The Exchanges

Q So would you agree with the barbell analogy that there's a lot of capital at the seed stage and a lot of the later just pre-IPO stage, but then there's the thinning out in the Series A, Series B?

A I think that's how we're seeing it, practically, yes. So, um, a lot of the Series A and Series B money, ultimately, the LPs in those funds are still institutions, pension funds, insurance companies, uh, and traditional LPs, and they're probably not making any more of an asset allocation to VC than they ever were. And in fact, because so much of the rest of their portfolio is done poorly, and the percentage of VC has always stayed the same, the absolute amount of pounds they're putting into VC has probably come down. Um, And really, what that means on the ground is there's just not that many VCs. Um, I could probably name you 10 VCs in London who can write a good Series A check, um, and will do more than a couple of those a year, and that's a problem for the community, I think.

AI assessment note: “I think that's how we're seeing it, practically, yes.”

Q And I'm intrigued. What rounds are you most interested in being involved with and why?

A So at NMC, we're typically investing in the Series A round. So for us, that means a company that's got some initial traction, it's got customers, customers that are willing to pay, and that are demonstrably getting some kind of value or ROI out of the product, even if it's not a huge number of customers yet. Um, and it's also a company that can take, uh, or is looking to take kind of one to five million pounds typically. Um, we do a little bit of pre-seed, uh, sorry, pre-Series A as well, Um, so I would think of that as a company that's probably 12 months away from their Series A and looking to prove the metrics to get there. Um, but typically we're, we're in and around the Series A sort of stage.

AI assessment note: “So at NMC, we're typically investing in the Series A round.”

Q So would you agree with the barbell analogy that there's a lot of capital at the seed stage and a lot of the later just pre-IPO stage, but then there's the thinning out in the Series A, Series B?

A I think that's how we're seeing it, practically, yes. So, um, a lot of the Series A and Series B money, ultimately, the LPs in those funds are still institutions, pension funds, insurance companies, uh, and traditional LPs, and they're probably not making any more of an asset allocation to VC than they ever were. And in fact, because so much of the rest of their portfolio is done poorly, and the percentage of VC has always stayed the same, the absolute amount of pounds they're putting into VC has probably come down. Um, And really, what that means on the ground is there's just not that many VCs. Um, I could probably name you 10 VCs in London who can write a good Series A check, um, and will do more than a couple of those a year, and that's a problem for the community, I think.

AI assessment note: “I think that's how we're seeing it, practically, yes.”

Q And I'm intrigued. What rounds are you most interested in being involved with and why?

A So at NMC, we're typically investing in the Series A round. So for us, that means a company that's got some initial traction, it's got customers, customers that are willing to pay, and that are demonstrably getting some kind of value or ROI out of the product, even if it's not a huge number of customers yet. Um, and it's also a company that can take, uh, or is looking to take kind of one to five million pounds typically. Um, we do a little bit of pre-seed, uh, sorry, pre-Series A as well, Um, so I would think of that as a company that's probably 12 months away from their Series A and looking to prove the metrics to get there. Um, but typically we're, we're in and around the Series A sort of stage.

AI assessment note: “we're typically investing in the Series A round.”

Q And what do you think the government can do to further this, uh, atmosphere and engender this almost Silicon Valley-esque feel to London?

A I'm not sure it's entirely within the government's gift, but there's a lot that the government has done and can do, and really successive governments of all, of all colors. Um, so EIS is a fantastic example, um, that has made London one of the best places, and the UK generally, one of the best places to raise venture capital funding in Europe, and it's brought a lot more capital into the market from sources that might otherwise not be looking to invest in, in young businesses or private companies or technology. Um, and that's a, A scheme that, um, most startups certainly that go the venture capital route have benefited from at some point in their life cycle, and that we're lucky that successive governments has protected or enhanced that scheme rather than changed it, and I think that's always a risk. Um, I think R&D tax credits has also had a big impact. Um, I think generally making good noises and a good buzz around things like Tech City and the sharing economy have been helpful, although there's less practical Help, I think, there. Um, but it's, it's down to creating an environment in which entrepreneurs and VCs and others, other participants can, can create a great community, community. The government can't do it on its own.

