Joel hambly: Founding partner at Onstage announcing their £10m Fund to build the YC of Europe!

0:00I'm Seb Johnson. I'm here with Joel, founding partner Onstage, who have just announced their£10 million fund. Joel, how are you doing?

0:12Joel Hambly:I'm very well. Congratulations. I mean, it's absolutely amazing news. Onstage has been on this journey for a long time. I guess it's always been leading to this, even if not intentionally. How does it feel? How's the team feeling?

0:28Joel Hambly:yeah we're excited um you're right it is it's sort of been always like our our grand plan i guess um if you like the way we set up the the demo day in the platform is we don't charge any fees uh we don't have like expensive equity dilutive structures um and so the plan was always to make money I guess through like equity upside investing with our VC partners and the kind of timing now is we're at a point where our early applicants are breaking out to become some of Europe's most exciting companies and we're seeing breakouts from every single cohort to date and so the fund was like a natural progression and the idea will be to co-invest with our VCs into applicants um and yeah it'd be it'll add a huge new proposition so the idea is that you will be investing in the companies that come through the demo days are you going to be you know like how many are we talking because i think there's normally what 20 25 like finalists on demo day and then are you going to be selecting the ones how does that work how's that process going to work

1:39Joel Hambly:so we now get around 15 000 applicants per demo day um the way our process works is a bit different in that um we go out with our vc partners to promote it um we then upload the full list of applicants to around over 200 vcs they go through request intros to the ones they like and that filters down to the top 1 % who will pitch live at a demo day. The strategy for the fund is to really co-invest alongside the VC partners at the point they come in to lead the round. And so that may be after a demo day, that may be a previous cohort, that may be a previous demo day, but the idea for us is we want to be very aligned with everyone, highly collaborative.

2:30got it how many investments are you looking to invest in or deploy and what's the time frame

2:38Joel Hambly:we want to do 80 investments in three years um and that is a lot uh but uh we we also really thought about it because of the volume of opportunities we have so we've been we've and doing SPVs to date and getting into some amazing companies. And the idea for the fund was the volume we have in front of us is so large that a fund structure is essentially needed to take opportunity. You know, the strategy of doing 80 over 20. Can you touch on, like, why are you choosing that approach?

3:21Joel Hambly:yeah i mean well the way we think of so we're not doing any follow-on on the fund um if you we have incredible access uh and so like the scale of the platform we have means we can do more checks um and uh really the way we think about it is a more diversified fund gives you a higher chance of more consistent returns. And so if you go extremely concentrated, you have a chance of doing a 7 to 10x plus fund, but it's not as consistent as a more diversified approach. And so that's kind of the way we think about it. And then in terms of fund size, the rounds that we're doing are all highly competitive and we don't want to kind of crowd out the VC partners we work with.

4:14Joel Hambly:And so 100K kind of makes sense as a check size, which is how we thought of like fund size. I've seen that data. Yeah, it's like the super diversified portfolios have a much better chance of doing like a 3, 4X rather than... Yeah, exactly, which makes a lot of sense. I just want to talk about the fund itself, raising this fund. How long has that been in the works and what's that process been like?

4:44Joel Hambly:Well, we went out in, like, formally in April. And the way we ran the process was we started off talking to people that know us best. And so the LPs will be other VC partners. There'll be people who are resting in our SPBs, founders that know us, and mission aligned with what we're trying to build. And after we kind of onboarded a load of people there, we then hit the amount we needed to do a first close and that kind of was how we did it. We also run a GPLP event called Deploy once a year and we found a similar problem set in europe where there wasn't one place where gps could pitch like all of europe's best lps in one room and we partner with 200 lps um and we do a day in london where 20 gps can pitch to them and we've kind of like given them an amazing platform as well and so that helped us also did you pitch yourself at your own event or not you kind of just went through the relationships you have uh not no we did not we didn't we didn't get yourself you're calling this i think a first close right are you are you still kind of raising more money do you have a target size that you want to get to uh yeah i mean we we uh i mean the target size is is 10 we don't want to go larger than that for core fund one um and the idea is um we did a first close because we've got investments we want to do um and then we will uh we'll likely do a final close in amazing it's super exciting like these investments that are happening right now you want to deploy in are these ones from like the last demo day the demo day before what are you looking at right now

