Venture capital firm Form Ventures, which aims to help startups navigate regulatory and policy issues as they scale, has today closed its second fund at its target size of £30m.
British Business Bank was the fund’s cornerstone investor and was joined by several notable backers including Isomer Capital and Draper Espirit.
Form plans to invest between £200k and £1m in pre-seed and seed stage UK startups that align with its focus on sectors directly shaped by policy and regulation, which it then advises on issues that may stand in their way as they grow.
“Most of the time, these issues are a blind spot for founders while they’ve got their heads down trying to scale, and adding government expertise to their headcount isn’t feasible at early stage,” co-founder Leo Ringer tells City AM.
“We cast the net wide when it comes to sectors we invest in and that’s intentional, as policy is becoming more and more important for startups in all sectors, not just classic regulated markets.”
So far for example, this has included backing Hoxton Farms, a lab-grown meat foodtech for whom policy is a “make or break issue”, according to Ringer, because as of yet there is no regulatory pathway for cultivated meat.
Form also thinks there are startups doing “really exciting things” in the mental health space, where providing actual diagnostics of clinical depression and mental health is a heavily regulated activity with large ethical consequences.
They’ve already invested in Thymia, a startup that uses an AI model to diagnose clinical depression, and will be on the lookout for similar startups with the new fund.
Unlike some VC funds that have a model where they sell extra services to the companies they invest in, Ringers insists Form brings this advice purely as an added value to their portfolio investments.
Founding partners Ringer and Patrick Newton draw on their expertise and contacts from their backgrounds in public policy, which means they’re always “one or two phone calls away” from getting a good handle on the most pressing regulatory issues facing the startups they back, Ringer says.
As startups increasingly look beyond capital to consider what kind of VC expertise they want on their cap table, Ringer points to the US where “it’s more of a thing”, and several funds are more established in specialist spaces. One example is Tusk ventures, which specialises in heavily regulated sectors.
“We think the UK and European markets are heading in the same was as the US in the next few years, and the best founders will be those that want to be backed by the VCs that can bring something more to the table.”
And as millions of venture capital flows into more complex markets in the UK like fintech, energy, and insurance, Ringer believes we’re “past the wave of smash and grab companies trying to keep off the government’s radar.”
“The UK is producing great startups in markets that matter to people’s livelihoods now,” Ringer says. “It’s not just their social media.”
“And the ones that are going to do really well will have a much more considered approach to policy and regulation going forward.”