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Video interview with Neil Rimer. Neil is a co-founder and Partner of Index Ventures. In 1992, Neil started the venture capital activity of Index’s predecessor firm, later co-founding Index Ventures and raising the firm’s first fund in 1996. Neil’s current investment focus is on innovative solutions for energy and environmental problems. Index portfolio companies with women ceos or foundees:Astley Clarke, Notonthehighstreet, AlertMe, Foodily, doubleTwist, 7TM, GoTryItOn, Editd (co-founder), Mobissimo, Net-a-Porter, Songkick (co-founder), Seedcamp, GenMab. In 2009, Index were honored by Astia with a Diversified Portfolio Award – The firm with the greatest percentage of investments in woman CEOs or founders. You can find Neil on Twitter @narimer
Transcript follows & video above.
- What is your sweet spot, in what kinds of businesses do you like to invest?
We are really early stage investors. I think we’ve been most excited about getting involved with the entrepreneurs at the earliest stage possible. Really help them form the idea & help them recruit the nucleus that will create the management team. So we really invest as early as we feel comfortable.
Fantastic & is there any particular theme that you guys are interested in than others?
I think we’re really interested in opportunities to disrupt big segments of the economy leveraging technology & innovative business models. It doesn’t have to be entirely newly invented technology. It could be adopting or applying technology that’s been around for a little while but coming up with a novel approach or novel business model that allows you to put a combination together that is disruptive.
So there’s no particular industry that you guys focus on? It’s just that piece, the early stage & the disruption that you like?
No I think that’s really a philosophy & we look at any industry providing that it’s large & that there’s a plan that could result in building a big company that would be valued highly.
And make lots of money?
I never thought I’d say this out loud but I actually even find the insurance industry interesting these days.
Oh fantastic, ok, so there’s lots of possibilities out there.
If that’s possible then anythings possible.
- What percentage of women startups do you get pitches for? And what percentage have you funded?
We don’t really keep those statistic, although we probably should. We have funded a fair number of businesses that have been started by women or women teams over the years. I don’t know if that’s because we do a fair amount of investing in Europe. But we’ve probably funded a dozen or so, possibly more businesses that have been started by women. In terms of whether or not that’s a higher hit rate based on ones that are pitched by men or pitched by women. I’d have to assume that it’s a higher hit rate because we don’t see that many businesses pitched by women. Because we’ve done that many, probably means on balance it is a higher hit rate.
- Have you noted differences with women entrepreneurs in how they pitch & build businesses? (We’re getting into that area of generalization & I know it’s a bit touchy?)
I frankly think that the variability among women is as great as the variability between men & women. I don’t think I’ve seen any particular bias one way or another.
- I have been told that venture capitalists fund people similar to them, white, male etc. What is your take on this & if this is happening how can women startups find an opening in this culture?
I think the venture capital industry is fairly large at this point. There’s a lot of different people you could be talking about or talking to. But I don’t think the good investors try to fund people who are like them. In fact if what you say is true, then I don’t know who’s funding all of the guys from South East Asia who are going to Silicon Valley & starting businesses. They certainly don’t fit the mold that you talked about. I think strong investors will look at somebody’s background, their track record, their vision & their ability to lead a team & carry out the vision & really don’t pay much attention to whether they come from the same background. In fact I think diversity is always a benefit so that’s going to bring additional strengths to the company. It will help them draw on a broader pool to build their team. It will give them access to a broader network to sell their product into & ultimately to exit their business. I don’t see how restricting the scope of people you fund can help in any way.
Aileen Lee, Kleiner Perkins, recently wrote a post on Techcrunch about the market of women & how huge that market is. I would imagine as you said with diversity, having women on the team is definitely going to mean you’re going to have an insight into that market.
Well you know sometimes people forget that half of the customer base out there is women. In fact it’s more than half, because many products the purchasing decisions are essentially made by women. So you may want to understand that. You may want to have some people on your team who understand that segment market.
Thank you, thank you that’s great encouragement
- Do you think that networking with Venture Capitalists is harder for women entrepreneurs in Europe?
I don’t think so.
- What do you see as the obstacles for inclusion of women entrepreneurs in achieving funding in Europe?
