Nic Brisbourne's view from London on technology and startups

Designer babies and other moral dilemmas

By | Startup general interest | No Comments

People have talked about designer babies for a long time, but I just read for the first time about a clinic openly offering genetic screening of embryos. You can pay $18,400 to screen for gender and they plan to soon offer eye colour, hair colour and other traits.

That’s illegal in most countries, but (somewhat surprisingly) it’s allowed in the US.

Genetic screening has reached this point now because technology developments are improving capabilities and driving prices down. That’s a phenomena that’s happening across a broad swathe of areas at an accelerating rate that will throw up moral dilemmas we have to grapple with.

  • Designer babies
  • Human augmentation with robotics
  • Human genetic enhancement
  • Cloning
  • Autonomous robots taking jobs (self-driving cars will be the first)
  • Autonomous robots making ethical decisions – e.g. a self-driving car choosing between hurting it’s passenger and a pedestrian in a crash situation
  • Artificial intelligence advising on legal matters, and eventually de facto making decisions
  • Artificial intelligence advising on policy matters, and eventually making de facto decisions

Coming to the right answers on these questions will require solid thinking and strong, far-sighted leadership. The default reaction of many people, politicians included, will be to reject, suppress and deny. That risks pushing developments and scientists underground and/or to less restrictive geographies where they will still flourish, but in a less controlled manner. And then they will come back.

And this isn’t far away now. In the next 10-15 years most of these technologies will reach a price point that makes them widely affordable.

We have interesting times ahead.

Spreadsheets in legal documents

By | Startup general interest | One Comment

I have spent a considerable part of today translating the equalisation clauses in our Limited Partnership Agreement into formulas in a spreadsheet. Equalisation payments are made when new investors join a Limited Partnership and they pass from new investors to old investors to compensate the old investors for the additional risk they took by investing first and/or to adjust for changes in the value of the fund’s investments in the period between when the old and new investors invested. They are dependent on a number of inter-related variables which makes them hard to calculate.

That was time I didn’t expect to spend on this task and time I didn’t have. And we still have to get all parties to understand and buy into our spreadsheet so it isn’t over yet.

I’ve been here before too, when implementing anti-dilution clauses after down-rounds.

It shouldn’t be necessary.

Rather than imperfectly describe formulas in legal documents we should be able to capture them precisely in a Google Sheet or Excel and append the file to the legal document. Then we would have definitive reference calculations that everybody could use saving time and eliminating scope for disagreement over interpretation.

I believe my former employer Operis have started doing this in the project finance arena, attaching complex models of entire projects to legal contracts which are referred to in clauses determining how payments change under different circumstances.

In time the Blockchain might be a better solution to this problem, but spreadsheets would work today without further development of software.

Why we like investor decks

By | Forward Partners | One Comment

When we are introduced to promising entrepreneurs and ideas our first response is to ask for information about the company or project, usually an investor deck. The extra information helps us to know whether there’s enough chance of an investment happening for a meeting to make sense. I like to think that’s beneficial to us and the founder because it saves time, although I recognise there can be value in getting feedback even if there’s no chance of investment.

A deck helps in the following ways:

  • Shows the entrepreneur is serious about their company and raising money. We invest at the earliest stages and some founders try and raise money before they are fully committed to their projects and/or to raising finance. Not for us.
  • Shows us the founder can craft a story and sell their idea/company. Key skills for any entrepreneur. Most of the best entrepreneurs are great story tellers.
  • Allows us to evaluate fit with our investment strategy – we are laser focused on idea and seed stage businesses in ecommerce, marketplace and related software, and have a number of other criteria too.
  • Writing the story forces completeness of thought. A good investor deck covers all areas of the business and requires the entrepreneur to have good solutions for everything that needs to be done. That’s a good discipline.

A good deck is also super helpful in investor meetings, so it’s best to have one anyway. Bill Gurley explains why here.

And this One Match Ventures guide to writing a good deck is amongst the best I’ve seen.


“Sharing economy” is running its course as a useful term

By | Startup general interest | 8 Comments

The meaning of the term ‘sharing economy’ has always been a bit vague for me. On the one hand it includes genuine sharing ideas like Airbnb whilst on the other it includes labour markets like TaskRabbit and Homejoy, and then more recently Venturebeat lumped in companies like Wework and Transferwise (although they called it the ‘collaborative economy’).

Still, the label was useful for PR purposes, and for building a positive company image with investors, regulators and the public.

