20 VC: Philipp Moehring, Head of AngelList Europe on Scaling Seed Stage Funding and Why 500 Is Not Your Traditional VC

Philipp Moehring is Head of AngelList Europe and their first European hire, a role he has had since Jan 2014. Whilst being Head of AngelList Europe, he is also Venture Partner for 500 Startups and prior to 500 and AngelList, Philipp was a Principal at Seedcamp and has been involved in more than 100 startups since becoming an investor. For anyone looking to join an AngelList syndicate, absolutely check out Philipp’s here! A special thank you to Mattermark for providing all the data displayed in today's show and you can find out more about Mattermark here! In Today's Episode You Will Learn: 1.) How Philipp made it into startups and investing with AngelList and now 500? 2.) In a recent post Philipp said that management consulting, investment banking and accounting were the worst backgrounds for VCs. Why do you think this and where would you like to see the new breed of VCs emerging from? 3.) Considering your work with AngelList, how do you think the US investing scene differs from the European? Why are we seeing this sudden influx of US capital into European markets? What is driving this influx? 4.) The recent £400m that AngelList received from CSC, Philipp tells us a little more about this and what it means for European companies? 5.) How does Philipp's role with 500 integrate with the AngelList model? How does Philipp split the time? Is Philipp ever concerned that with the dominance of syndicates in the years to come, VCs will become non existent? Items Mentioned In Today's Episode: Philipp's Fave Book: Snow crash, Follow Philipp on GoodReads Here Philipp's Fave Blog or Newsletter: Brad Feld's: Feld Thoughts Philipp's Biggest Productivity Tips: SelfControl (Mac) As always you can follow The Twenty Minute VC, Harry and Philipp on Twitter here! If you would like to see a more colourful side to Harry with many a mojito session, you can follow him on Instagram here!

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  This is the 20 Minute VC with your host, Harry Stebbings, and following on from our amazing interview with European tech titan, Morten Lund, we welcome another dominant player in the European tech scene today with Philip Mering, joining me. Where do I start with Philip? He is Head of Angel List Europe and he was also their first European hire, a role he has had since January 2014. Whilst being Head of Angel List Europe, he's also a venture partner for our friends at 500 Startups. And prior to 500 and Angel List, Philip was a principal at Seedcamp and has been involved in more than 100 startups since becoming an investor. And for anyone looking to join an Angel List syndicate, absolutely check out Philipp's, with the link included in the show notes for this episode.

• 0:44Harry Stebbings?

  And I'd like to say a huge thank you to the awesome John Henderson at White Star for making the intro to Philip, without which this interview could not have happened. And before we jump into today's show, we'd like to say a huge thank you to Matamark for providing all the data and analysis for today's episode. And if you're looking for a New Year's resolution, join me in mine and read all the articles on Matamark daily. And for more voracious readers out there, follow @thinker on Twitter for some amazing reading suggestions. But now it's time to dive into today's episode with Philip Mering, Head of Angel List Europe and Venture Partner at 500 Startups.

• 1:27Speaker 01

  You have now arrived at your destination.

• 1:30Harry Stebbings?

  Philip, a legend of industry, I'm hugely excited to have you on the 20 Minute VC today. Thank you so much for joining us.

• 1:36Speaker 02

  Thank you so much. I don't know if I'm a legend yet, but thanks for that.

• 1:42Harry Stebbings?

  And I'd like to also thank John for introducing us, John at White Star that is, and for making this happen. And can you start us off today, Philip, by telling us how you made it into the startup and the technology industry in the first place?

• 1:55Speaker 02

  Sure, yeah. First of all, when you look back, it seems to be a very straight line. Coming into the industry, it didn't seem like a straight line at all. And I think that's probably the most important thing for young folks to realise when they start their career, that, you know, nobody has that plan or figured out when they started. I certainly didn't. I worked for a bunch of startups during my studies and some larger technology companies as well. Then realized I didn't want to work in a large company, I didn't want to work for a corporate, I didn't want to work for a consultancy or something like that, which was what I thought I'd do when I started studying.

