The Impact Files podcast – Douglas Hansen-Luke, Founder and Executive Chair, Future Planet Capital
Ned Wells: Welcome to the Impact Files podcast. And this week, Ally and I are joined by Douglas Hansen-Luke, founder and executive chair at Future Planet Capital. Welcome, Douglas. Great to have you here.
Douglas Hansen-Luke: Thank you, Ally. Thank you, Ned. A pleasure to be with you.
Ned Wells: So nice to have you here. Douglas, let’s start with an introduction to yourself and future Planet Capital and the work that you do.
Douglas Hansen-Luke: So why don’t I start with Future Planet Capital quickly and then go back into why I established this company a decade ago. Future Planet Capital is an impact led, profit first venture capital manager. So our vision is to be able to channel and invest on behalf of some of the world’s largest institutional investors, money into the brightest minds, the smartest founders and the best science from the world’s top centers of innovation. And to do that with a specific purpose and goal of addressing global challenges. So, you know, as far as we’re concerned, it’s about the biggest investors. It’s about brilliant minds. It’s about creating a better planet for all of us and that’s a huge planet. I set up the business 10 years ago, co-founded it with the designer and architect Norman Foster and with a friend of mine from the Middle East, where I was working at the time, Saif Al Suwaidi. In my career, which has been mostly in emerging markets and emerging asset classes and investments, I’d spent a lot of my time doing new things, trying to do that in a data driven systematic way, feeling ultimately that it was for the good of the world, you the efficient deployment of capital. All of that, you know, it’s very easy. to be able to say that you’re kind of pushing the, moving the needle a little bit, know, just expanding that envelope just a little bit in finance. But the, so I’d always thought there was a purpose to what I did. I think it was a purpose to what many, many people do. But I wanted to, when I reached a certain age, I wanted to actually make that impact bigger to make it more focused. and to use the experience that I’d built up over 20 or 30 years for the biggest challenges. The moment when it crystallized, because I’d always wanted to do something which I think many of us do with a sense of purpose, something bigger than ourselves. But for me, the moment it really crystallized was reading Peter Singer’s book, The Life You Can Save. And those people who are fans of effective altruism may have read that as well. And he just talked about use what you’ve got, use it in the most effective way possible. I ignored his advice because actually his advice was if you’re working for a big investment bank, a manager, carry on doing that, pay lots of tax and you’ll make the world a better place and carry on. Whereas he also said, if you are going to move into doing something directly to address those challenges, make sure you’re not just doing the glamorous ones. make sure you’re also looking at the problems that are the biggest problems and addressing them. He gave tapeworm as a very unsexy, unglamorous example, of causing one of the biggest problems in the world, but no one does it because it doesn’t lend itself to cute faces. So it was that that inspired me, got me off my ass. And I began working with sovereign funds for impact, helping them in their new mandates to deliver. mandates and in emerging asset classes that would both make money for them but also address challenges. Then, and this is a big moment, the, you know, in working for sovereign funds, we saw what sovereign funds were doing on a daily basis. We had the relationships that I built up over 20 or 30 years. One day, and I still remember this day, we saw that the Chinese sovereign fund had invested in spin outs coming out from Trinity College Dublin. And Trinity College Dublin had secured money from the Irish sovereign fund. This was five, six years after the global financial crisis. Got money from the Irish Sovereign Fund, from the Chinese Sovereign Fund, but it’s about 50 million dollars or euros as it was. Now, for most people, 50 million is a fairly considerable amount of money. But the Chinese Sovereign Fund, which manages over a trillion, truly a rounding error. And I joked at the time, what will happen is they’ll fly one person over for the signing ceremony. They’ll go, they’ll have some photos taken and they’ll never come back again. It was just a… kind of soft power influencing to make friends in Ireland. But by the end of the day, we’d said, well, that may be potentially pointless, but what really does make sense is the idea of saying, why wouldn’t you want to harvest the very best ideas and the greatest talent from top centers of innovation? Instead of just doing one, it’s just in Trinity College Dublin. Why not do 10? Why not make it not very early stage, which is difficult? for big funds to invest in, but later stage, growth stage, where the technology is more tried and tested and it’s ready to roll out. And absolutely both out of personal interest, but also because the markets are bigger, link it to the biggest challenges the world’s faced. And that we had that in one day and it was kind of revelation and that was it, we’ll start a business because not only would it make sense and no one else was doing it, but can you imagine anything more enjoyable and fun? than working out with bright people who are committed ways to solve issues and actually deploying capital and large amounts of money to make it happen and fast. That’s certainly what got Norman Foster excited when I talked to him about it and my friend Saif who was working at a sovereign fund.
