E470 | Joe Seager-Dupuy & Mike Martin, True: Building a Specialist VC Platform Around Consumer and Retail Tech | Deep Dive Episode

0:00In a venture landscape crowded with generalists, What happens when a fund takes a radically different approach? Effectively, True is a sector specialist investment and innovation business where consumer, retail, technology, that's all we do. While others chase trends, True focuses on a market so massive it's hiding in plain sight. You know, when we think about it just for Europe, we're talking about half a billion people spending$12 trillion a year on goods and services. But in this$12 trillion arena, how does a specialist fund create unfair advantage for founders? I'd say stepping back is really the combination of these constituent parts that makes up the true ecosystem.

0:36You can be part of this and we can help your business. This isn't just theory. True's integrated flywheel delivers real solutions across the entire consumer landscape. It's actually a really good example of the true flywheel worker retailer that we're seeing a huge problem with shrink. And they're backing founders at every critical stage of the journey. Seed is the main thing that, I mean, we have a sort of range of check sides. About 1.5 million into it. Series A round is our first investment. Ready to plug your startup into the true flywheel? Join us as we dive deep with the team reshaping how consumer startups scale in Europe's largest market.

1:16Tear down this wall. It's more than just an ally. This is a union of values. values. Let's start acting. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Welcome back everyone to the European Easy Podcast. This is yet another of our episodes where we are trying to really bring forward the champions of the European venture ecosystem and putting them in the spotlight that they deserve. And we're doing that by giving them the stage to present their fund to all of us so we can dive deep with it. Mike, Joe, you're both from True. Please join me here in talking through True Global or however we should refer to your fund.

2:05Awesome. Thanks, Andreas. Really appreciate it. Great to be here. Maybe we can start off to the extent that is helpful with some intros to us. I'm Mike and I've been running the venture funds at True alongside Joe for the last three years. I previously spent my whole career and almost 15 years at a company called Sky, which is a multinational corporate in the media and entertainment industry. And after several years in finance, I was really fortunate to join the founding team of their corporate venturing unit, where we had a mandate of investing into technology companies across both consumer and also B2B software infrastructure.

2:42So I did that for about eight years. It was a really fortunate introduction to VC, I would say. We had a really great autonomy as a team just to kind of figure it out. And over that time, we invested about a hundred million pounds across the US, Europe and Israel into both directs and also funds. And by the time I'd left to join True, we'd managed to return over three times captain invested so we did okay when i decided to leave sky i was really looking for somewhere to continue my career in vc but somewhere where working with entrepreneurs was the core business rather than kind of something shiny on the side so that's when i decided to join a fund and was very lucky to meet the co-founders of true and here i am three years later so that's me beautiful Mike.

3:33Joe, tell us a bit about your journey. Sure. So as Mike mentioned, I joined True in April 2022 as well. So it was three years ago now, which has flown by. Prior to True, I was with Virgin Management, which is the family office of the Branson family, which was a great experience. I primarily was leading on the corp dev side, looking at opportunities to create new Virgin branding companies around the world, which was fascinating. all sorts of weird and wonderful ideas from flying cars to digital banks and everything in between. Increasingly throughout my time there, I was getting more and more involved in the families, venture capital, investing as well, which is a bit of funds that primarily directs into Series A stage companies on the consumer side and on the enterprise side.

4:18And the more I did of that, the more it was pretty clear to me that that's the direction I wanted to take my career. I remember sitting in the back of one of the Wave vehicles during D.D. going around Kings Cross, being driven around by this autonomous vehicle and just thinking, yeah, this is the sort of thing I want to be doing for the rest of my career. So I was looking for an opportunity to do it full time, met the true guys, heard a little bit about the model, which we'll talk about. I thought it was really interesting, really differentiated them. And then alongside that, just had a really strong cultural fit with the team here.

4:51And so it was a pretty obvious decision to jump across and join. And then before Verge and I started my career in a structure of consulting at a firm called OCNC, doing primarily tech and media. And that was a great foundation for the first couple of years to learn the ropes. Before we dive into the VC fund specifically, I can start just by framing sort of high level overview of True, because it's pretty different to other funds out there. Effectively, True is a sector specialist investment and innovation business where consumer, retail, technology, that's all we do. based in London, but very active across all of the UK, Europe, sometimes US as well.