AI assessment note: “EIS is a fantastic example... R&D tax credits has also had a big impact”

Q So what is the documentation you'd like to see then?

A Honestly, in the first meeting, I would be much happier with, uh, eight to 10, eight to 12 slides, um, or even a couple of slides on a piece of paper that we can sit down and talk to, uh, because I think, um, Really, first pitch meetings are not formal pitches that last an hour. They, they quickly devolve into question and answers, and, um, and I think the best founders go with that and love the challenge and rise to it, and you come out of the meeting feeling you've had a great conversation. I think the, the mistake some people often make is they get thrown very quickly when the VC asks a question and goes off track.

AI assessment note: “I would be much happier with, uh, eight to 10, eight to 12 slides”

Q And then what industries do you feel are next to be disrupted?

A I think we're, um, we're moving away from a world where big means efficient. So big companies do lots of things in an okay way. Cause I think now technology is enabling people to do very niche things in just as good way as a big company can, um, can do that. And we've seen that a lot in, in lots of industries. And I think the next industries that we're going to see it in is where, um, it's been too difficult to do so far. So in industries like health, In industries like fintech, where there are a lot of regulatory barriers. In industries like travel and logistics, where there are a lot of physical things involved, so it hasn't just been a software problem until now. Those sorts of industries where we've had less headway to date, but now there's a new generation of startups that are starting to, um, to really change the way that, uh, some of those big, slower, and quite comfortable industries work.

AI assessment note: “In industries like health, In industries like fintech... travel and logistics”

Q And with the increasing length of time it's taking for venture-backed companies to IPO, how would you say that the funding path for startups is changing?

A I think at the IPO end, when you're talking about very large, large startups, or startups that aren't really startups anymore, um, the market's changed quite a lot, and you're seeing a lot more private capital, and again, that's the sort of capital that might not have been investing in startups before, flooding into the market, and, and, you know, Uber that we talked about before is a great example of that, but generally, large tech companies raising mega rounds, uh, it's, it's private capital sort of replacing what the stock market It might have done in the past, um, but I don't think that's impacting too much what's happening on the earlier stage. Um, I think at Seed, we've got a lot more, um, small VC funds, a lot more angels, a lot more, um, business people who are interested in backing startups that are in, in their domain of knowledge, and we've seen a real explosion of, um, of Seed availability, and, and people are raising, I think, smaller, initially, But more frequent rounds, and then there's a good availability of capital up to, you know, one, two million pounds, something like that. Unfortunately, I'm not seeing the landscape changing all that much once you get to the Series A sort of stage. There's actually not that much more capital in that market than there ever was, really.

AI assessment note: “it's private capital sort of replacing what the stock market might have done”

Q And you said about networking within the industry. That's often a problem for founders, just getting to the door of VCs. How would you recommend networking within the VC community?

A Well, for me, um, trying to get a job in VC, it was much more about using the network that I already had. So, um, you know, I, I wasn't in VC, but I did have, uh, colleagues, uh, and clients who knew people in that world, and I was able to get a few introductions. And really, I'd recommend that when founders are trying to pitch VCs, it's the same story. You may not have a little black book with all the VCs in it, but you probably do business with people, or you have earlier stage investors, or you have a peer network. Um, that can get you some good introductions to VCs. Uh, it's not true that getting introduced in a warm referral to a VC is the only way to get investment, but it's absolutely true that it helps. Um, we certainly, uh, most of our investments are people that we've known for a few years by the time we invest, or they're people that have come through a really, um, a person that we trust, uh, and it makes us pay more attention and, and get that person in front of us quicker.

AI assessment note: “earlier stage investors, or you have a peer network. Um, that can get you some good introductions”

Q So what is the documentation you'd like to see then?

