The Form Playbook #2: AI policy and regulatory strategy, with Dorothy Chou
Welcome back to The Form Playbook, our newsletter supporting founders building in markets where policy matters. Form is the only fund dedicated to helping founders understand, navigate and build where regulation is a driver of success.
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This month:
🎙️ Interview with Dorothy Chou: Insights on AI policy and early-stage regulatory strategy from the angel investor and policy leader at Deepmind, formerly Uber, Dropbox and Google.
📰 News & Views: Patrick wrote about how founders should decipher the recent ownership debate in VC, plus 3 takeaways on what the UK’s Conservative Leadership race means for UK start-ups, VC and tech policy.
⏰ Form Updates: We made 2 soon-to-be-announced investments, both in health, and spoke to the New Statesman and TechUK on policy, venture and start-ups.
Dorothy Chou on AI policy and regulatory strategy
With a career in policy development and public affairs at Deepmind, Uber, Dropbox and Google, and as an investor on Atomico’s Angel Programme, Dorothy Chou has a unique insight into the regulatory challenges and opportunities faced by start-ups. We caught up to discuss the how smart founders can execute more effectively by getting on top of regulatory exposure early, the role policy plays in companies’ success, and the impact of forthcoming AI regulation in the UK and US.
Dorothy’s Advice for Founders:
The more start-ups have worked through the rules & institutions they want to operate within, the more freedom they will ultimately have to focus on the work they do best. It’s best to consider whether you might need to do this before you need to learn the hard way—which is almost always more costly.
All companies inventing new ways of doing things eventually have to (re)negotiate a social contract with their users. Since public institutions like regulators are a proxy for what users want, they can’t and shouldn’t be ignored.
The ongoing discussion about AI regulation should be seen as an opportunity to clarify the outcomes society wants AI to achieve. The more clarity the law provides, the more stability & predictability for start-ups. The best case scenario results in clear targets and outcomes, while the worst case leaves founders guessing and spending on how to comply. Companies like FTX have demonstrated how to get ahead and avoid the costly, default situation when there are no rules.
Read the full interview on Medium: Dorothy Chou on AI policy and regulatory strategy
News & Views
Ownership. Does it matter when investing in start-ups? This question has led to a confusing debate recently, so Patrick blogged to set the record straight: Putting the ownership debate to bed. For VCs, it (almost always) matters
In the UK’s Conservative Leadership election, despite Rishi Sunak originally leading among MPs, Liz Truss is now highly likely to win the race. Here are 3 takeaways on what the campaigns mean for start-ups, VC and policy:
Truss and Sunak both favour tax cuts, deregulation, and lower public spending — but differ on timing. Under pressure to win, Rishi Sunak has tried to shed his record of raising taxes by promising an enormous reduction in the basic rate of income tax, from 20p to 16p, but only by the end of the next Parliament once public finances are stronger. Truss, on the other hand, plans to reverse increases in National Insurance and corporation tax now, borrow more in the short term, and hope growth picks up to close the gap in public finances. In this scenario, the Bank of England is likely to raise interest rates even more quickly — creating broader economic ripples and almost certainly implying a rocky Q4 for financial markets.
Both candidates support growing the UK tech sector, are committed to data protection reforms, and would review the Online Safety Bill — but an enabling regulatory regime for crypto is less likely under Truss. Truss founded the Taskforce on Women-Led High-Growth Enterprises, chaired by Anne Boden, to encourage female entrepreneurship. But on crypto, strong political sponsorship will be required to overcome the FCA’s ongoing scepticism and resource challenges. As yet, Truss has not shown any indication of supporting crypto in the same way Sunak did as Chancellor.
But despite the current jostling, expect limited reform (beyond initial tax cuts, in Truss’s case) — at least for 2 years. Whoever wins will need to navigate:
Tight parliamentary and budget timelines leaving minimal room for radically new policy
Any remaining political attention will likely be dominated by the cost of living crisis, inflation, Ukraine and trade disputes with the EU
Neither candidate has the overwhelming support of MPs or a mandate from the wider public to implement new policy
Form Updates
We completed 2 soon-to-be-announced health investments, one in clinical trials and another in digital therapeutics. Despite the market conditions, we’re still really interested in hearing from founders who are raising pre-seed or seed rounds.
Leo spoke to the New Statesman about the recent downturn and what it means for the future of UK VC, start-ups and government’s response, and Andrew joined a TechUK panel on how tech companies large and small are thinking about complying with new online safety responsibilities.
And as always, if you know anyone building a game-changing company in a market where regulation either already exists, or is taking shape — or you’re an investor thinking about how policy affects your portfolio, get in touch.