5:30As a firm, have about 600 million pounds of assets under management across investment strategies. And we also have an innovation advisory practice, which works with some of the largest corporates in the sector from around the world. And so it's really the breadth and combination of those businesses, which makes us really unique. And I think that's super important in today's market. And we can obviously come on, talk a bit about that as well. But I would say sort of stepping back, it's the sector specialism that kind of brings a real deep expertise and network to help drive value across the ecosystem, including the founders that we're partnering with.

6:08And then because we're investing from early stage startups and other teams into the public markets, means we can have a very broad perspective across the life cycles of companies in the sector. To sort of dive one layer deeper on that, and on the next slide, I can briefly run through kind of very briefly touching on the different parts of TRU. So on the investment strategy side, which is kind of the left-hand part of this chart, obviously we'll come on to talk about the VC strategy, which is the earliest stage of investing that we do. The private equity business, which is on the far left-hand side, really partnering with later stage growth companies, much bigger in terms of AUM, really focused on backing the next generation of consumer brands and retail tech companies.

6:52And they're writing up to 50 million pound checks. So it's much, much bigger than the venture checks that we're writing. Recently launched a public equities vehicle that's kind of in the middle there, again, focused on the consumer sector and a natural extension of True's approach. And then on the right hand side of the slide, this is really True's innovation advisory business sort of coming to the fore, works with some of the largest consumer and retail businesses around the world. You can see some of the logos of examples of companies they work with. And fundamentally, they're helping typically leadership teams of these businesses, sometimes board level executives, sometimes P &L owners, really focusing on future focused growth, access to innovation and new technology.

7:34So really helping those companies at the most senior and strategic levels. And then finally, on the very right hand side of the chart, we have a stable of later stage technology companies that partner with us. They're typically more proven applications and think kind of series B and beyond and that we help tap into our network of potential customers. So almost thinking of us as an extended business development team of those companies and they're fundamentally wanting to work with True to tap into our network. I'd say stepping back is really the combination of these constituent parts that makes up the True ecosystem and it's really a connective tissue and network that is what people are seeing value in.

8:16And that's fundamentally our proposition to entrepreneurs when we're talking to them is saying, you can be part of this and we can help your business. I'd love to ask the two of you, because obviously you're a sector specialist, consumer retail and technology, what is the, does it have to fulfill? Because tech is all of venture basically. so tech does that mean that it's tech applications within retail and consumer that's kind of how you think about it but it doesn't have to be both retail and consumer but it's tech within retail and consumer yeah i think we we kind of we call them out separately just because i think when you talk about consumer often people forget about the technology aspect of that they often think about consumer products and physical goods the largest part of us our investment strategy is really around tech investing, but we're not investing in any tech company.

9:09It kind of has to fall within the consumer retail bounds. And fundamentally, it's around changing consumer behavior and fundamental shifts in the landscape for consumer and retail sector that we're investing behind. But as an example, it could be a B2B software business in the hospitality industry, in the hospitality sector, because these are fundamentally retail businesses as well. I'd love to then better understand because what I always, when I see a vertically focused fund, the first thing I'm looking for is then to understand, okay, where does the special expertise within this specialist area then really surface?

9:47So I'd love to understand the unfair advantages that you've built within consumer and retail, both the two of you and your team. And of course, we should also talk about how it connects to the broader ecosystem of all of True, because I think that's obviously very important as well. Yeah, for sure. I mean, the kind of origins of True really was so by the two co-founders. And maybe that's actually a good time to flick to the next slide, because it kind of just gives a bit of a snapshot of the team outside of Joe and I. So Matt and Paul set up True probably 10 or 12 years ago. They had backgrounds in corporate finance and also investment banking.

10:23And specifically, Matt was running the consumer team for a couple of different investment banks. And so that was the origination of having those consumer and retail connections because they were helping these big companies go public fundamentally. So that was kind of the origin of it and where the network started to grow. and then they actually together they ended up buying and running an e-commerce business for a little while and selling it so they were also operators and so the kind of consumer e-commerce retail as i guess the the core competency of that founding team is something which has been built on over the last 10 or 12 years and now true has you know 40 people in the business obviously there's specifically you can see the four of us at the top who are running the vc team specifically but But there's a lot of people outside of this team who are working in this sector day in, day out.

