Great Time For Deep Tech Investing With Outsized Ventures
Startups should focus on their cash burn and seek to build a 36-month runway as the downturn in markets and economies has started, but it's a great time to be investing in deep tech as founders are increasingly keen to tackle world-changing challenges, Outsized Ventures' general partner Isabel Fox said in an interview on the sidelines of the Latitude59 startup conference in Tallinn in late May 2022.
London-headquartered Outsized Ventures is a 2021-founded deep tech investment firm that invests in Seed+ rounds in founders that are going to have a big impact on the world for the better.
A few key takeaways from Isabel Fox:
I think people want to do stuff that's going to have a purpose and an impact. So you're finding more and more great talent wanting to address some of the world's greatest challenges.
The first thing you'll see is more founders wanting to find solutions to our problems. So we definitely see an increase in fabulous people trying to work through whether that's carbon counting, whether it's sustainability projects, which they think can get off the ground.
I still think more money will come into the area. It sort of leads with the quality of the founders and the ideas, and what they're trying to build, and the money will be there for great founders, as you know, and I think that's starting to happen. But we need to obviously speed up what we're doing in order to save our planet.
You definitely hear from corporates that they're looking at it. But I don't think many of them actually even have a strategy. They're working through the plans with the consultants, and when you start to look at the costs of going carbon neutral by 2030, they've got to make a significant investment to get there. Of which I see sort of the start, but I'm probably like you: I'm not seeing them make that full, big commitment of quite a few 100 million, in some cases to sort of drive that. So I think, I think it will be right, I think there'll be panic right at the end. And people then want to sort of see how they can get out of it, rather than necessarily fulfill that obligation.
So my advice to founders has been: to watch the cash burn, get prudent on that, and try to increase your runway to 36 months. So you have the luxury of time, and hopefully, the world may have stabilized sooner than we think.
I think being tight, and being focused is not a bad thing. I always think that it's about being savvy, it's about being prudent and nimble.
I think the stuff that we're backing and the stuff that you like are big plays that have a huge impact on the future of society. That's not going to change much. For me, actually, in deep tech, I think it's a great time to be investing. We still got the problems in the world; we still need to solve them. And these opportunities are so huge that even if we have a bad two-year period now in the macro economy, they're going to come through the other side, very, very strong.