What Investors are Looking for When Investing in Young Startups

Desi Velikova: [00:00:00] Today I’m joined by Eamonn Carrey , general partner at Tera Ventures and former managing director at Techstars. We discussed the current startup landscape, what he’s looking for when investing in founders, and why he believes we’ll be seeing more and more opportunities coming from the east. We’ll also delve into how VCs may create investment bubbles in hyped industries, and you will find out why I labeled him the kindest investor in Europe.

If you’re interested in startups and early stage funding, this episode is for you. And as always, don’t forget to subscribe to our channels wherever you are watching co listening.

Welcome to the product show. Insightful interviews with founders and tech leaders sharing how they hack product growth.

Eamonn . It’s a pleasure to have you on the podcast. For people who don’t know you, you have a [00:01:00] quite diverse, impressive resume from engineer, investor, author, mentor to dozens of startups. Former managing director of Techstars to your current role, general partner at Terra Ventures. And what I find even more interesting is that before all of that, you wanted to become a journalist.

You worked at a radio station for a few years, you even have a degree in journalism. Tell me a little bit more about those early years when you realized that you don’t want to be covering the news, but rather making the headlines. Can you pinpoint a moment when you discovered your law for innovation and technology that led you to founding your own company and securing deals with companies like oto, emase, Diagio, and many more?

Eamonn Carey: For sure. First of all, thank you for having me and hello everyone. I was fortunate that. Being a journalist that involves asking a lot of questions and being willing to be stupid. Which is a good thing because I would never pretend [00:02:00] to be the cleverest person in any room that I’m sitting in.

And so as a skillset, journalism was something I was always interested in because it would, it revolved around telling stories and talking to interesting people and learning about the world and. From a young age, that was something I was always passionate about. I always read loads of books, kept my, nose to the grindstone.

In terms of that side of things, I wasn’t the most academic person of all time in school. I paddled my own canoe on that front, but I was fortunate that my dad bought me a computer when I was quite young, and so I started playing around with. Games and coding and various different things and had always stayed interested in what was happening in the computer world, both from playing games as a kid, right the way up to the early days of the internet.

When I was in college and actually when I was in, in college, I got a job, part-time job working for an internet startup in San Francisco. I was their kind of European. Editor, it was a travel company and the idea that a business could raise money and grow on the promise of getting to scale was something that was quite interesting.

But it didn’t feel like it was necessarily something that was [00:03:00] available in Dublin in the late nineties. But the real catalyst for me was A, always staying interested in what was happening online. B, starting to work in radio stations and newspapers and in the media more widely.

And seeing that world not really pay very much attention to the internet and be maybe sometimes a little bit dismissive going, Hey, 99 happened, the internet was a bit of a fad, let’s move on. But the moment that really solidified things for me was I’ve been having this conversation with colleagues saying, we should do more online.

We should do more online. And the general reaction was we’re not so sure. And then in about 2004 or 2005, I went out to Korea. I had two friends from college who were teaching English out there. And so I went out on a vacation to spend some time with them. And I think in my first week I sat on a subway, and this is in many ways, one of the defining moments of my life.

But I sat in the subway and a guy came and sat next to me and he took a, something out his pocket and started watching Spider-Man too. The movie on it. And what kind of.[00:04:00] It was a, as I later realized, it was a prototype. So they were running a thing called a DMV TV trial in Korea at the time where it was mobile tv.

And so it was a Samsung device that that he must have been testing or using. But it had full screen video playback. And then as we were getting off the train, he turned it around and started doing something else on it, which to all intents and purposes, looked like sending a, sending an email.

And I remember looking at that and I had a Nokia 33 10, right? So I thought predictive text was like the, the highest moment of human achievement at that point. And I saw that and I just thought, good grief. If you think about that device connected to the internet and being able to watch movies, or watch TV shows, or, communicate, et cetera, et cetera, that to me felt like that was gonna be the, their moment.

And so I came back from that trip. I spent the rest of that trip looking at how people use devices and use the internet in Korea. Became obsessed about it. And I came back from that trip going, this is the future. Like everyone is gonna use these devices to access, all aspects of their lives.

And, this is two years before the iPhone and still very early [00:05:00] prototype days of Android. But I persuaded a friend of mine to to pack in his job. We said, look, we can, because we were journalists, we could do the content side of things because I’d been interested in computers from a young age.

I could do the kind of code. I wasn’t very good at it, but I could do enough to be dangerous. And because we had, gone through the journalistic process, we knew how to tell a story to people. And so going into Three, or Diageo, or O two or any of the big clients that we worked with in the early days, It was telling them that career story, telling them, what we thought the future held, they already knew how big Mobile was in, in many cases and saying, look, this is gonna be the way that things go.

And thankfully we told a convincing enough story that they said, Hey, we’re gonna give you some money and we want you to produce content or produce games or do different things for us. But that was really where it all kicked off was this real, a frustration that, that the internet wasn’t being taken and mobile wasn’t being taken more seriously.

And B, this belief that. Content was gonna be a huge part of it and that we could deliver

Desi Velikova: that. Did you act more as an agency or as a production company and how long did you have this business? 

Eamonn Carey: Yeah so we started off [00:06:00] mostly as an agency. So we worked with big clients who wanted to produce mobile shows or online shows or podcasts or anything like that.

And so we did that for the first couple of years. But the big moments for us in particular two big moments happened relatively simultaneously. One was the iPhone being released and then the app store coming to market in, in 2008. The second one was the financial crisis.

And so the financial crisis hit our business pretty badly in Ireland and in the uk. Lost a lot of clients. Had a lot of clients who, who were struggling to, to pay had to let people go and various different things like that. We were lucky we’d opened an office in the Middle East, and so we were able to continue to do some work out there.

