Entrepreneurs First raised $200M: Jonny Clifford, Partner at Entrepreneurs First

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0:33Hello and welcome back to the Scaling Europe show presented by Deal. I'm Sir Johnston. Today I'm joined by Jolly Clifford, partner of Entrepreneurs First, who has got some very exciting news to announce. Jolly, take it away.

0:43Jonny Clifford:Yeah, thanks, Seb. We're thrilled to announce today that we've just raised$200 million in fresh capital to continue to invest in some of the most exciting founders in Europe and the rest of the world. and we've raised this money from some of the best founders and investors in the world, people like John and Patrick Collison, people like Reid Hoffman who've backed us for many years, but also new investors like Matty from Eleven Labs, Jeff Dean, Danny Reimer, Matt Kohler, and many others. And yeah, we're really, really excited to be able to continue this path of identifying great founders before their founders and investing and doubling down into them.

1:26Amazing. So can you give a quick explanation into the EF model? Because you guys are going to do fundraising a bit like a startup, but everybody will know you as investors. And so you do operate in this sort of hybrid world. Can you just touch a bit on how the model works for maybe those who aren't so familiar?

1:42Jonny Clifford:Yeah, for sure. So at EF, we believe that the world misses out on some of its best founders, where people who grow up in places like the UK, where maybe founding is not a legible career path for very ambitious people, don't go and found when they're very early on in their careers, and in fact, get trapped in other high ambition careers. And with that thesis in mind, EF pioneered this model of investing in people before they have a team, before they have an idea of what they're going to work on. And so we have, over the last 10 years and more, been going out and identifying people that we think have really high potential to start something and saying, hey, why don't you quit that job, quit that academic path that you're on and try and build something.

2:38Jonny Clifford:And we typically will do this in a cohort model where we will invest in a group of people at one point altogether to start working on startup ideas and figure out what their life's work is um people will often form teams with other people that they meet that we've invested in um and then we we fund the companies that emerge through that process and and accelerate them amazing you've had great success so far i know like i remember one of the first breakout success was uh like magic pony and i thought that was like a turning point where that was like a crazy story of like zero to acquisition in like two or three years.

3:17Jonny Clifford:Who was it? Less than 18 months. 18 months. It was acquired for hundreds of millions, right? Yeah. Yeah. Amazing. And then you also have a Clio Barney who's been on the show. I mean, you know, I feel like they're going to have to raise it like a multi multi-billion dollar valuation this year. Poly AI, another great founder been on the show. Like you've backed these amazing founders. Is that what gave these new investors that you've brought on the conviction to double down? Yeah, 100%. I think, you know, when we started with this model, I think it was seen as quite a weird idea and one that wouldn't necessarily mint companies that ended up being very valuable was always the big critique that you're kind of baking adverse selection into your model.

4:03Jonny Clifford:whereas I think what we've evidenced now in you know like the combined portfolio value of EF is 16 billion dollars and that's grown like um over 4x since we last uh raised a round of funding um is that this is kind of a proven repeatable um way of finding really great founders that can raise money from some of the best investors in the world and can build some of the most interesting companies in the world you know we've minted five unicorns in our history we've um we've now seeing that like all the best investors in the world want to co-invest with us in the companies that we're building whether that's sequoia or founders fund or costler or index who or benchmark who've all you know backed ef companies in the last 12 12 to 18 months um so the new investors that are coming in kind of just looking at this model saying like um oh wow it's not just like a finding a new way of uh of doing investing but it's actually working um and building some of the most interesting companies on the market and you you ef started taking all of its pre-seed founders out to california ahead of their seed round yeah what kind of role has that played in i don't know the success of the portfolio the success of the founders what's the impact of that I think the impact, you see the impact in terms of just like, the most tangible impact is the speed to raise capital and the valuations that founders can command by being in the Bay Area.

5:38That's the thing which I think is like most obvious to the outside world

5:42Jonny Clifford:of like, okay, EF companies are raising more at better valuations than they did previously. but the thing that's probably more exciting to us and the feedback you get from founders and kind of the reason we did this in the first place is their companies are just growing a lot faster um and i think that's you know i think this is a function of uh less oh you know the capital markets are more mature but just like the um the nature of uh the way that customers want to work with young founders and young startups out in the US as well. The conversation I have again and again with founders is we just saw a huge difference between the way that customers would reply to us, respond to us once we got out to the US relative to when we were here in the UK.

6:33And I think that's also evidence now.

6:36Jonny Clifford:And we've been out there for two years and taking all our founders out there for two years. and the speed of that first cohort to getting kind of like Series A as well is probably faster than we've seen historically. And that, you know, kind of, again, is like a function of revenue growth. So I think that just like what we care about most is enabling some of the world's best talent to build some of the world's most important companies and uh and we know that speed matters to do that and so like placing them in an arena where they can like amplify their chances of success in winning feels like the most important thing that we can do yeah interesting it's um it's interesting that it's not just about being closer to the investors it's like actually being in that area where there is unparalleled ambition where the speed is crazy sort of brings the founders up it's not just the environment that's different it's like it brings the best out of them 100 i think you you revert to the mean of like the people you surround yourself with right um but but i think the other thing that is really exciting for me is that you know not not all of our founders stay out there i think we're seeing more and more founders do want to base themselves out of the us but a bunch of them come back if they've got customers here um if if it makes sense for them to if they've got talent networks here where they can hire quicker or better here.

