Strategy

  Technology Innovation

It is no secret that digital technology is changing the world. Few industries remain unaffected by developments of the past 20 years. The pace of innovation appears to be accelerating, which is great news for society, and a big opportunity for investors.

Today entrepreneurs bring their ideas to market more quickly, easily and cheaply than ever before. Some key underlying trends are:

  • Cost Down: launching a new product takes 5-10% of the capital it did 10 years ago.
  • Speed Up: entrepreneurs regularly deliver their first marketable products within months of company inception. More people are willing to adopt new technologies, and products iterate faster toward success.
  • Opex not Capex: cloud computing and service innovation have largely converted fixed capital costs into variable operational spending. Investment risk can be aligned with operational performance more than ever.
  • Robust and Scalable: technology-enabled businesses now enjoy development tools and processes that are faster, better, and stronger. They can focus on building and selling their products, and new systems scale naturally along with them.
  • Global Distribution: app stores and online visibility give new products access to billions of potential customers almost immediately, almost at zero cost.

The sum of these trends is a rapidly growing number of capital-efficient exciting new companies that need expertise and capital to fulfil their potential.

  Partnership

In the technology world people often use the word ecosystem. It describes the fact that a wide range of knowledge, experience and contacts are needed to bring any new idea to life, to market, and to success.

ecosystem - a system, or a group of interconnected elements, formed
b
y the interaction of a community of organisms with their environment.

At Isomer Capital we know partnership is the only model for sustainable success. We operate as a network of networks to help all our partners prosper, bringing opportunities, capital, expertise, contacts and assistance to our GPs, LPs, and investee companies alike:

  • Access to investments and segments of the economy many cannot reach.
  • Expertise and Relationships in venture capital, a high performance but complex asset class.
  • Scale to help big investors benefit from big ideas in their early stages, and to help small investors extend their reach.
  • Diversification to spread risk across many assets and key dimensions such as sector, stage, geography, and vintage year.
  • Infrastructure to execute on opportunities through the extensive work of market screening, due diligence, negotiation, legal, tax and ongoing monitoring.

  Europe

The European Union has a population of over 500 million, generous investment and R&D tax incentives, positive immigration policies, and leading scientific research and education institutions. That fertile landscape, with the technology trends above, has fostered a boom in entrepreneurship. EBAN reports over 33,000 angel-backed companies are started each year.

Yet while Europe and the US have similarly sized economies, for historic reasons annual venture capital investment in Europe is about 20% of the US equivalent. Such market trends take time to correct, however a number of observations suggest underlying historic drivers have already changed:

  • Ambition Up: today’s entrepreneurs play to win big, building products for large markets and global audiences. They read blogs from the best VCs and entrepreneurs, and pursue billion-dollar outcomes with equal ferocity.
  • Returns Up: before the global financial crisis returns in European venture capital were not as attractive as elsewhere. However since 2009 returns have risen consistently, on individual fund levels and amongst leading investor portfolios. This positive trend is growing, and presents an attractive opportunity to investors who act now.
  • Talent Flowing: repeat entrepreneurs, big company technologists, and experienced developers are in better supply than ever before. Start-ups and investment organisations increasingly attract people already experienced in building and scaling technology products.
  • Deal Competition Low: in Europe investment opportunity outstrips capital availability, so venture deals are less frothy than in other markets. Process, alignment, and terms are in line with global standards, and entry valuations lower.
  • Next Generation VC: start-ups in Europe receive early funding from friends, family, business angels and a new generation of VCs that arose in the years following the global financial crisis. These VCs grew out of the same environment as entrepreneurs and are well placed to cultivate young technology-enabled businesses.

  Entrepreneurial Capital

Isomer takes an entrepreneurial approach to its market, building investment solutions that maximise performance and manage risk.

In classic terms this means primary and secondary transactions in venture capital funds and their underlying companies. It also means remaining open and flexible to challenges and opportunities presented by our partners.

 

 

Isomer Capital Ecosystem

  

Isomer's entrepreneurial approach accesses high-potential opportunities through limited partner investments in funds, company co-investments, and providing liquidity to firms and founders via secondary purchases.