And what was interesting about that part of the world, and particularly the kind of iOS and Android apps coming to the fore was the idea that, look, We’ve built this expertise and this muscle doing stuff for other people, let’s build our own products. So we started building travel guides in English and Arabic for various different cities.

And in that part of the world, we started building our own kind of apps and products. And in many ways that was what saved that business and allowed us to exit it out [00:07:00] in, in, in that part of the world. So I think it was an evolution from being, and one of the challenges of doing the agency side of things is, You very frequently have really good ideas that your clients don’t quite buy into.

And so it was nice for us to be able to go, look, we can paddle our own canoe to a certain extent. We can go, look, we’re gonna build our own products. We have enough belief in this and we have enough expertise to do it. And thankfully in, in many cases, those

Desi Velikova: products paid off. How do you think this experience running your own business impacted the way you evaluate startups and prospect use at the moment?

Eamonn Carey: I think a lot of it comes down to, People that you invest in and the types of deals that you look at. And, I think a lot about what the first question I ask and any founder that I’ve ever invested in. I think the first question in pretty much a hundred percent of those cases is like, why this business?

Why this opportunity? Why you and why? And I love hearing people tell me that like they were so frustrated about an idea for a year or two years that they decided to build something or they couldn’t believe that this product hadn’t been released and that, they decided [00:08:00] to go and do it themselves.

Or they were, a lawyer for three years and they saw this huge inefficiency in the in their daily workflows and they decided to go and build something to solve for that. So it’s certainly it made me think an awful lot about founder market fit. It made me think a lot about kind of the resilience that founders need to have.

It made me think a lot about the support network. That founders need to have around them. So it certainly gives me a perspective going into deals. And I think the other big thing now is, investing is at least somewhat competitive, right? Like I think maybe a little bit less so at the moment, but for the last couple of years there’s been a lot of money sloshing around and a lot of entrepreneurs have had choices about where they can take their capital from.

And I think one of the big things for me is being able to go to founders and say, look, I’ve. I’ve started businesses, I’ve had successful outcomes. I’ve started businesses, I’ve had unsuccessful outcomes. I’ve stared at the ceiling in my bedroom for hours and hours at night and probably draw you up.

Picture of the cracks from memory. And so I think there’s a lot of that kinda empathy that that comes with having started a business and gone through the process of [00:09:00] hiring your first person or firing your first person or asking for help or, God forbid, realizing that you’re occasionally

Desi Velikova: wrong.

You were at Techstars which is a. Global network for startups and accelerator that everybody really knows. But then you shifted your focus to the bot in Eastern Europe, but you are now running the ventures. Tell me a little bit more what you guys are doing and why your interest shifted to

Eamonn Carey: the east.

Yeah, so I think so Tara, we’re a generalist pre-seed and seed fund investing in founders in the new Nordics. So typically investing kind of 500 k up to 1.5 million in businesses. We’re very high conviction investors, so we like to lead rounds. We like to take board seats. We like to be very hands-on with the founders that we back and one of the reasons that I’m here in London is that a lot of the founders that we back think about London or the US as their big expansion market once they prove that the model in Estonia or Finland or Sweden or elsewhere, And so for me to be able to help them get [00:10:00] connected into the ecosystem here, whether it’s investors, whether it’s partners, et cetera I think is quite valuable.

And I’d known Andrews and STAs who were the other partners at Terra for quite a long time. I first got connected to Estonia back in 2014. I was a mentor back then on, on Techstars London, which is how I first got connected to Techstars. And I was helping Language learning company who went through that program.

A company called, and at the end of the program, they asked if I’d be interested in maybe joining their board as a. Independent. And so I flew out to Estonia, met the rest of the board, met the rest of the investors, the team, et cetera. And I guess in some respects, because it was an anomaly to have an Irish guy flying out to Estonia to meet companies, they made some introductions to other accelerator programs or to other companies.

And I just started going over and back a little bit more often and really met lots of founders there. The Estonian ecosystem is incredible in terms of what they’ve achieved and how they’ve been able to recycle talent, how they’ve been able to generate the number of. Extremely successful businesses that they have and have kept that going for now, multiple [00:11:00] generations from Skype to, to TransferWise and beyond.

So it was a great part of the world with a kind of great energy. And I think what was interesting for me was looking at these founders. Who had great businesses, great stories to tell, but who maybe needed a little bit of help going into markets that I was familiar with or maybe needed a little bit of help, framing and positioning their company and their story for new markets for different investors, et cetera.

And so the more time I spent there, the more co-investments I did, the more people that I got to know, the more I thought, you know what actually, a, they’re building great companies. B, there is a. I think something unique that I can add to the ecosystem there and to the companies there to, to support them.

And it became a pretty simple choice once I factored all of those

Desi Velikova: things in. Are founders any 

Eamonn Carey: different there? A little bit, I think fa having spent a lot of time in, in the US and Europe and in Asia, you see kind of founders, being quite different, I think in Europe more widely but Northern Europe in particular, people tend to be [00:12:00] maybe a little bit more reserved.

They tell you about their business, but they maybe don’t sell the sizzle of the business in the same way that a founder in the US might do. And if you go to a, website or collision or a pitching event or anything like that and look at the way that. US vendors pitch their business.

They’re much more focused on the vision. They’re much more focused on engaging with the audience, et cetera. I think with European founders sometimes we, we tend to focus a little bit more on here’s the brilliant stuff we’re doing now. Here’s, how we’re generating revenue. And then almost an afterthought is the vision.

So I think there’s a difference in confidence that changes over time. I think there’s a difference in how people message their businesses and explain, exactly what it is that they’re that they’re doing. But then by the same token, there’s a difference in terms of how people react to feedback.

