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George Spencer III (Seyen Capital): You go to a war with these guys, and I just love the battle!

By Borys Sydiuk

20 Sep, 2021

George Spencer III is Founder and Senior Managing Director at Seyen Capital

George Spencer III is Founder and Senior Managing Director at Seyen Capital. He has over 30 years of experience in the venture capital industry. Before founding Seyen Capital in 2007, he spent seven years as a Partner at Adams Street Partners (“ASP”) where he helped to architect the spin-out from Brinson Partners. At ASP, he was a key player in the direct investing group as a lead IT investor. After leaving Adams Street Partners in late 2006, he continued to serve as a Senior Consultant to ASP, managing his prior investments with the firm. He was also a co-founder and Executive Member of JK&B Capital, a Chicago-based venture firm.

How it all started? How did you decide to enter the venture investment business?

I got a job in venture capital in 1990, when I get out of Business School. 

Just like that?

Yes, I work in VC since my Business School.

What surprised or impressed you the most when you started working in venture capital? 

It was such a long time ago. I guess it’s, probably, that you have to rely on every single functional skill you have to be a good venture capitalist. And that’s what I really enjoy about it: some days you’re a strategy guy, some days you’re a marketing guy, some days you’re a sales guy, and some days – a financial guy. 

How did the ecosystem change over time, both in terms of entrepreneurship and VC world?

It’s a way way more sophisticated world now than it was when I got into it. Entrepreneurs have a lot more information than they did at that point of time.  I think, today the later-stage business is really institutionalized. The early-stage business is probably a lot closer to the same as it was before, but there are lots of people who try to institutionalize it as well, but that’s hard work: I don’t think that early-stage venture scales. 

Ok what is your strategic vision for the next 5 years?

I think, data is going to become increasingly important in the world – there are lots and lots of new data being created by the Internet of Things. That data will help to create or to companies strategic value if they use it correctly. That’s one of the big things I’m working on right now.

What long-term consequences of COVID do you see? 

The obvious one right now is work from home is an accepted means of work. There are specialists and skills that are really really hard to find now – data scientists or engineers. We are moving into a new world in terms of how we define culture and create stickiness amongst employees. That’s one of the new things that we’re going to deal with.

What was the most memorable or favourite startup you ever supported?

I have a lot of favourite ones. The favourite ones are really the ones where you do a lot of work and you end up being right. In most cases, they do require the most amount of work. One I remember was Cbeyond and that was a telephone business. I invested in them back in 2002/2003, when nobody would touch Telecom after the Dotcom Bubble burst. And that was a great deal and a lot of fun. The other one and comes to mind right off the top of my head is Borderfree, which was an Israeli company and they just moved to the United States. We had to really pivot it, we pulled it out. We grew the thing and took it public. But it was 3 or 4 years when I was going to Israel every 6 months. 

What is the size of your current fund?

I’m currently managing about $300M. 

What percentage of it is reserved for follow-up rounds?

I usually think about reserving about the same amount I’ve invested in my initial round. 

There are many venture funds out there today. How do you differentiate yourself?

I keep doing what I’ve been doing so it seems to work. I’ve lost money once since 2001, and for the stage I’m investing that’s really good. I just tell entrepreneurs that I’m going to use my playbook of how to build these businesses and that I’m here to help them make money. It doesn’t mean that we’re always going to agree and it doesn’t mean that at some point I’m not going to take them off my shoulders and say that it’s time for them to play the third base. 

How startup teams usually find you? Do you wait for inflow or scout actively? 

The best deals I got are either my past entrepreneurs or referral from my past entrepreneurs. It may be somebody like the VP of Sales in a company who’s now the CEO of a new startup. I just found a company called, the co-founder of which, Laura McKee, was founding CEO of Autism Home Support Services that I’ve supported earlier. Those are the best ones on my mind. 

How many startup projects do you review per year?

We typically invest in 2 or 3 deals a year. I don’t even count how many pitches I see, because  I know what I’m working for and just turn down things we’re not interested in instantly. 

At what stage you prefer to enter?

We typically invest in what I call the Venture/Growth stage when a company has developed its product and has its first handful of customers. 

And how much do you invest in initial checks?

Somewhere between $750K and $1.5M and double that over the life of the company. 

Geography of your interests?

Definitely, the United States, but we’re trying to stay out of the Bay area and out of the West Coast.

What verticals or Industries you are interested in?

