A large number of U.K. tech "unicorns" have been in complex markets where policy and regulation really matters. But regulated markets (fintech, health tech, etc.), or markets where regulation is still emerging (e.g. lab-grown meat) are, well, HARD. Founders have to navigate policy-makers, regulators and even politicians.
So it’s interesting that today a new fund is launching specifically to back founders working in regulated markets.
Form Ventures today announces the final close of a £30 million Fund II at its target fund size to do just that.
Form will invest in startups at pre-seed and seed stage in sectors “directly shaped by policy and regulation”.
It’s secured the support of the British Business Bank as the cornerstone investor as part of its Enterprise Capital Funds programme.
The Form Ventures Fund II becomes the 36th fund in the Enterprise Capital Fund portfolio, taking the programme’s total investment capacity to £1.66 billion. Fund 1 invested in areas such as childcare, mental health, carbon offsetting and cellular agriculture.
Patrick Newton, partner, Form Ventures said: “Technology is now disrupting every corner of our lives, from our mental health to our childcare to the future of our planet. More than ever, policymakers want to have their say on how disruption happens -- gone are the days when startups could just 'move fast and break things'. Smart founders realize that if they take policymakers seriously, they can build faster, not slower, and gain a real competitive edge.”
So if it's so important to back founders in regulated markets, why hasn't it been solved already?
Newton told me that founders can't always get this support from European VCs, as they “tend to be generalist in how they support founders -- so while they invest in aspects of regulated markets, policy/regulatory insight and network is well outside their core zone of competence.” He notes that in the U.S., “this problem has been solved.” VCs in this area include Tusk Ventures, Trust Ventures, investing in Uber, Bird, Lemonade, Ro, etc.
Form will invest between £200,000 and £1 million in pre-seed and seed-stage startups, usually as a co-investor rather than leading rounds, as was the modus operandi for its Fund I, previously investing in nine startups alongside the likes of Index Ventures and Founders Fund.