Pattern recognition and backing Europe's next unicorns with Andrei Brasoveanu, Partner @ Accel

0:00Hello and welcome to another episode of Bride of Unicorns. Today we're delighted to be joined by Andrei Brasoveanu from Excel. So thank you so much for joining us, Andrei. It'd be great if you could briefly introduce yourself and then we can dive into some more questions about Excel and your investment strategy and how it's all going.

0:17Andrei Brasoveanu:Thanks so much, James and Hector, for having me. I'm Andre, one of the partners of Excel based in London. Now with a firm for 11 years. I'm originally from Romania, as you can guess by my unpronounceable last name. I grew up there until I was 18. I did a lot of math as a kid, and that brought me a lot to contests all over the country and the world. And in the end, I managed to get a scholarship to study in the States. And when I was 18, I got onto my first flight ever, went to the US and ended up studying there and spending 10 years on the East Coast. Continued my passion for math, went into high frequency trading as a quant.

0:54Andrei Brasoveanu:And that was a really exciting window into both investing and specifically a systematic approach to investing as well as technology. And at least in those days, HFT was probably one of the industries on the bleeding edge of applying technology to an industry. And I was really excited about the potential for applying technology into the broader world and found my way into venture during Excel 11 years ago. And with that, I moved back to London. And here, I spent my days flying all across Europe and Israel, finding great founders to back. A lot of my work has been in more technical topics. I've been doing a lot in security, software, infrastructure.

1:37Andrei Brasoveanu:And I was mentioning to Hector prior to this, many of these founders end up moving to the US. Hence, a lot of my work is probably on both sides of the ocean. André, it's amazing to have you on. And I think Accel needs little introduction, but you've, of course, backed companies like Facebook, Slack, Dropbox, many others. But can you tell us a few about a few of the companies that you've backed and perhaps any anecdotes from finding and meeting those great founders and perhaps the company that you're sort of most excited about at the moment in your portfolio? Of course, I would say it's, you know, we love talking about the big successes.

2:16Andrei Brasoveanu:What sometimes someone forgets is how humble the beginnings are of many of these. Also as Excel, we pride ourselves of being very, very much with our years close to the ground. We've now been in Europe for 25 years. We've backed companies in close to 70 cities here. And many of the founders we've backed come from an obvious background, an obvious networks. And yeah, I take great pride with finding some of these gems kind of hidden pretty much across Europe. A team I would mention that I would say follow this pattern is a company called Humio. We backed them. It's a team out of Arhus, which is a strong academic center in Denmark.

2:59Andrei Brasoveanu:We backed them as they were building a new technology to do logging at scale. And as you may know, Splunk, a very large company, it's the established leader in this domain, but also a company that's potentially legacy now, many enterprises, borderline hated. And it's pretty hard to scale with Splunk from a cost and just scope perspective. And Humio built this new approach to logging a super technical team out of Denmark. They made this technology global. We led their Series A. Eventually, they teamed up with CrowdStrike. And now it's a business in the couple of hundreds of millions of revenue.

3:37Andrei Brasoveanu:Pretty much the backbone of CrowdStrike in terms of logging. And that was, let's say, our first foray in this market. We recently backed another company going with a more federated approach to logging. And it's, yeah, I especially like this team as it's a team very much outside the ordinary and outside of a major hub, as you may expect. And what sets Axel apart from other investors? I'd say the reach now having been in the market for 40 years. We were set up on the Stanford campus in 1983. over four plus decades, you build a network that's very hard to match. We've always maintained a very strong early stage focus.

4:24Andrei Brasoveanu:Our core is seed series A. And we pride ourselves by being very close to founders. And so even as we built a muscle to back companies at the later stage as well with our growth funds, we believe that one-on-one relationship with the founder is paramount. So we strive as we scale to steal a state boutique, not be overly institutional and prioritize speed, personal engagement over the state process or bureaucracy. The reach I would say is particularly relevant right now as more and more founders be back across Europe, have incredible ambitions and they want to build global businesses from day one.

