20VC: Why Signalling Risk is Real, What Founders Need to Know About Taking Multi-Stage Money vs Seed Fund Money, Lessons Scaling to $600M AUM, The Secret to Hiring in VC; Hire People with No VC Experience & How Venture Will Be Disrupted with Rob Lacher

0:00That's something I hate about VC. There are a thousand ways to be a great entrepreneur. In the VC space, there's too much hype about what's right, what's not right. As a founder, just think totally independently how much money do I need, which people don't want to hire, that one are my muttsaws in the next one or two years, and then raise the money that you need and not over raise. This is 20 VC with me, Harry Stabbingz, and I think there are not enough fun managers who are entrepreneurs in terms of how they think about building their firms. Today's guest is a dear friend and an incredible firm builder, Rob Locker, So Rob founded Visionaries Club in 2019.

0:31In just three years, he scaled the firm to $600 million dollars in AUM and backed some of Europe's best including Central, Pigment, Personio, Mirro and Lagy to name a few. And before Visionaries, Rob founded the fashion platform Amazing 2014, which he sold to Zalando, and then he founded La Familia, the European seed stage venture firm in 2016. But before we dive into the show's day, you've heard me talk about Coda being the docs that brings it all together and how it can help your team run smoother and be more efficient. I know this because Coda helps me in 20 VC. We have a team of amazing researchers who do 10 reference calls before each episode.

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3:23Check out this amazing offer, eligible startups get advanced Intercom features at a 95 % discount, so do not miss out head over to intercom .com -4 -20VC to find out more. 3, 2, 1, 0. You are now arrived at your destination. Rob my friend, we have been friends for quite a few years now, so thank you so much for joining me. Thanks for having me, it's my honor and pleasure. I speak to so many of your friends and they will tell me about your ability to dominate the tennis court, but how did you make your way into the world of venture once you realized I realized that he think Fadder wasn't an option.

4:01Good one, I wish I was more talented in tennis than everything would have been much easier. Look, if I have to put it into one sentence, it's always being honest to myself to do what I love doing and really not compromising on it. So when I finished university, I was actually about to start a company and then got talked into Boston Cositing, who by certain, Jochen Engert, and maybe Jochen, he ended up being the founder of Flixbass, which is the biggest passability company globally. So he's a very close friend. He was my mentor back then. He's also part of Visionaries. I was again, the mentor of Max Fisman was on the total other side of entrepreneurship.

4:31So Max inherited a hundred year old family business with 14 ,000 employees, 4 billion in revenues and had to take it to the next level. And the thing that we found out back then was that there's absolutely no connection between all the new economy entrepreneurs. Even though 90 % of European companies are family businesses, right? So we always thought bringing those networks to us together because we think it unlocks a lot of power in B2B. Took a little on T -Wedith list, so I started my own small company in the mobile space, which I sold to Zalando and then ended up doing angel investments and from those angel investments we set why don't we pull our money in a small seat fund so that's how I started my familiar with a group of friends which was a small 40 million angel fund fact then that we invested into 30 B2B companies.

5:10Did you know that time you wanted to be a VC? They had done some angel investments here. I enjoyed it. It's real I want to be a VC. Now the first time I heard of venture capital was when I was 22 at university and I thought after the lecture of fact this must be the most amazing job on earth because you're looking into new companies every day speaking to young smart people which are building the biggest thing in their life and you have the privilege to choose who you want to work with and work with an array of people and not just focus on one idea. So I thought maybe when I'm 50 -60 and in case I succeed I could become a VC but I never thought that I would become an entrepreneur in VC in the middle of my 20s without any experience.

5:43So I stumbled into it over angel investing but I figured out it was my biggest passion. You mentioned that familiar that and you obviously laughed laugh a million to start visionaries. What did you learn about yourself from leaving that familiar? I think I learned about myself from leaving Stribal Fred, which is actually he was fantastic at so many things that it meant that I didn't have to do them and actually I should have been doing them and I was just comfortable and so I didn't force myself to be uncomfortable and that's why I run every day because I like to feel uncomfortable. What did you learn about yourself?

