E363 | Tom Wilson (Seedcamp) and Anthony Danon (Cocoa): Angel investing insights with Dorothy Chou, Director of Policy & Public Engagement at DeepMind

0:28Welcome everyone to the Super Angel Podcast. collaborate and co-create the future. Mark your calendar. 13th to the 16th October 2024 at Dubai Harbour, where dreams meet scale. Expand Northstar is not just an event. It's an all-in-one opportunity offering a massive value with a single free pass. Expand Northstar provides the ideal ecosystem to turn your ambitions into reality. Back to reality, man! Secure your free pass now and join us in Dubai. Dream big, scale bigger. Is this a dream? No, it's not a dream. I'm an angel. Why would God send me an angel? Because God knows that everyone needs a little coaching now and then.

1:09I'm loving angels. I saw an angel. All angels say. Angels. All along. Yeah, you say it's me, an angel. The smile on her face. We're here to get that little angel. You think so is by an angel, girl. This show is not investment advice, and the hosts of this episode may be invested in the funds and companies featured. Thanks for joining the show, Dorothy. Very interesting background. Dropbox, Uber, now DeepMind. So excited to learn more. Thank you for joining. Thanks for having me. This is a lot of fun. I'm excited. Let's get started then. So do you want to tell us a bit more about your story and what led you to kind of angel investing in the first place as well?

1:53Yeah. So I'm American. And I went to school in Washington, D.C., always wanted to study politics, really interested in social change and what drives that. But after school, I spent a few years in D.C., went to the Silicon Valley and then came to London about seven years ago. So it's been a journey. I would say I've always been in scale ups, basically. So I joined other than Google, I joined companies at like a couple hundred and then take them to a couple thousand. So it's that scale up hyper growth phase that I'm super interested in, usually around just pre IPO. And during COVID, I came to this realization that I've been taking bets on people my whole life.

2:39Right. I bet on founders, obviously, and giving them my time and my energy is a real thing. and it's the same profile of founder over and over. And that was a really tough realization for me as somebody who considers herself progressive and wanting to really drive change in the world. And so when I looked around, I was thinking to myself, what are the ways that I can support more diversity in the ecosystem? And I think having worked at these major scale-ups you realize that founders drive so much of the culture. And usually, a lot of these companies are built in the image of their founders. And so I started thinking, what would happen if I really thought hard about backing overlooked founders?

3:32And could that activate some of the undervalued markets that we deeply need? So I actually started doing angel investing in women's health in particular, just because I wanted to understand a single vertical. I had never done this before, so I was thinking if I stuck with one topic, I could probably do better pattern matching. And what I found was a couple dynamics that were really tough. One being women, especially in place where there's socialized health care, aren't used to paying for their own health. And I was working with Atomico at the time, who did a survey that showed if you ask women to stack rank their needs and what they'll spend money on over other household expenses, they will always spend money on other people.

4:18And so it's not just a, oh, there's lack of investment in the system and people don't think women's health is real. There is a fundamental social interaction in your brain that enables women to basically put themselves last. And that is a combination of factors that are social, political, cultural, in addition to financial that I found super interesting and also really wanted to do something about. because what Atomica was saying to me was that even if there is a need, we're not sure if there's a market if women won't pay for their own health. So there's so many interesting things I've learned along the way like that and have really pushed me into doing even more angel investing to kind of shift these different dynamics.

5:05So I really see it as a lever to create social change. It's quite inspiring, and I wish we had more of you. And so maybe to make it a bit more real on some of the kind of like since then interesting founders you've met or kind of companies you've backed, do you want to kind of share a few? I mean, the first deal I did was actually, now I remember it, not in women's health. I had called a very good friend in San Francisco named Roy Bahat at Bloomberg Beta who does future of work investing. And I said, I have no idea what I'm doing, but I really want to get started. This is what I care about. and a couple weeks later he emailed me saying i have a deal for you it also happened to be a former deep mind intern which was perfect for me so i felt kind of like kismet i was like oh this is meant to be and they were building uh a company called justice text after um george floyd was murdered uh to create legal tech for public defenders so they were storing archiving and basically using AI to comb through police body camera footage for public defenders who, frankly, were doing that manually.

