20 VC 013 Frank Meehan Series A, Spark Labs and The Future of The Asian Tech Market

In episode 13 of "The 20 minutes VC," Harry Steppings interviews Frank Meen, cofounder and partner at Sparklabs Global Seed Fund. Frank shares his journey from coding at a young age to establishing his own venture fund, emphasizing the importance of a global network for early-stage startups. He discusses investment strategies, stressing the significance of growth and the collective strength of multiple investors in seed rounds. Frank also highlights the value of understanding technology for founders, even if they aren't coders themselves. The conversation touches on the potential of sectors like cybersecurity, IoT, and health, and the varying investment landscapes across different regions. Frank's insights into making tough investment decisions and the future of Asian tech markets round off the discussion, with a nod to the influence of successful figures like Lee Kashing and Mark Zuckerberg.

• Frank Meen is the co-founder and partner at Sparklabs Global Seed Fund.
• He has invested in 40 companies across the US, UK, and Asia.
• His prior experience includes working with Horizon Ventures and serving on the boards of notable companies such as Sumly, Spotify, and Siri.

"Frank is cofounder and partner at Sparklabs Global Seed Fund, where he's invested in 40 companies in the US, U, K and Asia."

This quote introduces Frank Meen's current role and highlights his extensive investment experience across multiple regions.

• Frank Meen started coding at the age of eleven or twelve, influenced by his father who brought home computers.
• He completed his last year of mechanical engineering in Sweden.
• His first job was in coding and troubleshooting at Ericsson in Sweden.
• Frank was involved in the early days of mobile technology and was part of the team that built the first 3G networks for Hutchison.
• He worked for the VC arm of Lee Kushing, Horizon Ventures, before starting his own fund.

"And then I ended up working for the VC arm of Lee Kushing, which is Horizon Ventures."

This quote summarizes Frank Meen's professional journey to venture capital, highlighting his technical background and his transition from engineering to venture capital.

• Frank Meen started his own fund in 2013 with five partners under the Sparklabs group.
• Sparklabs includes an accelerator (Sparklabs Korea) and a fund (Sparklabs Club).
• In partnership with Brent Hoeman, Frank launched Smartup to innovate in the entrepreneurship and business learning space.
• Smartup aims to provide mentoring at scale through software.

"And then last year, together with Brent Hoeman, who's the founder of Lastminute.com, got started on smartup, which we want to shake up the whole entrepreneurship and business learning space by helping."

This quote details Frank Meen's venture into educational technology with Smartup, emphasizing the goal to transform entrepreneurship and business learning through scalable mentoring software.

• Frank Meen's son learned to code through his interest in Minecraft and the use of educational sites like Youth Digital.
• Meen believes that having an incentive and passion is essential for learning to code.
• He shares his own experience of learning to code to organize books at home.
• Motivation for coding should go beyond work and be driven by personal passion.

"And that's where it gets really interesting, because he taught himself because he loves Minecraft. And then after a while, he learned that to do mods in Minecraft, which he learned through YouTube."

This quote illustrates the personal motivation behind learning to code, as demonstrated by Frank Meen's son's interest in Minecraft and the use of online resources to facilitate learning.

• Frank Meen does not consider coding as a necessary skill for all founders.
• However, he believes that an understanding of coding principles and technology is crucial.
• This knowledge allows founders to have a better grasp of how things work in the technological realm.

"I don't think that's necessary. I think an understanding of it so that you can have an understanding of how things work and an understanding of the principles of the technology behind it is actually probably even more imp"

This quote conveys Meen's perspective that while coding itself may not be essential for every founder, a foundational understanding of technology is important for success in the tech industry.

• Founders need a basic understanding of technology to have informed discussions with CTOs.
• It's important to avoid being misled by the tech team due to a lack of understanding.
• Design skills and business acumen are also critical for founders.
• Knowing the specifics of technologies like blockchain could be more beneficial than coding skills.

"It may be more important for you as a founder to know the deep ins and outs of how blockchain technology works than actual coding."

• This quote emphasizes the importance for founders to understand emerging technologies relevant to their business, such as blockchain, even more than knowing how to code themselves.

• Deep market knowledge is essential for founders.
• Understanding market dynamics can be fundamental to a startup's success.

"Absolutely. So deep market knowledge is also fundamental."

• Harry Steppings agrees with Frank Meen's point that having a deep understanding of the market is crucial for founders.

