Meet the investor: Will Gibbs, Octopus Investments
Focused on helping small businesses grow, Gibbs discusses the potential for property tech and why Secret Escapes and SwiftKey are one's to watch
Firm: Octopus Investments
Name: Will Gibbs – part of the ventures team at Octopus
Where are you based?
What kind of investor are you?
Octopus invests at seed, Series A and Series B (£150,000-£5m) rounds in fast-growth companies that can scale explosively to create, transform or dominate an industry.
What kind of deals do you finance?
We predominantly invest in European tech start-ups with high growth potential.We look to back the talented people behind a business as we believe that while markets change and challenges arise, outstanding entrepreneurs will nearly always build successful businesses. We usually invest in financial tech (fintech), marketplaces, cyber security, mobile and SaaS technology.
What kind of person do you invest in?
There are many characteristics or skills to which we attach significant value, the most important being ambition, recruitment, initiative and tenacity. Having an insatiable appetite for growth and rapid pace of execution is essential. We are always looking to super-charge the growth of businesses. This is virtually impossible without a management team who have a similar outlook.
Being able to hire world-class talent is essential as otherwise this can place an early ceiling on the potential growth of the business and will not allow the full value of the technology to be realised. The ability of an entrepreneur to problem solve and have the determination to beat challenges is also of paramount importance.
How do you source prospects?
We receive thousands of business plans a year and this number is only increasing. However we receive the majority of our highest quality deal flow through introductions from our portfolio company CEOs, angel investors, other VCs and at events. We also utilise data and our sector knowledge to seek out businesses producing services or products that we feel could fill a niche in the market. In this way it allows us to cut through the inevitable “noise” around a popular sector and make our own mind up.
What is your ideal investment?
Our ideal investment is one where we are aligned with the entrepreneur and we are both ready to accelerate quickly. The business should operate with a strong and ambitious team at the helm, able to deliver successive growth in a global market. The product or service that business delivers should also have strong USPs and not be easily copied to prevent saturation of the market.
What are your USPs?
We place an emphasis on being a hands-on investor through the services we offer to portfolio companies, and aim to be straight talking and up-front with our entrepreneurs. At Octopus our portfolio businesses are exposed to a wide range of industry specialists further to the ventures team, our “Entrepreneurs in Residence”. This team has a wealth of experience growing, selling and buying companies worth hundreds of millions of dollars, and our Venture Partners, a group of 100 outstanding entrepreneurs who co-invest alongside our funds financially and give their time to help develop the businesses we back.
They also have access to expertise and guidance through our partnerships with other service providers. This all means that we are able to open up our portfolio companies to a network that is beneficial in a meaningful way. It is also worth saying that the structure of Octopus also helps many of our portfolio companies as we have evergreen funds. These raise money annually from our underlying retail investors, which allows us to be patient investors, able to partner a company from seed stage right through to exit.
What are the hot sectors?
We try not to be led by the crowd as by the time a sector is “hot” it is often too late for the most exciting investments to be made. VC investment into fintech, security and mobile technologies is only going to increase and the European ecosystem continues to generate an incredible calibre of businesses. For example, within security we are excited by the opportunities within behavioural biometrics underpinned by our investment into Behaviosec. Strengthening user authentication will always be a huge market and tech that can do so without compromising the user’s experience is potentially the next generation of cyber security.
There is room for disruption in so many sectors. Take property for example. This is an area of interest for us as innovation in the residential and commercial real estate space is really shaking up the landscape and the potential prize is measured in the £billions. We have recently made an investment in Property Partner, a crowdfunding platform for property which allows retail investors to directly invest into a property with as little as £50. This has opened up an entirely new market.
Three things a company should be able to offer an investor?
- A plan and vision for how the business can realistically move from the current position to a potential exit of over £300m within 5 years
- An honest and open discussion around the challenges for the business and weaknesses of the team
- A team with the credentials, skills and characteristics to ensure a good business idea becomes a good business
What is the cardinal sin when looking for investment?
Not being open and honest. We place a huge amount of importance on the relationships we have with our portfolio CEOs and management teams. We are open and honest with them about how we think about situations but holding information back can completely undermine this and can make it hard to move forward.
What continuing involvement do you like in an investment?
We look to take a board position in virtually every investment we make. Completing an investment round is genuinely only the start of our job. On a daily basis we spend a great deal of time making connections between the portfolio companies and key decision makers, helping them source the highest calibre of employees and feeding into the strategic direction of the business by leveraging a shared set of central learnings from our growing portfolio of over 50 companies.
What has been your best performing investment to date?
Zoopla was an early investment for us – we backed Alex Chesterman to build a portal for estate agents to advertise properties, and for consumers to access local property price data. Seven years later and with around 16,500 estate agents using the platform, the company listed on the London Stock Exchange for approximately £1bn. It is now an indispensable tool for both consumers and estate agents.
While that has been the best performing company from an overall exit perspective, there is a strong case for businesses such as SwiftKey, the predictive mobile keyboard powered with machine learning, with over 250 million users globally or Secret Escapes with their continuing strong revenue growth, to become the next generation of stars in the portfolio.