How to identify value in the technology enabled ecosystem and decide where to invest

Industry Vertical. Ventures presenting an offering in professional services or an offering capable of evolving into something in the professional services vertical. Our deep industry knowledge, extensive network and experience creates a unique advantage for us in this area.

Product Differentiation through technology. Products differentiated from other products in the area through the use of technology. This differentiation can apply to the product itself (for example, machine learning algorithms to perform real time statutory audits of financial records without human intervention) or in the manner it moves through the value chain and is distributed (for example, crowd sourced tax advice).

Differentiation through the talent model. Ventures that are creating a differentiated talent model that move away from the traditional “rates/hours’ models with their highly leveraged vertical employment structures.

Clarity of Vision. An easily articulated vision for the business that will attract visionary (cheap) capital. The vision must be clear and compelling (or capable of being made so) – think Google “organising the world’s information”.

Global Reach. Able to scale outside the UK.

Founder. A founder(s) (or top teams in businesses with revenue) who is articulate (or who could become so), able to listen and take (and act on) advice/feedback. Realistic about the long and short terms and committed to the success of the venture. The most critical attributes for a founder(s) (or top teams) is their ability to attract, surround themselves with, draw the best from and retain the smartest people in their field. Super smart founders surrounded by weak teams never succeed – equally, inspirational founders with little technical knowledge can create huge value.

Barriers to entry. Strong barriers to entry – cost, time, distribution, regulatory, etc. Protections exist for the Venture – IP (patents), regulatory, speed, covenants (for key employees) and so on. We should not be afraid of areas with a complex regulatory framework (Governments like a “chippy” start-up disrupting incumbents and will often stretch and bend regulatory frameworks to accommodate them). Equally we should not see regulation as protecting Ventures from future competitive threats.

Vertical Integration. The Venture must control or be capable of controlling the customer experience. Complex technical solutions delivered through channel partners rely heavily on those channel partners and the venture’s ability to control the customer experience is thus limited. Solutions that rely on data or technology controlled or licenced from others are exposed to significant risk.
Artificial Intelligence. The product or service must produce high quality data outputs that can be fed into algorithms which in turn can drive (initiate) actions and decision making (AI and Machine Learning), improve future offerings and target new customers.

Career. The “super smart” must see (or there is the capacity to develop a story around) the Venture as a place to build a career, develop experience and accelerate their learning. It must be an attractive organisation to have on their CV.

Economics and speed to value. The Venture must be capable of super growth (- exponential, 10x). A clear potential exit route (a few will result in IPO, most will involve a trade sale, acquisition by another financial or strategic investor, merger or other combination – potential opportunities and a clear vision to execution must be developed). A realistic capital model, the technology spend must be sufficient (always underestimated in terms of cost and over-estimated in terms of speed) and a robust articulation of what triggers the take off in revenue predicted in the business plan.