Ned Wells: It’s fascinating story and I guess I wanted to… dig a little bit deeper into that in that, what was the sort of, so you mentioned you sort of reached a certain age and you read the Peter Singer book. Was there something deeper down in you, Douglas, that was sort of interest, was sort of motivating you to want to go and attack these, as you say, these kind of huge issues? Where does that sort of come from inside you?
Douglas Hansen-Luke: Yeah, I think and it’s actually quite a well-meaning question, but I think it’s actually also a very difficult one for people to answer. so I just try to answer it as honestly as I can. You know, there’s a deep, I guess, Christian side of me. There’s my education was also very much about service or the importance of it. I think anyone brought up in Britain has that as part of the culture, it’s good to do something for those around you, those in society. There’s ego, there’s the want and the understanding, particularly when you have traveled around the world and seen people suffering, to actually say, well, wouldn’t it be good if we could do stuff? And particularly, there’s a certain part of me which gets frustrated when things do carry on being wrong. or bad when you know that there is a solution. So there’s that part of me which is energised. I couldn’t tell you which of those different things it is. I don’t think they’re all noble. think it’s very wrong for people in impact investing to be noble. I mean, you should be doing it for a noble cause, but you shouldn’t think of yourself as noble. There’s a whole range of different motivations. But I know since starting this, been the most exciting, happiest part of my professional career. And I can’t see that changing.
Ned Wells: How interesting. That’s an absolutely great. Perhaps we could turn to the business. And it would be fascinating to just hear about the scale of the business, the sorts of opportunities you’re working on. And you mentioned the sort of the largest challenges in the world. You could sort of categorize what you actually work on. That would be fascinating.
Douglas Hansen-Luke: Oh, absolutely. So, Future Planet, we’re currently managing just under half a billion sterling. So, a reasonable amount of money that’s divided into three areas, global, global growth, which is exactly the thesis that we set the business up for, investing in those companies coming from those top centers of innovation. We have a national strategy and team, which is primarily managing the British government deep tech fund. It’s a mandate that we purchased five years ago. that’s for the last 20 years, I’ve been looking at the very exciting, very competitive deep tech coming out from Britain’s myriad research centers and the 50,000 researchers that the government employs and commercializing the best, most exciting ones of them. And then finally, regionally, you you talked earlier and I think both of you, Ally and Ned, work with local impact. And so we in work regionally, mainly in the West Midlands at the moment, but around that. So global, national, regional, all of the money that we manage split are really fairly equally between those and linked with one investment, combined investment philosophy, which then leads to a process, which is to benchmark everything against those centers of innovation with a track record. And also, of course, to give people confidence that you’re doing the right thing if you’re not globally competitive. then ultimately you won’t be profitable. Ultimately, our investors make a loss and they won’t put more money into impact investing. The second area is the impact itself, which I’ll come to and the challenges that we look at. The third unifying element of it is data and data layers so that we look at things globally. We analyze over 30,000 startups at the moment, planning to increase that to 80,000. And frankly, if you’re doing that, globally, you can’t do that without the help of computers and data. But it also keeps us objective. So those three elements, data, impact, global benchmarking are unifying threads across all three of those business lines that we have and our challenges. So we began just before the UN SDGs were announced. So we looked at long lists from lots of, you know, sensible sources like the United Nations, the Economist, Financial Times, World Economic Forum, the World Bank, etc. And we came up with climate change, education, health, security, and sustainable growth. And we’re really glad we did that, because when the UN SDGs did come out, there were 17 of them, and there are about 217 subgoals. So it’s, you know, it’s quite difficult to quickly say what you’re investing in. those five main themes. pretty much cover all of those UN SDGs. And they’re something that certainly for climate education, the health people can quickly tangibly understand. Security, I spend a bit more time talking about because I think without peace, can be no prosperity. So security includes things like cyber security, water security, food, but it also includes for us defense and making sure that people can be can live safely. And then finally sustainable growth. This is very mean, it’s almost everything else that’s good, but you can’t put them into another category. So Lord Foster’s, smart cities, autonomous movement, FinTech, all of those areas would go into sustainable growth.
