How to survive and thrive in 2021 as a VC firm according to Downing Ventures
In 2021, it has never been more important for venture capital firms to be able to differentiate.
The success of a VC fund is based on their ability to successfully identify and gain access to the highest quality companies and crucially, their ability to help founders scale and drive towards successful outcomes. Downing Ventures believes a thematic focus is key to success that is driven by an investment team who are experts in these focal themes.
2020 caused uncertainties and disruption at every level across industries as, in the face of the global pandemic, businesses have had to overcome unprecedented challenges. In the context of Brexit, the position of how venture capital firms would continue to operate was precarious with the impending threat of a no-deal Brexit. The industry breathed a sigh of relief as the departure from the single market was agreed at the end of the year, which now opens up new regulatory opportunities for the UK to revamp policies and regulations that enable SMEs clear access to venture funding. In turn, the UK continues to be a leader in financing technology innovation and Europe’s main financial hub, without even having to be part of the EU. We believe this truly highlights the resilience of innovation and venture capital in the UK and Europe, as it continues to go from strength to strength.
2020 saw the highest amount of investment into startups globally than ever before at an amount of USD $325 billion. Europe and the US continue to go from strength to strength in terms of capital raised and an increasing number of startups receiving funding. In fact, European venture investment has doubled since 2017, reaching $50 billion in 2020. Not to mention the unprecedented levels of special purpose acquisition companies (SPACs - more commonly known as “cash shells” in the UK) being raised across the globe for later stage ventures. To learn more about SPACs, see here.
The post-Brexit environment and the robust VC landscape has put Downing Ventures in a strong position for success as a VC firm that is striving ahead with a strong strategy: one that focuses on thematic investing across Deep Tech, Enterprise and Healthcare. Each of these are sectors that offer much innovation and unique opportunities for superior returns to investors.
In the last six months alone, Downing Ventures has made significant world-class investments across these different investment themes. Parsable, Cornelis Networks, Ayar Labs, Carbice and Touchlight are all examples of companies that have catapulted the possibilities of what tax efficient venture investments (EIS and VCT) might look like.
Each of these companies presents significant upside for Downing Ventures investments, as they align to large and growing markets identified by our thematic approach: Parsable is making the workplace a safer place for industrial workers with a digital Connected Workers platform; Cornelis Networks is taking high performance computing to the next level with a tiny piece of electronic equipment (a scale-out interconnect); Ayar Labs is moving data using light to vastly improve computing capabilities, Carbice is redefining engineering possibilities and a new material age with their heat absorbing Carbice® Carbon and Touchlight has helped make a Covid-19 vaccine a reality. These are all life changing and revolutionary technologies that will continue to grow in scale and innovative possibility.
These investments highlight Downing Ventures as one of the only UK VC firms participating in syndicates with some of the world’s leading Silicon Valley VCs in their thematic areas including Founder’s Fund, Lightspeed, Playground Global and Intel Capital. These opportunities are only enabled when you have a team that has the access points to make them happen.
Warren Rogers came on board in 2020 from Airbus where he was a Ventures Partner leading investments in Enterprise and Deep Tech. As a founder himself, he understands the intricate nuances of the founder/investor relationship and has an innate passion to help companies scale. Three international Venture Partners were swiftly brought on board to help capture global opportunities and widen the net - Joe Raffa as a Silicon Valley Ventures Partner bringing in US opportunities; Joe was previously at Adams Capital and a thought leader in next generation computing having worked with Paladin, IBM, IQM and BCG; Gideon Shmuel as a Tel Aviv Ventures Partner, bringing access to Israeli opportunities, with Israel being the epitome of innovation technologically and scientifically, with a passion for AI and deep operational experience from Eyesight Technologies, Vidya Networks and Top Image Systems. US-based Steve Pedrick joined from Salesforce as an Operating Partner who is working with portfolio. directly helping them with business development and scaling up. Downing further strengthened the team in the UK with Jack Eadie joining as a Director in 2020, with relevant experience from Eight Roads and Next47 bringing a unique expertise and perspective of the industry to Downing Ventures investment strategy.
Both the expertise and different backgrounds of the team - professionally and geographically - have opened further global opportunities and funding syndicates focused on specific themes driving forth impactful, expert-led investments and ultimately greater returns for investors.
Investing in international companies with a UK base (as per EIS/VCT qualification terms) also brings unrivalled innovation into the UK, that consequently brings employment opportunities and continues to bolster the UK’s reputation as a hub of new industry and transformation. Due to Downing’s strong connections, a recent portfolio company accelerated plans to come to the UK and hired a UK lead to truly commit to innovation and job opportunities in the UK, with a plan to further scale the business in the UK over 2021.
The quality of these VCT and EIS investments has driven demand for Downing Ventures to raise an LP fund, to up the ante when it comes to the ticket size for future deals and follow on funding. The launch of a new fund would maximise investors access to a differentiated pot of interesting deals that are being made in syndication alongside some of the most successful global VC firms out there into bigger, better companies led by even more exciting founders. Watch this space.
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04 Feb 2021