Reshma Sohoni
Seedcamp

Reshma Sohoni is the CEO and co-founder of Seedcamp. She co-founded the program in 2007 with Saul Klein and it has been considered the top European accelerator in 2011.

Seedcamp is an organization to accelerats startups by connecting entrepreneurs with a network of seed investors, serial entrepreneurs, product experts such as HR specialists, marketers, lawyers, recruiters, journalists and venture capitalists. It acts as a micro seed fund and it invests during mini Seedcamp events that are held all over Europe. Its flagship event is Seedcamp Week which is held in London in September. Following Seedcamp events, startups that received investment get support for 12 months. Seedcamp's standard investment is €50k.

Reshma holds a MBA from INSEAD and a dual undergraduate degrees in Engineering and Business from the University of Pennsylvania. Prior to Seedcamp Reshma worked as part of the Venture team at 3i.

Pedro Santos: Where did the actual idea for Seedcamp come from and how did you implement it? How did it start?

Reshma Sohoni: Saul [Klein], had been watching what was happening in the US. And he had been noodling around some ideas in his head and named this idea, Seedcamp. It ultimately became much bigger than, probably, even he had in mind. It was his idea very much, and I, at the time, was at 3i and Iit wasn't a great fit for me. I really wanted to do things really early-stage and they were doing things more later-stage and moving more later-stage.

I just had very simple ideas around, “Why isn't there a place where people can really mentor and meet entrepreneurs?” and “Why is it that every time you see an entrepreneur for the first time, it's when they're coming to pitch to you?”

Why isn't it just a conversation? And so you could bounce ideas back and forth and then get to know them over a few weeks and then have them pitch. 3i had a huge office building and people would leave work at six p.m. and I just thought, “Well, that's a waste of space. Isn't there something you can do with all this office space?

Maybe have start-ups apply for spots on a calendar system, using tungle.me or whatever, just so we can set up some time for mentoring? And I would be happy to spend a few hours a week doing that.

So these were all ideas in my head and I met Saul through Michael Arrington very briefly, but as we were just having a conversation, I think he realized he and I had quite similar kinds of thoughts, though I didn't put a name to them.

I thought he was really visionary in some of the things that he was thinking about. So, when he came around to talk to different investors about Seedcamp, and it was just a few PowerPoint slides, I casually mentioned, “Hey, I'm happy to work on it as much as you want outside of regular work hours.”

As it happened, very quickly after I decided to, basically, leave 3i. And I think 3i was quite happy with me leaving, as well. But they said, “Why don't we support you for the next six months? You seem to enjoy this more, why don't we support you for the next six months on kicking this off?”

So, as it happens, a bunch of us basically met up several times over the next few weeks and the ideas started to take much more shape into a longer- term program. I think the original idea, even Saul had, was a summer kind of a start-up program. So something very much long-term and I really wanted to do something like that long-term.

It started to take shape like that and, basically, in a very, very intense six weeks, we got some funds together, we got the web site developed, we got the application system up. Those were the three core things: the app system, the web site, and the investors, the core investors.

Santos: Yeah. So it was really quick. How much time before the actual launch of the first program in 2007?

Sohoni: I think just about eight weeks before, or something like that. One of the biggest things that I really wanted to do was, I felt that conferences are really great, but they're often VIPs up on stage and the entrepreneurs and a lot of people who want to talk to the VIPs are in the audience. I wanted to flip that around. I wanted it to be the entrepreneurs as VIPs and such, and also the mentors as VIPs, but I wanted them to be on the other side of the table almost. That's why the format is very much like the entrepreneurs are the center of gravity and the mentors rotate from one to another around that center of gravity.

Santos: And this first six weeks that you had, did you come to the model that you are following still today, or did it evolve even more after that?

Sohoni: Sometimes when you're sort of thinking through problems for a long time, often if you hit on something that looks like a solution, sometimes it's actually very, very good. We haven't really played around with the core elements because I think they came from a very good place in our heads and our hearts about putting entrepreneurs in the center of gravity. So a bunch of those ideas we haven't changed.

The investors we have in Seedcamp are very relevant investors because in eighty percent of the cases, when the company raises follow-on funding, at least one Seedcamp investor is involved. So a lot of those core tenets and things we really believed in, we haven't changed and haven't needed to change.

Santos: Okay, let's break it down. That initial, very intense period, where most of the things were done, how big was the team then? Was it only you and Saul or did you have more people?