• 2:38Speaker 02

  And I wrote, I worked at a, at the university I got my degree at in Lausanne, the EPFL. I worked for a professor that was doing research about venture capital and small businesses. I helped him get some data together and so when it came to the point where I needed to write my thesis, I decided I worked on the same research topic as he did, which was venture capital. And then I asked a bunch of venture capitalists for some information, for some data, and one of those firms asked me to work for them while I was doing that research, because they couldn't just give out the information without having, without having contacts or without them knowing me better.

• 3:18Speaker 02

  So that's really how I got into VC. I was super lucky, there were some great people there. This was, I had a corner fund in Bonn in Germany, this is a large state-backed VC fund. And then, actually while I was working in that team, one of the guys from the team went out and started his own fund and he asked me to join him. So that's then how I, how I got my real first full-time job in venture capital.

• 3:45Harry Stebbings?

  And you mentioned there about doing it with your studies. What studies were these? Was it an MBA or a?

• 3:51Speaker 02

  Yeah, so this was a master's of science, not an MBA, but you know, the typical kind of European masters. I studied, for my undergrad I studied in Holland, in Maastricht, did what's called international business, so just a kind of normal business degree. And then because of my experience with startups during that time, I decided I wanted to do something that's more technology-focused as my master's degree. And Lausanne had this program, so this is a joint program for EPFL and Ashesay and Lausanne. They had this program that was focusing on technology entrepreneurship and technology management.

• 4:30Speaker 02

  And that seemed like a great idea. Also, Lausanne is a great place, I could learn a new language, I could go snowboarding. And so picked that uh picked that degree, um which was mostly about how the technology industry and uh management in the technology industry is very different from management in other areas. So, you know, the technological change, um the whole disruption theory uh and and and practice, of course, um makes for a very different beast of management studies. So, yeah, that's.

• 5:05Harry Stebbings?

  In a recent post on your blog, I remember reading that you said that management consulting, investment banking and accounting were the worst background for VCs you think nowadays. But why do you think this? Uh and where would you like to see then the new breed of VCs coming from? Should it be the world of academia or should it be the world of industry? Or should it be, you know, young founders? What do you think it is?

• 5:28Speaker 02

  Um. So first of all, this was a, this was a quote I posted from Guy Kawasaki, who is a lot older than I am, a lot more experienced, has been in the startup world a lot longer.

• 5:37Harry Stebbings?

  He was our first guest.

• 5:39Speaker 02

  Oh, was he? Interesting.

• 5:41Harry Stebbings?

  Very first into you.

• 5:42Speaker 02

  There you go. So, um, what he, what he said, so he said, this is, uh, you know, these guys shouldn't be VCs or they don't make for great VCs, um especially young VCs trying to get into the industry. I I posted it for two reasons. One, uh, to keep myself honest. Um, and secondly, because I think there's a lot of, um, you know, from from the outside, the VC world looks very glamorous and it's, it looks like a great thing to do uh when you're young. However, as a young joiner in a fund, you usually do, you know, analyst work and associate work is is.

• 6:20Speaker 02

  I think it's, I still think it's a great job, um, but people who start young in this industry usually don't make partner very quickly. Uh, and and the career path is a lot more, um. Well, mysterious and a lot less planable than a career path in other industries.

• 6:38Harry Stebbings?

  Do you think that's because there's a glass ceiling? I've often heard this glass ceiling for young kind of career VCs who who do go in at a very early age and don't have the.

• 6:47Speaker 02

  Right, um, there certainly is a glass ceiling, but I think it's for a very good reason. Um, so. The real thing about the VC industry that nobody really tells you is that things take a very, very, very long time. Um, so I've been in the industry for about eight years now. And right now I see founders who I first saw in two thousand seven and eight. Do their second business. Right now I see companies that we invested in two thousand seven, eight, nine, ten. Um, really hit their stride, go big, you raise huge rounds of funding and of course also exit. Um, and this is, you know, this is me starting eight years ago. If you wanna be at a fund and really be successful, you need that time.

