Having only spent a few months in venture capital after joined London-based firm Dawn Capital in September 2019, principal Mina Mutafchieva brings a fresh perspective to the industry, with a particular interest in startups in the data analytics, fintech and future of work sectors.

Born in Bulgaria, Mutafchieva's route into the industry certainly fits the rubric for many venture capitalists: a degree from LSE, two stints at McKinsey and a MBA from Harvard Business School. She then got her first taste for investing in 2015 at private equity fund Palamon Capital Partners.

Image: Mina Mutafchieva, Dawn Capital
Image: Mina Mutafchieva, Dawn Capital

We sat down with Mutafchieva recently to discuss her early experiences and the strategy herself and the Dawn Capital team tend to follow when making investments and promoting diversity and inclusion across the industry.

Below is a lightly edited version of that discussion for clarity and brevity.

Hannah Williams, online editor at Techworld: How did you end up in venture capital?

Mina Mutafchieva, principal at Dawn Capital: [During my time at Palamon Capital Partners] I started to get really frustrated, because I thought well: I want to invest in the best companies out there. I don't want to be limited to companies that don't want venture funding.

Then Dawn reached out last year [2019], and I thought two things: I finally get a chance to invest in the best companies in Europe in tech and second, I wanted to focus on a B2B only strategy.

I had done quite a lot of consumer investing before and also looked at a lot of companies in payments and business services that were more on the B2B side and I definitely noticed my passion and affinity and also, intellectually, I definitely veer more to the B2B side. So that's kind of how I ended up with Dawn.

HW: You're quite new to VC and the B2B space, specifically. What's your experience been like breaking into venture capital? And how would you say the industry is changing?

I guess for me, because I've been investing already for about four and a half years before I moved over, it's kind of the basics of investing, that was not something that I really needed to learn. The analysis and the documents and all that was not a big learning curve. I think the key thing when you go to venture is to really build out your network and really start to build out a profile for yourself, because it's still kind of a personality-based industry, to a large extent.

That's where we at Dawn actually believe that it's becoming much more about the platform and what you have to bring to the table and actually being a specialist in a certain area, rather than necessarily just an overall great investing track record, which is of course important as well.

The reason I moved over to venture was because I really observed that the quality of companies that are getting founded, the quality of entrepreneurs, generally the quality of people who want to do entrepreneurship and be in venture is really, really high.

I'm very deeply involved with our recruiting here at Dawn, and honestly we get literally the best candidates out there who want to do venture nowadays. We even have to turn away people with fantastic CVs and really good skill sets, because we just have such a great choice of candidates that come to us. So I'm really excited about that. I think that's super positive on both sides, that's the venture side and on the entrepreneur side. So I think that's a huge positive change and really exciting for us as investors.

The other thing of course, is it's becoming more competitive. So our firm belief here is that you really need to be on top of your content, you need to be a specialist and you need to be able to really add value to the companies you invest in. So we think that the days of showing up with a big cheque and closing the deals are quickly going to be gone. I think more and more founders are asking what you bring to the table. What do you know specifically about my business? What's your perspective on how I should scale my sales? What's your perspective on open banking in Europe? We think that's great for the industry and a very positive change, just a generally higher quality professionalisation that we see all around.

How important would you say diversity and inclusion is in the industry? You mentioned previously that you are keen on the recruiting end of things as well, but also when it comes to actually dealing with founders.

Of course, it's extremely important. We start in-house by putting things in order here first. So we're very pleased to have a very balanced investment team. We have our first female partner Evgenia, who got promoted earlier this year. We've got a pretty balanced investment team after that. Our CFO is also female. So we're very committed to having a balanced team.

More so than just on the recruiting side, we are very committed to providing the kind of culture and environment that actually retains a more diverse team. I think everyone in the industry has woken up to the need to have a more diverse recruiting policy. But then what I've observed, especially coming from private equity, is that the retention is really, really tricky. I think in venture, and I haven't been here long enough to see, but I think there shouldn't be a reason why it's different. So actually, I think a lot of funds have done well in recruiting and now it's to be seen, will they actually be able to retain more diverse people from different backgrounds? It takes a while to train them up, it takes a while to make sure they're performing at their best ability. I think that's the key thing, enabling everyone to actually bring their best part to the table. That's the start to a culture of respect and actually requiring people to bring their views forward, rather than requiring them to conform to whatever is the order of the day and I think that works really well here.

In terms of how we deal with founders, we ultimately aim to back the best, most exciting companies. I'm very encouraged to see now many more diverse founding teams. It's actually very tricky on the B2B tech side. My experience of who I meet, and the pipeline that I see is that it's still a relatively male-dominated environment. The founders are predominantly male. But in the last year, especially in the UK and Nordics, I see a lot more mixed founder teams, which is really great.

In our own portfolio companies, we actually have a very balanced executive team, especially in our more mature companies. Obviously, I sit on boards, which is nice, because it's very difficult to get female board members as well. So Evgenia and I both sit on boards, and actually on all of my boards, it's a pretty nice mix of senior men and women. So we try to encourage our companies to look at that very closely. 

What kind of startups do you tend to go for? I know you mentioned already that you do focus on B2B, but is there any requirements that teams have to follow, do they have to be diverse?

No, we don't require that the teams are diverse but we are focused on several thematics.

So obviously, we are just focused on B2B software-as-a-service (SaaS) and within that we look at companies that are in data and analytics. Fintech is a big area of focus for us, and the future of work. Then, finally, we do quite a lot in cyber security. We also invest in Series A and B. So what we do place great value on is recruiting a diverse executive team.

