20VC: Biggest Lessons and Challenges Building One of the Most Successful Seed Funds, How To Manage Investor Psychology, Self-Doubt and Insecurity & The Secret to Truly Successful Venture Partnerships with David Frankel, Co-Founder @ Founder Collective
Feb 7, 2022
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David Frankel, Co-founder and Managing Partner at Founder Collective, dives into the challenges of building a successful seed fund with a stellar portfolio including Uber and Airtable. He discusses the transition from angel investing to institutional roles and the importance of creating a safe space for open discussions among team members. Frankel shares insights on analyzing the current seed market, balancing emotional responses in decision-making, and the significance of emotional trust in investor-founder relationships, all while navigating self-doubt and insecurities common in the field.
The importance of trust and collaboration in venture partnerships and creating a safe space for open communication and non-judgmental sharing.
The significance of aligning investment decisions with both the founders and the market opportunity, and the need for adaptability and continuous learning in the ever-changing investment landscape.
Deep dives
The Power of Investing in Seed Stage Companies
David Frankle, co-founder and managing partner at Founder Collective, emphasizes the importance of seed stage investing. He shares his journey starting from running a flea market store to building the largest ISP in Africa. David discusses the transition from angel investing to managing an institutional fund and the importance of trust and collaboration in partnerships. He also highlights the significance of focusing on both the founders and the market opportunity when making investment decisions.
Navigating the Early Stage Market Environment
David explores the changes and challenges in the early stage market, with the increase in competition, collaborative dynamics, and changing investment landscape. He emphasizes the importance of aligning fund size with investment focus and maintaining patience and judgment in the face of market fluctuations and uncertainties. David also discusses the impact of COVID-19 on investment decisions and the need for entrepreneurs to be savvy in navigating the funding landscape.
Delivering Constructive Feedback and Building Trust
David shares his approach to delivering constructive feedback in a sensitive and effective manner. He highlights the importance of empathy, creating an environment of trust, and starting conversations from a place of understanding and support. David emphasizes the significance of aligning investment professionals' judgments and trusting their expertise. He also emphasizes the value of learning from and being inspired by various mentors, including entrepreneurs, authors, and podcast hosts.
Lessons from Missed Opportunities and Insecurities in Investing
David reflects on missed investment opportunities and the lessons he has learned from them. He discusses overcoming biases and the importance of finding conviction in investment decisions. David shares insecurities about the current investment landscape, including concerns about market sustainability and the weight of capital absorption in the early-stage market. He stresses the need for adaptability, continuous learning, and maintaining a focus on long-term alignment and impact.
David Frankel is a Co-Founder and Managing Partner @ Founder Collective, one of the great seed firms of the last decade with a portfolio including Uber, Coupang, Airtable, Whoop and many more incredible companies. Previously, David was Co-Founder and CEO of Internet Solutions (IS), the largest ISP in Africa, ultimately acquired by NTT. David is also a founding board member of Endeavor SA and in the past has been selected by the World Economic Forum for the Global Leader of Tomorrow (GLT) program.
In Today’s Episode with David Frankel You Will Learn:
1.) How David made his way into the world of angel investing? How his mindset changed when making the transition from angel to an institutional investor with the founding of Founder Collective?
2.) Building the Firm: Founder Collective
What are the biggest challenges in venture firm building today?
Why is "deploy" and "the game" banned as words within Founder Collective? What terms are promoted as an alternative?
How does David construct investment decision-making in the partnership?
How does David create a safe space where all team members can share their thoughts in a non-judgemental, safe environment?
What are the biggest mistakes or challenges that David sees firms make when building?
3.) David Frankel: Investor Mindset
How does David analyse the current seed market today? What does he like? What worries him?
Does David agree that early stage investing has never been less collaborative?
How does David reflect on his own relationship to price today? How does he determine when to pay up vs when not to?
How does David think about the compression on fund deployment timelines? Will this change?
How does David keep a fresh and clean mind when viewing new opportunities, having seen many work and not work? How does one retain that mental purity when investing?
What have been some of David's biggest misses? How did it impact his style of investing?
4.) The Partnership:
What was the most recent disagreement David had with the partnership? How was it resolved?
How does David approach self-doubt and insecurity within the partnership? How can this be managed successfully?
What have been some of David's biggest lessons on how to give effective feedback without being judgemental?
In a world of Zoom, how did the partnership retain the same level and quality of connection that they had in person? What works? What does not work?
Item’s Mentioned In Today’s Episode with David Frankel