6:13And we're having a really hard time finding the right pieces of evidence. They could have done that with white collar law firms, but they went in a different direction instead. And now they're expanding across with all these public agencies. And if you start to understand the power, the purchasing power of public procurement is incredibly high. So I'm super proud of them and also happened to be on the cap table with Reid Hoffman and John Legend with my first deal, which was just wild to me. I did not know that's what was happening. So I think sometimes for me, if you follow your instincts and your intuition, that does lead you strangely in the right direction.

6:55And other deals that I love, the lowdown Alice Pelton, who's in the UK, collating experiences from women with different contraceptives, as well as IVF and also menopause. It's amazing to me that we have no data on women's health out there. And so how are you for, you know, I work in AI. How are you supposed to build anything? So really collating that and getting that into the four, especially around just side effects of the different things we're using and doing. And there's a number of other ones. There's like Cusp AI, which I just invested in with Max Welling and Chad Edwards that works specifically on material science and climate.

7:35And so I kind of invest across the board now, but really in traditionally underrepresented founders who are working on really big, interesting problems that are important for society. Amazing. Super cool. And John Legend and Reid Hoffman, what a combo. for a while what a fun cap table that must be um yeah it's no it's fascinating to hear and fascinating to hear the story obviously you know you've you've worked at some of the biggest companies in the world and some of the you know fastest scale-ups from like google dropbox uber and now obviously a deep mind you touched upon this a little bit of your last answer but when you think about the network access that you have now through those companies are you leaning more into that?

8:19Or are you actually trying to look at people who are kind of outside of that, I suppose, you know, very, very like elite access. And it's just interesting, yeah, to understand a little bit how you kind of think about those points. Yeah, it's pretty wild. I didn't realize that access was an asset, if that makes sense. And it's a good friend at Atomico once told me, because I said that I wasn't sure if I was good at this, if that makes sense. And, you know, being brought up in a household where I was very structured and disciplined, I wanted to be good at whatever I was doing. And his point to me was, here's the thing, you've built this network over decades, or two decades, precisely, and you don't understand that other people aren't getting access to the deals that you are.

9:09And so I think that's sometimes what I love about being an angel investor is that you get to realize your own value in a way and what you bring to the table and just being who you are. And that is really rare in the work environment, I think. And so that was a good learning for me. But to your question, I would say, I actually just believe that how you invest reveals what you believe about the future. So do you believe that things should continue the way they are? or do you believe that things should change? And so in my network, I actually have to look harder if I want to find the kind of founders I'm looking for.

9:53And so, you know, backing women and people of color in particular, you know, I'm assessing what makes a safe investment in a quite a different way. And so sometimes it's easy to find them in my network, but sometimes you have to really dig. Often if you focus on areas that are underserved, it's a little bit easier because I think good founders tend to build on their lived experience. But yeah, it's about getting access to both quality, I think, in terms of who's building, as well as looking for people who are specifically, maybe not like the first person you would go to to address this topic, but might be the most relevant.

10:34So one of the examples I have is I have backed a woman named Amber, who's working on Research Grid. And it's a two-sided clinical trial platform to both recruit more diverse people into clinical trials, as well as manage the clinical trials themselves. And she is a woman of color from Canada, living in the UK. And she actually She recently told me that somebody literally pitched her same exact deck with three Caucasian guys trying to build a more inclusive platform, and they raised more money than she did. So the question I think we have to ask ourselves is, who is better suited to solve this problem?

11:17And why is that the case that these three guys would more easily get funding than she would for this kind of idea, right? It's a huge question. I think it was the most recent unicorn or the first unicorn in women's health coming out of Europe was also created by men. It was a period tracking platform, which is great for them. I'm glad that women's health is making it to unicorn status. But also, there's something very strange about that because I'm sure there are women building that. It goes way back, by the way. Sorry to interject. I know, Tom, we have to go to the next segment. But my uncle was a bit like a role model to me.