6:53Joel Hambly:all of the above um the the most recent deal we have is from uh um is from a company that applied to our most recent demo day um which has raised around from some incredible vcs that we know well um and is like exactly the type of founder that you want to back um uh so that's that's one deal we've got, there's another company who also pitched our most recent demo day and are raising a later Series A round who we're really excited about and so we're going to look at that quite closely and we've also got a few where VC partners have sent us companies because they want us to put their companies on our platform and so Interesting and how do you see your thesis or strategy evolving like at the moment it's like 100k checks across three years you know you're very conscious not to crowd out you know the big vcs that you've partnered with for you're pretty much all of one stage's history how do you see that evolving in like two three four years do you want to stay a small fund like a small firm with small funds that you can deploy across lots of investments or do you see yourself actually the ambition is in five years we'd be like you'd like to lead the investments that are coming through our demo day?

8:19Joel Hambly:So I don't think we'll ever want to, so the way we look at it is both the platform and the fund, the most successful venture firms build really strong flywheels. And at the moment, our flywheel is amazing because we're able to attract high quality founders, which meant we partner with better quality PCs, which bring in high quality founders. and that's led to us essentially partnering with all the tier one and tier two funds in Europe and essentially being Europe's largest demo day. The fund we think will be like a catalyst to that because companies we invest in outside of demo day will also like benefit from the platform we have and we see both working well.

9:06Joel Hambly:The idea for the platform is just to continue to build it. We've kind of done it like very bootstrapped to date. If you look at where YC's got to in the US, it's an incredibly valuable platform and the idea for the funds will be to continue to run more funds alongside the platform. And do you see the platform itself evolving? I mean, like it is, it's very similar to YC in the demo day, but of course it doesn't have the accelerator and maybe you never want to do the accelerator or maybe you want to do different things. Like, do you have a vision of how the platform will evolve as you start to invest?

9:46Yeah.

9:47Joel Hambly:I mean, the, yeah, you streamed our most recent one, um, where we went in person for the first time. And I think that was a huge unlock for us. Uh, we had, we rented a theater in Soho. it was it was full of essentially all vcs um and i think that doing more in-person things um we'd like to do um the one core like elements of the platform we have is we don't want to do structured events um so we don't want to make like we don't want to have like a highly time like things which take a lot of time for founders um and if you look at the type of founders that you're seeing today velocity is more important than ever and so i think we always want to keep like the core principles of it takes five minutes to apply um you get put in front of all the best vcs essentially a no-brainer to do um and i think the the areas we want to improve are mainly around like volume quality um and can we then maybe add on some more in-person elements around the demo day um but amazing and can we talk a bit about how um like the investment structure that you have right because i saw that you kind of built out an investment committee i think you've got somebody else on board as well who's joining can you touch on the kind of like how you're fleshing out your investment arm to help run these investments

11:11Joel Hambly:yeah so we we have an ic um and really the ic are three of our vc partners who um we're extremely close to and already work with so we've got um we've got Laura from from Balderton uh we've got Emma from Local Globe and Jameson from chapter one um and the idea there is we meet once a week and we'll look at a company um that we're that we're going to propose um and kind of like work together to assess like if it fits the real stage strategy um and the i think the thing that we we learn over time through demo days is also uh the characteristics of founders that make them successful and so you know you can see how how someone pitches how they're able to um express their thesis and you can then see how those go on to do and we can kind of look at like founder qualities that we think make them successful and so i think as we build out the fund things like that we'll we'll start to do we also generate incredible data so we've got we can see metrics of so we can build like a thesis around if a certain industry we can see if the demo days like startups are growing really quickly um on we can benchmark against them and we can also see um which vcs are consistently the ones picking the winners that come through um and so we're able to use that to like overlay yeah and kind of augment when you look at the type of investments you're going to be investing in it's not you're not going industry specific you're not going for a niche it's all just about finding that the best founders who are being backed by the best investors.

