Aydin Senkut’s Felicis Ventures received a burst of attention last year for its investment in Rovio Mobile Ltd., the creator of the popular Angry Birds app.
Not only could this mobile gaming bet be a big winner, it stretched the boundaries of seed and early stage investing. Rovio isn’t your typical down-the-block deal. Its headquarters is in Espoo, Finland, while Senkut’s digs are three floors up in downtown Palo Alto, Calif. In all, Rovio raised $42 million from Felicis, U.S.-based Accel Partners and London’s Atomico Ventures.
Senkut tells VCJ Senior Editor Mark Boslet that the perception of seed as local is changing. “In some areas, the best companies in the world are not in the U.S. and not in Silicon Valley,” Senkut says.
In other words, putting the extra effort into investing a continent or two away brings certain advantages. Companies often have less competition, and they find it easier to attract talent. They also can deliver more predictable outcomes.
Boslet and VCJ had the opportunity to recently discuss international investing with Senkut. Here is a portion of their conversation:
Q: What percentage of your portfolio would you consider international?
A: The percentage is roughly 10% to 15%, but if you look at the number of companies that are close to escape velocity—or reached clear leadership—it’s a much higher percentage. Out of our portfolio companies, if you chose the top eight, I believe three of those are international.
Q: You’ve spoken about the need to partner with local investors. How important is this?
A: We found that to make international deals work it’s not very effective to simply go and hire people locally. We found the best strategy for us is to find the equivalent of us locally and simply partner with them. They can be kind of the first contact. We can be the secondary contact and add value.
Q: How do you know an overseas firm is the right match?
A: Venture is one of those ecosystems that is very mature and deep in Silicon Valley. However you don’t find the same kind of selection and depth outside of the U.S. So the number of firms is smaller and if you take that smaller number and look for the firms that have made great bets, have great teams, have a local track record and a local reputation, the number gets small really fast. Then it is not that hard to find one where you have mutual chemistry.
Q: What changes are you seeing in the seed landscape in the United States?
A: One of the things we saw last year was the emergence of the incubators. There are a lot more incubators now. People realize this is a concept that has been proven with Y Combinator, and a lot more are going at it. We’ve also seen a lot of venture funds have seed programs.
VCJ subscribers can read the full interview of Aydin Senkut by VCJ’s Mark Boslet by clicking here.
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