Sohoni: In terms of team and operations, yeah, it was just Saul and me. But I think you can't discount all the other early investors that came on board, and you have Venrex, Eden Ventures, Atlas Ventures, and Robin [Klein], obviously with Saul, they really got in there early. Having those few guys early on to say, “No matter what, we're putting some money on this and we're going to make it happen.”

It has a huge impact of galvanizing the community. Index, Atomico were really the first ones. They were just phenomenal in helping get things off the ground. So knowing I could really rely on them to pitch in and help made us look like we were several people. Each of them were helping part time, and I was, of course, doing it full-time. Our early advisory board as well, Paul Bird, Sara Murray, Jason Goodman, Paul Birch, Sumon Sandhu and a few of those people were really great people.

Santos: So the investors, if I understand correctly, they basically felt the same problem that you were trying to solve and they were very easy to convince to actually help you going forward. Correct?

Sohoni: Yeah, I think some of them continue to be. Eden Ventures, the other guys I mentioned, just continue to be leading edge and visionary and want to support new innovations. It's great to have those kinds of investors in Europe.

Santos: How about the mentor's network? How did you build that up?

Sohoni: At the beginning I think, I obviously had a smaller network back in 2007, because I came from Vodafone really before that, so definitely in the venture ecosystem my network was smaller. So we really had to rely a lot on this advisory board and also the investor group to help with their networks and their portfolio companies. And Niklas Zennstrom from Skype was—having just started Atomico at the time—was great to have as one of the biggest success stories in Europe and really get behind Seedcamp, as well.

So just having Brent Hoberman, as well, I mean, having people, Marc Samwer, Brent Hoberman, having people like that who are super well-recognized and lending their name to this at the beginning was absolutely very, very helpful.

Santos: How many mentors did you have in the beginning?

Sohoni: Such a good question. I think, I'm sure we at least had a hundred or a couple of hundred?

Santos: Really?

Sohoni: Yeah.

Santos: That's an amazing number for such a little…

Sohoni: Time. Absolutely. Absolutely. At least a hundred and fifty, I want to say, maybe not more than that, but definitely around one hundred and fifty.

Santos: When you launched the actual web site to get applications in, you already had some investors on board, some mentors on board, I suppose?

Sohoni: Exactly.

Santos: So, how did you actually spread the word to convince the entrepreneurs to apply for the program?

Sohoni: Folks like Spark PR and Ballou PR also came onboard very early as supporters. They have their huge networks; Ballou in France particularly, Spark PR in the US and UK. What we did was really reach out to TechCrunch and FT [Financial Times] became big partners early on and we just worked through those networks of bloggers and journalists and writers and thought leaders in local communities to help spread the word. We continue to use those same channels today. So, once again, we've grown that, of course, but we've stayed very connected and true to the initial folks, like the bloggers, etc., who helped us spread the word.

Santos: And how many applications did you have in the first program compared to now? Do you get many more applications now that it's a known brand than in beginning?

Sohoni: Yeah. I think it's grown almost like ten times.

Santos: That's a big difference.

Sohoni: Huge.

Santos: How different is the process of setting up a program, now that you've done four years of it, against this first one? Is it much more streamlined, organized, the same?

Sohoni: Definitely. Sort of the beauty of what influenced in that first event, and we have it still to this day, is we don't use a fancy stage. This is an event for start-ups and start-up mentors and it's got to have a bit of organized chaos. So we continue to have a bit of that element to it, but, absolutely, it's become very much a military operation. In the sense of some of the basics. We can see weeks and months in advance what needs to happen. Little things that now mentors notice, three or four years later, that happened like clockwork because we got that process in order and they notice that.

But the energy and a little bit of being easy-going and that mentality you definitely need to have. Because you need to have that openness to say, “Wow, here's a disruptive start-up and I'm going to bend my mind around what they think about the world.”

So in order to have that: you've got to talk openly and the ambiance needs to be gung-ho, quite energetic. That's why we work a lot with universities and, generally, tech spaces, rather than any sort of fancy space.

Santos: Until now, in the history of Seedcamp, what were the main challenges or difficulties that you had to overcome? Or that you still have?

Sohoni: I think it's people who don't know us and it's their impressions. You're kind of always hoping that the material you communicate and things you communicate are well-understood by people. But, every now and then, it jars you when someone hasn't quite understood it the way you thought you communicated something. Those are challenges. That's a lot around communications and content and we continue to work through that.

