What Seedcamp Learned From Sprouting Startups In Europe

I get a lot of requests for interviews with companies outside the US. Reshma Sohoni, Seedcamp’s CEO, has helped launch 22 of them.

I invited her to teach what she learned from the hits and misses

Reshma Sohoni

Reshma Sohoni


Reshma Sohoni runs Seedcamp on a day-to-day basis as its CEO. She joined Seedcamp from the Venture team at 3i.



Full Interview Transcript

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Here’s your program.

Hey everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. You guys know what we do here. Every day, I bring on somebody else who can come on and teach us how they build businesses so we can suck as many ideas from them as possible and feed those ideas to you, my audience, so you can go out there, build incredible companies, and give me credit for helping you to do it.

Hopefully you’ll do what today’s guest is doing, come back here and let me interview you about how you built your company so you can teach others.

So today’s guest is Reshma Sohoni. Reshma, can you help me with the last name one more time? In fact, say the full name.

Reshma Sohoni: Reshma Sohoni. I’m the CEO of Seedcamp.

Andrew: All right. Now I understand why Robert Scoble has his guests read their names themselves. Why he starts off, first question is, ‘Who are you?’

Okay, so she’s the CEO of Seedcamp, a program that’s been growing the European entrepreneurship community by connecting founders and experienced mentors. Seedcamp also acts as a micro-seed fund and invests in startups. Its investments include Zemanta, MyBuilder, and Erply. My goal for this for interview is to find, did I just get some wrong? I saw. . .

Reshma: Along with 19 other companies.

Andrew: Along with 19 other companies. My goal for this call is to find out how they do it, to find out how they find and fund entrepreneurs, and to find out what they’ve learned about building companies from backing all these different startups.

First of all, welcome to the program.

Reshma: Thank you. It’s fun to be here.

Andrew: You’ve mentioned earlier you’re at home because it’s late your time and that your husband is somewhere in the background and I’ve asked him please to come on camera if I ever get anything wrong, especially the pronunciation of his last name. You took his last name?

Reshma: We’re not married yet. Fiance.

Andrew: Oh. Fiance. Okay. Are you taking his last name?

Reshma: [laughs]

Fiance: You don’t want to have to pronounce that.

Reshma: Yeah, you don’t want to have to pronounce that German last name.

Andrew: What is his German last name?

Reshma: Shtokel [SP].

Andrew: Shtokel! I could do Shtokel. All right. But don’t go by based on what I can pronounce. You’ve seen me mispronounce a lot here in this call. Let’s start off this way. What’s the process that Seedcamp goes through?

Reshma: Yeah. Throughout the year it’s pretty changing and dynamic, which is, I think, what keeps life interesting and keeps a lot of freshness in the whole program. Pretty much, a big part of the year, and things are going to change in the next three years because we just finished Seedcamp One basically, but first part of the year is really identifying some of these startups. I think how we differ from a lot of other programs is their immediate value to the startups who come ‘apply’ to Seedcamp.

There’s these mini Seedcamp days, one-day events, or Seedcamp week, where immediately they get to meet about 50 to 60 mentors at any given event. We try to always keep a ratio of about three to four mentors per team. After that, those are obviously, from their view, it’s a huge learning experience just in that one day and relationships they build. From our view, it’s getting to know them. It’s definitely a way for us to filter the investments we want to make and the teams we want to back. We watch how they take feedback, how they listen, how they iterate.

The next six months are a lot around investing in these companies and then supporting them quite actively and across the mentor network here. We have a road show in the U.S. that we do as well, because the U.S. is absolutely a critical component for anybody wanting to build a global business, obviously.

Andrew: Okay. So if I understand this right, it starts off with these mini Seedcamps, moves on to Seedcamp weeks. . .

Reshma: Yep.

Andrew: . . .if they make it to the next level, and if they make it to the next level still, after you’ve narrowed them down to 20 companies, you invest in about seven of them.

Reshma: Historically. We’re going to do more in the next three years.

Andrew: Okay. I, in the introduction, said that you focus on European companies but I’d seen a couple of Middle Eastern companies in there too, so it looks like you’re broadening beyond just Europe?

Reshma: Well, I guess that we continue to enlarge our empire. [laughs] The definition of Europe is always broadening. No, but basically the idea was if you want to make Europe a core to your business, as a market, and that’s why we have a couple of companies that are even in the U.S., and one Jordanian company. That’s where we can help, if you’re a first-time entrepreneur and Europe’s a big part of your business. It doesn’t matter where you come from. We’re pretty agnostic to that.

Andrew: I see. Okay. I want to understand the funnel here. You do a mini Seedcamp. Who’s invited to the mini Seedcamp? Who could even be there?

Reshma: Anyone, if you can buy yourself an easy jet ticket to any destination, or say a cheap flight ticket, you’re welcome from anywhere in the world. Let’s take Warsaw, for example, you can come there, you can come to Copenhagen, you can come to Tel Aviv, you can come to Barcelona. Any startups are invited. There’s always 20 startups. As I said, the ratio we try to maintain, so there’s always between 50 and 60 mentors.

