#36 Rubina Singh: engineer investing in frontier deep tech and climate tech w/ Octopus Ventures (>£1bn AUM)
Deep tech and climate tech investment teams at Octopus Ventures (European VC with over £1bn AUM and investing over £100m a year)
We are Pol Fañanás and Gerard García, two friends passionate about tech, startups, and VC, getting views from exceptional people doing interesting things and sharing it for free with those who lack access. Thanks for reading!
Rubina Singh plays a key role as investor specialized in climate tech and deep tech at Octopus Ventures (one of the largest and most active venture capital investors in Europe, with over £1bn under management and investing over £100m a year). Octopus is also part of Octopus Investments (a UK based financial services company managing £13bn on behalf of over 63,000 investors, with over 750 employees).
Rubina is also an advisor in the European Innovation Council’s deep tech programme (European deep tech community backed by the European Union) and in the Solar Impulse Foundation, as well as a Non Executive Director at POWERful Women (initiative to empower leadership development of women across the UK’s energy sector).
Before Octopus, Rubina was Head of Innovation Delivery at Centrica (public-listed energy services company with >$10bn market cap, >10m customers, and currently UK’s biggest retailer of zero carbon electricity). Previously to Centrica, as part of Gemserv, she worked in the electric vehicles and smart energy division. Earlier, Rubina was as solar engineer at Fraunhofer (non-profit entity dedicated to the advancement of applied research) while heading Fraunhofer TechBridge (division to validate and support early-stage cleantech).
Rubina holds a Bachelor of Engineering and Master of Engineering in sustainable energy engineering from Australian National University and University of Michigan, respectively.
overView(s)
Curated highlight of the most important Views from Rubina in case you don’t have time to read everything (as it happens to the best of us):
There is a unique opportunity in deep tech investment. Fundamental macro paradigm change, global big critical problems, hard tech breakthroughs, and potential wild upside, are giving birth to a huge opportunity period for deep tech.
Different game with different rules. Bigger problems, more meaningful products, extremely technical founders, bigger upside, need for more technical/operator experience from investors, understanding new risks (product, market, timing, capital) and how to mitigate them, fighting against common misconceptions, real contrarianism being important again.
Top engineering and VC advice to make a dent in deep tech. Finding tough tier 1 technical founders with frontier vision and helping them engage the market, need for improved detailed technical understanding of product development, frequent customer discovery, systematizing risk mitigation, boldness to pursue what others don’t, building up network while contributing to ecosystem.
The strategic relevance of improving the frontier tech ecosystem. Bridging the gaps among universities and research labs, incubators, corporates/industry, public gov, and other investors.
Hot interlinked investment opportunities. Energy (building a new energy system, new electricity, smart grid, off grid, transformation of automobiles, new intelligent systems to match demand, new ways to monetize, renewable sources, improved batteries, evolution of buildings/homes, etc), materials science (new steel manufacturing, green cement, etc), construction (sustainable and more efficient), decarbonization (applied climate tech transforming multiple verticals), alternative fuels (hydrogen, ammonia), transportation and shipping (electrification, autonomous vehicles, new infra, AI applied to route optimization, sustainability) - among others.
Yes, huge returns and huge positive impact is a real equation. More people driven to do well while doing good and more proven success cases, but there are still challenges. We need to build better ecosystems, get more breakthrough tech from lab to market, and improve capital available in general but in pre-seed and late stage in particular.
Index
1️⃣ Engineering lessons for investing in meaningful frontier hard tech
2️⃣ The extraordinary opportunity happening in deep tech right now
3️⃣ Why investment in real breakthrough tech and science is uncommon
4️⃣ Measures to mitigate risk and boost deep tech investing
5️⃣ How can we improve an ecosystem for superior tech sovereignty
6️⃣ Advice for new investors in deep tech
7️⃣ Hard tech analysis blueprint from a tier 1 VC
8️⃣ Global state of VC and deep tech
9️⃣ Hot verticals today and tomorrow
🔟 Is it possible to optimize for huge returns and huge positive impact?
