Meet a founder who has been backed by Leila Zegna and Tracy Doree, and the response is always the same: that they are two of the brightest people you’ll ever meet, and two of the most switched-on in tech.
That’s quite an accolade if you look at some of the people and companies funded by their early-stage VC firm Kindred Capital, launched less than two years ago: Peter Thiel and Max Levchin-backed Peter Johnston of Lystable; Julia Salasky, whose platform CrowdJustice enabled the crowdfunding of the People’s Challenge to Brexit; Ted Nash, the 25 year-old serial entrepreneur who built his first company before he was 15.
Other portfolio companies include Farewill, which enables you to create a will online in 15 minutes for £50, and StreetTeam, where people earn tickets by promoting them to friends using P2P sales software. Kindred’s initial investments range from £200,000 to £1m. Just last week, it was part of Lystable’s $10m Series A funding round, which will secure the British firm’s expansion across the US.
Thirty three and thirty four years’ old respectively, Doree and Zegna met each other a decade ago, when the former was working at MMC Ventures and the latter was on secondment there while completing an MBA at Harvard. “The first day I met Leila, I was trying to play it cool but I was just so keen to work with her. Her ability to put information together is phenomenal. I just thought ‘this woman is amazing’.”
Building from scratch
In the intervening years, the pair set up and co-founded their own companies, before successfully exiting. “That means we know the loneliness of being a founder. You’re always putting on this incredibly positive front and selling yourself and your company to people, but every day a lot of things don’t go your way. The only person you can confide in is another person who’s going through the same thing.” And it’s obvious the pair know what it’s like.
“We leaned on each other really heavily when we were setting up businesses, and that’s very much informed our thesis for Kindred: how do we institutionalise that community, that support?,” says Zegna. Their answer is something they call “equitable venture”. A unique model, every founder Kindred invests in becomes a co-owner of the fund. Via a carry points system, once money has been returned to the fund’s investors (private individuals, family offices and institutions), the entire network shares up to 20 per cent of the fund’s profits. “We invest in them and they invest in us,” says Zegna. Indeed, she and Doree, along with their two co-founders Mark Evans and Russell Buckley, stumped up a fifth of the fund out of their own pockets.
“We had invested in 14 companies as a foursome before Kindred,” explains Doree. “That demonstrated to us that we look for the same stuff, and we all had capital we could put in.” If you’re wondering what they look for, Kindred is not sector-specific, it simply looks for the very best people who are solving big problems: “all our founders have a deep-rooted belief in the way the world should work. They couldn’t do anything except build their company. They’re usually solving problems that they’ve experienced, and that a lot of other people do too. There are plenty of fantastic people who have great degrees and who find a problem and come up with a commercial roadmap. But we need people to be evangelical – not in a position where they’ll just pivot or go back to the old job,” says Zegna. Kindred has met 700 startups. It’s invested in 12; two-thirds of those were introduced by entrepreneurs they had relationships with already.
Their evangelism is clear, too. Sipping matcha tea lattes and sharing a snack bar, they call Kindred their family. “Founders will turn up at our houses or ring us at 7am. We have to be excited, we have to encourage them. After all, this is our startup, so doing that is vital,” says Doree. All four partners are family people. “Does building a family and fund at the same time add complexity? Absolutely. Is it worth it? Absolutely!,” says Zegna. “I don’t believe we operate in a zero sum world, and I’m a firm believer that personal growth also leads to professional growth. At the end of the day, we bring the person into work every day, so being a fulfilled, energised, engaged human being, whatever that means to you personally, is what will enable you to be your best self professionally as well.”
The diversity in their team is unusual in this industry, Zegna says. “The shocking statistic is that currently less than 5 per cent of the investment partners at venture capital funds are women.” Doree chips in: “If there’s a woman in the partnership with decision-making abilities – so someone on the investment team – the fund is three times more likely to back a female entrepreneur. Making sure you’ve got a range of genders, nationalities, ages, sexual preference, ethnicities is so important. The data proves it time and time again, and if you’ve lived it, you know it makes the journey a lot more fun, too.”
Now, the Kindred ecosystem is starting to prove its worth. Not just because founders are going for second rounds of funding, but because members are helping each other. Recently, for example, all the engineers from each startup got together and compared notes. “We have two or three events a month, many are organised by the community,” says Doree.
The pair are confident that the UK is the right place for them to be building Kindred. “On the one hand, the ecosystem here for building companies has become far more vibrant and high performing; the quality of founders and companies continues to improve, the depth of talent is world-class, and the appetite for risk and levels of ambition are increasing across the board. On the other, the funding landscape is still full of opportunity for emerging managers to bring new and innovative fund models into the market, much like we’ve seen with our US counterparts setting up leading franchises over the last decade like First Round Capital, Spark and Foundry,” explains Zegna.
I ask what their three to five-year plan looks like. “Three to five? It’s a 35-year plan!”, says Doree. “The ambition is to build the leading firm in the UK, to be at the top of every entrepreneur’s call sheet. If you’re building something here, we want you to come to us first. The `market here will mature in the same way as the US, and as we do funds one, two and three, six or so leading names – the firms that attract the very best entrepreneurs – will become established. We’re doing everything we can do to ensure we’re in that list. And we intend to still be building Kindred when we’re 70.”