Then, in terms of start-ups, as well, we're always trying to make sure we're always attracting the best of the best potential start-ups to apply. That's always, of course, challenging. Making sure they really understand our value proposition across all the different facets in which we operate to help them. And, of course, just grow and raise their next round's funding or finding customers or distribution channels. Those three things are probably the most challenging things. But I imagine it makes sense to you.

Santos: They make sense. But Seedcamp is a very small team. How can you keep up with all of startups? How can you help after all they go through the program?

Sohoni: Yes, actually, we have some fifty start-ups that have been funded by Seedcamp now. The help you give, there's two elements to it. There's some very immediate help in the three to six months after they win Seedcamp [win the Seedcamp 50K investment] that they most often need. And it's a lot about the way they think about building their business and getting them set up to be able to bring on a team and bring on investors and bring on business. So getting a lot of that set up and cleaned up and all that. There's a lot of intensive work in those first three months after we fund. Obviously, that has a cycle of its own. We never completely leave those businesses. I still, in other people I'm meeting, whether it's larger corporations, industries, I always run into people where a company from 2007 is as relevant to them as a company from 2011.

So we never miss helping them out. We help them out every chance we can get, but when they do raise follow-on funding, whether that's with angels or VCs, that's the whole purpose of angels and VCs coming on board, is investing money and investing a lot of their time and energy into it. In a way, they're graduating from Seedcamp and into the ecosystem and realm of these angel and VC investors.

Santos: Talking about ecosystem, how different is the ecosystem in Europe from the beginning when you started? You were one of the first accelerators of this type in Europe, but now, there are quite a few already.

Sohoni: We are very happy with the fact that the ecosystem's developed hugely in four years. I see much more cross-border deals, cross-border interaction, the composition of teams being much more across different geographies, mentors, as well, going across different countries. Whether it's investing or mentoring, or advising in some way, companies from very different sectors and different geographies. One of the big goals that we had was trying to break down borders. I think that's come a long way in the past four years. So I definitely see that.

Secondly, the quality of entrepreneurs we see continues to improve. I still think there's a long way to go with entrepreneurs in Europe, kind of a commercial sense for things, and also usability design of products, but, again, from where we started off four years ago, it's a huge improvement.

Thirdly, ambition. You definitely see entrepreneurs being extremely ambitious. You might have seen the announcement Erply made. One of the companies from our 2009 group, that's doing extremely well in point-of-sale. They made a huge announcement this week and are going after some pretty big guys. It's good to see that kind of ambition.

Santos: And that ambition was not as visible in the beginning?

Sohoni: Yeah, I think so.

Santos: You think that's changed?

Sohoni: We hear that from the guys we've backed. Now that they've become role models in their own local geographies, it's amazing to see them inspire future entrepreneurs and I hear those stories over and over again.

Santos: Going back a bit, when you started, Y Combinator and TechStars already existed, and in the blog post when as you mentioned, Saul was thinking of the idea, he actually looked into them. In the beginning, in those talks that you were defining the model for Seedcamp, did you think to follow, more or less, the same model? Why did you choose different values, a different model, the Mini Seedcamps? What led to this difference?

Sohoni: Inspiration always comes from both seeing things that trigger ideas in your head. But I think you have to be a bit smarter and apply them in a way that makes sense to whatever problem you're applying them to. So we tweaked a lot of things because the cross-border issue was huge. So you really needed to make sure you're going into local geographies and we couldn't just sit in London and say, “Come to London, or come to Berlin, or come to Paris.” We really needed to work hard and go into each and every regional geography across Europe.

Because the fragmentation that everyone talks about, and the border problem, the cultural border problem, across Europe is rife. That's one of the huge changes we made in applying the Seedcamp model. The second is, as I said, in Europe I kept seeing such a class difference, almost, between money and entrepreneurs, between VCs and entrepreneurs, between the serial entrepreneurs and first-time entrepreneurs, and we wanted to break down that social caste system.

So having a much more laid back and almost a university atmosphere for the events was really crucial, and, again, putting entrepreneurs at the center of gravity really was a big shift in culture here.

So I think that was crucial to do as well. One of the biggest things we've done is we invest per company three times as much as any other, Y Combinator or TechStars, do. And we take roughly the same amount of equity that they do. That was the other thing. Companies here need a longer runway to raise follow-on funding. I think that's probably changed in the last four years, but at the time we started, they needed a longer runway and you couldn't just invest $18,000. [laughs] It would definitely not have the same result. So that was the big difference, as well. We changed an originally inspirational idea in fundamentally different ways in order to apply it to Europe.