• 7:31Speaker 02

  Um, and if you're in your first job, you don't have that time. You don't stay in your first job for eight years. I mean, usually you don't. Um, and so, you know, the the illusion that you're gonna make investments and and become rich by being a VC. When you're young is is a fallacy that um I think people need to understand. However, if you start in the VC industry, um. And you know, as a as an associate or something like that, then very often people go and join startups after that. Um, which I think is a is a great preparation for being a VC, uh, running your own startup, being part of a startup. In, you know, in a in a crucial role, uh, really shows you much more what. Building companies is about, what growing companies is about. Um, and that's really.

• 8:16Speaker 02

  Um, a set of skills that you need to be a VC, um, especially nowadays, because things get much more operational. Uh, and especially if you wanna invest early, uh, founders are really looking for more operational advice. Um, and business advice from experienced folks.

• 8:33Harry Stebbings?

  And then moving now to your time with Angel List and your work with Angel List. You run everything Europe for Angel List, I think your LinkedIn profile said, I think it was your LinkedIn profile.

• 8:42Speaker 02

  Yeah.

• 8:43Harry Stebbings?

  Yeah, um, so how do you think then, obviously Angel List being a US company. How do you think the US investing scene differs from the European?

• 8:52Speaker 02

  I mean, very, very clearly, the investment scene in Silicon Valley is where venture capital started. Um, and therefore it's a, it's a much advanced in comparison to the European scene. Um, the European scene obviously is a lot more disjointed because companies come from more different places. There isn't as much of an epicenter like San Francisco or the Valley, um, within Europe. Uh, the venture scene over there is sixty years old, here it's, you know, at best twenty or thirty years old. And if you, especially if you talk about any meaningful size or a number of investors in the market. Um, so I think that's a huge difference. There's a lot more money going in in the US and therefore a lot of other things develop.

• 9:37Speaker 02

  That over time also come here, so, you know, it's often quite easy to, to look at what's going on. Trend wise in the US and then see those same, same things, um, happen over here a bit later.

• 9:49Harry Stebbings?

  And we've seen a lot of kind of large US VCs entering the European tech market in the last few months. With lots of lead edge ventures funding Kata Wiki, for example. So why do you think we're seeing this sudden influx of US capital into the European market?

• 10:04Speaker 02

  I wouldn't say that's a, you know, a very recent phenomenon. This has been going on for, for years. And you've seen, uh, folks like Union Square funding, um, funding SoundCloud here in Berlin. You've seen, you've always seen the, especially the East Coast VCs doing deals in London, um. But I think it's just a testament to the fact that great companies are built everywhere. Um, great founders are everywhere and no one has really that uh monopoly of of starting companies. Uh, you know, and this is something everybody says and this is something obviously that um in Europe, both founders, VCs and and pundits. Really talk about and they say Europe is building great companies, but it's just true.

• 10:49Speaker 02

  Um, these people have great, uh, you know, have great opportunities they see here. And if they have money to invest, then, you know, it's possible, especially in later stages, um, also to invest in companies that are further away. I think in the seed stage, it's very difficult to do that. Um, because in the seed stage, as I mentioned before, you probably wanna be more involved with the company. Um, you wanna meet the founders, um, you know, maybe not every week, but certainly every month. Uh, and therefore, in the seed stage, a lot, a lot fewer USVCs are investing.

• 11:22Harry Stebbings?

  And then talking specifically now about Angel List, what are, what are your kind of plans or vision for Angel List for the next five years? I mean, the funding rounds on syndicates have increased substantially and now, you know, Gil Panchina could. Could, and I'm sure will soon do series As, um, and onwards from that. Is that the direction that Angel List is looking to go?

• 11:43Speaker 02

  Uh, well, first of all, um, a lot of syndicates are already ru- uh, investing in series A rounds. Um, not a lot of them are leading series A rounds at the moment.

• 11:53Harry Stebbings?

  That's, that's what I'm.

• 11:54Speaker 02

  Um, but yeah, I, I certainly see that's something that's happening. Over the next five years, you know, which I think is a very interesting timeframe, because five years will roughly be when we will. Likely see our first big exits, um, and that's really when the model will be proven out. So, um, I think over the next five years, what, what we want to do and what we kind of have to do is really deliver on the promise of. Scaling the seed stage and early stage investing, uh, because that's mostly what Angel List is, is about. And we won't only grow because we're going later stage. We also obviously want to continue what we're doing, which is go. broader in seed stage.

