The Investor View: Creativity and Humanity with Frederic Court, Founder, Felix Capital
Felix Capital is a venture firm investing in the intersection of technology and creativity, which includes brands such as Farfetch and Peloton. With a name derived from the Latin for ‘happy’ and ‘lucky’, the team lives by the words: “Work hard to be nice to people”.
It’s an anxious world right now. How have you coped with the current situation?
At Felix, we’ve been extremely busy doing three things:
Firstly, we’ve re-shifted and adapted our businesses to this new environment, including remote work, no more travel and creating new ways to collaborate as a team but also new ways to collaborate with our portfolio and to source investment opportunities. All of this is happening in a context where the COVID pandemic accelerated digital adoption and the transformation of our lifestyle with technology.
Secondly, we’ve supported our portfolio, especially with the rise of uncertainty and the importance of having cash reserves (many companies had to adapt their cost base or even fund-raise to extend their runway). With the longer-term impact of COVID, many companies are benefiting (especially those exposed to e-commerce, wellness, digital media, food, etc.) with the exception of travel companies – the travel industry was heavily affected by the crisis and this market is currently quasi-frozen.
Thirdly, we’ve made new investments, including with teams we hadn’t met before in person. It was a new way of doing business, without having the chance to meet with the founders in spite of starting a long-term partnership with them. We got to know them through multiple conversations on video and got comfortable that we could create a strong bond and mutual trust.
Times of crisis have often been platforms for innovation and experimentation. Is that true for you?
Yes – there are currently great opportunities for up-and-coming brands which are more agile and can blend technology into their offering and leverage social media channels as a way to engage consumers. One recent investment that is “brand-driven” is VanMoof: Electric bikes, direct-to-consumer, design-led product with a strong community. Another, which gained a lot of attention and has just announced a funding raise of $300m, is Mirakl, a start-up that helps businesses to build their own marketplace.
What is the biggest change in consumer behaviour that you’ve seen? And what is it that consumers are putting new value on?
The young are a generation of activists; they are much more vocal about what they expect from the brands they transact with. Sustainability is also becoming more important and we’re integrating it increasingly in the companies we’re working with. Consumers are asking for more sustainable packaging, for a more transparent and sustainable supply chain. However, there is nothing completely new going on in consumers’ behaviour; it’s really an acceleration of what was already there: an acceleration of the digitalization of our lives, of a more conscious attitude and a more sustainable lifestyle.
Another area that is becoming more and more important is self-care, especially during a difficult period with COVID. Being fitter, eating better, taking care of your mental health, meditating, these are activities we are all more prone to do. That’s why we invested in Unmind, for instance, because people are looking for tools for mental health. The social price of this crisis is going to be a heavy one. There’s a need for more humanity, more personal relationships and a human connection.
What are the biggest challenges for heritage luxury brands? Can they create a bond with consumers in the same way some newer brands have?
During the recent period, we’ve seen many emerging digital-first brands create amazing bonds with consumers. For instance Goop and Anine Bing have started to create content in a much more agile and cost-effective way. Goop launched a new beauty line using videos the teams created with their mobile phone, very cheaply but very authentically. The same thing for Anine Bing, taking videos from home. Authenticity is key.
“But I’m wondering whether heritage luxury brands need to do this – I don’t think people expect them to. Building a direct communication with customers in a personal way is not as central or imperative for them. Consumers still expect these brands to be top-down, they rule the fashion world. They have enough brand equity to drive pricing, fashion trends, and consumers’ interest. The counterpart is that it will be very difficult for smaller brands that don’t have these attributes, neither a strong brand equity or a direct communication and intimacy with consumers.
Has the crisis changed your strategy?
Our investment strategy is focused on the areas in our lives where we see the strongest potential for change and growth. Overall, though, we are very interested in brands with a positive impact on the world: sustainability in all sectors, wellness defined in many different ways. Our investment in VanMoof is a good illustration of how people expect their life to be more sustainable. More and more people are switching to bikes, to sustainable modes of transportation. Reinvention of urban lifestyle will also impact how we live. We are doing a lot of work around digital tools for communities and ways to a more human connection. Home is also going to be an area to explore as it has become even more important in our lives, which we saw in lockdown.
We’ve seen a great rise in creativity. Creating content differently, engaging with an audience digitally and making a living differently as a result. People are seeking opportunities to express themselves creatively, purely for self-expression or for work. With the economic and social constraints of COVID, people have also been forced to be creative, to find new ways of doing things. All of it is about humanity, at its centre.