Evolving our investment strategy

By | Announcement, Entrepreneurs, London, Startup general interest, Strategy, Venture Capital | No Comments

This is a long post (1,900 words). For those of you who are time poor here’s the tltr:

  • Forward Partners operates a focused investment strategy because it helps us make better investment decisions and provide better support to our companies
  • A good focus area for us is one that can generate 50+ deals and where we can build some generalised expertise that helps with our decision making and value add
  • Until now we have focused on marketplaces and next generation ecommerce
  • Recently we evaluated lots of options and did a deep dive on Applied AI before selecting it as our next area of focus

For the three and a half years that we’ve been going, Forward Partners has operated a focused investment strategy. We observed that small transactions of all types are increasingly moving online and backed the companies that were helping to accelerate that trend. That meant lots of consumer and small business focused marketplaces and next generation ecommerce companies. Lost My Name, Appear Here and Thread are three of the better known examples, but overall there are 37 companies in that portfolio.

We chose to be focused for three reasons. First, and perhaps most important, being focused enabled us to build up expertise that resulted in better investment decisions. Specifically, we feel we have strong capabilities in working out whether customers will value products highly and whether it will be possible to market them cost-effectively online. Secondly, we have seen so many similar companies now that we have a good sense of what they should be achieving by when. We are better able to see problems coming and advise on strategies to work around them. Being expert in an area makes us better board members and hence better able to win deals with the best entrepreneurs. Finally, focusing allows us to add more value operationally so our companies can execute faster and with higher quality. The companies we back often share the same challenges as each other and because we focus our team has solved those problems many times over.

However, venture capital is a dynamic business and good focus areas don’t last forever. We are still seeing lots of marketplace and next generation ecommerce opportunities, but as we move into our second fund we decided to add another focus area to make sure we will continue to have enough high quality opportunities to invest in over the next four years.

Our first step was to define the what we mean by a “good focus area”. For us the following characteristics are important:

  • Will generate 50+ deals
  • We can build knowledge that’s broadly applicable across the focus area and gives us an advantage versus other investors
  • We can articulate a few underlying investment theses
  • We can articulate use cases
  • Suitable for early stage investment
  • The UK has some kind of advantage

Then we had a high level discussion about what areas we might focus on next. A couple of interesting things came out of that. Firstly we like to invest in sectors that are rising from the low point of the Gartner Hype Cycle. Investing at this point leverages our key capabilities of assessing whether customers will love products and whether companies will be able to market them cost-effectively. If we get the timing right then mass adoption should be achievable. Investing with this strategy means we don’t chase the very rapid value appreciation that sometimes occurs at the beginning of the Hype Cycle, but we think the benefits of focus outweigh the cost of the lost opportunity.

The other interesting point to come out is that investing in deep tech at the very earliest stages is difficult. One of the key drivers of success for us as a fund is backing companies that make rapid progress and are able to raise up rounds a year or so after we invest. To do that they must pass valuation milestones. With ecommerce and marketplace companies those milestones relate to sales and unit economics and are easily demonstrable. Progress at deep tech companies, on the other hand, is based on internal development milestones and it’s difficult to predict how next round investors will respond. Until a product is released and is in the hands of customers, which can take years, the only evidence of success is internally reported improvements in algorithms and the production of code. I’m sure there’s a way to solve this for deep tech investments, but we haven’t figured it out yet.

The next stage for us was to brainstorm potential areas of focus. Each member of the investment team went away and over a couple of weeks contributed ideas to a shared Google Doc. Then we reconvened with the objective of choosing a single area on which to focus. Via a process of discussion, voting and then amalgamation of ideas we decided to look seriously at making “Applied AI” our next focus area. That would mean investing in companies that were using well understood artificial intelligence techniques to build new and superior products.

We felt that Applied AI is attractive because:

  • It’s a broad enough area to generate 50+ deals
  • Is one where we already have knowledge and could could go on to develop a deep expertise in the different techniques and their application
  • Is at the right point in the Hype Cycle and plays to our strengths in evaluating demand

The major concern we had is that AI more generally has been a popular investment theme with other investors for some time and we wanted to make sure that Applied AI is sufficiently differentiated to be a viable investment focus for Forward Partners.

