All In on Venture Capital: From Seedy Casinos to Seed Investing at Playfair

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I’m really proud to have joined the Playfair Capital team in London as a Venture Capital Analyst. Playfair invest in Europe’s most ambitious technology startups at the pre-seed/seed stage and I will be assisting through all aspects of the investment lifecycle. It is immensely exciting to work with such a stellar team and ambitious founders at the cutting-edge of technology.

Landing a role in VC is competitive. Whilst there is no ‘standard’ route, my journey is certainly one of the less well-trodden paths. This short piece will outline my background; how it applies to Venture; why I joined Playfair; and what I do on a daily basis.

I have been a poker enthusiast since installing Zynga Poker at 13 years old. Some of my early opponents were consistent winners and I became interested by how this was possible. It turns out, the strategy for winning sits right at the intersection of mathematics and human psychology and has fascinated me ever since. I’m also pretty sure my teenage self was influenced by the glamorous aesthetic in films like Casino Royale. My life peaked on my 18th birthday; proudly waiting at the casino entrance at midnight with my ID in hand ready to take a seat at the table.

Not quite how I would dress but you get the gist

At University, I quickly realised that many Economics topics were actually relevant to my fascination with poker. Game theory, statistics, risk preferences and human biases were all useful for my exams and my weekly trips to the casino. I ended up writing a multi-purpose dissertation which analysed the willingness of TV contestants to take financial gambles on Deal or No Deal. This allowed me to study more deeply how my casino opponents made decisions. A part-time hobby quickly became a strategic and profitable side hustle.

After a couple of internships at Santander and State Street, I quickly realised what I did not want do post-graduation. Much to the dismay of my family and tutors, I set myself the challenge of financial self-sufficiency through poker. Countless books, YouTube videos and hours of analysis later and I was ready to take the game on full-time.

Contrary to popular belief, Professional Poker is not the glitzy, James Bond-esque lifestyle from the movies. For a start, the most lucrative poker games are played past midnight. My typical hours were therefore the inverse 9–5, rendering my social life non-existent. And whilst the game is inherently social, every player at each table is in direct competition. There are truly no friends/colleagues with whom your incentives are aligned, which, at times, was lonely.

That being said, it was a lot of fun.

One of my more impressive chip stacks

I worked to my own schedule, met diverse people I would never have met (including a memorable hand with a player from Old Crow, Yukon) and earned myself the financial freedom to live/work in Manchester, London, Barcelona and Vancouver. At times I had to remind myself that this was enabled through playing a game.

However, on any given night I could win/lose a couple of months rent and I could never rely on a stable income. (My VC brain is screaming out for a recurring revenue model here).

I later came to find there are many similarities between a poker career and a career in VC. This is likely the topic for a future blog, but my key learnings from this time can be found below:

  • Decisions > Results. The luck element means good poker decisions are not always rewarded with equally good results. You can play a hand/session/week perfectly and still lose. Success requires focussing only on things I could control — my decision making — and expecting results to follow. This is particularly relevant within early-stage Venture Capital where time horizons span many years and good decisions do not always result in immediate growth. At Playfair, we pride ourselves on being patient capital, focussing on getting inputs right for each investment and expecting long term success as a result.
  • Self-motivation. Poker is an individual game with a rather extreme mental load. Periods of success would leave me feeling like I was untouchable. Sustained losses cast self doubt on my ability. Despite fluctuating mental state I found a way to continue to play 6 nights a week, study, and out-grind the other professionals. I developed a serious caffeine addiction and have since become even more appreciative of the toil of the founder.
  • A desire to grow the pie. Since poker is a zero-sum game, any winnings are at the expense of others’ losses. I became acutely aware that my time and energy were dedicated to a problem with no clear impact on the wider world and soon became eager for change. It’s extremely pleasing to now be working closely with early stage companies with global ambition to influence the way we live and work.