I’ve worked with some founders from, the US who don’t take feedback very well who don’t react very well to constructive criticism, et cetera. Whereas I think any of the founders that I’ve worked with in. The Nordics, Baltics, the EE region, et cetera. Even if they think [00:13:00] you’re an idiot for saying what you’re saying, I think they’re always happy to have a dialogue and have a conversation and kind of dig into things.

So I think there’s quite a systematic approach that founders in Estonia take to everything when it comes to starting the business, doing their customer discovery, building the mvp, et cetera. And I think they do an amazing job with that. I think part of my job is to Help them then get that message across that these are very structured, systematic people who are building something amazing and let’s make sure that we give them the opportunity to tell the world what that amazing thing is gonna be.

Oh, that’s

Desi Velikova: very interesting. Tell me about what is it the perfect pitch for you? What do you like to see in founders pitch decks, but also in terms of quality, what kind of people are interested in? 

Eamonn Carey: Yeah, I think I suppose I’ll give a slightly annoying answer in that it depends, I think, for a first meeting, right?

The best pitch for a first meeting is the shortest one possible. Most of the first meetings that I do with companies, you’ll be maybe mentoring on an accelerator program or doing a quick intro call. So it might be 15 minutes or 20 minutes, [00:14:00] or you meet them at a conference and it might only be.

Five minutes that they have. And so what you have to do in the first minute of that is get me really excited. Convince me early on that I should want to take a second meeting with you, or that I should, if it’s at a conference, that I should be saying, oh, actually walk with me to my next meeting and let’s spend a little bit more time together.

So I want someone to almost treat their pitch. And this was advice I gave to people at Techstars and for, lots of companies outside of that. Treat your pitch almost like one of those teaser trailers that they show before, like a Star Wars movie or a Marvel movie, or it’s like it’s 30 seconds long.

It might just be one thing, but it’s enough to make people go take my money, right? It’s like I, I want, in like the goal of those meetings, the goal of every meeting should be to get another meeting, right? If you meet me once, you should wanna meet me three or four times. Eventually you wanna meet me in a partner meeting, and then the next meeting is when we decide to invest and it’s your first board meeting, so you should constantly be thinking about that.

And The pitches that are best are the ones that either build excitement or build intrigue, or tell me something really interesting about the [00:15:00] founder early on. Because that’s what’s gonna get my attention. That’s what’s gonna pull me in. Because you’ve gotta think as a founder, even if we’re doing, a call like this, or if I’m meeting you in person, there’s a non-zero chance that my wrist will vibrate or my phone will vibrate.

Or if we’re at a conference, someone that I know will walk past and say something or someone, will walk past and say something. And so you gotta think, okay, how do I pull this person in and get them as excited as I can so that the rest of the world disappears for them and they stay focused on me for that time.

So I think thinking about what it is that’s super interesting about what you’re doing that might be traction, it might be the. Team that you’ve built, it might be your background, it might be a unique solution that, that you identified from, years of experience or lots and lots of research.

So that’s the perfect pitch to hook me in, right? Make it really short. Make me ask you lots of questions, right? You again, advice that I give to everyone is you have two ears and one mouth in those kind of, if you’re a founder, you should be using them in that proportion, right?

You should. In those meetings, initial meetings. If you can get me talking a little bit more than you, then a, hopefully if [00:16:00] I’m if it’s me and I’m not a total idiot, I can give you some information and b, if I’m getting excited, I’m gonna talk more, I’m gonna ask more questions, et cetera. So I think that’s the perfect first meeting.

And then subsequent meetings, I talked about this recently where we invested in a company in Finland called Rental. And I think, they were one of the most impressive groups companies that I’ve ever seen pitching. We had the first conversation I was interested by what they were doing.

But as we went through the second conversation, they had a really detailed data room on notion. And so as we talked, they were able to say, Hey, yes, we can talk about competition, and here’s a link to an ocean page that has kinda a thousand word essay effectively on, on all of our competitors, and the pros and cons and points of differentiation, et cetera.

Oh, When we’re talking about financial models and key hires, here’s a link to another page. And so for me, a that, that showed that they were really well structured thought through, they had all of the information at their fingertips. They were prepared to go through a fundraising process.

But also I have two other partners that I have to, we’re conviction fund I have to get them to [00:17:00] believe in this company. And it’s my job to pitch the company sometimes to them. And so that data room to really send to them and say, Hey, if you have a concern about A, B, or C, the answer is in here.

They’ve put in chapter and verse, so the defenders that come really well compared again, even a Techstars. The founders that were able to come and say, I want to do Techstars because I know you invested in this company before, or you have these two people as mentors who are gonna be able to help me with.

Fortune favors the prepared minds to, to use a cliche. And I think the companies that show that level of preparation are the ones where I have a high degree of confidence that if they’re prepared to do that when they’re fundraising, they’re gonna prepare their materials really well.

When they go and do sales, they’re gonna prepare their onboarding really well when they go and hire someone, they’re gonna be structured in the way that they do lots of things versus I have conversations all the time with companies who. Get on a call and kinda go, Hey I dunno much about you.

Can you tell me a little bit about what your fund does, or can you tell me a little bit about, I, I feel like if you’re gonna do a VC conversation, like it takes 10 seconds to look up the fund [00:18:00] website and go, okay, generalist fund doing A, B, and C. And one of the big challenges at the moment is the number of automated emails that I get from founders going, Hey, do you wanna invest in my company?

We’re doing, company, whatever we’re doing in. In a market that we don’t invest in, and you think, look it’s really easy to do this research, and the fact that you’re not doing it shows me that you’re lazy. And if I think you’re lazy, I’m not gonna invest. If a company, if a founder is lazy, it means that the likelihood of failure is much higher.

