Consumer

Q: What impact is the macroeconomic climate likely to have on investments in the consumer space? With Rebecca Hunt

A: There are likely to be two main impacts: 1) Investors are more focused than ever on ensuring that any company they invest into has a sustainable and scalable business model. This doesn’t mean companies are expected to be profitable from the get-go — but the days of high spending to achieve growth are over. Now investors are looking for those businesses that will create enduring and valuable relationships with their customers. While this has always been our thesis and approach, we’re still encouraging all our portfolio companies to focus on the fundamentals (check out our Consumer report on the metrics that matter to see what we mean). 2) In most recessions we see a drop in consumer spending/demand (this is by design — central banks hope that by increasing interest rates they can curb inflation by reducing people's disposable income). For consumer tech businesses, this most likely means that converting customers is going to be trickier — and acquisition costs will rise.

But it is not all doom and gloom! This environment creates opportunity. Businesses with a focus on organic customer acquisition and community will prosper. Behaviours created in a recession, such as buying and brand decisions, tend to endure much longer than in the "good times”. Put simply, customers won over now may well stick around for longer. Founders who focus on their core business model, and ensure their growth and scaling is sustainable, are likely to create a more valuable and enduring company.

Deeptech

Q. With current market dynamics, how should companies make themselves competitive to the best talent, with the salary constraints of being a startup? And how can they do that while keeping a diverse workforce that reflects their company culture front-of-mind? With Amy Nommeots-Nomm

A. We’ve got Jonathan Durnford-Smith (our bees knees Talent partner) to provide some insight: ‘This is a challenge across the board in the startup community, but deeptech founders find it particularly hard. Our top tip is to always recruit new staff by painting out your vision for the company. Explain why you’re unique, and why working for you (versus some Big Tech giant) will get them out of bed in the morning. In our experience, culture, disruptive tech, and a cheerful outlook — with a large teaspoon of ambition — are a winning combination.

Fintech

Q. What does my company need to prove in order to unlock each funding stage from early-stage to growth? With Tosin Agbabiaka

A. As I see it, an early-stage business is 1) An idea, and 2) A long list of risks that stand in the way of a profitable, scaled business. The best founders are those able to focus on, and eliminate (or mitigate), the key risks relevant to each stage. Each of these goes to unlock a new set of risks at the next stage — and so on. So what are the major risks at the early stages? Broadly speaking, the Big Question throughout a company's pre-seed stage is how the founder(s) can cost and time efficiently transform an idea to a product.

Through the seed stage, the major risks start to relate to 1) Whether this product can achieve product-market-fit and 2) Whether the founders can recruit exceptional talent to execute this product to market. In going from series A to series B, the Big Question is whether the company has strong and efficient sales growth, enough to prove the existence of a deep market, and its ability to command significant market share. At this stage, the company needs to prove that it can identify and recruit top-tier functional experts, as it builds a team for scaling.

Beyond series B, the company has eclipsed its "early-stage" status and should be considered a “growth stage” business. At this point, scaling product, proving strong growth efficiency (and control of growth levers), and demonstrating the ability to expand—on product, geography, or sector, for example— take over as the new risks a company’s management should look to address.

B2B Software

Q. What will buyers of software prioritise until the end of the year? With Conor Scanlan

A. It’s our thesis that buyers of software products will become increasingly focused on solutions that can demonstrate very quick time-to-value. Software budgets are tightening, and demonstrating ROI is going to be ever more vital. For startups in the space, this means architecting sales processes to surface the ROI early — and automating as much of the implementation processes as possible.

Health

Q. Do you invest into health & bio companies pre-launch — and pre-revenue? With Matt Vallin

A. Yes — we’ve invested into many companies prior to their launch. As a team, made up of operators with a diverse, and deep, portfolio of experience, we dig into existing clinical evidence, intellectual property, and diligence, as well as the team and product roadmap, in order to make an investment decision. After we make an investment, we’re committed to working closely with the founders to shape the go-to-market strategy across various channels — and help elevate the business to the scale it deserves.