Forward Partners raised £60 million from BlackRock to invest in artificial intel
British venture capital firm Forward Partners has raised £60 million from a sole investor — BlackRock — for its second fund.
Source: Shona Ghosh
Forward Partners wants to invest in "applied" AI startups, which use artificial intelligence to solve a specific problem, like drug discovery.
AI is tech's hottest investment area right now, with VCs ploughing $5 billion (£3.8 billion) into startups through 2016.
Early stage UK venture capital firm Forward Partners has raised £60 million from a single institutional investor, BlackRock, and plans to invest in one of the hottest areas in tech — artificial intelligence (AI).
The fund closed in March, but Forward Partners has never revealed the backer beyond saying there was a solo institutional investor.
Business Insider examined public filings on Companies House, which show BlackRock invested through a diversified growth fund.
Managing partner Nic Brisbourne, formerly a partner at DFJ Esprit, said the firm wants to invest its second fund in AI startups working on a viable product, which he describes as "applied AI".
He cited SwiftKey as an example, a predictive keyboard for mobile which uses AI to work out what a person might type next. That was acquired by Microsoft for $250 million (£189 million) last year. Brisbourne believes applied AI startups could pop up across data-reliant industries such as healthcare, financial technology, travel, and pharmaceuticals.
The company has invested in three startups to date from the new fund. They comprise Empowered, which uses AI to process research and development tax claims, realtime messaging platform Ably, and events startup Epic which will have an AI element "down the road." Forward is in the process of investing in a further three startups, Brisbourne added.
Brisbourne plans to avoid startups like DeepMind, the AI firm acquired by Google for £400 million in 2014. That's because DeepMind, despite that impressive exit and achievements like beating the world's best Go player with an algorithm, isn't about to start generating substantial revenue.
Google's DeepMind took on the world's number one Go player — and won. Mustafa Suleyman/Twitter
"It's very difficult investing in businesses that are predicated on advancing research, at the early stages," Brisbourne told Business Insider. "At the early stages, there's a bunch of clever people [and] if you look at what progress they're likely to make in the 12- to 16 months after your investment, it's likely to be more research, a breakthrough in ideas, and maybe some kind of prototype.
"It's very difficult to evaluate whether they're making progress over the course of the year, and difficult to know whether next round of investors will put a lot of value on the work they've done."
Exits like DeepMind's are also rare for pure AI startups. Matt Wichrowski, currently head of funding at Entrepreneur First, noted in a 2015 blog post that pureplay artificial intelligence startups tend to make poor VC investments because they exit too early.
CBInsights artificial intelligence AI funding CBInsights
Brisbourne wants to land around 50 deals over "the next few years". He has increasing competition: Venture capitalists invested $5 billion (£3.7 billion) in AI startups globally in 2016, up around 65% year on year, according to CBInsights.
Forward Partners' latest fund focus comes as early partner Martyn Holman leaves the business.
A spokesman for the firm confirmed Holman's departure and said: "After almost a year as a partner at Forward Partners, Martyn took a personal decision to transition from the business and channel his energy into pursuing other career avenues outside of VC."