We decided to go away and do some work to improve our understanding of the area with the aim of answering the differentiation question and convincing ourselves more generally that Applied AI has the potential to yield a flow of high quality investment opportunities over the next 3-5 years.

To that end we sought to answer the following questions:

  • What are the AI techniques that can be applied cheaply and predictably by startups?
  • What capabilities do those techniques enable? (e.g. natural language processing enables conversational interfaces)
  • What use cases can these techniques be put to? (e.g. conversational interfaces to FAQ databases can improve customer service)
  • Are there enough use cases where the addition of ‘intelligence’ makes the product meaningfully better?
  • How can Applied AI startups meaningfully show progress in their first year of operations?
  • How much AI talent is required at pre-seed and seed stage Applied AI startups and can we find enough companies with that talent?
  • How can we add value to Applied AI companies?
  • What are some hypothetical strategies for Applied AI startups to obtain the data they need to train their algorithms? (Addressing the “cold start” problem.)

The first three of these questions relate to the size of the opportunity set. To choose Applied AI as a focus area we had to believe there is the potential for 50+ deals that would make sense for us. To get an answer we mapped an extensive list of Applied AI techniques against the Gartner Hype Cycle, and put them into a spreadsheet linking them to the capabilities they enable, then linked those use cases to capabilities, and finally the use cases to ideas for companies. After that we scored the company concepts based on their attractiveness as Forward Partners investments and looked to see how many high scoring opportunities there were. Fortunately there were many.

Screen Shot 2017-07-26 at 20.10.30.png

Once we had comfort on the size of the opportunity we turned to the final three questions which relate to whether the opportunities will work as early stage investments. Our approach this time was to hold workshops and meetings with people who had experience of building applied AI businesses. Thank you in particular to Matt Scheybeler, Steve Crossan, and Martin Goodson for helping us with this part of the journey.

One important learning at this point was that in the early stages of Applied AI startups the artificial intelligence component isn’t that complicated. We heard multiple times that you can get 80% of the way there with statistics, that almost any AI technique will get you the next 10% and that it’s only when you get to the last 10% that you need to get clever. That was great to hear for two reasons:

Most startups with true potential don’t get to the last 10% in their first couple of years so hard to find AI talent isn’t a prerequisite to get started.

Our existing strengths in building products that resonate with customers and driving growth aren’t eclipsed by a requirement for deep tech knowledge – i.e. we can help.

The other important point we learned is that Applied AI startups can get product to market quickly and drive predictable value appreciation in the timeframe of a pre-seed or seed investment. We talked through numerous real and hypothetical examples and got confident that when we make Applied AI investments they will be able to raise their next rounds at a good step up in valuation. That’s one of the most important questions any VC has to answer and we were pleased to find that because they can get started with simple algorithms, Applied AI startups aren’t different from other software startups in this regard.

The final piece of our investigation was to think about the “Cold start” problem. We talked about three different data strategies for Applied AI startups and what that would mean for us:

  • Founders have access to some proprietary data
  • Founders have an innovative idea for using publicly available data
  • Founders will generate data from their business and develop algorithms later

In the first two of these cases Forward Partners needs to evaluate whether there is value in the data pre-investment and to help the founder extract value from the data post investment. In the third case we need to be able to evaluate whether the business will be able to generate data, and then if they can the evaluation is the same as in the first two cases. All of this points to us enhancing our data science capability at Forward Partners.

Our conclusion therefore, is that Applied AI is an attractive focus area for Forward Partners. It looks promising that there will be the required volume of dealflow, we can see how an early stage investment strategy will work, and we can leverage our existing strengths to help businesses in this new area. The only new requirement is that we enhance our data science capability.

Hence for the last couple of months we have been targeting Applied AI deals alongside our traditional focus area of marketplaces and next gen ecommerce. Wherever possible we like to take an experimental approach so we have decided that we will run with it until the end of the year and then evaluate. In parallel we are investigating what sort of data science capability we need. That will in large part be determined by the sort of opportunities we see and end up investing in, so for now we are relying on relationships with people who help us on an ad hoc basis with a plan to bring the capability in house when the picture gets clearer.

