Blossom Capital & ‘high conviction investing’

Blossom

The top tier Silicon Valley VC firms have always taken a distinctive ‘high conviction’ approach to investing. By that I mean they are thesis-driven and move fast, taking big risks on ambitious visions, and throw everything they have behind the teams they back. They lead rounds, and give entrepreneurs the necessary runway to build the company of their dreams. As we announce today that Blossom Capital has raised an $85m fund focused on Series A-stage companies across Europe, I want to explain why this conviction-led approach is one we wholeheartedly buy into — as well as set out how we are doing things just a little bit differently to our European peers.

‘You’re never going to get outliers unless you take big risks.’

To win in disrupting, transforming or even creating new industries often means having ideas, visions or convictions that seem implausible. It also means being comfortable with the fact that the odds of success are usually heavily stacked against you. For most founders, playing it safe is not an option. The best investors understand this too.

If you look at the performance of some of the Valley’s leading venture funds, as many as half of their companies ‘fail’. But for all of those who don’t succeed, transformative companies like Apple, Amazon, Google or Facebook emerge too. The lesson here, of course, is that you’re never going to get outliers unless you take big risks.

The reason Blossom can take this approach is because of our LPs. These include vision-led institutional investors with the heft, patience and long-term perspective to ensure big outcomes, alongside highly experienced VCs like Tom Stafford (DST Global) and Andy Weissman (Union Square Ventures), and entrepreneurs-turned-investors such as Robinhood founder Vladimir Tenev, and Mikkel Svane, co-founder of Zendesk, who know what it takes to rapidly scale a business.

As a young team – who between us have helped grow some of the biggest names in tech including Facebook, Klarna, Robinhood and Deliveroo — we have been the beneficiaries of living through a period of sustained growth, meaning that we know how quickly startups can scale and the size of company they can become.

Strong Valley links.

Another way we’re evolving the European venture model is through the relationships we’ve forged through making multiple co-investments with many of the most active and influential Silicon Valley VCs – including Greylock Partners, DST Global, Sequoia Capital and Social Capital.

So far Blossom has backed Duffel, Fat Llama, Frontify and Sqreen, bringing in some amazing investors, including Y Combinator, Greylock and Index Ventures – something that will be particularly useful to our portfolio when they look to raise their next round of finance. Similarly, advisors to the firm include a network of 30 founders and executives from some of the world’s leading technology brands.

The most diverse partnership in Europe (possibly). 

Blossom’s partnership — which includes Imran Ghory, who previously led data-driven deal sourcing at Index, Mike Hudack, until recently CTO at Deliveroo, and former director of product at Facebook working in both Menlo Park and London, and Louise Samet, who joined Blossom after six years at Klarna, where she was responsible for their digital products and led the company’s technical sales team – is certainly one of Europe’s most diverse, if not its most diverse.

Why is that so significant? Successful venture investing is all about information asymmetry – it’s about seeing and believing in something (or someone) that others don’t. Having different genders, ethnicities and backgrounds around the table encourages diversity of opinion and independence of thought, avoiding the stifling consensus which can develop without it.

Under the hood.

Unusually, we’re only going to make four or five investments a year because we’ll be thinking very carefully about our bandwidth and how much time we have to devote to each of our companies.

From the moment I started to assemble the Blossom team I knew it was really important that – ideally – half of us came from operator/engineering backgrounds. You can’t have the right conversations with founders unless you have the expertise in how to build companies from the inside. It also enables us to be hands-on when we’re asked to be.   

Due to the fact that there’s such a range of experience, skillsets and network among our partners, it makes sense for each of us to work with every one of our investments. What that means in practice is rather than one person taking a board seat (and we don’t believe in VCs taking board seats at Series A-stage anyway), we encourage a more collaborative and transparent relationship between Blossom’s partners and our founders. And because we know what’s actually going on under the hood, as opposed to just tracking KPIs, we can be far more useful to the team.

Data is central to what we do.

In the same way entrepreneurs are building tech products to help themselves scale, we use data to find the leverage in our business when it comes both to sourcing deals and helping startups grow. Having a data scientist on the team, in Imran, enables us to find investment opportunities early. If you look at the big outcomes in Europe, around 70% of them today came from outside of the major hubs, in countries such as Romania, Finland and Portugal. Data allows us to cover the entire continent, not just the major and overfished capitals like London, Paris, Berlin and Stockholm.

Imran also works very closely with founders to figure out appropriate benchmarking, how to build data infrastructure and making that all-important first data hire.

More ambitious than ever before, today’s cohort of European entrepreneurs expect so much more from their investors than ‘just’ capital. They want backers who can match their levels of energy and ambition and offer practical support with product, operations and growth. They think globally from the outset and need local VCs who have experience of scaling internationally, as well as deep networks not just in Europe, but in the US and Asia too. Ultimately, however, they want to partner with operators who’ve done the hard yards themselves and know just what it takes to reach the summit, while navigating the inevitable turbulence along the way.