A few weeks ago, the legendary investor and entrepreneur Saul Klein joined me in the Odin offices. Saul is co-founder of Phoenix Court Group, which runs Local Globe, Latitude and Solar, and has backed the likes of Wise, Monzo, Mistral and Figma. It was a long conversation, which we’re publishing in two parts.
In part one, we dive into Saul’s unusual journey into venture: from co-founding DVD-by-post business Video Island, to joining Skype in its early years, before investing at Index Ventures and eventually starting what became Phoenix Court.
Knowing the right time to step aside and let others lead. Saul left LoveFilm to join Skype not long after the merger that created it, and has since handed several Local Globe-backed businesses over to operators he considers better suited to running them than he is. His logic each time was the same: if there are people who can do the job better, get out of their way.
Phoenix Court recently restructured to become a limited company rather than a partnership, a move only a very small number of the 20,000 active VC firms globally have made. Being a limited company, rather than an LLP, lets the firm keep profits on its balance sheet instead of distributing them to partners every year. Saul argues this enables longer-term decision making. The firm’s largest shareholder is now a foundation that grants most of its funding within a mile of the office.
A common theme in our Going Solo episodes is how seed investing is one of the most commoditised businesses there is. With around 20,000 active VCs offering essentially the same product, cash, Saul compares the category to a street of identical hairdressers. The real question for any fund is why a founder should choose to work with you over any other shop on the same road. Saul cites research showing that just 2.4 percent of the stocks traded globally since 1990 accounted for effectively all the value created in public markets. His own numbers for seed are similarly narrow: a 1.3 percent chance that any given investment reaches $100 million in revenue, and a 1.8 percent chance it becomes a unicorn. By his count, only 21 of roughly 20,000 active funds worldwide have picked more than ten of those companies at seed.
He borrows a line from Benchmark’s Andy Rachleff: back surfers, not waves. A big enough trend, AI, cloud, whatever comes next, will always attract thousands of investors. The actual job is picking founders who will still be riding waves twenty years later, which is why Phoenix Court’s whole model is built around backing people as early as possible.
Part two will come out next Sunday, and covers the origin story behind backing Wise, how Phoenix Court has spent eleven years building an AI system for evaluating founders, and Saul’s advice for anyone starting out as a solo GP. If you can’t wait to watch it, you can check out the whole conversation on YouTube.
You can also check out Saul’s Substack, here.
Hope you enjoy it.
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