5 November 2019
How has the first six months managing the GLIF been? And which are your focus areas for the Fund over the coming months?
We’re incredibly pleased with the progress we’ve made since Greater London Investment Fund launched in May this year. So far, we’ve invested in nine businesses and met all our targets for 2019. The three areas we are focusing on at the moment are:
- Launching Greater London Labs. A pre-seed programme, looking to provide match funding to pre-seed stage start-ups in London. We’ll be partnering with accelerators, angel investors and other very early focused funds.
- A research piece around the circular economy in partnership with several key players. These include government departments, a few sustainability and circularity focused funds, and angels investing in this space. The circular economy is one of the big themes for the Greater London Fund, with £14m ringfenced for investments moving us towards a more circular future.
- Last but not least, we are looking at bedding down the portfolio we’ve started to build by joining the boards of some of our investments. We are also working on a platform to provide specific offerings to all in our portfolio.
What are the key attributes you look for when evaluating a deal?
We meet over 2000 companies a year and end up investing in 10, (max 15) of those every year. So we end up saying ‘no’ to almost every company we meet. What we look for is a unique confluence of attributes. Regardless of the stage a business is at, the two things we evaluate in every case are the team and the market the company operates in. We are looking for founders who are structured and organised, have the charisma to attract others on their journey and a good mix of functional and domain expertise.
Because we look for companies who can become category leaders, worth hundreds of millions of pounds,the addressable market needs to be very large, so that even if you capture a small slice of that market, you’re still running a big company. At the pre-seed stage it is not often clear, precisely what the market is going to look like, or even which one you will end up operating in. However, there has to be a decent hypothesis about what that market may look like.
How hands-on are you with your investments? How do you like to work with the companies post-investment?
By the time a company reaches Series A stage, we will likely be leading the round and taking a board seat with the deep investment and partnership that entails. At the earlier stages, it depends on our role in the round. MMC focusses on helping the entrepreneur in the areas that fit best with our strength as a VC that can take a company from seed, to growth, and beyond. We will work alongside the founding team through milestones leading to Series A, and help the team prepare to scale-up.
When it comes to pre-seed companies, we are trying to offer the kind of support they would typically receive after a significant intake of capital but normally can’t access yet. There may not be a board, so we will focus on supporting the founders to validate their market hypothesis. Over time, we will start looking more at the product, customer traction, revenue and other financial metrics. We focus a lot of our attention on how we can bring in the right people – which may be potential customers, exceptional talent or mentors and investors.
We also spend a considerable amount of time thinking about the boards of scaling companies. We are often searching for the right chairman or bringing in advisors with strong domain expertise. We provide access to MMC’s network of later-stage companies who give advice, workshops and masterclasses which all take place in our wonderful new office in Holborn.
What drives the most successful start-ups?
It is an unusual combination of factors which make a great founder and a unique blend of factors which contribute to each founder being successful or otherwise. I believe there are commonalities around attributes of founders. Firstly, they must have the right mix of execution ability, tenacity and grit. Secondly, a relentless focus on offering the customer something that they genuinely get value from and addresses a real pain point. Finally, having a good mix of focus, drive and adaptability to keep a clear view of the vision and opportunity while adjusting in response to what they learn along the way. Most successful startups have to get 100 things right and avoid 100 other things going wrong, which is why so many companies have rollercoaster journeys to the top.
Could you give us an example?
Timo Boldt, founder and CEO of Gousto, an award-winning recipe box, are one of the most successful companies in the MMC’s London Fund (run in partnership with Funding London). We backed Timo and the team in 2013 because we were so impressed by his tenacity, market knowledge and charisma. Timo has an incredible ability to figure out when to push hard, grow fast, change something or prepare for a new raise of capital. As a founder you have to get this right, quarter after quarter, year after year, and Timo has done this successfully over many years. I believe the best founders ask themselves regularly, as does Timo, how do I continually upgrade my team year after year.
Timo also made a considerable difference at Gousto by bringing data and data science into the business at an early stage. This alone has driven a vast number of the decisions, on how they grow, how they source, and the way their highly automated warehouse operates.
If you had to pick a new sector to explore which would potentially fit your investment strategy, what would it be?
We are making a big push into digital health at the moment. This is an area we have invested into in the past, but has never been a real focus for us. Last year we hired two former doctors, Tom Moon and Dele Akinyemi, who are leading our effort here. I genuinely believe the combination of better ways of understanding and processing information, such as ML and AI, and how the technology is being deployed in hospitals and care, will unlock tremendous advances in health outcomes and the efficiency of the systems, here with the NHS and globally. For example, by offering patients the correct treatment pathways, predicting health outcomes more accurately, and creating new methods of diagnosis which can catch problems earlier or in much more widely-accessible ways.
Dr. Tom Moon has published a series of articles focused on digital health. You can find out about why we decided to invest in the future of healthcare and discover insights into areas such as AI Radiology, from his latest publications.
What one piece of advice would you give someone starting a company?
My advice for early-stage founders is to define from the very beginning what your customer proposition is and who your ideal customer will be. Then challenge, test and iterate this relentlessly. Many founders get caught up in the excitement of growing the team and and talking to investors- and of course we love it when entrepreneurs come and talk to us. However, focus on their value proposition must come first, and customers will be the ultimate judge of that value.
How did your journey as an investor begin?
I started as a strategy consultant, working mainly with tech and media start-ups. One of the things which frustrated me was the slowness in which things were moving. I wanted to be able to work with companies and entrepreneurs, in a space where you have a conversation one day, and the following week, decisions are made. I spent about a year networking, meeting VCs, entrepreneurs and angel investors and finally found a great opportunity at MMC. That was eight years ago!
What small change has made a big difference in your life?
I used to sleep with my phone on my bedside table. My partner and I have recently been trying to create a habit of placing the phone across the room, face down, on silent. This small change has improved the quality of our sleep and helped us become a lot more mindful when we go to bed. However, I must confess we’re still breaking that rule a lot!