Sonali De Rycker on Venture Cycles, Building Accel’s Team and Learning from Misses

Sonali De Rycker describes growing up in India in the 1970s and 1980s with limited choices and expectations that she would enter a traditional profession. Wanting a different path, she researched how to apply to US colleges and obtained a scholarship. She recalls the move as ambitious and life-changing rather than frightening.

After college, debt and visa considerations led her to Goldman Sachs in 1995. A meeting with an early internet software company introduced her to fast-growing startups and sparked an interest in technology. After business school, she chose to pursue venture capital in Europe, joining Atlas Venture and later Accel in 2008.

Reflecting in 2022 on the dot-com crash and the 2008 financial crisis, De Rycker recalls how quickly capital disappeared. In the early 2000s she worked with founders who had to reach break-even, return cash or sell. She recounts a small investor scrutinizing an otherwise modest sale as a lesson in fiduciary care.

She remembers meeting limited partners on the day Lehman Brothers collapsed in 2008, when falling portfolio values made venture allocations harder to manage. Accel nevertheless raised its fund, she says. Her lesson from both periods is to respect capital and the obligations owed to founders, shareholders and limited partners.

Her other lessons are to keep investing through cycles and support founders during difficult periods. In 2022 she describes the whiplash founders experienced as advice shifted from cutting costs to pursuing growth and then to profitability. This is her interpretation of the market at the time.

Stebbings asks whether investors should spend time on a company unlikely to become a major fund winner. De Rycker argues that early-stage relationships can last ten to twelve years and should include both highs and lows. She says firms may staff support differently, but should not simply abandon founders.

On private-market valuations, she says Accel uses established accounting methods and has historically tried to be conservative and realistic. In mid-2022 she expects adjustments to take time, particularly where companies avoid outside financing. She distinguishes contraction in valuation multiples from deterioration in the underlying business.

Asked why colleagues call her a source of cohesion, she says collaboration depends on many relationships rather than one person. She wants colleagues to become effective investors in their own style. Frequent communication and timely feedback matter: she recalls being frustrated when feedback arrived only at year-end.

Accel added a person dedicated to talent and development, which she sees as a sign that mentorship is a real commitment rather than a side task. De Rycker also describes being open about a difficult family situation and receiving support from colleagues. She speaks from within the firm and has an interest in its reputation.

She agrees that seniority and success can make it easier to be vulnerable. A professor challenged her assumption that everyone can simply be authentic, reminding her of the role of privilege. She hopes senior leaders can model openness and make it easier for others.

She describes Accel’s desired culture as competitive externally and collaborative internally. She says a successful investment sourced by a junior team member can trigger a bonus for the wider junior team, an incentive intended to encourage cooperation. This is her account of the firm’s practice at the time.

To avoid becoming a bottleneck, she says senior investors must delegate and empower younger colleagues to make decisions, sometimes before those colleagues feel ready. The wider team should then help them win. She recalls a colleague traveling to Andorra while pursuing BeReal.

In hiring investors, Accel learned that analytical rigor and clear thinking were not enough. De Rycker says the firm began looking more deliberately at resilience, reflection, self-awareness and persuasion: the work involves repeated setbacks and building relationships rather than being the star in the room.

She suggests asking candidates about surprising negative feedback and personal mistakes to explore how they reflect and respond. The answers are imperfect evidence, she acknowledges, but can open a deeper conversation. She believes candidates who really want the work tend to engage with it.

For young investors experiencing a downturn, she recommends leaning into supporting existing early-stage founders and retaining the excitement of company-building. She also urges them to extract lessons from losses without becoming so discouraged that they stop meeting founders or making investments.

A company can struggle after both founder and investor made reasonable decisions under earlier conditions, she says. One lesson is that cheap capital is not permanent and that unit economics and financing costs matter. She also says investors should internalize risks in their memos rather than list them mechanically.

Stebbings worries that caution about capital-intensive models could narrow ambition. De Rycker remains optimistic that exceptional founders and long-term technological trends will attract funding. She cites Accel’s Spotify investment as an example; she has a financial interest in the company and her view reflects 2022 conditions.

Stebbings predicts that large growth investors might move into seed deals and drive up prices. De Rycker thinks many founders will still value active long-term partners, particularly when markets turn difficult. Stebbings disagrees that most founders will prioritize support over a higher valuation; the future outcome is not established in the interview.

She suggests that fewer competitors in a sector may concentrate talent and capital in a smaller number of businesses, though she acknowledges that concentration is not always beneficial. Her broader bet is that relationships continue to matter to enough strong founders.

De Rycker says seeing an exceptional business up close changed her understanding of how far a company can grow. She recalls Spotify having roughly $70 million in gross revenue and 1.5 million paying users when Accel invested, and says it later reached about $10 billion in revenue. These are her historical figures with different dates and metrics, not a statement of Accel’s realized returns.

She is skeptical of detailed long-range outcome models at the earliest stages, because the strongest outcomes can exceed what investors imagine. She still advocates a prepared mind: research the category, recognize an exceptional founder and combine conviction with careful debate. This is her investment philosophy, not a promise of returns.

On reserves, she says fast follow-on rounds in the prior cycle made it difficult to assess progress. Accel treats follow-on decisions as collective decisions, even if one person led the original investment. The team debates whether support and additional ownership justify committing more capital.

She warns that automatically following every investment can consume a fund’s capital in companies that never return it, offsetting gains elsewhere. Stebbings adds that reserves have an opportunity cost. De Rycker says the answer depends on conviction and price, and that buying more ownership can make sense in the right company.

When an investor loses faith in a founder, she recommends an open, non-defensive discussion with board support where possible. She says careful initial evaluation can reduce but not eliminate the risk. In her view, investors owe honest conversations to founders and limited partners rather than only cheerleading.

She distinguishes a false positive, an investment that fails, from a false negative, passing on a future outlier. She says a loss on one ordinary investment is limited to the capital invested, whereas a missed winner can carry a much larger opportunity cost. The firm reviews its misses collectively to learn from them.

Her own mistakes include treating a market as too small when a founder could expand it and underestimating the amount of capital available to strong fundraisers during the preceding boom. These are retrospective judgments, not proof that every small market or capital-intensive plan will succeed.

Despite experience, De Rycker says she remains uncertain about identifying every exceptional founder, particularly at seed stage. Stebbings responds that investors do not need to back every winner. She agrees the work involves continual learning and unavoidable mistakes.

On building a global venture firm, she says Accel learned to combine a global network with people and decisions on the ground. She describes backing founders across many European cities as requiring deliberate team structure and coverage. Her claims reflect Accel’s perspective and history.

She sees US firms opening London offices as a sign of a maturing European ecosystem, while noting that local relationships took years to build. For her, local decision-making matters more than a particular fund structure. This is her assessment as a long-established European investor.

In a quick-fire round she recommends Rohinton Mistry’s A Fine Balance, names caring for people as a strength and worrying as a weakness, and says attracting and retaining excellent talent remains hard. She values empathy, independent thought and responsibility in her children.

She says she advises others not to dwell on regrets but sometimes struggles to follow that advice herself. Asked about a recent investment, she names BeReal and says she and Stebbings both backed it. Her enthusiasm for its founder and social identity thesis comes with their investment interests and reflects the 2022 interview.