Leila Rastegar Zegna is a founding Partner at Kindred Capital, a leading early-stage venture capital fund based in London which is pioneering a new way of investing.
From Silicon Valley entrepreneur to London based venture capital investor, Leila has mastered many facets of the technology industry. She has an impressive background; Leila studied Maths & Philosophy at Yale University, where she graduated Cum Laude with distinction, and has an MBA from Harvard Business School. She started her career at Bain and Company before working at a number of start-ups including Endeavor, which supports entrepreneurs in developing countries and the early team at Innocent Drinks. After business school Leila moved to Silicon Valley, joining the founding team of GenapSys, a DNA sequencing company then moved to London to set-up Kindred Capital with her co-founders.
“... Leila studied Maths & Philosophy at Yale University, where she graduated Cum Laude with distinction, and has an MBA from Harvard Business School.”
Kindred Capital is sector agnostic and invests across Europe from their base in the UK. They have pioneered a new model of investing, which they call ‘equitable venture’, in which every entrepreneur they invest in becomes a co-owner of the fund.
Regardless of incredible achievements and breath-taking beauty, Leila has always been a genuine and approachable person who makes time for people. She lives in London with her three young children – aged five, three, and one. We met up for a coffee in Mayfair to discuss Kindred and some of her biggest learnings from her career so far.
You have worked at some really interesting start-ups, what made you switch over to investing?
I actually didn’t think of it as a career switch at the time. I feel like I’m an “accidental venture capitalist”. Throughout my career, the driving force for me was finding problems I cared about solving and for the first 10 years of my career that took the form of operating businesses. In 2014 when I moved to London, the problem I most cared about solving was on the venture capital side. Back in Silicon Valley building GenapSys, I’d been the recipient of a phenomenal and vibrant venture capital ecosystem. The maturity of that ecosystem over many decades meant that it was hyper-competitive for VCs to get into the best deals, and that competition drove innovation and differentiation. As an entrepreneur, we were great beneficiaries of that.
“I wanted to be a part of doing something really different... we work in an industry where we’re fortunate enough to back the most innovative individuals, so why not turn the lens on ourselves and be more innovative as VCs?”
Coming over to Europe back in 2014, it felt like a completely different environment, where the quality of the talent, of the companies, of the ambition felt like it was increasingly exciting and vibrant, but wasn’t matched by the same dynamism on the investor side. It felt mostly like the same firms, with the same people, doing things in the same way for a decade or two. I wanted to be a part of doing something really different. After all, we work in an industry where we’re fortunate enough to back the most innovative individuals, so why not turn the lens on ourselves and be more innovative as VCs?
Can you share the background behind how you and your founders started Kindred Capital?
When I first moved to the UK, I thought I would start another company. It just so happens that next company was a venture capital firm but I didn’t know that initially. My plan was just to immerse myself in the entrepreneurial ecosystem here in London in order to get my bearings: I thought I’d look for great founders working on great ideas and be as helpful to them as I could. So that’s what I did. I came across phenomenal founders like Timo Boldt of Gousto, Aron Gelbard of Bloom & Wild, Ed Cooke of Memrise, Kieran O’Niell of Thread and made it my business to be helpful to them, I made angel investments in them and a handful of others and paid to ‘join their team’ in a sense.
“I came across phenomenal founders like Timo Boldt of Gousto, Aron Gelbard of Bloom & Wild, Ed Cooke of Memrise, Kieran O’Niell of Thread and made it my business to be helpful to them”
That gave me the first-hand experience into how underserved European founders were versus what I’d experienced as a customer of venture capital in the Bay Area, but also gave me the opportunity to co-invest alongside my now partners. We kept seeing each other’s names on cap tables, and started meeting weekly to discuss dealflow, then multiple times per week. That organically evolved into the decision to found a fund together, around common values and principles, that we saw were grossly underrepresented in the ecosystem at the time.
When you first came to the UK, what did you notice was different about the VC environment here compared to Silicon Valley? How has that changed since you started Kindred?
A lot has changed in the last 7 years. In 2014 there were essentially 3 tier one brand names in town – Index Ventures, Accel, and Balderton (formerly Benchmark Europe). GV hadn’t even launched yet, let alone the plethora of firms that have been founded and launched since then, nor the slew of top-tier US brand names that have since opened a physical office and presence here on the ground (e.g. Sequoia, General Catalyst, Battery, Lightspeed, and others). These firms were predominantly made up of white men in their 40’s and 50’s who didn’t have founding or operating experience (the statistic the year we set up Kindred was that <5% of the funding provided to early stage companies in Europe had no founding experience on the partnership i.e. 95% of the capital was pure financial capital).
“If you have an idea you’re passionate about, or a problem in the world that you want to solve, find the very best people you can find (in values first and foremost) and build it with them.”
Few firms therefore felt the need to innovate because ‘if it ain’t broke don’t fix it.’ Today you see tens of firms at every stage, from seed to growth, and a real variety of the partnership DNA, the breadth of operating experience, sector focus, and differentiation of the model. This is a wonderful thing, it makes us all better, and there’s never been a better time to be a start-up founder.
Please could you tell us a little more about Kindred’s “equitable venture” model and what was the inspiration behind this?
