The VCs who think they know how the world is will be extinct in 5 years

By Tarmo Virki | entrepreneurs | October 21, 2016

Meeting Accel’s Fred Destin.

First published in CoFounder winter 2015-2016 issue.

Fred Destin joined Accel in 2014 and focuses on consumer and software investments. He is the lead investor and board member at Deliveroo, Pillpack and KNC.

Prior to Accel, he was a partner at Atlas Venture, where his big success story was British property website Zoopla. He was the only venture capitalist at Zoopla from seed level all the way to its 1.3 billion-euro initial public offering last year. After taking Zoopla public, Destin was choosing between joining Accel or launching his own fund, but eventually, the decision was easy. “I knew the team really well. There was an opening here and there was a short discussion,” he told CoFounder in an interview.

When talking of the sector and future of VC business he always ties it to the entrepreneurs.

“I do what I do as I get to mentor great entrepreneurs. 10-12 at a time. For someone intelligently curious that’s not a bad place to be.”

“I have to be prepared, but really entrepreneurs drive this. We have to constantly learn, we have to be a student. There are really two ways – you either think you know or you will become more and more humble. You get better and better at understanding the human. Your success comes down to luck, serendipity, and surely luck comes into play.”

It’s the entrepreneurs who claim new territories, take new innovations to the market. By nature, investors are usually followers, he says. A great example is Accel’s early investment in Supercell, which was at the time yet to launch its big hit games on iPad. However, the entrepreneurs had a successful exit under their belt having sold mobile gaming firm Sumea to Digital Chocolate. “Did we have a thesis on gaming on tablets at the time? No,” Destin said.

To get onto Destin’s list the best solution is content marketing and an introduction from another founder, not cold e-mail. “I think in Europe we have only ever done one backing from a cold email. It’s just not the right method. People might be surprised how outbound we are. We spend a lot of time on ProductHunt, AppAnnie. Content marketing is the best marketing – if we notice, we will reach out.”

“I think in Europe we have only ever done one backing from a cold email.”

Now, one of his interest areas is clearly in food delivery, a sector some might say is getting too much venture financing. Destin does not agree. “You’re after Tescos and Walmarts. It’s going to be the largest e-commerce sector within a few years. There are a lot of different aspects. It’s just enormous,” he said. “Combined with that is the logistics problem.”

From CoFounder’s perspective, anyone revolutionizing the postal service would be a welcome move. Some startups are starting to do it in the United States, but there is room for a lot of innovation on this side of the Atlantic too. “It’s just a low-margin business. Legacy providers have so much amortized architecture that it’s a very complicated business. Your incumbents are massive scale players,” Destin said. “It’s a hard, hard battle. The guys doing it are really, really bad-ass.”

In addition to food, Destin keeps an eye on machine learning and artificial intelligence, marketplaces, infrastructure as a service, and e-commerce. When we talked he had just spent some time getting a deeper grasp of the virtual reality market, which will likely still take some time to be ready for venture investments. “Building blocks are there. The big boys are moving: Samsung, Apple, Facebook. Does this mean that the market is ready for venture investment? It’s probably a market that will take a few years to materialize. What will happen is that some entrepreneur will come and convince us that it’s ready,” he said.