QED Investors’ Yusuf Ozdalga discusses the qualities of a great founder and gives his advice for start-ups looking for funding.
Yusuf Ozdalga is a London-based partner at QED Investors, the fintech-focused VC that has backed start-ups including Irish unicorn Wayflyer. In his role, Ozdalga heads up investments in UK and European fintech companies.
His career started at Capital One in 1997 and has gone on to span roles as an operator, adviser, entrepreneur and investor. He started his professional investing career in 2006, with a focus on specialty finance and consumer credit companies in Europe.
As well as Wayflyer, his current portfolio of investments includes Wagestream, Fidel API, Capitalise, Rest Less, Weavr, GetGround and Payhawk.
‘The right investor can fill in gaps and provide that bit of additional help that can make the difference between success and failure’
– YUSUF OZDALGA
In your opinion, which areas of science and technology hold the greatest scope for opportunities?
The three most exciting areas of opportunity I currently see are fintech, biotech and quantum computing.
Fintech, because so much of our everyday lives are impacted by financial services, whether it be buying a house or making a simple payment online.
Biotech, because I think we are just starting to scrape the surface of what is possible in this field. Genetic engineering, new drug development and many other fields will usher in an area we cannot even imagine today.
Quantum computing, because I find quantum physics incredibly exciting. To think there are many parallel universes in existence all around us is so fascinating. To those that are interested, I greatly recommend the book The Fabric of Reality by David Deutsch.
What are the qualities of a good founder?
The best founders are resilient, focused, good communicators, smart and very lucky!
In all seriousness, to start a company from scratch and deliver a multibillion-dollar outcome is something that very few of us ever will experience. To be a member of that rarified crowd takes the confluence of many factors – and the one I find most fascinating is actually luck!
Good entrepreneurs are made, and all it takes is the desire and the willingness to take that first step, then trusting that things will somehow work out. Many of the best entrepreneurs I know are also very good leaders and they have this ability to set a lofty vision, without exactly knowing how we will get there. They believe.
I should also mention that I know many entrepreneurs that started their first enterprises very late in life. So it is never too late! If you have an idea, start working on it right away. That does not mean you need to set up the actual company now, but by all means start doing the work and draft your master plan.
What does a successful entrepreneur need to do every day? What tools and resources are a must?
A successful entrepreneur needs to get up every day. And by this I don’t mean get up out of bed – while that is important as well, no entrepreneur will have a problem with that one. During the day, entrepreneurs will constantly be knocked down and they need to get up, over and over again. The best entrepreneur is the one that can get up where others cannot.
An analogy I often think about is Rocky Balboa in the first Rocky movie. Despite losing the match on a split decision, Rocky wins over the hearts and minds of the spectators because he manages to last 15 rounds against Apollo Creed, a much superior boxer that keeps knocking the lights out of him. I often think the best entrepreneurs are like that. They don’t give up.
In terms of tools and resources, it comes down to one simple thing: people. No matter how good or how resilient, no entrepreneur can win by themselves. The best entrepreneurs are fortunate and smart enough to be able to surround themselves with the best people.
And of course, the key to surrounding yourself with the best people is a combination of vision, charisma and treating those people fairly so that they trust you.
What is the critical ingredient to start-up success?
There is no one critical ingredient, but rather a confluence of many factors and ingredients. These include the founder, the team, the idea, the investors and the right timing.
From all those, the investor is probably the least important, but they do still matter. The right investor can fill in gaps and provide that bit of additional help that can make the difference between success and failure. And of course, money. The investor provides money.
How can founders assemble a good team?
The key to assembling a good team is to have a clear vision, communicate it well, be charismatic and make sure people trust you. The line between charisma and trust can often be a tricky one, but the best founders combine both.
The other very important thing to do in this context is to define the roles your organisation needs very carefully. Finding, hiring and incentivising people is easy compared to defining exactly what the highest priority roles are for your organisation.
As a founder, spend time on thinking carefully about what the roles are you need, and how those roles will change and evolve over time.
What advice do you have for founders who are starting to look for investment?
Come to QED!
Joking aside, define your goals for the next 12 to 18 months. Make sure you have no more than two, max three, strategic goals. Strategy is very much about what you say no to. You cannot do everything! Once you have set your high-level strategic goals, think about which investors can help you reach those the most, and reach out to those investors.
Once you have term sheets from investors, make sure you do reverse due diligence on them. Go and talk to other companies that they have invested in, and ask the founders there how their experience was.
What are the biggest mistakes that founders make?
Founders tend to be very optimistic and ambitious, but sometimes they can turn a blind eye to an aspect of reality. I am not saying this happens a lot, but when it does happen, it does always catch up with you.
As the saying goes, “You can fool some people all of the time, and all of the people some of the time, buy you cannot fool all of the people all of the time”. This also applies to yourself – you cannot fool yourself, reality always catches up eventually.
The other mistake that is very common is not to ask for help often and early enough. Nobody can carry the weight of the world on their shoulders, so ask for help, and learn how to be vulnerable. This is an area where a good investor can be especially helpful.
What are your views on mentorship and the qualities one should look for in a mentor?
Mentorship is super important, and the best founders have several mentors. It should ideally be somebody with more experience and somebody you trust.
In some cases the mentor can have a perspective or view that is complementary to that of the founder, and in some cases it can be a person that has walked the same path before, having started their own company.
What’s the number-one piece of advice you have for entrepreneurs?
Find a way to surround yourself with the best people, make sure you care about them, and invest in those relationships, paying special attention to trust.
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