John Frankel, ff Venture Capital talking to London Web meetup

John Frankel is a Brit who is a partner at New York based ff Venture Capital and during a visit back home this week he gave a great talk to a mixed audience of developers and entrepreneurs at the regular London Web meetup. John’s fund, which he describes as “a micro VC or super-angel”, helps companies go from “3 to 30 employees”. ff has invested in companies like Voxy, Cornerstone OnDemand, Phone.com, Mogotix, Klout, ShareSquare and many more.

You can watch the entire talk and Q&A below, or just read on:


ff typically invests in 4 – 12 companies in a year, but since December have invested in 15. The reason? John was unequivocal, this is an “interesting time with unbelievable opportunities for both investors and those seeking to change the world”. The reduction in cost of doing business online in the last decade means that mass customisation is now possible and software can create new and immersive experiences.

This disruption has entered every industry, citing Paige Craig, John told us that “every company is a technology company“. The platforms that didn’t exist 10 years ago are now in place: broadband, smartphones, cheap storage, etc.

He told how Jim Cramer of CNBC’s show “Mad Money” spoke at a conference John attended during the previous dot com boom, telling the story of how the media industry has these massive fixed costs through the legacy of newsprint production, by growing trees, waiting till they are mature, chopping them down, transporting them hundreds of miles, turning them into pulp, transporting paper hundreds of miles into cities usually, making newspapers from them, and then finally putting a pile on every street corner; every 24 hours.

Fast forward ten years and we have Amazon’s kindle, Apple’s iPad, and numerous inexpensive smartphones. John is certain that this time round “this is not a bubble“, although he did indicate they may slow down their investment pace if valuations get too high.

Advice for startups

“Solve big problems, they are more satisfying”.

And he used the example of the Winklevoss twins to tell us that “everyone has ideas, but execution is everything”.

Geography

Being in London – with its perennial inferiority complex-  of course the question of geography came up. John said that ecosystems are made by people and infrastructure, and despite the ability to use Skype, meeting “in person is important”. Although he’s prepared to invest almost anywhere it’s harder to justify if that company is off the beaten track. Another crucial geographic factor is big companies being in the vicinity of startups, as is the presence of second-time entrepreneurs.

Talking from his US experience he compared NYC as very individualistic to San Francisco is more team orientated, and collaborative, gaving the example of one of their portfolio companies relocating there for that reason.

What he looks for in investments

“The team”. And “unreasonable and driven people”. He says “pivoting is normal; the start idea is never the same as the end idea”. Specifically he likes companies with low capex model, and those that start charging for their product early, talking of the benefit of “training” your customer to pay.

He cited an example of one company they backed, the enterprise software company Cornerstone OnDemand of whom they were amongst the first outside investors in and since 2002 they invested in all 8 subsequent rounds until it went public in March 2011. Despite that incredibly successful exit, John says he doesn’t “believe in exit strategies”, and puts faith in interesting things happening and valuable things being created if you let smart people do interesting things.

I really enjoyed his talk, and I hope John spends more time in London, we need more of this kind of seed VC in the UK.

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3 Responses to John Frankel, ff Venture Capital talking to London Web meetup

  1. Scott, a great write up, and I agree a great talk. I think there was a fundamental contradiction though. John compelled his audience to “solve big problems” and yet, in line with the Paul Graham dogma, his preference is for “companies with low capex model, and those that start charging for their product early”.
    Maybe some big problems can be solved with low-capex models and evidence of sales pre-capital (say <USD20,000 funding)- though I can't think of any off the top of my head. "Solving big problems" requires big risk, not just for the people who solve the problems, but from people who can back them up with capital and influence to overcome the barriers solving big problems necessitates (distribution, critical mass, legislative change etc).

    • Good point. I don’t know what exactly the answer is, although I would note that when people talk of “big problems” sometimes they mean “difficult problems”, which aren’t necessarily as expensive to solve as problems which truly are BIG.

  2. […] ——————————————————————————————————————————————————- Last week British born John Frankel who is a VC in New York gave a great talk to London Web. If you didn’t make it, you can watch the video or read my report here. […]

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