Dan Bowyer shares what he learned moving from B2B founder to venture capital investor at SuperSeed: VC is probabilistic, takes time to get right, answers to its own investors, and is less glamorous than it looks from outside.
- At the time, SuperSeed invested before Series A in 'deeper tech business automation', doing about one deal every six weeks with an average ticket of around £1m.
- Early-stage deal volume was down while deal sizes were up across all stages, making the market look busier than it was.
- Dan found it took about three years to 'get' venture capital, as it had with each of his businesses.
- VC is probabilistic rather than deterministic: SuperSeed assumes most deals will fail and needs only one in ten to work.
- VCs have their own investors who expect returns, and founders should check what knowledge a VC actually has before leaning on it.
As a founder turned VC, here’s what I’ve learned so far from the other side of the table.
For context, here at SuperSeed we invest in what I call deeper tech business automation. i.e. anything that transforms how we work, make or move things. Early stage, which to us means anything before Series A. We do a deal about once every six weeks and our average ticket size is ~£1m.
Below are a few key lessons I’ve taken from the transition from B2B founder to VC investor.
Volume down, value up
Early-stage deal volume is way down, but the deal sizes across all stages are up. This makes the space look more voluminous than it really is for the new kids on the block. This will shift as markets shift, which will probably happen later this year. That said, there is still a lot of money available for new startups.
It takes time
We’re 4 years in and started investing 3 years ago. It seems to always takes 3 years to ‘get it’. I’m old. I’d like to think I’m smart. But yet again, after all these years and businesses, the rule still stands. It is the magic number. It’s taken 3 years to build the fund to a state that feels like we’ve camelled the hump. The model works. We’re off to the races. It will take you time too, and that’s ok.
VC is probabilistic not deterministic
VC is as much gambling and luck as it is systems and hard work. We live by the fact that most deals will fail. We only need 1 in 10 to work. In startup it’s the opposite paradigm.
We have investors too
Just like B2B Founders, VCs have investors, and they expect outcomes and returns. We’re here to make money. It’s not charity, as ugly as that sounds. The more we make, the more we can recycle. The more founders we back, the richer the ecosystem, and the network recycles.
VC is not sexy
It looked it from the outside. It’s just not. Don’t believe the hype. But likewise don’t be too anti. I don’t really care to be a VC or for some of the ego mania (though some of it is fun, I will concede). I simply love startup and working with founders who are changing the world. That’s magic. VC is my vehicle of choice to get a job done.
VCs don’t always get the mechanics of early stage startup
Or we might have a very specific, myopic view on certain sectors, spaces, plays. Don’t lean on us for knowledge we may not have. Check us out first. In our case in particular, there is lots of information available about who we are, how we can help, and who we can help.
Venture will become more democratised
Crowdfunding kicked it all off and there’s more coming. We have an IPO. There are new VC models coming. More niches are being served. More people are understanding VC and its attractions. Try to read and learn this side of the desk. We’re an open book, and would welcome any questions you might have.
It’s really all about opportunity creation
Early stage businesses are net creators of jobs. Big business is the net destroyer. We need this ecosystem more than people appreciate. B2B Founders, you are the lifeblood of this world, and without you, we have nothing.
Venture is the fuel for the engine of innovation
A pithy phrase, but I know you’ll get the meaning. Love or hate us, we’re a really important cog in the machine. I didn’t quite realise to quite what extent until getting into the weeds.
It’s an adventure. Adventure Capital.
Good name for a fund…
… Dan
Frequently Asked Questions
How is venture capital different from running a startup?
Dan describes VC as probabilistic: most deals are expected to fail and only one in ten needs to work, whereas a startup founder works in the opposite paradigm where the one company has to succeed.
What does SuperSeed mean by 'deeper tech business automation'?
In Dan's words, anything that transforms how we work, make or move things. SuperSeed invests in it at the early stage, meaning anything before Series A.
Why should founders care that VCs have investors too?
Because VCs are accountable to their own investors for outcomes and returns. Dan notes that the more a fund makes, the more it can recycle into backing founders, which strengthens the ecosystem.