11:53He did a year on McKinsey, which he disliked. nothing wrong with mckinsey but back back then he told me that his first project was like him and like six other white dudes excuse my language to basically consult a company about the kind of future women's health and kind of like period tracking and tampon technology and i was okay that makes sense anyways hopefully we've come a bit a bit way forward since then but uh loads of work to be done still yeah yeah yeah for sure oh no not about the thesis

12:34that was the sound of the investment thesis segment that means we'll now move to talk a little bit more about strategy and your approach to angel investing kind of like generally we've touched upon a couple of portfolio companies already in the kind of segments but what countries maybe you've invested into. Obviously, you've spent time in the US, spending time obviously in London now. So it'll be great to kick off the conversation around that. Yeah. So I've made over 30 investments in the past three years. Check size is between usually around 5K and 15K, depending on the size and stage of the round.

13:12It's basically a broad set of different areas, all the way from health and women's health to, I would say, climate. I have some infrastructure deals and deep science. I think what I'm really looking for these days is the application of AI to interesting spaces. And the reason I say that is twofold. One, I just think it's sad that we're going to get personalized soda drinks and coffees from AI before we get any impact in health, energy, or education. And it's funny when I say it, because everybody nods, like, yep, that's true. And yet, what are we doing about it? The second reason for that is because I believe that the barriers to those applications are, yes, somewhat technical, but actually really they're people challenges.

14:02And it leverages my expertise in public policy and public engagement to get that done. I mean, applying AI in regulated spaces is very different from other general technologies. So if you take Google search as an example, when we were plugging search mechanisms into different verticals, it kind of just plugged and played and it probably worked better than what was there before. That's just not true for AI. You actually need a certain level of partnership with experts to make sure you're getting the right results and that everything is working as intended. You need like transportation experts, for example, medical experts, you know, energy experts to make sure that things are working the way they're supposed to.

14:43It just takes a lot more groundwork and infrastructure work to make that fly. And I think my area of expertise based on work actually just puts me in a sweet spot to be able to help founders with that. So that's the most important reasons, I think, why. And I've just loved doing it. I mean, it's really interesting to see how the founders solve problems, why things aren't working. It's just as interesting as why they are. You're very intentional with your angel investing in some respects, right? Which I think is really nice and refreshing to hear from an angel perspective. And I think, you know, on the one hand, you talked about comms and some of your superpowers and kind of wanting to utilize those as kind of a key value you want to bring to the table to the founders.

15:33On the other hand, the clear agenda and kind of where you want to play increasingly. How do you think about, I don't know, positioning yourself in a way where you can see more of those founders from a sourcing perspective, right? Whether it's partnering with others or just being discovered more easily. I think you have to be out and about, right? You have to be constantly meeting people. I mean, I think having a really fun network of values aligned VCs has just been amazing. I mean, as soon as they know what you're looking for, you get past deals that are just so fun to look at. And I think on top of that, I really believe it's not transactional.

16:11You're building real friendships, right? If you believe in the same things, you're trying to create the same kind of change and people get you, it's a fun community to be a part of and also learn from. I wasn't always the best networker, if I'm being totally honest. I was professionally raised in Washington, D.C., and so everything there is fairly transactional. And I didn't like that. That's why I left. And so what I've learned about myself is, like, if you can connect on similar values and similar experiences, there's something really amazing about you're looking for the same things and you can find them together.

16:48And I actually think going in on deals with other angels or with funds that I have gotten really close to is some of the greatest partnerships I have because you can kind of bounce ideas off of each other. I think what I'm trying to do is learn from and with other VCs and from and with other founders. And so if you put yourself in that environment, it becomes easier to source the things that you're looking for. Very cool. And I 100 % agree. And I think that the thing I love about this podcast and, you know, having the opportunity to speak with so many interesting people is loads of crossover with some of the stuff, the deals that I like to look at.

17:24So look forward to sending you a load of things over email after this. But a question which I wanted to ask, you know, again, looking through your work history and who you've been exposed to, do you feel that on a founder level that has kind of influenced how you think now about angel investing and backing founders? So if you look at, obviously, the leaders of the companies that you've worked at, and in particular, a lot of those companies, obviously Google and now even more so DeepMind, have been very, very technical missions. And from an investment perspective, I think it's always challenging sometimes to identify some of the traits in those types of founders when they're building businesses in spaces, like you said, that are like AI applied to interesting or hard industries.

