Outward VC invests in startups seeking to be the most important fintech companies in the world. Founded in 2018 to address the lack of options available to fintech startups seeking post-seed investment of €/£2-5M from their first institutional investor, Outward has backed category leaders such as Bud, Curve, Monese, PrimaryBid and Vauban.
Fund Strategy Overview
Geography: Pan-EU
Preferred industries: Fintech and adjacent
Investment ticket: £1-5M
Company stage: Entry ticket in £2-5M round, then follow-on for 2 more rounds
Product type: All
Product stage: MVP and later
Revenues: Yes
Q&A with Kevin Chong, Co-Head of Outward VC
What are the 5 main things you look for in a startup?
First and foremost, the market opportunity. Why does the product or platform need to exist? Why is the market interesting?
Once we are convinced about the market opportunity, we spend time with the startup team to understand why they will succeed. What’s driving the ambition? What has the team learned from their previous lives?
Thirdly, we want to be sure we can help the founders and the company post-investment.
Other important things are round composition and deal parameters. The deal must make sense for both the founders and us.
What disqualifies a startup as your potential investment target?
Lack of transparency can be early grounds for disqualification. As early-stage investors, we work hard to build long-term relationships and transparency (from both sides) is the best foundation.
What in your opinion differentiates the best founders from the rest?
The best founders know what they don’t know. They hire and build partnerships to fill the gaps. They are not afraid to find out. They don’t get stuck in tunnels of their own making.
What startups should take into account before making a deal with a VC fund?
There are some important questions that the startup team should find the answer to, before looking for the right VC fund:
How investors will support you post-investment?
Are you getting a team or one individual?
Are you comfortable calling investors when things get tough?
Will they help you raise your next funding round? How?
What do their portfolio companies say about them?
What is your approach to startup valuation and preferable share in the company?
At the early stages, valuation can be a red herring. It is not about the number, it should be about a fair allocation of risk and reward between founders and investors. Good investors will find you more shares or liquidity at the right time.
How do you support your portfolio companies?
As early-stage investors, knowing runways are short, we help our companies position for their next round from the get go. We spend a lot of our time building a highly qualified network of later-stage investors. How we support our startups varies greatly across our portfolio. No two companies are the same. We take calls night and day from our founders. Sometimes the best support we can give is freedom to operate.
What are the best-performing companies in your portfolio?
Ask me again when all of our companies have exited. The startup journey is not straight-forward. Sometimes early traction hits a ceiling and you need to change course. Sometimes you have several near-death moments before the business takes off. We are proud of all our companies.
What are your notable lessons learned from investments that didn’t work out as expected?
For early-stage startups, go-to-market is vital. The market opportunity looks rosy and you may have what looks like a differentiated product but … how do you go-to-market? Imagine doing it at scale.
Another lesson is the need to do exhaustive market research. Identify all your competitors, small and large, direct and indirect. Understand where you fit in. Understand the customer.
What are the hottest markets you currently look at as VC and where do you see the biggest hype?
We are not in the habit of chasing the hottest markets. Often these are lagging indicators. It’s too late already or overvalued. We like to stand by the fundamentals – is there a gap in the market? Is it the right team? Do the deal parameters make sense?
In your view, what are the key trends that will shape the European VC scene coming years?
European VC as an asset class is gradually becoming better understood by investors globally. Encouragingly, liquidity is building for European VC at all stages. European founders will also become more practiced at partnering with VCs resulting in more productive relationships. Fintech will become a much broader category, we will begin to understand how areas that appear outside of fintech will end up shaping fintech.
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