The likelihood of me and others having to do tons of work to try and fix it is very high. And why would I spend that time with someone who’s lazy versus going, Hey, here’s someone who’s really well prepared for. Maybe there’s a few more question marks around the business, but I know that actually the feedback that we give them will translate into action.

Desi Velikova: Awesome. Do your homework, come prepared. Make the investor excited about your idea and leave them wanting to learn more. So it’s annoying when they’re lazy. It’s annoying when they ask questions about things they, could have checked on wine. What else are other red signs and mistakes that founders make?

And it’s like a huge note for you. [00:19:00]

Eamonn Carey: I think I think that the preparation one is the biggest I think being lazy in how you structure information. And I’ve had this debate mentally and with other VCs and I’ve struggled with it at times, but I’ve covered into their way of thinking that, the way people present information is really important.

And If I get a pitch deck that has loads and loads of text that has no pictures of the product that, goes into kind of crazy amounts of detail about things that are irrelevant, I think. I think, communication obviously is really key. And being able to communicate information quickly and easily is critically important.

I think as you spend more time with people, there are personality traits or behavioral traits that you learned to look out for. So the one that it’s a little bit easier when you’re, when we were doing things virtually But when you are interviewing a company or when you’re meeting the not meeting the whole team if you ask a technical question and the CTO starts to answer and the CEO speaks [00:20:00] over them, say, no, actually what they’re trying to say is X.

Or you can watch companies like different people react. So like the. CMO talks about some strategy that they’re doing, and you can see the CTO like roll their eyes. There’s lots of little nonverbal cues that you can start to pick up on that kind of say, look, are these people actually working well together, or do they hate each other?

Or how obviously the people react to criticism or feedback, et cetera. So I think you certainly look for those types of. Red flags. I think it’s but then I, you also have to be forgiving to a certain extent. I think I probably made every mistake under the sun when I started my first company, right?

I think a lot of things that I tell people not to do now are probably things that I absolutely did, 15 years ago. So I think I try where I can to forgive an awful lot, but, Especially now, there’s so much information out there. There are books, podcasts, videos, resources of the wazoo to tell you how to construct a deck, how to pitch an investor, how to do all of these different things.

And so back to that preparation piece, like really if people are not doing that they’re showing me that there’s [00:21:00] either some sort of weird sense of entitlement that they have or that they just don’t care. And obviously don’t really wanna invest in founders that don’t care about what they’re doing.

Desi Velikova: Reflecting on, the last almost couple of decades do you think that the expectations we have from founders have changed? And do you think that the popular advice from Reid Hoffman, if you’re not embarrassed by the first version of a product you’ve launched too late? It’s still largely.

Valid. Here at Pony for example, we see more and more early stage companies investing in their brand identity. They see their identity and their tone of voice as their main differentiator in a very saturated market because the majority of industries have become so competitive. How have the seed rounds changed over the years and do you think we expect more and more from founders in those early days?

Eamonn Carey: I think we absolutely expect more and I think we’re probably right to, to expect more. Again, I had this conversation with a friend of mine [00:22:00] recently where, when we started the first business back in what, 2005? If we had wanted to build something like, what was that at the time?

Like bebo or MySpace? If we wanted to build a social network, it probably would’ve cost. I don’t know, maybe a couple of million dollars to, to build it, to market it, to get it discount. That would include like buying your own server instead doing all of this kinda stuff. Now you could build a social networking service using Bubble and a bunch of no-code tools in, in, 20 minutes.

And you could run it entirely on AWS or GCP or something like that. So I think the barriers to entry in many respects have gotten an awful lot lower and the expectation of quality has probably gotten higher as a result. I think, that Reid Hoffman quote is still very true.

If I look at even the most successful companies that I’ve backed in recent years who really had their their ducks in a row in terms of the product positioning, messaging, branding, et cetera, even those companies have gone through. A bunch of changes over the last couple of years.

I think no matter how big or good your company is, or how well polished, it’s when you [00:23:00] launch, you’re still always gonna look back on it and go, oh my God, I can’t believe we used that font. Or, why did we use that color? Or, that photograph, there’s always gonna be something that, that, that will, make you make you a little bit embarrassed.

But I think because there are, there’s such a. An abundance of tools out there to help people build an mvp, an abundance of content out there to help people, understand what to do when it comes to, cus customer discovery, right? As a process was something that I never had really heard of when I started out.

Now I can, have one of a dozen books on it and an online course on Maven if I want to. So I think expectations are higher, but I think That also leads to better quality founders. And to be honest, it’s also flattened the globe, right? Like it used to be the case that. Companies in the US were amazing.

They had access to lots and lots of capital. They built fast, they scale fast, et cetera, et cetera. And then you had kind of companies in Europe that didn’t have access to the same level of capital, were doing good things, but maybe struggling to go international. [00:24:00] But there was some capital available and then there was like the rest of the world, right?

And there was very little capital available for companies in Latin America, Africa, Asia, et cetera. But my firm belief at the time was like that the talent was evenly distributed, right? The, just the capital wasn’t. And if you look at the last 10 years and five years in particular, you look at the.

Explosion of FinTech in freaking markets. You look at what’s happening in e-commerce in Asia and how much that’s influencing e-commerce entertainment, much more in Asia, how much that’s influencing the rest of the world, the growth of amazing large companies in, in, in latam and other markets.

Now everyone’s realized that talent is evenly distributed and it’s easier for folks in those markets to get access to tools to let them kind of prototype test launch and get to some scale quicker. And I think that’s been a real. Net positive, like it’s increased the total amount of global competition, as it were for eyeballs or share of wallets or anything else.

But I think it’s unlocked a wave of innovation that’s just been really inspiring to, to see.

Desi Velikova: Yeah, absolutely. And it [00:25:00] just democratization to access to resources. It helps you to filter the right people who are resilient, who are inventive who are creative when it comes to how they’re going to use those resources.

