Hi folks,
We’re slightly changing the format for this update and potentially going forward. First, we’ll start with an update from Harry about the venture space as a whole and how WarwickTECH sits within it. Then, we’ll give you an update about some of what’s going on within the WarwickTECH portfolio and wider community.
Harry’s View
I’ve now spent 10 full years in the venture capital space which possibly makes me the youngest ‘old person’ in the field. Looking back, it’s easy to understand my personal growth and how the industry has shifted around me. 2013 was the spark - Doughty Hanson, where I was first able to develop my autonomy and autodidactic learning process (in a work context). I then spent the following decade focused on independent research in venture, economics, and demographics.
From a venture perspective, I spent between 2014 and 2018 focused on learning fund creation. Culminating at Outlier Ventures, my need for independence became too great and I left to focus on learning about fund investment. A few years on from that, my need, and society’s need, for the next phase of meritocracy, became too great and the world was finally ready for me, Simplify, and the rest of the Inversion set-up.
Well-being is socio-economic, and the social must always develop in step with the economic. Over the past 10 years, the social has overtaken the economic. In the venture context, DiversityVC started to collect its namesake data in 2017 and we were excited to see what they revealed - we have always been pro-diversity, pro-equality, and pro-inclusion.
Unfortunately, this firm and others could not delineate between confounding factors and between correlation and causation which led it down the path of weak verbal intelligence, wokeism, and fundamentally flawed DEI practices. This was a path we refused to follow and opted to understand venture’s underlying drivers and how to make improvements there. As we already suspected and flagged with the team, the problem was in the LP space.
This socio-economic misstep had long been taking place in society at large and broke with the end of affirmative action and the Hamas terrorist attack of October 7th. In a venture context, the need to dispel fundamentally anti-Semitic DEI and to make venture more meritocratic, fairer, and more open, became obvious. We have been very, very patient.
We’ve realised that while we love venture, most of our frustrations with it come from seed which ultimately replaced the ‘family-and-friends round’ post-GFC. This has led us to a fundamentally different approach to the early-stage venture space where we do idea-stage directs, pre/seed fund seeding only (pre-tracks only - no funds beyond that, no directs), and global Series A directs for ‘species-defining companies’.
With that, we have a few thoughts on venture which we plan to expand on in guest posts and op-eds in the coming months:
Seed lied to you, Series A is the first round
Ethics clauses didn’t work, meritocracy clauses will
Sovereign wealth needs to have its VC moment
The Details
We run a tight team of two here. Logistically, it is very simple, especially with decision-making. Our pitch to on-thesis founders is capital selectiveness and a ‘single stabilising ticket’ before a pre-seed round. This worked well for us in our pilot fund. Going forward, expect this to work as follows:
For founders without startup experience, $150k for 15%
For founders with startup experience, a $150k convertible note with a 20% discount
converting within 6 months either to the terms of the raise,
otherwise converting to the standard $150k for 15% if they don’t raise within that timeframe
Beyond this, our operational expertise (especially in async-first environments) is well-known to the founders we’ve backed. Often, they have learned it by working for us in the past. We have found that our meritocracy and insistence on full-vision thinking makes them more enthused about their startups, and most enthused about working with us above other investors. We expect to invest in at least two of these companies this year.
Most of the companies we’ve backed to date are AI-first and crypto-native - we’ve long considered these technologies table stakes. Of late, Customuse launched AI avatars for Roblox, and then expanded to Minecraft as well. Also, Flow Bio’s great work with the likes of the Brownlee Brothers and Tim Don paid off and they’ve launched the S1, the world’s first real-time sweat sensor - plus it’s also reusable! Full video here. We can already see how exciting it would be to stitch some of these products together with APIs at WarwickHACK - which we will relaunch!
Before we wrap up, check out Cosmonaut, the mobile game by alum Zara Yaqoob and her brother! 🚀
Until next time,
Harry and Viktoriia