• 12:35Speaker 02

  So, you know, more syndicates, more money into those syndicates, more reliable capital like, you know, the upshot fund that was just raised to invest in syndicates. This is really where, AngelList is really a very classical example of how a marketplace can take, can take over an industry or can take part in an industry. Where we can now do something because of the structure of syndicates, because of the structure of the investments that are being made, that couldn't have been done before, which is invest in seed at scale. Because there are, if you think about syndicate leads as, you know, general partners of a fund, there are hundreds of general partners for syndicates running around all over the world, investing in companies.

• 13:21Speaker 02

  And these larger funds simply back those syndicate leads at scale, which is something that couldn't have been done before.

• 13:28Harry Stebbings?

  And you mentioned there the kind of the expansion or the broadening of your offering that you want. What do you think is the biggest kind of challenge or hurdle then that AngelList will have to overcome to achieve that?

• 13:39Speaker 02

  Uh, I think we just need to be really good at, at the operational part. So, you know, the, the hard parts for every startup in, in their journey are usually the parts that you don't see from the outset. So really just making sure investments run well. Uh, making sure that everything is on, in, on solid footing from a tech perspective. Obviously get the right people to lead deals, make sure that the incentives we set are the correct ones for deals to, you know, to run the right deals. Um, and find the right investors. Um, so all of that stuff is really execution and that's usually the hardest in building a startup. And I think that's really the challenge for us. If we want to go for the next five, 10 years,

• 14:22Speaker 02

  um, or even the next 15, 20 years, then, then that's probably the biggest challenge for us.

• 14:28Harry Stebbings?

  And being kind of head of AngelList Europe, you obviously know the European tech and funding environment incredibly well. Where would you say the tech hub is? I mean, where are the most AngelList users in Europe? We often hear Berlin or London.

• 14:41Speaker 02

  Yeah, certainly London.

• 14:42Harry Stebbings?

  Certainly London. What makes you say that? Is that just the sheer size of VC fundings? Or is it the companies? What makes you say London?

• 14:50Speaker 02

  I think on all levels, London is just the number one ecosystem in Europe. And that won't change for, you know, either for a long while or ever. London is the, you know, one of the biggest metro areas in the Eurozone or in Euro in general, in Europe in general. There's the oldest technology industry, there's really the oldest VC industry. There's a lot of money in London due to the financial, the financial scene there. I think that's just really hard to copy for anyone else. You know, and besides all of that coming together, which is what you also have in Silicon Valley, which is tech companies, VCs, et cetera.

• 15:31Speaker 02

  There's this ecosystem of culture, politics, you know, all the other stuff that make up a great metro area or a great city, which makes it interesting for people to be there, start companies. So I don't think that's gonna go away. I think it's also pretty clear that in terms of momentum, Berlin is probably, or is in my eyes, the clear number two in Europe. And then there's other ecosystems like Stockholm that are very solid. Up in Finland, you have a very solid gaming ecosystem. Paris is obviously a great ecosystem, but that's a little bit more inward looking, or at least seems like a little bit more inward looking than other places.

• 16:13Speaker 02

  And then you have the up and coming ecosystems, you have Lisbon coming really strong. Eastern Europe, you know, a little bit more distributed. But yeah, lots of other places where there are also great entrepreneurs and VCs developing.

• 16:27Harry Stebbings?

  And then going back to Angel List now, how can we not talk about the recent 400 million that Angel List received from CSC? So can you tell us a bit more about this and what it means for the European companies and maybe for Europe in general?

• 16:42Speaker 02

  Yeah, so just to get clear on the, on how that whole thing is structured. It's a fund that is being invested by CSC up in London. Shot into syndicates. So this is not Angel List getting money as a funding round. This is not Angel List getting money to decide where to put. This is actually a very smart team of GPs that are investing directly in syndicates. So it's a little bit more removed than than people first think that when they read about it. So this four hundred million is earmarked to go into syndicates only and absolutely also into European companies.

• 17:23Harry Stebbings?

  So do you think that will lead to a kind of sudden influx in capital into the European tech market?