I think the biggest problem & probably the only problem is that there aren’t enough women in technical & engineering & scientific tracks. I think that given that we invest in lots of technology companies, many of the founders & members of the founding team come from that background. If it’s predominantly a male source then by the sheer numbers we’re going to see more male entrepreneurs. So we end up funding more of them. Really it’s a supply problem. I don’t see any obstacle to women getting in front of us with their great idea.
Great so really a lot of people do say that it starts really young as in children & encouraging girls to study technical subjects.
- Do you think that women need to have their business developed before they can achieve funding?
Yeah but I don’t know why that would apply more to women than men. There are some businesses & in some cases some entrepreneurs where you would only be comfortable if they have significant prior experience. There are some instances where you’re willing to back a couple of kids out of university or out of a graduate program with no prior experience but a lot of vision & a lot of promise & belief that they’re scalable. And I don’t that see that’s any different for men or women.
It’s really obvious that you’ve got no bias Neil, because even the question was a curly one for you. Thank you
- Often advice for sourcing venture is equated with dating, implying that there is a matching that needs to happen with entrepreneur & investor. Have you noticed a general psychological profile of venture capitalists and also of entrepreneurs that promotes the attraction & synergy between them to develop a great startup?
Yes so I think that confidence is the fundamental currency of these decisions & it really cuts both ways. I think the entrepreneur has to have a lot of confidence in the investor that they’re letting into their company & that they’re ultimately forming a very important partnership with. And the investor has to feel that way about the entrepreneur. That’s again like dating or like a marriage. You have to be able to look at each other & feel like no matter what comes, you’re going to be able to face it. You may have arguments & you may have disagreements but one of you will end up convincing the other, or you both will be in agreement to begin with, what the right thing to do is. You’ll face whatever challenges & this is somebody that you’d like to go into battle with. I think again that applies for any entrepreneur. I don’t think it’s any different for men or for women. But I do think that that is probably the single thing for any entrepreneur to convince an experienced investor. Lots of people can come in with interesting ideas, big markets, nice demos but the real question is, given that I know that things will not go as planned (& that’s really a given), is this someone that you’re willing to get into that kind of trouble with. Are you confident that you will be able to get through those challenges & prevail in a very productive way. Actually are you going to enjoy doing that because life is short & you prefer to do this with teams that you’re going to enjoy spending lots & lots of time with. That’s a key fundamental question. I think chemistry has a lot to do with that. The approach that somebody takes in a conversation, how straightforward they are & whether or not they are the type that shares risk & talks about risk & says ‘Hey this is the biggest challenge that I’m facing, I have a couple of ideas about how I might deal with it but what are your ideas?’ Rather than a different approach would be to dress everything up & conceal risk & hope that the investor only figures out that that risk exists when it’s too late & they’re down the path.
Authenticity & building trust is what I’m hearing are very important & that there’s a human connection between the investor & the entrepreneur.
Very good thank you.
- In the dance with an entrepreneur both in the decision making process of funding a startup & then in working with those startups what are the necessary qualities that make a good venture capitalist. Some of the talents mentioned: Would you trust your gut instincts & feelings that happen within the relationship with the entrepreneur as signs about what’s happening in the business, in the startup? Or would you ‘manage by influence or persuasion?
Again I think you want to have the kind of dialogue & relationship that you would have in a personal relationship. This may be very different than what you hear from some other folks. There’s kind of no room for formality or politics or protocol I think in a discussion between partners. We don’t see ourselves as anything other than just another partner in a business. This is the kind of the stuff that gets in the way at the larger companies & the incumbents that our companies are trying to run circles around. So if we get caught up in the same kind of stuff, we’re not going to do very well. We really need to have just a really direct, open discussion. There should be nothing that you can’t say to each other. You can criticize the business as much as you need to to make a point, if that’s genuine & it shouldn’t be seen as an attack on somebody’s value as a person & it shouldn’t affect the relationship. In the same way that 2 brothers or 2 sisters can really say anything to each other if there’s that kind of underlying trust & respect & love that protects them & allows them to just communicate very effectively. I think you really need to aspire to that same kind of channel between partners in a business, whether they’re founders or founder & investor.
Yes because you’re working so closely together for a long time, correct?
Thank you so much Neil, it’s been really, really valuable to hear your feedback about this issue & I really appreciate that you’ve taken the time out of your busy schedule.
My pleasure thanks for giving me the opportunity.