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We’ve got one our occasional investor profiles for you today.

A name that has come up increasingly frequently here at PreSeed Now is Antler, an early-stage investor with a global presence that includes a UK operation.

They’ve had a hand in a number of companies we’ve covered, so it seems like a good idea to find out about what they do and how they do it. I spoke to partner Adam French, and you can read our conversation below…

– Martin

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Inception investors: Inside Antler, which definitely isn’t an accelerator

Who is Adam French?

Adam French is a partner in the UK arm of super-early-stage global investor Antler. 

French started his career in investment banking, but he left the corporate world for startup life, co-founding fintech business Scalable Capital in 2015. The Munich-based company has now raised around €326 million from investors including BlackRock and Balderton Capital.

Pining for the early-stage scene again, he left Scalable Capital in 2021 to become a founding partner of Houghton Street Ventures, investing in alumni from his alma mater, the London School of Economics. 

One such deal was a co-investment with Antler in Germany. Intrigued by the Antler model, he moved to become a partner there, just as its second fund was kicking into gear.

Antler has backed a number of startups we’ve featured on PreSeed Now, including Praxium, Intriq, and Blend.

This conversation has been edited for clarity.

MB = Martin SFP Bryant, AF = Adam French

MB: Antler is often perceived as an accelerator, but that’s not really true, is it? How would you explain your approach to developing early-stage startups?

AF: I used to also think it was an accelerator, but now that I'm on the inside, I realise it's not an accelerator at all. 

In my mind, we’re inception investors. We want to invest in people the day that they incorporate. The average age of companies that raise a pre-seed round is actually about a year old. And so we see ourselves as investing in people and backing people. And these are the most ambitious people, who have some very interesting, somewhat crazy ideas, but ultimately want to solve big problems and build big businesses to do so.

And we do it by hosting them in our offices. Every six months, we get about 5,000 applications from people in London, all across the UK, and even into Europe, to come and join us for 10 weeks and build a business with us. We help them with everything that they need help with in the earlier stages; finding a co-founder, building out their team, ideating on their business idea, and ultimately getting traction.. 

Over the 10 weeks with these founders, we get to understand which ones are the best, which ones really have the drive and determination that we're looking for, which ones have a bias towards action, which ones scare us, because of the progress that they're making and the ambitions that they have.

Out of those 5,000 applications, we have about 100 people come into our offices for that residency, and at the end of the process, we end up making an investment into the best ones. We end up investing in about 10 to 15 businesses. That's when we're an investor in them, and that's when the hard work really starts. The 10-week process definitely accelerates their progress, but for us, that's our due diligence process. 

For them, it's the start of a 10-year, venture-backed journey to build an incredibly big business. Because Antler is present in 30 cities around the world, we can help them, not just with their needs here in the UK, but with scaling internationally, with finding talent abroad. 

Once they’re in our portfolio, we help them with  two main things: growth and raising money. They remain in our offices for three months, and we prepare them for their pre-seed round.

It's a really fun way for us to do our job, because I sit in my office with 200 different entrepreneurs every single year and get exposure to some incredible people who are looking to build things in all sorts of sectors, because we're completely sector-agnostic. We back anything from deep tech, fintech, health tech, climate tech, B2B SaaS, consumer products, because for us, the most important thing is the people.

MB: And how do you source these people to build the startups?

AF: We get a lot of inbound applications from people who know us, because we've been around now for six and a half years, so our brand is kicking in. We get a lot of applications from migrant communities, because they might know about us from back home, or they might be the second generation in the UK.

The brand really helps people to know who we are, and to be a really interesting stepping stone into the world of entrepreneurship in the UK. 

But we actually get our biggest success through two different channels. The first is referrals. We now have a portfolio of over 100 companies in the UK, and we are absolute data nerds here at Antler.

We get about 200,000 applications around the world every year, so we've got an amazing dataset on entrepreneurship and we know that if we were only to back the founders that came referred to us through our portfolio founders, our investment returns would be much higher than if we relied on other other channels. Now that the portfolio is getting bigger, that referral channel is getting stronger and stronger.

And then the third channel is we have to be very, very intentional about reaching out to those that we think have what it takes.

Every single scouting cycle that we run, we're actively reaching out into different communities, actively reaching out to individuals who we think have an incredible track record to date. These could be serial entrepreneurs, or people who have led very successful careers in large corporates where they've been promoted and promoted, but they want to leave to set up their own thing,

And then there are those who have been part of high-growth startups, maybe somewhere like Revolut from Seed to Series B, and they're building something themselves now. 

We never call ourselves an impact fund. We never would say we're a climate fund, or investing in female founders. But with the process that we run with this residency model, we end up being incredibly, incredibly impactful. A third of the portfolio companies that we’ve backed have a female co-founder.

I'll make 150 investments in the UK over the next four to five years, which will probably make me one of the most active investors in female entrepreneurs. 40% of the applications that we get, and people who come through our cohorts, come from underrepresented backgrounds.

We offer the same terms to all teams: £120,000 for 10% of the business.

MB: What’s Antler’s LP profile? Who invests in you?

AF: We're only six and a half years old, so we’re still very much on our own journey of scaling up. In the beginning, it was all high net worth individuals. We have an SEIS fund, so we've got individuals in the UK who like to take advantage of some of the tax benefits that that entails. 

And then we have a plethora of family office type individuals, high net worths who can look a little bit more institutional in nature. 

But now we're onto a second fund, that mix is changing. The first vehicle was £20 million, the second vehicle is still in between first and final close, but we're targeting £70 million for the final close. And to reach £70 million, you have to bring institutional investors on board.

