Prolific angel investor and ex-Googler Sarah Drinkwater has raised a 3rd of a £10m fund. The fund, known as Widespread Magic, will again European and US startups at pre-seed and seed constructing “merchandise with neighborhood at their core”.
Whereas Europe has seen extra solo GPs emerge in recent times, Drinkwater is the one feminine solo GP within the area who doesn’t have a conventional VC background. It additionally makes Drinkwater one among a number of Atomico angel programme members — together with Deepali Nangia, associate at Speedinvest, and Stefano Bernardi, solo GP at Unruly Capital — who’ve gone on to change into full-time VCs. Atomico can also be an LP in Drinkwater’s fund.
What’s Widespread Magic’s fund technique?
Widespread Magic will again about 30 firms with cheques of £100k-150k on common and is within the means of doing its first deal.
Drinkwater says she has a desire for “first rounds” when different institutional buyers haven’t but backed an organization. The fund has a “mild reserve technique”, which means that it gained’t put aside a lot cash to do follow-on investments in outperformers within the portfolio.
“My purpose with this fund is basically to weave the velocity and elegance of an angel — quick selections, blunt suggestions — whereas on the similar time being operationally helpful in a selected space,” she says. Therefore Widespread Magic gained’t lead offers or take board seats.
“So lots of my founders, as an angel, have used me to, for instance, follow one thing they need to message to their lead investor higher. They carry it to me and we hash it out collectively. That is the form of function that I need to play with founders on this fund, too.
“I see VC as a help perform. It’s fascinating to me that VCs have change into this glamorous, celebrated function and really, to me, a VC is in the end, selecting and actually supporting a sure group to go additional.”
What’s neighborhood precisely?
Drinkwater says the businesses she needs to again have “some mechanism the place they create their prospects, customers or members collectively”, and offers the instance of secondhand vogue app Depop, neobank Monzo, open-source AI firm Hugging Face and open supply enterprise software program firm Odoo as such firms. Which means Widespread Magic is technically sector agnostic, however Drinkwater says she is seeing “plenty of thrilling issues” in developer instruments and future of labor.
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She believes the neighborhood element can get early-stage firms to product-market match quicker and get higher product suggestions.
“It’s fairly clear to me that promoting doesn’t work and we’re over the expansion hacking insanity of the 2000s and 2010s. I consider for sure firms, neighborhood can change that as a mechanism to construct belief.”
Drinkwater says she’s on the lookout for founders which have “distance travelled” — in her definition, that’s founders who aren’t 21, who could have skilled failure earlier than and are “in some way underestimated or underrepresented of their subject”.
Who’s backing Widespread Magic?
Drinkwater has 19 LPs to this point. They embrace Atomico, Phoenix Courtroom Group’s fund-of-funds, Basecamp, Taavet+Sten, Hugging Face CTO Julien Chaumond, Stripe CTO David Singleton and WeTransfer cofounder Nalden.
Relating to the powerful fundraising atmosphere — she began elevating formally after Slush in late November final 12 months — Drinkwater says: “Elevating a fund is at all times laborious, and it needs to be. The privilege and the fitting to write down cheques is just not one which we should always give away calmly.”
What’s the distinction between being a VC and being an angel?
Drinkwater has written 37 angel cheques, in firms from Olympian Jessica Ennis-Hill’s Jennis to micro-ticket funding platform Odin. She says the most important distinction between angel investing versus being a VC is self-discipline.
“As an angel, you do issues which are intellectually fascinating, the place you fall in love with the story, the place the value is just not at all times an element. A 3x end result for an angel is nice, however for a fund, it’s not.”
For instance, she lately handed on a staff in Paris as a result of the deal’s valuation was too excessive. “It’s laborious.”