So it’s amazing to see, more and more, even here at Pony, we see more and more founders and companies coming from different parts of the world is not so much like Western centered culture anymore.

Eamonn Carey: Yeah. And that’s a huge, a huge shift. And as I say, I think the influences, you look at everyone in Europe wants to build a super apple.

That idea, it came from WeChat and others. In the Chinese markets, you look at, the rise of live streaming. So much of that has come from that part of the world, so I think there’s a lot of innovation and excitement happening there, but there’s also an awful lot that we can learn.

From that neck of the woods as well.

Desi Velikova: Yeah. What are some of the industries you’re particularly excited at the moment? And where do you want to see more startups coming from? 

Eamonn Carey: Yeah, I think I, I have I’ve had a fairly similar kind of investment thesis [00:26:00] almost since I started certainly for the last kinda seven or eight years.

So for me, I think there are really interesting opportunities in technology for, let’s call it kind of the aging populations. So I meet lots and lots of companies who are building, some social network for 16 year olds who have a low attention span, lots of competition and not very much.

Money. Far fewer people building products for 60 year olds who own their own houses are probably the last generation to have a proper pension fund who in many cases worked with and on laptops and PCs and tablets and smart phones, et cetera. So I think there are massive, that, that is a massively underserved market at the moment.

And I’m excited to see more and more people. Talking about it and investing in it. And I’m selfishly, I’m also like unfortunately not getting any younger. So I will be a customer for some of these products in the in the next 20 or 30 years. So I hope people start building better things, but that, that whole market, both from a healthcare lifestyle [00:27:00] quality social like tacking, loneliness, all of these types of different areas, I think is really exciting and interesting.

I think how. How people have fun, right? This kind of idea of almost escapism is something that I think is really exciting. And part of that ties in with, what meta are doing with Oculus and the Quest, what Apple are doing with the Vision Pro, et cetera. Not entirely, pigeonholed into that, but kind how people spend their time and have fun, right?

And whether that’s, I’ve invested in lots of. Platforms that are trying to democratize the creation of video games, right? Make it easier for people to create games, to create these amazing experiences that will bring people kind of joy. And I’ve invested in games. Studios I’ve invested in streaming platforms that try to, bring entertainment to people, et cetera.

So I think how we spend our leisure time, but most importantly how we put a smile on our face or how we get into the kind of flow state is again, is really interesting and it’s not something that lots of VCs will invest in. But I ran a games company for for quite a while, and so have a love that part of the [00:28:00] world I think there are a huge still huge opportunities in machine learning and ai again, we’ve been investing in it for almost the last 10 years.

And so I’ve watched a couple of different hype cycles come and go from everything from productivity to healthcare to, Food flavoring and beyond. I think there’s lots of there’s lots of exciting stuff to be explored a little bit more in in that market as well.

And then the last one that I’m really passionate about is food. Both what we eat and how we eat it and where we eat it, and the content that sits around it. How we become better. Chefs how we get access to better, healthier foods, et cetera. Again, I think they’re, we’re gonna be at a point before too long where there are 10 billion people on the planet.

And we’re gonna have to figure out pretty quickly how to feed all of them and how to feed people healthily. So I think there are big systemic challenges in that industry and obviously that creates big opportunities as well.

Desi Velikova: When it comes to industries there is a delicate balance between being on the edge of innovation and [00:29:00] being part of an overfunded bubble.

As an agency, we closely monitor that because we are part of the cycle. We work with companies that have just race around usually. So we’ve seen the golden years of marketplaces. The delivery apps FinTech, the Uber for X. Then in the last couple of years, been all about blockchain and Web three, and now we live in AI dreamland.

Just last week we’ve heard of a startup Misra AI that raised over 100 million in a C round without even having a product yet. And we discuss this internally all the time. And it almost feels like that VCs bear a huge responsibility when it comes to superficially inflating those bubbles and probably unintentionally harming an industry.

Do you agree with this point of view? Is the first part of my question. And then the second is as an investor, how do you distinguish between [00:30:00] like real innovation and somebody who just wants to be part of the hype and do you sometimes feel pressured to invest in a hyped industry?

Eamonn Carey: So I think the second question first, you definitely.

I don’t know if, I don’t think we feel pressure. Certainly in our case, I don’t think we feel pressure from our LPs or, from our advisory committee or anything like that. I think we probably almost mentally create the pressure ourselves because you see so many of your colleagues investing in, in, in various different businesses.

So I think certainly you can. You can back yourself into a corner a little bit. And I have seen people do that in across many of the verticals that you mentioned and certainly know a lot of people who kinda went, okay, now, Strategy, even though I don’t really understand it, but because I feel like I need to have at least one or two, bets as it were under my belt before I go and talk to our investors about investing in the next fund that we [00:31:00] do, et cetera.

So there’s, there is a certain amount of pressure that’s there, I think largely artificially created. There’s also, a certain amount of pressure that you create because you go because this has become such a mainstream topic. A lot of the kind of fund of funds and institutional investors who invest into vc, this is a question that they’re gonna, that they’re gonna ask and they will be sold by other funds.

Oh yeah, we’re experts in this. Like we’re all in on, web three or generative AI, or, whatever it is. And they’re like, absolutely writing a hype train. So there is a certain amount of pressure that you create and there is a certain amount of responsibility that, that investors bear for some of the.

Hype and silliness that ends up surrounding some of these markets. With that said, the, if I look back at kind of the web three and crypto piece, if I look back at, or now reflect even on the last couple of weeks of activity in, in the AI and LM and, g PT and AI space, I think people are Placing a bet in the hope that this is one of those generational shifts [00:32:00] that, you know, lots of people invested in any number of search companies in the, kinda late nineties, early two thousands, lots of people invested in a plethora of social platforms.