11:17And as the previous slide alluded, we've got hundreds of people in our network that are either board level executives across the consumer retail industry. That's across both public and private companies. And because we have these corporates that the innovation team are working with, who are obviously operating in the sector, they're leaning into true to say i want to access innovation and i want to access new technology and so they're people that we can we can draw on and we leverage to make sure that we can help the companies that we're partnering with so it's really that everyone in the business has been wholly focused on this sector for you know over 10 years in addition to the kind of sector specialism element of the differentiation i think the the coverage across all stages of the life cycle from the very early stage in the pre-seed stuff that Mike and I are looking at all the way up to working with publicly listed corporates and with the private equity stuff sort of in the middle.

12:14It gives us a really helpful visibility across the entire journey of building a big business in the sector so we can draw on the right expertise for the right stage of business from across the accumulated network that we've developed. And so in addition to that kind of vertically specific focus. We've got sort of a longevity throughout the life cycle as well that shows up really meaningfully for founders. I always look to try and see, okay, what are the flywheels that are built within a firm? What is it that's really allowing you to build repetitions as quick as possible within the space that you're in?

12:49Could you talk a bit about how you internally inside the venture team work and kind of the interlocking motions that you have that builds up your expertise and reach and empower as an investor in this space, but also maybe the larger true ecosystem, how that works together. So I guess as we talk about that a little bit, I guess the whole point is that we want to be able to bring a differentiated value proposition to founders ultimately, obviously incredibly competitive space in BC. And so we're constantly be thinking across the investment life cycle how do we leverage the network and expertise that she has built up to really kind of show up both for us in better investment decisions and then ultimately for our founders and lps as well we talked a little bit before about i guess there's two real kind of broad facets to this one is the the expertise dive that we have from a decade of investing globally and in this space across every stage and business model you can think of which which fills a really kind of rich library of learnings and people that can help support.

13:55And then on the network side, with 60-odd portfolio companies across the investment strategies, we have exec contacts at more than 200 corporates globally. We have a combined deal flow across the VC and innovation consulting team of over 5 ,000 new technology companies a year. That gives us a really broad coverage. And as Mike mentioned, I think the beauty of the model is that everybody is incentivized to maximize the knowledge sharing within True so that when the innovation team are doing a deep dive on a specific space for one of our retail partners, for example, to the extent there's interesting opportunities within there that are within the pre-seed to Series 8 remit that we have in the venture fund, we can very much sort of jump into that perspective.

14:37And then similarly, once we're an investor, we can now activate that network from a support side. And I guess just to touch on, I guess, the different stages of the investment lifecycle cycle would have to try and leverage that unfair advantage. On the sourcing side, as I mentioned, the brand and the network drives quite high volume of deal flow. So 5 ,000 overall for true, and then about 2 ,000 of those each year are relevant for us in the VC fund. A lot of that is driven through referrals from other investors. And I think one of the things we're seeing is that we're often co-investing with generalist investors who likes the idea of having a consumer specialist on the cap table alongside things to bring complementary expertise.

15:21We try to be pretty clear and pragmatic on the areas we can't help and very clear and deliver against what we say we're going to do where we can. And often we're bringing a different lens to more generalist players who might have more expertise on the core of building a technology business and then we're helping more on the go-to-market side, whether it's consumer or on the B2B. Joe, you described the platform's reach there, 5 ,000 inbound or deals looked at for the platform, 2 ,000 of them relevant for you. We also have described you as just true, not true VC or true something. So do you go to the market as true?

16:05Does people come to the true platform, not necessarily directly to you and because of efforts by you, but because they come to the true platform? It's base. So I guess on the venture side with the team that we've pulled together, we're very proactive in going out amongst other venture investors and founders presenting True's VC strategy. There's obviously quite a lot in the broader True model and we want to make sure that we're cutting through and being clearly articulate in what's relevant to founders as soon as we're talking to them. But then more broadly because we do have this 40 person team that are out all day every day meeting other people that could be useful from an ecosystem perspective we want to also provide the step back view of okay this is the true ecosystem overall and for example when we're speaking to corporates and some of whom are our LPs we're able to sort of present the benefit of being plugged into a broader ecosystem rather than just an LP in a venture fund.

17:05Makes a ton of sense I I just wanted to understand that better. Feel free to proceed as you were going before. Yeah, cool. I think just touching on the selecting side, and I guess maybe that also leads in a little bit to how we leverage the network to make, not just a source deal, but to make better investment decisions. I think there's the obvious benefit of the accumulated expertise of what good looks like, particularly when it comes to the consumer side. So that's really helpful. And again, getting the benefit of the experience of the private equity team and we're looking at stuff is quite helpful.

