The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Why Large Seed Rounds Increase the Chances of Success | When to Sell in Venture | Why Multi-Stage Firms Do Not Do The Work | Is Europe Totally F****** and Why AI Means London Can Compete with the US with Hussein Kanji

Jan 20, 2025

Hussein Kanji, Founder and Managing Partner of Hoxton Ventures, shares insights from his experience in venture capital. He discusses how large seed rounds can boost startup success rates and critiques the UK’s small funding challenges. Hussein reveals lessons learned from missing out on significant gains with Darktrace and how Deliveroo shaped his investment strategies. He examines the broken incentive structures in VC, the importance of hiring diversity, and speculates on the competitive landscape between Europe and the U.S. in tech funding.

01:17:42

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Hussein Kanji

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Quick takeaways

Larger seed rounds significantly increase a startup's chances of achieving unicorn status by enabling effective scaling and resource allocation.

Emerging managers should prioritize capital deployment based on time allocation rather than focusing solely on reaching a specific fund size.

Investors must adopt a contrarian approach by focusing on long-term value creation amidst a market increasingly driven by momentum investing.

Deep dives

Correlation Between Funding and Success

There is a notable correlation between the amount of capital invested in a company and its likelihood of achieving unicorn status, with an average of around $300 million required to reach this achievement. This highlights that larger funding rounds may significantly increase a company's chances of success, especially in the current venture environment. The discussion suggests that the substantial financial backing allows companies to scale effectively, attract talent, and invest in necessary resources. These factors collectively improve the probability of creating a successful business in competitive markets.

Intro

4min

The Evolution of Venture Capital in Europe

7min

The Struggles and Strategies of Fundraising in Europe

3min

Navigating Venture Capital: Timing and Strategy

22min

Navigating Fundraising Challenges

9min

Navigating Partnership Dynamics in Venture Capital Decisions

2min

Navigating Seed Funding in Venture Capital

8min

Navigating UK Entrepreneurship Challenges

19min

Building Legacy and Collaboration in Venture Capital

5min

Hussein Kanji is the Founder and Managing Partner of Hoxton Ventures, one of Europe’s leading early-stage firms with mega wins in the form of Darktrace and Deliveroo. Hussein cut his teeth in venture at Accel Partners in his early years.

In Today’s Episode with Hussein Kanji We Discuss:

1. How to Raise a Fund:

What are Hussein’s biggest lessons from his first fund taking 39 months to raise?
Why does Hussein believe you should fundraise for a set amount of time and not to achieve a certain amount of capital?
Does Hussein believe governments should be investing in venture funds?
What are the biggest mistakes Hussein sees emerging managers make when raising?

2. How to 10x a Fund:

What is Hussein’s formula for knowing when to sell an investment?
How did Hussein miss out on making $400M in Darktrace? What did he learn from it?
How much money did Hoxton make from Deliveroo? How did doing 37x on Deliveroo impact how Hussein invests today?

3. How to Build a Team in Venture:

Why does Hussein believe the incentive mechanism for young VCs is broken? Why do they just want to get cash out the door and not worry about quality?
Why is it hard to hire female partners today? What needs to happen for this to change?
What are the single biggest ways that venture partnerships break down? What went wrong between Hussein and his partner, Rob?

4. Is Europe Totally F*******:

Why does Hussein believe small seed rounds are a massive problem in the UK?
Why does Hussein believe the dire state of the London Stock Exchange is not a problem?
Why does Hussein advise companies that the best way to scale is in the US?
What advice would Hussein give to Keir Starmer on how to stimulate growth in the UK?
Why does AI mean that the UK can now compete with the US?

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