I think what's quite exciting for us is that even though it's only a second fund, which usually would not be that institutional in nature, because of the way we do business, we have a lot of institutions that see the strategic value of what Antler can provide to the UK ecosystem because of the residency model that we run, the impact we have not just on the portfolio companies that we end up investing in, but also the individuals that we bring into our programmes. 

That means that we can unlock pools of capital in other ways. And we're not just doing this in the UK, but around the world. And so as a platform as a whole, we have an opportunity to bring in institutions who don't just want access to UK innovation, but want access to global innovation. Not many venture funds can support such a diverse portfolio. 

We make about 500 investments around the world every year. And there are asset managers, life insurers, and sovereign wealth funds that are more interested in some of the regional plays that we have around the globe.

MB: A lot of early-stage investors are taking a more cautious approach than they used to. Have you changed your approach as the wider VC market has changed? What do you make of the early stage market?

AF: It's kind of a tale of two cities. You have businesses that had previously raised early-stage rounds and ended up scaling in 2021 and 2022; a lot of those businesses now are struggling when it comes to raising further financing rounds. You've got broken cap tables, they raised too much money, and the expectations on those businesses are too much, and ultimately growing into those valuations is incredibly hard. 

And then you've got the businesses that started raising capital, even during those years, at an early stage, or raising now, and the bar for raising further capital is incredibly high. I think it's never been higher, but the competition that they're facing is lower than it would have been otherwise. 

And so I'm actually quite excited, even though it is incredibly hard for businesses to raise money, even though it's incredibly hard for venture capital funds to raise money. You look at the amount raised into VC funds, it's never been lower over the last decade. But if you're able to build a business in this environment, I think these will be some of the strongest vintages of all time. 

For us, what that means is we have to be incredibly selective as to the individuals that we're backing. But then again, we've never seen as many applications. The number of applications we’ve had in the UK has doubled over the last six months. We used to get about 2,500 applications, but the last cohort was close to 5,000, so we've never seen so many people interested in building a business.

That means we've never been so selective in terms of the amount of people that we ultimately bring into the cohort. We've never said ‘no’ so many times. 

And so our approach has differed, in that we need to be a lot more intentional around the types of businesses that we're backing. We want to make sure that when we back a business, we have a clear plan of how we're going to take that business from an idea to an investor base. And that type of business has changed drastically over the last four or five years. 

It's not a huge change in approach to the types of businesses that we look to invest in, but it's definitely having an understanding of what's going on the market so that we're backing businesses that we know will stand a chance of being able to get the follow on capital that they need to be able to be a success in the long term.

MB: There must be challenges around being sector-agnostic, in making sure you're able to understand all the markets you're going into, and to support founders across a whole different range of markets.

AF: For sure, it has challenges, but benefits as well. We see ourselves as talent investors, and as such, that means that we're evaluating the ‘founder DNA’ of the individuals. Do we think they have what it takes? The drive, the passion, the determination, the track record, the motivations to want to build a big business.

And we're ultimately testing that, and so we take a little bit of a lead from them as to where they see their skills and the opportunity, given the background that they might have.

The way that we support them is helping to synthesise the idea with our knowledge of other sectors, but also with other people within the residency. The magic happens when an individual who has a certain background like financial services meets somebody who might have a machine learning and AI background. 

Those two people might never meet each other in their own networks, but when you bring them together, they end up coming up with a relatively unique solution to a problem space. And it's in that uniqueness that the differentiation and the defensibility starts to come out.

The way we de-risk ourselves is that I have a team of about 10 in the UK but Antler around the world is about 300 people, so we look to lean on the expertise that we have around the world when looking at stuff which is not the area of expertise of an individual within the UK team. 

And during the residency itself, we have a program of visiting partners who come and join us. And they offer office hours and one-to-many sessions with our founders, and we lean on their views as well. 

MB: If you look at the companies that have come through the London program, are there any we should particularly keep an eye on?

AF: Antler is only six-and-a-half years old, and the average age of the companies in the UK is only two years, and so a lot of them are still between their pre-seed and Series A stage. What that means is that there aren’t winners starting to emerge, but there are a lot of companies in the portfolio where we know that the best is still ahead of them. 

We're very data driven here, and one of the things we look at is the fund-through rate of our companies. The fund-through rate from the companies that we invested in in spring of this year is beating every single cohort that we previously did. So companies are raising more money faster than ever before. 

In the last cohort that we ran in 2023, a business called Capsa AI, operating in the financial services due diligence space, ended up raising a £1.7 million Seed round backed by Outward and Cornerstone VC. And that was the biggest, fastest Seed round that we've ever seen from our portfolio companies. And that was 10 months since we initially backed them. If we go back to say. 

We have a business called Cloud Cycle in our portfolio, which is at the Series A stage. It’s in the deep tech space, testing the quality of concrete without having to break it. And if you can save the amount of wastage in concrete, you're having a huge impact on the climate.

There are many, many more as well in the portfolio. A company that we backed in the spring called Vinny is using AI agents to help tradespeople to complete their jobs. Imagine you're renting a property and your boiler breaks, or you've got problems with your water or your electrics.

You can use an AI agent to triage all the problems and to better understand exactly what's going on before the tradesperson comes through and has to and has to deal with the issue itself. 

It ends up being a better service for the renter and the property managers. They were two co-founders who were incredibly productive during the residency, and they seem to be off to a flying start as well. 

Back next week

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