At the beginning of the year, we welcomed Lisa Edgar to the OpenOcean team as our new Strategic Advisor. Lisa assists the OpenOcean team in driving key strategic initiatives for our firm and our mission to empower the leaders of the data economy.
With experience in developing and investing in VC funds and startups, and creating long-standing relationships with many of the world's leading VC firms, we wanted to ask Lisa the burning questions on our mind regarding the VC market, the importance of ESG for any company and the current sentiment of LPs.
What excited you about OpenOcean, and what factors influenced your decision to become an advisor for the team?
Open Ocean has an experienced, multi-generational team with diverse backgrounds and has been investing since 2009 in data-driven companies across Europe. It’s not too often that you find a firm that is stronger than their brand in the market. Those are the types of groups I feel I can really help as a Strategic Advisor.
As an experienced investor who has worked extensively with entrepreneurs in Europe and the US, what qualities and abilities do you believe are most important for a successful entrepreneur?
An intense desire to succeed at solving a problem, the ability to build a strong team of operators around you, and someone who can inspire others are key characteristics for success. Often passionate, repeat entrepreneurs do this best.
What is your evaluation of the current state of the European venture capital market? Specifically, how does it compare to the US market in terms of specialist funds and investment opportunities?
In some ways, the market in Europe is ahead of the US, for example, in terms of incorporating ESG principles in their investment activities and working with distributed pan-European teams which was the case long before the pandemic. And let’s not forget the performance from many European VC firms now is on equal footing to those in the US.
Yet, Europe is still behind the US in terms of the sheer number of repeat entrepreneurs, C-level talent, and corporate buyers – as well as exit market opportunities. In my view, however, this is due primarily to the maturity of the market and ecosystem, not the long-term prospects of European VC.
What is the current sentiment among LPs in light of the market downturn, and how do you see this affecting the startup ecosystem?
Most institutional LPs investing in venture capital are still very bullish on the opportunity. However, many have issues with their own portfolios with respect to capital allocations - particularly because of the fast pace of the last several years, the decline in value of their public portfolios, and the significant slowdown of distributions. As a result, we’re in a difficult market for fundraising - especially for new managers.
Given the current market environment, what industries or sectors do you see as particularly vulnerable, and which ones do you believe are better positioned to weather the storm?
Those that cannot demonstrate a unique and clear differentiation are most vulnerable. In this environment, the “must haves” get done – the “nice to haves” do not. In that same vein, sector-specific funds can be more interesting in markets like this if you’re trying to ensure adequate exposure to a sector, i.e. Data-Driven AI, DevOps or Digital Health.
What factors do you consider when evaluating a company’s commitment to ESG? Furthermore, to what extent do you believe a company's ESG practices can impact its potential for long-term success?
I firmly believe ESG matters. Companies that have a clear vision of how they run their business and influence others with respect to creating a more diverse workforce or protecting the environment will inevitably be building more sustainable businesses. Moreover, in what universe would an investor believe that good governance doesn’t matter?