5:03Andrei Brasoveanu:And they look at UiPath and Salonis and Dropbox and Slack and they aspire to these role models from day one. And our ability to support them across the world as they scale, oftentimes with the US, is very important. And so being there early and meeting them where they are, whether it's Arcus or Zolingen or Bucharest, and being able to support them as they scale throughout the full lifecycle of their journey very much resonates. One thing I've noticed from speaking to a number of people from Accel is actually you're all just really nice people. And how have you guys kept that culture as you've scaled over the years?

5:43And, you know, I think a lot of a lot of our listeners would assume, you know, big, big funds, kind of cutthroat clinical. But like there's there seems to be a very human culture at Accel. Do you think that's been important to your success? And how do you keep that going?

5:59Andrei Brasoveanu:I mean, we take a lot of acting lessons. It's a I'm just kidding. It's I would say a few things. So one, there are many, we're all quite different in terms of everything, kind of backgrounds, views on the world, personalities, but we're, I would say, gelled by very strong common values. And I think this combination brings the best in us in that we're very aligned when it comes to trust, transparency, intensity, ambition, professionalism. But then we also respect our differences and each of us brings ourselves to work, which I think is a key way to be successful in venture. So there's no reason for anyone to fake it or pretend they're someone else.

6:48Andrei Brasoveanu:and I say also each of us like really deeply enjoys and loves what we do so when you have that combination I think it's yeah hard not to not have fun yeah yeah powerful and Andre you mentioned at the start that you spent some time in the US early in your career how do you think that exposure to the sort of size of the market and innovation and access to capital and attitude helped shape your thinking oh very much so I mean in some sense throughout my life I've only worked at American firms, accounting, Excel is one as well. First of all, it's incredibly fun. I think everyone should experience American college life if they can, New York in their 20s if they can.

7:31Andrei Brasoveanu:So just the sheer energy is amazing. I'll say that can-do feeling and the sense of ambition you have is pretty special. And also the fact that from a very young age, you kind of have to figure it out on your own. I would say that's evolving, but many technology trends start there to some extent. So it's always helpful to be closer to what the action is. And whether we like it or not, a lot of the technology industry is still very US-centric to this day. So I find it very hard to invest in European isolation. A lot of what we do is very much with the US lens. And most companies I back become US companies in a couple of years.

8:15Andrei Brasoveanu:So yeah, at least in my experience, it's been incredible, both personally and career-wise. And I think it's the same for the founders we've backed. And you guys have backed so many unicorns, been exposed to so many unicorns. We're fascinated on this show by the study of unicorn founders and trying to uncover what makes the most successful people so successful. I wonder if there are any common traits or any early signals that you see in founders that signal their future success? What are those traits that you look for in founders at the earliest stages? Is there anything tangible that VCs should be asking about, looking to in their early lives or in their careers?

8:57Andrei Brasoveanu:No, I think this is the question. I think it's a hard one to answer. And by the way, each of us probably sees different special traits in different founders. It's interesting also to see how, for example, different partners of Excel get drawn to different types of founders. At least speaking for myself, I love to see intensity, just sheer intensity and drive. Ideally, that's paired with a cerebral thoughtful approach. And I think when one is incredibly thoughtful and intense, you can only break through walls and achieve a lot. First thing I have, not necessarily over-indexed on experience. Many have found it in my...

9:35Andrei Brasoveanu:I mean, I back up teams across the whole spectrum, but I've worked really well with first-timer teams who are just incredibly hungry and learn at the base that's um yeah borderline chaotic and then they're able to really surpass much more experienced teams as they attack a new domain yeah i'm saying especially it's a market that favors speed above everything else can you think of any examples where you've backed a really scrappy team or where axel is back to really scrappy team that's gone through that sort of maturing journey has ended up you know super fast moving super hungry but they managed to build like a mature high performing organization in the long run yeah of course i mean i would give the example of salonis it's a software company out of munich we backed them they had actually bootstrapped out of school they went from like an academic project and they're they essentially developed a new technology called process mining where they act like a probe on your main core systems like erb in their case sap or CRM or so.

