Sophia Bendz (Cherry Ventures, formerly Atomico)
Sophia Bendz already became famous as the chief marketing officer at Spotify and one of tech’s first female big-name executives; she started using her power at the latest since joining Atomico as a partner in 2018. It was at Atomico where she rolled out the Angel Programme, which is the focus of the conversation here and also something she is looking at repeating at her new fund, Cherry Ventures, where she joined as GP in 2020.
Interviewed November 2020
From Spotify C-Suite to Atomico’s Angels
Erika Brodnock (EB): Sophia, please tell us a bit about your background.
SB: I’m a storyteller and marketer at heart and by trade, and was lucky enough to join Spotify early on. We were just eight people in a tiny flat in Stockholm and I learned a lot. That was my segway into the startup world. I spent seven years as the global marketing director. There was lots of blood, sweat, and tears—it’s hard to start a company and grow it from zero users to 100 million users. I helped launch the service in 56 markets. During my last five years with the company, I lived in New York City. When my firstborn arrived I decided to move back to Sweden and started angel investing, bumped into Niklas Zennström, joined Atomico, was promoted to partner looking after the Nordic Region, and was fortunate enough to also head up their angel program and be part of their Diversity and Inclusion Task Force. That is one of the best things about big funds: they have resources.
I ended up coming back to the early-stage investment landscape because I am an operator and not a traditional banker per se. That is why I joined Cherry Ventures. I have been with them since September 2020, based in Stockholm. I am still interested and very much involved in the angel landscape, as well as being an advisor to Atomico.
EB: How did you come up with the idea for the original Atomico Angels program, and what were your motivations?
SB: It stemmed from frustration in me. When I met Niklas Zennström, I was proud to show him my track record and that was my ticket into the VC world. I was on the ground in Sweden, good at sourcing deals. I said to him, I think Atomico needs to be closer to the angel community. From a personal perspective, I was frustrated because there were so few women on company cap tables. Normally when you do a deal, you share it with other investors who could be interested in it and that could potentially help from a strategic point of view. So, as an angel, I grew my network and actually expanded my contacts. However, many of them were men and I wanted to see more women on cap tables. I wanted more people like me and my friends to be able to invest. The closed ecosystem presented a huge frustration for me. It was almost like a little boys’ club that invested together, and while I was invited in, I felt like the only woman in the club. I wanted to open the doors, and I wanted to talk about it, because it’s not rocket science. And if you have money to spare that you can live without, I think it’s an interesting investment class. I wanted to demystify it, I wanted to tell the world this is one way of spending your time and money. I think it could lead to more people that were exposed to potentially considering a career as a VC. That was my long-term goal. But if we open up an angel program for more people, my dream was that some of them would continue to invest, as we move along and after that year is done.
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Success Through Opening Up Deal Flow
JL: Can you go a little deeper on how you designed the program? What principles were in mind? And what do you think now, having done two batches, what is most crucial for the success?
SB: My colleague Will Dufton is an absolute star and is equally passionate about this area. He and I created the Atomico angels’ program together. The aim is that angels connect, share experiences, and do deals together. Niklas thought it was a great idea and asked us to come up with a proposal. Will and I created the proposal together. Our main aim was to avoid repeating what the Silicon Valley VCs were doing, because it seemed to me, and maybe some say different, but in my view, they were reinforcing a closed boys’ club atmosphere. They were not transparent about where money is coming from, and for me, it is all about trust. If you cannot be honest with where the money is coming from, that really isn’t a great way to build a relationship. Transparency is key.
Moreover, they were backing founders within the exact same circles they were in and giving money to many who had already achieved a liquidity event, most of the time. A great number of deals happen at barbecue parties in the local neighborhood, many of the founders and investors live on the same street and are already friends. I think that is just a way of putting more money into an already closed system. I wanted to create and put money into a new system, or a new group of people, or new individuals. I wanted a rotating program so that we would not ever stagnate or become an elite club. I wanted it to be open. We wanted to reach and engage people and talents that we normally would not have met—people we suspected had access to good talent and lots of entrepreneurs, what we refer to as “good deal flow.” So many of these people are company builders, sector experts, or community builders. The common theme among them is passion for what they’re doing. Normally they’re helpful and good at connecting with people, they have an excellent network. So, we decided to create a rolling schedule with a new class each year. We also wanted to provide training so our angels felt supported. Finally, we wanted to create network and mentoring opportunities that paired new angels with an alumnus and encouraged them to do deals together.
EB: On the second program, was there a wide array of people from all sorts of cultures and backgrounds as well as gender?