18:09So, yeah, I'd love to see if you've taken any learnings from any of those people you've worked with. I mean, one of my big lessons is the question of what does it mean to, there's no good phrase for it, but like disrupt well. And what I mean by that is, when I came into Uber, all the relationships they have with government were basically broken. lack of trust of journalists, all kinds of things that were going on. And I mean, we were brought in with the express purpose of fix this ahead of the IPO. And I got a really good sense of the culture that that created. You had young people who were intending to do amazing things, not really asking the right questions.

18:50And so I really thought about, you know, what is it, what is the moral fiber and attitudes towards collaboration with governments while still being aggressive in terms of how you build the business, because you have to be at pace when you're doing that, that I wanted to see in the founders that I was backing. And I think I want to see a certain level of discipline and going after the problem. But I also want to see a level of scientific rigor in that. And I think that's what I love about DeepMind. And what I've learned the most there is the value. I didn't even know I had that. I couldn't name it before, but my parents are both drug discovery scientists.

19:33My brother's a doctor. It's how I grew up. And so that level of scientific integrity and questioning is incredibly important to me. And I also think I look for founders that are relationally competent. Having high EQ isn't always valued in deep tech, some of these founder circles. But actually, if you look at the biggest reasons why founders fail, a lot of them are deeply relational. They have nothing to do with the financing or the tech. And that is something that I don't think we value or talk about enough. We talk a lot about you know, like market opportunity and size, execution, product market fit, and all these things are important, ability to accelerate.

20:15But at the end of the day, what makes a founder a safe bet or a strong founder is probably very different for this generation and what we want to achieve versus what we've seen before. And I think the system works to structurally push a certain kind of founder to the forefront. And I'm not sure that's yielded the results that we want to see in the world. So we have to do it differently and think about what we believe to be true about these founders in order to really make that change. Totally agree. And I think it's, I hope anyway, and I think I do see, you know, signs in, I've been kind of doing this not for about just over 10 years, and you see some changes in some industries within startups, maybe more than others i think one of the most kind of new to change industry is this kind of like science meets startup world yeah that's the one which i actually think is almost one of the most exciting markets to to be potentially investing in and backing founders but that space obviously has had a history of being funded in a very very different way for so long and now it's now we're seeing that kind of startup mentality almost applied to sciences which i think is really really exciting.

21:31And obviously, DeepMind is probably one of the biggest pioneers in that space, right? Yeah. And I think it has to do with the advent of AI too. It's speeding up the pace that science can be done in a way that wasn't possible before. I mean, you used to take a four-year PhD to structure a single protein and we released 200 million in one go, right? So it's like years to seconds kind of thing. And I think, look, the pace of VC and the returns it requires doesn't allow for as-patient capital, right? And so I think that if you look at the macro trends of science speeding up and VCs looking at that saying, okay, now we can invest because it creates the return profile in the amount of time that we typically would expect.

22:10That makes sense to me. I think it's still going to take a little longer. Like science is not something that you can't just build, like kind of brute force it to happen. So that's something I've really learned at DeepMind. And yet I think it could yield some of the biggest changes. I mean, science is really at the heart of progress, right? Like a lot of, if we look at the pace of scientific discovery and the fact that everybody's saying it's slowing down, and maybe that's a health indicator in society of, are we finding the things that we need to at the pace we need to? I mean, if you look at history, the Renaissance is when everything was flourishing and we found out all kinds of things about ourselves and arts and culture.

22:50And then the dark ages were referred to us when nothing really happened. You know, the speed of the pace of science is incredibly important and how we fund it is incredibly important. And you're right that it's moved from public funding largely to private. And yet I think at least what I've learned at DeepMind is you need public private partnerships to really make science fly and to really encourage that social development aspect of it. I look at, you know, governments and I think you're going to be the number one or two purchaser of AI in the world. And people aren't, and yes, there's the whole defense part, but there's actually so many other parts as well, like in public services that we haven't thought about.

