Ali Mitchell is a co-founder and managing partner at Odyssey Ventures, an early stage VC fund that just announced a $75 million debut fund out of London.

What is Odyssey’s raison d’être – and why now? How long – and how difficult – was it to raise in the current environment?

Odyssey Ventures exists for one reason only – to help the most ambitious European founders build multi-$bn global winners. To do that we firmly believe that in most market categories you have to go global early.

• Today that means the US. Start here, build here. Raise money there, scale there and (ultimately) win there. That’s hard and it’s not for everyone. But it’s our sole focus. And so we’ve just announced our early-stage fund to help founders on the first part of their journey to do exactly that.

This funding environment is extremely tough for first time funds – easily the hardest in at least a decade – and we’ve had our own ups and downs like any startup! But we’re delighted we got here. We have a decade of investing and a decade of start-up founding/operating experience before that, so LP’s see we us an exciting combination of founder-led emerging manager edge, with a highly successful VC track record.

• NB: It’s quite the opposite for AI first companies – it’s like 2019 all over again in some places – and not necessarily in a good way! But overall this is an incredible time to be investing, with so many previously ignored sectors being totally transformed and accelerated.
• As the saying goes “a terrible time for raising funds is a fantastic time to be investing”.

Every fund says it’s ‘founder-led’ and ‘deep tech-focused’. What problem in venture do you think justifies Odyssey’s existence?

The reality is that most European VC’s are generalists run by non-founders. Only 8% of European VC’s are run by founder/operators, which is the opposite of the US.

• There’s a massive difference between the two, when investing at the earliest stages of a company. It’s not to say non-founders don’t make great investors – they of course can do – but in general if you ask any early-stage founder who they’d rather take money from – a founder or an ex banker – 9/10 times they will say ‘we would rather take money from an ex-founder’.
• That’s because founding any business is the hardest but most satisfying thing a person can ever do. Being multi-time founders ourselves we have the empathy and operational chops to be truly helpful when needed – and stay out of the way when not! And that’s why so many of our previous founders have invested in our fund and we’ve been able to consistently deploy even into the hottest follow-on rounds; because our founders want us there.
• It’s also why we left very well paid jobs running big VC firms to build Odyssey in the first place – from our own experience of working with great (and not so great) VCs and a strong view on what it takes to be successful in this next cycle.

When it comes to Deeptech vs Generalist – we like to boil it back to fundamentals. We see ourselves as ’thematic generalists’ with a focus on Deeptech. The world does not need another CRM, even one with a nice bit of AI on top! What we absolutely need – and will be the foundational technologies of our future – are breakthroughs in science, deep tech, compute, energy, human and planetary health – which is where AI and automation can truly make enormous gains.

Is the next frontier of venture differentiation sectoral (AI, climate, hardware), or structural (fund architecture, time horizons, governance)? Given the current industry shifts, how will Odyssey look in 10 years – more like a specialised VC fund or a scale-seeking generalist?

Deeptech is really just a way of saying IP-led innovation right at the cutting edge of what is possible, often built on deep research – vs. Scaling a pre-existing product or service more efficiently. At the start of every new cycle – these technologies look like Deeptech. The LLM’s are great examples of that!

• In the last 20 years the term ‘Deeptech’ has been conflated with sectors like energy, hardware biotech that have previously had very long term return horizons; a place for scientists and patient capital – not real venture capital. But that is changing, fast.
• Hardware doesn’t have to be hard now – it can scale at software speed with software margins now. And if you combine that with the fact that many of the biggest sectors out there are still relatively untouched by digitisation – it’s a truly enormous opportunity.

But at the same time there is absolutely a structural change going on in VC. Partly it’s cyclical – the end of one tech cycle means the passing of a generation of VC firms who have grown up in it.

But we’re also rapidly seeing the professionalization of the sector generally with things like Secondaries becoming much more commonplace as VC’s and LP’s (especially very early stage ones) realise that they don’t have to hold onto 100% of their ownership for 10+ years to make big returns. They can trade in and out, return capital faster and still ride winners as appropriate.

You’ve described Odyssey as bridging the valuation gap between Europe and the US – but is that really a market inefficiency or a cultural one? Btw, would you ever fund a European company that never intends to go to the US?

As we are focused only on potential global winners (vs regional winners – which can of course be very large businesses in sectors like fintech, defence etc) – naturally we expect that you are going to have to go global at some point. So we wouldn’t invest if you didn’t have that ambition.

• The reality is that US markets are bigger, so US funds are bigger, so US risk appetite is bigger, so US rounds are bigger and so of course ultimately… US companies are bigger. Which inevitably means that going to the US is essential if you want to win globally. In that way it’s an easy screening question for us, and one that sets the bar on the ambition of the founder, and how likely they will be to be successful raising from the big guns on the west coast.

WHEN you go to the US though, is a huge question. In our experience, either you go very early – Seed>A to get into the US capital stack and look/smell like a US company from the start. (Even if you keep engineering here in Europe). OR you go later – when you’re on your path to winning Europe have the resources to try to attack such an enormous market. There’s a valley of death in the middle though…

Which leads onto the cultural gap. The US loves immigrants i.e. you have to be there. If you want to win in the US, you have to be in the US. You have to build here, then scale there. Sadly most west coast VC’s will tell you ‘oh yes I love Europe to go on holiday or buy a house in the Cotswolds – but build a company and stay there? Oh… we’d never invest in that!’.

