My focus here is to consider what’s exciting in the next couple of years while having an eye on where the world of technology is going over the next decade. For a decade long perspective, two expert views I recommend reading are Fred Wilson’s What will happen in the 2020s, and Azeem Azhar’s Preparing for 2030..
They talk well about the prominence of the climate crisis, of the challenges of geopolitics, of AI and automation everywhere. Over the longer term there are lots of seismic changes ahead and these of course create opportunity for entrepreneurs and investors.
Naturally, Fred Wilson talks positively about crypto and I mentioned crypto and blockchain in my equivalent post a year ago.
I’m more negative about crypto and blockchain than I was a year ago. The volatility of crypto currencies continues. Granted Satoshi Nakamoto is a genius and his invention of Bitcoin and blockchain is off the charts impressive. I do think Bitcoin has a long term place in the world though I’m sceptical about a role for more than one or two other cryptocurrencies. Also as regards blockchain technology, we still have not found a business idea exploiting it for good technical reasons and at the stage and valuation we like to invest at.
Neither Wilson or Azhar mention quantum computing, and I would agree that is still in the research stage. There are various potential alternative methods of solving the science challenges and none look close to production any time soon, so it could well be more than 10 years before quantum computing breaks through.
So at Episode 1, we are most interested to consider where to invest in the next couple of years. As a UK VC based in London we have our local challenges of Brexit and they are specific and important enough that I have written a separate post on how Brexit is likely to work out and how to prepare for it.
In the next two years we would love to invest in climate change mitigation. As individuals, some of the partners of Episode 1 have just invested in an ecoforestry startup because it was out of scope for Episode 1 (which only invests in software driven businesses). If you have ideas relating to climate change using software, please do get in touch — we’d love to help.
For the next couple of years, we see our market as very much business as usual. Automation, especially using AI and machine learning, is very likely to be the biggest focus. As examples, recent investments include
- Mimica — machine learning to observe repetitive processes and codify them ready for RPA (Robotic Process Automation)
- CircuitMind — for automating the process of designing printed circuit boards (PCBs)
- Vector AI — workflow automation for international logistics paperwork
Although there are a few generic AI services like DeepMind — now part of Google — which threaten to compete with every specialist automation company, we believe there are still many billion-dollar markets ripe for efficient automation where DeepMind and alike won’t win. Specialists can understand their markets more intimately and build domain-specific models and propositions with material advantages. Furthermore, many of these start by assisting humans to be more efficient and gradually extend their reach rather than aim for complete replacement of jobs by perfect automatons.
We still see plenty of innovation in infrastructure. I wrote a year ago about Edge Computing where we remain very bullish. We also recently invested in Webiny a serverless headless CMS (content management system), and are currently working on an investment in a new form of databases.
As a firm we are very excited about the next couple of years ahead for seed-stage UK based software businesses. We are now focussed more on deep tech businesses where their technology is relatively hard to develop, and we are also strengthening our support for these companies as they achieve product-market fit and start to sell. It’s the hardest stage, but the most rewarding when it works.