A Honestly, in the first meeting, I would be much happier with, uh, eight to 10, eight to 12 slides, um, or even a couple of slides on a piece of paper that we can sit down and talk to, uh, because I think, um, Really, first pitch meetings are not formal pitches that last an hour. They, they quickly devolve into question and answers, and, um, and I think the best founders go with that and love the challenge and rise to it, and you come out of the meeting feeling you've had a great conversation. I think the, the mistake some people often make is they get thrown very quickly when the VC asks a question and goes off track.

AI assessment note: “eight to 10, eight to 12 slides, um, or even a couple of slides”

Q And what do you think the government can do to further this, uh, atmosphere and engender this almost Silicon Valley-esque feel to London?

A I'm not sure it's entirely within the government's gift, but there's a lot that the government has done and can do, and really successive governments of all, of all colors. Um, so EIS is a fantastic example, um, that has made London one of the best places, and the UK generally, one of the best places to raise venture capital funding in Europe, and it's brought a lot more capital into the market from sources that might otherwise not be looking to invest in, in young businesses or private companies or technology. Um, and that's a, A scheme that, um, most startups certainly that go the venture capital route have benefited from at some point in their life cycle, and that we're lucky that successive governments has protected or enhanced that scheme rather than changed it, and I think that's always a risk. Um, I think R&D tax credits has also had a big impact. Um, I think generally making good noises and a good buzz around things like Tech City and the sharing economy have been helpful, although there's less practical Help, I think, there. Um, but it's, it's down to creating an environment in which entrepreneurs and VCs and others, other participants can, can create a great community, community. The government can't do it on its own.

AI assessment note: “EIS is a fantastic example... R&D tax credits has also had a big impact.”

Q And you said about networking within the industry. That's often a problem for founders, just getting to the door of VCs. How would you recommend networking within the VC community?

A Well, for me, um, trying to get a job in VC, it was much more about using the network that I already had. So, um, you know, I, I wasn't in VC, but I did have, uh, colleagues, uh, and clients who knew people in that world, and I was able to get a few introductions. And really, I'd recommend that when founders are trying to pitch VCs, it's the same story. You may not have a little black book with all the VCs in it, but you probably do business with people, or you have earlier stage investors, or you have a peer network. Um, that can get you some good introductions to VCs. Uh, it's not true that getting introduced in a warm referral to a VC is the only way to get investment, but it's absolutely true that it helps. Um, we certainly, uh, most of our investments are people that we've known for a few years by the time we invest, or they're people that have come through a really, um, a person that we trust, uh, and it makes us pay more attention and, and get that person in front of us quicker.

AI assessment note: “using the network that I already had... earlier stage investors, or you have a peer network”

Q And then what industries do you feel are next to be disrupted?

A I think we're, um, we're moving away from a world where big means efficient. So big companies do lots of things in an okay way. Cause I think now technology is enabling people to do very niche things in just as good way as a big company can, um, can do that. And we've seen that a lot in, in lots of industries. And I think the next industries that we're going to see it in is where, um, it's been too difficult to do so far. So in industries like health, In industries like fintech, where there are a lot of regulatory barriers. In industries like travel and logistics, where there are a lot of physical things involved, so it hasn't just been a software problem until now. Those sorts of industries where we've had less headway to date, but now there's a new generation of startups that are starting to, um, to really change the way that, uh, some of those big, slower, and quite comfortable industries work.

AI assessment note: “So in industries like health, In industries like fintech, where there are a lot”

Q What would you say about Uber then? It's replacing black cabs. Potentially making thousands of people unemployed, but it is arguably a more effective, more cost effective replacement available to everyone.

A I don't think it's replacing black cabs. I mean, there may be a little bit of replacement in the short term, but I think it's enabling totally new journeys. So for me, uh, I probably get cabs twice or three times as often as I used to two years ago before, um, Uber came along and I'll get them for those slightly marginal journeys that I probably would have taken some other mode of transport home. I would have taken a night bus or something like that. So for me, it's about, um, they've made it so much better, easier, and cheaper that suddenly it's an option where it wasn't an option before. So really they're disrupting, you know, inefficient train companies or, uh, you know, lack of choice on transport at night and, or, um, going down a less safe route than you might otherwise have. So I think it's, um, it's, it's good for society. It's good for consumers. It's good for people. And I think, um, as long as, um, Businesses, across the gamut of companies that are getting funded by VC, everybody's getting a share of that, um, by which I mean everybody's the customer for somebody, then I think that's fine.

