For the seven weeks before, Schlottman, a UCL graduate and ex-consultant, had been working on business ideas at company-builder Entrepreneur First’s Berlin headquarters but was yet to find a co-founder. It was getting desperate; EF only lets cohort members who have paired up by the end of the eighth week of the programme continue to the next phase. Solo founders are not allowed to complete the final six weeks of the programme, at the end of which paired-up founders pitch to EF’s investment committee.
Yet Schlottman was far from the only one. Across EF’s London, Paris and Berlin programmes, 29% of founders were unpaired, according to EF. Some had given up hope of finding anyone to build a company with. And so, on Friday 16 November, EF announced that people could pair with someone from any of the three locations.
“It did feel a bit frantic and panicked,” said one founder who has been on the EF cohort in London known as LD11. “It’s already hard enough to imagine forming a company with someone you’ve barely met, but to find someone from a different cohort who you haven’t even seen around…”
“We do think it’s easier to start a company with a co-located person,” admitted Matt Clifford, co-founder of EF. “We wouldn’t want to pretend to those people that it’s as easy to form a team [based in different cities]; one of our main value propositions is that we physically move 50 or 100 individuals to the same place. But if you’ve come to the end of the normal team-building process [without making a match], options are stop now, or at least meet other people.”
Subscribe to the Sifted Newsletter
Four cross-city teams were eventually formed, and are now building businesses together, remotely.
EF, which was founded in London in 2011 by Clifford and fellow ex-McKinsey consultant Alice Bentinck, has been called many things: ‘Love Island for founders’; ‘social experiment’; ‘intense’. Speaking to dozens of members of the current cohort, many have simply called it chaos.
“It’s like musical chairs… on acid,” said one founder who, on Monday 19 November – four days before the pairing deadline – had still not found a co-founder. On EF’s global Slack group (icon: a unicorn), there’s a channel that simply lists founder breakups and makeups; there were a lot of recent updates that people were ‘available as a co-founder’.
For EF, this is a problem. Like all investors, EF is playing a numbers game; it needs to build as many companies as possible at this early stage to improve the chance that at least one of them will be successful. So far, more than 100 companies have been funded by EF, and its website lists six exits. Placing more bets on more horses at the starting line increases the odds that it will win (funnily enough, its biggest success story to date is an AI startup called Magic Pony, which went through EF’s third cohort and was sold to Twitter for £102m in 2016).
The situation also undermined the thesis that underpins EF; that if you bring amazing talent together, they can build great companies. Its website proudly states that its programme ‘is the best place to find a co-founder’. Either the talent bank is running dry, or EF’s matchmaking abilities are straining under the pressures of scale.
In September 2017, EF raised $12.4m from Greylock Partners. LinkedIn founder and Greylock investor Reid Hoffman – a proponent of ‘blitzscaling’ – joined the company’s board. And then EF started scaling, fast. In April this year, its first Berlin cohort began. In September, the first Paris cohort kicked off. There are also programmes in Singapore, Hong Kong and, starting next year, Bangalore.
EF this week said it had raised a whopping $115m new fund — which it says is one the largest pre-seed funds ever raised — to enable them to back more than 2,200 people who join its various programs over the next three years.
“You’re taught to scale once you have a proven business model: Does EF have a proven business model?”
Some of the founders I’ve spoken to from LD10 and LD11 have said they think it’s scaling too quickly.”You’re taught to scale once you have a proven business model,” said one.”Does EF have a proven business model?”
Over time, EF has been tweaking its model. Its team have become increasingly hands-off with founders – and much more so since the fundraising last year. Founders have relatively few touch points with programme managers, besides weekly modules on subjects such as customer development and building a sales pipeline, and team and individual check-ins. Not that this is necessarily a bad thing: “We have a lot of time for ourselves to work on our company,” said Zeena Qureshi from LD11. “It’s not too full on – but if we need the help, it’s there.”
During the weekly check-ins, programme managers assess how productive pairs are and actively encourage teams to breakup if they think they’re not right for each other. (Sometimes these teams don’t agree with those assessments.) “It’s not so much about ideas, but your productivity as a team – how quickly you can iterate through ideas,” said one member of LD9. The average founder goes through two and a half co-founders before they find their match, according to EF.
One LD11 member, who had only been working with her co-founder for two weeks when we spoke, admits that starting a business in this way is “risky”. “We don’t have a strong foundation, a long relationship, or prior knowledge of each other.” Yet, she said, for people who don’t already know “the perfect co-founder… this seems like a reasonable way.”
“Intense but fun”
Not one of the dozens of founders I spoke to regretted their time at EF. And all wanted to keep EF onside – few would speak to me on the record. EF now has a 1000-strong group of alumni, and is well-connected to many investors and influencers in the tech ecosystem. Why burn those bridges?
“A lot of people are feeling like what EF wants is not necessarily what’s best for me,” said one member of LD11 – many founders have struggled with the compact timeframe of the programme, which forces many to make crucial decisions faster than they are comfortable with. “But most people are happy to be here. In the worst case scenario, we spend a few months acquiring a really cool network of people.”
“A lot of people are feeling like what EF wants is not necessarily what’s best for me”
“I wish I could do it all over again,” said one especially enthusiastic founder on LD11, who was happily paired with a co-founder long before the week eight deadline. “It’s intense, but fun.” Another first-time founder on LD11, who joined EF with no intention of taking investment at the end of the programme (she wants to build her business more slowly, and raise money at a later stage with a higher valuation), said it had been useful for connections and learnings. “I came with an idea and experience; I left with a plan,” she said.
The 75 or so pairs who did incorporate their businesses on Friday 23 November now have six more weeks to hone their business models. In mid-January, they will present to EF’s team of venture partners. For each team, there’s £80,000 up for grabs, in return for a 10% stake in their company.
This next phase “is really miserable,” one member of LD9 told me; many founders, who may or may not really want to work with each other, spend six long weeks scrabbling to find a business model that stands up. “But you’re so hyped at that stage; and you have the chance to get £80,000 to mess about with.”
EF admits that its programme’s intense timeline lends itself to creating a very particular type of business. If anything, that type of business is growing more particular; moving away from anything that takes time to validate, design, or grow a customer base, and steering clear of regulated industries. This means that EF recognises it is unlikely to produce a Facebook or a Snapchat; its model is much better suited for business-to-business companies.
It also lends itself to a particular kind of founder. EF won’t share statistics on its cohorts’ demographics, but the founders appearing on stage at its demo days are overwhelmingly male, and many come from elite universities or top corporates. Many recent recruits have a ‘technical edge’ – often they have PhDs in machine learning, and are actively hunted down by EF. One founder on LD10 who did a doctorate at world-leading science university ETH Zurich said EF invited everyone on his course to apply.
Network, pitch day, and programme aside, the thing that EF thinks it does best is talent. Co-founder Alice Bentinck often refers to EF as a ‘talent first’ investor, rather than a company builder. Some of the alumni I spoke to, however, questioned whether the talent bank may run dry as EF scales. There are only so many people with machine learning PhDs or deep technical knowledge around the world, and as EF launches more programmes, it needs to recruit more and more of them for every site. “We certainly don’t want to be twice as big as we are today,” said Clifford – but he thinks that the day EF runs out of talent “feels a long way off”.
After all, it only needs a few ponies.
This piece was first published on December 1 (before Sifted even had a website) and has been updated and republished this week in light of EF’s $115m new fund.