• Frank Meen has experience investing in various stages of company growth.
• A diversified investor base at the seed stage can lead to a successful Series A.
• The network effect from multiple investors supporting a startup is critical for growth.
• Growth, especially user growth, is the most important metric for Series A.
• For B2B startups, an easy sales process and the ability to meet demand are key.
• For B2C startups, daily user engagement is a strong indicator of success.

"The best rounds and the hottest companies in the valley now will not have one or two investors in them. They will have a good eight or nine or ten."

• Frank Meen highlights the importance of having multiple investors in early-stage startups, which contributes to a network effect that supports the company's growth towards Series A.

"It is literally about growth. I mean, before anything, it's about growth."

• Frank Meen agrees with Y Combinator's stance that growth is the most critical factor when evaluating a startup for Series A investment.

• Investing in the idea stage can be risky and should be done sparingly.
• A strong team and a practical approach are essential when considering idea-stage investments.
• Overfunding at the idea stage can lead to failure, as seen with startups like Clinkle.
• Frank Meen prefers investing in seed-stage startups with a prototype and some validation.

"Stage a couple of times, once or twice a year you will invest in an idea stage just because the combinations are amazing, where the team is incredible."

• Frank Meen is open to investing in the idea stage but only when the team is exceptional and the idea has strong potential.

"Otherwise, I prefer seed, where someone's built a prototype and demonstrated, potentially launched and."

• Frank Meen expresses a preference for investing in seed-stage startups that have a working prototype and some level of market validation.

• Frank Meen emphasizes the importance of collective validation from top-tier investors before making an investment.
• The presence of established investors signals a level of confidence in the startup.
• Occasionally, unique opportunities arise that are overlooked by others, which can be identified by having a deep understanding of the sector.
• Without sufficient backing, pushing a company forward can be likened to pushing it uphill.

"Yeah, I mean, we won't invest unless there's other very top tier investors in it, be that private individuals or firms, because you've got to get the collective validation."

Frank Meen is stating that his firm requires the presence of other reputable investors to consider investing in a startup, as it serves as a form of validation for the investment's potential.

"But otherwise, if everyone else is not going for it, it's generally a sign that you just leave it, because the problem is that you'll end up being one of those one."

Meen explains that a lack of interest from other investors is often a red flag, suggesting that it may be more prudent to avoid such investments.

• VCs compete to invest in highly sought-after startups, often trying to secure a place in fast-closing funding rounds.
• The competition among VCs does not necessarily drive up the investment price, especially at early stages.
• Founders who are sensible avoid inflating the price to maintain relationships with initial investors.
• In later funding rounds, such as Series C and D, large investors may drive prices up.

"Well, I mean, that's obviously the ideal type of company that you want to go into. So where a hot round will close very quickly."

Frank Meen describes the ideal investment scenario where there is significant interest from VCs and the funding round closes rapidly.

"So the sensible founders will not do that later on. In a series C and a series D, when you've got big, big players like a Goldman's or something jostling around, then the price does get driven up, but not at an early stage."

Meen points out that sensible founders do not exploit the high demand to drive up prices in early funding rounds, unlike in later stages where larger investors may inflate prices.

• Sparklabs sets itself apart by addressing the global needs of startups with a localized investor base.
• The firm has six partners located across various global tech hubs, providing a network and on-the-ground support for business deals and additional investors.
• This global presence is attractive to founders and other investors, offering a competitive edge for Sparklabs.
• The strategy has led to successful deal-making through inbound requests.

"So at Sparklabs it is really different. We set ourselves out to be different because we could see that companies have much more global needs than ever beforehand."

Frank Meen explains how Sparklabs differentiates itself by recognizing the global needs of modern startups and positioning itself to meet those needs with a diverse geographical presence.

"And that gave us a global network and a presence so that we have people on the ground that can help, you know, business deals, extra investors, et cetera."

Meen highlights the practical benefits of Sparklabs' global network, which includes facilitating business deals and attracting additional investors through their on-the-ground presence.

• Sparklabs' recent investment was in Castle IO, a Swedish company offering a sandbox for developers to implement high-grade mobile security.
• The startup provides a cost-effective solution for two-stage authentication, which is typically expensive and used by large companies.
• The investment decision was influenced by Frank Meen's close ties with key angels in Scandinavia, leading to a collective investment from his network.

