Q&A with Octopus Ventures' Zoe Chambers

Zoe Chambers is an early stage investor at Octopus Ventures, based in London. Prior to Octopus, she worked as a corporate attorney and in the Special Situations Group at Goldman Sachs.

What drew you to venture capital and working with startups?

I didn’t get born with the desire to go into venture capital. I didn’t know anything about it even during college. I was drawn to venture because it is fundamentally a people business and I love being around dynamic, intelligent people who are intent on doing something groundbreaking.

This is the career for people with curious minds. It's endless learning and I believe, a dollop of luck, in a way that keeps you humble because no one can claim to be the master of venture capital. We’re in this age where people jump from job to job. We try new things because it’s hard to be constantly satisfied. In VC, you’re in the business of being versatile and exploring new spaces. It’s a unique privilege.

For me, it was this combination of people, new technologies, and constant learning.

You have a degree in law and French law from UCL. How did that help pave your way into venture?

I was a corporate attorney for 8 years. I joined a large US law firm focusing on private equity and M&A. Working for a GP and structuring a VC fund was one of my previous projects. Then when I went to Goldman Sachs, I worked for the Special Situations group which has a broad mandate, including investing in minority stakes in companies. Whilst this was not exactly the same as investing in early stage companies, it does relate to the idea of being an equity investor and understanding the thought process behind investing. Through these experiences, I spent a lot of time with management teams… but the focus was always transactional.

As most people know, being a lawyer is a brutal job. I worked very hard. And at the end of the day, it's a service job. You’re working for someone else which has its pros and cons. I was wondering whether I could sustain it for life. I was at an inflection point where I was either headed towards being a partner or I had to reevaluate my career and try something else. I spoke with friends and trusted colleagues and a few raised the idea of working on the commercial side. I did the classic thing of thinking I wasn’t qualified, but after some very useful encouragement, I decided to give it a go and interview with Octopus.

After meeting most of the team, I joined 18 months ago and have spent the last 6 months in our New York office. I still can’t quite believe I snuck in 😊

That path wasn’t traditional by any means but what’s great about our team is that no one comes from an obvious, formulaic path. People have done wildly different things - we have a pig farmer, a PhD in genomics, and one of our founders didn’t even go to college (but is one of the most incredible investors out there having taken our fund from £30m to coming up to £1bn AUM). Octopus embraced that I can come in with a different perspective because of my background and took a leap of faith on me.

Now that you mention it, I can think of several partners who were previously lawyers.

Have you heard of Valar Ventures? They’re all corporate attorneys. It does make some sense when you think about it. Lawyers know how to structure funds, they understand the relationship and value drivers of LPs and GPs, and do transactions continuously including investments, IPOs, and exits (full buy-out or roll-ups to PE). I wouldn’t say there’s a real need to have someone with a legal background, but there are things that make it helpful for VC.

You had worked in VC as well as private equity. Why did you ultimately choose the early stage over later stages?

One of the partners at Octopus also asked why I didn’t go into private equity during my interview process. And I could be stereotyping but private equity funds tend to have their own ideas about how a business should run and operate. They can be controlling and aren’t typically offering a true partnership with a management team. More often than not, they're coming in with specific financial engineering objectives. I find that really stifling in terms of innovation.

In venture, you really do want to support your entrepreneurs on their journey. Because Octopus invests at the early stage - and only owns a minority investment - we know that we're going to ride the ups and downs. A VC investment lasts longer than the average American marriage! That really appealed to me because you see the entire lifecycle of a company. What Octopus does (though it’s a long feedback loop) is ultimately help founders really understand their market, raise money, scale, and exit.

Growth and PE have their place in venture as the next phase of capital for startups but I found more appeal in the early stage.

When you were looking at VCs, why did you ultimately join Octopus? Were you excited by their strong cross-border presence?

Octopus is European-focused first. They had just opened the New York office a few months before I joined. Out of the 65 companies in our portfolio, 28 are the US in some shape or form (through a subsidiary, office, customer base, etc.). VCs all talk about how to add value beyond capital. When we see our startups go into a new market, making similar mistakes and burning runway quickly, that also affects us as a fund. Although we don’t invest in the US, we established an office to help with go-to-market, recruiting, sales, partnerships and more. There are also strange, idiosyncratic processes that businesses and entrepreneurs can’t understand unless they’re actually here. Credit scores, green cards, visas. I have so much empathy now that I’ve done some of these things myself. We’ve got a European Founders group and produced a report (with a soon-to-be v2.0 for anyone thinking of scaling to the US).

On the west coast, we have venture partners on the ground. We have venture partners in Singapore and China. We see the biggest hubs of innovation in China, America, and Europe; we bridge all of that together with our London and NYC offices. Having an international reach is helpful not just for our portfolio but also for European founders in our broader network.

Elvie is one of our female-focused health tech companies. Their first bit of hardware was a pelvic floor trainer. After pregnancy, a lot of women struggle with incontinence from a weak pelvic floor. Elvie created a Kegel trainer and recently followed that up with a silent, wireless breast pump. These are all products for mothers at the stage of post-natal care. The startup was actually just testing the breast pump with New York mums and got a lot of great feedback. But in order to launch in retailers and direct to consumer, the company needed a manufacturing line in China. Of course, the team are familiar with the OEMs out in China, but Octopus’ venture partner can also be a person on the ground in their corner and Octopus’ NYC team can help with the product testing, go-to-market strategy and fundraising their Series B.

I love our New York presence. The firms here are so welcoming and collaborative, and of course, several are looking at Europe. Octopus is able to be a pipeline for some of the larger funds and a helpful source of information for others who have existing portfolio companies in Europe or who might be looking to enter that market.