AI assessment note: “I don't think it's replacing black cabs. I mean, there may be a little bit”

Q And with the increasing length of time it's taking for venture-backed companies to IPO, how would you say that the funding path for startups is changing?

A I think at the IPO end, when you're talking about very large, large startups, or startups that aren't really startups anymore, um, the market's changed quite a lot, and you're seeing a lot more private capital, and again, that's the sort of capital that might not have been investing in startups before, flooding into the market, and, and, you know, Uber that we talked about before is a great example of that, but generally, large tech companies raising mega rounds, uh, it's, it's private capital sort of replacing what the stock market It might have done in the past, um, but I don't think that's impacting too much what's happening on the earlier stage. Um, I think at Seed, we've got a lot more, um, small VC funds, a lot more angels, a lot more, um, business people who are interested in backing startups that are in, in their domain of knowledge, and we've seen a real explosion of, um, of Seed availability, and, and people are raising, I think, smaller, initially, But more frequent rounds, and then there's a good availability of capital up to, you know, one, two million pounds, something like that. Unfortunately, I'm not seeing the landscape changing all that much once you get to the Series A sort of stage. There's actually not that much more capital in that market than there ever was, really.

AI assessment note: “it's private capital sort of replacing what the stock market might have done”

Q What would you say is a good Series A?

A So, um, companies raising anything from sort of one to five million, where they're probably doing something along the lines of Half a million to a few million of run rate revenue. They figured out their scalable, or they're starting to figure out their scalable customer acquisition channels. They're starting to get their KPIs in shape, and things are moving in the right direction. And they know that they can deploy money into acquisition, hiring of salespeople, and all that. Go to market side of the business as well as technology, and see a return on it in terms of increasing the valuation of the company over the next decade. Couple of years. And normally we see companies, frankly, they do a couple of series A rounds, or they do, um, you know, a bridge, something like that, because it's taking longer for those companies then to get to series B.

AI assessment note: “companies raising anything from sort of one to five million”

Q What's your typical, what's your typical investment length? I mean, they typically say seven year marriage, but what would you say yours at MMC would be?

A Uh, it's difficult to say. Um, so we sold a business last year called base 79, which we had in our portfolio for five years. Um, we've got a couple of companies that have been in our portfolio for only two or three years that are getting quite significant inbound interest. In acquisition, although the debate for us is to continue to invest and grow it or to think about those now. But then equally, we have a company in our portfolio that's been there for more than 10 years. Um, they've done super well. It's a very valuable company now, but, um, it hasn't been the right thing to sell it yet. So I think we're coming out of a period where it was very hard to sell companies for a few years after, uh, you know, the financial crisis.

AI assessment note: “we sold a business last year called base 79, which we had in our portfolio for five years”

Q And talking of fintech, then, why do you think London is the fintech hub that it is?

A I think London's always been a financial services hub, or at least for the last few decades. Um, so it's a, it's more a matter of technology changing every industry. Um, and the financial services industry being in London. So London has that great combination of a financial services industry that's already up and running. And, um, a lot of that world happens here combined with a great environment for tech companies. Um, so I think we'll see London continue to thrive there as long as we, uh, we and the government can create the right environment and continue to have the right environment around funding, regulation, um, Um, support for small business, all that sort of stuff, and there's been a good story on all of those fronts in the last few years, and we've seen it as London has really emerged as a technology capital.

AI assessment note: “London has that great combination of a financial services industry that's already up and running”

Q What would you say is a good Series A?

