The EIS Navigator Brian Moretta, Hardman & Co

Governance is all too often seen in startup companies as a chore, or necessary evil when it can be a positive and enable success. Dermot Campbell, founder of CEEIO, is trying bring more of the latter to the venture world. In this episode, he discusses how startups can enable good governance without spending too much time on it and make it a means to the right end rather than an end in itself.
Dermot covers a lot of areas, including:
what is governancethe importance of maintaining stakeholder relationshipswhen startups should start introducing governance structureshow governance should lead growthwho should take the lead on board creationthe role of fund managersgood preparation for board meetingsbuilding effective board agendasthe value in identifying riskssetting up risk assessments and how these can lead to key objectiveshow to generate relevant KPIshow to translate a business plan into something usefulgenerating the right boardthe commons mistakes made by foundersthe rise of ESG and how its different in startups from quoted companies
Whether you are a founder looking to put governance into place or an investor helping or wanting a company to do it, this is an essential discussion.
01:00 Dermot introduces himself
02:00 What is SEEIO
03:10 What is governance
04:20 the importance of maintaining stakeholder relationships
05:40 importance of creating a governance framework
06:15 how should new startups approach governance
08:40 when to create the board
09:45 who takes the lead
11:30 role of fund managers
12:30 the work in preparing for board meetings
15:00 don't just sell - value in identify risks
16:30 setting up appropriate risk assessment
20:30 how to use a business plan and use it to generate objectives
22:10 working on KPIs
24:00 building effective board agendas
27:20 generating the right board and founder relationship with them
30:30 role of independent NEDs in startups
32:10 what mistakes do founders make
33:30 value of governance in improving odds for fundraising
35:50 rise of ESG and how investors care about G - G facilitates E & S
42:20 favourite questions
Links
SEEIO website - https://seeio.co.uk/
Dermot on LinkedIn - https://www.linkedin.com/in/dermot-campbell-3178a326/

Subscribe to the EIS Navigator podcast on most services here: https://the-eis-navigator.captivate.fm/listen

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Bio
Dermot Campbell
CEO, SEEIO
Dermot Campbell is an experienced fintech leader,...

Getting big returns in venture capital can involve stepping away from the mainstream and investing in opportunities that others won't. Will Gibbs of Octopus Ventures has a reputation for investing in areas others see as taboo. We ask him about being a contrarian investor, how to do it well and what needs to change to create a successful investment.
In a discussion filled with numerous examples, Will discusses:
getting big enough markets when the market is somewhat hiddenbalancing new technology and new marketswhen specialist investors are neededjudging whether a company will be ripe for follow-on investmenthow taboo investments can interact with social changesequencing market expansionwhat a company needs to internationalisewhat problems that internationalising doesn't solvebuilding deal flow in taboo areashow the venture capital industry is creating some of the problemsthe value of team diversity in looking away from consensus areaswhether valuations are different in taboo areas.
In a wide ranging conversation, Will brings a great perspective on how to bring mainstream venture capital skills to genuinely new areas. Its a great discussion for investors and companies who dare to be different. Enjoy!
01:00 Will introduces himself
03:40 Who Octopus Ventures are
06:30 Contrarian and tabooo investing
07:45 Example: Elvie - silent breast pump
09:50 Example: Pelago - substance use disorder
13:20 the size of taboo markets, challenges in assessing true market size
16:00 new tech and new markets - need for specialists
17:30 Example Overture - improving and automating IVF
19:20 market meets social movements - will someone follow-on?
22:05 assessing the pace of social change - risk of too early
25:30 sequencing the right national / international markets
25:45 Example Skin & Me - getting expansion right and not too quick
29:30 Time and capital to internationalise
31:00 when is the right or wrong time to internationalise
33:30 building deal flow in taboo areas
35:15 to what extent is the venture capital industry part of the problem - value of diversity
38:05 is the industry going in the right direction?
40:00 are valuations different in taboo areas?
42:35 creating communities supporting companies
47:45 prospects
50:20 Favourite questions
Links
Octopus Investments: https://octopusinvestments.com/
Octopus Ventures website: https://octopusventures.com/

Companies mentioned:
Pelago https://www.pelagohealth.com/
Overture https://www.overture.life/
Vira https://www.vira.health/
Elvie https://www.elvie.com/en-gb
Skin and me https://www.skinandme.com/

