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Newcomer of the Year Finalist: Sarah Drinkwater, solo GP at Common Magic on community as investment focus

This episodes features an exciting conversation with Sarah Drinkwater on the story behind Common Magic, and why communities are a mechanism for building modes around products and ecosystems.

Celebrating one of the finalists in the Newcomer of the Year category at this year’s European VC Awards, this episode dives deep with Sarah Drinkwater, solo GP at Common Magic.

Common Magic is a pre-seed/seed solo GP fund investing in and supporting founders building products with community at their core across Europe and the US.

As a small fund, they act like an angel:

  • fast decisions

  • operationally useful

  • comfortable being the first commitment

Sarah Drinkwater has been building communities in tech for over 15 years and building communities for fun for much longer. From advising protocols for Filecoin and Gitcoin on their ecosystem building to growing Campus, Google’s East London space for startups, and growing an angel investing portfolio of 36 startups, she built playbooks and networks that can help founders build powerful communities right from the start.

Watch it here or add it to your episodes on Apple or Spotify 🎧

Spotlight on Our Esteemed Newcomer-Award Sponsor

We express our profound thanks to Floww, the sponsor for the Newcomer Award. Their support has been crucial to allow us to acknowledge our new European VC Champions in style.

Floww simplifies venture capital fund management with FlowwFunds, a full funds management solution which removes the friction and fragmentation associated with the private markets, on a single platform.

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  • 00:24 Diving into Community

  • 00:53 Common Magic's Investment Focus

  • 03:07 Sarah's Journey and Achievements

  • 04:19 Understanding Community in Tech

  • 10:58 Blockchain and Community

  • 17:27 Community as an Investment Focus

  • 22:19 Fund Structure and Geography

  • 22:47 Investment Focus and Strategy

  • 23:27 Community and Market Assumptions

  • 27:30 Monetization Strategies

  • 28:29 Challenges in Community Building

  • 35:45 AI and Community Platforms

  • 38:38 AI Investment Trends

  • 42:29 Fund Status and Future Plans

✍️ Show notes

Sarah Drinkwater discusses the concept of community as a mechanism for building modes around products and ecosystems, the importance of community in technology, and the investment focus on community as a resilient and distribution-advantaged strategy.

"I think the word has been bastardized, overused, corrupted, and made meaningless."

She also shares insights on the power of blockchain and the role of small funds with clear operational expertise. The conversation delves into the challenges and opportunities of community-focused investments, the structure of community, and the litmus test for on-thesis investments.

"Community adds in the layer of what you leverage, kind of both tangible and intangible."

Sarah Drinkwater discusses the key factors she considers when evaluating early-stage companies, the role of the community in product development, and the challenges of monetizing and pricing community platforms. She also shares insights on AI models, the importance of distribution advantages, and the need for unique behavioral insights in the edtech space.

Key takeaways:

  • Community as a mechanism for building modes around products and ecosystems

  • The importance of community in technology and its role in building resilient and distribution-advantaged companies

  • Insights on the power of blockchain and the role of small funds with clear operational expertise

  • Challenges and opportunities of community-focused investments

  • The structure of the community and the litmus test for on-thesis investments, Quality of assumptions, market dynamics, and the potential for the community to be a moat are key considerations for early-stage investments.

  • Monetizing community platforms requires a balance between free and paid tiers, with a focus on unique value and tiered pricing.

  • AI models require strong distribution advantages and unique behavioral insights to succeed in the market.

  • Edtech startups need a strong-willed founder with a thoughtful approach and unique behavioral insights to address the challenges of education and personalization.

Community as an investment focus

Common Magic is a fund focused on three core beliefs.

1.The next wave of great companies will be powered by communities.

  • What are communities? → Mechanisms that build ecosystems around products.

  • These enable companies to find users/participants/custmers who stay and:

    • connect users to to each other

    • surface the best product feedback

    • enable users to make money on your platform

    • reach product-market-fit faster

2.In a downturn, companies powered by community are more resilient, they keep close to their customer base, and consider broader stakeholders early.


community is horizontal, not vertical.

Community isn’t a growth tactic but a mindset, of building with people, not for them

3.Small funds can win with clear operational expertise.

community as the fund’s thesis helps access distinctive dealflow + community strategy as a specialism that helps portoflio companies win.

What does that strategic help looks like?

  • For product startups - that’s understanding how to leverage community and unlock growth.

    • Find the first 100 true fans

    • Set metrics that matter

    • Hire the foundational community lead

  • For others - that’s understanding how to convert a thriving community into a company (think open source):

    • Growth + monetization strategies

    • Set metrics that matter

    • Hire the foundational community lead

👋 Upcoming in-person events we’re hosting

There’s nothing we like better than getting Europe’s best and brightest together with good food, drinks, and conversations that go truly deep.

SuperVenture Side event on Realizing DPI | 5th of June | 🌍 Berlin, Germany | Join the waitlist.

European VC Awards | 4th of June | 🌍 Berlin, Germany | Get tickets.

📅 Upcoming virtual events

From time to time, a podcast is just not enough. Check out our roundtables and live events below.

🏆 Firesides with the winners of the European VC Awards

Fireside with the Newcomer of the Year Winner | 13/6, 12-1:30 PM | Register here. Hundreds of new VC funds come to market every year. But only ONE will win Newcomer of The Year. This is your chance to meet the winner firsthand.

Fireside chat with the Winner of the Hall of Fame | 25/6, 12-1 PM | Register here.
Hear firsthand from a true giant upon whose shoulders the European tech ecosystem stands tall.

🗓️ The VC Conferences You Can’t Miss

There are some events that just have to be on the calendar. Here’s our list, hit us up if you’re going, we’d love to meet!

SuperVenture | 📆 4 - 6 June | 🌍 Berlin, Germany

Nordic LP Forum & TechBBQ | 📆 September | 🌍 Copenhagen, Denmark

How to Web | | 📆 2-3 October | 🌍 Bucharest, Romania

WVC:E Summit 2024 | | 📆 7-8 October | 🌍 Paris, France

North Star & GITEX Global | 📆 14 - 18 Oct | 🌍 Dubai, UAE

Invest in Bravery | 📆 22th of October | 🌍 Kyiv, Ukraine

GITEX Europe 2025 | 📆 23 - 25 May 2025 | 🌍 Berlin, Germany

Trying to get in front of European VCs and LPs? The 2024 EUVC Media Kit is out - check it out here, and let’s talk. 💌