Hannah Seal, Index Ventures, on investing in regulated markets
Welcome back to The Form Playbook, our newsletter supporting founders building the future of regulated markets.
This month:
🎙️ Interview with Hannah Seal, Partner at Index Ventures, on investing in regulated markets
📰 News & Views: New blog from us on Winning in Regulated Markets: Mapping What Matters
⏰ Form Updates: Peppy raises a $45m Series B, Patrick joined the EUVC podcast, Leo caught up with Global Counsel podcast, and Andrew speaks to the FT about R&D support for startups
Hannah Seal, Index Ventures Partner, on investing in regulated markets
Hannah Seal is a Partner at Index Ventures, working with companies like Remote, Multiverse, Fonoa and Beauty Pie. As a former operator at eBay and Ocado, and now at Index investing in policy-adjacent markets like the future of work, Hannah has seen what it takes for founders to take on complex, regulated sectors and win.
Hannah’s Advice for Founders:
Deep insight about your market, as well as realism about what it will take to build a global business in a regulated sector, is essential to being an exceptional entrepreneur.
Navigating a pre-seed or seed round in 2023 isn’t without challenges, and the best advice must be tailored to your runway and efficiency. But entrepreneurs with a burning desire to build something significant can flourish in the aftermath of crises — just look at the dot-com bubble and financial crisis.
There is opportunity in complexity: Fonoa and Loctax, which are both solving different aspects of business tax headaches, show the prize available to those willing to break down barriers in even the toughest markets.
Find the full interview transcript below.
News & Views
Andrew has a new blog on Winning in Regulated Markets: Mapping What Matters
Building a start-up in a regulated market is challenging: rules are constantly evolving, policy affects different business functions in different ways, and, as you scale, different countries will have different frameworks.
To win, the best founders optimise their regulatory strategy like any other function.
At Form, we run a session with every new portfolio company to map what matters early, to avoid learning the hard way later on. So we’ve written up our framework, running through the areas where policy has real business impact: product, go-to-market, finance, operations, brand and the broader ecosystem.
Form Updates
Peppy raised a $45m Series B to expand its work connecting employees to real, human health experts to the US. Congrats to a brilliant team on the round, which is a testament to their remarkable vision and execution.
Patrick was on the EUVC podcast, discussing how Form Ventures was founded and how we were built to be differentiated from Day 1
Leo spoke with Global Counsel, the public policy advisory firm, about the state of the UK tech scene and how it compares to other countries, ft. our collaboration with Atomico on startup policies across Europe
Andrew was in the Financial Times, highlighting that the UK’s proposed cuts to R&D tax relief are still due to come into force in April, despite a welcome consultation to revisit the issue
FORM: It would be remiss of us not to start with your sense of how 2023 will shape up for founders looking to raise at pre-seed or seed — what’s your take and any tips for fundraising in this market?
HANNAH SEAL: Counterintuitively, even given current macroeconomic headwinds, this can be a good time to start a startup. Great businesses have been built and flourished through some of the most difficult times; and, we have seen it before: crises lead to the creation of a new generation of founders and startups. Look at Google raising capital in the aftermath of the Dot–com Bubble, Salesforce surviving the 2001 crisis, Uber and Adyen raising during the 2008 Financial Crisis. But it also has to be done right and with conviction. In this period of economic contraction, only the entrepreneurs that really mean it are going to start businesses because they have a burning desire to build something very significant and impactful. Some companies are able to raise funds even in difficult circumstances — but each company is unique and faces diverse circumstances and, therefore, good advice for fundraising in this market needs to be tailored and specific. Certainly, turbulent times will require founders to be subtle and precise in their control of the business, but the best advice should be based on the length of your runway and the efficiency of your business.
Like Form, you’ve invested in lots of founders taking on markets where regulation is make or break. What do you look for in a founding team to tackle these complicated sectors?
We want to invest in exceptional entrepreneurs — those with unique insights who are intrinsically driven to make their vision a reality. This becomes even more important if they are operating in complex, regulated sectors. I look for founders with a deep and specific insight of their market — and who are realistic about the challenges that will be involved in building a global business in a regulated sector.
Is there a deal you’ve done or an Index portfolio company that has really impressed you when it comes to dealing with regulation — mitigating the risks and taking the opportunities?
One company in our portfolio is doing more than dealing well with complex regulation, tax and compliance… it’s actually a business founded to help organisations do just that! Fonoa identifies and solves a genuine business headache, enabling companies to manage their tax obligations seamlessly through one API. The company built a hassle-free global tax compliance platform, automating real-time tax workflows across many countries and local governments in one place. Despite the global economy being more connected than ever, local laws and governments are becoming increasingly complex. Fonoa is one of the innovators breaking down these barriers and bringing us a step closer to a virtual global single market in the process.
What (regulated) market / problem area are you most interested in right now?
Probably, tax, as it is one of the major issues of the moment. Governments are clamping down hard, while the increasing multinational nature of even the smallest of businesses makes managing tax a constant, and often losing battle. The moment is now for transforming tax and one of the companies we invested in last year, Loctax, shows that there is still plenty of space for innovation in the space. By offering teams a single source of truth, which existing and new specialist tools will ultimately plug into, Loctax has an opportunity to be the default tax management platform for every company.
Index announced its Origins II seed fund just before Christmas — tell us a little more about what you’re hoping to do with that fresh capital.
We first launched Index Origin to give entrepreneurs access to the resources of a multi-stage fund, combined with the hands-on expertise of a dedicated seed fund. This collaborative approach with the seed community has been expanded further with Origin II — prioritizing co-investing with seed funds, solo general partners, and angel investors for the benefit of founders. With the new funds, we continue to support new ventures through all of the stages of growth, from ideation to maturity. We will be investing in companies across sectors, particularly in consumer, enterprise, software infrastructure, gaming and fintech, where we have established leadership and expertise.
As always, if you know anyone building the future of regulated markets — or you’re an investor thinking about how policy affects your portfolio, get in touch.