Deep Mind: Raising $60M Funding

Source: Cambridge University Technology and Entrepreneurship Club, Feb 2015

What DeepMind accomplished is astonishing, not only from a research/technology point of view, but also from an entrepreneurship point of view. DeepMind was created as an independent research institute that would investigate general-purpose AI. This left many people with questions. How do you get investors excited about ventures that are so Blue Sky without an immediate view on the exit strategy? How do you accomplish selling the enterprise to Google for £400 million without having any product ready? Here are a couple of point of advise Demis had to share:

  • Be about 5 years ahead. You need novelty and competitive/intellectual advantage. Demis achieved this by combining computer science and cognitive neuroscience. He advised everyone to keep on learning and improving, which would allow to identify a specific niche that you can overtake. Flirting with disciplines different than the main one you are focussing on would give you an edge, a fresh point of view, and a strong advantage compared to your peers. However, he suggested, you should not be too innovative (e.g. 50 years ahead), because people need to understand your technology and the implications of your Blue Sky initiative.
  • Be passionate and obsessed with your goals. When starting a new venture, you need to be incredibly excited about what you are trying to achieve. This is even more true for Blue Sky initiatives. You need to stay ahead of the game, which you can only achieve by momentum and continuously pushing forward. If you are not passionate about what you are doing, your drive will be lower, you will not reach your milestones as quick, you will not be able to motivate your team as well, and you will have more difficulties attracting investors.
  • Seek a lot of investment in a short time frame. For his previous startup, Demis went through the typical process of different rounds of funding. He received investment from one VC, reached the milestones, and then went for the next round. What he did for DeepMind was completely different. Once investment was secured from one source, he immediately went to seek more investment. In a quite short period of time, they were able to secure over £60 million in investment. This did not only allow them to pursuit Blue Sky goals in an accelerated manner (keeping ahead of the game), but also create momentum and awareness.
  • Seek investment from the right sources. Most typical investors and VCs aim for a 10x return within a couple of years. This was obviously not something that DeepMind could deliver on. There was no clear exit strategy set in place, nor did they focus their efforts on creating a marketable product as soon as possible. For this reason, Demis approached investors such as Peter Thiel, Elon Musk, Li Ka-Shing, and Jaan Tallinn. These people understood the mission from DeepMind, including the impact it would have in terms of technological revolutions and financial return.
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