So You Want To Be A Venture Capitalist? - M2 Magazine (2024)

Ever wanted to run your own VC fund but thought that was another world away? Well, Rob Vickery wants to not only connect a new level of venture capitalist focus to New Zealand innovation and help us go global, but also to encourage budding VCs here as well. His newly formed Hillfarrance Venture Capital fund has set aside a one million dollar fund which will select 10 would-be venture capitalists to invest up to 100 thousand dollars each in businesses they believe have the creds to become the next Xero or Rocket Lab.

This is in itself is a boost to the VC world here, but having Hillfarrance and Rob setup base here is a big deal full stop. Prior to creating Hillfarrance, Rob was the Founding Partner of one of Los Angeles’ most active enterprise software venture funds, Stage Venture Partners. At Stage he invested multiple rounds of capital into 23 seed stage companies from across the globe and raised three funds. He has served on the boards of Kuona, Spidr Tech and Storyblaster, and is a mentor at TechStars and Bunker Labs, a Global Ambassador for BAFTA, and an EHF Fellow.

Rob talks to us about what it takes to be a great investor and entrepreneur and how much potential there is in tech innovation here, but also in story telling and building businesses embedded with indigenous concepts of community and custodianship.

I recently read a press release that said that you’re giving some people the opportunity to become VCs. Why?

It’s a hard industry to get into. There’s no degree for venture capital. There’s no pathway other than through just making mistakes or having successes. You just finally convince enough people to want to give you enough money to raise your own venture fund.

I want to try and help people. New Zealand needs more venture capital investors. They have a lot of angel investors and they’re great, but we now need more professional investors, so I thought that this is a great way to do three things.

The first one is, I’m giving money to people because I want to get into deals before anybody else, I want to be first. That’s the cold-hearted capitalist within me. Typically this scout program, as we call it, is investing in startups a lot earlier than what I would typically invest.

I invest when there’s some traction and the company has got some revenue and a product that works and great people working for it. The scout program is investing into startups when they’re often just an idea and often in areas that I’m not actually focused on, which is another cool part of it.

I also want to help identify potential recruits in the future. It’s really hard trying to recruit people into venture capital firms and bringing people from overseas to come and work. Because as you know, it’s tricky to do that these days from an immigration side of things. I really want to find really cool individuals who’ve got the right traits for this job. This is not an easy job. This is not a nine to five job. This is mentally and physically exhausting, but it’s a heck of a lot of fun.

Then lastly, and this is the softer and, I suppose, more philosophical thing is that, I want to help upskill the New Zealand market. The more professional investors there are in New Zealand, the more capital there is for founders and the more everyone succeeds. A rising tide raises all boats. That’s the reason why.

I was looking at your website this morning and there’s a different language, there’s different ways of describing what you’re doing than, say traditional funds. Is there a shift in the idea of the cold-hearted capitalist?

I think so. For you to be a successful VC, you have to be focused on the founders and you have to make it a warm, inviting place for founders to come take your capital and for you to build a relationship with them to help them grow that business.

I don’t want to build a firm like an ivory tower. I wanted to be very clear also that I’m not building a bunker in New Zealand, I’m building a business. I have no interest in building a bunker on Waiheke Island. I’m shipping my entire family here. I purposely set out to make this approachable.

At the end of the day, the lifeblood of venture capital is deals. Seeing every deal in the marketplace is important. If there’s anything that stops an entrepreneur from wanting to come and talk to me, whether it’s because they think I’m an asshole or whatever, that’s not good for my business, it’s not good for my investors, it’s not good for the returns that I want to create. Being approachable is really important.

I actually think that’s tricky to do in Silicon Valley and some of the more established markets. That ivory tower is very well established. That’s what I liked about New Zealand, is that I can come in and try something a little bit different.

I’m also very, very focused upon integrating Māori principles into our fund. You can see a lot of Te Reo on our website and I’m trying to learn Te Reo and I hope I do a reasonably good mihi these days. I want to envelop Māori principles into how we assess companies and how we work with them going forward.