That may now be changing. I’ve just read Sarah Lacy’s Let’s face it: Uber IS the sharing economy which makes the point that Uber dominates the sector, and The “Sharing Economy” is the Problem which argues that Uber and other sharing economy labour marketplaces are using a novel corporate structure to exploit workers.

Being labelled as ‘sharing economy’ is starting to carry more negative connotations than positive. Hopefully we can move to something clearer.

UPDATE: Alan Patrick pointed me to a Grist article which makes a more emotive claims against Uber and others:

The sharing economy is a nice way for rapacious capitalists to monetize the desperation of people in the post-crisis economy while sounding generous, and to evoke a fantasy of community in an atomized population. …

[I]t sees us all as micro-entrepreneurs fending for ourselves in a hostile world. … You may lack health insurance, sick days, and a pension plan, but you’re in control.

399 scale-ups in UK, 208 in Germany, 205 in France

By | Venture Capital | 2 Comments

Screen Shot 2015-07-06 at 14.05.27

The Startup Europe Partnership (SEP) just published their SEP Monitor: From Unicorns to Reality. There’s a wealth of good data there on fundraising in different categories split by geography. “Scaleups”, companies that have raised $1m-10m, are where we focus and are shown in the picture above. The report also covers companies that have raised over $100m, termed “Scalers”, M&A, and IPOs.

Focusing on amounts raised is an improvement to focusing on valuations but is still a far from perfect measure of startup activity/progress, largely because some great companies raise little or no money. That said, this new analysis largely confirms the geographic picture we’ve been seeing for a while, namely that approaching half of Europe’s startup/venture activity happens in the UK.

The lock of traditional TV distribution is weakening

By | Startup general interest | 3 Comments

Earlier in the week I wrote that the time for TV and film distribution startups might finally be upon us, arguing that radical reductions in the cost of production are a force for change that could break the legacy arrangements that have held for so long and usher in an era of direct connection between artist and consumer.

This chart shows that TV viewing is declining fast amongst American teens, weakening one of the key points of legacy control and creating more space for new distribution startups to build an audience. I haven’t seen equivalent stats for the UK, but I imagine they would be similar.


Don’t make permanent decisions with temporary feelings

By | Startup general interest | One Comment

When I saw Banksy’s tweet this morning I thought ‘great advice for life’. Then I thought it’s great advice for investment decisions too.

Most obviously investment decisions should be rational rather than emotional, based in analysis of likely long term outcomes.

It’s important for us that we’re excited about the startups we invest in, but that excitement should be rooted in data rather than emotion. E.g. X market is exciting because it’s growing at y% and the company in question is z% better than the competition. Y and Z will be estimates based on a combination of research and educated guesswork but they should be defendable.

It’s also important that we feel a strong connection with the entrepreneur, but it’s the presence of that connection which allows an investment to be made rather than the strength of the feeling driving the investment decision.

So far so obvious.

Where it gets trickier is in competitive situations, particularly in hot markets when it’s easy for smart people to unknowingly have feelings drive their decisions. Fear of missing out regularly pushes people to make investment decisions they otherwise might duck. That might be rational – if our hot startup has a 10% chance of being the next Uber then it’s worth me investing even if it has a very high chance of failure – but more often it is rooted in temporary feelings related to loss aversion, embarrassment and greed.

Fear of partnership reprisals for simply not getting enough deals done has similar effects.

Where clever people often go wrong is deciding they want to do make an investment because of temporary feelings and then using their intelligence to build rational arguments that support the ‘10% chance of being the next Uber’ thesis. If you find yourself getting emotional when you defend your analysis then ask yourself if you’ve made this mistake. I’m not saying I’m smart, but this is a mistake I’ve made before and will probably make again.

This same logic applies to many important startups decisions everywhere that are emotionally charged, e.g.:

  • should I take this big round of financing that scares and excites me?
  • is my founding team the right team for the next stage of growth?
  • which features should I take out of our increasingly bloated product?
  • which of these strategic options should I ditch so I have time to properly focus on the other two?
  • how long should I hang on for this big deal?
  • and many more….