Santos: Interesting the point of the €50,000. Why do you offer more than other accelerators?

Sohoni: Yeah, in Europe, generally, on average, it takes them twice as long to raise half the money.

Santos: Yeah. But you also tour with your start-ups in the US, correct?

Sohoni: Yes, and that has had a great positive impact. Because, again, trying to break down borders, it's allowed US and European investors to come together and invest in European start-ups. For our companies, it's certainly given them access to US investors and US businesses.

Santos: Now going a bit more into the details behind Seedcamp. Seedcamp is also a company, so it has to pay its own investments. If we look at it, you're taking the same equity, you're offering more money, and you're even touring with the teams that go through the program in the US. Is that competitive in the long run against programs like Y Combinator, TechStars, or other things in Europe, or is it still an unproven model?

Sohoni: Granted, yes, it's more funding per business, but we're not in here to build very small businesses. We have a global ambition and it's building globally relevant and globally-sized businesses. And in that sense you're coming in quite early, right? And you're coming in for small amounts of equity, but you're definitely coming in quite early. So, I still think, in terms of return on investment, it's very attractive.

Our view is what you have to do is support these guys in order that they can survive long enough to get the next round of funding and be in a position to bring on the best people, as well. I think if that bet works, then I think the larger bet on whether you're building global businesses works, and then the model works, as well.

But in terms of all the costs you mentioned, that's why our sponsors are essential—it's sort of unique. Because we do have events. We have event sponsors and annual sponsors. Microsoft and Google have been our biggest sponsors from very early on, so they deserve a lot of recognition for being with us for the past three-plus years.

In recent days, PayPal has been very active. Qualcomm, as well, will be coming on board as sponsors. The sponsors are really helpful to us and they know that, as well.

Santos: In your role as mentor of a start-up. What mistakes have you seen constantly being made by the start-ups that go through the program?

Sohoni: One is, very much, around momentum. One of the biggest mistakes is not leveraging the momentum that they get, from either a Mini Seedcamp or Seedcamp Week, into something longer term. Where they kind of go back to what feels more natural to them or go away into their vacuum and just continue to code and work on their product without really leveraging the big burst of momentum that they've gotten. So that's one of my biggest things. Where we see companies succeed and do well, whether that's like uberVU, Zemanta, Erply, Base Kit, is to really take that momentum and really push it to the next level. And Profitero, Editd, I mean, all those guys really take that momentum. Garmz, which is now called Lookk.

It's incredible to watch them operate vs some of the others who kind of go hide away again. I just don't understand that. [laughs] It's crazy to me. I want to shake them, sometimes.

So, that's probably one of the biggest mistakes. The second one, also, I see, is building the team. If they're quite scared to part with something … like when they're quite scared to part with equity or bringing on mentors who become advisors into the business. And just being quite, sort of, closed with their equity. I go back to like, “Do you want to be a big fish in a small pond or a big fish in a big pond?” In order to do that you need to bring others on. That's your team. That's your investors. That's your advisors. That's several people in the ecosystem. Again, it's not just about you and one or two other people.

So, that's the other, second, kind of mistake I see, is where they're too closed with their equity and they try to do everything. One or two people try to do everything when, as they're growing, when they start seeing initial growth and growing fast, they just don't bring on people fast enough.

Then, thirdly, not understanding your users and what they're telling you. And measuring everything and making intelligence or sense out of everything you're measuring as well. That's like the third mistake I see—it's just not really listening. And not just not listening, not even asking users in the first place. So that's probably a third big mistake I see, as well.

Santos: As you identify these mistakes, do you have ways that you try to help the start-ups, specifically, with these mistakes? Is it more general? Will the mentoring focus a lot on teams trying to avoid exactly this kind of mistakes?

Sohoni: What we do is pair the new guys with some of the older Seedcamp companies as alumni. So that…the alumni guys can share their war stories with them and talk about how to use the momentum.

Santos: And for you personally, what were the biggest lessons from creating Seedcamp?

Sohoni: I think the biggest thing was probably that if you have just enough of the right positive people around you, you can create something very, very big. Because there were loads of people who were quite negative about Seedcamp—or just saying that it won't work. There aren't good European entrepreneurs. There aren't good European investors. There aren't good mentors, so there are a bunch of people who had lots of negative things to say, and more about the eco-system than about specifically what we were starting.

But I think the key to me, it was pretty incredible to have just a few of the right people early on and then, four years later, it's quite staggering what we've built.

Santos: How do you react to the negative people? How do you keep yourself positive?