1️⃣ Engineering lessons for investing in meaningful frontier hard tech
First of all, it is important to highlight that I’m talking from the point of view of someone who is focused on investing in breakthrough technology and science such as deep tech and clean tech. I’m making this clarification because in some sense it influences the applicability that I believe my engineering lessons can provide.
From there, I’d say:
Extreme focus on understanding technology, from generic fundamentals to specific details. As an engineer, it is part of your daily job to grasp all the technical details of the task in front. As a venture capital investor trying to invest in really groundbreaking companies, having internalized this detail-oriented product-driven approach that goes beyond basic elements can help you illuminate the future potential of a technology that in the present moment and without that angle, could seem too much like a leap of faith. I know it seems obvious but in practice it is not as common. I believe sometimes the need to find clear market fit limits the exploration for product innovation. Yes, great tech won’t translate to a great product if the customers don’t want it or aren’t willing to pay for it. But as an investor you need to be open to new angles.
Exploration of product adjacencies to improve visibility on hidden value. Strongly related to the previous bullet. An additional lesson that I think engineering provided me with and that can be applied to investing, is that when you truly understand the full technical ins and outs, you can actually leverage the knowledge and go one step further from the current product stage (and even current product roadmap) to explore adjacencies that may hold great value.
Systematic iteration to improve data feedback and reduce risk. Again, probably more meaningful when investing in hard tech (where the risk can be more about actually achieving a breakthrough product) rather than in traditional digital. I don’t believe this is a game about doing an investment analysis at moment 0, placing your bet, and then just waiting. One big lesson from being an engineer in new climate tech projects, is that it is super important to allocate time and effort in understanding tech validation during the development process (steps required to evolve, risks that can be a danger and how to mitigate them, scaling up in the right place, building up confidence internally and externally at every stage, making sure the product path includes working with customers and having proper feedback loops with the market, etc).
2️⃣ The extraordinary opportunity happening in deep tech right now
Now we are going through a potential revolutionary opportunity. There is clearly a paradigm change where critical problems to humanity are becoming increasingly evident while at the same time we are having access to the best technology potential ever available. We have a very exceptional chance to create a new world to live.
Steam engine, lightbulb, … some of the most important improvements ever for the world came from deep tech.
Climate, energy, transport - you name it. The possibilities in deep tech are mesmerizing and there is a clear gap in investments that can hold interesting value.
3️⃣ Why investment in real breakthrough tech and science is uncommon?
I believe there is a mix of real difficulties and not-so-real misconceptions.
About difficulties, real breakthrough tech and science, often categorized within deep tech, is complicated work. True technical advancements take some more time and some more capital intensity than traditional digital venture capital investments.
But there are major misconceptions: culture, data, and upside. First, studying the past we see that investments that could’ve been categorized as deep tech where some of the most important ever in history, however culturally deep tech has become this tough struggling category in the minds of the mainstream VC industry (specially when it comes to investing in hardware). Second, data shows that even though more time and money can be required by this type of companies, it is feasible and not as extreme as some current narratives say. Third, the upside of having a home-run investment in this thesis can actually be more interesting than it may seem.
4️⃣ Measures to mitigate risk and boost deep tech investment
Going after the biggest problems. Maybe could sound paradoxical, but going after the biggest pains implies three key upsides: huge markets, more upside if you manage to provide a proper solution, and evidently a more transformative impact for society. Looks obvious, but It will surprise you how many people allocate significant focus on solving stuff that is too marginal and far from the market sentiment. Deep tech is complex anyway, let’s make it worth the effort at least.
Improving clarity regarding potential future upside. As we already mentioned, tactics such as close follow up and understanding of product development, and having frequent feedback loops with markets/customers, can improve visibility on ultimate potential even when the current stage of the company is too early and abstract to build conviction.