Ned Wells: Fantastic. So interesting. Ally, I’d like to hand over to you.
Ally: Yes, certainly. Yes, I’d just like to follow on from the points you’ve made already, Douglas, about the UN Sustainable Development Goals, which, as you say, are designed to be comprehensive. But by extension, that means they are multifaceted and measuring and tracking against them is a challenge. They’re robust, but it’s a challenge. So I’m interested to hear whether your starting point when you’re looking at potential investments, whether you start there using the SDG measurements as a backup or how you go about that, how you get the right balance and ensure that you’re benchmarking consistently.
Douglas Hansen-Luke: It is. I’m a really impatient person. It makes me a great entrepreneur, I think. It could be a dreadful thing if you’re investing in stuff quickly without some guidelines and guardrails. for us, know, the fundamental truth is it has to be a major challenge. But I’m impatient as well. So how do we go about this in a systematic way? The first is if we can’t explain within 30 seconds or a minute why something is actually addressing a global challenge, how it matches a UN SDG or one of those 217 subcategories. We can’t do that straight away. Then we don’t need to spend many days, weeks or months agonizing about it. It’s just not there. There are enough big challenges out there where the solutions are obvious that you do it. First check and that’s the impatient bit. The next bit that is also quite important is It’s trying to understand not just does it address a challenge, but what’s the scale of that challenge. that we look at and we use the equivalent to cost benefit analysis to see how much is this problem costing the world. And really in a kind of Fermi best estimate way, we say, if, you know, let’s use, it’s very topical right now, let’s use energy. Right? You know, the global energy industry is about 12 trillion a year. It’s huge. If we could invest in something which provided energy, which wasn’t polluting, which didn’t lead to wars or to conflict over energy security, then wouldn’t that be a wonderful thing? And, you we can say that that is a it is you’d be looking at a market that’s 12 trillion, but you’d also be looking at the fact that if you could do it in a way that didn’t have particulate emissions, which you get with hydrocarbons, that didn’t lead to all these other problems, you’d be saving six million lives a year or whatever. So you can actually get to a figure for what not just the market value is, but the total value of the market plus the externalities, which very often aren’t priced in. So you put that together and that’s your total big picture. This is the problem, how much it’s worth. You can see what the market value is. You can then look at the startup that you’re investing in. and you can say, this startup is valued at 50, 100 million or something like that. And you go, well, that’s great, but compared to 12 trillion, and maybe 20 trillion, if you include all the externalities, frankly, there’s a massive gap there. So we try to look at that impact value gap as a way of actually scaling and looking at both latitudinally and longitudinally the opportunities available to us. So That was a good example with energy. can either, you know, you can do it with the cost of carbon or you can do it with life saved by things like particulate emissions. So we try to get to a dollar value and that allows us then to both see what the biggest challenges are. We have our list of 100 and then we and by the way, now that I’ve said that, I’m [going] to ask our impact head in a moment to give me the top 10 and send it to you because I know you’re going to ask that. And the and then we also can look at it. So we can look at it, you know, in terms of biggest challenges, we can also compare something like education, to climate change, to security, which is quite often quite difficult to do. But that, I call it a Fermi estimate, because it’s the best estimate, it can be calculated quite quickly. And then we go into the investment to check our thesis on the impact, to work out whether other people could do it, you know, will it really make a difference if we invest in this company? or there are actually 20 companies, would it happen without us? And we want to be the ones who making that difference.
