought into the modern world. And then under climate tech, there's just, there's so much, so good stuff.

19:49And the hard thing is really, I think, finding great stuff because it's all positively impactful. So that's like a slightly different challenge. And then, you know, there's stuff which is very specific, like FaiU, as I mentioned earlier, software to help companies reduce their carbon footprint. And then there's other products like plant-based food or Bonnet, which is an EV charging app, which I'm an investor in, which it's a useful consumer app, which also has a huge sustainability play. And so the plant-based food stuff came in through that angle. We're very much also kind of with Cocoa, like very excited about the climate space.

20:19And I think we've made two investments to date within the software space. I think the question of Andreas was very pointed and right one. And if you look at the guys at Lower Carbon, which I think are doing a really great job, like a lot of the really high impact stuff also include hardware. So when I look at us, I aspire we don't. We do software and tech because the model of ECNR model works like that. But I do know that a lot of the high-impact stuff do include some hardware as well. So a small part of me wishes that we have more of the lower carbons that do some of that hardware. Yeah, definitely.

20:52Yeah, hardware and biotech generally is just such a long way from where I feel I'm most useful. As a consumer, mainly marketeer, I think I'm not going to be the most useful in those kind of worlds where, you know, the products that are still way, like, you know, a decade from being really launchable, there's loads of awesome stuff there, but I just feel like there are other investors who are going to be way more helpful to the founders in that world. And maybe I jump in with something that is a bit off script. And, you know, here we go. Just one thing, which is like, you know, the most exciting opportunities you usually have to sell yourself as well.

21:26So where do you find yourself selling more? Hardly, like, what's the proposition you usually sell to the founders that you can bring to the table for them? That's a good question. Actually, it was really relevant in 21. Yeah. It was really typical for a round to be like, well, we're closing tomorrow and there's like a tiny amount left and every single VC in the world wanted in. And then it was a case of like, can I get in? Which it was surprising to me that I would then be in a sort of selling myself position, but absolutely. And the pitch is always, well, I think I can possibly help because I've been there.

22:00And if you have like a marketing question, which is going to be about building a brand or a growth question, which is going to be about using your like virality or consumer, using your existing customers as an engine for that, then I think that could be helpful. But then this stuff's been different since then with the changing environment because so many rounds aren't getting closed. I have to say, it's been a really interesting time to be an agent investor for two years. One of those years being 2021 and one being 2022. So let's see what this year is like, hopefully 2021. Very cool. Yeah. I'm curious to hear because you said you had around 25 investments done by now.

22:35I'm curious to hear, how do you think about going forward, the sustainability of you being an angel two years in, already 25 investments? Are you going to manage that going forward, both time-wise? And also, there are so many VCs that I talk to that are starting to raise a fund because, well, I kind of ran out of angel cash. I've thought a lot about this. and yeah I am going to change strategy actually going forwards so I don't think it's sustainable to do another 25 and deliver on the promise of being useful to all of them there's two parts of the shift so what is going from rather than looking at every deal in isolation or every potential company in isolation with a kind of am I investing in this yes or no which is how I have been doing stuff I think that leads you into areas that you don't quite understand or you maybe say yes to stuff I've not regret any of my investments but there's some stuff where I'd happily say I had pretty low conviction still said yes whereas actually i want to shift more to like having theses around specific parts of the spaces i'm looking at and then thinking more like is this company the one that's going to deliver that for the world at scale so it becomes less of a like am i investing in this company yes no and more of a which companies out there are going to actually deliver this that's one shift and as a result of that i'm hoping to be in a more like high conviction space and then to force that i'm going to increase check size as well so my plan to do lower volume and high checks over the next year or two years.

23:55And I'm really just thinking, is this one of the deals that really matters this year? That's a quite different approach to go. Do I like this founder in this company? Most investors that I know that are investment thesis driven, they are oftentimes in a very broad geo because if you're looking for the one that is going to solve air conditioning and the problem with the overuse of resources on that in the future, you're not going to find the one that is going to win in Europe, or you're definitely not sure that the one that's going to win is going to be in Europe. So for that reason, very thesis driven investors are oftentimes global or at least not very local.

24:31I'm curious to hear both your past track record and your past investments. Have they been very local? And how do you think about that going forward? There's definitely a skew towards UK, Europe, but certainly not all. So I do have investment and I'm really sort of open to anything globally, but it's just more like, how can I build networks and friends in countries you know it's obviously just easier to do it here so i think and you know the access to great companies and really interesting founders is a function of how much time you put into building a network so there isn't a sort of way of saying i globally now want to suddenly meet everyone seems to exist so one area where like i've been quite thesis driven actually is fintech so emerging markets fintech i think is such a huge space because i i genuinely think a lot of like the real zero to one fintech in europe and the us is done and there are so many companies now which are yeah they're going to be useful but they're sort of additive to the big change which has already happened there's maybe a few bits left so i'm not like closed by any means to fintech in the developed world but yeah there's not that much left i think whereas this is so much in other markets where there's still that like phase one zero to one um has to happen so for example i'm investing in a clasher in nigeria and mono in columbia which are both good examples of like especially mono perhaps you know there wasn't a really good way to open a business bank account on there was no way to open a business bank account online in colombia and you're like okay it's just a you know the execution risk is the only risk that there's no question that that's a product that is needed so that's a good example i think once i'm not like it's not a super specific thesis but it's a broad enough thesis to then help me filter through stuff on a global scale but it's a thread as well right because when you're a generalist let's say right your reach is much more about your direct network and your localities whereas when you're developing a thesis per se that can be the thread by which you develop your networks and your brands.

26:22And so suddenly, you know, you were known for having operated wise within FinTech. People will seek out your expertise and your value add within the segment, no matter the geo, right? And so organically, basically, you can have further reach more easily because of your focus, I guess. Absolutely. Yeah, because there's a balance between sort of your reputation being based on the past, your experiences as an ex-operator versus your current experiences as an investor. There are so many angels, so many potential sources of capital, but there are, I think, fewer people that would have that ex-operator focus.

26:59And so if you can match that first, I think that is exactly what you said, finding where that's most useful and then eventually perhaps develop an investor reputation in that geo. But it's not something I'm feeling like I have to do. It's just a potential way. Yeah, things might pan out. It's super interesting. And you said something in this that I thought was very well said, because you said building deal flow is really building networks and how much effort you put into that. And I have to ask you, because, you know, we're sitting here with Anthony from Cocoa VC. And me myself, I'm a guy who is building LP syndicates, angel LP syndicates into venture funds off the thesis that it makes sense to be an LP in venture funds.

27:39But I'd love to hear you. What is your take on that? How do you work with VCs or do you? Yeah, massively. I do work with VCs. And to be honest, that is the, it's pretty, without any question, the way I've sort of accessed the industry is through getting to know VCs and partners in VCs. And Anthony, for example, my favourite of all.