And obviously if you back the right horse, the return is pretty substantial, right? I think Andreesen, Horowitz’s investment in Coinbase returned basically all of their funds put together, or, gave them that, that amount of. So I think there are these kind of generational shifts in, in techno or what people perceive as generational shifts in technology that investors then think, okay I have to pile money into this because if this turns into a trillion dollar company in the next kind of 15 years, then the fact that I invested 5 million, it will matter.

If you look us. The angel investors who put 50 K into Uber back in whatever it was, 2007, 2008, right at its peak that was worth 200 million. So that’s a pretty, pretty decent return. And so you can understand sometimes why people go bananas for, I think it’s, it net.

I’m not sure it’s great for the markets. We had [00:33:00] all of the hyper, ultra fast kind of grocery delivery, especially here in, in London over the last couple of years. Billions of pounds sunk into businesses in, in that market that in some respects I look at and think, wow could I have gone to a company where they were doing something really innovative in healthcare or they were doing something really innovative in food or other sectors?

So there is a bit of a challenge and I do wonder what the future is gonna hold. I suspect there will be at least a little bit, if not a, reasonably large pullback in VC as a whole. I think a lot of. Family offices, a lot of those types of folks are just doing direct investing now.

They maybe won’t become LPs and funds to the same extent. I think a lot of bigger funds and fund of funds, the mix of public holdings and real estate and VC that they have has been skewed because public markets have suffered so much I think there will be a bit of a retrenchment in the number of funds that we see.

The CEO of Techstars has come out and said that, she thinks that probably half the funds that exist now won’t exist in, in a couple of years time. I’m not [00:34:00] sure I would be that pessimistic, but I also would not be surprised if that were the case. And these hype cycles will always exist and be around.

I, I hope people. Can take the right lessons from them and try and be a little bit more pragmatic and not necessarily get into an arms race. But when you see 50 K turning into, 200 million, it’s hard not to. Hard enough to think about the arms race as a winning strategy.

Desi Velikova: No, absolutely.

And probably another reason why we’re gonna be seeing this accelerated shift is the speed technology is changing. Even AI at the moment, people are investing in companies with huge promises, but they would really create these kind of huge shift in change in how many of probably the companies you’ve invested five years ago.

Would operate. So it’s yeah, it’s part of the same cycle, going.

Eamonn Carey: Yeah. We’ll see, I think a lot of interesting things will happen over the next little while. I had a meeting with a founder this morning who raised a really good round, not so long ago, and who’s now thinking, look, because so many other companies in their [00:35:00] sector are struggling to fundraise at the moment, they’re thinking about raising another larger amount of capital.

Excuse me, to go out and acquire some of those businesses, to acquire competitors, to acquire adjacent companies. So I think there will be some interesting models that evolve out of a world where maybe capital gets scarcer for some sectors. And I think for some of these companies that have raised, a hundred million plus there will be some requirement for them to potentially take, Acquire other companies, acquihire, other businesses to hire the right engineering talent because that’s still challenging to do.

Desi Velikova: Yeah, no, absolutely. Even internally, our founder created a Slack channel. Let’s use ai. So we constantly dropping new tools there that can help us deliver better, designs faster, more efficient, and it’s just about adopting the technology as quickly as we can just to make sure that we are on this edge of innovation.

Yes.

Eamonn Carey: But I use it for due diligence on companies. I was at an event at a, one of the big consulting firms [00:36:00] offices earlier in the week, and they were talking about how they’re training people to use it for research and how they’re using it in training in lots of different ways. So I think everything from, I have friends who are lawyers back home who are being warned not to use it because of the hallucination problems.

So I think it’s it’s, it’s table stakes to be working with these tools now and understanding them and understanding some of the limitations as well. But I think you’re exactly right. Like I have a, I subscribe to a couple of newsletters now cause there’s so many tools that come out that I need someone else to curate them for me and tell me once a week, these are the ones to test

Desi Velikova: out.

We need an AI to curate the AI news. Come. Going back to you as an investor tell me what makes a great early stage investor and what should founders be looking for in a potential partner aside from the funding.

Eamonn Carey: I think I think you want someone who understands your business and gets excited about it and is hopefully as passionate about it, or at least moving towards being as passionate about it as you are.

But also an investor who’s not just the checkbook, [00:37:00] right? Who will, give you the money and bugger off. I think you need someone, especially if it’s a lead investor who will. Challenge you, who will ask questions, who will hold you accountable? I think a great investor probably has some kind of track record of helping companies, right?

So it’s, so one of the things that I do with all of the investments I’ve made is I get them to do their due diligence on me. So I ask them to ask other founders about working with me and make sure that’s all gonna work. So I think you’ve got. You’ve gotta figure out if this is someone where there’s gonna be a good kind of fit in terms of working styles and knowledge and and so forth.

I think especially a pre-seed and seed. So super early in the business’s life cycle, I think great investors have to have a lot of empathy. Because it is a very difficult, lonely journey to go on. And even if you have a co-founder, certainly if you’re a solo founder going on that journey is crazy.

And having someone, yes, I’m investing in the company, yes, I want to hope for a financial return, but, [00:38:00] In order for that to happen I need the founders to be as happy and healthy as possible. And so having someone who understands that is not necessarily gonna be kinda standing on your neck going, give me 50% month over month growth, or You’re fired.

I think that empathy is is really important. And then I think, again, early stage investors, like someone who’s got a good network, right? You’re gonna have, for the first two or three years of your business and probably for the entire lifetime of your business, you’re gonna have way more questions than you have answers.