6:15I'm still managing the first laugh I'm here for and I'm incredibly proud of what we've built with the team. And believe me, it hasn't been an easy decision then, saying if you've put all your energy in something, building it, if you invented it, if you put risk in it, it's contrary to thoughts to say you want to continue in a different setup. But I was at the beginning of my 30s. I realized that it's my biggest passion to be an entrepreneur in VC. And I wanted you to do this for the next 20, 30 years. So the one thing you shouldn't do is compromise on the partnership setup because it's a very long -term game.

6:44And what's the best thing I've found it visionaries with? Yes, being a long friend. So we've worked on many deals together. It was my first LP in the first La Familla Fund. When he became available after selling Amoeba Li after six years, it was basically a great set up to team up. And on the other side, you know, with Janet, I really love working with her and we started in the La Familla idea. But we also incredibly different on how we look into deals, how we would run a company, how we would take things to the next level. Is that not a strength? I'm always hiring team members now and I'm trying to figure out the right composition, to be honest.

7:14Is that an constraint that they come from a different perspective and look at deals in a different way? It is. The best thing you can do when you partner in a funding team is take risks with someone that is a totally different ingredient than you have. And that's what we did and the fund is now a ten times the money that we invested into your wealth. But if you want to be in the setup for 20, 30 years, you need to have a certain overlap of how you work together. I think my synthesis is take risks when you're going through those setups, but also be 100 % brutally honest to yourself if it's sustaining and if it's the right setup for everyone.

7:43I think it was a great decision that we took that way because now the first fund we're still managing together It's a success. We've put visionaries within three years I have to ask final thing and then we'll move on to some quite meetiotopics when you get asked advice from Manages raising today and who are starting partnerships today What advice do you give them on the partnership dynamic having experience what you have now with different partners and having founded two funds? What should all partnerships consider before becoming partners? I think you should really spend time together about the truth of what's your purpose and what you really want to do and why you're doing it together and be super honest about your strengths, your weaknesses, what excites you and the reason why you're doing it.

8:24The more complimentary ingredients that you can find in a person the better it is, but you need to be aligned on the core on how to do everything. The best thing how I did it with, for example, Sebastian was we really went to the deepest level of what we love doing. And we were super allied that being an entrepreneur in VC having all degrees of freedom to build this and doing this for a period Hopefully of 20 30 years was really what excited both of you. Do you consider yourself an entrepreneur or an investor? That's the daily balance. What gets me up in the morning is basically on the one hand side We're an entrepreneur as we need to build the company that we're investing with right?

8:57And that's like just building any other company that there's no team. There's no strategy There's no office. There's no website It's basically just like any other company you can spend 150 percent of your time doing it And on the other side we're doing investments at our job is to fight the best companies. That's why we never decided to become part of another fund, but having those degrees of freedom to build it the way you think it's right. It's what excites me. It's what gives me energy, and I think it's what makes me a good investor for founders because I have an entrepreneurial passion of building something not just an abstract investor.

9:25I think it's what investors don't anticipate when they spend out like the fund build aspects is 50 % of my day or more, and short it's probably 50 % of yours. Everything around team management and everything we discussed. I think people forget that. You've found it now two firms of visionaries as of I. What was the fucking hardest Adam building in firm? I think it is the balance of being an entrepreneur and being a VC with all the things that you have to do at the same time. It's all about the team then that you build that really unlocks the power of the company and what you can get out of it.

9:53Adventure Capital is incredibly difficult to hire people because they need to be hyper smart, humble, visionary at the same time, no linear thinkers. So it's hard to fight them, but the way we decided to do it is basically not hiring experienced people who have been in VC and who just apply the logic that they've learned at another fund. I'd go for incredibly young, hungry, hyper -intelligent people that really want to go exponential in their development. Man, I need, again, the reason the show's as successful is because I need you to use it to learn myself. My question and concern there is I don't want to hire someone with an experience because you can't just give them a chat, but you need to put mechanisms around them to learn that to grow.

