In Episode 19, we speak to Simon Schmincke, General Partner at Creandum, a VC advisory firm with offices in Stockholm, San Francisco and Berlin. Spotify, Klarna and Kahoot are among their portfolio of companies across Europe and the US. Originally from Germany, Simon built three companies for Rocket Internet and was part of the founding team of FoodTech startups Foodpanda in Singapore and HelloFresh in the United States.
In this episode, Simon talks about the fundamentally human side of venture capital, his ideal founder-investor relationship and the differences in consumer behaviour he has noticed while working and investing across Asia, Europe and America.
I'm someone who really enjoys social interactions face-to-face, so it was not easy for me in the beginning to build the same relationships with founders via Zoom. But it’s also a fantastic opportunity, right? You're sitting in Singapore, I'm in Berlin, and we're having this great conversation here.
Creandum has been doing deals remotely in many countries in the last 12 months, something that we were, quite frankly, skeptical about in the beginning. Can we wire 10 million euros to a group of folks that we've never met before? That's scary.
It's about getting people into a mood where they feel they can loosen up and don't feel that this is just a business relationship. For sure, by the name itself, “capital” says it is the cause of business but we see such a human side to Venture Capital.
As I mentioned before, if I don't feel comfortable with you, I don't want to give you my money. And you shouldn't choose an investor who you wouldn’t want to have dinner with.
It really comes down to the dynamic, the passion, and quite frankly, the social chemistry we have with them. I go for walks, dinners and coffees with them. We talk about barbecuing, family and vacations. I want to see if it’s a group of people that I would like to hang out with for the next 10 years, because we'll be WhatsApp, Facetime and Zooming pretty much every week for 10 years if things go well. So, we invest a lot of time in getting to know each other and see if there's a fit.
Secondly, we try to find out how “big” these individuals and teams think. Are they willing to admit that they’re planning to build Bavaria’s biggest platform, Germany's biggest platform, Europe's biggest platform? Are they trying to conquer the world? More often than not, that's a criteria that makes us choose not to invest into founders because they're thinking too small, not bold enough, not brave enough.
Finally, we're looking for hints about how founders think about the product. Are they doing this because of a business opportunity or because they believe the world needs this product? That's very important for us.
We strongly believe at Creandum that the best product wins. Even if you have someone with a head start commercially in front of you, if your product is fundamentally better, and you know, you have a vision for what to do better, then that’s a bet we often take.
As a European, what I love so much about the US is the customer's willingness to try out something new. They have a willingness to spend on services and to change habits with new offerings. On the other hand, Europeans are often very skeptical and not willing to pay for anything. They’ll ask: “Why does this cost 50 euros more than the previous version, which is significantly worse than the new version?”
In Asia, the consumers are very different from country to country. So I think it's very difficult to generalize, at least from my experience when we built Foodpanda. I was responsible for the global team overlooking Thailand from Bangkok. I lived in Singapore, but we had offices in the Philippines, Vietnam, KL and Hong Kong eventually. And it was different from country to country, the expectations on customer service, on timing, etc.
This is the most important topic for mankind right now. Ignoring sustainability and climate change can be very expensive for all our LPs and for sure, for my son, who just turned seven. It’s a topic that's very close to everyone at Creandum. Most of us have families and we’re really afraid of envisioning a future when we're not able to turn around climate change.