Association Series #4: Tom McQuillen, Principal @ ReGen Ventures
Uncovering how interesting minds entered Venture Capital and new aspects of their personality, experiences and processes to light.
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#4 Tom McQuillen, Principal @ ReGen Ventures
1/6 Career overview before joining the Venture Capital fund, ReGen
After university I joined PwC and spent 18 months there and then 18 months at Grant Thornton, both in consulting roles. I had the opportunity to work with some really great people and learn a lot very quickly but also realised that consulting wasn't the career for me.
I decided to take a mini career break – a sabbatical and I moved to Central America. I bought a one way ticket to Panama, and moved to a place called Bocas del Toro. I'd never been there before, it’s an island off the Caribbean coast of Panama. I went there with the aim of reading “Infinite Jest” the book and I joined an organisation called ‘Give n Surf’, where we taught English to kindergarten students in the morning and then we surfed and taught English to the adults in the community in the afternoon.
While there I met someone who had founded a for-purpose business called Sonati in Nicaragua — he asked me to take over from him and run that business. It was an environmental NGO in Nicaragua that was self funded through ecotourism activities. I had a staff of about 35 people running hostels in a couple of different cities in Nicaragua as well as tours — multi day treks up and down volcanoes, kayaking through mangroves, and trips up into the mountains in the north of the country.
I relished working in a business that was connected to my environmental values and realised that I wanted that alignment for the rest of my life. So when I came back to Melbourne I joined a startup called Yume Food with the aim of eliminating food waste. I was the first employee there — we raised a pre-seed and seed round and they’re still going strong. I learnt to do everything from driving the van to business development before eventually running the product team.
I actually met Dan Fitzgerald, the founder of ReGen Ventures, through the fundraising process at Yume many years ago.
After Yume, I took another sabbatical, this time in Sri Lanka, and South-East Asia where me and my partner at the time ran a little side hustle — a blog called The Palm Diaries. We were visiting social enterprises and doing some consulting and media work while we travelled.
I ended up in the UK, where I joined another startup called Prolific. I met them serendipitously at a ‘Pitch at the Pub’ night at the Wig and Pen in Oxford. I caught up with the founders for coffee and offered to help with their fundraising process, given what I’d just gone through with Yume. Katia asked me to help her with an application to Y Combinator.. Prolific was lucky enough to get in so I joined them and went over to San Francisco and spent the summer there.
I got to see part of the YC program with them, which was a great learning experience before I started my MBA at Oxford. I was selected to lead the Oxford Seed Fund (a student led fund), which was my introduction to investing in startups. The Seed Fund was actually one of the first investors in Australian success story Go1, as well as the first check into Onfido. So they've got a couple of unicorns in the portfolio, which is pretty cool for a student Seed Fund. We were meeting some really interesting climate-tech companies, so I reached back out to Dan, who happened to be founding ReGen at the time.
2/6 What was the interview process to join ReGen?
There wasn't a formal interview process given ReGen as a fund was in the very early stages of creation.
I reached out to Dan on LinkedIn, I probably hadn't spoken to him in four or five years. I mentioned that we were looking at some climate-tech companies through the seed fund and that I’d love to catch up with him and get his thoughts.
He told me that he was starting ReGen - at that stage it was pretty much just a PowerPoint deck. That was in June 2020.
We just started talking, I shared a little bit about some of the companies I was looking at, and then we looked at some companies together. We made some mutual introductions, and then we basically just started working together. I was completely enthralled with his ambition for ReGen and the way he wanted to build a climate fund. So I offered to help out and work on a trial period for a few months while we got to know each other and we ended up getting on really well. That turned into me pestering him to let me join ReGen, and eventually he did!
That’s been the template for every role we’ve hired at ReGen since then. We’ve worked together or done some projects before moving forward. We love getting to know candidates and making sure it’s a good fit for both sides.
3/6 Looking back on the past 12 months of being an investor, what two skills have you had to accelerate the most?
One of the skills is designing my own learning pathway. I think VC is a bit of a ‘choose your own adventure’ type career in some respects. The feedback loops are super long, you could make a bunch of seed investments today and not know whether or not they are successful for five to ten years, and so with that in mind, it's hard to know – how do you improve your decision making, how do you even know if you're in the right ballpark, that you're weighting the correct things the right way.
I've spent a lot of time on this in the last 12 months - and it's still a work in progress. But I’m trying to work out — How do I create a structure for constantly growing and getting better?
Part of that means focusing on specific areas such as, what's the best practice for board meetings? What does the world's best investor update look like? How do different people connect to founders at the early stage? And then really trying to reflect on that and turn it into a growth plan.