And so been able to say, look, I need to talk to someone about going through procurement processes with government agencies in the us or having someone who can go, okay, yes, I can get you this person, or, yes I have someone that can help with that. I think that’s really useful as well because again the kind of, you think about your kind of Dunbar number of having 150 friends and then those 50 people have a network around them, et cetera.

And being able to tap into that, I think is is really important. And then there are some businesses where having someone who’s got, very specific domain expertise or some, operational clout, et cetera I think that helps. But for me, it’s just someone who’s engaged, [00:39:00] helpful.

Know when to shut up and back off. Know when to lean in and help and know when to deploy empathy, and that’s.

Desi Velikova: The point on empathy really resonates with me. Having experience with being on the other side of the table. I’m telling you, having a bit of empathy and kindness towards founders is hugely appreciated.

It makes a huge difference for them. And you probably don’t remember, but back in the years when you were at Techstars I was running my startup and we met with you and my co-founder to discuss us potentially joining Techstars. And you are one of the kindest, nicest investors we’ve ever spoken to.

And I’m not saying this is a compliment. This is just a fact. You asked the right questions. Thank you. I’m blushing. This, and you make, made us feel hurt. You gave us a quite lot of direction and advice, and you left us with this. Positive aftertaste and quite lot of ideas to work on. [00:40:00] You won’t believe the amount of arrogance and cocky behavior founders have to deal with that is completely unnecessary.

Why have we built this culture? I have no idea.

Eamonn Carey: Yeah, I think it’s counterproductive in, in so many ways. I think. The most of the best referrals that I’ve had in terms of investments that I’ve made have come from founders that I’ve worked with, right? They very rarely come from other VCs.

And as I say, the majority of companies that I’ve invested in where it’s been very successful, it’s like another founder has said it to me, or I’ve specifically said, I want to invest in this sector. I’m gonna go find everyone in that industry and try and talk to as many of them as possible.

But it is it amazes me having backed lots of companies and seen all of them go through funding rounds successfully and unsuccessfully the extent to which, people try to make themselves feel big by making other people feel small. And it’s it’s needless I think it’s much.

It’s no ski off any of our noses to do a 15 minute call, have a conversation. I’ll freely admit there are probably people watching this. You go, you never sent me [00:41:00] a no, or you ghosted me, or whatever. I do genuinely try my best to go back to everyone, but sometimes stuff falls through the cracks, but I think you it’s our job to be honest with people, but you can be honest with people where I’ve been an asshole about it.

And I think that’s a real balancing act. And that’s why, again, I think a lot of early stage investors who are former founders tend to do. Better because they recognize what it’s like to be vulnerable and pitching your business at a point where you are not even sure if it’s a good idea.

And then you can pitch someone else who’s you’re kinda like, they’re definitely not gonna think it’s a good idea. I think it’s incumbent on us to, to try and be a little bit nicer. Cause as I say it’s a, like starting a company is the scariest, weirdest, stupidest thing that I’ve ever done is also best and most rewarding.

And most fulfilling. But it’s, I think anyone who started a company knows that. You’re either you’ve signed a deal, something amazing has happened, and you’re like, this is, it’s incredible. I love it. Everything’s amazing. And then two minutes later, one of your top team members resigned. Or you get sued.

We got sued by a large clothing firm, bizarrely in my first company. And so [00:42:00] you go from like extreme elation to total despair, and that’s your day, right? It’s this. There’s never really a period in the middle where you’re like, oh I’ll have a week of just being okay.

It’s it’s constant up and down and. I think recognizing that and not being an asshole about it is is yeah. Is a good thing to do. Definitely a

Desi Velikova: good thing for everyone, not just in investment everywhere. 

Eamonn Carey: Yes. I think the world could do with that 

Desi Velikova: actually. Thank you so much for your time.

Amen. It is been an absolutely pleasure having this chat with you. And before I let you go, can you share with us your biggest regret as an investor? Is there a deal that you passed on that you wish you have invested in?

Eamonn Carey: Yes, there is. Unfortunately. So I was in Dubai a couple of years ago and a friend of mine said, Hey, you should meet this guy he’s building an app.

I think he’s great. I think the app has real potential, et cetera. And it was a kind of a taxi, like an Uber type of business. And so I went to meet him and I used the app to get there. And I, obviously most people have [00:43:00] probably used Uber or one of these kind of Bolt or others. So you open the app, you tap it once to go, this is my location.

You put in where you want to go, and you tap it again and away you go. In the case of this app, Kareem, I think there were maybe I counted it at the time, it was either nine or 11 taps that you have to do to hail the cab. No, the in cab experience was great. They had really thought about that and how to make it as, as pleasurable as possible.

But the app wasn’t great. And so I went and I met the founder Stan Daer. And we met at a a club, like a member’s club in the financial center in Dubai. And I went and they were like, oh, you have to wear a jacket to come in. I was like, look, it’s 40 degrees. I don’t even own a jacket. So they gave me a jacket, which was about 10 sizes too big for me.

And so I went into this meeting, not so sure, and I met Modesta and I was blown away. He was amazing. Like a really nice guy. Very humble. We had a conversation, we talked a lot about the UX of the product, et cetera. And I came away from that meeting thinking there’s something interesting here, and I spent a little bit of time in the Middle East, so I thought there were, [00:44:00] there, there were and are still huge opportunities in north Africa, middle East, Gulf States, et cetera.

And they had thought a lot about that kinda user experience and how things were different and subtle and major ways there. So had did another chat with him, had a chat with his co-founder and talked to a friend of mine in, in the US and we said, Hey, look let’s put a, let’s put a little bit of money in here.

They’re smart guys, et cetera. And for whatever reason we ended up effectively talking ourselves out of the deal. You were kinda, oh, yeah, but wouldn’t it be easy for Uber to launch there? And no. Lyft have launched and I think Bolt had just launched as Taxify. In the Estonian market at the time.