Even beyond Te Reo, looking at some of those indigenous principles in terms of the intergenerational thinking, the different perspectives in terms of ancestors, present time, the future; do you see that influencing the way that a lot of businesses will be formed?

Hugely. The multigenerational thing is really interesting because that’s building a business for, not just 10 years, but for a lot longer. That’s a pretty positive thing for an investor, to have a very long-term, sustainable business.

Secondly, there’s a lot of guardianship involved as well; providing back to the community. Lots of startups do that by default these days, a lot of them have charity outreach programs and lecture at universities and want to do more. I think that’s something that’s been developed already.

I’m also very interested in this mentoring capacity and how people can pass on knowledge and pass on stories, in particular. Again, that’s really positive stuff for a venture firm to be involved with.

I’ve been working with some different iwi around the country and I’m also a partner of a program called Kōkiri, which is part of Te Wānanga o Aotearoa in Hamilton and is an accelerator for Māori entrepreneurs. I’m trying to learn as much as I can.

You really celebrate the fact that the early navigation is a part of the DNA here. Understanding tides and stars, there’s a real STEM base. I find it fascinating that it’s such a struggle to get Pacific Island and Māori kids into those fields where it is so intertwined. It’s really interesting to see that some of Silicon Valley, the US funding and way of thinking could potentially meet that as well.

I think it benefits from it. I think when it comes to STEM and getting indigenous children to think about it and to not be frightened of mathematics, it’s important to remember that maths is an art form. It always was. Right at the beginning, it was an art form.

I think we need to de-demonise mathematics with all ages of children. I think this is one way to do that. Startups are quite cool and sexy for kids, right? I think children are curious about it and I want to welcome that.

I used to run two entrepreneurship academies in LA, one at a school in Compton and the other one just outside of Compton – schools that were really underperforming. I spent a lot of time working with youth to try and help them mostly increase STEM grades really. I like to bring the curriculum to life. So I’d like to try and do a bit more of that in New Zealand as well. I look forward to finding the right avenue to do that.

There are some profound differences between LA and New Zealand, but what about LA and Silicon Valley? Is it a totally different way of doing business?

It used to be. I think there’s a little bit more of a crossover. LA has always been a little bit more of the ugly step-daughter of Silicon Valley when it comes to tech, but I think LA has now started to go out on its own and has developed areas of expertise that Silicon Valley could not do.

Netflix is headquartered in Los Angeles for a very good reason, it’s close to all the content production. There’s some big video game focuses. There’s also lots around e-commerce and brands that are selling online. LA has found its own groove and what it’s good at and has welcomed companies in for that reason.

Also, labour is a little bit cheaper and one of the most expensive people that start-ups can hire is a data scientist. These guys and gals are paid a lot of money. They can start at $150,000 US a year, straight out university.

It’s a little bit cheaper in Los Angeles, maybe by $20,000 a year. There’s a little bit of a price differential, but a lot of people like coming down there for the lifestyle change. The weather’s a bit better, the beaches are very nice.

The evolution of the LA startup scene and maybe the potential here as well, does that show that there’s a move away from purely value out of the tech side and that people are seeing more and more value out of the storytelling side that connects with that? Are we seeing that there are other ways to add margin?

I think you can add margin. I think if you could also just add uniqueness. I fundamentally do not believe that New Zealand needs to become another Silicon Valley. I think it’s got a destiny all of its own. I don’t know what that is yet, but I think there’s a blend of humility, there’s a blend of sustainability, in terms of the target business that you’re trying to build and how you run it.

There’s obviously the story telling component. Storytelling is interesting because storytelling could go two ways. It could be about creativity and about sharing messages. I know that a lot of people use storytelling, particularly in the US to refer to sales, how you fold storytelling into selling a product.