That’s been a mix of learning from the incredibly experienced partners at ReGen, speaking to a lot of peers and being really open and transparent about things such as, what they do, what I do, how we can get better, how we can grow together. I’ve found that those at the junior levels of VC firms have been really collaborative and supportive as we go through this same strange journey together.
The other pillar has been trying to learn from the masters of the Venture Capital industry. I've consciously spent a lot of time over the past couple of years learning the history of Venture Capital, learning about all the investors and some of the big storied firms, and how they came together.
I think the job of someone on the investment team in some ways is to absorb complexity and then transmit clarity. I've spent a lot of time working on this, i.e. how do I make my memos as impactful as possible?
Some people hate memos but I think they're a really, really great learning tool. I think that writing something down helps you organise your thoughts. Doug Leone from Sequoia talks about a good memo being three pages long and containing absolutely everything you need to know about an investment opportunity.
So I've been spending a lot of time on this practice – how can you distil everything about an opportunity down to its absolute core? How concise can you be? How can you make sure that you're highlighting both the negatives and positives or potential risks and potential upsides? Weighing everything up but still presenting a strong opinion is something I’ve striving to continuously improve.
So those are the two things — a self-managed learning plan and improving my writing, particularly around investment memos.
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4/6 Three specific things you do directly after meeting a founder for the first time?
Straight after I met a founder I usually try to jot down my thoughts in a CRM tool we use and give these a little bit of structure. Some of this might be very practical things about next steps, follow-up questions and things like that, and then I spend some time ‘taking the temperature’ - how I feel after the meeting, how excited I am, whether there was that magic spark and interaction with the founder.
I have a very un-scientific scale, which is ‘double fire emoji ' – the highest rating that signals I should drop everything to work on this, then hot, interesting, and then probably not for us. So immediately after I try to think about where that opportunity fits on that scale.
One of our principles at ReGen is to “put more into the ecosystem than we take out”. And so for every founder, whether we invest or not, I try and think of a way that I can help them with some feedback or an introduction, though this isn’t always easy given the volume of great founders you meet every week.
We invest in Climate Tech, which can range from software to food to robotics to cold plasma - the scope is pretty broad!. So the next step is usually diving into the data room to get my head around the underlying technology. I also find myself gravitating towards either techno-economic analysis or the financial model, which is funny given we invest at the earlier stage.
Usually the only thing you know about the financial model is that it's guaranteed to be wrong. But at the same time, I find them super useful because it's a great way to unpack and understand what assumptions the founders are making about the business and therefore — where are the areas that you need to dig into further and what do you need to believe to underwrite an investment in this company?
5/6 What is your top tip for getting into VC?
Saul Klein (Founder of LocalGlobe, Europe’s top ranked seed fund) told us that the best way to get into VC is to ‘be a VC’, which sounds like silly advice, but what he meant was you should think about what your role entails as an analyst or an associate or a principal at a venture capital fund. You need to connect with great founders, find interesting companies, develop your thinking around markets and articulate a thesis. All of these things you can do even if you’re not already employed at a VC firm. So that’s the best place to start!
That’s where I started. When I was going through the process with ReGen and speaking to other funds in Europe, I spent a lot of my free time meeting companies in the Oxford ecosystem that were working on climate. I tried to make useful connections for both parties. I wrote memos and notes and shared my high level analysis on what I thought about the opportunity, the potential upside and the risks. All of those things I could do without being employed as an investor.
I think that's the best advice — try and be a VC before you're a VC and that will put you head and shoulders above a lot of the other candidates.
6/6 What separates the best investors from the rest?
When you first asked this question I was thinking about characteristics like curiosity, judgement, and optimism, but I think for me, the most important thing is ‘support;.
We're asking founders to do nothing less than change the world. It's a pretty tall order. When I hear founders talk about the best investors they've ever worked with, or their favourite investors, something seems to come up quite often, which is they say, “so and so was the best investor I ever had on my cap table. They were the first person that I would call.”
I think a lot of being a good investor is about how do you become the first point of call for a founder that you work with? That's the ultimate trust, the ultimate sign of confidence from a founder.
And having had the opportunity now to meet a lot of really, really great investors from a bunch of funds across Europe and US and Australia, I think that seems like a common thread — they'll listen more than they talk. They understand that investors are servant leaders, that their job is to support founders who are the ones doing a really hard, sometimes lonely job.
One of my favourite books in venture capital is “E-boys” which is the story about Benchmark Capital as they were getting started in the 90s. One of my favourite quotes from that book is, “when capital is a commodity, service is the only way to differentiate oneself”
And so you will succeed by helping others succeed. The best investors realise that this is a really long term industry.
Thanks for reading this fourth instalment in the Association Series! Get in touch with me anytime here — to share your thoughts, suggest other questions and/or people we should feature.
Fly high,
Vidit