Misconceptions about pitching early stage investors - with Sequoia Capital Partner George Robson

Summary

In this episode of Unicorn Bakery, host F interviews George Robson, a partner at Sequoia Capital, at the Start Summit. They discuss the current state of the European tech ecosystem, the resurgence of hardware, and strategies for founders approaching venture capital. Robson shares insights on Sequoia's investment style, the importance of storytelling in pitches, and the value of Sequoia's Arc program for early-stage founders. The conversation offers a glimpse into the venture capital landscape and advice for startups navigating funding and growth.

Takeaways

• 🌟 The current European ecosystem is ripe for founding great businesses, with a focus on unique ideas, exceptional teams, and the availability of talent.
• 🚀 Europe's strong industrial history and push for technology in manufacturing present significant opportunities for entrepreneurs, especially in areas like robotics and AI.
• 💡 The resurgence of hardware is attributed to advancements in enabling technologies such as computer vision, industrial automation, and robotics.
• 💼 Founders should approach venture capitalists by showcasing their domain expertise and the long-term potential of their technology, even if the gestation period is longer.
• 📈 When fundraising, it's crucial for hardware and deep tech startups to have a milestone-driven strategy that aligns with their capital requirements and risk management.
• 🤝 Founders should seek investors who can provide not just capital but also strategic insights, industry connections, and support in scaling the business.
• 💡 Sequoia Capital's investment approach values long-term partnerships with founders, emphasizing the importance of shared vision and alignment on business milestones.
• 💼 Sequoia's evergreen fund structure allows for a long-term investment horizon, which is beneficial for companies with complex R&D and growth phases.
• 💡 The consumer market is experiencing a resurgence, driven by changing customer needs and the potential for more personalized online experiences through AI.
• 📝 When pitching to investors, founders should articulate their personal founding story, clearly define the company's 'act one' wedge product, and outline a believable expansion plan ('act two').

Q & A

What is the current state of the European tech ecosystem according to George Robson?

George Robson believes it's a great time to found a great business in Europe due to the availability of capital and talent, and the opportunity to leverage new technologies in areas like machine learning, AI, computer vision, and robotics.

Why does George think hardware is making a comeback?

George sees a comeback in hardware due to advancements in enabling technologies like generative AI, physics models, spatial data, and computer vision, which are unlocking opportunities in robotics and other industries.

What advice does George give to founders raising funds for hardware and software businesses?

George advises founders to be prepared for a longer gestation period due to the nature of hardware development, to clearly articulate their milestones, and to fundraise against those milestones to manage risk effectively.

How does George address the concern of founders about Sequoia not participating in their Series A after a seed investment?

George reassures founders that Sequoia's data shows that companies they partner with at seed or pre-seed are more likely to raise successful Series A rounds. He emphasizes that building a great business is the best way to ensure a successful fundraising round.

What is Sequoia's approach to investing in different stages of a company's growth?

Sequoia has multi-stage funds and operates as an evergreen fund, allowing them to invest at various stages from seed to growth, with a long-term partnership perspective beyond traditional fund cycles.

What is the Sequoia Arc program and how does it benefit early-stage founders?

Sequoia Arc is a program that introduces early-stage founders to similar founders, provides insights on company building beyond just product-market fit, and aims to help founders get clarity on important questions in the first 18 to 24 months of their business.

How does George view the consumer market's potential for startups, especially in Europe?

George sees a resurgence in the consumer market, driven by changing customer needs and the potential for more personalized online experiences enabled by AI, suggesting a significant opportunity for European founders.

What does George suggest for founders when pitching to Sequoia or other VCs?

George recommends founders to tell their personal founding story, be authentic, and clearly articulate their vision through a phased approach, starting with a wedge product that leads to their grand vision.

How should founders approach Sequoia if they are not selected for an investment?

George encourages founders to reach back out to Sequoia, as they are open to re-engagements and believe in building relationships, even if an investment is not made immediately.

What is George's stance on cold outreach from founders, and does Sequoia respond to unsolicited emails?

George is open to cold outreach and claims to respond to almost every email. He suggests that founders should tell their story succinctly and seek clarity if they feel they are not getting direct feedback on their pitch.