I think that’s true to a certain extent, but I’m really curious to know about how we could take more traditional forms of storytelling and how does that manifest in a company and a start-up? Does it mean that Kiwi’s have got a unique angle on marketing, on presenting their products in creative ways?

I think New Zealand’s got a very interesting startup journey ahead of it and that’s why I changed my life and handed over the reins to my co-founder to come and pursue that.

In terms of the humility that you spoke about within the New Zealand psyche, do you think certain things are holding us back?

There are a few things that can be easily fixed. Seven times out of 10, the pitches that I receive from Kiwi founders, they don’t tell me who they are upfront, which is really important. We invest in people, particularly me.

They just jump straight into saying, ‘This is the problem I’m solving, and this is what I’ve done. Look at how much revenue I’ve created.’ That’s great, but I want people to take a step back and tell me what you built, how does it work? Why is it different? What’s really cool that you’ve done, that nobody else has done before?

I think there’s an element of wanting just to jump ahead. England’s kind of the same, we’ve got a similar kind of perspective. You only know if you’ve made it when you’ve made money, but actually there’s a part of making it when you’ve solved a problem that nobody else has solved before.

Kiwi founders are often shooting themselves in the foot by just jumping straight into sales and results. I want to hear about why you did this thing. Why is it only you in the marketplace who can build it? What was your journey to coming up with the idea? That stuff is what I invest in. I think that holds them back a little bit, but it can be easily fixed.

Another one is just the nature of geography and the fact that most startup investing has been done across the Tasman, it’s mostly Australia and New Zealand. That’s where you build your business and you sell it. I think that Kiwi founders need to be a bit more audacious in their vision about how big can this get.

I’m not interested in investing in a company that sells for $50 million. I want a company that sells for a billion dollars. That’s how I generate the returns that my investors expect. Venture capital is a risky investment, so you’ve got to give them really good returns. I think having a vision of saying, ‘Okay, yeah, we’ll kick off in New Zealand, then we’re going to go straight to North America. Then we’re going to target Europe. We’re going to go to China and the rest of Asia. Then we’re going to hit India.’ That audacity of business, vision and plan needs to be ramped up considerably.

Is there sometimes a fine line between audacity and insanity?

Oh yeah. I invest in both. Most of the people I’ve invested in are a little bit nuts. To want to do this, you can easily become a narcissist. Narcissists often found tech companies, because this is their thing. This is what they control and this is what they want to do.

You could easily fall into a whole bunch of camps that might be undesirable to some parts of the society, but I think tech people and founders are the most interesting individuals ever and I like them. I call it being on the right side of weird.

Pitching seems to favours extroverts. Is there room in the mix for different types of founders and different types of ideas and different types of ways of getting those across?

Totally. I meet founders who’ve never looked me in the eye in America. That’s okay, it’s a personal choice. As long as the other things stack up, then it’s a quirk that I’ll take.

I think there’s a general need in humanity that we need to conform to certain preconceived ideas and I don’t think we need to. I think being unique is who you are and that’s very investible. I don’t really want to invest in a bunch of Mark Zuckerberg clones. Be who you are, own it.

I love receiving pitches from Māori and Pasifika entrepreneurs. They’re super humble, like painfully humble, but once you dig into it and you really go through it and you look at it through the holistic lens, there’s really cool stuff and it’s really out there. It just needs a bit of time. I think the 30 second elevator pitch is a thing of the past. If it takes you a couple of minutes to talk about what you’re doing, then so be it.

What about for a VC? Is there a certain psychology or mindset that makes for a good VC?

I think we just have to be curious about everything. I read about 15 journals a day; I’m constantly consuming content. You’ve just got to be curious about stuff and open to things that you don’t understand, because most of the things that I’m going to get presented next week, I don’t know anything about, so I need to learn about them. Endless curiosity is important.

I think being a people person is super key. Welcome people, make them feel good. It’s nerve wracking pitching to a VC. It’s intense. I think a VC needs to be disarming and needs to be welcoming.