"You know, one of our most recent ones was a very cool company up in Sweden, a couple of guys, and this is very early stage, a couple of guys have been working on a prototype for building a sandbox for developers to offer very high grade mobile security options."

Frank Meen describes the innovative nature of Castle IO's product and its relevance in the current market where mobile security is increasingly important.

"So these guys were like, let's build a very cool sandbox. They're called Castle IO. And let's build a very cool sandbox so that in a SaaS model, developers can just put the code in their front end or back end and have two stage or other different types of authentication systems."

Meen explains the concept behind Castle IO's product, emphasizing the ease of integrating advanced security features for developers through a SaaS model.

• Frank Meen finds encouragement in the trust and positive feedback from people he personally knows.
• He expresses a liking for the cybersecurity sector, Internet of Things (IoT), and health.
• Frank does not have a natural preference for one sector over another but follows the market trends and investment opportunities.

It's very encouraging. Right. So you just know, know a lot of people that I trust personally have also said yes to it.

This quote underlines that endorsements from trusted individuals are a source of encouragement for Frank.

I would. I would say I like cybersecurity. I like Internet things. I like health.

Frank lists the sectors he is interested in, indicating his broad range of interests within the tech industry.

• Frank discusses the importance of following the 'hot' sectors and the availability of investors and potential exits for startups.
• In London, the focus is on fintech due to a large investor base and exit opportunities.
• In Asia, e-commerce is a key area of investment because it's in an early stage and growing rapidly.
• The U.S. market is described as more flexible, with a variety of sectors being invested in.
• Scandinavia is focused on health and IoT but with a deeper technology angle.
• In Israel, the investment strategy is sector and location-specific.
• Frank is not interested in investing in European e-commerce due to market saturation and operational challenges.

No, I think you've got a pretty good idea of which sectors are you got to go with the flow, like which sectors are hot and which sectors have the greatest number of investors and the greatest potential exits around the startup.

Frank explains that investment decisions are based on the current market trends, investor presence, and exit potential in various sectors.

So in London, we tend to really only do fintech right from the very start because we picked that there would be a huge group of investors around the fintech space and a lot of great exits.

This quote highlights the strategic focus on fintech in London, driven by the investor ecosystem and exit opportunities.

• Frank associates success with Lee Kashing's consistent success and ability to make the right deals.
• He also mentions Mark Zuckerberg's achievements with Facebook and his continued success.
• Learning to focus on exits and driving value was a key takeaway from Frank's experience at Hutchison and Horizons.

Lee kashing has been incredibly successful and stayed incredibly successful over the years consistently, which is extremely hard for anyone to do.

Frank identifies Lee Kashing as a prime example of sustained success, emphasizing the difficulty of maintaining such a level over time.

Mark Zuckerberg. You can't argue with what he has done and what he consistently delivers for Facebook.

Mark Zuckerberg is cited as another example of success due to his consistent performance and impact on Facebook.

• Frank predicts a significant future for the Asian tech market, initially driven by e-commerce and gaming.
• He foresees the growth of deeper tech and IoT, particularly in smart cities.

The future of the asian tech market is huge. Initially it's going to be driven around ecommerce and gaming, but already you can see deeper tech and particularly Internet of things. Smart cities.

This quote provides Frank's outlook on the Asian tech market, highlighting the sectors he believes will drive its growth.

• Frank reflects on the difficulty of turning down startups that don't align with his firm's philosophy, even if they show promise.
• He regrets not being able to invest in a startup that later became very successful.
• Now with his own firm, he has more flexibility but remains focused on funneling investments through Sparklabs rather than personal investments.

I think the hardest decision is always saying no to a startup that I think the hardest one was when I was in a previous VC firm and I had to say no to a startup that I knew didn't fit with the firm, but was with the firm's philosophy. But I knew was like a really cool, I won't say what it was, but I knew that was a very cool startup and it became very big.

Frank discusses one of the toughest decisions he had to make, which involved rejecting a startup with high potential due to a mismatch with his firm's investment philosophy.

• Harry Steppings thanks Frank Meen for participating in the show and expresses the desire to have him again in the future.
• Listeners are directed to the show's website for resources and encouraged to provide feedback and questions for future episodes.

Well, thank you so much, Frank, for coming on the show. It's been such an honor to have you and I really hope to have you on again in the future.

Harry Steppings concludes the interview by thanking Frank Meen and expressing appreciation for his participation.