We try to mix the mentors, of course there’s a quite heavy local presence in Barcelona or Warsaw or wherever, but often times a lot of the UK guys, the mentors will come over, or even the U.S. guys who are traveling through will come over. Real mixture. We’re all about breaking down boundaries so we try to encourage as much integration and interaction as possible.

Andrew: You open it up to whoever can make it out there and you’re saying about 20 show up per meeting.

Reshma: We choose 20. That’s always our. . .

Andrew: Ah. I see. It’s not just about having the easy jet ticket, it’s also about being invited, or at least there’s some kind of screening process first.

Reshma: Right. There’s the online application process.

Andrew: Mm-hmm.

Reshma: So, out of that as judges, which include our investors in Seedcamp, and that’s kind of a unique factor as well, that we are by the industry, for the industry. We’re funded by the venture community, the Angel community.

Andrew: How do you know who to pick?

Reshma: We keep two things pretty top of mind. One is we’re not trying to creat a new VC fund as such and we’re not trying to compete with the venture capital industry. We’re a feeder into Angel and VC investors. At top of mind in that sense is what criteria they look at, we look at, because those are the kinds of investors that’ll likely invest in our company, so that’s important to us. Secondly, ultimately we’re a commercial business as well, so liquidity and returns are important, too. So we, again, look for very similar criteria.

Andrew: This is really early on. How can you tell, early on, who’s got it and who doesn’t?

Reshma: Yeah. So then a part of your question is how we pick. We absolutely look at founders. That’s a pretty crucial part of how we make a decision. When we look so closely at founders, we look at the way they think, and that goes into how do they think about the market and what size of market? How do they think about their own opportunity and their own approach to the market?

All the other questions, you talk about market size and their specific approach, and how did they channel to market and all that, often comes through the entrepreneurs in Europe, or as you get to meet them and really understand how they think. The focus, very much, is on the the founders themselves.

Andrew: When they send you an application, what you’re looking for is to see how they think about the market that they’re going to pursue. How they think about the opportunity. Do you try to see whether they have a product up and running yet?

Reshma: Yes. One thing, there’s a perception in the market, different perceptions about the companies we look at. Ideally we don’t look at pure ideas because you can put anything up on a PowerPoint slide. We do want to see a prototype.

In Zemanta’s case, when we saw them, we saw them with a prototype in Slovenia, so we had no idea if in English, the biggest global market, would actually work or not. That was okay because we knew something worked in Slovenian, so that’s fine.

To the other extreme, when Erply came, they actually had a few customers. We also, those are very rare, and often those get the hype and the coverage from Tech Crunch and so forth, but those are minority, a few percentage, under 10% of our companies. It’s just they are further along so they get coverage. Really, at the prototype stage.

Andrew: I see.

Reshma: Have to have something working.

Andrew: So Zemanta had a prototype. What is Zemanta for people who don’t know it?

Reshma: It’s a tool for anybody offering on the web to enrich the content of what you’re writing, so to speed up the content creation process.

Andrew: Okay. So if I were blogging about you and I had Zemanta in my WordPress blog, I’d be able to find a quick picture of you. Just one click and the picture would be entered in there. When I wrote your name, another click from Zemanta’s tool would allow me to link directly to you and that’s the kind of automation that Zemanta does. What did they have? What was their prototype like when they first approached you?

Reshma: Actually the two guys were from the media industry. It was very specific to technology media, the covers that they were doing. Again, we couldn’t really understand but it had the essence of the product you see today. Again, it was just in Slovenian. They didn’t have the databases, necessarily, of content so it was trying to get data from creative commons and so forth. Now they have partnerships where they can get more proprietary data.

The kernels were there. You could see where the product could evolve. But to be frank, they didn’t have a business model for a very long time and it’s taken a good year-plus to really figure out what the business model is.

Andrew: What is their business model? Because the tool as I described it now is all free.

Reshma: Yes. So to the user it’s free, but for publishers, they charge publishers for discovery of the content. They have their own ranking mechanism and indexing mechanism but for publishers who want their content and for discovery of that content, they do pay Zemanta for it.

Andrew: So if I wanted my site to be listed on someone else’s blog who is using Zemanta, I would pay for that?

Reshma: Yes, but you wouldn’t be ranked any higher or anything necessarily like that if you’re not relevant.

Andrew: I see. It’s inclusion and then they include me whenever it’s relevant.

Reshma: Yes.

Andrew: I see. What about MyBuilder? What did they have? What do they do now and what did they have when they met you?

Reshma: Yeah. It was really interesting. That’s a story of a single founder. A lot of people say or are adversed to backing single founders. It absolutely helps if you have a co-founder and especially if you’ve got a complementary skill set.