10:31We don't have the time or space to do that. You need to just run from day one. So did you put the mechanisms in place? And if so, what are those mechanisms? Look at the beginning. You're doing everything right? So it was just Sebastian and I starting the fund in your CEO of all your chief media office, your chief investment officer, and you just cover everything. I think it's also important to give the DNA of what you think you want to do different into that company. But then it's also important to not micro manage the whole time, but really in the best case, find people who are so much better than you are in each of those dimensions to really take things to an exponential development.

11:04And that's the balance after you're in the beginning. It's easy. You don't have a portfolio to cover. You have enough time to look how you design your office or website, but you start doing investment and then you have 30 companies that portfolio and then you don't have time to do this anymore. You can't be everywhere. So that's why the best mechanism that we put in place is that we hire people that we We give 50 % a job description of why we need someone. And 50 % we give them the degrees of freedom to use their time to really unlock what they love doing, what they're good at, and what really in turn brings our company to the next level.

11:34The thing I'm struggling with is actually this entitlement. I want 500k salary, I want 500k bonus. It's all I want, I want, I want. And this is real entitlement I find in 25 to 35 euro banjo hiring. How should I deal with that? It's, I think it's an adverse selection. like those are not the people that we want to get with visionaries. It's the other way around. So if someone is asking for a high -celerary, that person is not willing to take risks. It's not believing enough in the entrepreneurial spirit to build something. We don't pay high salaries at visionaries. I think if you go to some of the multi -stage fans in London, maybe you get twice the salary.

12:08But we're pretty generous with Kerry and people know that they can build a career faster than at other fans if they perform extraordinary well. And if they're a great co -entrepreneurs building visionaries. These are the kind of people that we want to take on board. And if you look at Martin, he became partner just after three years of joining visionaries. But he's a co -entrepreneur already leading the seed funds. So, he's doing the same for the growth fund. He's doing the same for the platform. These are incredibly young, hungry, hyper -intelligent people that haven't been in VC before. I think that's the beauty, you know, you can do it super easy and say, look, I just poached from other funds.

12:38I hire people who have been three years in VC. They have the networks. They know how to look at deals. you just get an average index of all the other funds. If you do this, I think if you wanna build a contrarian, only an A, you need to go for people that are unbiased, that wanna grow exponentially themselves, and that have the trust that over time, this will pay out and not the people that say, look, I know finished Harvard, and now I wanna have a 750K, and you'll sell it really otherwise I go to gold. Then by the way, they should go to gold, and because then it's the better, say, for environment.

13:07I think hiring is where a lot of people were wrong. When you think about biggest mistakes that other managers make the EC around you. What do you think is some of the biggest? Maybe the first thing is that not having a clear differentiation about your proposition why the market needs you. If you want to be a new fund for a kept table of a funder, you need to be a painkiller, not a nice environment. If you don't have this value proposition that is new for the market, that's something difficult. Second thing is I think many new managers start investing into hype deals because it's nice to sneak into things that are validated by other funds.

13:37But again, you just build an index of what's already there. I think, you know, early in a pushing ban, but it does help with our piece. Like, being able to get into hype deals bluntly shows access and it shows ability to an allocation and the best of the best real time with no data deals. If we operate on a world of no data, the hype us deals would seem to be the most attractive at this real time moment. Do you know what I mean? Fear, maybe build a blend, right? If you're sure that you can get allocations in some of those great hype deals, it's fine if it's 20 % of your portfolio, but I think it's so much more impressive if you have 2s and companies that others haven't seen and after 5 years it turns out to be one of the most successful companies in the market.