17:35obviously very different risk reward profiles and those investments but the fundamentals are often are often pretty similar and then the network on i guess on the particularly on the b2b technology side it's really powerful for us if we're looking at a a retail technology play that's selling into major retailers to go speak to the cto or the innovation teams of major retailers as part of our DD and really get insider insight on where people are focused and what are the key areas that we ought to be digging into further from a DD perspective. Could you share a bit the names and the profiles of the, if not the LPs, then the ecosystem around True?

18:17Yeah, I mean, as Mike mentioned on the first slides, we work for the likes of Marks & Spencer in the UK, who are obviously a very large retailer across food and clothing and home. We work with TJX companies are in the US, a big off-price retailer that owns TJ Maxx and TK Maxx. We do work with Associated British Foods, so a bit more on the kind of branded product side of things. They, again, are very large conglomerate that's looking to treat, to introduce technology that can improve operations. And then we've worked with multiple other players in the US, Abercrombie with Fitch, is a good example, so the fashion brand.

18:51So it's kind of quite well diversified across the different categories of consumer and retail so we've got some exposure across most areas which we we gap into a lot so give an example we've looked at a few kind of ai tooling businesses for fashion design workflows and in that scenario we were able to speak to the likes of the teams at abacomia vip or um ush in our private equity portfolio to get a bit of a sense of the problem and and how compelling that solution is so we we leverage that a lot to try and build conviction when we're of new things. Maybe jump a bit to the consumer opportunity, understand that a bit better.

19:28I think really this is just about sort of helping to frame it a little bit because I think a lot of people, I'd say at least in the last couple of years, have shied away a little bit from consumer. The reality is it's like a massive value pool. The largest companies in the world are consumer businesses. And so don't want to kind of dwell on this too much, but really just some high-level numbers to remind people, I think, how much of our economies are driven by the consumer and therefore how big the opportunity is. And, you know, when we think about it, just for Europe, we're talking about half a billion people spending$12 trillion a year on goods and services.

20:07And that doesn't include, obviously, the sort of B2B aspect, the kind of retail side, when you're thinking about retail and supply chain software spend. And so the addressable market for us when we think about consumer retail is actually pretty huge but my sense is that a lot of people over the last couple of years at least I think in general generalists probably dip in and dip out of consumer depending on the sort of sentiment of macro or kind of what's going on with the consumer at any one point in time which I think the benefit we have of always being in it is that I think it helps us have a more informed and a kind of deeper level understanding of what's going on and obviously we're investing on a very long term time horizon so we try not to kind of get too distracted with the sort of specific ups and downs of you know what's going on the public markets necessarily so this was just a bit of a framing because i think in particular you know like i said a lot of people have shied away from consumer in the past and i think that often leads to you know when we're having discussions with lps in example and they think well, is consumer really that big?

21:13And I think we just wanted to kind of frame that it is pretty huge. I mean, I think for OECD countries, it's kind of like 60 % of GDP is consumer spending, so it's pretty huge. I'd love to understand a bit about the – so this is how I often think about verticals in venture and where they're exciting and so on, is what tech inflections have there been, What inflections have there been in adoption and in regulatory that is creating some interesting tailwinds for a specific vertical? Are there anything in particular you would draw out when it comes to consumer? AI is kind of an obvious one, right?

21:56Clearly, in the last couple of years since ChatGPT launched, it's kind of really brought consumer AI to the mainstream. and so you know things have have kind of progressed quite quickly from then and we're really seeing it permeate like kind of across all categories you know like across fintech healthcare education it's it's kind of everywhere and so ai is is definitely bringing other people back into the market as well and so we're definitely seeing you know a lot of activity on that front from others who had maybe been shying away, like I said, from consumer in the past. But that's definitely dominating a lot of our deal flow, I would say, at the moment, for sure.

22:41Yeah, we'll do a full deep dive on that at a later point because I absolutely love the consumer space, at least as an opportunity to think about. I also buy in that with Ventra, I think it's more about the manager than it's the vertical they're investing in. I don't think you can time things. I think that unless it's something super small, it's probably investable from a venture perspective. So the interesting thing to me is, of course, how do you think about consumer? What's the setup like? And so on. So speaking of that, let's go into this last slide of today, which is your investment strategy.

