Choosing the right type of investment is one of the most integral decisions one will make as an early-stage founder. If that decision involves taking on external funding, identifying the right firm to come along on your startup journey is critical. Here, we're asking European investors to share a little bit about themselves, to make choosing the right investor partner a little bit easier.
To kick things off, open source and blockchain investor Outlier Ventures has agreed to take part in Tech.eu's inaugural Reverse Pitch. Outlier Ventures was founded in 2013 by Jamie Burke and Aron von Ammers. Investing in open source and blockchain technologies, Outlier is a founding member of the Converge Alliance, a community working to build a more equitable and scalable web to counter "the platform monopolies of Silicon Valley". Research and insight on the market is a core element of their work and Outlier has recently published a report on the State of Blockchains.
In June, the firm was awarded "Europe's Hottest Blockchain Investor" at the Europas Awards. Outlier is headquartered in London and has office locations in Toronto, Amsterdam, Singapore and Chicago. This year, Outlier has invested in two companies based in Europe, including Finland's Haja Networks and Cambridge-based Fetch.ai.
Hi Outlier Ventures, thanks so much for participating in Tech.eu's Reverse Pitch! First, can you summarize your investment thesis in three sentences?
At Outlier Ventures we invest in privacy-protecting, peer-to-peer, and open-source technologies that we believe will be the foundation for the next era of digital infrastructure. We call this digital infrastructure ‘The Convergence Stack’ and this vision of the future and investment thesis has been refined over 5 years of investing at the intersection of blockchains, internet of things and artificial intelligence. We think these technologies will decentralize the cloud platforms and create a more equitable data economy.
What industries and business models are you most interested in investing in?
As early investors in the space, we foresaw the coming together of key technologies like AI and IoT with blockchains – which we termed ‘Convergence’ in 2016. We are technology-focused investors and believe the privacy-protecting, peer-to-peer, and open-source technologies we invest in are applicable across every market and industry. As software eats the world, all value chains are transforming and we are focused on investing and supporting protocols like IOTA, Fetch.ai, Ocean Protocol, Sovrin, Ocean, and Haja Networks that can support applications and use cases across industry.
Which technologies do you find most exciting right now, and why?
Outlier Ventures vision of the future and thesis is all about the Convergence of technologies, particularly blockchains, artificial intelligence and the internet of things. These technologies should not be considered independent, instead we think they combine in important and valuable ways. We think that digital infrastructure will combine the internet of things to collect data, blockchains to validate and share data, and artificial intelligence will automate and consume the data. These technologies are exciting, but far more exciting when combined.
We have strategically chosen a number of investments because they are an important piece of this future digital infrastructure. The investments and partners include IOTA, a foundation building Internet of Things infrastructure with a new type of decentralised data structure. Evernym, a company using the Sovrin Network and Protocol to establish self-sovereign identity. Fetch.AI, a startup building an emergent intelligence protocol combining distributed ledgers with machine learning. Ocean Protocol, who are developing a decentralised data exchange protocol to unlock data for AI as well as more recently Agoric Systems who empowers individuals to securely execute transactions, establish new markets, and craft novel patterns of exchange — without centralized control.
Which company stage do you typically become involved in, and how much do you typically invest per company?
We work with seed and growth stage startups as well as larger businesses who are committed to building the next generation of digital infrastructure. Unlike a typical VC firm, our approach to investing goes beyond providing financial capital in that we provide full-service consultancy.
We provide early-stage funding, as well as providing support via relationships, introductions, and access to specialists from across the venture platform. As a result of working with projects in The Convergence Stack over the last 5 years, we have developed a tried & tested offering of seven service areas that are needed to succeed.
Every project will need a different blend of services at different times depending on stage of development and internal capacities and competencies. We have an original, synergistic ‘stack’ approach to investment and our commitment to funnel an additional $30 million (USD) over the next three years into developing our portfolio companies stands us apart.
When you consider a typical £100m VC fund only has a 2% management fee (or £2m) to play with, you can see that what we’re committing here is way beyond normal. Most VCs invest their money in assets in the hope of gains, but this time we’re not investing the $30m in exchange for tokens or equity in our companies. We’re pushing the extra money into the support and wrap-around initiatives the space as a whole needs to foster greater real-world adoption of decentralised protocols. If you think of the technology adoption life cycle model, we believe that our additional investment will help to push the technologies built by our companies from being used only by today’s ‘innovators’ to being used by a larger number of ‘early adopters’ in the near future. That’s where the real value comes from.
Beyond funding, where does Outlier Ventures provide the most “value-add” for founders?
Our team is 30 people strong, with a global presence. We have specialists in token economics, research, legal, marketing, and technology, and bring a powerhouse of support to founders and partners through their expertise and network. Our team’s expertise provides informed, strategic, technology decisions that have connected investees to specialist architects, development partners and talent for their core team. We’ve supported them with access to our best-in-class researchers who provide portfolio companies the resources and insights they need to make more informed decisions
We become an aligned advisor in the regulation and compliance of our investees decisions, through our specialist in-house function supported by our membership to the Wall Street Blockchain Alliance, Chamber of Digital Commerce, Wharton Working Group, All Party Parliamentary Group in Blockchain, EU Blockchain Observatory and many more associations.
We also recently launched The Convergence Alliance, a unique community of open source protocols, enterprise, start-ups, government bodies and academia leading the next phase of the Web. Any business who produces, processes and derives value from data, The Stack offers a framework for navigating decentralisation, blockchain and Web 3.0
The Convergence Alliance’s mission is to accelerate and diffuse a more equitable, scalable and usable Web 3.0 to effect a new open data economy based on the sovereignty of the user. Countering the platform monopolies of Silicon Valley and enabling a more evenly distributed value creation from AI. The 18 global founding members of The Convergence Alliance include; T-Mobile, SAP, Jaguar Land Rover, Smart Dubai, Imperial College London, Frankfurt School of Finance & Management, MOBI Foundation and Outlier Ventures.
Do you have any geographic restrictions on investments?
No, although we have a preference for Europe and North America.
If you could invest in any type of business or technology right now (real or imagined) what would that be?
As part of the Convergence Stack thesis we have clearly defined 18 technology areas that we either have investments in or want to, as they are required for the Convergence Stack to be realized. We are particularly looking for startups building machine learning tools and applications in a privacy-protecting, peer-to-peer, and open-source way. We think there is an urgent need for the benefits of artificial intelligence to be shared more widely and not accumulate in the hands of a tiny few companies. Ideally, these projects would use the Fetch.AI system to build these tools and applications.