Amadeus Capital Partners’ Amelia Armour, a Principal in the Early Stage Funds team, on the opportunities for investors in deep tech and the space’s emerging trends
The next Mayor of London’s TechInvest pitch event takes place on 21st and 23rd April 2020 and the focus is on deep tech. A sector that has profound opportunities for meaningful change and cutting-edge discovery, deep tech is rooted in scientific advances and tangible engineering innovation. The pitch event will showcase start-up and scale-up businesses that are harnessing the power of deep tech. Ahead of the event we spoke to one of the judges, Amelia Armour of Amadeus Capital Partners.
With a natural sciences degree from Durham University, Amelia trained as an accountant with Deloitte. A couple of years working in investment banking in Sydney, then Amelia moved near to Cambridge to work with Amadeus.
“For a few years I was an analyst, looking at performance and trends across the portfolio,” recalled Amelia. In 2013, when we raised our fourth seed fund, I moved into investing in the UK. I now sit on seven boards of deep tech companies here.”
Amelia’s mixed skill set of science and finance has been invaluable when it comes to carrying out due diligence on companies. “I find the combination has been useful in evaluating the different aspects of each new company we meet, whether it be the technology, the financial model or the market opportunity. Often, it’s knowing which questions to ask that’s the challenge.
“If we need an expert opinion we’ll contact members of our network. Other entrepreneurs in the portfolio can be really helpful when we’re gauging an opportunity.”
“The impact of the coronavirus and the inability to meet teams in person is changing the way we conduct due diligence. We’re holding all conversations virtually but because our investment process can take three to four months to complete, we’re hopeful that we’ll still be able to visit offices and meet the wider team before a deal is concluded.”
Amadeus’ early stage fund invests up to Series A, primarily in B2B opportunities. Detailing what they focus on, Amelia says:
“We’re hunting for disruptive technologies that can displace incumbents based on cost and performance or are bringing a completely novel product to market. The market size and whether that market is growing or shrinking are important factors. There are lots of great businesses that aren’t suitable for venture capital funding because they won’t reach a significant size. Fortunately we’re still taking pitches from lots of exciting companies whilst working from home and are continuing to issue term sheets and close investments.”
When it comes to vetting potential investment opportunities, Amelia identifies three key factors that she always looks for: a great team with a star academic or CEO; superior technology and a large potential market. Deep tech is a space that has plenty of buzz surrounding it and Amelia sees some clear trends emerging. One such trend is quantum computing.
“Quantum computing is a new area for us; we’ve made two investments – in software provider Riverlane and quantum communications company, Nu Quantum, both based in Cambridge. We’re seeing a significant amount of government and VC funding being deployed in the space. There’s been debate about how long it will be until the hardware is sufficiently advanced so that it can make calculations that outperform a high-performance computer. This is now within the timeframe of VC investing rather than something which has previously been better funded as an academic exercise.”
“Taking data that already exists within organisations and applying machine learning tools really drives operational change.”
Amelia believes there are many opportunities right now for investors. Machine learning applications will provide disruption for a number of years to come.
“Taking data that already exists within organisations and applying machine learning tools really drives operational change. The key is to make the data central to activities rather than a by-product of current systems. The data that organisations hold is still not being used in an optimum way for them to get real benefit because it’s sitting in silos. As people adopt new systems, they’re becoming more cogniscent of the value of their data. The collection process is also speeding up so that more data is becoming available to machine learning tools, which then can be applied in a transformational way.”
Drawing on her experience, Amelia has some wise words for angels thinking of investing in deep tech.
“You’ve got to try and understand not just the science but also the product and who will be the end customer. Experts in the field can help with the tech review, especially at this early stage. Eventually the tech becomes secondary for new investors because they’re looking at other indicators of traction, such as customer adoption and the sales pipeline. When you’re an early stage investor, understanding the technology, how it differentiates itself from existing competitors and making sure that the IP is defensible are all important.”
As a woman in the investment world, Amelia understands the importance of encouraging more women to get involved in the industry. At times she’s found herself to be the only female in a board room and believes that active diversity programmes can help to redress the balance.
“The statistics show that at A-level there’s a 50/50 split between girls and boys taking core science subjects. When it comes to picking degrees, there’s a big change with more male students taking STEM subjects. Recent UCAS data shows that only 35% of STEM students in higher education in the UK are women, which is frustrating. A Women in Engineering Society document highlighted that in 2017 only 15% of engineering undergraduates in the UK are women compared to over 30% in India. By the time you get to starting businesses and joining VCs, there are just fewer women to pick from with a STEM background.
“Having recruitment policies that mean you interview a diverse group of people for roles within VC could definitely help there and as more women become entrepreneurs and act as role models we should hopefully see an uptick in female founders.”
For information on Amadeus Capital Partners visit http://www.amadeuscapital.com.
If you’d like to find out more about Mayor of London’s TechInvest or register your interest to attend, please visit http://techinvest.london.
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