14:17This is in Shanghai, she spoke to a multi -sage GP earlier this morning and they said the other thing with visionaries is when you look at that early stage practice they believe that actually you generate returns at early stage by picking when really everyone else is much more focused on breath and volume. How do you think about the picking at seed and whether it's really possible to honestly do a concentrated strategy at seed and pick well. I mean, I think on the extreme, either you run the Y combinator receipt kind of model where you're just basically building a broad portfolio and the likelihood to have one or two of those amazing software, the iPath kind of outliers is almost given.

14:53So you're basically building a seed index on the really best of the best founders. But then you can't get your ownership that if something is really a crazy home run, you get to 20X, you're a fund or 25X. So you'll have incredibly good performance and those funds are doing super well. That's the one game and the other one is loading a more concentrated portfolio where the truth is you won't even get that, but if you look at doing a hundred to two hundred and fifty or even four hundred K in a UI path at seed, that will do unbelievably well. But if you have a hundred million fund and you did a two hundred and fifty K jack, a hundred X is twenty five million, four hundred X is your fund.

15:27Do you see what I mean? Like twelve hundred X would be three times your fund. It's hard, but look, I think, and then the other model is that you try to build a more concentrated portfolio of 25 companies where picking is more important. So you can get it wrong and the fund is zero or one. But if you get it right, then you get a very right. If you have two or three companies where you have your 10 -15 % ownership, let's say you have 100 million fund, companies 10 billion, you have your 10 % right, it returns your fund a few times. If you have two or three of those companies, it's 10%. You're threshold.

15:54We say 80 % of our receipt portfolio is 10 -15 % ownership and 20 % will leave room with their exceptional teams where there's maybe another setup is more interesting for them to meet up with a multi stage fund or just a different rotten setup or maybe we're not 100 % confident about the space what we want to learn then we keep 20 % for you worry that then like light speed or sell index full state entrepreneurs are in another deal with Robin visionaries and they only have 3 % sashi in this next one we can cut them down my worry is that if you do do those you allow yourself to be pushed down at others.

16:27No, so we're pretty clear about that strategy and I think as long as you get that message across to the founders and also get that referencing on how you work with them I think it's a fair value proposition where founders then need to decide look either it's a good partner to take the sherrys on board with them or 15 % or not Well, this two or three percent deals we're doing it with maybe two or three deals of fund and we're pretty clear about this strategy And we don't make a difference then how we work with the founders Wait, I think the interesting thing here that I want to discuss next, because it's important for both of us actually not fund strategies, because we both do the barbell approach.

16:58Unlike just a seed -only strategy, I think there is a strategic reason as to why. Can you just walk me through the two funds and how it's a little bit different than maybe just a traditional fund set up? How does that work out in terms of fund sizes just so everyone can understand it? Yeah, we think, if you look at Europe, when we started Visionaries with Thoughts, Surus, it was pretty crowded. You have a credible amount of funds with 100 to 700 million fund sizes. that typically enter series A but then has been bloody red ocean and I think valuations have been quite aggressive compared to the traction that the company's had.

17:27And at the same time it's not yet a space where we can add so much value with our networks. So we said we're good at pre -seed seed. We've all been entrepreneurs before and we will love working with founders really at those dirty early stages. And then we leave out series A so there is no signaling risk for the founders and they can choose from those amazing funds out there whether it's an Excel or Sequoia and Linux or you name them, or amazing lead investors. And then again, for us, it's really interesting that series B, when B2B companies start hyperscaling, they need to build a custom of A's across Europe.

17:54That's my own family business, entrepreneurs can be interesting. That's also where founders, if they want to get go -to -market advice, they better want to speak to a Hannah Rennah from Pazonia who was just got the company across Europe, or if they want to have more product advice with the Andre who founded Myro and not just with average advice. So that's where we think we can bring in a lot of value at series B stage. On the other side, we thought the best product we can offer to foreigners is not another one -billion fund that competes with those funds out there, but complementing great multi -states, US funds, and those funds with a five to ten million investment.