Subscribe to the EIS Navigator podcast on most services here: https://the-eis-navigator.captivate.fm/listen

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Valuations are always a popular topic. With much discussion about whether we are at the bottom of the current cycle, it seems a good time to revisit and we invited back someone who has experienced several market cycles: John Glencross, co-founder of Calculus Capital.
We had a great discussion on how the current market, how this compares with recent times and how a fund manager handles them. Topics discussed include:
how companies are accepting lower valuationsthe danger of growth at any pricewhere there are still bubbles and what the consequences of these might behow to manage investing when valuations are highthe psychology of down rounds preferential return structures and what John is seeing in the marketreal unicorns versus valuation aberrationshow valuation matters for investinghow Calculus values existing portfolioJohn's sense of valuations in the EIS & VCT market and where he thinks the discrepancies arehow close we are to the bottom of the valuation cycle
Talking with someone who has seen several downturns gave a great perspective on all these topics and there's lots for all advisers and investors. Enjoy!
01:00 John introduces himself
04:30 recent exit patterns
06:00 companies accepting lower valuations attraction of investment vs exits
07:30 avoiding growth at any price - US vs UK
10:15 where there is still bubbles
13:15 investing when valuations are high - changed pace of investments in recent years
16:45 the psychology of down rounds
18:45 preferential return structures and the general tightening of terms in market
26:00 when are unicorns a market aberration?
28:30 how valuation matters for investing
31:10 portfolio valuation - lags, being realistic and getting a good process
35:00 how EIS managers are using unrealised performance as marketing, but its not similar to exits
41:00 what is an acceptable band of uncertainty? How exits matter
44:15 are we at the bottom of the valuation cycle?
48:45 favourite questions
Links
Calculus Capital website: https://www.calculuscapital.com/

Subscribe to the EIS Navigator podcast on most services here: https://the-eis-navigator.captivate.fm/listen

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Sing as We Go by Simon Heffer

Bio
John Glencross
Chief Executive and Cofounder, Calculus Capital

John co-founded Calculus with Susan McDonald in 1999, creating one of the UK’s most successful,...

When we last spoke with Harry Heartfield of Edition, the leisure sector was all about recovering the pandemic. Fortunately, we have moved on so we thought it was time to get him back to discuss where we are now, how his investment philosophy has evolved and what the prospects for exits are now.
We covered a lot areas in our discussion, including:
the unevenness of the current recoverythe difference that geography and target market makesthe need to rebalance portfolio risk nowhow live entertainment and hospitality are doinghow to run live events professionally and Edition's role in supporting thatprospects for exitshow the landscape of purchasers looksthe challenges of making rollups workwhy profitability matters more than everhow and why to set up EIS deals six months in advance
Its another great discussion - Harry is both erudite and insightful, and the lessons are not just about the leisure sector . Enjoy!

00:50 Harry introduces himself
03:00 Why Edition is more than a fund manager
05:00 How does the leisure sector feel now?
08:00 the unevenness of the recovery
10:00 where is recovering and where isn't - geographic and demographic differences
13:40 rebalancing risk in portfolio
15:30 how live entertainment and events are doing
19:30 the return after pandemic
20:30 how to get professionalism in live events
25:30 the prospects for exits returning
28:10 political games amongst the big players in live entertainment and the structure of purchasers
31:20 making rollups work - the danger of multiple arbitrage and focus on synergies
35:45 how long to build a company?
40:15 the importance of profitability in the current market and when there is a trade off vs growth
44:30 messaging around doing something different
47:30 why Edition is lining companies up for investment 6mths in advance
50:20 the challenges of agreeing deals 6 mths in advance
54:00 favourite questions


Links
Edition Capital - https://www.editioncapital.co.uk/
Harry on LinkedIn - https://www.linkedin.com/in/harry-heartfield-2275983a/
Email harry.heartfield@editioncapital.co.uk

Subscribe to the EIS Navigator podcast on most services here: https://the-eis-navigator.captivate.fm/listen

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Bio
Harry Heartfield
Senior Partner, Edition Capital
Harry has over 15 years’ experience in the leisure sector. In 2011, he joined boutique asset manager Ingenious becoming a Senior Investment Manager in their Live Entertainment Team. At Ingenious, he was responsible for working across several investment funds including several Venture Capital Trusts with a focus on leisure assets. During his time at Ingenious, he also developed and launched several investment products aimed at...

