In our third instalment of the ‘VC Under The Spotlight‘ series, we speak to Simon Menashy, Investment Director at MMC Ventures – a leading early-stage firm based in London.
Simon, who will be taking part in Startupbootcamp’s new #TeaWithaVC event, shared with us MMC Ventures’ investment strategy, his advice to fundraising founders and the best way to get into his ‘flow’.
Tell us a little bit about yourself
I’m a Londoner and have worked in various media and tech consultancy roles prior to joining MMC four years ago. In my role on the investment team at MMC, I work with a bunch of fast-growth companies and I split my time between leading new investments and sitting on the boards of our existing portfolio companies.
Tell us a little about MMC Ventures
We’re an early-stage venture fund based in London. We invest in companies that are using technology to do something different in a large, interesting market. These are startups that are re-shaping supply chains, radically changing a customer experience or offering a significantly cheaper or better way to solve a problem, and are creating big sustainable businesses along the way.
We think of ourselves as Series A investors, meaning we’re typically investing in companies that have commercial traction, minimum revenue of around £50k a month and are looking to raise anything from £2 – 5 million to get to the next stage.
We also invest at Series B, writing slightly larger cheques for early-stage companies that are beginning to scale but are not yet raising huge rounds.
Do you have a focus when it comes to your investments?
We invest in both B2B and B2C. I would say about 60% of the deals we do are B2B and those can be anything from fintech, to digital media and ad-tech, to software and SaaS – all companies that are providing some kind of technology-enabled product or service.
For B2C, we invest in a lot of marketplaces and subscription-based businesses, as well as e-commerce and consumer-facing financial services.
MMC Ventures solely invests in UK-based companies, do you have plans to expand your geographic focus?
Our strategy is to make sure we see every great Series A deal that’s happening here in the UK. We believe that not only does the UK produce world-leading companies and talent, but also serves as a great launch-pad to expand into the US, elsewhere in Europe or (increasingly) into Asia. So we focus on those sectors where the UK is strong and produces amazing talent.
With the kinds of high-growth companies that we back, we also see it as part of our job to help those companies expand and sometimes raise money internationally. So, while we’re initially investing in UK-based companies, we spend a lot of time maintaining relationships in key cities in the US and elsewhere.
What would you say are the current ‘hot-trends’ in the UK investor scene?
In the UK, particularly London, fintech continues to be at the forefront of investors’ minds – London is a financial powerhouse and there is an incredibly concentration of smarts, ideas, customers and startups here. It’s great to see some of the financial services giants starting to pay attention to startups and taking their products seriously.
We also like companies that are solving complicated real-world problems as well as creating great digital solutions, and wrapping them together into something powerful. The on-demand economy is one of the hottest parts of this, and we’re seeing massive growth in numbers of startups and investment rounds as well as a bunch more startups springing up to service this new space.
What attracts you to investing in a new startup?
It has to be something that I would be excited to be a part of. That’s usually a combination of the founders themselves (I really want to work with these people), the actual product/idea and something that I think could be big.
Do you have any ‘golden rules’ when exploring a new investment opportunity?
I wouldn’t invest in anyone that I didn’t want to work with for 5+ years. Making a VC investment is a long-term relationship and you’re stuck with each other from the time you write that first cheque. You’ve got to believe that the people you’re working with are passionate, driven, trustworthy and you will enjoy working together… it’s all about the relationship!
What advice would you give to a founder fundraising for the first time? And are there any pitfalls should startups should avoid?
I’d say make sure you’re raising the right amount at the right stage.
Good founders balance the amount they raise, the valuation they can support and the time it takes to hit the next set of the milestones – if this means raising less now and more later, sometimes that’s a good result.
Too many founders rush to raise too much money too early – either they waste time talking to the wrong investors about the wrong-sized cheques, or they find they can’t support the valuation they want and find themselves heavily diluted too quickly, or they succeed then get into trouble when they can’t support a higher valuation at the next round.
So in summary: right time, right amount and right valuation!
Do you have any typical questions you ask founders pitching to you? If, yes, can you give us examples?
I ask them to talk me through their metrics – both the numbers themselves and why those numbers are the right metrics to track. I also ask them about their economics when they get to a much larger scale – i.e. how they see the shape of their business in 5 or 10 years time (and whether it makes sense).
Also, passion is key. A founder should be able to talk me through how they came to start this business and persuade me that they plan to devote 5-10 years of their life to it. If they’re just doing because they think it’s a good way to make money and there is no other passion, then it sometimes makes me question their commitment and whether they’re the right people to be building a company in that space.
What would you say is the difference between a good startup and an exceptional one?
For me the what differentiates the good from the exceptional is: focus and execution. You can have the best business idea in the world with fantastic staff and technology, but if the senior team can’t execute relentlessly on everything – product development, hiring, delighting customers and raising money – then they’re not likely to create a market-leading business.
Unfortunately for me, you don’t usually find that out for real until after the first investment!
Can you give us three tips on how a founder could get on your radar?
Get into my flow, not just into my inbox.
Every day most VCs receive a flood of emails, calls, LinkedIn invitations and all the rest of it. We have to find some way to filter it, and so we pay attention to the signals that have the most credibility behind them. And sometimes you’ll catch me when I’m at my desk and paying attention, but most times I’m focused on something and your email might go to the bottom of a big pile.
This basically means: get somebody I know or respect to introduce you, meet me at an event, or send me an interesting tweet. Be a notification I pay attention to, not an email in that pile!
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