Sure, it’s something I’m really passionate about. It starts from the fundamental premise that venture capital and company building is not a zero-sum game. That’s why I love what I do. It’s literally the value creation business. A few founders band together, take an insightful concept, a ton of blood/sweat/tears, some capital, and create value where there was nothing before. That value, therefore, can be shared with a wider and wider group of individuals and stakeholders, and everyone wins.
“That’s why I love what I do. It’s literally the value creation business.”
It’s the concept from founding and operating a company that you take completely for granted, because it’s so fundamental: a smaller piece of a bigger pie. Every founder thinks that way; they have an option pool to motivate great talent to join their team, they sell some of their company to VCs and each time they are diluting themselves, but create a far bigger pie and everyone wins. We wanted to bring that idea onto the investing side – where we can share the upside of the fund with every founder we invest in and if that gives us an edge in finding and winning the best deals in the market, then everyone wins and the whole pie gets bigger.
What are the most important and challenging parts of being an investor?
The hardest parts for me are three things:
1) You find yourself saying no 99% of the time. Literally. Our conversion rate through to completed investment from initial meeting is sub 1%. We’ll meet over 800 companies every year, and make c.8 investments out of that pool. So you have to get really good at saying no.
2) The feedback cycles are long! This is one of the hardest aspects for me. It takes a really long time to know if you’re a good investor or not. Even once the 5-7 years play out and you get some data on true performance and returns (i.e. DPI not just TVPI), what element was down to your own skill and repeatable, systematic process vs. a healthy portion of luck?
3) “You’re only as good as your last deal”, as the saying goes. One feels like the work is never done, there is always another founder to meet, another deal to look at, a company that you looked at and passed on that’s flying, a company that you missed…. It’s an emotional rollercoaster and can be tough on one’s psyche. I have to remind myself often that it’s a marathon not a sprint.
“It takes a lot of stamina, an almost irrational hubris but it is worth fighting for if you’re building something you’re truly passionate about and have enormous conviction in.”
Please can you share some of your learnings from being an entrepreneur that have help you as an investor?
You’ll get 9 no’s for every 1 yes, and that tends to mean you’re on to something. It takes a lot of stamina, an almost irrational hubris but it is worth fighting for if you’re building something you’re truly passionate about and have enormous conviction in. Looking for the “non consensus, but right” quadrant of the 2x2 matrix, both as a founder and as an investor are where the big returns are made.
What are your views on diversity in the tech industry?
Diversity in our industry has been painfully low for decades, but the good news is that is really starting to change both on the founder side and on the investor side. A big part of that change is that it’s now a part of the discussion. The awareness had to be built over the course of the last decade in tech, and now the groundswell is so powerful and strong that it simply cannot be ignored.
The philosophy that always stood out to me was “if you can’t see it, you can’t be it”, and I think that we should all be the change we want to see in the world. So being a female founder, and now a female VC, that’s been an important part of my own motivation to have impact and play my role in diversifying the talent in tech.
“... I think that we should all be the change we want to see in the world. So being a female founder, and now a female VC, that’s been an important part of my own motivation to have impact”
I also believe hugely in other aspects of diversity, which we have represented on the Kindred team in spades, things like age diversity (we are an equal partnership but span from 36 years old to 62 years old and every decade in between), gender diversity (50% female partnership), diversity of nationality (5 partners and 5 nationalities represented on the team), diversity of sector specialisation and interest, etc. The reality, as shown by countless publications and studies at this point, have shown that diversity is just plain good business: diversity drives better decision making, which leads to better returns. Full stop.
You became a founder at a young age, how have you grown in your role?
I have grown in every single role I’ve had, and this one arguably more than any role before! Starting a company later in life doesn’t mean that you don’t grow as much, on the contrary. I’m so much more aware of all the things I don’t know, at this point, and how truly humbling this industry is. My best advice is to throw yourself into your work and do what you love. If you’re doing that, then pouring yourself into constant improvement, iteration, self-development, accelerated learning, all that will come far more naturally and feel far more energising. When you’re building a company, you need all the energy reserves you can find… and then some more.
What do you believe are the core principles of entrepreneurship?
People, people people. If you find the right people, everything else flows from there.
Which investments have you been most proud of?
I’m really proud to have had the opportunity to back so many companies that are making a positive impact on the world. In particular, I’m passionate about companies building at the intersection of computation and biology – where advances in technologies like machine learning and artificial intelligence have the potential to transform the way we think about diagnosing and treating disease.
“It’s an emotional rollercoaster and can be tough on one’s psyche. I have to remind myself often that it’s a marathon not a sprint.”
I have been fortunate enough to back companies like LabGenius, Ori Biotech, and Eleven Therapeutics, all at the seed round. They are each revolutionising the way that treatments get discovered, developed, and delivered to patients around the globe. I feel very lucky to be able to work hand-in-glove with those remarkable founders.
What advice would you give someone wanting to start-up their own venture?
Do it! We rarely look back and regret the things we do – but we often regret the things we don’t do. If you have an idea you’re passionate about, or a problem in the world that you want to solve, find the very best people you can find (in values first and foremost) and build it with them.
“People, people people. If you find the right people, everything else flows from there.”
The future is full of uncertainty, and success in the conventional sense is far from guaranteed, however you can never fail if you love what you do, and if you strive for greatness alongside people you pinch yourself that you get to work with every day. One thing you know for sure: it will be a great adventure.
You can find out more about Kindred Capital at https://kindredcapital.vc/
Photographs courtesy of Leila Rastegar Zegna