Don’t underestimate first-time founders
French payroll startup PayFit is now valued at $2.1 billion after raising a $289 million Series E round. It’s not France’s only recent unicorn, though: Ankorstore, Qonto, Exotec and Spendesk also joined the club this month.
If you add Back Market’s $510 million Series E round valuing the company at $5.7 billion, things are shaping up well for French tech in 2022.
As you can imagine, the pace of new unicorn creation and fundraising generated plenty of press coverage in France, but there’s an article in particular that caught my attention: A portrait of PayFit’s Firmin Zocchetto, OVHcloud’s Octave Klaba, Shift Technology’s Jeremy Jawish, and Contentsquare’s Jonathan Cherki.
As French financial newspaper Les Echos pointed out, these four French Tech founders have another thing in common: They founded a unicorn on the first try.
If it’s possible for a first-time founder to build a billion-dollar company, why don’t we talk about it more often?
Sure, entrepreneurs sometimes get press for being under 30, as Zocchetto is. But even 20-somethings aren’t always first-time founders – Glovo’s Oscar Pierre isn’t, for instance.
This post isn’t about young founders. It’s about remembering that regardless of their age, first-time founders can build huge companies.
Weirdly, this seems underrated in the startup ecosystem. This fact reminded me of a funny outburst from Expensify CEO David Barrett when I first interviewed him for my deep dive into his company, which has since gone public.
I think the whole idea of the serial entrepreneur is a weird concept. The only time there’s a ‘serial anything’ is ‘serial killer.’
Imagine a ‘serial parent.’ I find someone, I fall in love, I have a bunch of kids. And then I leave, and I do it all over again. And then I say I started seven families. You’d be like, “Man, you’re a monster.” But if you do that as a CEO, we celebrate that! “Oh, that’s great, what a great job.”
There are so many weird incentives in Silicon Valley, and all the hero stories of Silicon Valley are wrapped up in this really morbid concept of serial entrepreneurs.
Expensify isn’t Barrett’s first startup, but as someone who set out to “build a company that [he] wanted to work at forever,” praise of the “serial founder” concept is a pet peeve of his. He has a point: There’s nothing wrong with long-term commitment, and there’s something inherently wrong about glamorizing serial entrepreneurs for the sake of it.
This is not to say that experience has no value, but that it comes in many forms. Having founded another company brings lessons, regardless of whether it succeeded or failed. However, it is perhaps equally valuable for a founder to have relevant industry experience, especially if it is directly related to the problem that they are tackling.
Unfortunately, when it comes to VC checklists, years of industry experience at unsexy companies don’t tick a box in the same way as having had a C-level role at a former startup. This is especially true in places such as Latin America, where the market is split into two tiers – hot or not.
Latin American VC Hernan Haro confirmed my perception: “Most Latin American VCs are chasing the same entrepreneurs, those ‘proven’ by a track record as founders or past leadership roles at unicorns. Granted, they are more successful at raising capital, but that’s more of a self-fulfilling prophecy than anything else.”
Pattern matching is part of what VCs do, but when they are looking at the wrong signals, they are doing a disservice to themselves and to their LPs. “VCs looking only at ‘proven’ founders are seeing correlation, not causality, and missing out on opportunities,” Haro said.
That VCs are missing out on opportunities doesn’t keep me awake at night. After all, it creates space for others, such as Haro’s seed fund MrPink. My concern is with founders; out of the spotlight, first-time entrepreneurs might not be getting the resources they need.
Luckily, there are more and more resources available for founders in general – not just capital, but also helpful communities and content from trusted sources.
For instance, it is now possible to find online advice from leading venture funds on how to raise your first dollars or to get pitch feedback from one of their partners, when a few years ago it would mostly happen behind closed doors within top accelerators.
Quality online resources are particularly valuable for first-time founders, not just for the knowledge, but also as a reminder not to underestimate themselves. Experimenting and bootstrapping are also great ways to learn, and VCs who overlook this type of profile may come to regret it.
My prediction, though, is that competition for hot deals will push VCs to look beyond their turf and pay more attention to first-time entrepreneurs. Let’s just hope it’s not only young ones or those who tick other boxes (top accelerators, top schools, etc.) – but simply those who are capable of delivering high returns.