Just like Balderton VI two years ago, and Balderton V before that, very little has changed. For an industry that invests in change, we believe in consistency in Venture itself. We will continue to focus primarily on Series A, we will continue to back European founders with global ambition, and the fund, at $400M, is just $25M larger than our last.
Uniquely amongst firms of our scale in Europe, we have now focused on Series A for over a decade. In that time, we have invested in over 200 companies, 95% of whom received their first investment from us at Series A.
Last year alone 7,500 European founders hit our radar, each building a company at or before Series A. Over the last two years we held 100 events at our offices, each focused on challenges faced by founding teams at Series A.
As a team, this focus on Series A is always the easiest thing to sign up to with a new fund. Series A is a unique moment of inflection in a company’s development. It is not a matter, as Series B, C and D can be, of doing more of the same, only with more people and more money. It is instead a moment in time when a team has to grapple with rapid and fundamental change. It is a time when all assumptions must be re-visited and when things that made you successful before can actively hinder you in the future. It is a difficult time but it is also an exciting one.
Pre-Series A, most companies have just a roomful of people. Most of them know each other and are, in the case of repeat founders, often a case of ‘getting the band back together’. In the highly iterative, experimental Seed phase of a company’s development this close-knit structure works.
But, if you want to build a really big business, you need to re-focus on a trajectory that can get you to your first hundred employees, then your first thousand and beyond.
You need a diversity of thought at every level. You need admin, finance, and legal functions. This requires thinking about process and structure. It drives explicit conversations about inclusion, values and culture. It means building out Talent and People functions.
These are big changes - Series A changes.
Charlie Delingpole, Co-founder and CEO of ComplyAdvantage talks about the change from being able to talk to every one of his 15 employees every day before Series A, to the challenge today of managing communications with hundreds of employees.
After Series A, you need a diversity of thought at every level.
Pre-Series A, companies typically restrict the market they target in order to simplify their feedback loop. This focus could be based on geography, on the size of the customer, on the channels used to access the customer.
But generating hundreds of millions of dollars of revenue requires you to straddle multiple markets, selling across timezones to different sorts of customers at a variety of internally consistent price points.
That’s a complicated change - a Series A change.
Maria Raga, CEO of Depop talks about preparing operationally and strategically to launch in new geographies such as the United States.
Generating hundreds of millions of dollars of revenue requires you to straddle multiple markets, selling across timezones to different sorts of customers at a variety of internally consistent price points. That's a complicated Series A change.
Pre-Series A many founders are maniacally product-focused: what is the thing we are building and what is its relationship with its user?
But later stage investors, strategic exits and IPOs require the placing of a company and its value within the context of the broader landscape.
Your product is scratching one of its customer’s itches, but what else bothers them? How do you relate to those?
Are you the next generation of an existing category or are you going to create an entirely new one?
Once identified, how do you move your company, your team, your product in the right long term direction in order to benefit from the context you can build around yourself?
This shift from the tactical to the strategic is a classic Series A challenge.
Hiroki Takeuchi, Co-founder and CEO of GoCardless talks about maturing his strategic positioning and marketing, and the need to be more strategic about growth channels after Series A closed.
The shift from the tactical to the strategic is a classic Series A challenge.
And, in the interest of transparency, let me also admit that investing at Series A can generate incredible returns for successful investors. The key theme that characterizes the Series A moment is that it is not just a matter of doing what you were doing before, only moreso. It’s the opposite. It represents a discontinuity when things change entirely. The risk around that moment is large. Series A investors cannot ‘spreadsheet invest’ from afar at that moment; you have to be nearby, you have to roll up your sleeves, you have to be available at any time of the day or week, you have to connect a company and its team to a community of others who have already trodden the path. It also helps, of course, if you have actually done it yourself before. Series A is hard, but it is also exhilarating. It can go wrong, but when it goes right the financial returns are spectacular for founders, our limited partners and ourselves.
The key theme that characterizes the Series A moment is that it is not just a matter of doing what you were doing before, only moreso. It’s the opposite.
I have focused on three areas of change here and linked to just three of our portfolio companies. The reality is that the Series A moment hits much more than just this and I could easily have referenced any of our other portfolio companies instead.
While every company and every founder is unique, the great advantage of our decade-long focus is a team with in-built pattern recognition. Every member of our team benefits that pattern recognition — both through just living this business day in, day out but also through the huge investment we have made in our Build with Balderton platform that is designed to make sure the right insight, connection or person is always available when any of the companies we work with needs access to them.
While it has risen to almost being a cliche at this stage, I really do believe being a venture investor is a role of huge privilege. We get to meet hundreds of passionate people, pouring every resource they can muster into building companies.
Every now and again, one of those teams connects in some deep way with ours and we get to join them on a journey as thrilling as it is challenging. With that privilege comes a huge sense of responsibility. Especially at Series A, we cannot just write a cheque and stand back — we owe it to our founders and our limited partners to do so much more. This is what has made the last ten years so fulfilling for the team at Balderton and, with another fund ready for action, we look forward to continuing on that journey.
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