8:05Jonny Clifford:But I'm also seeing in companies that have gone out there just for three months and then come back that they are also moving really quickly. And so I think that there is an advantage to just having experienced that, that if we can kind of get more founders here, seeing what it's like to play in the big leagues and then come back to the UK and use that mindset to move even faster here, I think you'll see like big returns for the ecosystem here. Yeah, that's interesting. Like bringing that cultural bit of San Francisco back to London, Paris to wherever. That's really interesting. And how has the EF model changed or evolved?

8:44You know, it's been 10 years longer since the very early days. And now, you know, how are things changing? You know, you're still doing cohort approach, you're doing slightly different things. Where are you finding your founders?

8:56Jonny Clifford:is yeah we so like the the base model of just find someone find people pre-team pre-idea and fund them has stayed the same now for like a for a long time but the way we do that has definitely changed and adapted a lot right um we still uh we still run our cohort models which uh which have been incredibly effective for the last like 10 plus years um but we're also uh experimenting with with new type new ways of funding people so we we ran our first residency program last summer where we took a bunch of founders in europe out to a castle in germany and uh we now um we're now building upon that and have launched a new product like called the bridge where we're taking european found founders out to the US to all live in a residency together and build together over the court over the over the kind of spring and then summer and so on.

9:59Jonny Clifford:We've also you know started experimenting a bit more with just like faster funding. I think that the cohort model works really nicely at like giving people like time and space to to idea and figure out exactly what they want to spend the next decade of their life on some people get there quicker and we've experimented with like funding people faster um i think you also have seen over the last you know 10 years as try out lots of different types of talent and probably in the last uh three years or so really doubled down a lot on uh quite early career talent i think we believe there's like a lot of returns to capturing uh someone's imagination in like how they're going to spend their career when they're very early on in their career.

10:47Jonny Clifford:So a lot of my team's time is spent on campus and we've even like now started branching out into building out a more robust like talent scout network. We do that a lot in the US because the US is a lot bigger than the UK in terms of number of colleges that you need to kind of cover. We've experimented with doing a lot of like data science work in India, for instance, where my colleagues have an enormous population of people to be trying to like scout through as well. So I think we are constantly trying to adapt how do we find really great people and where do we think these people are and how can we be most impactful to them.

11:30Jonny Clifford:But the base idea of identify people before they know what they're going to work on or who they're going to work with and help them accelerate on that kind of like life trajectory from pre-founder to founder remains very similar to even when I joined a decade ago. Yeah, really interesting. And it's interesting because we're seeing this wider trend of kind of founders getting younger and younger. And it's become a bit of a, I don't know, a bit of a meme. You know, like it's like people talk on X and it's like the teenage founder getting younger, the five-year-old founder. But also it's true where those really big outliers are.

12:06And often I think even where you've seen a lot of your success like Barney from Clear was very young when he started, James to Comb when he was in Combine, very young.

12:15Jonny Clifford:He was 18 when I met him. Yeah. Yeah. And it's, yeah. And did you, with somebody like that, is there an opportunity for you to get involved with the second company, even though, you know, how does that work when, you know, you build these relationships with these super young people, they're almost certainly going to have success, continued success. Are you able to stick around for second and third companies? Yeah, and we've funded a lot of our, like a lot of the people that have been successful through EF and built their first company through EF, we've then funded their second company. So we were investors, we were the first investors in CoMind.

12:48Jonny Clifford:We were also like first investors in Olex, which is James's new thing. We were first investors in Omnipresent, which was Matt Wilson's first company. And now we're among the first investors in Jack and Jill as well. We funded a guy called Jack O'Mara to start this company called Okabayo. He started another company called Eska now and we funded him. We funded Rob Bishop, who was one of the co-founders of Magic Pony's second thing. We've now, part of the future of EF is being able to continue to double down on the great people that we meet and enable through this process. And I think that as EF becomes more mature, the founders that we back when they're very early on in their careers become more mature.

13:37Jonny Clifford:And invariably, we expect them to do a second and third and fourth swing at the bat. Indeed, this is such a thing now that in September we ran out of the first version of our, like, what we call experience founders cohort, where we take people that have actually already built companies before and had some success who say, hey, I want to do this again and I want to do this in an environment where I can have a community of people doing it at the same time as me, an environment where I have extreme accountability and an environment that will enable me to move with pace and urgency and an environment that will help me figure out what my life's work is.

