30. August 2012–
A dynamite investor immersed in some of the world's most promising startup hubs, Frédéric Court is a general partner of Advent Venture Partners – one of the biggest investment firms in Europe. He's got a swag of co-led investments in companies such as Farfetch, Zong (sold to eBay), Qype, and Dailymotion – under his belt.
Here, Court explains the (mostly) good, bad and ugly of his startup investment world and dishes out some top advice to entrepreneurs looking to do business...
Hi Frederic, you've been a banker and an entrepreneur, what made you become an investor?
FC: I made the long-term career decision to move into investment as it combined the diversity, intensity and intellectual challenge I loved while working at Lazard, with the focus, long-term commitment and direct impact I have working with entrepreneurs. I wanted to build long-term partnerships with great entrepreneurs and help build businesses in tech. In fact, I don’t feel I am working at all, I just love what I do and our recent successes have made the journey even more rewarding.
What are the pros and cons of using London as your base in comparison to say, Paris and Berlin?
FC: London has a lot of advantages. The UK is the biggest market for VCs in Europe and the obvious point of entry for most global technology companies with ambitions in Europe, especially the US. As a result, the ecosystem is very strong and recently there has been an amazing resurgence of entrepreneurship in London. The cons are that it's more competition for deals (most top VCs are based here) and for talent, and operating in a more expensive environment. This is where Berlin has an edge as it also has to build a strong and capital-efficient ecosystem.
Tell us about your biggest success story
FC: Building Advent into one of the most successful investment firms in Europe. We have been fortunate with a very successful run, five exits in the past 18 months for average returns of over five-times, probably one of the best performance for a VC in Europe where exits are typically harder to achieve.
Out of these I would pick is Zong as the best success story. I met with David Marcus (left), founder and CEO of Zong in 2004 and tracked him closely until we invested in 2007. I felt he had amazing talent, we backed him to build a mobile payments business in Europe and then the US when he moved in 2008. The growth has been spectacular and in 2011 eBay acquired Zong for $240m to merge the company with Paypal.
David joined Paypal as VP Mobile and within nine months he was promoted as President of Paypal running the whole business! Zong has been an amazing adventure, David is probably one of the most successful European entrepreneurs in the Valley and we built a fantastic partnership (and friendship) through this journey.
What do you look for in an investment?
FC: Great people. Something different. Potential for significant strategic value. The first criteria is the key, we invest in people not ideas. Every business plan will differ from reality so we need people who can adapt the trajectory and build while moving at light speed. Our model is to do fewer deals in areas we know well, so we tend to focus on businesses that are highly differentiated, as they tend to lead to strategic merger and acquisitions as an exit route. Take Farfetch.com as an example, it is a very unique business with global ambitions, led by an amazing entrepreneur and team, exactly the kind of situation we love to be part of.
What's your biggest or most expensive regret?
FC: Backing a business I liked a lot while not being convinced by the team from the get-go. This will not happen again. It doesn’t mean that we need to find a Founder CEO that will stretch all the way to a very large business – although we seek to find and back those – but at least someone we can create a relationship with, who will listen and will become a great partner over time.
What inspires you the most?
FC: Silicon Valley! So inspiring, each trip I make there makes me excited to be in this business and humble as well. The strength of the ecosystem there is spectacular, it is hyper-competitive and the concentration of talent is unique. It's exciting now that we're building a number of centres of excellence in Tech in Europe, especially London and Berlin, but also Stockholm and Paris. Still, I do believe that deep links to Silicon Valley are essential to build an investment business anywhere in the world as so much is driven by innovation from this part of the world.
What advice would you give a budding investor?
FC: The advice I would give is to see this business as a long-term game. Economically it takes a long time to make money, and to build both a track record and investment judgement. Generally businesses take a few years to grow, typically eight to ten years, although recently we have seen businesses scale faster.
Still, building a business takes time, I insist on the word “build” as young investors often think that they could “flip” a business – this hardly ever happens, especially in Europe where the buyers are scarce. The other advice is humility, having capital does bring some “power” but not the right – or skills – to run the businesses we back. We are just here to help and share a common goal to increase the value of the companies we back. It’s about finding the right balance, I thrive to build proper partnerships with the entrepreneurs I have the chance to work with. Mutual respect is essential.
Any common mistakes you see entrepreneurs make?
FC: I can think of a few. A typical mistake is not understanding the investor's business and not doing enough due diligence on them. Good entrepreneurs will have options for funding and as a result should spend time researching who fits his business best (at a partner level as well as firm level). Talk to the entrepreneurs they have backed, look at what they tweet, say publicly, write about, and invest in - to make sure they're relevant to you. Don’t think of investors as a source of capital but as a partner in the business to help you reach your goals, and help you be even more ambitious.
Do you have any advice for dealing with investors?
FC: Do your homework! Get to know them in advance, make sure they are relevant for you and that your story will be relevant to them. Find an angle to approach them. Investors have the same problem entrepreneurs have, not enough time! As a result they focus on people and opportunities they can relate to.
What excites you about future tech?
FC: I am excited by what I don’t know yet and what’s ahead of us! There is so much innovation ahead of us with incredible technologies and services to be created. Software and the internet have only started recently to conquer the world! Looking at Europe we feel in a corner with so much bad news around. Looking at our environment in tech, the contrast is stark. With the Cloud, Social and Mobile as three ubiquitous platforms, European entrepreneurs can now afford to have global ambitions.
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