Close and detailed tracking of tech development. As we already mentioned, tactics such as close follow up and understanding of product development, can improve visibility on ultimate upside potential even when the current stage of the company is too early and abstract. This is key to have awareness of the risks along the way and be ready to mitigate them, since in really game-changing investment like deep tech, product risk is one of the biggest challenges.
Better understanding of the market and customer. Also as commented, it is very important to have frequent feedback loops with markets/customers, since it can greatly influence both, product development and go to market. This risk mitigation measure tends to be the missing piece in quite a lot of deep tech founders, who usually are highly technical and extremely focused on product.
Building up the ecosystem. Last element but extremely relevant. From engaging super early with potential customers or having the support of public gov, to building bridges with the industry you are targeting, empowering universities and research labs, or easing the path for more capital to be active in the game. For tech breakthrough investment to flourish, we need to the whole ecosystem to flourish.
5️⃣ What are your top 3 advices to improve an ecosystem for superior tech sovereignty?
Following up from the previous question, my 3 top factors are:
Building bridges. We need to build more bridges involving technical academia, research centers, private industry, public gov, and capital. It is a must to take more tech out of the lab and focus on commercialization, make a significant improvement of the relationships with startups, and ultimately empower all the stakeholders in the ecosystem so they are more willing to go the extra mile.
New policies. Special focus on bringing in policy makers is a major need. They tend to be reactive and defensible but times are changing, and we need them 100%. For instance, I personally participate in some groups bringing together investors to work with the government in order to communicate challenges within the startup ecosystem (specially around cleantech), and it is quite helpful.
Pre-seed and B+ funding. There is a big opportunity gap for investors paired with a big need for the ecosystem. In Europe and UK we are seeing a clear lack of appetite in deep tech / breakthrough tech investing, specially in the earliest and latest stage. I’m looking forward to see a generational change in this aspect in the coming years.
6️⃣ Guidelines for new investors in deep tech
Some things that come to mind:
Do your homework on LPs. Study the strategy of your target LPs. Some of them are not exclusively focused on financial returns but also on the chance of doing an impact. Find them, study them, build a good strategic alignment, and articulate well the fit.
The power of being different. Some LPs look at new emerging managers more interested in seeing what differential angle to the current status quo can be useful, rather than seeing the n+1 version of the previous thing. Maybe it is some specific industry experience, maybe it is a rare but exciting technical background. But whatever it is, contrary to what it may seem in this VC world at times, resisting your natural urge of blending in with the current state of things can help you. Explore your differential edge and empower it.
Building verticalized networks. Ok, so you want to focus in a specific industry like deep tech? Allocate time and money to nurturing relationships with key stakeholders in this specific target. Deep and wide. In this case, universities, research labs, well-known technical experts of some of the segments you find more exciting, gov entities close to this world, other investors either active in the space or with some deal activity in it, etc.
Dealflow access. Evidently, a must for any manager regardless of your target. You need a strong proven dealflow access that somehow can show unique aspects of what you can bring to the table in terms of good investments.
Technical insight and operator experience. I’m aware this is still today a big debate in the VC world, but my honest opinion is that for something like deep tech, the difference between an investor having technical and operator experience or not, is huge. Not just in terms of picking the project and making your bet, but also in the much needed support and advice you’d need to provide along the way.
Seeing what others don’t. A no-brainer in VC in general, but I believe even more important in deep tech. A trend follower style only gets you so far. The interesting thing for me is, do you really have that depth of technical knowledge and market vision that you are able to see opportunities that others may overlook? Because if we are talking about highly complex breakthrough technologies with extreme transformative potential, you really need to see things differently. A bold approach to not be aligned with conventional wisdom is a fundamental requirement.
7️⃣ Hard tech analysis blueprint from a tier 1 VC
Based on my point of view, at Octopus I don’t really have a standard blueprint for investment analysis, but it is true we do have many portfolio companies providing a lot of ongoing data that we can leverage.
Based on that, my top 3 elements for analysis are team, tech, and market. But without a doubt, team is probably one of the most valued elements.