13:07Joel Hambly:Exactly and you do have obviously sector specialists that we partner with so some may be fintech some may be consumer internet some may be AI infrastructure and we kind of like leverage them and the idea will be to kind of go in alongside them but for the fund we want to be completely generalist um agnostic um and yeah i mean also that allows you to find sort of unsexy sectors today um which things that ai are making yeah sexy again i guess um and uh not kind of like predict which spaces to be in but rather focus on the fact you've had a lot of success you've mentioned that like every every demo day that you've had has had at least one breakout company you mentioned that there's actually an investment that you're looking at which is from a previous demo day how late are you going to go you know if you have you know you've you've got companies like lawhype and scan.com if they're raising around now maybe it's like a series c would you like chuck something in there or is that too late you're much more interested in the like seed pre-seed series a um we i mean the so we're going to do pre-seed to series a um that is the the range of demo day finalists as well or demo day companies um so we're going to stick to that uh and then the idea for the fund will be we'll split it across those stages um i suspect we'll do a majority precedence and this process of um raising the fund right like this is it's been a phenomenal job in the sense that like on stage is relatively young really lean team that has been almost like a side project for Hector and Taos for a long time.

14:55You've like really built an edge, you know, in like a really competitive emerging market, emerging manager space. What advice would you give to somebody else who's like thinking about raising a fund or who wants to go through this process? You know, you've worked with a bunch of GPs through your deploy day. Like, yeah, what hints and tips can you give to people who are interested in raising their own fund one day?

15:20Joel Hambly:um well i mean i think what what we did was we went to solve a problem first um and i think in europe there was like a clear issue around the uh the fundraising market um we weren't really thinking about um yeah anything beyond that at the start and I think once you do solve something it then gives you an edge and I think for us we've built a competitive advantage which has allowed us to raise a fund and access and so I think that's how we approached it for everyone else I think it's difficult particularly in the fundraising environment today, but at the same time, you're also seeing, I mean, through Deploy, these emerging managers are doing an incredible job.

16:19Joel Hambly:And I think they all have their own kind of role in the ecosystem. You're seeing kind of, in particular, like, you know, funds which go maybe before VC rounds who are able to connect early with founders, they're able to help them shake they're around um you've got uh you know more and more younger founders coming out so maybe they relate to more younger vcs um and we're seeing that they're playing a hugely important role in particularly the european ecosystem um and i also think that you know their fund returns amazing you mentioned it was difficult what's like the hardest thing been from like raising the first fund

17:10Joel Hambly:really admin no i'm shaking no no no uh no i think it's um i would say it's like articulating what you're trying to do in a really concise way that makes sense because um at least for on stage there are so many kind of nuances to what we're trying to build um but i think the key is you want someone to leave um and if they go and tell another lp or someone else at a dinner party what are they trying to build they should be able to do it in one or two lines um and i think and i and i actually think that probably does lead to advice i would give to others um if i see gps pitch at a deploy for example i i often find the best ones are the ones that where you can you can easily tell someone what they're trying to do um and yeah and i think you've got quite a strong approach to that right it's like building a sort of like a yc in europe without the accelerator um but look joe this is amazing news congrats to you and the team i'm like super excited to see you like deploy the capital make some investments and see how it goes but um i have full confidence you and the team are going to smash it so uh so thank you for joining me and best of luck no worries and thank you for everything you do you've been a huge part of uh on stage like live streaming the first demo day in person and like the first people we're talking to about the fun announcements no love it appreciate it i love what you guys are doing we're huge fans yeah sounds good look cheers joel bye-bye