Listen on:
.svg)
And why investors should look outside of London
This article distills insights from the Tech Story Podcast episode with Oliver Kicks from Concept Ventures. In particular, it looks at why successful investors have found that taking a generalist approach can be beneficial for achieving investing success at the pre-seed and see stage.
Oliver Kicks, principal at Concept Ventures, is one such investors who has found success through a generalist approach. Kicks has worked in a variety of industries, including crypto, fintech and venture capital. He believes that having a broad range of experience has helped him to identify promising startups and provide valuable support to founders.
Kicks's experience in crypto and fintech, for example, has given him a good understanding of blockchain technology and its potential applications. However, he does not limit himself to investing solely in blockchain startups. Instead, he maintains a beginner's mindset and looks for promising startups in a variety of sectors.
At Concept Ventures, Kicks and his team focus on pre-seed investing, which means they invest in startups at the idea or pitch deck stage. As such, they are often investing in founders who are just starting out and may not have a lot of experience in their industry. Kicks believes that his generalist approach allows him to better understand these founders and provide them with the support they need to succeed.
One of the key benefits of a generalist approach is that it allows investors to identify opportunities in a variety of industries. By not limiting themselves to a specific sector, investors can discover startups that may have been overlooked by others. This can be especially valuable in emerging industries where there may not be many established players.
Finally, a generalist approach can help investors to build a more diverse portfolio. By investing in startups across a variety of industries, investors can reduce their risk and increase their chances of finding a successful startup. This is especially important in the early stages of investing when it can be difficult to predict which startups will be successful.
Kicks cites Y Combinator and 500 Startups as examples of successful investors who prioritise diversification and large portfolios. These investors understand the power laws of venture capital, where one or two outlier investments can significantly impact the overall return. As a result, they construct portfolios that are naturally diverse across various verticals.
However, Kicks cautions against over-indexing in trendy industries, such as AI, which can be risky due to uncertainty about the landscape and where value will accrue. Instead, he suggests looking for opportunities in underrepresented industries and regions, where there may be less competition and more potential for success.
Concept Ventures, which focuses on early-stage companies in the UK and UK adjacent regions, exemplifies Kicks's approach to diversification. The firm's largest backer is the British Business Bank, which has a mandate to invest in regionally focused businesses. By looking beyond the traditional startup hubs of London, Oxford, and Cambridge, Concept Ventures is able to identify unique opportunities and build a more diverse portfolio.
One of the key takeaways from a recent podcast featuring Oliver Kicks, the investment manager at Concept Ventures, is the importance of investing outside of London and prioritising the team. Kicks notes that while London may be a hub for talent and opportunity, there is incredible talent across the Southwest and Northern Ireland that should not be overlooked. Kicks and his team have already invested in companies in Bristol and Edinburgh, and they are open to exploring opportunities in other regions as well.
Investing outside of London is not only important for finding untapped talent, but it also allows for more flexibility in a post-Covid world. Kicks notes that repeat entrepreneurs who have a great network and have already made some money may not need to be in the city 24/7. Additionally, companies based in regions outside of London may have access to top talent coming out of those areas, providing them with a competitive advantage.
However, Kicks also emphasises the importance of prioritising the team when making investment decisions. While a company may have a solid foundation and be in a promising market, if the team is not right or has overlooked core weaknesses, they may not be successful in the long run. Kicks notes that one of the most rewarding aspects of his job is working with companies and founders who are going on ambitious journeys and trajectories.