Ryan really knew his space. He was a stonemason before he started MyBuilder, which is a marketplace for builders and homeowners to meet. When we met him, he just couldn’t catch a break. A lot of the community was saying, ‘Oh, it’s interesting. We can see that immediately you’re a marketplace so you can make money. The business model is in question.’ Really, just wasn’t getting a break. Seedcamp gave him that break and now he’s a very profitable business and making really good revenue. They’re pretty dominant in the marketplace.

He started with a percentage of transaction fee.

Andrew: Mm-hmm.

Reshma: And he’s now moved on to adding a subscription-based model. Tradesmen actually have to pay an annual subscription to be part of MyBuilder, which goes to show, if you build a very valuable marketplace, you can certainly get one party, at least, to pay for that value.

Especially in the recession, these builders, you get stories of them saying how MyBuilder saved their lives and their businesses because it was starting to be harder to find jobs. That’s another example of a company where they got the break, and he’s got one of the top TV channels investors in him and he’s got one of the top construction companies in the UK as an investor in him. All that credibility you got and the connections you got from the mentors really helped him to get to that point.

Andrew: Okay. I’m on his website right now. It says, ‘Find the best UK builders. Get the best quotes.’ You can post a job, you can get quotes, you can hire tradesmen, you can leave them feedback. That’s the business right there.

Reshma: Exactly.

Andrew: How old of a business is it?

Reshma: Basically launched a little bit after, kind of a re-launch, after Seedcamp, so it’s just a little over two years old.

Andrew: Okay. How did he get people into his database? I mean, how did he get the early people in there?

Reshma: It’s the chicken and the egg, right?

Andrew: Yeah.

Reshma: I think that he was helped by Travis Perkins [SP], which does a mailing into all the households across the UK. Basically they packaged his offering into that. That solved a big part of the problem.

Andrew: How did he get into that? Did he pay for it or did he partner up?

Reshma: No, because Travis Perkins is an investor.

Andrew: Ah. Okay. In addition to investing money, they’ve also sent a note about him.

Reshma: Absolutely. Yeah. There’s a commercial deal there. Similar with Channel 4, which is a big TV channel here, same thing, they’re investors in the company and obviously a commercial relationship. So we’re really smart about, for this business, to get not just Angel money but really commercial money that could help him scale.

Andrew: How did you do that for him? How were you able to help him get that?

Reshma: A lot of it has to do with the mentor network. I’m not trying to claim credit as the one person to do it, it’s really the network we have and he was able to get a good group of Angels, or a couple Angels on board at the beginning, and just really using that network to see who we know at what places. We’ve got very good relationships with Channel 4’s investment arm, so they followed up in a couple of Seedcamp companies. Obviously that helps a lot.

Andrew: Okay. How about one more? What’s Erply?

Reshma: Erply are these guys in Estonia. If they came knocking on UK VC doors or U.S. VC doors, probably not going to get anyone to really open the door or pick up the phone. They had a small business there, basically a new one, but a growing fast, small business around web-based ERP.

Andrew: What’s ERP?

Reshma: Enterprise resource planning.

Andrew: Mm-hmm.

Reshma: Sorry. So your inventory and all your systems competing with SAP of old, and things are moving more and more online. There are startups in this space and there’s been a noise but they came to us because they really wanted to break out of the Baltic market and they really wanted that stamp of credibility and again, the connections. Right?

And so, actually we brought them on the U.S. road show and that’s where they met Redpoint Ventures, so they got investment from Redpoint and Satish [SP] from that trip. All of this part of the program becomes really valuable. You never know where it’s going to come out of. You just have to fiddle yourself across a lot of relevant parties.

Andrew: How did you end up being the CEO of Seedcamp?

Reshma: Luck.

Andrew: [laughs] I know you have a background in the business, right? You were, before this, with 3i Group?

Reshma: Yes. Actually, I’m American and in the U.S., I originally had worked with Softbank back in 2000 who had a joint venture with a news corp called eVentures. It was sort of incubator 1.0. So I learned a lot of things about how not necessarily to do it, but really love the early stage. Having worked a lot in the Valley and New York, knew a lot of the factors that make things work.

When I met Saul and he had the original idea around Seedcamp, we had very similar ideas about it. I was leaving 3i at the time, they were moving later stage basically, and I wanted to focus on early stage. He and I got to talking and we set this up. We actually raised our own money in very short time, in six weeks.

Andrew: Wow. He’s got a lot of connections. He has an incredible history, the founder of Seedcamp.

Reshma: Yeah.

Andrew: Could you call yourselves co-founders then, if you were there in the early days?

Reshma: Yes. For sure. [laughs]

Andrew: I would. I got to tell you, I’ve seen people who just were hired on about a year after a company launched and because the company grew while they were there, they’re calling themselves co-founders.

Reshma: Oh, definitely. There were a few PowerPoint slides, but I was part of the fundraising process and all that as well. So, yeah.

