Our Thesis

We now live in the post-COVID era but are facing a prolonged downturn that presents every industry with a new set of unprecedented challenges.

As tech investors, we position ourselves at the forefront of emerging trends and changes in the market. Still, the current environment has forced us to question how the world’s appetite for (and consumption of) products and services has changed, and critically, which of these national and global shifts present opportunities for the next generation of long-term businesses, perhaps Unicorns.

We seek to find, fund, and support the world’s most ambitious entrepreneurs. For 2023 and beyond, we’re honing in on the industries we predict will see some of the most significant and permanent shifts in the coming decade. We’re looking to help scale and provide funding support to the next generation of technology entrepreneurs that are maximising the opportunities that the new world presents.

Our Sectors

Data/AI

Data volume has skyrocketed due to advances in technology and the popularity of the cloud. As a result, many new different kinds of data infrastructure software platforms now exist that focus exclusively on AI or ML algorithms when dealing with large amounts of information. With this development we’re looking forward to seeing new products that will simplify ingesting and interpreting large datasets.

Vertical SaaS

Many businesses that relied on old-fashioned processes and outdated tools have been forced to rapidly adopt new technologies. Specialised solutions delivered via the SaaS model reflects the movement towards business-specific software which is tailored for a single domain.

Web3

Blockchain technology’s core characteristics are decentralisation, transparency, immutability, and automation. Web3 will change the way we interact online with one another by changing how open-sourced information is shared. This has many implications for many different industries which will all be made available in this new age of information sharing and interaction.

We believe in mission-driven founders with an irrational commitment to their cause based in the UK, Europe or USA. The best startups require patience as the technology is developed, matured, and markets are built. Our focus is on B2B SaaS & Deep Tech. Cloud-based software targeting industries ripe for disruption, and Deep Tech startups that combine science and engineering to tackle the toughest and potentially most lucrative technical challenges facing the world.

Our Strategy

7startup is a private investment club and venture builder obsessed with B2B SaaS and Deep Tech product development. Built upon the wisdom of hard lessons learned, guided by seasoned founders and leaders, we exist to journey together with entrepreneurs on the path to creating lasting companies.

Seed to Series B

Our Fundraising Support service helps showcase your venture to investors and advisors, off the back of relationships initiated and cultivated by 7startup. Following a thorough audit to get everything in order before we start approaching investors, preemptively addressing red flags before investors see them. These startups typically generate £500k – £5m in ARR and are looking to raise between £1m and £20m.

Seed

Our private investment club is an agile investment partnership with HNWI, Angels, Family Offices and VCs. We pull together on a set of common goals and common values; our members are partners who have worked together for some time. Our relationships are everything. We look for the next trend and early validation, growth, differentiation, capital efficiency and a large market size.

Pre-Seed

We navigate the risks founders encounter when building a company by leveraging our playbooks, methodology, and community – we build together. We look for a great founder that understands the market need and is building an MVP.

We invest in the infrastructure that enables the digitalisation of every industry. Guiding our entrepreneurs with expertise and capital – helping their company to grow and fulfil its promises.

Scalable and transformational companies are those worth investing in. These desired qualities in a company can be difficult to find and often come at a steep price in later stages of investment. Over the last decade, the B2B category has come to epitomise value for investors hunting the next billion-dollar startup, particularly B2B SaaS platforms. Further, these types of startups offer high returns with low risk; superior to those of comparable B2C companies.We aim for higher quality with less capital and strive to take bold risks early with our founders and co-investors. B2B SaaS and often Deep Tech startups don’t require “big” dollars, and in our experience, too much capital early on can constrain creativity.

We know great companies take time to build, and we don’t mind getting our hands dirty. Actually, we enjoy the journey. We start small so that we can go big – because we know what it takes.

Long-Term View

For a decade now, growth has been seen as what defines success for the majority of technology companies. Moore’s law gave us unprecedented levels of computing power which led to winner-take-all markets. As a result, entrepreneurs adopted this ideology and created new technologies, creating an era where online communities change how we live and work.

Longevity in business creation is taken for granted – no one sets out to create a company with an expiration date. That said, very few early-stage companies think critically about the principles needed to survive. Going forward we believe it is essential that we do so.