And I’m pleased to report that we have already made our first two Applied AI investments. Neither is announced yet, but watch this space 🙂

Quality over quantity on The Equity Kicker

By | Announcement | One Comment

Robert Scoble is perhaps the greatest blogger of them all, so when I started blogging in 2006 I read Naked Conversations, his guide to blogging. One of his tips was to post every day. At the time we were all reading blogs in feedreaders which we checked every day for updates from our favourite bloggers. I tried them all, but Netvibes was my favourite. At that point in time blogging was in it’s infancy and readers were using feedreaders to keep up to speed with rapidly expanding content, therefore to serve up content in a way which worked for readers it was key to post daily. I also figured that an everyday habit would be easier to maintain than posting on some days but not others.

So I’ve posted pretty much every working day for nearly ten years now.

But the world has changed. When I look in my traffic sources now it’s all Twitter, Facebook, Google and aggregators like Mattermark, channels where posting daily makes much less of a difference. In fact most people are surprised to learn I write that frequently. Twitter is different from feedreaders in that inactivity on my part doesn’t waste screen real estate for my followers. They are equally likely to see my post-tweets if I post daily, twice per week, or even once a fortnight.

In summary, posting frequency no longer effects distribution.

The other thing that’s changed is me. In 2006 I was a newly minted Partner at DFJ Esprit (now DraperEsprit) without the family, fundraising, and fund management responsibilities I have now. Blogging is still a priority for me, but on some days I struggle to find the time to do it justice.

So going forward I’m going to switch to posting twice per week, allowing me to spend more time making sure each post is good. I will also start writing posts in advance so I have time to get feedback before I hit publish. You will be the judge, but I’m hoping these two changes result in a higher quality blog.

This is the first of those posts. Next up will be some thoughts on mutual funds investing in startups and their impact on valuations and the VC industry.

Transport for London’s ‘Private hire proposals’ make me mad

By | Announcement | 25 Comments


Many of you will have seen this already, but Transport for London’s ‘Private hire proposals’ are so loaded in favour of protected interests and against consumer choice that I’m cross enough to have a moan here. Hopefully this post will make a small contribution to the debate and increase the chances of a sensible outcome.

There are 25 proposals in total. The five below seem to do nothing for the consumer and are only explainable as an attempt to make Uber less attractive. If they go through 10m+ Londoners will have less choice, wait longer for their cabs and probably pay higher prices so that a small number of taxi drivers can be better off.

How can that be right?

  1. Operators “must provide booking confirmation details to the passenger at least five minutes prior to the journey” – should be a matter of consumer choice, and who wants this when you can have a car in 2-3 minutes?
  2. Companies “must not show vehicles being available for immediate hire either visibly or virtually via an app” – hard to see how this hurts anybody, and again should be a matter of consumer choice
  3. Operators “must offer a facility to pre-book up to seven days in advance” – consumers should be able to decide whether they value seven day advance bookings 
  4. Drivers may only work for one operator at a time – doesn’t seem very fair on drivers to restrict their employment options
  5. There should be “controls on ridesharing in public vehicles” – targets UberPool, a ridesharing service

This list is taken from an article on the

Announcing our investment in Dataloop

By | Announcement, Forward Partners, Uncategorized | 2 Comments

I’m very pleased to let you all know that we have invested in The announcement went live yesterday.

Dataloop provides infrastructure monitoring for cloud services and they fall into our ‘late seed’ category of investment. That means they are up and running and on a 12-18 month path to their Series A. (Our other category of investment is ‘idea stage’, often with solo-founders.)

The starting point with this one was the team. We got to know David Gildeh, the CEO and one of three co-founders, around this time last year. At that time he was talking about infrastructure monitoring, doing customer development work but had yet to start the company. The first thing we liked was that the team was scratching their own itch. They were coming out of Alfresco where they’d built a custom solution to monitor their infrastructure as they’d moved from an on premise software company to a cloud play. On top of that we liked the fact that David was being very thorough with his customer development work and the fact that Dataloop was to be his second startup (his first was acquired by Alfresco).

From a market perspective we liked the fact that companies everywhere are building their own custom cloud monitoring solutions using open source software – just like David and his team did at Alfresco, and that as cloud penetration increases demand for cloud monitoring solutions is only going to grow.