Andrew: So Saul Klein, I’ve got here some of his investments. Tweetdeck, Bit.ly, LastFM. Was he also an investor in Skype?

Reshma: He was, actually I don’t know. He was head of marketing at Skype, but I don’t know before that if he put money into the company or not.

Andrew: What about this, as long as we’re talking about some companies that you guys invested in. What happened with, how about, Kublax? The company. . .

Reshma: Oh, I love that story.

Andrew: Tell me.

Reshma: You got to celebrate the things that don’t work.

Andrew: Yeah. Exactly. And learn from them. Am I pronouncing the name right?

Reshma: Kublax.

Andrew: Kublax. All right. So I’m not too far off on that. That’s like the mint.com for the UK.

Reshma: Yes. I actually did a case study on this recently, a lot of learnings for us. Actually, after three months, so we have a very strong support period in the three months following our investment.

Andrew: Mm-hmm.

Reshma: One of our co-founders left in that three months. You can’t predict that stuff. Right?

Andrew: Why? Why did the co-founder leave within three months? Here he’s got funding, he’s got an infrastructure, he’s got direction, he’s got people who are helping him. Why?

Reshma: Personal issues.

Andrew: You mean like family issues?

Reshma: Yes.

Andrew: Interesting. See, I would actually, I got to say this, my mom wouldn’t mind me saying this, even if my mom was on her death bed, I’d continue working at the company. Don’t you think that entrepreneurs find, I see it startling you, but don’t you think entrepreneurs will come up with something like, ‘I’ll go see her for a quick minute, but I got to throw myself into work’? Maybe they come up with the excuse like, ‘That’s the way I get over my parents dying. I got to work.’ I’m disgusting you now as I say this, aren’t I?

Reshma: [laughs] I totally get it. It wasn’t, actually death might be easier.

Andrew: Oh, okay. It was worse than that. There’s some family issue that’s worse than death and he’s not a jerk like me. Sorry, mom.

Reshma: [laughs]

Andrew: All right. So one of the co-founders leaves. What happens next?

Reshma: As you can tell, you’re starting to be at the point of vicious cycle. Right? One of the co-founders leaves, and not all companies, I’ve been watching the debate about lean startup versus not, some companies need money and financial services startup to get credibility to ask users for your accounts and passwords and things like that. You need to put a fair bit of money into the business. Obviously with half the team gone, it was harder for them to raise money. They raised less money than they really needed to get the product out.

Andrew: Okay.

Reshma: The product wasn’t quite as good, right? Things were, the usability wasn’t as smooth as you’d like to have put a bit more money in to. Yodlee is the backend for Mint as well, but in Europe, at least, it was failing quite a bit. It wasn’t as stable. And I think even Mint had a lot of problems with Yodlee on the backend. It was even worse and in a way you have to throw marketing money at it to say, ‘Look, that’s not us. It’s Yodlee.’ They didn’t have necessarily the marketing expense for that.

Now you’ve raised too little money, you put a product out that’s not really a right fit for the user and everyone’s pushing you to get your product out because it’s trying to test do users want it, how they. . . So then, bad product, you try to go raise more money. You can see how this is going.

Andrew: Yes.

Reshma: Finally, basically, one of the investors who was willing to put money in said, ‘Look, unless you raise X amount, we’re not going to invest.’ And they never got to that point where they could.

Andrew: Why did losing one out of three founders hurt them in the fundraising process so much?

Reshma: No, one out of two.

Andrew: One out of two. Why did that even hurt so much?

Reshma: Well, because the one that they lost was the front-facing person.

Andrew: I see. Okay. What do you do differently if this happens again?

Reshma: Yeah. It’s a tough one to predict. Right?

Andrew: Yeah.

Reshma: That’s a good question. We’re always trying to encourage these guys to, and one of the things we do is get an advisory board before you even are trying to raise money. Right? Get people who care about your business.

One of the learnings I have is don’t be just one or two guys. Right? Even if it’s not part of the core team, get the people who are really going to help you get out there. If one leaves and you’re not the person front-facing, then you’re advisors can help you with that. Stuff just happens. The chemistry between two people is so important, you can’t just go and hire someone as a co-founder so quickly. That’s one of the ways I think you can probably get around it. We’re better at picking new entrepreneurs, as well.

Andrew: What did you learn about picking entrepreneurs from that experience?

Reshma: You want a complementary team, but you also want both people to really be deeply integrated into the business and you can’t just compartmentalize between founders either. In a way, both people need to be able to do both jobs. They shouldn’t, but they at least need to be able to.

Andrew: I see. So the front-facing person should be able to code a little bit and understand what’s going on with the code of the site, and the coder needs to know how to present the business well.

Reshma: Yeah. Absolutely. Again, you don’t want them to be both working on everything together, but the capacity should at least be there.

Andrew: What else have you learned about what it takes to be successful as an entrepreneur?