You have written extensively about intelligent robotics - what areas are you most excited about?

We’ve just led an investment into Dogtooth Technologies. The talented team - with years of experience at Microsoft and the top universities in the UK - are designing intelligent agricultural robots. They navigate autonomously, inspect, pick, and punnetise berries.

Agriculture faces huge labor shortages. Brexit and the US’s reduction of H2A visas for seasonal work has caused waste and cost control issues. While we see alarmist commentary on robots, there’s a real need here. In a way, intelligent robotics is about replicating human senses. Major advances have been made with in multiple enabling technologies and computer vision has really been cracked. But we still face the problem of replicating small, easy tasks that would involve real dexterity for a robot. Similarly, true spatial awareness is a challenge, which is why we backed SLAMcore (another world class team out of Imperial College London) who want to increase intelligence for ground robots and UAVs by giving them a semantic understanding of the world around them.

Beyond that, I see robotic applications for last mile logistics and delivery. Entrepreneurs are looking at the natural world for inspiration. Should we have a bipedal robot? We know it’s difficult to replicate a human knee, but can we have a device that shuffles like a crab? As a VC investor, you have to think about what is within the 10 year window of success (as we believe Dogtooth is) and what is either a hobby or a real punt into a far longer window of success (eg. a robot that can complete tasks by mimicking actions that are demonstrated to it by humans). You’ve got to remember your own investors.

I’m also curious about food and restaurant automation. I thought we’d see robots driving changes in supply chain and on the assembly line but it appears that the biggest driver for prospective customers has been labor scarcity. Just look at Knightscope and Cobalt, two security guard robotics startups! What’s driving robotics innovation is real-world problems.

Some years ago, I saw Columbia University professor Hod Lipson speak about autonomous vehicles. He participated in some of the first DARPA AV challenges. One of the courses had a giant hole and none of the vehicles knew how to pass it. That was less than 10 years ago and now autonomous freight trucks are being piloted on major highways!

It’s just amazing! Of course, this space is still plagued by safety issues. When you're not in a controlled environment and human lives are at risk, from a regulator perspective, I totally understand the need to ensure transparency and reliability. Autonomous trucking makes so much sense, just like restaurant service robots. Few people want to engage in repetitive, menial work.

Why did you get interested in intelligent robotics?

This just shows how much of a geek I am. It came from just from being curious. Before I got into venture, I had looked at developments in military technologies as well as the future of sea and space exploration using robotics. That brought me to also look at surgical robots. There’s endless possibilities for robotics in the physical world.

I could've come in and focused on legal tech and reg tech but why be comfortable! The area of intelligent robotics is so outside of anything I have done before but I’m the kind of person who could just sit in MIT’s lab all day and just observe. The great thing about venture is that you’re never going to know everything. You don’t need to be scared, you can just jump into spaces and become more of an expert!

Another reason I gravitated towards deep tech is that we’re an evergreen fund. We deploy $250M a year into new and follow on deals. We can be patient with our investments. A perfect example is quantum computing - we might not be able to activate the technology tomorrow but Octopus (unlike most funds) can make bets in something that might really benefit from patient capital.

I was recently chatting with Natasha Lytton of seedcamp, admiring their work around funding transparency. It’s really encouraging to see less opaqueness around the etiquette and nuances of fundraising.

Absolutely. I probably air on the side of oversharing. People are resilient and can deal with nos, especially if you give a strong justification. Unless an entrepreneur is really savvy, they might not realize that the ‘no’ they receive from investors has nothing to do with their company. A firm could be at the end of their fund. A VC might be looking for a 3-5 year exit. You could be a be a great founder but your company will likely produce a 4x return and the investors are looking for much more (you’d suit a different fund whose model works on 3x returns). Too many people give mixed messages and I try and avoid that as much as possible. We make it a rule to respond to everyone and to try and be helpful if we are a ‘no’ – there’s plenty of angels, accelerators and other funds who your business could be a fit for, we should go that extra mile and link you up. Good deeds have a way of coming back around in our community.

I’m also thinking about ways to participate in the venture community as an outsider. One thing I do is follow a lot of entrepreneurs on LinkedIn. They often seek user testers and product feedback, and it’s a great way to observe a company’s evolution.

I love that. That’s really creative. I feel like this is gold dust in the venture community - it’s the age-old question of how to discover new companies and keep your finger on the pulse. There’s no uniform rule but it does tie closely to creating your own network of entrepreneurs and creatives.

What advice do you have for young women who want to enter VC - on the investing, operations, or platform side?

Your most valuable asset is your network. In the case of VC, it’s your network of entrepreneurs, investors and mentors but of course its also your network of recruiters, potential talent, customers, acquirers, later stage funds, executive coaches (the list goes on!). You want people to trust you. If you’re looking for a job in VC, why not demonstrate early on that you can add value. Introduce an investor to a new company that’s right in their sweet spot. If you can hustle your way into a coffee chat, congratulations! You’ve smashed life because that’s your future and how you will be an effective originator. I always call on 10 people who are more expert than I am whenever I’m thinking about an investment. You need to know those people because they’ll put you in the best position.

Also don’t get stressed if you haven’t dreamed of being a VC since you were in high school. It doesn’t mean it’s not the right career for you even if you come to it late. The path into venture is getting less prescriptive. I don’t think you need an MBA or a PM background or experience in banking. It’s brilliant if you have it (I know so many incredible people with this background!) but a desire to learn, a unique perspective and high emotional intelligence will definitely set you up for success..