Assessing companies for venture capital investment is often more of an art than a science. Richard Blakesley is trying to change that with Venture Cubed. Its rating system aims to objectively assess how investible new companies are. We asked him to talk about how they built their rating system, what it tells us about the venture industry and how it might change it going forward.
This is the second part of our excellent discussion. In the previous episode, we spoke about his rating system and what matters when assessing companies for investment. In this one, we discuss scaling the UK venture capital industry, indexation and investing at scale. In particular, we talk about:
the proportion of companies that should be getting investmentthe challenge of getting more investment into different companies instead of boosting valuationswhether support and investment should come from the same organisationcreating a index for venture capital and benchmarkinghow to make that index investibledata and creating systems for intermediate valuationsbuying and selling a venture capital indexdifferent investment models that might be usedwhy bigger funds would expect to outperform smaller funds
As you can see, we covered a lot of ground. This is a really important discussion for the venture capital industry: there could be an opportunity for it to scale up dramatically in the near future, but how it does that really matters. This discussion may not produce all the answers, but at least it asks the questions. And don't forget part 1!
00:45 How many companies get funding that deserve it and what's the shortfall in companies not being funded that should?
05:00 inflating valuations versus broadening the range companies getting investment - need new channels for pension funds
08:00 why the industry needs to change - case for passive management
10:00 the challenges of indexing venture capital
11:00 separating investment and support - how passive managers might arrange that
14:30 the real role of a fund manager
21:00 issue of intermediate valuation (before exit) - data collection on private countries
26:20 data protection & confidentiality
27:40 how to make index investible / expand coverage - without diluting quality
33:00 buying & selling index - fund types, physical vs derivative
35:00 creating funds where industry can write a big cheque
35:45 bigger diversified funds outperform
37:00 the power law and reversion to mean
42:00 co-investment model and role of BBB - public plus private models
45:30 favourite questions
Links
Venture Cubed website - https://www.venturecubed.com/
Richard's email: richard@venturecubed.com

British Business Bank venture capital reviews: https://www.british-business-bank.co.uk/uk-venture-capital-financial-returns-2023/

Subscribe to the EIS Navigator podcast on most services here: https://the-eis-navigator.captivate.fm/listen

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a...

Assessing companies for venture capital investment is often more of an art than a science. Richard Blakesley is trying to change that with Venture Cubed. Its rating system aims to objectively assess how investible new companies are. We asked him to talk about how they built their rating system, what it tells us about the venture industry and how it might change it going forward.
We had such a good discussion that we have split it into two parts. In this episode, we discuss how he measures companies. In the second part, we talk more about the wider industry. Here we discuss:
what their rating system aims to measurehow they assess how good the ratings arewhat are the important factors in the ratingthe weights that are given to those factorshow they quantify factors that are more qualitativethe challenges in analysing financial modelswhere founders don't understand what investors wanthow founders can get good advice on fundraisingthe process of giving feedback to founders and how receptive they arethe mistakes that founders often makethe proportion of companies that are really investiblewhat investible really meanswhere funding gaps are
As you can see, we covered a lot of ground. Whether you are an investor thinking about how to assess companies or a founder considering fundraising, there's a lot for you here. And don't miss part 2!
01:00 Richard Blakesley introduces himself
02:20 What Venture Cubed does
03:45 What are Venture Cubed scoring? - investibility
06:00 How he measures the success of ratings
09:25 What are the most important factors
12:20 How they quantify qualitative factors
14:20 Issues are around bias in interviews
18:10 Assessing companies without interviewing management
19:00 How founders often don't understand the desires of investors
22:00 Getting good advice on how to fundraise
26:30 How founders get feedback from the rating process
30:20 The receptiveness of founders to feedback
32:45 What mistakes do founders often make?
38:50 How does Venture Cubed weight the factors?
42:40 What proportion of companies are investible?
45:15 How many companies get funding that deserve it and what's the shortfall in companies not being funded that should?
Links
Venture Cubed website - https://www.venturecubed.com/

Richard's email: richard@venturecubed.com

Subscribe to the EIS Navigator podcast on most services here: https://the-eis-navigator.captivate.fm/listen

Bio
Richard Blakesley
Founder & CEO, Venture Cubed
**tbc