Reshma: Iterating. I think we hear it a lot, we hear it all around, but it is constantly the sense of urgency you need to have. Particularly in Europe, I find we really need to push that through a lot more, is a sense of urgency and a constant iterative philosophy is whatever, whether it’s customer feedback, or your board feedback, or your team feedback.

Andrew: Can you give me an example of how one of your companies has done that well?

Reshma: Zemanta is a good example. They’ve always tried to iterate and try to figure out, obviously at some point, revenue model and business model was going to become important. And really try to figure out, they put a premium version out there, tried to sell that. That didn’t necessarily work at the time because everyone was pulling back on spending. They tried to do different things to try to figure out what was going to be the right fit. That’s one example.

UberVU actually, you had mentioned the company on the side, a Romanian group of founders, similarly, we thought the API was going to be their main business but we’ve actually realized that people are migrating from a free account to a premium account. They’ve continually iterated on what was going to be the main thrust of the business while being able to still provide value to both sets of customers. And they’re iterating on pricing packages and how people step up. It’s always listening to customers and figuring out what’s going to get them interested, hooked, and moving along the chain as you want them to.

Andrew: UberVU is a website where I can go and type my company name and see what people are tweeting about it, see what people are saying on Tumblr, see what people are saying on lots of different sites. If I want specifics about what they’re saying and I click over to, say, find out what people specifically are saying about my company on Tumblr, that’s when they say you need a registration, you need to pay for an account.

Reshma: Exactly.

Andrew: That’s what they iterated to. How hard is it to shift your whole business model so quickly? You’re talking about trying to make money off the APIs, which is selling one kind of product, to suddenly selling membership, which is a different kind of product. How can people do that well?

Reshma: Yeah. In a way for them, it happened a bit by, not chance, they put themselves in that position, but as they were continuing to improve the product, they were just seeing a ton of visitors and visitors actually starting to become users, users becoming customers and so forth. It’s not easy and they have a small team, so it’s not easy.

You want, I think there’s a debate around focus versus being able to do two or three things differently. It’s an agile team. The API product, as such, isn’t really different. Yeah, it’s a different way to use the service that they’re building up, but the core of what they’ve been building is the same. It’s just a pivot around how they actually sell it. I guess that’s different from having to fundamentally change your business model versus, there’s a company called Redmine Online.

Andrew: Mm-hmm.

Reshma: It’s actually based in California. They had a huge, painful pivot is when they came to Seedcamp in ’07, it was around peer-to-peer renting, or, yeah, renting, lending. They had the idea of lawnmowers to houses to wherever. I think it was all a bit still too early for that. There’s a lot of issues around all those different kinds of products, around insurance, how do you get access to that product, and so forth. A lot of very tough months and they ultimately looked at where is the money.

I think that’s an important lesson for a startup too is, you kind of have to sometimes go with where is the money? They realized that at the same time, a lot of the real estate agencies and so forth were just trying to grapple with what was happening with the social media and users engaging with products much more. They actually started to say, ‘Okay. We will take you online. You guys are doing a lot of this offline work, but we will be your, not an agency, but we’ll help you get online. We’ll help you use Facebook and a lot of the social media tools, and network tools, to help you be much more efficient and reach more users.’

It was a huge pivot, but basically was a hell of a lot of trial and error and work to find, ultimately, who was going to pay and there’s nothing like a point of starvation to get you to that.

Andrew: [laughs]

Reshma: Really focus on who’s going to give me some money.

Andrew: I see. So, now they’re helping companies get on Facebook and social media. I thought they were also helping landlords communicate with their renters and renters communicate with each other, too?

Reshma: That’s what, yeah. Yes. I was saying using email, Facebook, a lot of different online mechanisms.

Andrew: To create communities around rental property?

Reshma: Yes.

Andrew: I see. Okay. Someone in the audience was asking about spelling for these companies. Let me make sure that I give the harder ones. Erply is E-R-P-L-Y.

Reshma: Yep.

Andrew: UberVU is U-B-E-R-V-U.

Reshma: Yep.

Andrew: Of course Redmine Online they can figure out for themselves.

Reshma: And MyBuilder.com.

Andrew: And MyBuilder.com they better be able to figure out for themselves. What have you learned to look out for? What are some big mistakes that you see over and over?

Reshma: Oh, tough questions. That’s why you’re so good at what you do!

Andrew: Thank you. I may not be able to pronounce, but I’m able to apparently ask the good questions, the helpful ones.

Reshma: I don’t know if this is true of the readership, well you have readership across the world, but I think the biggest thing I see mistakes is not listening to your users. You see a lot of, we always err on the side of technical. Right? We see technical founders. There’s a lot of love of the technology, but again, or even love of your product from how you use it rather than how your user is going to use it. I think losing perspective of users.

It’s not just startups at the beginning. I think you’ve got to maintain that throughout and as your user base changes, you have to understand segmentation and what kinds of different users that you have. I think that’s the biggest mistake I see over and over again.