14:15Jonny Clifford:And we made seven investments off that. Amazing. There was only a group of 20 people. I'm not like publicly announced all of these yet, but of those seven investments, six of the teams had an EF alum in the co-founding team. And so like, yeah, we're trying to double down on all of these great people and follow them through their journeys as well. That becomes like a really important part of our story. Yeah, and that makes sense. It makes sense why you need a long time, right? You're not just going through one company's life cycle. you're sort of committing to a founder to back them through decades for sure i i think this is like why that's so important to us is um what we'll often find when we talk to people here in the uk who have thought about founding is that they decide to do something that isn't founding to get the experience of founding so they'll say oh i'm just going to go and join you know company ex as a founder's associate or as a founding engineer uh or i'm gonna go and join you know a big lab as a as a member of technical staff and once i've done that then i'll become a founder and and our response is always the same which is like for every other skill in life to get good at it you have to do the thing right like yeah um and so how do you get better at being a founder you become a founder um and like you know we are the earliest stage investor on the market it is priced into our investments that most of them are not going to work out.

15:45Jonny Clifford:And that's fine. Like we want to kind of take that bet on you, not as a like one time you've got to be able to return all of our money straight away thing, but because we're going to want to continue to bet on you into the future because the only way you're going to get good at founding is by doing it. And so the more capital we have to be able to back people more than once, the more that rings true with the messaging that we've always given to people. yeah it's really interesting it's so true i speak to so many people who want to get involved even in startups who are like oh i'm gonna wait for my next promotion because then i'll be in a better position to like join a startup and i'll be like no startup is going to care at all about your promotion you need to just like get operating experience and the the the other thing is that hey you're very likely to get trapped uh doing that thing because the after the next promotion And guess what?

16:36Jonny Clifford:Your salary went up. Your job got a little bit more interesting. You probably started spending more. And then that gap between putting everything to one side and taking the big swing becomes much, much harder to do. Yeah, that's really interesting. So now you've raised$200 million. What does that look like in terms of deployment? How long is that going to last you? How many investments? Yeah, so we've got pretty aggressive growth plans with EF. I think we want to try and double our output of companies that we fund over the next five years or so. This capital effectively funds us to do that. So it gives us money to deploy in hundreds of founders, hundreds of companies over the next three to four years, um, and allows us to continue to experiment with things like the bridge with, um, you know, things like opening up an office in San Francisco so that all of our founders can go out there and experience it.

17:43Jonny Clifford:Um, and, uh, uh, and things like, you know, a cohort for experienced founders. I think, you know, for us, the bottleneck on, um, on us building more companies is not uh is not the amount of talent that's out there we think there's tons and tons of great talent out there it's really just like do we have the capital to be able to put behind people to go and find those people and tell them to go and do it and and we do and that's what's very exciting for us amazing you know you've been doing this for a number of years now how have you seen that founder profile change you know now we're in this crazy age of ai yeah are you you How different is it now that it was five years ago?

18:27Jonny Clifford:Well, look, I've done this for a decade now, and you see peaks and troughs of interest in founding, for sure. And I think that you see there are times like now when founding is probably more legible and attractive than it's ever been at any other point in the last decade. Um, and, and then there are other times, uh, that I've, I've been working here when that, when that's not been true. And I expect that will continue to, to, you know, like to go in peaks and troughs over, over the coming decade. Um, what's different, I think today is, um, you know, it's, it's not a surprise, but, uh, some of the best founders we backed in the last 12 to 18 months have not been technical.

19:17Jonny Clifford:And that is a big, um, departure for us. like we've always been predominantly backing technical people a lot of our early successes were backing um two technical co-founders together uh and yet what we've seen yeah as i said in the last 12 months is that a bunch of people who uh previously would have probably just been struggled through it struggled to find a great technical co-founder to work with um a very quickly been able to like get up to speed with what what does great look like in in a technologist through ai right like and being able to like converse better with uh great ctos that they might want to work with but also just be able to contribute more i think this was always a bottleneck on for non-technical founders before i'm just like how do i contribute to effectively half the work of uh of building this company in developing the product um and when you have more non-technical people being able to contribute on on product or being able to um even just like build themselves that like massively opens up the market of potential founders that we can work with which again it's very exciting for us yeah and i remember i think it was three years ago but it i felt like the founder types framed the kind of EF or kind of like commercial and technical.

20:44And there was always, it was like the technical was always the hot stuff, right? Like there was always more commercial people, people from like a background, more like my consultant or whatever it is, but you don't have the hard coding skills. It was always like trying to, and they would just be all over LinkedIn and X. It would always be like, Hey, looking for a technical co-founder. And now it feels like that, that, that those barriers have been broken down and, you know you see founder ceos deploying code building up mvps um which is yes it's it's uh open the door for so many more founders um but yeah look johnny we're out of time thank you so much for joining me congratulations i love what you guys are doing i think you guys are going to strengthen strength and you are doing an amazing job of lifting up the whole ecosystem so thank

21:25Jonny Clifford:you so much no thank you thanks we're very excited to to start deploying yeah let's go

21:35Thank you.