And so even though we the thing that was interesting was this insight into the region that was probably the rationale for investing. We thought, oh no, we’ll leave it, it’s. It’s a good idea. He’s a nice guy but market is too crowded, et cetera. And actually, I should have just gone, I back.

I back really nice people, I back great people. And actually, even if he pivots this idea into a [00:45:00] helicopter rental business or a dog walking business, I don’t care because Rud asked, who’s a great guy, and I wanted him to succeed, but we said no. And then about three years later, they sold the company to Uber for a billion dollars.

So that that was a rough experience, but it was one of those ones that you I try to go back. If a company I’ve passed on goes on to become successful, I do try to go back and go, why did I pass? What was it? Was it, did I make a mistake? Did something go wrong in the process?

Et cetera. And in that case, I made a mistake by not just going, look, my job as a pre-seed investor is to invest in amazing people. And is the idea that they’re working on gonna be the one that they win with? I don’t know. Is it gonna be this time around? There are some people I’ve factored on look I just want to, I wanna have an option to invest in your second or third company because even though the first one hasn’t been successful, you will be and if I can come along on, on that journey then I will.

But in, in. In my defense, I was a lot younger in my investing journey back then. But yeah, that was a big and expensive mistake.

Desi Velikova: I lied. I have one more question now. When you said that, Okay. So now reflecting on your mistakes and the [00:46:00] learnings from the last couple of DA decades what do you think are some common factors that suggest that a startup is going to be successful?

Because I feel like you have one of the hardest jobs in the business world is almost like predicting the future. There are so many factors that will influence the trajectory of a company. It could be, founder circumstances. What kind of. Team, they’ll bring in competitors moves. You mentioned Uber, what you’ve uber launched that and so on.

So how, are there any kind of common factors that suggest that maybe there is something in here.

Eamonn Carey: I wish, you know what I, I wish the answer was yes, because then I’d be like, this is my algorithm and I’m just gonna apply it all the time. Notes straight away. You’re right. Like it, it is so many different things.

Like the fundamental thing that I come back to, and someone said it to me once we had a dinner with a bunch of the, Companies that I’ve backed and a friend of mine came afterwards. They said they’re all just really nice people. And that’s what I, I want people who are. Driven and passionate and [00:47:00] engaged and, are gonna do something to change the dial in the world.

But I don’t know that there is a common thread because every business is so different. And again, I’ve invested in companies that were going in this direction when I invested, they’re now somewhere over here and they’re infinitely more successful, even though I probably thought, hey, this direction is more interesting.

But it’s a, it’s all over the map. What generates. Successful companies. I think it’s the environment around them, it’s the people around them. It’s so many different things that I know a lot of VCs go, Hey, we’re building an AI to help us with decision making, or we’re gonna take all of these things into account.

It’s I don’t. I don’t know that there’s an AI that can do that yet. There’s probably something that can give you some signals at a very basic level. You have to train them on a data set that maybe says, Hey, you exclude people who didn’t go to a global top 50 university. And then it’s I didn’t go to a global top 50 university.

A lot of people I know didn’t go to a global top 50 university and they’re very successful or, you won’t be one people who study these subjects. I studied journalism like, there’s not a, let’s just say the global market for journalism is not what it was a hundred years ago.

So I think [00:48:00] people can develop frameworks. I think you’re right that part of our job is predicting the future and trying to figure out like what are people gonna be doing five or 10 years from now. But in order to do that, you have to have a certain amount of fluidity in the present to go.

I don’t know if beyond visual line of drone, beyond visual line of sight. Drone operations is gonna be a big business in a couple years time, but I think this group of founders are amazing. And I buy that if anyone is gonna do it, it’s gonna be them. And so you back that business and hope.

So I think fundamentally it, this is a people business At my stage, when you’re a series A or series B business, you can look at LTV over cap ratios, you can look at conversion rates. You can look at all sorts of different kind of. Very mathematical formulas that allow to determine success or failure.

But when it’s, one person and a, and maybe not even a PowerPoint I backed a company called Alina a couple of years ago, some mental health startup at Techstars. And Mandana the founder came in at idea stage we had coffee together. It was supposed to be 15 minutes.

It turned into an hour. I nearly cried during it. [00:49:00] It was an amazing kind of conversation and 15 minutes in I was like, look, I’m investing in this person. I don’t, they could tell me the craziest stuff ever and I’d still invest, but, so I think some of it you just have to really back your ability to trust people and praying that as, as much as you can, and that then like, when I’m helping people hire, when I’m helping people with board members, et cetera, like that’s, I think my job is part investor, part therapist and part priest times, and I’m not sure which one I spend the most on.

I think you

Desi Velikova: actually answered this question. It’s your gut feel about the person in front of you. You know how much trust you have in them. 

Eamonn Carey: Yeah. It’s about, I’m sure LPs would tell me, no, you never say that. You have to have some sort of mathematical principles that you apply, but no.

For me, it’s do I, if I’m gonna invest at a company and I’m gonna join their board. I’m gonna probably be hanging out with them once a month for 10 years. Average lifecycle to an IPO is 10 or 12 years. The average length of a marriage in the US is six years. So you’re making a very long-term commitment to to the founders that you back.

And so you have to be sure that, they’re the type of people that you’re gonna wanna spend a bit of [00:50:00] time with and that you’re gonna be very happy helping with, and you know that you’d be happy to have them for dinner or go and hang out with them and, 12 hour airplane flight to San Francisco or

Desi Velikova: something like that.

Yeah. We’ll have to be very careful who we spent our days with, right?

Eamonn Carey: Yes. We made plenty mistakes. The product show was brought to you by Pony, a design studio, helping startups and scale up build and optimize their digital products at Speed Check Pony Studio to learn more.