Most importantly, I just think we have to be humble as well and match the humility of founders with our own humility and remember that we’re 99 percent entrepreneur. There’s just a part of us that means we have to manage money, so do the founders actually, so we’re very similar.

Most VC’s aren’t bunker builders. Most of us haven’t been paid for a few years. We wait for 10 years before we get paid, when the fund generates returns, so most of us live a pretty lean life and don’t lead extravagant lives. We’re entrepreneurs.

Surely with your background though, there’s easier ways to make money, right?

Yeah. I’ve had good jobs and I’ve made good money before in the past. But I don’t like reporting to anybody. I like being my own boss, for one. I like having the variety of what I have as a career now. I’ve made enough money to be able to live a nice life and to do the things that I want to do. So one day I’ll be able to buy that big house in Queenstown, but that’s a few years away.

I never really thought of having to be across so many different areas. If you look at your portfolio, it’s very, very broad. You’re dealing with drones, you’re dealing with aerospace stuff. You must be amazing at pub quiz.

I would say that I know a little about a lot. I don’t have to be an expert in everything. One of my companies that I invested in is an AI company that is eliminating the need for animals to be used in drug testing.

As you probably see through my investments, everything I do has some benefit for the planet. I don’t like investing in stuff that hurts people or causes devastation to things. This company was bang on the target. I had to read every weekend and learn all about primate biology because they were building AI bio simulation models of chimpanzees and rhesus monkeys that are used in pharmacology.

I actually really enjoyed that, but I had to do that because I had to be able to ask the right questions to be able to make sure this is the right investment. Also, because it was competitive, I had to make it seem like I knew what I was talking about. So I spent an entire weekend learning about chimpanzee biology.

Going back to your journey, you mentioned passing over the control of a really successful fund that you’d built in LA and then taking a wild leap to the ass end of the world. You must’ve been working on this for a little bit, but what on earth possessed you?

I was thinking about a few things. I was looking for a market where I can make an impact or make a difference. I think that the US is pretty well established in venture capital. I looked around the Commonwealth and I was thinking that maybe I can go back within people who share a similar cultural view.

So I looked to Canada, very well served. Looked back at England, to be honest, Brexit really killed a lot of my passion for my home country for a while. And then Australia is quite well served by venture capital and just wasn’t really enticing for me as a place to live. So I looked at New Zealand and I came here and have had probably 80 meetings since I decided that I wanted to do this properly.

I just did all my homework. The country just shone out to me as it would be a grave mistake for me not to do this. So I had to convince my family to move, which is not easy. I’ve got young babies, four months old and my wife-to-be is from Guatemala and she’s used to quite a warm climate. I know it’s warm some times of the year, but it’s also bloody freezing others.

I had to do some salesmanship of my own, but we decided that this is a wonderful place to raise my son, which is very important to me. Also, I think it’s just an opportunity that I’d be daft not jump at.

Where are you going to be based?

Good question. Pre-Covid, it was obviously Auckland, because it’s close to the investor market and the capital of finance. But I’ve started now to really think about other areas that I could do because of the remote working situation.

I’ve been thinking about Tauranga. I had a good look around Hamilton last time I came, I quite like the Waikato. Wellington is just a bit too cold for me, I come from a cold country, so I don’t think I can deal with that again. I love Christchurch, it’s rapidly moving up the list of places that we might live. I don’t want to live in Queenstown, it’s just too touristy and traffic getting in and out of that place in the summer must be absolutely awful.

I’ve driven the whole country, I’ve driven 6,000km across all of New Zealand and I had a good look at all of it. Quite taken with the Waikato to be honest and the Bay of Plenty and then I can just drive into Auckland once a week.

Was the drive part of your typical VC homework? Or was that just where you were going on a holiday?

I’m never on holiday truly, I’m always working. It was a holiday but it was running through my mind while I was driving up to Mount Cook.