GrowthBusiness speaks with new DFJ Esprit partner Scott Sage to find out where he’s carved out an investment expertise and how he compares the London set-up with Silicon Valley.
Now the American-born investor has been promoted to partner status and will be looking to continue with his particular focus on early-stage businesses in the Nordics and UK.
His rise to parter at DFJ Esprit sees him become one of the youngest at the firm at 30 and, one a wider scale, one of the youngest in Europe.
His entry into DFJ Esprit, after a period at UBS, came through the firm’s managing partner Stuart Chapman who ‘stuck his neck out’ for Sage when the VC was looking for a new associate.
Sage first became exposed to the venture capital world through working for the chief economist at the British Private Equity and Venture Capital Association (BVCA) designing public policy. His work revolved around working with LPs to get them to invest and collaborating with the government on demand-side regeneration projects.
‘I then had a quick stint at a next-generation trading platform start-up called Smarkets, which had just raised a round of finance,’ Sage explains.
‘The founders there taught me a lot about start-ups, and this was just at the time when working for one of these companies had started being vogue.’
Explaining his first year at DFJ Esprit, Sage says he had no idea what he was doing – despite thinking that he knew what a good business or founder was.
In his second year, he began to work with other partners and repeat what he has seen there on his own. The last year, he says, was when he became better at the transaction part.
‘I was always good at sourcing, but improved in the transaction space. Then it was about optimising to add value to portfolio companies,’ he adds.
‘When we join a board we are looking at how we can create equity value and hit certain milestones. It’s a steep learning curve, and it takes a while to learn what you are doing.’
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During his three years in the venture capital world, Sage says he has gravitated towards a couple of particular sectors. He’s taken a keen interest in the next wave of exciting e-commerce business, evidenced by his involvement in the backings of Lyst and SportPursuit.co.uk, as well as enterprise products relating to making employees more efficient at work.
He adds, ‘I’m also hugely interested in the next generation of financial technology companies, and we’ve made one investment in Redkite which we have already exited.’
Having worked on the other side of the Atlantic, and had constant exposure to the North American market through his travels, Sage says that the London ecosystem is at least ten years behind that of Silicon Valley.
‘This is due to the large companies which have been built and exited over there. You now have people who have skills of going from start-up to large corporates and have money to invest back into the ecosystem,’ he explains.
‘We are in the middle phase of that ecosystem, in terms of having those kind of people reinvesting their money.’
While he believes that it will be some time before London can or will be on par with Silicon Valley, Sage is excited about the kind of communities being built in Stockholm, Helsinki, Berlin, Dublin as well as the English capital.
‘We are now seeing the first generation of really successful enterprises getting close to exit like SoundCloud and Spotify. Hopefully they will be reinvesting back into their ecosystem.’