Earlier this month, venture capitalist and former Spotify global director of marketing Sophia Bendz announced that she was leaving London-based Atomico to join Berlin’s Cherry Ventures.
Her stated reason for leaving the London VC firm — which mainly does Series A and Series B rounds — is that, having made the difficult transition from seasoned operator to venture capitalist, she wants to focus on seed stage where she can do more deals and work closely with founders and their teams at a much earlier stage.
Bendz is already a prolific angel investor, with a total of 44 deals in the last nine years. However, although she was promoted to partner at Atomico in November 2018 and has helped source and carry out due diligence on a number of deals, she didn’t end up leading any during her time at the firm.
That will quickly change once she starts officially at Cherry, which does far more deals per year than Atomico, being that it is focused on an earlier stage of the startup funding funnel.
To find out more about her latest career move, I caught up with Bendz the day before her announcement. In the conversation that followed, we dug deeper into how she approaches angel investing, why the new focus on seed stage makes sense, and what it’s like to compete for deal flow.
TechCrunch: Why are you leaving Atomico?
Sophia Bendz: You know me … I’m not a trained investment banker, and I come from the world of investing as an operator by heart and trade, and that’s my majority of experience. Then having done angel deals the last nine years now … 44 of them, I think … then that gives me a lens from an early-stage perspective. When I joined Atomico, I was super excited about helping to launch an angel program to make the worlds of the angel community and the later-stage investors become closer. I also wanted to learn from the real pros of how do people do venture capital? How do you do investments? I was used to doing it on my own as an angel. I wanted to learn from the best. I came to Atomico and I have had almost five years now where I’ve learned an incredible amount from an extraordinary team. It’s been a super intense and fun journey. But also it made me understand I can be more valuable and bring more value to the table as an early-stage investor, rather than as a later-stage investor. When I had that realization, I sort of needed to ask myself, do I think Atomico will start doing more seed rounds or do I need to find another way of being able to do seed rounds? So that’s how I kind of started thinking about this move.
Tell more more about your time at Atomico.
I started off as an executive in residence. I was eight months pregnant, and they just hired me for the opportunity to come on board then. As an executive in residence, the focus was to help source deals in the Nordic region and tap into my existing network within the startup community, and also to help and support the marketing directors or CMOs of our portfolio companies. So that was a role that was fairly broad and a bit mixed. Then when I was promoted to partner, my role became more focused on sourcing in the Nordic region, which I have done. As you know, we look at around 2,000 deals per year and we end up doing around 10. My focus has been the Nordics and I have a tendency to fall in love with direct-to-consumer and femtech and female founders. The sourcing has been good, we have had great deal flow coming from the Nordic region. I have not led any of those deals myself, but I have contributed to the deal flow and done a lot of DD processes and taken companies to IC and commitment level but not led any deals.
Was that frustrating?
Yeah, I think it was part of the learning journey, right? I had done deals in one way. Then, joining a big fund that are, you know, the real pros at it, I needed to kind of get a handle on how it works and understand how to do it. But I do think that I have a passion for the earlier stage, when you need to make a bigger bet, because when you invest in A round or B round, there are more variables that you can measure. You look for KPIs, and you want to see things in place. When you make early-stage, there’s still a little bit of a portion that is unknown. And I find that thrilling. I like that part when you need to make a bet and you can therefore play a bit of a bigger part in that founder’s life, and you can get an opportunity to back someone from day one.
It’s actually two different ways of investing. One is more metrics driven and one is more people and gut-feel driven.
Because I cover so much early stage, I’m having to do that just to see if it’s worth writing about, because there aren’t really many signals at that earlier stage.
No, there’s not many signals, but there are a few and it’s a fun game to interpret them.
When you’re doing seed or even angel, do you feel like as an individual, as an ex-operator, you can make an outsized difference at that stage, but as the companies mature, the ratio of your time versus impact lessens?
I think that’s one of the core reasons why I love it. I think when you are an early-stage investor, and especially if you have an expertise that you can share with the founder — having been the marketing director at Spotify or if it’s being a journalist who has the talent when it comes to communicating what they’re doing — that is super valuable for the founder. And for me, I get a kick out of bringing value and being valued by the founder. I want to feel like I’m making change and having an impact … But when a founder is raising a Series A or Series B, they have less urgent needs, at least for some of this type of operational support that I can bring.
Let’s talk about Cherry Ventures: What’s the backstory? How did that come about?
I am someone who appreciates building relationships over time. And I have been able to do so with Cherry, because Atomico is extremely close to them. So I met them through Atomico. But I’ve also met them through my own angel investments. We have four deals where I have angel invested and they have followed on with seed investment. So I’ve gotten to know them through working together the last couple of years. I also think we bonded over being former operators, all of us, and wanting to help and add value to the founders early on.
What’s your remit at Cherry?
I will be a partner based in the Nordic region and will continue to look for founders with bold, big missions to change the world in Europe, but obviously with a focus on the Nordic region, because I have my bigger network here.
What are the things that you’ve already recognized or built into muscle memory that you see in those early-stage founders or those products that make you more likely to back them?
Yeah, that’s a great question. I think some of the patterns that I look for or things that I look for … one being that the founders are good at articulating what they want to do. Sometimes it’s not easy to condense down to a sentence or two what you’re actually working on. I think if a founder can’t explain to me in an easy way, exactly what they’re doing and why it matters, it’s hard for others to understand. So communicating your story would be one.
The other one would be if they have the ability to surround themselves or hire really good, smart people with relevant experience, because we know that they’re going to need that. It could be that they have hired someone as a CTO or on an advisory board, or if they have a prominent angel on board, someone who I know can help guide them.
I also look at the cap table. Sometimes you can see that some big family offices own too much, and then it can be a bit of a messy process to get that cleaned out.
Then if I feel like the entrepreneurs are hungry, to work night and day on this for 10 plus years, they almost need to be a bit obsessed with what they’re working on, because it’s gonna be super hard. And if you don’t really want it badly, you’re probably not going to last.
What are the things that catch you out still?
One thing would be in sectors that I feel like I have not enough prior knowledge about. This could be energy or nuclear power or stuff that is out of my comfort zone from a knowledge perspective. It could also be that I haven’t had time to map out a competitive landscape, that it’s hard to know how unique they are exactly, if they haven’t done that well in a slide and showed it to me. But, you know, sometimes if you’re good at pitching, it can sound like they are the first one thinking about it, and you get really excited and then you realize, oh, actually four or five other players are doing something similar.
And the other would probably be, you don’t want to be the only funder in the early stage, so they need to have a skill or capacity to attract investors. Otherwise, I risk being the only ticket in and that’s not a sustainable situation.
Lastly, have you ever had a deal where you want to be in on the deal perhaps more than a founder wants you? I don’t mean literally, I mean, there’s a lot of competition for that deal and so how do you fight for deals?
Yes, it is a very relevant question. I think the good deals are always very competitive. And they don’t need my money, like, as an angel, I’m small ticket. So, you know, that is not a game changer if they get my ticket. So I always try to explain to them what I learned in my Spotify journey and how I can share those learnings to help in their journey. Also, one big part of that is that I can help them when they need to go and raise their Series A because I’ve been on the inside and I understand some of the dynamics and I know how it works. I know the questions that we asked the founders that are raising Series A, so I can help craft them.
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