18:24You mentioned the red ocean, now we're going to get it, it's just one of the most quick feet. You lead rounds at pre -season seed. We're seeing totally different fundraising environment now where I do remember before when it's like, I did, you need your pro -router and then like, oh everyone else wants to be like, right, okay, they get in my every company. And so my question to you is like, how does your reserves management change today versus years of old because it's shifting for sure? It's actually not in the current fund. We have 60 % reserve in a seed fund to follow on. 4 % is initial reserve.

18:54The latest one is 150 million. Wow, so you've got like 70 million financial shares or 65 million financial shares? Wow, it's no money. We're trying to build a focus portfolio there. And then, you know, typically you can follow on in series A and in serious B you can do either full or half parada, depending on the price points of the company's round sizes. And why we haven't made a change to the current fund, I mean, what drive us do you have that would change your strategy? Either you have a momentum market, which we had the last two years. But we try to avoid investing into momentum companies.

19:23I think we have done none of them. And we try to be incredibly disciplined with our funder to raise what they really need to raise, what is necessary and not going to momentum fund raises, where you basically just put in more money without knowing what it is. Second, reason could be that you have not good companies, you're a portfolio and you still sent them to family offices to raise money. You're riding off those companies and with the founders deciding not to continue the model doesn't work. Why should we encourage them to raise more money to just postpone the decision? The third reason could be that you're such an amazing picker that you have so many companies in the fund that are outperforming that you not have enough money to put into that.

19:57And that's something where to pick the opportunity funds or the late stage fund could then come into place to take care of. It's so long story short, with our existing fund, we haven't made any change to the reserve minute, but we've done the new fund. We've increased the fund size to 150 million because the initial checks sizes are just getting bigger. So I've done three C deals in the last two months. Three C deals all tier one US, all beaten tier one UK in Europe. And then I spoke to an LPN, they said, I'll put money in European funds at the A because I'm just betting that they would get something that the US fund missed.

20:30Do you think that's short -sighted and unfair? And do you think you'd be worried if you're a series A fund today when the US guys are coming in harder than ever? I'm winning. I think those founders that we want to back are those guys that are really duty referencing on the fund that they want to work with and everyone's super clear impression why they want to work with which fund. It is like a wedding you can't get divorced and I think those founders that are just hyped by US brand putting in 3 million in a seat run or 5 million without thinking about the So what are not the fun as we want to back because that's not the long -term thinking those founders that really go deep into referencing We see actually many conversations where they might go rather for point nine or visionaries or 20 We see or whoever for the seed stage because they're closer to those partners working with them They are meaningful check in all funds because we're small of funds We work hard We want to make everything and they are independent in this series around to really choose from a great fund with a significant check A board position from a partner and on an associate long story short itself selection those founders that go with US funds, either they want to go into the US market or they have a certain alpha and whether it's gaming industry or something.

21:34I see two thirds of the founders at seed stage that have those term sheets. Rather going for European seed fund setup because they want to keep the Iran open to choose from those funds. How do you advise founders when they have a US multi -stage fund and that debating that or European offer? There's no right or wrong. I just want to advise them to make a very active choice about the somewhat of the setup and that the cons of doing a multi -stage fan setup at sea, you're a very small check of a huge fund. The moment you sign the trim sheet you need to ask yourself did they just buy an option to lead the next round or does the partner really really go all in go my board and spend the time with me because such multi -stage fans can't do 150 seed rounds a year and keep that quality.

22:13Second thing is they need to be aware that the signaling risk if that fund doesn't lead the next round. G -buy the I just had a competition on the show from Borgsgrip in his life, Not suddenly risk is the biggest load of BS. I've seen it many times, they are reportedly a weak team app a lot with multi -stage fans at sea. I'd say 20 % of our deals are like this. And so when they don't come back, it does look bad. It is terrible for you as a founder if things don't work out. There are three scenarios either you kill it and everything is amazing then it doesn't matter. Then everyone wants to do your around it as a younger.