Ned Wells: That’s so interesting. So is everything you’ve described just there. Does that fall under the the impact value gap tool, which I’ve seen reference.
Douglas Hansen-Luke: That’s right, a large part of that and we’ve got an excellent impact report which we put out every year and it’s fully explained there so I’d recommend that to anyone. You can get it both from our website but I think on request as well.
Ned Wells: Thank you. That’s really helpful. I’ll certainly be diving into it myself. That’s for sure. Because it sounds like such a, I don’t know whether it’s right to describe it as a matrix, but what I’m hearing is you’re looking at the cost of doing something, the cost of not doing something, are other people doing it? What’s the wider environment? All those interconnections, which if we had more time, I’d love to talk about more the connections between biosecurity and.
Douglas Hansen-Luke: Yeah. Yes, absolutely. And the value of natural capital, is unpriced, for example.
Ned Wells: Yeah, indeed. But no, that’s really helpful. And just to triple check my understanding, am I right in saying that every potential investment you’re looking at, they’re always connected or an offshoot of a higher education institution, they’re all allied?
Douglas Hansen-Luke: They’re benchmarked against it. you know, one of the, well, first of all, the arguments for and against the argument for, you know, top centers of innovation around the world or top universities is, well, actually, if you look at the seven most valuable fastest growing companies in the American Stock Exchange, they’re all venture backed. But if you then look at the founders and the science that, you know, was behind them, They’ve come out of Harvard or Stanford or Berkeley, in case of Nvidia, Wharton, and U Penn, and MIT. So you’ve actually got these institutions that have got, the youngest one is still over 100 years old. The oldest, if you look at Oxford, close to where you’re both based, that’s a thousand years of track record of innovation. So it’s proven people can understand that. And the people and the science that comes out of those places ends to be at a top level. why they’re ranked number one in the world or on the top 10 in the world for their science, but also the network, the credentialism that allows it. If you go into a meeting and say, I’m from Oxford, I’m from the department that’s the number one vaccine universe, vaccine department of the world, you tend to get the meeting. So it’s both the right reasons and also the network reasons which de-risk these things. However, we’re also acutely conscious that there’s You know, we said there’s 80,000 companies in the world and not all of those founders went to those universities and not all of those, not all of the science or the business is great. So what we do is we benchmark it. So a great example we’ve got at the moment is a company called Maeving. So Maeving is from Coventry. It’s an electric motorbike company. Fantastic way to get around cities in a non-polluting way to use up less space. So yes, it’s fairly clear impact to have an electric bike, which one person or two people use rather than a car, is, you know, most of the time, 75 % underutilized or empty, even when you’re driving it. And it’s only used 5 % of the time. And Maeving is based in Coventry. The two founders study humanities at Durham. So not one of the top great university, but not one of the the top centers of innovation that you’d normally think of. It’s not Stanford where Google came from, but they’re outselling Harley Davidson electric motorbikes in California. Their battery technology is something that both the Indians and the Chinese are studying really carefully because their battery technology, allows you to take your battery, plug it into a wall socket at home for 10 minutes, and that gives you 100 kilometers of range. That battery technology is world leading. And we know it’s world-leading because we’ve checked it with the companies that we see from our benchmark areas. That’s a great example of we acknowledge that not everything comes from those centers, but at least make sure you’re checking that rather than the slightly lazy habit we’ve got in Britain of saying Britain’s the best in the world. We’re a scientific superpower. And assuming we’re right, every now and then you need to prove it, which is why data is so important to us as well.
Ally: Sure, that’s fascinating. Thank you.
Ned: And that’s a super segue as well, Douglas, into your DataLace tool, which you mentioned earlier. Do talk us through that.
