Expert Insights – with Sam Hields, OpenOcean VC

Expert Insights – with Sam Hields, OpenOcean VC

In our first Expert Insights series, we speak to Sam Hields, Principal at OpenOcean VC. In this conversation, we were offered a glimpse into the intricate dynamics of VC investment and the ever-evolving startup ecosystem. Sam, whose career has spanned roles from software engineering at JP Morgan, operations at Uber, and commercial leadership at Community Fibre, delves into the ethos and strategy behind OpenOcean. OpenOcean, renowned for its MySQL origins, as well as MariaDB, and its status as a Seed and Series A investor in Europe, is deeply entrenched in the technology sector, with a particular focus on Data Infrastructure, AI, DevOps and Automation.

OpenOcean’s average investment ticket, averages at three and a half million euros and they typically lead.” but have gone above € 5 million with their initial cheque. This information set the stage for a discussion about the firm’s investment philosophy, the scale of its engagements, and its approach to nurturing startups.

Sam took us through OpenOcean’s diverse and innovative portfolio, highlighting companies like Supermetrics and Booksy, and ventures into quantum computing (IQM) and AI with investments in LatticeFlow and MindsDB. Speaking on MindsDB, Sam elucidates its significance, stating, “it simplifies machine learning for developers,” underscoring OpenOcean’s commitment to supporting accessible, cutting-edge technology.

Delving deeper into the realm of technological innovation, Sam was quite excited about Platform Engineering (such as Strong Network) and developer platforms. He likened the evolution of these tools to a significant leap from primitive tools to advanced machinery, revolutionising how structures are built. “It’s like a domain of companies or a domain of products which are the tools that developers use to build the stuff rather than the raw materials,” drawing an analogy to the construction industry’s advancement. This shift, according to Sam, is integral for engineering the next generation of applications. He humorously references a common frustration in software engineering — the “it works on my machine” syndrome — to underscore the value of containerized development environments (CDEs) and cloud development environments in facilitating smoother collaboration and efficiency in development processes. Sam is convinced that as software continues to “eat the world,” a phrase popularised by Marc Andreessen, the demand for sophisticated, accessible tools for developers will only escalate. This necessity spans across the spectrum of developer expertise, from the novices to the seasoned, ensuring that everyone has the means to build faster, more secure, and increasingly AI-enabled applications. Sam’s insights into platform engineering not only highlight an exciting trend but also anticipate the future needs of the software development community, reinforcing the narrative of ongoing innovation and the democratisation of development tools in the tech ecosystem. 

Our conversation naturally transitioned into the current funding climate, where Sam offered a straightforward assessment: “It’s definitely tougher.” He elaborated on the market’s pivot towards valuing capital efficiency, marking a departure from the previous emphasis on growth at any cost. This shift, according to Sam, necessitates a reevaluation of startup valuation strategies in line with the evolving expectations of investors.

Reflecting on the potential for an increase in startup failures, Sam predicts, “I think there’s going to be a lot [of startups failing],” referencing articles that have reported significant losses in the venture capital sector as evidence of the challenges ahead. Despite this grim forecast, Sam identifies a silver lining, noting the opportunity for astute investors to support startups in distress, highlighting the complex nature of venture capital as both a competitive and supportive industry force.

The conversation lightly touched on the dying startup unicorn and the concept of “zebras” — startups that eschew the unicorn model in favour of sustainable, value-driven growth. Sam explains, “Zebras are startups that prioritise values such as sustainability, social responsibility, and community,” signalling a broader industry shift towards ventures that champion ethical and sustainable business practices.

Try and do as much as you can before getting on the roller coaster because once you’re on it, you’re on it.

— on VC funding

As the interview drew to a close, Sam provided advice to founders currently navigating the venture landscape: “Try and do as much as you can before getting on the roller coaster because once you’re on it, you’re on it.” This analogy encapsulates the irreversible commitment that comes with accepting venture capital and underscores the importance of diligence and independence in the early stages of a startup’s life.

Sam also touched on the importance of building something that truly resonates with the market before seeking external funding. He advises, “if possible, go through that period of trying to make it work without taking outside capital,” emphasising the value of proving your product’s market fit independently. This approach not only validates the product concept but also places founders in a more advantageous position when they eventually seek funding.

In discussing the broader implications of AI and automation on the startup ecosystem, Sam wonders about the changing dynamics of venture capital itself. He contemplates a future where the democratisation of development tools, spurred by advancements in AI, could potentially reduce startups’ reliance on traditional venture funding with the cost of software building being greatly reduced. This speculation underscores the transformative impact of technology not only on product development but also on the foundational structures of startup financing.

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