3i veteran goes green: from Tech to EnviroTech
Patrick Sheehan is leaving 3i, whose line-up in Europe Tech has been evolving in the past few years under the stewardship of Ian Lobley.
Patrick will be starting a 3-partner inaugural fund called ETF (Environmental Technologies Fund) which he indicates should have a first closing in coming months. No site yet. I find the name confusing (reminds me of EuroTech Forum, George Coelho‘s now defunct ETF Group) but it may be a placeholder. Perhaps he too was in awe of the reality of global warming and decided to do something about it.
The late career move to a new investment territory is interesting. Patrick has proven his mettle in technology (set up 3i’s Silicon Valley ops, some good IPO’s attached to his name). I have obviously no visbility on his returns record but I assume it must be pretty good since he spent 20 years at the firm. But a natural question comes to mind: can a VC switch segments ? Say you have been investing in hardware for 20 years and developed a great network, can you decide to invest in cleantech in a completely new ecosystem ?
The folks over at Union Square wrote some nice posts about their investment strategy recently (which I can relate to since my focus is almost identical) and their "declaration of faith" includes the following on investment focus:
We invest in information technology. We do not invest in energy, biotech, materials science, or nanotechnology. Information technology is the world we know. We believe that when it comes to start up investing, success is dependent on understanding the forces shaping a developing market more than knowing the trade of investing. That conviction keeps us close to the markets we know best.
If you are in a hyper-competitive market where sticking close to the top 5% of dealflow is the only way you will make it, then very long-term focus is how you get there.
But funding innovation is what we do; it is not about this sector or that. There are highly generic lessons learned from growing companies that can and should be applied across sectors. One of the great risk a VC faces is to be stuck in the segment that its partners have expertise in, even when that segment has stopped being attractive.
I for one would think that a couple of years of dedicated and full-on network building in a new industry and a great track record as an investor in an adjacent space are good building blocks to leverage oneself into a new and less competitive segment. I look forward to finding out who the rest of the team is and wish Patrick an oversubscribed fundraising.