10:40Andrei Brasoveanu:In just all that data, map all the processes in your org and that's just inefficiency in those processes and ways to improve and automate those processes. So it's a very horizontal, very powerful technology. They managed to prioritize it and their first couple of years for services and one-off work with enterprises in Germany, they managed to build a pretty unique company and left a bootstrapping with leather series A. That was in 2016. Now they've evolved incredibly. There's hundreds of millions in revenue as well moved to the US and now it's a dual company, dual HQ between New York and Munich.

11:22Andrei Brasoveanu:And what's interesting is that both, all three founders, in fact, when we backed them, we're in their 20s, right out of school. No kind of specific experience here. Definitely really scrappy. I remember one of the stories they had around signing their first customer. And they had this debate whether they should charge him$5 ,000 or$100 ,000. And they didn't quite know. And they decided to ask for$100 ,000 and they got it. Investor kind of drove the pricing beyond that. And it's these crappy teams who kind of try a lot of things, work really hard to figure something special. And then once you have that special core, you find the right resources, investors, mentors to employees to scale that into something really interesting.

12:14And in those cases, how much of your job as a VC is to help them avoid the mistakes that you've seen other founders make? Because the benefit of being a repeat founder, of being a more mature operator, that you've seen a lot of mistakes play out and you can avoid those mistakes and shorten the journey of company building. But how can you help these companies that you're backing avoid all those mistakes, which are going to slow them down?

12:40Andrei Brasoveanu:Yes, I would say that's a good question. So I would say probably 80 % of what we do is helping founders avoid mistakes. And I would put that more into the hygiene bucket of our jobs as board members, right? I mean, it takes from everything, right? From small issues in your options plan to how you package an offer to a key candidate, how you run a process to hire a great VP, how you think of a potential like M &A as you go down the road, how you deal with certain issues, partnerships, challenges that may arise. And certainly our pattern recognition, our experience with other such cases in the past and we don't have all the answers but our ability to tap the right person who may have had that exact experience in the past I find this is really instrumental that being said I don't think that's the only way in which we can help and I would say where we really move the needle is when we can help founders really make a step change and I think those are much harder to instrument and also much easier for investors to actually steer founders on the wrong track.

13:53Andrei Brasoveanu:But think of key crucible moments in a company's life when the market turns against you or you have an intensely competitive situation or you have a big decision to take whether you should sell the company or not or the two founders are starting to have a disagreement. I think there are such key situations where we can really move the needle and impact a company's trajectory. But most of the times, I would say, we try to stay out of the way, help with hygiene points. but in the end it's the founders who really drive the company to to a special place yeah and for james and i we're both really early stage investors pre-seed and seed so there's some overlap with what you guys are doing but often you're looking at companies with a with a bit more traction than than those we're looking at how much does the founder profile come into your decision making because there are people who say that the winners are obvious because they're crushing the metrics, it's a no-brainer.

14:49So how does that decision fit with you guys between founder versus metrics?

14:54Andrei Brasoveanu:Yeah, it's interesting. I would actually argue that what we do is actually not that different. Also, the market has evolved in that half of what we do on the early side or more is seed. That being said, our approach to seed investing is very concentrated, very conviction driven but many of the seed companies we back are pre-traction, pre-product, pre-idea sometimes very much a bet on the founders and over the years we realized that founders are the constant. These days markets evolve dramatically, traction can come and go so really the founders are like the the only thing we can hold on to and as you mentioned traction specifically it's been much easier to get fake traction.