When you ask that deeper question of, okay, you say X about your product but who’s using it? What are they telling you to be qualified customers? What are they doing with it? How engaged are they? What are the friction points? Keeping the user focus, I see big mistakes around that.

Andrew: I wonder how to do that right because, on the one hand, I hear some entrepreneurs lose everything, time, money, lose their whole companies because they end up listening to every customer and they end up doing everything.

I had one entrepreneur who, I think, was offering Viagra for dogs because somebody asked for it, he was running a health site, he said, ‘All right. I got to give people what they want.’ On the other hand, I see the founders of AirBnB went out and lived with their customers to see how much more they could listen to them, how much more they could give them.

How do you do it right? How do you do it so that you’re getting enough information but not so much that it’s going to crush you? Do you have an example maybe of someone who’s doing it well?

Reshma: MyBuilder’s probably a really good example of it. I am not, hand raised, I am not an expert on this. As an example of who does it well, MyBuilder, he didn’t necessarily have, because he was a single founder, he didn’t necessarily have the CTO on board yet, but who he had from day one was a customer service person.

He’s obviously a stonemason so he knows the mind of a tradesman, but he always had somebody interacting with both sides. Right? The supply and the demand side of it, from the homeowners side and the home builders side.

You need a tension between your team members too. The guys who, you as a, whether you’re a CEO, saying, ‘We need to get this out to market.’ Someone who’s the voice of the user, the customer, and someone who’s about building and always has to think about the tradeoff of listening to one more customer with one more feature versus having a vision for what the product is and where the greatest value and the greatest use will be. I think you need to bring that healthy tension within the business. I can’t say, ‘Spend five hours on it.’ But I think if you have, or whether you’re only two people and then you have a split personality, but you need to create that tension, that point. That’s the way to keep a balance.

Andrew: What about revenue? I’ve heard you mention revenue a few times. I know when I interview entrepreneurs here in the U.S. who’ve gotten funding from companies, from organizations, like yours, they don’t think about revenue. In fact, they intentionally put it out of their mind for a long time until they build up a customer base and then they add revenue. Why the difference? What’s your philosophy?

Reshma: Because it’s harder to raise money in Europe.

Andrew: Mm-hmm. I see.

Reshma: To be honest.

Andrew: Yeah.

Reshma: It is. It takes twice as long to raise half as much money in Europe as it does in the U.S., on average. We do have to, these things are going to run out of money and we do focus them to first get your product out there. Right? And iterate and understand how it’s being used.

Because again, if they’re very technical or academic, they just want to spend their whole time just building features, building the product. There’s a discipline around getting it out. Yes, there’s a discipline around figuring out ways to make money because as bootstrapped and cheaply as you try to do it, if it’s taking longer to raise money, which it realistically does, you’ve got to kind of figure out. I think 16 of our 22 companies make revenue. So 19 have product out and 16 make revenue.

Andrew: 16. How many of those are profitable?

Reshma: Four or five those.

Andrew: So four or five out of, did you say 26 so far?

Reshma: 22.

Andrew: 22 so far. Four or five out of 22. That’s a huge percentage that are already profitable and you guys haven’t been funding for more than three years, right?

Reshma: Yeah. I’ll borrow Paul Graham’s phrase ‘some are [??] and profitable,’ so you got to take that with a grain of salt. But, yeah. It’s amazing.

Andrew: It doesn’t sound like they’re going to pocket millions of dollars every day. But it does sound like they’ve got enough of a runway that they could continue to iterate and test and figure things out.

Reshma: Exactly.

Andrew: How do you get them to profitability? We are in a recession. We’re in an environment where people aren’t so willing to take money out of their pockets. They’re not willing to trust their credit cards online. How are you training your startups to find money?

Reshma: They are run incredibly lean.

Andrew: Mm-hmm.

Reshma: Because they’re able to get some revenue in, that helps run up our ratings as well. Yeah, when they raise money, they are raising for the next 12 months or so with that visibility in mind. They try to get anything and everything as, sort of, cheaply as possible.

This is the other thing that is really important is startups reaching out to each other and to the mentor, again that mentor network that I keep talking about over and over again. That really helps them with whatever it is, whether it’s keeping office space really low or getting marketing help somehow or whatever it is. They try to figure out every which way to keep it really lean.

Andrew: What about the cost of the cities that they’re from? You mentioned Slovenia. You mentioned Tel Aviv as a city that’s not that expensive and it’s one of the more expensive ones that your entrepreneurs are from. Do they go back to those cities and does that give them an advantage?

Reshma: Very good point. Very good point. Yes, absolutely. It’s uberVU, Zemanta, another Romanian company called Rainiant [SP], that we have in our portfolio. In a sort of a perfect Seedcamp organization, there’s either your CTO or CEO who’s somewhere between California, New York, and London, essentially, because your investors, your customers, and your distribution are in one of those three locations, depending on whichever sector you’re in.