I invest in Software and Information Technology related businesses. We did a lot of work in and around Data which I talked about earlier. Also in and around Healthcare, in sort of what’s going on in Healthcare right now and it’s a kind of alignment of risk and helping produce higher quality of health care for a lower price.

How do you select startups to support, what are your criteria?

We’re looking whether there is a unique value proposition, whether it is a degree of technology, a big market, nice tailwind in the market that you’re in helps a lot. And we’re really looking at the team, at their desire to build that business. 

What is the way for startup founders to estimate their company’s realistic valuation and how much money they need to rise?

You have to fit it to the size. The deals I typically looking at are $1M away from friends and family financing to get the product to market. Then I raise Series A at around $3M. And we go from there. 

Are and what are the key metrics that you consider when a company seeks investment?

I want to see a couple of customers: I want to be able to understand the value proposition, I want to be able to talk to customers and ask how strategic the value is, how big the problem is – that kind of stuff.

What qualities you are looking for in founding teams? 

I’m looking for someone who’s got a combination of domain expertise, technical expertise, and sales skills.

Who you would prefer to work with, Steve Jobs or Steve Wozniak?

Neither of them, frankly. I think, Steve Jobs was really hard to work with. I don’t think you could work with Steve Jobs: I think you just give him the money and get out of the way. 

Investors prefer to work with teams. Have you ever supported a one-person startup?


What are your red flags?

My red flags would include people who consistently lost money and those whom I won’t consider as serious people. I don’t invest, for example, in kids right out of college, who didn’t have any previous job. Also, I wouldn’t support people who switch jobs every 2 or 3 years.

What is your process of working with startups once you invested in a company?

I’m not super hands-on. I work with them on building a team, strategy, and financing. 

What are the most common mistakes startups make? 

The most common mistake is thinking about making money when the price is unrealistic.

How much runway should a startup have to feel safe?

When you raise money you should have at least 18 months of runway money. Startups fail when they run out of money, as simple as that.

What is your target multiplication on exit?

My average return over the last 30+ years is 5x.

What percentage of ownership of a company is fair enough to take for investment?

For our investments, it starts somewhere over 10% and ends up in the high single digits.

Have you ever rejected a startup and then regret it? 

We definitely rejected some startups that became successful later, as any other VC firm. 

Can you name the three most breakthrough startups in history? 

I would say, Amazon, Genentech, and, probably, Intel.

The greatest startup failure?

How about Theranos?

Could you name three entrepreneurs who inspired you the most?

I’m just going to go to my own set of entrepreneurs and name Jim Geiger, founder of Cbeyond, who’s gone on to do another deal after that. And Mark Fowler, the founder of Unisite and PowerFone before that. I’ll go with these two. 

Venture capital is a long-term game. What keeps you going on? 

I just love the battle! You go to a war with these guys, with every company. It’s always different.

What’s the most challenging aspect of your role?

Probably, it’s the team-building thing. And when it’s time to transition from CEO to another role, that’s a real challenge.

What qualities do you think are important to be a good VC?

You have to be a good listener. You have to have good guts and be able to see things before they are on a spreadsheet. You need to read people and understand if a sales guy is good in sales or an engineer is good in things he does, and if they are not, you need to move quickly. You need to be able to draw a line with one data point. 

What are the most important things you have learned from founders?

Founders are really really special kinds of animals and it’s really discontinuous function – getting a business off the ground. Successful founders are able to cross the chasm if you will.

Where do you get your daily information from?

I read a lot. I read The Wall Street Journal, The New York Times, and 2 or 3 local papers. 

Any books you would recommend to founders?

Crossing the Chasm by Geoffrey Moore is the Bible.

Is VC business chess, checkers, backgammon, go, card games?

It’s Monopoly. It’s really a matter of knowing when to roll a dice and when not. When you are involved with so many companies, you need sometimes understand that this or that one won’t be that huge, so you’d better not to raise, say, the next $50M and just sell it. It’s like Kenny Rogers’ song, “You need to know when to hold ’em, know when to fold ’em” (“The Gambler”), that’s all. 

What are the biggest shifts that you see in technology which will define our nearest future?

I think a lot of managers would learn how to capitalize on data. 

Your three pieces of advice to founders?

Have a big vision. Never quit, but understand the steps to execute along the way what you gonna do. 

Was your dream job when a child?

I want to be either with The Trashmen or play for Dallas Cowboys.

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About the Author

Borys Sydiuk

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