UKBAA Angel Investment Awards sponsor Playfair Capital discuss the impact of the pandemic on the DeepTech sector
With less than a week to go until nominations close for the UKBAA Angel Investment Awards, we spoke to Henrik Wetter-Sanchez from Playfair Capital, the sponsor of our DeepTech Investment of the Year category, to see how the sector has fared during the pandemic over the last 12 months.
Playfair Capital is a pre-seed and seed fund that invests at the earliest stage. They work with founders that are just getting their businesses off the ground, to help them convert their idea into a product with a view to being able to scale it quickly from Series A. Explaining their approach Henrik says:
“The first year or two at the beginning of any startups’ journey are the hardest part and that’s where we focus. We invest in deep technologies, that’s one of the reasons we’re sponsoring the DeepTech Award, and that’s where we believe the most exciting innovations in this decade will come. In terms of our background, Playfair was founded by an angel investor. Most of us on the team have also been angel investors or crowdfunding investors of some kind so we understand that angel mentality. We like being hands on, we like being flexible and we like being partners to early stage founders and their businesses. We’ve worked with the UKBAA for a long time because it very much fits into our entire ethos of investing.”
The beginning of the pandemic resulted in an unusually busy time for Playfair Capital. They made four investments in Q2 2020 when normally over the course of a 12-month period they make six investments. They reverted to a normal pace in H2 2020, but 2021 has taken off again.
“The award itself, you’re getting access to the ecosystem and to the breadth of early stage venture.”
“At the beginning of this year things have gone through the roof. VCs have settled into this new fully digital world, which actually suits us and the scalable businesses we invest in very well. Valuations and round sizes have doubled or tripled and have gone even higher for the edge cases. We’re seeing a big disconnect now between the companies and funds operating at the very top of the quartile and the rest. For many funds, cutting through that noise to company fundamentals is probably one of the biggest challenges at the moment.”
With many sectors struggling during the pandemic, Henrik has seen companies in Playfair Capital’s portfolio adapt to improve processes. One such company is Recycleye, who are transforming the waste management industry. Explaining how Recycleye has adapted, Henrik comments:
“Recycleye previously had to do in-person site visits but they had to step back and say we can only solve this now (during the pandemic) if we create a product that can be fully installed, deployed and operated remotely. That’s what they’ve done and it’s fundamentally improved their business beyond Covid: it’s quicker, easier and cheaper to scale their product.”
Henrik has seen similar improvements across the DeepTech sector as businesses have had the time to regroup and look at what they do in a different way. 12 months on from the first lockdown and the sector has proven to be incredibly resilient.
When it comes to who should submit a nomination for DeepTech Investment of the Year at this year’s UKBAA Angel Investment Awards, taking place on 8th June, Henrik says that any company that fits the criteria should consider it.
“It’s a win-win. Being able to put your vision, your company and your achievements into a condensed format for the nomination is a useful exercise. You need that information for fundraising, you need it for hiring and you need it for selling to your customers. That’s just the practical exercise of submitting an application for anything. The award itself, you’re getting access to the ecosystem and to the breadth of early stage venture. Whether or not that’s for direct investment, or for contacts, it’s a brilliant way of being connected in at the very earliest stages.”
Looking ahead to the rest of 2021, Henrik acknowledges that there are still a lot of unknowns but Playfair Capital plans to double down on what they know they’re good at while helping their entrepreneurs and investing in businesses they think can last the distance.
“A company that we invest in, we’re working with for 10 years, not for six months or a year, so they need to outgrow and outlive bubbles and hype. It’s just trying to really stay within our own zone of genius, and that is the first two years of a business and fundamentally improving the business itself rather than responding to the market’s hype.”
Submit a nomination for DeepTech Investment of the Year and the other categories at this year’s UKBAA Angel Investment Awards by going to https://awards.ukbaa.org.uk. The deadline is midnight on 18th April 2021.
Find out more about Playfair Capital at https://playfaircapital.com.