23:30And I think I'm really excited about, you know, some of these new markets that will be created. And I also think about trends like, you know, what is a valuable market that presents a good opportunity? Are we looking just at the existing purchasers in power today? Or are we thinking about how there's a rise in purchase power coming from elsewhere? That will affect the ability to execute quickly and who can accelerate and capture that value faster. I think you can think about how that acceleration could happen tomorrow and who's going to be on top of that. So yeah, I love the idea of science being at the heart of progress and how do we really make sure that can get into the right places to spur that forward.

24:23I almost see this like a generational piece to particularly where it's science. I think that the tools are there. I think, you know, companies like Google DeepMind are making incredible advancements. And I think it's fantastic that they're sharing those openly to get the kind of like understanding that this is possible and i think that would only be possible for from a company which is you know funded to the extent that google deep mind is because you know having like family similar similar to yourself not on my wife's side in in and around this space that the skepticism is is real and the results haven't been fantastic so far but within particular fields but now it feels like we're at a bit more of a tipping point where even that generation are waking up to you know the potential for this kind of as a tool which makes everyone's job not only easier, but could result in amazing breakthroughs.

25:15And then for sure, probably the next generation, probably people kind of our generation who are coming through are going to be even more native within that. And I think the potential for it is gigantic. So it's definitely a fun area. It's one of those areas that whenever I speak to a founder, I'm always reminded of, you know, always feel like the stupidest person in the room, which is the place I like to be. Well, I'm also excited about how it kind of democratizes scientific results. Like, yeah, if you think about working on a neglected disease and there being like no funding in that because there's no profit in that, right?

25:48And now you get access to something that otherwise you would have had to raise funding for to spend four years trying to figure out. Like, it's an amazing thing in terms of what breakthroughs can do to spur on like discoveries where they would never have been found before. If that makes sense. I mean, it is. I absolutely agree. Right. I think we could probably get on that rabbit hole for another hour. Maybe Anthony, do you want to take us into kind of like exploring some core learnings? Because for sure, for sure. You've been in flows. I didn't want to interrupt. And actually I've been leveraging both of your minds.

26:20It's been amazing. Thank you for that. You're out here learning more about them angels, are you?

26:30Let's switch gears a bit into the third segment, core learning. So going back to the craft of angel investing, but kind of blending your experiences and a lot of what you've done within that, if you had to kind of pick two, three core learnings from your time, angel investing, what would those be? I would say diversity and how that is going to lead you to new markets and activating new markets that maybe haven't been tapped yet is a real key. I think the more I talk to diverse founders who frankly aren't getting funding as easily, the more I find novel and different solutions for frankly, currently just underserved, but also under activated markets.

27:18And that can be really crucial for filling some of these gaps that haven't been addressed yet. Like women's health, you know, sometimes you uncover all kinds of reasons why things are underserved. And then if you can unravel that with your skill set, like with me on, you know, policy, reputation, and comms, I do think government needs to get involved where there are market failures. That can make a real difference for not just the founders, but people who need those services. So that's one. I think two is, you know, redefining what safe and investability looks like. I do think traditional VC metrics really miss some high potential founders.

28:00You know, we, in society, we let certain, we're very comfortable with certain types of people, you know, trying something and failing and not others. Like I, being a woman of color myself, I feel like I've been on this tight rope my whole life. Like I remember early on dating somebody and he was like, yeah, you know, I just breezed through high school and college and it's all fine. And I was like, I've been working hard since I was 10 years old. I've had no margin for error. And I think to myself, and A, that makes me risk averse, but also if I were to start something, that means I will be very exacting in how I do it.

28:36And I had very strong convictions about how I work. And so So I do think, you know, really rethinking what we think is a safe and investable founder and what that profile and looking at some of our unconscious biases is what's going to drive the next wave of amazing founders. And I think the third alongside that is that we do need some systemic change in the way we do venture capital. There's a lot of funds that I think do support underrepresented founders as like a CSR activity, and they think we all need extra help. rather than just looking at that as a complete asset. So, you know, those are the kinds of learnings I've had is that I don't have to do it the way everybody else is.