SB: This was super important for me, because I realized that’s essentially untapped business. If we, as investors, normally invest 98% of the capital into the same type of profile, we understand that there are so many other interesting businesses out there that we are not getting access to. We wanted to get access to pockets of talent that we normally wouldn’t meet. Normally we go and source deals at conferences, and incubators and accelerators, and many times, you see the same type of CEO or founder profile. We wanted to broaden that perspective and put a bigger network in play that could help us access a more diverse and interesting set of talent.
Measuring Success and Cherry’s Next Steps
EB: How would you judge its success so far? Did it fall short? Did it meet your expectations? What do you think the reasons are for either the success or not? And what’s next with Cherry?
SB: I would definitely call it a success. One proof point is that it still lives on, even though I left Atomico. And now we’re preparing for next year’s batch. It’s hard to determine if a company is going to be a big success, because it takes time and you start investing early on. The biggest milestone is seeing if they get good follow-on investments from top-tier seed or Series A investors. So far, the stats we’ve seen have been really good. That’s why I would say it has been a success. Also, from my personal view, it has been successful in getting new people to find VC interesting. Seeing that someone like Roxanne Varza, for instance, is now a scout for Sequoia. I got a message from one of this year’s angels and she wanted to share some news … I’m expecting that it’s an offer that she wants to brief me about. So that also feels like it has sparked something in more people. I really take great joy in seeing that.
I have not defined what we’re going to do at Cherry yet. It’s something that I’m working on now. The relationships that I have gathered from the angel program are incredible, they helped me with sourcing across core geographies in Europe. I think that it makes more sense to run an angels program when you are a seed fund, because then you can invest in the follow-on round. The deal flow that I have from angels was harder for me to harness when I was at Atomico, because they needed to grow through a pre-seed, seed, and then Series A. The investments of the angels can quickly turn into pre-seed or seed, and that makes perfect sense for Cherry to do.
What Funds Can Do to Improve Their Deal Flow and D&I
JL: Would you say other funds can put similar things in place? Where would that be most needed? With what focus? Let’s talk angel first, and finally, what other initiatives do we actually need?
SB: When it comes to angel initiatives, it’s an easy way to engage in the community. If I was starting my own VC fund today, I would definitely do it. You want to have good relationships, so that your companies can get funding from the best follow-on investors in the next round. On the other hand, you also want to have good relationships with the people investing earlier than you, because you want to get the best deal flow. It’s very much a system where everyone is interlinked and exchanging information and deal flow. I think finding a way to connect with angels is crucial. Rounds are getting much more competitive. The earlier you build a relationship, the better chance you have at investing in the very best companies.
EB: Knowing what you know now, how would you go about creating a new D&I initiative? What would be the steps to setting it up? Is there anything specifically around how much you give the angels?
SB: I think it depends on what type of fund you’re working at and the size of the fund. If I think specifically about diversity and inclusion initiatives, I would go about it the same way, but maybe be more confident this time around. Setting up the D&I Task Force internally, have the right stakeholders at the table. It is not a women’s issue that should be run by women, it should be coming from the top—everyone needs to walk the talk. It needs to be something that is interlinked with the company’s overall objectives. It helps a lot that here in the Nordic countries, we have a lot of LPs who are very good at driving the diversity question. This forces most VCs to have a strategy for it. Once you have that group set up internally, it’s good to have bi-weekly meetings. Listen to others who have already done it well, to learn. List the activities that could be done, then decide what can realistically be done from that list. There are a few essential areas: you need to ensure a pipeline of diverse founders, and set targets for how many female founders or how many diverse founders should be in your pipeline.
Then you can also begin to support your existing portfolios with their diversity work. That is the role that VCs can play if they take responsibility. If we back an all-male team, for instance, I think it’s my job to ensure they think about how to fix that and implement a diversity plan before growing the team. I know one VC firm here in Sweden called Kinnevik, they have linked diversity to financial targets, stipulating that there will be no follow-on investments unless diversity goals are achieved. It is the best example of putting money where your mouth is. At Cherry, we have specified in the term sheet that our investees must have a diversity plan in place. This is proving to be a strong way of ensuring diversity is on the agenda, talked about, and prioritized.
Funds can impact diversity in three key ways:
Portfolio companies: How you influence and support them.
Pipeline: See all good deals rather than hiding behind the fact there were too many companies to look at. Then,
Internal team setup: Female investment partners lead to more female founders. The same can be applied to other forms of diversity too.
Tech plays such an important part in how we build society moving forward. If we only allow one portion of society to build that tech, then it’s going to be a really weird world that we build. I feel like we need to back men and women equally when thinking about the future, and we are not today. So, shame on us. We need to do better.