We will not turn away a great company just because it doesn't conform to some diversity metric. We think the key thing is that our own team is as diverse and as balanced in the deals that we put forward as a first step, and then that hopefully makes us better decision makers and better investors, which we firmly believe that it does.

What advice would you give to females that are trying to get their foot in the door of the industry?

I'd say the key thing is that you should really know why you're doing this. What are you getting out of this and what are your skills? VC is an interesting space because you can actually be very successful here with a totally scientific or operator background if you're investing in the more deep tech things, or some of the biotech funds out there. Then you can also be super successful if you've been an operator before, we've seen that many times. You can also be super successful with something like my background, which is more from the financial and commercial side.

So I think knowing what your strength is, and exactly what you're bringing, and then matching that towards the potential opportunity is really important. I'd say that's the same for men and women. Then I think women tend to focus a little more on what they're less good at. So I would just say know what you're really good at and lead with that, because you can be successful in venture with many different backgrounds and people expect you to bring your best rather than necessarily focusing on trying to fix things that maybe you're less good at.

Then I think, in general, the industry is extremely open and really understands the need for increasing diversity. Not just gender diversity, but generally diversity of backgrounds, diversity of where people come from, what kind of things they've done with their life. So, that's a real positive.

You have to really try to find out why people are doing it and who is in the team, who is successful, what do the partners look like? What is their background? Unfortunately, we are all biased and we all kind of want to recruit or be around people that look like us and I think that's something that we all need to fight. The best example of that is when you look at the current team, can you recognise yourself? Is it truly a diverse team? That's where you have to start.

What specifically is Dawn Capital doing to really double down on that?

I mean we have a very rigorous recruiting process and for us, it's very important that everyone who comes here is extremely high quality, extremely smart, extremely motivated and can fit in culturally.

What we have found, luckily, is that we find candidates with those characteristics everywhere. So we obviously have Sarah [Noeckel] here, she's the founder of Femstreet, so she's more of an operator and we have a few others of our more junior team who are also former operators and have a mix of backgrounds. Then if you look at our founding team, it's really the ultimate mix. So it's an academic, a VC and an entrepreneur that started Dawn and I think in a way that is reflected in our makeup, where it's good to see that the founding team is actually fairly diverse already in terms of backgrounds.

We also have this funny statistic that everyone at Dawn except for one person have actually had some kind of scholarship to get through university and in many ways we're very diverse in terms of country makeup. Also our new hires are bringing three new countries to our mix, including Uganda, which is pretty cool. So I think what we do is we try to set the bar really high and then we try to look far and wide for anyone, regardless of background or gender, whatever fits. Luckily we've actually been able to do that and attract these candidates to us, which is also important, because the people come to work here, they could have done anything. I mean, I'm really impressed with the quality of people we've been able to attract.

What does your strategy look like for the year ahead? Do you have any plans in terms of investments and growing the company?

We've already extended offers for a few new joiners, so that's great. We're looking still for another associate to join the team and that's quite advanced. So we're definitely growing the team. In terms of our strategy for the next year, the plan is to stick to our existing investment strategy and stick to what we know. We see a lot of very exciting companies that are coming up for fundraising in the next 12 months, so that's great. That's kind of up to us to get to catch those and convince them to take us on board.

Typically, we do about eight to 10 deals per year at Series A and B across Europe. I specifically cover the Nordics and UK and mostly fintech and future of work, I would say are my two topic areas within Dawn and we've seen a lot of really exciting companies in that space. So no real change in terms of our strategy or what we're doing. We're just very happy to see the quality of assets that are coming up is very high, and the quality of teams as well that are starting these companies is impressive.

Do you think it's essential to have a balanced team, say 50/50 on the investor team, when it comes to having meetings with the startups? Does the investor have to be somebody that looks like them if it was a female-led business, for instance?

No, I mean, hopefully not. You know, we think we have a very objective way of looking at companies and a lot of it is about what's happening in the market. What's the competition like? What are your metrics, like?

Of course the issue with venture compared to more mature businesses is that the founders really matter, you're investing in that team. So I can see why if you don't have a diverse decision making team, you might discount the capability of a female founder just because she doesn't look like you, which would be a terrible thing. I can see how this conceptually could happen, that you just look at two founders and see their Series A you just think the guy is more competent, just because he looks more like me. Right?

I think that there is a real danger, but hopefully, people are aware of this. At Dawn we don't really have these sole decision makers. If we invest in a company, we'll actually have all the partners and pretty much all the principles meet the founder in different settings to do different things. Of course you have the team that's leading the deal, but again it's always a team leading a deal and because of our makeup it just doesn't happen that you have an all-male team working on a deal, it will always be a mixed team, just because we have a balanced team.

The other thing I should say about Dawn is yes our three GP's are male, but they also have very strong willed partners who are also professionals. So that also helps us, it's very helpful in your mindset and how you perceive things. So hopefully you never turned down a great investment because of that, it would be a massive shame like that.

Some of the companies that I'm most excited about happen to have a female founder, but that's honestly just because they're a great company, in a great space, with great backgrounds, and super promising traction, so that's hopefully how it's going to go. Having said that, I do think, especially in B2B tech, there are still not as many female founders as I'd like to see, it's a little bit fewer than healthcare and consumer. But you know, it's a process and it's good to see now a lot of women that are starting their own things and teaming up with great people to start their own thing.

There is still a way to go. We need a little more of a push.