WLB talks to London VC Nic Brisbourne

by James Agate

Nic Bisbourne is a VC veteran and partner at London venture capital firm DFJ Esprit. Wired magazine recently placed him at number 49 in the Wired 100 of movers and shakers that are shaping our digital world. Nic also authors the widely read ‘The Equity Kicker’ blog. WeLoveBusiness.co.uk had the privilege of getting to know Nic a little better…

What was your very first job?

My first ever job was helping the milkman with his Saturday round – six hours work for a fiver! My first proper job was as a strategy consultant with Gemini Consulting.

What did you do prior to joining DFJ Esprit?

Before DFJ Esprit I was with another venture fund, Reuters Venture Capital – initially we were part of Reuters investing from Reuters’ balance sheet and then we span the fund out in 2001.

So you are a partner at DFJ Esprit, what does your role involve and what is your main area of focus?

The two biggest parts of my job are making new deals and looking after the ones I’ve already made.  My main area of focus now is the internet – largely ecommerce, adtech and social media.  Historically I have also invested in software companies.

Can you tell us a little more about DFJ Esprit as a whole (size, portfolio etc)?

DFJ Esprit now has four funds under management totalling c£500m (I don’t give a precise figure because the funds are in a mix of Euros and Sterling).  There are around 60 companies in the portfolio and we have twelve partners.

At what stage does a business have to be in for DFJ Esprit to consider making an investment?

We invest at all stages from pre-revenue through to reasonably substantial companies, although I think it is unlikely that we would invest in a business that didn’t have at least some track record of product development and execution.  It is hard to give much insight beyond that without writing an essay as our investment strategy is different by sector and varies over time.

Does your role involve getting ‘hands-on’ with the businesses you invest in?

Yes! One of the reasons I love this job is that I get to work closely with interesting entrepreneurs and their companies.

When it comes to considering an investment, what do you personally and your firm look for?

A big market, an opportunity to be the market leader, great product and a great team.

Furthermore, what makes a great business to invest in?

For a startup to have the opportunity to be a leader in a big market there usually needs to be some kind of change that is causing customers to alter their buying behaviour.  Great businesses are usually the ones driving these changes – not too late and not too early, but at the right time.

As an experienced VC, do you think you can instantly spot a business that is going to flop? Or is it much more of a difficult call to make i.e. could it still go either way?

We receive a lot of business plans (1,000-2,000 per year) and we need to review them pretty quickly to leave enough time to focus on the good ones, so yes, that is usually a pretty instant decision.  That doesn’t mean the businesses we don’t follow up with will flop though, it just means that they don’t meet our criteria – remember that the vast majority of successful businesses are not VC backed.

Additionally, even the ones we do invest in don’t always go on to succeed.  The VC model generally assumes 1/3 failures, 1/3 money back (hopefully plus a bit) and 1/3 good successes.  So whilst we only invest if we feel good about a company’s prospects we know that they could still go either way.

Let’s talk about Dragons’ Den; whilst this show involves smaller investments made by business angels which are obviously different to VCs: Do you watch the show? If so, do you find yourself agreeing with their judgements or are there some businesses you would have invested in? Any in particular you can recall?

I can’t watch Dragon’s Den.  I think the way entrepreneurs are treated on the show is often appalling and the way the Dragons exploit their position winds me up.

Is a ‘formal style’ business plan still important? If so, why? If not, what modern take on a business plan do you think is important?

The important thing is to convey your pitch in a compelling and concise manner.  The format is not important.  Powerpoint is often the best medium.

I understand you manage your firm’s investment in WAYN, could you explain a little more about the site and what makes it so special?

WAYN is a place where travellers can come to meet their friends and meet new people to discuss their dreams and aspirations – where they want to go or what they want to do next.  The combination of ‘new people’ and ‘aspiration’ is what makes WAYN special and marks it apart from the mainstream social networks.

WAYN has nearly 7million members which makes it quite a force in the social networking scene. What do you think contributes to their success and if you were to bottle up a ‘recipe for success’ to pass on to other business owners what would you say would be in it? (e.g. targeting a niche, research, people etc?)

An effective customer acquisition model (we spend nothing on marketing) and a vibrant community are at the heart of WAYN’s success.  There is no formula for creating either of these and what worked when WAYN started out wouldn’t work today.  I think the best thing an entrepreneur can focus on is building great and innovative product – if you do that, and you have picked a segment with enough demand, the rest will follow.

You’ve probably seen hundreds of great (and less than great) entrepreneurs in your time, what do you think makes a good entrepreneur?

Passion, determination, intelligence, leadership, compassion and expertise in their area are the first things that come to mind.

Do you consider yourself to be an entrepreneur? Why?

Not really.  I haven’t started my own company.

Do you think being based in London hampers your career as a VC? Do you think it is still necessary to be based in and around the Valley or has London got its own tech scene now?

London very definitely has its own scene now, but it is less advanced that the Valley.  I think it is fair to say that it is still easier to be a VC over there than it is here, although at the same time there is much more competition.

You author the successful blog ‘The Equity Kicker’, do you think maintaining a blog is important in business even if your not a ‘blogger’ as such?

The Equity Kicker is a great vehicle for DFJ Esprit and for me personally to connect with our ecosystem and to form and test our investment hypotheses.  I think most businesses today can benefit from something similar – so, yes, a good blog is important in business.  You don’t have to be a ‘blogger’ to write a blog though – all it takes is a bit of passion and an ability to write.

Congratulations on making the Wired 100, a list of the most influential people in the digital business. Do you think your blog has helped you to achieve this?

Thanks, and yes – they cited The Equity Kicker as one of the reasons I made the list.

Do you have any side projects (business, charity, personal) you’d like to talk about or is your focus solely on your role within DFJ Esprit?

I have two small kids (three and five) and most of my non-working time is spent with the family.  Beyond that I help out as a volunteer at a homeless shelter in north London, I’m a Chelsea season ticket holder and I like to dream about getting some value out of my golf club membership…

I see Esprit backs Garlik, the semantic web company, we interviewed its chairman Mike Harris a little while back, do you work personally on this investment and if so how do you find working with both Mike and Tim Berners-Lee, the man credited with inventing the internet?

Garlik isn’t one of mine.  I’d love the chance to work with Berners-Lee though.

I noticed from your post from 26th March about The Times and Sunday Times conducting a paywall experiment. As someone intertwined in this industry, do you see this being a viable business model or the future? If so why? If not, how do you think the online content business is going to work in the future?

It is impossible at this stage to say whether paywalls will work or not and I think it is an experiment that News International and other newspaper publishers probably have to try.  That said, in my opinion the experiment will probably fail.  I don’t think that consumers have sufficient brand loyalty to the papers that they will pay a subscription rather than go for one of the free alternatives.  Also key to my opinion is the fact that you can build a profitable news company based around free online publication with revenues drawn from a mix of advertising and other brand oriented events – for example conferences.  Techcrunch is a good example.

Do you think the UK is a business friendly environment?

Yes, it’s pretty good here.  Regulations are not onerous compared with Europe and the legal culture is not stifling like it can be in the States.

Is there anything you would change about the British business system?

The tax system could provide better incentives for entrepreneurs and small company employees, for example if options were moved into the capital gains regime.

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