Everything can change but great founders remain. We value tenacity, never giving up type of attitude, good reactions when things get tough, resilience, determination, love/passion for what they are building, constant drive to engage and understand their market, and openness to change approaches if needed. Can this be subjective based on the investors eyes? No doubt, that’s why it is important compounding valuable experience as investor to improve detection of those patterns.
Then, if talking about deep tech, what we usually see are 2 founders with at least 50% being extremely technical. They see and understand the technology opportunity and want to build up from that. It is true though, that from a team perspective, in this investment target you tend to find a lot of super technical profiles more similar to the CTO role than anything else. So even in the analysis stage it is already important to provide valuable support for team building, specially when talking about the sales aspect.
Besides team, tech + market equation is the other key element. A good example of the importance we give to this is the Springboard program of Octopus. Springboard is a deep tech programme created to help founders in the earliest stages. Our main focus is analysis and work towards understanding how a very ambitious high impact technology can go from the lab to engaging a market successfully. So we are concentrated on understanding target and adjacent markets, customer discovery, product triggers that will enable product-market fit in the future, leveraging expertise of our extensive network of corporates across several industries, what steps will the company require to be investor-ready for next stages, what are the short term and medium term pilots and projects that can be achieved, etc.
8️⃣ Global state of VC and deep tech
In terms of VC, the market is a bit off and conditions aren’t as great as they were a couple of years ago. Everything feels a bit slower.
However if we talk about deep tech, I see appetite for investing with verticals such as climate tech going through quite a sweet momentum. Problems are perceived as bigger and more critical than ever (e.g. needs for better future sources of energy, water, and food), US + UK + Europe policies are increasingly pushing hard towards tech sovereignty, incredible amount of research is happening in multiple areas, local deep tech ecosystems are getting a lot of attention, and there is a global rise in the understanding of how important this adventure is (e.g. India’s recent deep tech push).
9️⃣ Hot verticals today and tomorrow
So many exciting things now and in the future!
To name a few (some of them interlinked):
Materials. Materials science sector is attracting considerable attention who want to capitaliza on the potential of advanced materials to disrupt traditional industries. Specially if we are talking about adding a climate tech angle. Some examples are new forms of steel manufacturing and the quest for “green” cement.
Decarbonization. Climate tech solutions trying to mitigate climate change risks, impacting other verticals such as “green” materials or energy.
Alternative fuels. More advanced and efficient fuel sources that are not only aligned with environmental goals but also can have transformative effects in other industries. Some examples are hydrogen or ammonia.
Transportation and shipping. Electrification of transportation, autonomous vehicles, new infrastructure development, AI applied to smarter route optimization, growing sustainable focus, etc.
Energy. My background is in energy so I find this particular one very interesting. I’m very excited about stuff like the revolution we are going through in electricity, evolution of automobile industry, new renewable sources, massive potential in more intelligent systems to match demand and monetizing in new ways, evolved buildings and homes, improvement in batteries, smart grids, off grid alternatives - I believe we are experiencing an almost once in a lifetime timing to build a new energy system.
🔟 Is it possible to optimize for huge returns and huge positive impact?
Good question!
I see a lot more of people driven to do well while doing good and I believe it is being proven that you can make a lot of returns while making huge positive impact (e.g. Tesla). However at the same time, to be honest, I also see key milestones that haven’t happened yet and lack of interest in achieving this returns+impact binomial coming from some industry players and investors.
But regardless of the challenges, I do think that we are in an amazing standpoint. For instance, we are in the break of building better ecosystems, having more success cases, exploiting more breakthrough tech such as in the intersection of solar energy and EVs, or in energy transition and decarbonization of traditional heavy industries.
Maybe not everything follows the traditional VC way of doing things, maybe not everything is even VC backable and we need new hybrid funding systems, but it is possible to do well while doing good.
Big thanks Rubina for sharing your views with us!
Big thanks to you, reader, for your time and interest!
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