Douglas Hansen-Luke: So there’s an element of… artificial intelligence in our DataLace project. It’s called DataLace in homage to Ada Lovelace, the lady who invented the computer. Our data scientist, Peter Mitchell, who actually lectures on AI of all sorts at Oxford. He came up with this and with the name and he’s really taken our original idea that you should be systematic and data driven. a platform that allows us to automatically scrape with just the domain name of companies and identify and score those companies against the criteria for our mandates, making the world a better place. Also being able to flexibly bring it against the mandate sometimes of our clients. So our British government Deep Tech Fund, which is primarily run for UK research and innovation and agencies around that. Their objective is to commercialise and scale up technologies in particular sectors so we can use the same data to really search for the companies that will do that best. To do it incredibly fast, it allows us to look at the top 25 % of companies or the top 10 % of companies and then our team of 30 incredibly experienced professional venture capitalists to then use their time. where effectively they’re fishing in those waters where you’re going to get the most fish. Rather than just doing it with the people that they know or they approached, it gives them that focus. It also, and this is where it becomes, it moves from being a kind of screening or advanced selection tool. It brings in things that we wouldn’t know because they’re outside of our network. So it expands our network. We’ve seen by about 30%. versus the deals that we just saw on our own through our network. And our network’s probably one of the biggest in the world, but still we find new things by using data. So we’re not blinded. And then it also helps us to be more productive and to be more objective because we can then see who the other competitors are. All those companies are scored as well. And we can see who the most likely investors are because in venture, it’s a good and a bad thing, but it’s very much a brand driven industry. So if you see top investors who’ve made money in the past investing in a company, again, it’s got that much better of a chance of succeeding. So we’re able to see who’s likely to be investing, who’s going to provide the capital as companies scale. Will it match? Is it competitive against others? All of those things are what I’d call a kind of productivity thing. The things that the data makes us more productive in the same way that which actually [Chat]GPT or Copilot does. But there’s an earlier element of this where actually the signals that we’ve put together and the response we can make to them, they’re also predictive of success. So you’ve got both productivity and also an element of AI, not pre-selection, we always use a human, but AI pointing to what may be or is likely to be the most successful.
Ned Wells: I I wanted to take that back one step to sort of to simplify perhaps. if we, is it possible to describe sort of in a nutshell what is the problem that DataLace is kind of
Douglas Hansen-Luke: Mmm. solving I mean, I like doing things in threes, so I can think of two problems immediately and then I’ll come to the third really. So the first is just too much opportunity in the world at the moment. Looking at 30,000 companies, as I said, going to 80,000 companies. the British government employs 50,000 researchers at the moment. every 15 minutes are going through another grant application. The more creative we are, the more we’ll be working through that mass. We don’t want to employ 50,000 people. If we did employ 50,000 people, our fees would be so high that nobody would actually be able to invest with us and make a return. So the first point is that it allows you to be that more productive, to be able to deal with too much opportunity.
Ned Wells: You could
Douglas Hansen-Luke: The second element is that human brains generally can’t keep, and we all know this, you can’t keep more than five or six ideas or thoughts in your mind in one go. Human beings are very, very good. And our brains are very, good at identifying threats and running a long way from them or seeing opportunities and food and running after it. But if you gave us more than five targets, we can tend to get bit confused and sit down and scratch our heads because it’s all too much. The behavioral psychology element of multiple opportunities, it’s not just a productivity thing, that comparing a broad range of outcomes is where we’ve seen the productivity and the insights come through from inference and from large language models and we’re creating the equivalent of that. The third element is bias. again, a behavioral psychology thing, but we tend to over trust and over rely on the people closest to us and the ones who look the most like us. you know, that’s great. If you’re if you’re doing charity, you know, very often, and we all know this, the people work to give you an emotional connection, which you can understand the picture of a cute kid, or it’s a project in your own village or your own town. But we’re investing money and our job is not to be emotionally guided or to go with what’s easiest, it’s to go with what’s best. that final element, it’s the future planet depends a huge amount on networks, but it’s to make sure that we are not biased by our own network. And DataLace is one very good way of keeping us honest on that. The other of actually having 10 centers of innovation that compete with each other is also good. You you just take, if you ask someone from Oxford, is anything from Cambridge any good? And they’ll go, well, no, it’s from Cambridge. And you have that same rivalry between Harvard and MIT, Berkeley and Stanford. So this kind of peer review is another way of using the network. So we’re connecting the networks. You’ve got one big cluster of innovation, which gives you more opportunity. But throughout it, both in terms of that very good example, a human being can just, you we can understand Oxford and Cambridge bias against each other and use it to advantage. We can kind of understand the principle for the three pairs that I talked about. We go beyond that, our brains start prying. So then you use DataLace and that does it in a very systematic way.
