BGV in San Francisco: bringing tech for good to Silicon Valley

To assess the appetite for early-stage tech for good investments in the US, we headed to the Bay Area to see what we could find out.There has never been a more interesting time to be a ‘tech for good’ venture in London, and international VCs are taking note. As the UK startup ecosystem matures, so does the opportunity for companies to attract US investment. US commitments to European VCs have increased to $1.7bn in 2018, up from an average of $0.5bn between 2014-2017, according to Atomico’s State of European Tech 2019 report, with London being the key landing space for this capital. At BGV, we have seen the investor appetite for purpose-driven businesses continue to grow. As a result, we wanted to deepen our understanding of how early-stage expectations compared between US and European investors so that we can better support our companies looking to make the leap. Our route in was SOCAP in San Francisco, a conference dedicated to increasing the flow of capital towards social entrepreneurs. Here BGV CEO Paul and Programme Manager Nelly hosted a panel on the future of work. They were joined by four of our portfolio ventures (Chatterbox, RightsDD, Alice SI and Devie), who had each won a ‘SOCAP Scholarship’ and Salve. With this group all set to be in San Francisco at the same time, we decided to make a full trip of it. We reached out to VC friends, both old and new, to meet and see how they were thinking about ‘tech for good’.[caption id="attachment_8164" align="aligncenter" width="651"]

BGV Abroad[/caption]Here’s what we learnedOur expectations on arrival were simply to meet and learn from pre-seed to Series A investors on how they first discover, then navigate the mission and growth of early-stage companies. We wanted to know; how were they thinking about impact? What kind of discussions were they having around unintended negative consequences, if any? We walked away with some great connections and insights which we’ll continue building on as we make these trips a more regular occurrence. Here are some key takeaways:

• There are many more venture firms that explicitly focus on impact and technology now than even three years ago. Many of these have launched new funds and others have introduced it to their strategy in the last few years. Also, there are more funds who have a very specific sector or thesis-led focus.
• There are some very good generalist impact tech funds; Kapor Capital, Better Ventures, Uprising, and Impact Engine to name a few. Within this space, there are also several funds with a specific impact theme focus. For example, we were struck by the similarity of approach between ourselves and Reach Capital around EdTech and WorkerTech.

• There are other, much larger funds, who are making impact part of their investment thesis.

• It was refreshing to meet so many female investors, a noticeable change from even 2-3 years ago.

• A strong focus on ‘VC as platform’ and firms having to win deals on their qualitative support. This is something that we’re increasingly seeing UK and European VC’s focusing on as well.

• There are more dollars going into fewer deals which means bigger expectations for founders at seed stage. In 2010, under 10% of seed companies were generating revenue at the time of their raise vs over 50% in 2017.

• In SF, startups go through an average of 2.9 funding rounds prior to raising Series A (a jump up from 1.8 in 2011). In the UK, we are also experiencing teams taking longer - companies raising $2-3M in total pre-Series A funding have the highest conversion rate to Series A.

What’s Next?We’ll be organising a West and East coast trip for 2020 so fire away any suggestions on who to reach out to while we’re there to me at bethany@bethnalgreenventures.com!