Yeah, they keep much of their CTO and at least the core development in a Berlin or Bucharest or Zagreb or Tel Aviv or wherever it is. I totally agree with you. That adds a huge element to keeping costs very low. They become masters at working across three or four different time zones and at least two continents.

Andrew: The other thing that I hear from entrepreneurs who have taken money from seeder organizations like yours in the U.S. is that there’s a camaraderie. They are inspired to compete with the people in the program so that they can build a better and better program and have something new to show every week. And at the same time, they’re there to help each other. Can that happen when your entrepreneurs are spread out across the country, across the continent, across the world?

Reshma: I think you raise a really good point. I was just going to say that we could be better at it. That probably answers a bit of your question. It goes back a little bit to the sense of urgency. I’m always trying to, if I left tomorrow and I left with nothing else, hopefully they equate me badgering them with a sense of urgency. That probably explains why you see a lot of the Y Combinator companies or others talk about that camaraderie plus competition.

I agree with you. I think it makes it a bit tougher to make that happen when some of our companies, a couple of them are in France or in Germany or wherever. I guess what we do try to do is, we have a demo day in London, we have an investor day in London, we have the road show in the U.S. Those are points through which we try to bring them together. More and more, we try to push them to spend some quality time in London so we can put a lot more in front of them. Or spend quality time in the U.S. and engage in some of the other networks that are out there.

You can’t just build something in one place and I just don’t agree with that model of forcing everybody to that place. As attractive as Silicon Valley is, it’s not realistic for everyone to move there. Same with London. So much stuff happens around here, it’s pretty amazing. Every day you could be going out and hanging out with fellow entrepreneurs but there are a lot of smart people out there who have other reasons they can’t necessarily up and move to London.

You got to work with, you got to do the best you can. As I said, we could do better and we’re always thinking of ways to continue to bring them together to show off what they’re doing. One of the things we’re going to do is have more finals at the mini Seedcamp locations and we’ll bring them there to show what they’re working on, how they’re getting on.

Andrew: I see. Do they all speak English when they’re together? Is that the common language?

Reshma: Absolutely. Again, a good point you raised there is from the beginning, we didn’t apologize. We were backing global companies and therefore you have to be speaking in English. That’s one thing we’ve never shied away from. That’s so part of our culture, that’s just a given.

We’ve had a couple of instances in Italy or, I think, in Poland where the person gave a presentation in Polish and I was like, ‘You’ve just offended a lot of people because some of these people have not, forget we’ve come from the UK, but they’ve come from Prague, or they’ve come from Romania just to mentor you. You’ve got to speak in English otherwise you’re not going to get value.’ I think all these guys realize that’s pretty crucial.

Andrew: Who are the mentors?

Reshma: One of the things we really try to do is, we obviously get a lot of VCs at Angel Investors interested, but more importantly, we try to really get a lot of product experts, tech experts, marketing, all sorts of those.

When it’s all said and done, whether you get money or not, ultimately you’re building a product. You’ve got to take it out to market and you’ve got to make relationships. Those are the people that are really going to help these guys on a very day to day and strategic level.

Andrew: Can you give me some examples of product guys who are mentors?

Reshma: Yeah. We have folks who come over from Skype, eBay, Google, a lot of the Google guys who are either based in Zurich or the London office or from California as well. So often when we do a road show to the west coast, we’ll spend half a day at Google. We’ll spend a day meeting VCs and Angels, but we’ll spend half a day just meeting the product guys.

So for some of the teams who want to get to know the YouTube guys better, or the mobile guys better, that’s pretty important for that. That’s product, again, go to market, people who build, Playfish founders or people who’ve built successful businesses will get those guys to talk about product market fit. BizDev guys as well, those who have relationships in to whatever distribution channel they need, whether it’s media businesses or music businesses, travel businesses, whatever it is.

Andrew: Is that the big benefit of a mentor that they could eventually introduce you to a partnership that would help your business?

Reshma: Yeah. I think it has a to be a win-win. The mentors also come because they are looking for something new, maybe a tool they can use, or a partnership they need, or whatever it is. Yeah, that’s a big, big part of the mentors.

Just recently, one of the companies has hired a mentor who, they brought him on for BizDev. Mentors come for all different, their own, sort of, self-interest reasons, which is exactly why it works.

Andrew: Can you give me some more of those? Let’s say, for example, Anthony Serrera [SP] or someone else who happens to be in the audience, I’m watching Anthony’s messages here, that’s why I’m picking him. Let’s say they’re listening and they’re saying, ‘I’m not going to be part of Seedcamp. In fact, I’m not even in Europe, but I do want mentors and I want to know how to convince them that they should be working with me.’

I’d like to hear how you convinced them, what kind of advantages the mentors get for being a part of your program and maybe my audience can take them and use some of those.

Reshma: Yeah. There’s not always a short-term benefit. Right? I think for those trying to convince people to mentor them, you can paint a longer-term vision, which is, ‘Look, you mentor me, potentially you could become a non-exec director.’ Again, if it’s complementary business, somehow that whoever you introduce me to might become a valuable partner and you get credit for having introduced us. There’s, ‘You might want to invest in my business.’