We kept in touch for the next several months, during which time David incorporated Dataloop with his two co-founders Stephen Acreman and Colin Hemmings, closed their first two customers, created the successful DevOps Exchage meetup, and took Dataloop through the Microsoft Accelerator programme in London. As they came out of that programme they started talking with investors about raising their first round.

We were encouraged by their progress so we dived in deep to develop our understanding of the market. It’s a complicated and deeply technical story, but once we’d wrapped our heads around it we began to get quite excited. Simply put, Dataloop is part of the growing ‘DevOps’ meme that’s arising because infrastructure management is growing in importance and complexity. The underlying drivers are the continuing shift into the cloud, the growing complexity of online services, and the trend towards continuous deployment – all trends with legs. The brittle custom built solutions currently in place are increasingly inadequate for the task and the competing products out there either demand that developers learn new languages or are not the main focus of their companies. We were significantly aided in our understanding by the developers in our team who have been living some of the problems that Dataloop is solving.

A strong team, an attractive market and a good dose of momentum are the key ingredients for a seed stage software investment and Dataloop has those in spades. I’m looking forward to being part of their journey.


Pleased that Scotland is still part of the union

By | Announcement | No Comments

Scotland votes no


No 2,001,926 (55%)

Yes: 1,617,989 (45%)

Turnout: 84.6%

I don’t write much about politics on this blog but I’m making an exception today because it’s great that Scotland has voted to stay part of the United Kingdom. We have enjoyed remarkable political stability as a single country but as separate countries we could have found ourselves in turbulent times. The risks to Scotland centred around financial uncertainties and the balance of the two to three party system would have tilted uncomfortably to the right in the rest of the UK. Much better the devil we know.

Also worthy of note is the peaceful way this debate has played out. I imagine many parts of the world are looking on wishing that their governments would allow a similarly threatening debate to play out without violence.

Hopefully attention can now turn to building the future in a similarly constructive manner.

Ice bucket challenge

By | Announcement | No Comments

The ALS Ice Bucket Challenge has been amazing, both as a money raising phenomena and a case study in how quickly memes spread these days.

And so perhaps inevitably my turn came around. I was challenged over the weekend and did it on Tuesday. Watch it below.

I tweeted the video out yesterday to keep the momentum going but I wanted to put it here for posterity.

Big thanks to our Head of Design Jack Oliver for bringing his magic touch to the video.


My interview on FrenchWeb

By | Announcement, Forward Partners | No Comments

Last Friday my friend Steph Bouchet (aka @rougefrog) stopped by our office to interview me for FrenchWeb, embedded below. It’s a good 12 minute intro to Forward Partners, the sort of companies we like, what we do here, and what makes us different. I also talk a little about the current state of the UK startup scene.

There’s a couple of minutes in French about Little Printer and then I’m on from 3.40.

Thanks Steph!

London Calling #12 by frenchweb

Starting an ecommerce company? Please apply to Forward Partners Open Day

By | Announcement, Forward Partners | No Comments

This is a copy of a post my colleage Dharmesh posted on the Forward Partners blog last week.


We are really pleased to announce our second Forward Partners Open Day during London Tech Week on the 17th of June.

Our team are offering a day of their time to work with you and 3 other startups with an aim to give you a meaningful boost forward. We had great feedback from our first open day and we got on so well with one of the companies that we are now exploring whether we can partner with them on an ongoing basis.

We combine investment with a hands-on team of experts that work with our early seed startups every day, so if you need help with marketing, investment, product, tech, design and talent, then we have got you covered. Taking feedback from the first event we will be spending more time diving deeper in a single area with each company to really move the dial.

The chosen startups can expect to leave the day with key action points related to their current challenges and insights into their business that you might not have thought of before. During the last open day we helped startups understand how to navigate the investment journey, understand how to make better product decisions and shared different strategies to acquire early customers.


To apply send us an email at [email protected] and include a bit about yourselves, the startup or idea, your current biggest challenge and your business model canvas. We work with companies from the concept stage so even if you haven’t incorporated your company you can still apply.

