EUVC #234 Sarah Drinkwater, Common Magic

DALLE3 created image on the basis of the episode introduction in the style of Salvador Dali.

Today we have Sarah Drinkwater with us. Sarah is the Solo GP of Common Magic, a pre-seed/seed fund investing in and supporting founders building products with community at their core across Europe and the US. You won’t meet many with as much insight and experience in building communities as Sarah, so of course, this episode is dedicated wholly to this subject!

Jump to the parts that matter most to you 👀

00:00:00 - Introduction to the European VC Podcast
00:02:02 - From Angel Investing to Building a CommonMagic
00:03:46 - The Importance of Trust and Community Building
00:05:16 - Motivations for Transitioning to Venture Capital
00:06:49 - The Power of Adaptability
00:08:29 - Personal Resilience and Thriving in Hard Times
00:10:32 - The Challenges of Building Community
00:12:24 - Building Trust and Connecting Communities
00:14:01 - Building Community from Small Beginnings
00:17:22 - Agility of Mindset in Founders
00:18:53 - The Acid Test of Communities
00:22:17 - Building Community Teams
00:23:43 - Organizational Structures and Reporting Lines
00:25:15 - Letting Go of Responsibilities
00:27:06 - The Challenges of DAOs and Group Accountability
00:32:06 - The Importance of Hard Work and Serendipity
00:33:43 - Creating Space for Serendipity in Work and Relationships
00:35:15 - The Grind of Venture Capital
00:36:58 - Trust and Collaboration in the Venture Capital Industry

Quote by Fred Destin from STRIDE:

Great founders who know how to invest make the best VCs. It is not obvious that this statement extends to operators.

Sarah’s take (paraphrased by yours truly!):

Considering that the venture landscape in Europe is relatively nascent, with the typical company taking a decade to reach IPO, and given that operator VCs have only emerged as a trend in recent years, can we conclusively determine the validity of this claim?

It's also essential to recognize that not all operators are the same. They possess varied skill sets and operate in different market segments. Like any profession, the key for an investor, be it an operator or founder, is to understand their strengths, their niche, and where they can add the most value.

Sarah dedicated her shout out to Atomico as they were her first significant ticket into the fund. Her association with them dates back to the early 2010s when they invested in an early-stage social network company she was part of. Though the startup didn't succeed, that experience introduced her to Atomico. Later, during her tenure at Campus, Google’s East London seven-storey space for startups, Nicholas and his team were consistent supporters of both her and the Campus initiative, emphasizing its community value.

Dali-inspired oil painting where Sarah stands in a distorted room with melting walls. She presents her business plan to a table where Atomico representatives sit, but their reflections in the polished floor show different ages of their lives. The window reveals a scene of her journey: an early-stage social network floating on a sea, and the tall Google’s East London Campus balancing on a single point. Sophia Bentz, with multiple arms, mentors young individuals, and cherubs with long, snail-like antennae hover with an 'ANGEL' banner.

In 2020, she joined the ANGEL program under Sophia Bentz's guidance. Their continuous engagement and invitations not only boosted her confidence but also honed her skills, especially in drafting memos. It felt like a hands-on training program for her. When she conceptualized the fund, Atomico was among the ten trusted entities she approached. Their solid backing was a pivotal factor that propelled her to pursue this venture full time. Their unwavering support has been instrumental in her journey. She's built strong trust with several individuals at Atomico. While their investment focuses differ in stages, their early endorsement was crucial in shaping her path with Common Magic.

1. Don’t wait for permission

2. Bet on yourself - and then start betting on others

3. Don’t over-plan - you never know what you’ll fall in love with next

Surrealistic oil painting in the style of Salvador Dali showing a vast desert landscape. In the center stands a large, ornate door slightly ajar, symbolizing the idea of not waiting for permission. Floating above are dice with faces of confident individuals, representing the notion of betting on oneself. From the horizon, long shadows of diverse people approach, signifying betting on others. To one side, a large intricately designed clock melts, symbolizing the unpredictability of time and the warning against over-planning. In the distance, a heart-shaped balloon floats towards an unexpected destination, hinting at the idea of falling in love with the unknown.

Q: What advice would you give your 10 year younger self?

Keep going and have fun.

Q: What are your top tips for emerging VCs across Europe who are fundraising ?Q: What’s the most counterintuitive thing you’ve learned in venture?

Build a story that makes sense, that you absolutely believe in.

Q: What’s the most counterintuitive thing you’ve learned in venture?

Sometimes it really is about intuition and gut feel versus numbers.

Oil painting in the style of Salvador Dali showcasing Sarah Drinkwater in a vast labyrinth. As she navigates, her younger self shadows her, reminding her to 'keep going and have fun'. Walls of the maze are made of intertwined narratives, symbolizing the importance of a cohesive story in fundraising. Emerging VCs, depicted as ethereal wanderers, seek guidance from scrolls floating above. In the center of the maze, a fountain flows, with one stream emitting glowing numbers and the other, a radiant heart, emphasizing the counterintuitive balance of intuition and data in venture.

Johanne’s controversial statement:

A little bit of chaos is good for you.

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