15:38Andrei Brasoveanu:In some sense, it's like much easier and one should get traction, right? As you have much easier access to distribution these days. But it's also easy to get fake traction in that you may sell your product to fellow startups and friends of yours, but really fail to cross the chasm to a broader population. Or sometimes, for example, with open source companies, we see that the wrong business model at the beginning, they may sell services. or support indies. But then when it comes to scale into enterprises, again, it's much harder. So we realized that with traction, I mean, sometimes it's very linear, but we also see that whatever model gets you to a few million revenue or tens of millions of revenue may not be the one that gets you to greatness.

16:24Andrei Brasoveanu:So we definitely listen to market signals, but we don't over-index on those. Yeah. And I'm pretty fascinated by this idea of the founders being the constant because if you're it points to experience being really really important as a VC and having met you know hundreds or thousands of founders so you can and having been able to close that feedback loop so you've seen the founders at the earlier stages and you've seen which ended up really succeeding and that that's a journey you can only really see from experiencing it over many years I mean it's part of the reason why James and I do this podcast is to expose ourselves to greatness.

17:06And we've managed to speak to dozens of unicorn founders over the years to learn what we should be looking for at the earliest stages. But how can young VCs accelerate that journey to being a good pattern matcher and knowing what to look for in great entrepreneurs to back?

17:24Andrei Brasoveanu:Yeah, that's a good question. I'm not sure there's an easy way to shortcut. Like certainly, you know, it's in the word, passion recognition means you have to recognize patterns and patterns get built over time over many, many data points. So really you have to meet thousands of founders and not just first meeting, right? But go into depth with them as you further evaluate their businesses. And most importantly, leave work back their decisions, right? After you strike a partnership with the founders, see how their relationship evolves. and there's a ton of learning. Most of the learnings on both sides occurs after investment.

18:05Andrei Brasoveanu:But I would say what's sometimes a shortcut is I found going narrower on domain, right? And that may not necessarily help you with reading the person at the kind of more fundamental level, but definitely helps you in calibrating a founder's understanding of a domain or ability to be successful in that domain when it comes to surrounding themselves with the right advisors, being able to attract the right employees, being able to tap into the right customers' networks. So my advice, especially in a market that's become much more mature and best, I think starting in a focused way and becoming an expert in a couple of areas, allowing you to go deep is probably the best way to start and a kind of extension to that almost different framing is are there any lessons you've learned where you wish you'd learned them much earlier in your career you know mistakes that perhaps you learn from the hard way yeah i would say and this perhaps ties to the previous point i'm not sure it's necessarily a mistake but But I think it's really important to lean into who you are.

19:24Andrei Brasoveanu:And I think that will really enable you to be successful. First of all, this job is a grind, right? And it takes a ton, as you know, a ton of hard work. Certainly nowhere near the hard work of a founder. But it takes a lot of intensity and work that sometimes may look like it's not going anywhere. But really hard work that compounds over the years. And it's really important to have fun and just love what you do. You can do that if you bring yourself to work and to meetings with founders. But beyond that, I think your way of differentiating as an investor relies a lot on how you differentiate as a person.

20:01Andrei Brasoveanu:And I think that comes down to your upbringing, special skills you have, technical skills, experiences, your inputs, what you read, what you listen to. And if you really double down on those, I think you also start resonating with certain founders who particularly appreciate what makes you unique. And you end up using those to your advantage. What did that mean for you? What did you lean into? For example, I love sports and I'm a very early bird. And I don't have coffee and I wake up early and incredibly energized. So, for example, I mentioned I landed from New York today. Yesterday was like a marathon and the day started with a 6am run with a founder I work with.

20:48Andrei Brasoveanu:We went across Central Park and it was amazing. So, you know, finding ways to combine what gives me joy with what gives the founders I work with joy. It turns out a lot of the founders I backed them to be also fit and love sports. But, you know, that's a small example. But finding ways to really connect with founders based on what makes you unique, I think is important. And it's not just because it's important to build a rapport that allows you to win a competitive investment, but because most importantly, it allows you to get to know that founder at a deeper level than if you're a faceless suit carrying a bag of money.