The pandemic closed casinos worldwide and I joined the sales team at Neudata — a B2B SaaS startup — where I helped figure out the sales playbook for a new product and market. I brought in £400k of new revenue in my first year then ideated and implemented a shift in the product offering from pay-per-play to recurring revenue.

This was an extremely exciting time for me. Experience at a startup is varied. Alongside the more traditional aspects of a sales role, I would be helping out with marketing, account management, operations and even helping influence the company’s strategic direction. The sales process included speaking to founders of ambitious technology companies and uncovering pain points. I found myself consistently inspired by their vision, passion and drive. It was through these conversations I found my desire to work in VC.

Somewhat surprisingly, I have since learned that much of Venture Capital is sales so my startup experience was formative in both my hiring and day-to-day work. Creating a killer VC elevator pitch is a quick way to build rapport with founders early in the investment process.

I spent time wondering how I would land a job in VC— there are very few roles, especially at the Analyst position (top tip: Nicole DeTommaso’s Twitter does a great weekly roundup of live VC job postings). I was delighted to find Playfair’s role advertised on Linkedin and fortunate enough to make it through the 8-stage interview process. Playfair was exactly what I was looking for:

Backing founders at the earliest possible stage. Playfair builds on the legacy of Fede, who was a key member of the London angel ecosystem in the early 2010s. As a result, angel investing is in our DNA. We are often the first institutional investor within our portfolio. This is special for a couple of reasons:

  • The earliest investors take on the most risk, but equally get the most reward. They are able to watch as ideas become reality and help guide young companies through all the challenges of getting from 0 > 1.
  • The absence of historic data means we have to build conviction in founders and their ability to execute on a vision. This is possibly the most exciting part.

High conviction & value-add. The Venture Capital asset class has seen extraordinary returns for investors for many years. As a result, many VC funds employ a (very reasonable) strategy of making many bets in certain sectors. They offer capital with a ‘hands-off’ approach and quite rightly expect some of their companies to become winners.

Playfair do the opposite. We make 6–8 investments per year into companies the whole team has conviction in. We then encourage our founders to leverage our entire team’s skills to increase the chance that they are a winner.

I’ve since watched Joe place perfect candidates in key early roles. Chris has built out robust sales processes which scale with each business. Henrik & Jeevan are reliably ripping up and reworking models, or helping drive the next funding round for our portfolio companies.

Of course, these actions are insignificant compared to the effort of the founders we support. However, in an industry where outcomes follow the power law, we hope that the smallest % improvement on the inputs across our portfolio can result in outsized returns.

The Analyst role at Playfair is split broadly into three parts:

  1. Outbound Sourcing. This means finding early stage companies that might be a good fit for Playfair. Building tech tools, attending industry events & building out my network are all targets to ensure we have as much coverage of the market as possible.
  2. Managing Inbound. To ensure any and all founders are able to pitch us, we have an open pitch deck form on our website. We typically get 80–100 submissions per week, so I spend lots of time reviewing these decks and take pitches where appropriate.

I’m still in awe of the sheer number of founders that are taking risks to build innovative businesses. I have also learned that, despite all-time-highs for VC capital deployment, fundraising is very hard for most founders.

3. Due Diligence. This is when things start heating up and we perform in depth due diligence to create a 30-page investment memo to discuss at our Investment Committee. Being a generalist investor, research can vary from market sizing the concrete industry one week to making reference calls with radiologists the next. It’s all hands on deck as we try to understand a company as well as the founder.

One of my newfound interests is optimising incentive structures in early stage sales teams. I will continue to read around this topic (book recommendations welcome) and aim to conduct a study to shed some light onto these opaque structures.

More importantly, I’ll continue to read decks, connect with founders and other VCs on my quest to find the best companies of the future. If you’re equally interested in this, or are a founder looking to raise early stage capital — I’d love to connect.

You can follow the Playfair team on LinkedIn, Twitter, Forbes and here on Medium.

Go to Publisher: Playfair Capital Blog – Medium
Author: Andrew Sheffield