However going to the US hard.

• Firstly you need experience of having done it before, of translating European to American. It’s very very different – despite the language! I went to school on the east coast as a kid, lived in the mid-west in my early 20’s, and then lived in California for a decade with my last start-up. I can tell you some totally-counter intuitive things about building US go-to-market and hiring sales teams here in Europe vs in the US. It’s nuanced and not always what you expect!
• And secondly you need a deep and genuine network; it helps that we are privileged to sit on boards with some of the best investors in the valley, and we have an SF office and team to help founder practically when they are there. As a result we’re very proud that our first investment out of London – Flow Engineering founded by the incredibly Pari Singh – just raised an amazing round from Sequoia in SF alongside the founders of Stripe and Unity – with none other than Roelof joining the board. Pari is well on his way to building that global winner…

How do you find founders before they identify as founders – what does pre-signal look like to you? And how much of your time is spent discovering vs. curating what’s already in the pipeline?

We generally look for founders once they’ve become founders. It’s something only the very few ever attempt, and even fewer are even good at it. Many operators try and fail without the support blanket of a large organisation around them, which is why most of the best founders are young – fresh out or even in the middle of college.

And being an early stage investor our ONLY datapoint is the founder – so we look for early signals on whether they are that generational talent – that 0.00001% of people who have the intellectual clock-speed, ambition, resilience, self-awareness, technical and leadership skills to go on from idea to a multi $bn business. The failure odds are crazy, so only the crazy really go for it!

If you could, what European scaling startups would you invest in now?

We actually have a growth/scale-up fund in build, that we will launch next year (hopefully!). There is a huge gap in Europe, which is why so many US later stage investors come here.

Big props to the likes of Plural, Index and others who make the sorts of bets that we love making on great European founders at that global scaling stage – but we need many more investors with the level of ambition to back the many incredible start-ups here in Europe who are starved of the local capital and experience to match their own ambition.

Which industrial or scientific domains do you think Europe leads the world in, but hasn’t yet built billion-dollar companies around?

We’re just at the very start of a new 20-year venture supercycle. The energy revolution is in full swing with many great players coming out of Europe, so looking beyond that I’d say the next big revolutions will be in Healthcare and Industrial.

In healthcare whilst our centralised health systems have disadvantages in terms of bureaucracy and difficulty of selling o, they make up for it massively in early R&D with the datasets they can give start-ups access to.

• The UK BioBank is an incredible example that startups all over the world are leveraging to bring amazing new therapies and devices to market. As a result, the combination of post-covid vaccine research, AI therapeutics and personal health measurement are going to lead to a transformation in personalise health, whilst robotics and neurotechnology are going to revolutionise intervention and the health system overall. We have an amazing stealth investment in a founder from Cambridge in the latter.

In industry new materials are being invented that will do things we can only imagine today. Nylon and Portland Cement – two of the most ubiquitous materials of our time – were invented 90 and 200 years ago respectively – with no change since then. If that doesn’t scream ‘ready to be disrupted’ I don’t know what does!

• One example of this is Viridi – a Southampton spin-out transforming all the everyday products we use like shampoo, cleaning detergents, plastics – into cleaner, lower cost, more degradable products that use CO2 as the feedstock instead of fossil fuels or palm-oil. Washing our hair with petroleum based products – or turning virgin rain forest into huge plantations just for palm oil – in this age? No thanks! Viridi transforms these huge (think gigatons of volume) industrial processes into products that that are better for us, better for the environment and much better for business. Oh – and in a business model that has software margins, low capex and is infinitely scalable. Yes please…

What are some interesting names (founders/startups) you came across recently?

A super interesting one to watch is Daly Energy – an EU/US startup whose ambition is to become the OS for the entire industrial solar industry. Starting with yield optimisation, where they can get 4% better yield from a large scale solar farm. That’s not 4% improvement – but 4 percentage points total improvement – which is incredible and utterly transformative for that industry. A classic case of applying a software / AI / automation lens to a huge physical market.

Venture is ultimately a bet on belief and time – what’s one belief you hold about European innovation that most people would disagree with today?

I think our belief that you have to go to the US to build a global winner is pretty contentious. It might sound like we don’t believe in building start-ups in Europe. Nothing could be further from the truth.

• We are huge believers in building here. But to scale – US capital and market access is essential in the sectors we focus on. In the future we of course hope that the capital part of the equation might change – but as founders and investors our job is not to build on what might be. We build on what is true today, and we scale fast. And the fastest place to scale truly big and truly fast is by going to the US.

What’s one question I didn’t ask but should have?

The question you didn’t ask – Why did you and your partner Michelle leave big jobs running big funds (at EQT Ventures and AP Ventures respectively) to start Odyssey?

Because we have unfinished business. Because we are founders at heart. Because we want to see VC done right, with true conviction taking huge risk and backing the best European founders. Because European founders need us. And because we love working together!