Please note, we have a sector focus on the future of ecommerce (in its broadest sense) and we will give preference to startups in this area as we can help more.

The deadline for participation is on the 9th of June and we will be notifying the chosen participants on the 12th of June and the day will be held in our new offices in Hoxton.

Welcome Stylect to the Forward Partners portfolio

By | Announcement | No Comments


We’re really happy to welcome Stylect to our portfolio. The deal closed a couple of weeks back and was announced on Techcrunch last week: “Swiping is the new liking” now applies to shoe shopping.

Stylect is a shoe shopping app for iOS which employs a Tinder-esque UI on top of it’s recommendation engine to help women find and purchase the perfect pair of shoes. The app launhed last November and now features over 50,000 shoes. One of the exciting things here is that users love swiping – the average downloader has swiped 400 shoes (and rising), with some swiping over 10,000. Each swipe generates a bit of information about the user which is used to power and refine the recommendation algorithm. This is the sense in which swiping is the new liking.

When we first heard about the company we were skeptical. Tinder for XYZ startups are everywhere at the moment and we had the obvious concern that Stylect was little more than a UI gimmick.

The first thing that started to change our minds was the team – Giacomo, Hadi, and Darius. They looked great on paper and one of us had seen them present well so we asked them in for a meeting during which they further impressed us as ambitious, metrics driven, tenacious, and smart. These guys know how to build an ecommerce business. However, the key was the vision – to redefine browsing for mcommerce. Already we can see that many people find swiping more engaging than clicking and scrolling. Add to that the fact that swipes generate far greater volumes of data and you have a mechanism that is better for the consumer and for the retailer. That’s what makes Stylect a high potential business.

Announcing SnapTrip

By | Announcement, Forward Partners | 4 Comments

Screen Shot 2014-02-24 at 11.46.58

One of the things we like to do at Forward Partners is invest in companies just as they are starting up. That’s what we did with SnapTrip which was literally one man, an idea and a single sheet of Excel when we invested. We loved the man and the idea (the Excel not so much…) and have been excited to help him bring it to life – something which happened with the release of their MVP a couple of weeks back.

The man is Matt Fox and his profile is a great fit for what we’re looking for:

  • He has a great idea  (more details below)
  • He has deep knowledge of his sector
  • He has startup experience having co-founded his previous company PureHolidayHomes
  • He has great personal qualities – he’s passionate, driven, smart, charismatic, humble and tenacious with a clear vision of what he wants to build and the leadership skills required to build it

The idea is to help holiday makers find last minute holidays in self catered cottages. SnapTrip’s opportunity is to own the late availability/discounted end of the market where the competition is limited. This contrasts sharply with the peak bookings end of the market where AirBnB, HouseTrip, HomeAway and a host of smaller players are competing fiercely. (It’s worth noting that most of these companies focus on apartments in metro areas whereas SnapTrip works with rural cottages.)

We’re attracted to this market for two reasons. 1) Nobody is yet focused on helping homeowners to fill out the c40% of their inventory which remains unsold.  2) There is nowhere consumers can go which aggregates all the late availability properties in one place and guarantees the best prices. Neither homeowners or consumers are well served by the piecemeal offerings from existing players whose core business is in the peak periods.

Excitingly, if successful, SnapTrip will grow the market by matching demand for late availability deals with discounted supply. They’ve started with an MVP focused on the Lake District and will soon expand to the rest of the UK and then Europe. This is a big opportunity.

Turning to the business and how we’ve worked together, the first thing to say is that Matt’s customer development work was encouraging. He had tens of conversations with consumers, homeowners and agencies which validated his core assumptions about unsold inventory, willingness to discount, willingness to book late and appetite for discounts and gave him a detailed picture of exactly what he should do to make the business fly straight out of the traps. Initial tests on CPAs and conversion rates have also been very promising.

Secondly, Matt was a sole founder when he joined us. He’s a commercial and operations guy by background and with our assistance in customer development, development, design and marketing he has been able to move extremely rapidly. Now that he is out of stealth mode with a live site we are helping him find a co-founder and build his team out.

Hopefully that gives you a sense of why SnapTrip is exciting and of how Forward Partners works with companies from the earliest stages.