One of the best ways to take the temperature of an industry is by talking to those helping fund it. Our conversation at FinovateEurope last month with Nick Sando, a member of the Future of Money team at Octopus Ventures, was a great opportunity to find out what venture capital is focusing on in 2020.
Octopus Ventures is one of the largest VCs in Europe and invests primarily in seed and Series A investments, two to five million. The firm has three principal focus areas: the Future of Health (health and wellness investments), DeepTech (industry 4.0) and fintech (or “Future of Money” of which Sando is a part), including payments, insurtech, credit, lending, and blockchain. “We’re pretty agnostic across the space,” Sando said.
Sando arrived at Octopus Ventures in 2018, after a career in which he founded companies like SaaS beauty and wellness platform Mojo and retail platform SnagTag. He notes that the benefit of co-founding two businesses what that it provided him with a “crash course in company building.” Sando added, “we had successes, failures, raised funding, and exited, all in a short space of time.”
Asked where he and his fellow panelist on our All-Star Venture Capital panel believe the smart money is headed this year, Sando replied with a smile, “Well, there is always the theme ‘Is there correction coming?’ And there a lot of people who think that there is. So the smart money is probably the money that’s still there at the end of it!”
Here are some of the top takeaways from my conversation with Nick Sando this year at FinovateEurope in Berlin.
On valuations in fintech companies and the IPO v.s. acquisition debate
Sando: Investors (should) … look at businesses which are trading at multiples which, if they went public, they would be receiving the same multiples. In fintech, some of them are getting too large to be acquired. So going public is route to go down. I look at some of the challenger banks, for example. Who’s going to acquire them? They are so big now! I think the IPO route should be back on.
On the role of venture capital in helping startups become better businesses
Sando: Having such a large fund gives us the benefit of being able to invest into certain roles across the board. The most commonly helpful role that we can provide outside of money is generally hiring. We have various people, and a whole hiring function in Octopus – and that’s not for our internal hiring, its for our help our portfolio companies hire.
In fintech, these companies are global companies with big ambitions, so traveling for example, from Europe to the States is on nearly all of these company’s roadmaps. Therefore we have set up an office, for example, in the States which is purely just to help those companies make these transitions.
So I think, given there are so many fintech investors in the market, as a fintech founder, I’d ask myself, “I should really be getting a little bit more than cash, these days!” Because they deserve it.
On what makes for a successful and creative venture capital team
Sando: A VC team should be made up of very different thinkers. If you have a VC team with all the same way of thinking, you might as well just have one of those people. What a team needs, therefore, is whatever it lacks.
We generally lean toward people who are intensely curious, have a different opinion than ours, see the world differently – maybe they grew up somewhere else, maybe they were a founder themselves – I think over half our team (are founders) … I think that’s what makes really great investment teams as a whole, when people can argue and talk and debate different ways of thinking.