A conversation with Passion Capital partner Stefan Glaenzer: From Last.fm to Loopcam


Stefan Glaenzer was named the best angel investor in Europe by TechCrunch in 2010. He is an early-stage investor in Berlin-based startups including Loopcam, Readmill, and EyeEm. Stefan served as first investor and executive chairman of Last.fm (which sold to CBS for $270 million in 2007). We decided to meet with him at Passion Capital’s headquarters in its inviting coworking space White Bear Yard in London. Here’s what we discussed…


You opened White Bear Yard in 2009 and two years later, in April 2011, raised a ₤37.5 million fund from a mixture of private and public sources. What’s the UK government’s contribution to Passion Capital and how did it impact your first steps? 

One of our biggest investors is Capital for Enterprise, which is a government-based fund management company. They provided two-thirds of the capital. When we started this, we wanted to have a coworking space with angel activities. We initially thought way smaller, taking 300 square meters or so. When we saw this office – and now we have more than 2,000 square meters – we thought, well that’s actually quite a financial risk. So we decided to raise a fund.

Do you suggest your portfolio companies to work here with you? (Right now about half of the 20 are based out of White Bear Yard, the other half in other spots in London, Berlin, and elsewhere)

We offer our companies the opportunity to make use of White Bear Yard but it’s completely up to them. We are here to support the entrepreneurs. For most of the companies, actually, it’s beneficial to spend a couple of the first months here because they get advice from and connected to other founders. The advice from other founders is often better than the advice that Eileen [Burbidge], Robert [Dighero] or I are able to give.

On the other hand, we don’t have a single door in the office so – for some teams who are on the phone a lot, for instance it might just not be the right environment. Others might prefer creating their own company culture from day one. It just depends. We leave it up to them.

What would you do if you weren’t an investor? 

So far I have more or less changed every ten years. So I call myself a real investor – with a fund –for maybe a year. I’m early in the game. So as far as the future goes, until 2020, I’m pretty sure I’ll stay an investor. When we sold Ricardo in 2000, I took two years off and travelled the world and moved to London. I did a lot of things I wanted to do. I even saw 62 of the 64 games on TV for the 2002 World Cup.

What’s the dynamic among you and your partners, Eileen and Robert? 

We are as complementary as it gets. Eileen is a product person – she worked ten years in the Valley…at Yahoo. Here [in Europe] she was employee number three at Skype heading the product. She is female which is quite rare in the whole venture scene.

And I met Robert when I sold Ricardo to him in 2000 and it was a rather complicated transaction. During this process of four months, I always had the impression that even though both sides had fights – lawyers and six investment bankers on our side – Robert was the only guy that I thought: “He really knows what’s going on.” He is unbelievable, strong, analytical, legal. On Ricardo, he has been on probably the biggest rollercoaster Europe has seen in the last ten years. And me? Even though I’m an investor, I’m probably more on the founder side.

In your first twelve months you’ve seen 1,532 business plans, 652 through the website, 444 from conferences and events, and 436 from personal introductions. How do organise pitches among you three?

Most of the time the person who got referred takes the lead. So one partner takes the meeting and after that on Mondays we have our partner meetings and we discuss. And then we either have a second meeting with the other partners or not. And we aim to decide after the second meeting. We don’t want to waste the time of the entrepreneurs. We are very straightforward. Often times we say “no” in the first meeting. [He pauses] I’ve been so often on the other side of the table pitching for money so I hate to have this, “It’s interesting, and maybe this, and so on.” We’re completely transparent…

How early are you willing to get involved? Do you ever help construct teams?

width="300"Our average seed investments [₤189,936] are enough to last startups 6-12 months or 9-12 months. From time to time we do help find a team with entrepreneurs-in-residence positions. StylistPick (left) is one example of one that started like that. In those cases, we help find the right team. But we have a passion for entrepreneurs, so we’re not seeing ourselves as an incubator or a company builder. We are here to support great entrepreneurs because we think they can build great companies. As far as team breakdowns here go, I would say about 90% of them are half or two-thirds developers. So we end up having a great developer community.

You’re focused on seed rounds, almost exclusively. How do you negotiate Series A? What’s important to you?

With the A Round we are very happy to participate pro rata but we will not take the lead. They need to find with our help, resources and network, an external lead investor in the A round. The purpose of this is to protect our stake. In the first twelve months we closed twenty deals. That means you need to have a very lean angel approach. Fast decisions, accepting that you do wrong decisions, don’t bother too much with terms, etc… Knowing that probably 50 per cent of the companies won’t make it to Series A.

How do you expect your teams to use the investment funding in the first year? Anything you’d be shocked to see?

200K is our contribution, but the round size is up to 300K with other angel investors in there and so on. Typically we get engaged with a founding team of 3-5 people, plus the first set of developers. So you see a burn rate of something 20-30K over the next nine months. The rest…we love tech, so most of the time the money is for salary or IT people. We very rarely see any marketing in the first year.

29% of your founders are German. 14% are Swedish. Without creating stereotypes, is it different working with a German or Swedish founder?

Germans tend to be way stronger analytically and in execution. The Scandanavian and especially the Swedish background is much more about the bigger picture and the ability to deliver on this bigger picture. I mean, there’s a reason we see the most successful European entrepreneurs being Swedish or Scandanavian. H&M and IKEA are massive global brands coming out of a little countries with a population of 10 or so million [9,453,000 to be exact]. It’s a cultural thing.

What part of the investment process do you enjoy most? 

It’s probably the first 24 months or so. Being a part from very early, being part of the more relevant strategic discussions. And then obviously the most beautiful thing is seeing some of the companies enter into hyper-growth mode. For me, that’s probably the magic bit. When you somehow – out of the blue – realise that, yeah, you have solved a problem or you have built a product that’s really needed. That’s magical.

What’s the magic in Berlin?

The massive executional strength of Team Europe and Rocket right up next to the more creative or innovative players like those we invest in. If Berlin’s able to bring this together, that would be quite awesome. In reality, it’s all a matter of density. And we see a density in Berlin, Mitte – this coordination between the two parties should happen quite naturally.

 For related reading, check out:
Investor Spotlight: Peter Read on why Berlin “floats his boat”