Ally: I wondered if I could ask a follow-up question because as you were speaking Douglas, I was thinking of just that point about bias before you started speaking about that and it’s really interesting and I wondered, it’s a slight pivot I think from what you were describing there, but I wondered whether there are scenarios where the data is going to tell you that the investment opportunity, pure and simple, so the opportunity to grow funds have long-term financial sustainability, I wondered whether there’s a risk of whether there is any bias towards I’m thinking global north potentially, yeah global north actually generally and if that bias exists whether DataLace then there are other factors which it takes into account or whether that’s where the human piece comes in you might look at an opportunity and go Yeah, that’s going to grow faster and has less risk associated with it with this opportunity over here, which potentially is proposing doing something very similar. But actually, I should go for that one with more risk associated because ultimately, there’s greater benefit to that sector or that region, actually, mean, globally. So more people benefit. Does that make sense?
Douglas Hansen-Luke: Yeah, well, part of it makes sense. And I’ll address that primarily, but very quickly, just to pick you up on one point, you talked about, well, something may have more risk, it could do more good. Well, actually, that’s also just a basis of finance. The greater the risk, the greater the reward. you know, having picked you up on that, let’s put that aside. The bigger point, so we are risk loving. The bigger point you make is there are two elements to our approach, which I think could be could be biased or could perpetuate inequalities, which we don’t like. Well, the first is, you know, clearly our model is elitist. You know, we’re saying we want to benchmark ourselves against the world’s top 10 most innovative universities. And given that in each year, roughly only 30,000 18 year olds will go to those you know, top 10 universities. And there are, you know, something like 30 million 18 year olds in the world. That’s clearly a very, very small sliver. And we’re giving them more money to be more successful than they already are. Right. So you can think of your think of that as a kind of self perpetuating elite. And, and you then look at the extremes, which, you know, you’ve worked in. altruism and charity, you’ll be well aware of the statistics about how the top 100 billionaires own more of the world’s wealth than the whole of the African continent. And you can see how, and I can see this, I think we can all see this, that what we’re doing is we’re helping fund the next Elon Musk or Zuckerberg. So how can we actually feel good about that? Well, the first point is that in actual fact, The top centers of innovation in universities around the world are probably some of the most open institutions in the world in terms of access. If you’re super bright, they want you. If you, Stanford is now, for a long time, Stanford has been a kind of needs blind within America as an educational institution. If you’re bright enough, they will find a way for you to pay that. Hoover, one of their early presidents, worked in the laundry rooms there. as an undergraduate, paid for his education, and then he went on to be a very successful industrialist and then president. And they’re now moving to be globally needs blind. If you look at Oxford or Cambridge, again, very, very high proportion of scholarships and so on. So provided those institutions actually stay looking for the brightest people, regardless of what their background is or where they’re from. then that helps at least give you that opportunity. Steve Jobs, Bill Gates, definitely from a privileged background, Zuckerberg the same, but Elon Musk, whether he’s a good guy or a bad guy, not from a massively privileged background. Steve Jobs, absolutely not. His father, his natural father was a waiter in Palo Alto and an immigrant from Armenia. So there are risks with that approach, but It’s something that we’re aware of. And certainly what we do is to provide as much access to people we recruit and portfolio companies as possible. And frankly, looking at Coventry, allows us to invest in the motorbike company from Coventry, even though it’s not connected to those networks because we benchmark it. Then to the global South, the biggest problem, of course, is we invested in the Oxford vaccine. So the Oxford vaccine… started out as a fantastic investment for us. We had the relationship with Oxford, which followed the company when COVID occurred. We had a strong suspicion that it might actually be a company that could be effective because of the work that we’d seen them before and we tracked them. We phoned up the company the same weekend that Sarah Gilbert got the COVID DNA strain from Wuhan. And they said, yeah, we think we could actually do that. We invested before they began developing it. We invested more before the trial results came out. We were very, very nervous, as you can imagine, when the trial results did come out. And yet they