Why is GoCardless COO Carlos Gonzalez-Cadenas pivoting to become a full-time VC?

Published November 20, 2020

Index Ventures, a London- and San Francisco-headquartered venture capital firm that primarily invests in Europe and the U.S., recently announced its latest partner. Carlos Gonzalez-Cadenas, currently COO of London-based fintech GoCardless and previously the chief product officer of Skyscanner, will join Index in January.

Gonzalez-Cadenas is a seasoned entrepreneur and operator, but has also become a prolific angel investor in the U.K. and Europe over the last three years, making more than 50 angel investments in total. Well-regarded by founders and co-investors, his transition to a full-time role in venture capital feels like quite a natural one.

Earlier this week, TechCrunch caught up with Gonzalez-Cadenas over Zoom to learn more about his new role at Index and how he intends to source deals and support founders. Index’s latest hire also shared his insights on Europe’s venture market, describing this era as the “best moment in entrepreneurship in Europe.”

TechCrunch: Let me start by asking, why do you want to become a VC? You’re obviously a well-established entrepreneur and operator, are you sure venture capital is the career for you?

Carlos Gonzalez-Cadenas: I’ve been an angel investor for the last three years and this is something that has basically grown for me quite organically. I started doing just a handful and seeing if this is something I like and over time it has grown quite a lot and so has the number of entrepreneurs I’m partnered with. And this is something I’ve been increasingly more excited to do. So it has grown organically and something that emotionally has been getting closer and closer as time has passed.

And the things I like more specifically are: One, I’m quite a curious person, and for me, investing gives you the possibility of learning a lot about different sectors, about different entrepreneurs, different ways of building businesses, and that is something that I enjoy a lot.

The second bit is that I care a lot about helping entrepreneurs, especially the next generation of entrepreneurs, build great businesses in Europe. I’ve been very lucky, in the past, to learn from great people, like Gareth [Williams, Skyscanner co-founder] and Hiroki [Takeuchi. CEO at GoCardless], in my journey. I feel a duty of helping the next generation of entrepreneurs and sharing all the things that I’ve learnt. I care a lot about setting up founders as much as possible for success and sharing all those experiences I’ve learned [from].

These are the key two motivations that have led me to decide that it would be a great time now to move to the investing side.

How have you managed your deal flow while having a full-time job and where is that deal flow coming from?

It is typically coming in three buckets. A part of it is coming from my entrepreneur and operator network. So there are entrepreneurs and operators I know that are referring other entrepreneurs to me. Another bucket is other investors that I typically co-invest with. Another bucket is venture capitalists. I basically tend to invest quite a lot with VCs and in some cases they are referring deals to me.

In terms of managing it alongside GoCardless, it takes quite a lot of effort. It requires a lot of dedication and time invested during evenings and weekends.

The good thing is that my network typically tends to send me quite highly curated deals so essentially the deal flow I have luckily tends to be quite high quality, which makes things a bit more manageable. But don’t get me wrong, it still takes quite a lot of effort even if the deal flow is relatively high quality.

Presumably you haven’t been able to be all that hands-on as an angel investor, so how are you going to make that transition and what is it that you think you bring with the operational side to venture?

The way I think about this is, the entrepreneurs I typically invest in and their companies tend to be quite capable in their day-to-day perspective. Where they tend to find more value in interactions with me is what I call the “moments of truth.” Those key decisions, those key points in the journey where essentially it can influence the trajectory of the business in a fundamental way. It could be things like, I am fundraising and I don’t know how to position the business. Or I’m thinking about my strategy for the next 18 months and I will basically welcome an experienced person giving me a qualified opinion.

Or I have a big people problem and I don’t know how to solve that problem and I need that third person who has been in my shoes before. Or it could be that I’m thinking about how to organize my team as I move from startup to scale-up and I need help from someone who has scaled teams before. Or could be that I’m hiring three executives and I don’t know what a great CMO looks like. It’s those high-impact, high-leverage questions that the entrepreneurs tend to find helpful engaging with me, as opposed to very detailed day-to-day things that most of the entrepreneurs I work with tend to be quite capable of doing. And so far that model is working. The other thing is that the model is quite scalable because you are engaging 2-3 times per year but those times are high quality and highly impactful for the entrepreneur.

I typically also tend to have pretty regular and frequent communication with entrepreneurs on Slack. It’s more like quick questions that can be solved, and I tend to get quite a lot of that. So I think it’s that bimodel approach of high-frequency questions that we can solve by asynchronous means or high-impact moments a few times per year where, essentially, we need to sit down and we need to think together deeply about the problem.

And I tend to do nothing in the middle, where essentially, it’s stuff that is not so impactful but takes a huge amount of time for everyone, that doesn’t tend to be the most effective way of helping entrepreneurs. Obviously, I’m guided by what entrepreneurs want from perspective, so I’m always training the models in response to what they need.