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The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Why Large Seed Rounds Increase the Chances of Success | When to Sell in Venture | Why Multi-Stage Firms Do Not Do The Work | Is Europe Totally F****** and Why AI Means London Can Compete with the US with Hussein Kanji

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Key takeaways

  • Fundraising should be time-bound rather than target-based, enabling quicker investments.
  • Larger seed rounds significantly increase the chances of success for startups.
  • AI presents a unique opportunity for the UK to compete with the US in technology.
  • Team dynamics are crucial; fostering diversity and nurturing talent is essential for long-term success in venture.
  • Historical successes like Deliveroo and Darktrace inform current investment strategies and expectations.

Summary

Fundraising Insights

Hussein Kanji discusses the lessons learned from raising his first fund, which took 39 months. Key insights include the importance of fundraising for a specific time period rather than a target amount, allowing flexibility in investment decisions. He emphasizes the challenges faced by emerging managers and urges them to be prepared for the intricacies of fund creation.

Investment Philosophy and Strategy

The conversation covers the philosophy around successful investments, specifically about the importance of larger seed rounds. Hussein believes that larger initial investments significantly increase the likelihood of achieving success, as the averages show a correlation between the capital raised and the probability of becoming a unicorn. He reflects on his investment in Darktrace and Deliveroo, detailing how these experiences shaped his approach to future investments and when to sell.

The State of Venture in Europe

Hussein provides a critical perspective on the current state of the venture capital landscape in Europe, highlighting the challenges posed by small seed rounds and the overall health of the London Stock Exchange. He posits that while London may have problems, the rise of AI offers the UK a chance to compete with the US in tech innovation. He also suggests that government involvement in venture should be approached cautiously, advocating for a focus on capitalizing companies properly.

Team Dynamics in Venture Capital

The episode delves into team building within venture partnerships, with Hussein addressing the difficulties in hiring female partners and the importance of creating an inclusive environment. He emphasizes the need for investment in the next generation of talent to sustain the industry's growth. Hussein reflects on the breakdown of his partnership with Rob, discussing how differing visions can lead to separation and the need for understanding within a team.

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Show notes

Hussein Kanji is the Founder and Managing Partner of Hoxton Ventures, one of Europe's leading early-stage firms with mega wins in the form of Darktrace and Deliveroo. Hussein cut his teeth in venture at Accel Partners in his early years. 

In Today's Episode with Hussein Kanji We Discuss:

1. How to Raise a Fund: 

  • What are Hussein's biggest lessons from his first fund taking 39 months to raise?

  • Why does Hussein believe you should fundraise for a set amount of time and not to achieve a certain amount of capital?

  • Does Hussein believe governments should be investing in venture funds?

  • What are the biggest mistakes Hussein sees emerging managers make when raising?

2. How to 10x a Fund:

  • What is Hussein's formula for knowing when to sell an investment?

  • How did Hussein miss out on making $400M in Darktrace? What did he learn from it? 

  • How much money did Hoxton make from Deliveroo? How did doing 37x on Deliveroo impact how Hussein invests today?

3. How to Build a Team in Venture:

  • Why does Hussein believe the incentive mechanism for young VCs is broken? Why do they just want to get cash out the door and not worry about quality?

  • Why is it hard to hire female partners today? What needs to happen for this to change?

  • What are the single biggest ways that venture partnerships break down? What went wrong between Hussein and his partner, Rob?

4. Is Europe Totally F*******:

  • Why does Hussein believe small seed rounds are a massive problem in the UK?

  • Why does Hussein believe the dire state of the London Stock Exchange is not a problem?

  • Why does Hussein advise companies that the best way to scale is in the US?

  • What advice would Hussein give to Keir Starmer on how to stimulate growth in the UK?

  • Why does AI mean that the UK can now compete with the US?

 

 

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