Cedric Giorgi, curator and host of La French Touch Conference, interviews John Frankel, Founding Partner of ff Venture Capital. ff Venture Capital is an early stage investment company. Here are the main takeaways from the chat between the two.
- Lose Some, Win More
“We’re trying to back great teams attacking interesting space,” said Frankel, describing his investment strategy. “And we believe you give them resources for a couple years, they should do well.”
When asked about how he feels on deals he missed, Frankel said it was an interesting question but a meaningless one to an investment manager.
Frankel looks at it this way: there is about 70,000 new companies formed each year, ff Venture Capital looks at about 3,000 and only invest in about 15. Based on this math, they are inevitably going to miss a ton of great companies.
“What we’re trying to do is focus on the companies inside our portfolio,” he said.
- Fool Me Twice…
Frankel has made mistakes, but he tries to “reflect those mistakes back out so they aren’t repeated by other entrepreneurs.”
One mistake to avoid: some entrepreneurs are incredibly smart and they know the answer, but then they spend 1 year, 2 years, 3 years perfecting the product before they get to market.
“That’s a bad strategy,” he said. “You want to get to market really fast and you want to listen to what your customers tell you and if you do that, your business will be better for it.”
Companies who choose to wait too long become R&D experiments, he said, because they exhaust their investor base and have no revenue.
- Drone On
“I have to tell you, we have an incredibly strong conviction that we are at the stage of drones that you were at the stage of the automobile back in 1890,” Frankel said. “We think it is a massively under-hyped space.”
According to him, the drone industry will have enormous layers of infrastructure: regulatory, hardware, software, service, vertical integration and so on. He said it would be a multiple-hundred-billion-dollar business in a short period of time.
One area you won’t find Frankel messing around in: Bitcoin. He’s a skeptic about its lasting power.
- Believe The World is Flat
Frankel believes that opportunities to invest in good companies are everywhere (“We believe the world is flat”) and so he’s open to talking to anyone. ff Venture Capital does 40 percent of its business in New York, one-third in the West Coast, and one-third in between.
Frankel said the largest pools of capital sit in Palo Alto, and they tend to want to invest in companies that are “a Tesla charge away from their head office.” Most companies looking for funding are pulled to places like Palo Alto.
“The apocryphal movie for this generation globally has been the social network,” Frankel said. “And the social networks have told people that entrepreneurship is a valid thing to do, and it is.