• 17:29Speaker 02

  I don't think so. I mean, this is not, you know, the four hundred, obviously, as a chunk is a huge amount of money. In the announcement already, Navar talked pretty clearly that about how that's going to be spaced out over, you know, over the next five years, how we don't want to have an influx of capital into what, first of all, the platform that can distort the way the platform works and also into the market and that distorts the way the market would work. If you think about, you know, maybe twenty million in the first year, something like that being deployed, that's not really a huge amount of money if you look at the whole industry. And so I don't think this will be, you know, some influx or, you know, distortion for the market.

• 18:09Harry Stebbings?

  And talking of the market, you're also a venture partner at one of our favorite funds, Five Hundred Startups. So how does your role with Angel List integrate with the role at Five Hundred?

• 18:18Speaker 02

  Yeah, so the Five Hundred role, the venture partner role, is really a thing I'm doing on the side. And if, you know, if you look at classically how venture partner roles were filled or were ran, it's usually someone who is in a full-time job and is doing some investing on the side. And then they get a venture partner role to have a bit more firepower to do that. And obviously, this is for a fund to get access to deal flow in a location or in an area of interest that they don't have as much coverage. So I'm gonna do some investments with Five Hundred Startups that, you know, would look like angel investments. So I know an entrepreneur, I know some other investors, they're doing a round and I

• 19:03Speaker 02

  get the chance to join and invest in a great company. So that's really the idea there. And then through Angel List, I will run a syndicate. So I will enable other people to co-invest with me, which is obviously something where the two things come together and both parties are really happy that we can do some great deals.

• 19:23Harry Stebbings?

  And then being part of Angel List and Five Hundred, you're bridging the gap between kind of, you know, the newer funding style and then the much older V C model. So are you ever concerned though that with the ever dominant rise of Angel List and syndicates, that potentially in a few years' time, the V C model may become almost extinct?

• 19:44Speaker 02

  Uh, definitely not. So first of all, uh, Five Hundred Startups is by no means a classic venture fund. Um, so I think the team is now at about sixty five people, spread all over the world. Uh, you know, investing at scale differently, investing at scale very differently from, um, Angel List. Um, much more ran by a big number of people. But yeah, so this is definitely not a classic V C firm. Um, I, I also don't think to your second point that Angel List will, you know, make the V C model obsolete, because the V C model is very boutique, um, you know, especially uh, in later stage investments,

• 20:24Speaker 02

  uh, larger, larger amounts of, are very well managed by the V C firms that exist. Uh, what Angel List does is it allows people that are already doing great deals at early stage, um, do more of them and so, uh, do bigger deals. And it will probably move some people that would have raised funds in the future and, um, and leave them on the Angel List side where they can run their syndicates and kind of have a pop up venture fund. Um, but I also think, and we're already doing this, we're helping funds do business better. So, you know, we do this with S P Vs that we can set up where funds can invest their, uh, get other people to invest in their proratas.

• 21:09Speaker 02

  We get, um, you know, a lot of V C funds actually run syndicates and new V C firms are being born that use Angel List as a, as a fundraising mechanism. Um, so I think this is much more different flowers than, you know, uh, replacing a crop.

• 21:25Harry Stebbings?

  And you said about the model of of investing at five hundred there. What was it then? I mean, you know, you could have been a venture partner at numerous different VC firms, I'm sure. What was it about the five hundred model and setup that really attracted you to them?

• 21:38Speaker 02

  First of all, I love the people. So Dave and Badji, who I mostly um talked with and and worked with at five hundred are just really amazing people. I've known them for years now and this is a great chance to work with them. Um. On the other hand, it's a really interesting model where I can invest in, you know, a style that wouldn't change how I think about companies, wouldn't change my work with Angel List. And so it was just a very simple setup um for me to agree to and um other people that I have talked in the past who um you know weren't as open in being so flexible as five hundred are. Uh. Which is really, again, born out of the way they run

• 22:18Speaker 02

  the five hundred fund and the way the five hundred fund is is positioned and uh and the way they are investing.

• 22:24Harry Stebbings?

  And if it's okay with you, we're gonna dive into a quickfire round now.

• 22:27Speaker 02

  Sure.

• 22:28Harry Stebbings?