A successful startup is driven by its founder, their vision, and the core team. Most of the key decisions are made by a small group of individuals who have the will and drive to steer the company through the early stages. In backing any company, we’re acutely aware of founders’ mindsets and rally behind those that take responsibility for what they do. We focus on endurance as a fundamental design principle because we believe it creates moats in every business; this helps to make their product or service better than most others while avoiding ethical problems caused when they don’t think about longevity first thing before taking action.

Invest broadly yet remain focused

B2B SaaS

Predicting the future is nearly impossible. However, we are trying to predict the present as best as we can. The software market is an ever-expanding pie that gets re-cut every day. Our philosophy is both narrow and vast at the same time. For B2B SaaS, we focus on investing in building blocks for modern software companies across all aspects of technology.

The growth in the cloud economy over the last five years has been incredible, and yet there’s still far more potential for growth. It might seem risky for some people who don’t invest in early-stage startups, but investing broadly in B2B SaaS companies provides an opportunity for greater rewards with less risk when compared to more traditional Venture Capital investments. These types of businesses typically have very high gross margins, predictable revenue from customer acquisition costs, and net margins of 25-50%.

The unicorn chase ignores the universes of high-growth B2B SaaS companies that didn’t set out from day one to become unicorns, nor were they geared for growth at all costs with the traditional multiple rounds of dilutive venture capital this entails. Instead, these are what we call independent software-as-a-service (SaaS) companies. These companies may have grown through customer revenue instead of outside investment and are seen by moste venture capitalists as incapable of delivering the huge returns that LP’s want due to a lack of urgency in their growth strategies.

We believe this assumption is incorrect

Many B2B software companies in particular are extremely capital efficient and can go from unknown to massively successful without much growth capital. This means late-stage valuations will stay high, and there is only so much money they can use.
Unlike in the public markets where shares of earlier-stage startups can be bought easily and quite cheaply, it is difficult for investors to buy shares of later-stage companies. A liquid market does not exist for fractional ownership in these businesses; even if one was able to purchase shares from an early investor, this person could sell those shares at a higher price than what the buyer paid. The decline of dilutive equity financing has also caused this issue with these investments.
Ultimately, the higher valuation rates for late-stage startups mean that the distribution of outcomes changes entirely – which also means an indexing strategy is no longer optimal.

Deep Tech

If you’re a technical founder who’s struggled to explain your tech and vision to investors, we’re the right partner for you. We partner and invest in pre-revenue to help turn your science fiction into reality.

We care about your code, not your sales pipeline, and like to partner with founders as early as we can. We believe that irrational ideas have the capability to change the world, provided they are backed by entrepreneurs with stellar problem-solving skills, and patient passion, who refuse to give up against all odds.

We look for diverse startups solving these types of technically complex challenges. From developing safe, net-zero energy solutions to planning and implementing the future of infrastructure, these startups employ precision engineering, bleeding-edge scientific discoveries, and visionary entrepreneurship to reshape the world.

We define deep technology as the integration of visionary ambition and pragmatic execution. Deep Tech ventures take on some of the world’s greatest challenges while delivering commercially viable results all along the way – including transforming entire markets with extensive research and development while creating whole new industries themselves – by meeting specific criteria:

They are problem oriented. Deep tech ventures aim to solve large and fundamental challenges to society. For example, 97% of deep tech ventures we have studied contribute to meeting at least one of the United Nations’ Sustainable Development Goals.
They look at using the best existing or emerging technologies to solve the problem at hand. 96% of deep tech ventures use at least two technologies, and 66% use more than one advanced technology. This enables them to generate distinctive intellectual property. About 70% of deep tech ventures own patents related to their products or services.
They have shifted from digital innovation—based on bits—to digital and physical innovation—based on bits and atoms. About 83% of deep tech ventures are designing and building a physical product. Their abilities are focused on the use of artificial intelligence, machine learning, and advanced computation to break through barriers in physics, chemistry, and biology.

”While 2022 has been heralded as the year of deep tech, other sectors are becoming saturated. We’ve seen venture capital investment in deep tech up from 10% to 25% in the last 10 years and current valuations of these startups worldwide now total $468 billion. Deep tech is on the rise and appears to have more downturn resiliency than any industry, and is currently one of the strongest investment opportunities available.” – Amit Khanna, CEO, 7startup