21:27Yeah, it's nice to hear. And when I think of Excel, because of the brand and the track record, I often think of Excel as a kingmaker fund. Like when you make an investment, the rest of the industry kind of fricks their ears up and thinks, well, that company is probably going to do really well in that sector. That's what it looks like from the outside. What does it feel like on the inside? do you have that sense of almost responsibility that when you're picking a sector to go after, you're picking a team that you're really sort of saying, we think this team's going to win. How is that viewed internally?

22:01Does that impact any of your thinking? Do you guys see yourselves like that? What's your internal perspective of that, maybe like external reputation?

22:11Andrei Brasoveanu:Yeah, interesting. We don't think that much about it. I would say we're pretty independent thinkers. First, I think it's common that we mind our own business and back the teams we were very passionate about. I mean, certainly we see an advantage, right? When there's certainly a brand halo in the companies we back. And I think that's particularly helpful, especially as founders on the early stage, act in a very competitive hiring market. As you get founders moved to the US, they need to hire VPs who may have a ton of other offers. so the ability for them to say they're backed by excel and that we believe in them and then that they're the best company in this domain we found globally i think that carries a lot of weight but certainly we make our own share share mistakes and i wish well it were the case that we could kink make in every situation but um yeah i mean sometimes we go out on a limb and get it wrong and that's part of the business and andre tell us tell us about a story of your latest investment And perhaps I'm not sure what your latest investment is.

23:13It might be Polar. I'm not sure. But how did the deal come about? You know, how did you make that decision? And what are you excited about?

23:21Andrei Brasoveanu:Yeah, of course. Yeah. So Indeed, Polar is the last one. We announced it, I believe, last week. It's a great founding story, first of all. So Berk, the founder of Polar, he's based in Sweden. He's actually a repeat entrepreneur. previously founded a company called Ticktail in the broader commerce world. He sold that company to Shopify and he ended up being a right hand to Toby through that time, being a lead on ShopPay and ShopApp and having a very close eye on Shopify payments strategy as well. He then left Shopify, caught the bug again and decided to start Polar with very much a vision to reimagine payments for builders.

24:06Andrei Brasoveanu:You know, he came to the realization that existing payment providers, as they scale, they become bloated, right? And the delightful experience someone like Stripe may have had in the early days just doesn't come up anymore. And their solution right now is payment offering in a couple lines of code. And what allows you as a builder is to incorporate payments in your app or software and immediately have global distribution. Well, Day is a strong word. It's himself and two other engineers. Launch Polar, they've had incredible success, already thousands of merchants using them, tapping into distribution, kind of his building himself, being the drums on social and through user love that's propagating at the massive speed.

24:55Andrei Brasoveanu:It's also interesting what's happening right now with the rise of bud coding. And we're backers of companies like Superbase. That's the backbone of many of these webcoding apps. Or Vercel, V0, Framer as well. And we see Polar as potentially being the payments infrastructure standard for this new emerging AI native stack. And if you think of a new app that will be built now and in the future, when you want instant backend, instant frontend, you want instant payments as well. that Rapolo provides. So yeah, we were very impressed outside being with what he's built through the Stockholm. He wasn't raising.

25:37Andrei Brasoveanu:We convinced him that we'd love to partner. And we let their seat just a couple of weeks back. And as part of that, we brought in a few incredible angels, you know, founders of the sound companies I mentioned, whether it's Vercel, Superbase, Framer, but also Shopify, Lovable, and others. So yeah, it's early days, but I'm incredibly excited and thrilled about work. Tell us a bit more about that, the tactics around bringing in angels to those funding rounds. So do you expect that Vercel and Framer and people will, they're much more likely to adopt Polar as their integrated payments method as a result of the founder being an angel?

26:18Is that the play?