Valuation trickle down

By | Startup general interest, Venice Project | 4 Comments
I’m back to the bubble question this morning.
First up we had an interesting post from Fred Wilson arguing that frothy activity is restrictred to Series B rounds and later in private companies, whilst Seed and Series A and public markets are still rational. He used this chart as evidence:
Second, I read Josh Kopelman’s/First Round Capital’s Open Letter to Investors from May this year which says that seed valuations are up 3x from 2007-2015 without a corresponding increase in exits. Note that we can see a similar increase in Series A valuations in Fred’s chart above.
Third, I was talking with a potential investor in our fund yesterday about market conditions here in the UK. He was asking whether with all the new funds in town valuations are rising and returns are likely to suffer. My view is that the market here is the healthiest I’ve seen it. When I joined the VC industry in 1999 there was too much money in the market, and then over the course of 2000 that flipped to too little money a position from which we are only just recovering now.
Whilst the odd deal is getting done that looks a little bubbly there isn’t much of that at idea and seed stage here. The valuations Forward Partners is paying haven’t moved in the last couple of years and nor are deals getting done in dangerously short timescales. I sat down with our investment team this morning and talked through some of the hotter deals that have been done in our sectors lately and how investors are responding to the deals we bring to them and we aren’t seeing anything other than isolated pockets of investors getting irrational.
Pulling it all together, I think that unless there is a correction in late stage private investing the frothy activity will trickle down to earlier and earlier stage rounds. Fred Wilson’s chart shows that US B and C rounds have already caught the bug and Josh Kopelman’s letter shows that seed markets are also getting hot. The trickle has two dimensions – down to smaller and smaller rounds, and across to other geographies. The trickle down happens faster than the trickle across, but absent a correction in the US valuations will start to rise here at some point in the next couple of years.
If the public markets maintain their discipline I think a late stage correction is more likely than irrational activity trickling all the way down to UK seed investing. If not, not.


Film and TV distribution startups please roll up

By | Startup general interest, Uncategorized | One Comment

I’ve just read an awesome description of the disruption going on in all the major storytelling media by one Hugh Hancock. I haven’t come across Hugh’s writing before, but he gets right inside the worlds of film, TV, games, prose, virtual reality and comics, with an insider’s knowledge and a light and witty style.

It’s the TV and film pieces that got me the most. In both cases production is changing at an unbelievable pace with new technology driving down cost and opening up new possibilities. This paragraph from Hugh’s post gives you a good sense of what’s going on:

Cameras are becoming cheaper, sure, but they’re also becoming lighter. At the same time, brushless motors and cheap IMUs mean that robot camera stabilisers are taking over from Steadicams for stable moving shots. And all of that means that a shot which used to require a guy who’d trained with a Steadicam can be done to 90% of the same quality by some untrained muppet (me) with a basic knowledge of how to walk smoothly and a magic box that does the rest of the work. And that magic box means that directors can rethink the rest of their shoot too, changing dolly shots (big pile of kit, couple of big hairy grips to work it) into a shot with a gimbal and a $200 self-balanced scooter. But all that might be irrelevant too because who the hell needs to wobble about on a scooter when you can probably just get a drone to do the shot?

And I could have chosen a couple of other paragraphs describing a similarly dazzling but very different array of changes.

So far so amazing. But the problem is that distribution hasn’t changed and we are now in a world where it is apparently a cliche to say:

There’s never been a better time to get your movie made, and never been a worse time to get anyone to watch it.

That’s a situation that can’t persist for very long, hence the title of this blog post.

That said, media distribution startups aren’t easy. It’s been obvious for some time that the legacy world of TV channels and movie studios is ripe for disruption and lots of entrepreneurs have had a crack at it, yet the old world remains largely unchanged. The biggest reason for that is money. TV and film makers need money to fund their production and the people who control distribution are in the best place to cut those cheques precisely because they control distribution. New distribution platforms have faced the catch 22 of needing to cough up lots of money to get good content to get an audience and needing an audience to get the money to cough up for good content. Netflix cracked the code by building a big DVD rental business and using the cash from that to fund rights acquisition but others have found it more difficult, including many startups that used VC dollars to buy rights and try to crack the code that way.

Still, difficult problems require creative solutions and that’s where entrepreneurs excel, and the growing imbalance between production and distribution can only be making this problem space more tractable over time.

Ray Kurzweil on the future of employment

By | Ray Kurzweil | No Comments


In this ten minute video Ray Kurzweil explains his view that as robots and AI automate low skilled jobs new higher skilled jobs will be created. In other words human labour will move up the skill ladder, as we have done before when we moved from agriculture to manufacturing and from manufacturing to knowledge work.

I think he’s right about that, but as I’ve written before I’m worried that the job destruction might happen much faster than the job creation and we will suffer major dislocation during the transition. Ray makes two interesting points in this area that made me feel a little better, one is that 65% of Americans are now employed as information workers, a category that didn’t exist 25 years ago – so job creation has happened quickly in the recent past, and the other is that the explosion of online education is making it easier for people to re-skill.

Ray finishes with a discussion on what you could call ‘post scarcity employment’, when our material needs are provided for and we only work for enjoyment.



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