A So, um, companies raising anything from sort of one to five million, where they're probably doing something along the lines of Half a million to a few million of run rate revenue. They figured out their scalable, or they're starting to figure out their scalable customer acquisition channels. They're starting to get their KPIs in shape, and things are moving in the right direction. And they know that they can deploy money into acquisition, hiring of salespeople, and all that. Go to market side of the business as well as technology, and see a return on it in terms of increasing the valuation of the company over the next decade. Couple of years. And normally we see companies, frankly, they do a couple of series A rounds, or they do, um, you know, a bridge, something like that, because it's taking longer for those companies then to get to series B.

AI assessment note: “companies raising anything from sort of one to five million”

Q What would you say about Uber then? It's replacing black cabs. Potentially making thousands of people unemployed, but it is arguably a more effective, more cost effective replacement available to everyone.

A I don't think it's replacing black cabs. I mean, there may be a little bit of replacement in the short term, but I think it's enabling totally new journeys. So for me, uh, I probably get cabs twice or three times as often as I used to two years ago before, um, Uber came along and I'll get them for those slightly marginal journeys that I probably would have taken some other mode of transport home. I would have taken a night bus or something like that. So for me, it's about, um, they've made it so much better, easier, and cheaper that suddenly it's an option where it wasn't an option before. So really they're disrupting, you know, inefficient train companies or, uh, you know, lack of choice on transport at night and, or, um, going down a less safe route than you might otherwise have. So I think it's, um, it's, it's good for society. It's good for consumers. It's good for people. And I think, um, as long as, um, Businesses, across the gamut of companies that are getting funded by VC, everybody's getting a share of that, um, by which I mean everybody's the customer for somebody, then I think that's fine.

AI assessment note: “I don't think it's replacing black cabs.”

Q And talking of fintech, then, why do you think London is the fintech hub that it is?

A I think London's always been a financial services hub, or at least for the last few decades. Um, so it's a, it's more a matter of technology changing every industry. Um, and the financial services industry being in London. So London has that great combination of a financial services industry that's already up and running. And, um, a lot of that world happens here combined with a great environment for tech companies. Um, so I think we'll see London continue to thrive there as long as we, uh, we and the government can create the right environment and continue to have the right environment around funding, regulation, um, Um, support for small business, all that sort of stuff, and there's been a good story on all of those fronts in the last few years, and we've seen it as London has really emerged as a technology capital.

AI assessment note: “London has that great combination of a financial services industry that's already up and running”

Q And we always hear about the importance of markets, um, but we almost, a 10 minutes ago or so, identified that Uber had slightly created their own market, potentially, in that quasi Range of not getting a bus, and not getting a black cab, and getting that middle range. So do you look for a market specifically, or do you appreciate that there is the potential for market creation?

A I think very much the potential for market creation, but, um, it depends what you're talking about in terms of a market. Often a market can be, um, money coming out of a consumer's pocket, so it's coming out of their pocket for your thing instead of the other thing. Um, it might not be totally the same market, but it's, uh, it's the same Pounds and pennies that you're talking about. Um, and often, uh, you're selling into what might be quite established pace, but you're doing it in a really, um, new way, and you might use the established market as a good benchmark for how big it's likely to be, but you've got to deviate. Get from that as you get better and figure out really who you're selling to and how big that is. So I think existing markets are useful to look at, certainly useful to look at, um, in the early days, but over time, hopefully you can create your own market for some companies.

AI assessment note: “I think very much the potential for market creation”

Q What's your typical, what's your typical investment length? I mean, they typically say seven year marriage, but what would you say yours at MMC would be?

A Uh, it's difficult to say. Um, so we sold a business last year called base 79, which we had in our portfolio for five years. Um, we've got a couple of companies that have been in our portfolio for only two or three years that are getting quite significant inbound interest. In acquisition, although the debate for us is to continue to invest and grow it or to think about those now. But then equally, we have a company in our portfolio that's been there for more than 10 years. Um, they've done super well. It's a very valuable company now, but, um, it hasn't been the right thing to sell it yet. So I think we're coming out of a period where it was very hard to sell companies for a few years after, uh, you know, the financial crisis.

AI assessment note: “it's difficult to say. Um, so we sold a business last year called base 79”