Sohoni: Good question! [laughs] It's hard sometimes. No, again, some of those successful people, you see how they're always coming up with new things and making successes out of those. I don't think it's about surrounding yourself with just positive people, because they might be very unsuccessful positive people. But surround yourself with positive, successful people. And we measure ourselves constantly, and we keep ourselves honest, so they know what we're accomplishing and we're measuring ourselves against. So more of those successful positive people start to come to us as well, and so it's really about that kind of cycle, keeping that cycle going. And you'll always have a bunch of negative people, as well.

Santos: Can you give me an example of things that you would use to measure yourself in the beginning? You, as a team?

Sohoni: Yes. I mean, when we started four years ago, it was just how many mentors, how to see mentor growth and seeing number of applications growth. I think now, four years later, we're seeing where we rate mentors, actually. We look at the quality of the top-notch mentors who are coming, not just mentors, but we're attracting the best mentors, and we also don't necessarily look at number of applications, but we look at the rate. We have judging scores, and so we look at how high those scores were per city as well.

So, obviously, you move from…when you have zero you look at quantity, and when you have quantity you really start to go deeper into quality.

Santos: How do you actually measure quality in a start-up in such an initial phase?

Sohoni: In terms of our start-ups, proving quality is, certainly, how many of them raise follow-on funding and how many of them raise follow-on funding from our investors, which we think are very good investors. And then, how many of them break the million revenue barrier, how many of them are generating revenue, how many are profitable, and so forth. So, we measure all of that.

Santos: And what were your biggest success cases until now? And why do you think they made that difference?

Sohoni: One of them was, certainly, Mobclix, which sold for a little over fifty million. Just, again, super…quite a complementary, comprehensive team to begin with. They all brought in complementary skill sets. Most of their board members actually came from people they met at Seedcamp Week. So they had a very international advisory board and they really leveraged those guys.

And then they were based in the US, they really leveraged the kind of cross-border connections really well. And then, in the US itself, it just really kind of drove their business hard.

And because each one had such a distinctive skill set, yet they were able to get along very well, they could just work on so many different dimensions of the business, right?

So, those guys are great. I see the same with Zemanta as it's been growing, with Erply and then uberVU and MyBuilder. MyBuilder, as early as 2007, was doing well and they'll have a very healthy profit this year, along with RentMineOnline.

So, these guys just sort of said, “All right. I've got a certain momentum and now I'm just going to build on that.” Like MyBuilder, for example, got brilliant. .They got some angel investors on board and they actually got the largest building company in the UK as a strategic investor and Channel Four, which is one of the largest media companies in the UK, as a strategic investor.

It's a brilliant move because they need to get into the hearts and souls of a very, very broad audience that, as a TV viewer knows the building company, right?

So, it was very smart, the kinds of investors they brought on. So, they haven't raised any VC money, but they raised the right strategic money. So these guys all made very different decisions, but they made them quite specific to their businesses.

Santos: Okay. Not a long time ago you were named the number-one accelerator in Europe. How did that feel?

Sohoni: It's nice.

Santos: [laughs]

Sohoni: I wouldn't want to be number two, so number one is great. Honestly, it's great, right? Of course, it's great. Like I said, I don't want to be number two. I think, ultimately, we'll be judged by “did we accelerate businesses towards becoming billion-dollar businesses, towards becoming global businesses, and would it have taken them longer to get there and would they have even gotten there if we didn't exist?”

When we have those kinds of businesses, hopefully soon one day, I think that's when we'll know if we're the number-one accelerator in Europe or if we've done a great job or not. I wrote this in the blog post about three and a half years [ago]. I think for some of the very basic things, we've already hit a homerun.

Bringing the ecosystem together, giving the ecosystem a platform in Europe to meet once a month and really drive businesses to the next level, we've absolutely hit it out of the park and we're extremely proud of that. As an economic model, the accelerator, there's still time to tell.

Santos: What advice would you give to the readers of this book?

Sohoni: I think a couple things maybe. One is educate, read, be curious, get inspired, apply your inspiration in a differentiated, novel, useful way. Secondly, that it's about bridging borders and it's about working across different cultures and borders and so Europe is a great place to start-up for that. Seedcamp is a great place to do that because we don't believe in staying very closed or just within certain geographies. We really try to work across US, Europe, Asia as well. So those are the two things. Really try to break those barriers, break those borders, and take inspiration from things around you and be curious, but apply it to problems in a smart, differentiated, useful way.