23:21So I guess as we've already touched on quite a lot, so we see consumer retail is the core of everything that we do is where our network is the most strong and therefore where we're most differentiated. I think the step back, as Mike mentioned, is really what we're trying to do is invest behind what we see as structural shifts in the way consumers are living their lives and in the technology that's both driving that and enabling it. And I think when people hear the word consumer, they're often thinking of consumer-facing business models, so B2C. We actually think it's a little bit broader than that.

23:57Obviously, the B2C side is a key part of what we do. We're investing across consumer tech, consumer and tech-enabled services, and consumer products. But we're also investing quite actively in B2B and B2C business models that sell into the consumer and retail sector, primarily on the software side because that again is where we can really help activate the network of choose corporates and private portfolio companies to help accelerate on a go-to-market side of things so just to give you a couple of examples on the consumer tech side so we're an investor in JITI which is the logo on the left without without any name there yeah exactly I have probably the wrong one to pick so those guys are building AI native property portal to challenge right moves as the as the leading incumbent in the uk a really good experience of what we were talking example sorry what we were talking about just a minute ago with a clear why now with the technology of collection point of applying ai folks to help aggregate the supply size but then also create a much richer and more dynamic search experience on the demand side so really exciting play and definitely worth checking out in the middle so something like fatifa for example so that's on the consumer service side that's helping employers offer reproductive healthcare services to their employees so again that the angle there is these introductions to corporates to help them scale and then on the consumer product side of things again not a huge deep market of vcs that invest in consumer products but for us particularly where we see real category innovation ideally underpinned by defensible IP, then we get pretty excited.

25:37And so, Flus on the slide there that you see is the world's first plastic-free and fully biodegradable sanitary products, fully flushable sanitary products. That's like a really good example where there's genuine IP in enormous category and someone taking a fundamentally different approach. And then on the right-hand side, more on the sort of retail tech stuff, an example would be SeaChange, which is a business building computer vision technology to be able to detect when people are stealing things in retail stores. It's actually a really good example of the true fly we're working. So it came out of a deep dive project that we were doing on behalf of a retailer that was seeing a huge problem with shrink.

26:17And they were scanning for technology solutions that could help solve it. We got introduced to the team because they were at the right side and stage for us. built conviction that they were they were the best solution in the market and then we're able to make an investment out of venture funds so a really good example of how we sort of use the network to source and then support very strong opportunities and then as we talked about this sort of north star for all of it is is how we we leverage choose platform to help if we can't we're kind of just another investor we really think through in the underwriting process how are we going to help move the needle once we're an investor here both on the consumer side and the B2B side.

26:55There's a long track record of having done that. And then finally, we're currently investing out of our third fund. So it's a 40 million pound vehicle. We have about 50 portfolio companies across the three funds. And stage wise in fund three, we're focused primarily on seed. We have the flexibility to go a bit earlier into pre-seed and a bit later into the smaller end of series A, but really seed is the sweet spot. I was actually about to ask about that in particular, because it's not too often that you see pre-seed to Series A. But what you're saying is your sweet spot is seed. But you're also very cognizant of what happens in both pre-seed and Series A and maybe a bit more aware and willing to invest in these stages than the typical pure play seed fund.

27:41And that's why you say pre-seed to Series A, but it is seed that's the main thing. Seed is the main thing that, I mean, we have a sort of range of check sizes. So we can sort of start at£200 ,000, which would typically be into a pre-seed round. And then we can scale up into putting a million or a million, 1.5 million into a Series A round as our first investment. But really where we're trying to focus is in the seed opportunities because we think there's just such a massive gap in the European ecosystem, consumer investing at the seed stage. The pre-seed is partly a sort of opportunity to establish relationships with really high potential entrepreneurs who are building in massive markets and improved the value of True's model to them to then double down at the seed round and make it a core position for the fund.

28:26I think often on the stage front as well, depending on the type of company that it is, the round dynamics can be quite different. So, you know, it'd be more likely that we might participate in a series A, you know, a consumer product business, whereas, you know, an AI company is more likely that we're going to want to get in much earlier, partly because of pricing. And so sometimes it's based on the type of company as well as to like what stage you might lead into more. Guys, thank you so much for joining me on the podcast to talk a bit about True, present it to everyone so they better understand who you are.

28:59and maybe as we close i want to ask you i said true global in the beginning why did i do that we are we are technically true global we we kind of shown it to true in theory it's true global but i think true is a bit easier i just wanted to ask just in case anyone was wondering uh what's the connection there and i think some people know as i do true global uh from other things so guys thank you so much for coming on the pod today thanks having us thanks andreas