You have to make yourself valuable to them. It doesn’t have to be short-term. Ideally, both a combination of short-term and long-term. You have to show them that you listen. Right? You’re not going to always agree and you’re not going to take that advice, but it’s listening to pieces of whatever advice they give you and iterating on that and really showing that you care about their opinion is really valuable.

When you’re having a conversation, saying it back to them, that’s what gets mentors really interested. If they talk to you, and you see a blank face, or somebody not doing anything about it, as mentors you lose interest because, one of the biggest pet peeves I have is someone asked me for an intro. I make the intro, and I ask five days later, ‘Okay. Who’d you follow up with?’ If I’ve heard you haven’t followed up with anyone, it’s like, okay. I’m not introducing you to anyone else. You’ve just wasted my time and my credibility because I just introduced you to five guys that you didn’t follow up with.

Andrew: Yeah. That’s painful when you do that. It’s also, it seems to me, the curation, that the potential mentors know that you’re going to introduce them to people who are going somewhere. You’ve spent all this time figuring out who those people are.

Reshma: Yeah. The best want to hang out with the best, so at Seedcamp, we keep our eye out for who are the best companies we can back because then we’re going to attract the best mentors.

I think, again, in your audience, keep that in your mind is how can you be the best so that the coolest guy or the prettiest girl wants to go out with you or mentor you or whatever it is. It’s putting yourself in the best light. No one wants to hang out with a loser, I guess.

Andrew: [laughs] I like that analogy. All right. Well, why don’t we leave it there? Actually, no, I’ve got two other questions here on my to-do list. Tech Crunch. I see that they write about you guys a lot. You’ve got some kind of partnership with Tech Cruch, don’t you? Can you tell me about that?

Reshma: Yeah. They came on board as a, actually, props to Mike Errington [SP] because he introduced me to Saul, originally.

Andrew: Oh, okay.

Reshma: Funny enough. At a random conference in London of all places. Yeah. Again, the point we just made about quality, we really wanted to partner up with really high quality folks and obviously Tech Crunch gets read by hundreds of millions of people all around the world and that’s the reach we wanted.

I keep, in my mind, you always want to feed them really good companies and stories so that it makes it interesting for them to continue to write about it. It’s great that they gave us a chance three years ago when we weren’t anybody. Now, hopefully, we give them loads of material.

Andrew: Beyond stories, are you giving them anything else? Is there a bigger relationship there? An equity stake?

Reshma: When we come out to the U.S., we spend some time with them out there, as well, and get learnings from them. Absolutely, we help them. Tech Crunch in Europe, particularly in the markets they’re trying to reach, we help them here as well with our networks. It’s a real exchange of network and assistance because again, in Europe, it’s tough to try to do it alone so we really try to help.

Andrew: Do they have an equity stake at Tech Crunch?

Reshma: No.

Andrew: No.

Reshma: But if they want to invest, we’d be very happy to.

Andrew: [laughs] All right. Final question. Can we get your fiance to come on camera and give me a little bit of feedback? What does he think? Is he willing to come on camera?

Reshma: He would except he’s got massive headphones on and he’s watching the race that just, the Grand Prix?

Andrew: Oh, he’s watching the Grand Prix while you’re doing this interview?

Reshma: From the weekend. I think he’s too [??].

Andrew: Ah. I see. When are you guys getting married?

Reshma: End of December in South Africa.

Andrew: End of December in South Africa. Oh, that’s going to be great. You’re going to take his last name you said? Shtokel.

Reshma: Apparently my dad has disowned me, so. . .

Andrew: Why?

Reshma: He’s like, ‘You’re a woman.’ I’m not badmouthing my dad, [laughs], but he’s like, ‘You should take your husband’s last name.’ So, there you go.

Andrew: So you’re going to? All right.

Reshma: I know. I can’t believe I just shared that! I’m sorry.

Andrew: [laughs]

Reshma: He’s giving me. . .

Andrew: Are you going to hyphenate? I know Germans do hyphenation.

Reshma: That’s true. It all gets so ridiculous at that point, doesn’t it?

Andrew: I agree. Then you got three names.

Reshma: Then you have two names you can’t say.

Andrew: All right. All right. Well, it’s great meeting you. I hope when I’m in Europe I’ll get to see and your husband. Thanks for doing this interview.

Reshma: Please do ping us. We get a lot of U.S. visitors and there’s so much going on and we know a lot of what is happening, so if you’re around this part, I’d love to connect you with other like-minded people.

Andrew: That’d be great. Not just there, but apparently you’re all over the world so next time I travel anywhere around Europe, I’ll send you an email.

Reshma: I’ll be your personal travel agent.

Andrew: [laughs] Thank you. And congratulations on the engagement. Bye.

Reshma: Thanks.

Andrew: Bye everyone.

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