  So, career highlight for you so far?

• 22:31Speaker 02

  Wow, uh, career highlight. Um. I don't think I've, I I hope I haven't hit my career highlights yet. Um. So uh, overall, I gotta say what makes me happiest, see entrepreneurs succeed. So people, as I said, that we invested in six, seven years ago, um and now hitting their stride, selling their companies, becoming super rich, um becoming angel investors themselves, starting their next companies. That's really the coolest thing to see and see how someone you know, that um that I that I met a couple of years ago is now um very successful. So I think that's really the most interesting thing about the job. Um. But obviously, you know, working at Angel List, working with five hundred

• 23:13Speaker 02

  uh is also something that I enjoy every day. So, uh, you know, that's kind of a highlight too.

• 23:18Harry Stebbings?

  And then your favorite book and why? I know you love your books. I'm reading your Goodread books, which are brilliant, by the way. I'll include a link in the show notes for everyone to follow you on Goodreads.

• 23:28Speaker 02

  Sure. Um. Yeah, so it's really hard for me to say what my favorite book is. Um. I'm, I can tell you who one of my favorite writers is that really influences my thinking, and that's William Gibson. Um. I think. If I had to pick one book that's, if someone asked me, what book should I read, I would probably say Snow Crash. Um, it's a very fast, it's a very fast read. It's, it's super interesting how the future is depicted in that. Um, and I've, I've caught myself looking to science fiction much more than to, you know, research or um, uh, academia when it comes to, when it comes to new technology advances.

• 24:11Speaker 02

  So, yeah, I think Snow Crash is a great book for everyone to read.

• 24:15Harry Stebbings?

  And then your most read blog or newsletter?

• 24:18Speaker 02

  Yeah, I think again, there are too many to count. I used to be a, a, a big Google Reader fan and had like hundreds of blogs in there. I think Brad Feld is writing a great blog. Um, I, I had the, or have the pleasure of working with um, Foundry Group on their Syndicate at Angel List, um, and-

• 24:35Harry Stebbings?

  Brad's, Brad's a good friend of the show, actually.

• 24:37Speaker 02

  Oh, that's awesome, yeah. So Brad writes really well. He writes really personal, uh, in a really personal style, which I really appreciate. And he's also covering topics that, you know, that a lot of people, other, that a lot of other people don't dare touch or don't, you know, don't want to openly talk about. So I think that's really great.

• 24:56Harry Stebbings?

  And then your productivity tools, what's your must haves?

• 25:00Speaker 02

  Um, ah, my, my biggest productivity tool is a, is a tool called self-control. And basically it blocks you from going to websites like Facebook, Twitter and, and uh, news and those blogs that take all your time away from, from real work.

• 25:15Harry Stebbings?

  And then finally, what are the next five years for you, Angel List and 500 Startups? Quite a heavy question there to edit on.

• 25:25Harry Stebbings?

  Normally it's just like for you and, but then there's a few with you. So let's, so let's go for, for you. What was the next five years for you?

• 25:32Speaker 02

  Um, well, first of all, I hope that with um, Angel List, we can really show that we can um, scale this model and really bring it um, to more places, bring it to more entrepreneurs and, and more investors. Um, and I think the next five years, as I mentioned earlier, is really the time when we show whether this works or not. Um, so that's gonna be super exciting. Um, for myself, I'm, I'm very happy uh, with where I am at the moment. So I, I hope I can get a few, few more years in this uh, in, in this setup.

• 26:05Harry Stebbings?

  Well, thank you so much coming on the 20 Minute VC today. It's been such fun having you on the show and I'm so pleased that you could make it.

• 26:12Speaker 02

  Absolutely, yeah, that was a lot of fun.

• 26:16Harry Stebbings?

  Again, I'd like to say a huge thank you to Philip for giving up his time today to be on the show with both positions at 500 and AngelList, time management must be tricky. So, very, very grateful for that. And if you are loving the 20 Minute VC, head over to the site at the20minutavec.com and sign up for our newsletter so you never have to miss an episode. Or you can follow us on Twitter at 20minutevc, all in letters. As always, thanks so much for your continued support and we look so forward to bringing you Friday's episode.