EXCLUSIVE: Triple Point Ventures will be looking to invest £15m into around 15 B2B tech start-ups in 2023, according to its head.
A subsidiary of the wider Triple Point investment company, the London-based VC said a third of these will be follow-on investments over the course of the next calendar year.
“Today the focus is very much on B2B software and technology at seed stage,” head of venture Ian McLennan told Growth Business. “Since 2018 we’ve made over 50 investments and deployed about £40m and will probably have invested £10m [by the end of] this year.”
Triple Point Ventures currently has two funds: its 2018 impact EIS fund, which is closed to new money and focuses on health, environment, education and work; and its 2022 VCT fund focusing on B2B tech.
Entering the Triple Point offices on King Willam Street just off Bank station in the City of London, it’s easy to be deceived into thinking the ventures side of the business is larger than it is. It has six in its team, including two new recruits in Manuel Antunes and Jamie Tomalin, who joined the investment team from Mustard Seed and Barclays respectively.
“We’re just £60m of the Triple Point AUM,” McLennan explains. “This is a fund that runs at £3bn across a whole bunch of sectors like leasing and lending, energy, digital infrastructure and social housing so we have a lot more depth to the business than a standard personnel-light LP/GP VC fund.
“We’re seed stage – the typical cheque is £1m but we will look at pre-seed, which not a lot of VCTs will do, so we’ll look at writing £400,000 to £500,000 cheques for earlier-stage businesses.”
For background, Triple Point has been around since 2004, funding small businesses in different sectors like fintechs Capital on Tap and LendInvest. McLennan joined its VCT team from a hedge fund in 2008 and only in 2018 started investing on the newly established ventures side he co-founded in 2017 for the “higher risk stuff”.
In that time, he and his team have built a portfolio including integration platform Ably – which synchronises digital experiences in real time and is used by Tennis Australia for real-time tennis scores and stats without latency – and Semble, which integrates software for GPs and proved particularly useful during Covid.
Both start-ups have increased their revenues ten-fold since Triple Point Ventures’ backing.
The VC also recorded an exit in credit scoring system Credit Kudos, which was sold to Apple in March resulting in a five-fold return. “We like to make 10 times our money, but we had only been in that company for two years,” McLennan said.
‘If there are question marks, it’s a much more difficult market than the last few years to be fundraising’
Today’s landscape is offering up different challenges, however. “It’s quite different from last year,” he admits. “Investors are choosier about what they will back. If there’s a flaw to the story, then it’s tougher to raise money [but] there’s still a lot of capital for interesting ideas where VCs are competing a bit to do deals.”
One start-up that has recently passed that test and received investment from Triple Point Ventures is OutThink, a cybersecurity start-up that fights human error’s role in data breaches.
“If you’re in a niche that’s growing a lot in the next few years or you’ve already proven you can get some great customers to grow your revenues quickly, there’s plenty of capital,” he assures. “But if there are question marks, it’s a much more difficult market than the last few years to be fundraising.
“The market’s not dead, there’s still a lot going on, but it can be tough for people.”
What does Triple Point Ventures look for in its investments?
A founder who knows the market: “Do they really know the market and is there a personal chemistry – are they on the same wavelength as us?”
Do the customers really need the product? “There are so many software ideas being thrown at companies and they need to prioritise their time as well as their budgets. There are a lot of things companies say that they like but do they sign on the dotted line and implement in volume? It must save them time or money or generate them money.”
Is there a big enough market? “If the company only ever gets to 5 per cent market share, will that be a big enough revenue base for us to make ten-times plus our investors’ money.”