became one of three companies in the whole world out of more than 100 companies that actually had the science that could work. They then moved on to be the most used vaccine in the world, the lowest cost. We invested, the company was quickly listed on NASDAQ. So you could say, fantastic, we’ve made money. And we’ve provided a low cost vaccine to the whole world, particularly to the global South. However, you know, we never crystallize that value, the value for humanity and to society was absolutely there because it was a vaccine that was available to the global South. But our value wasn’t crystallized because the other two companies, Moderna and BioNTech, great companies, great science, much more expensive. products which sold to countries with much higher per capita incomes. And they made a fortune compared to that in that short period of time. And that’s an example where we were able to make a difference to the global south, but very clearly the economic impact of one being think it was about [10] to 20 times more expensive than the other, actually meant 10 to 20 times more profit, and profit went for the ones that had a benefit for a smaller number of people. So what we do isn’t perfect. There are examples where it doesn’t always work. But by addressing the biggest challenges, you would hope that if we develop nuclear fusion, for example, then we’ll be able to power the whole world and it’ll be at a lower cost, and it’ll be at a cost that doesn’t, you know, harm those people who would otherwise be harmed by particular emissions or coal mining etc. So it’s not perfect, that’s a quick answer and we acknowledge that but at least by looking at the biggest problems if it does go wrong maybe it goes wrong without us not making enough money but it certainly can have an impact with those companies, those individuals.
Ned Wells: That’s a really, really powerful example with the vaccine. And I’d like to ask you, Douglas, about if you could talk about a couple of the businesses that you’ve recently exited in a similar vein.
Douglas Hansen-Luke: Yeah, so Breaking Free is the example that I like to use most. And then I’ll also talk about a company called Eagle Vision, which is getting to the point where it could follow a similar route. Breaking Free was a company developed by a professor at Manchester University. First trialed at Strangeways prison. famous for many people, for international listeners, probably most famous because of the Smiths and it being mentioned in some of their songs. There’s a major, big prison in Britain, like many prison populations around the world, major issues with people having addiction, substance abuse, either before they go to prison and as a result of, or as a result of going to prison. So the professor behind this, he, developed an app which would effectively be the easiest way to describe it perhaps is like a Duolingo. The Duolingo nudges you to learn a language, it makes it fun, gamifies it, did the same thing for breaking free of addictions. So work through what you could do, what behavioral patterns you could see from an app on your mobile phone that would nudge you away from addiction, even so far as kind of rerouting your way home. So you didn’t pass an off license or you didn’t go past an area that was known for a high rate of incidence of drug dealing or whatever. So the impact case, they’re very clear. The company relocated to the Midlands. We invested in it from our regional portfolio. We helped develop growth on Scale AI. It was then purchased by a Canadian private equity group. and then sold to one of the biggest telemedicine providers, the corporate venture arm, or one of Canada’s largest telecoms companies. And now is being rolled out across America, both for individuals for fentanyl addiction, but also being used in also being used in penitentiaries throughout America. So really good example where we in this instance, and this is where we get it right, because if get it right, more money will flow in. We made a return of 20, 30 times on our investment. The founder made even more. So he is now lecturing other founders and mentoring them, but also starting his next business. And the benefit to society is huge. So you’ve got all of those things working together. So you’ve got this flywheel going around in a circle, a virtuous circle. And it’s a great story, a great success.
Ned Wells: That’s an absolutely fantastic story. it’s not an app that I’ve heard of. And as soon as we’re over here, I’m going to be jumping straight onto Google and going have a look at it. Do you remember the origin story, how you were introduced to them, how they were introduced to you, how you found out about it?
Douglas Hansen-Luke: That’s the maintenance. I mean, in that instance, it was a regional fund. Those regional funds go out there into the market, telling people that are ready to invest to support their primary goal was actually government policy driven. That was about reducing regional inequality. It’s about providing access to finance for businesses. So, know, the professor there would have met one of our people in an outreach program saying, you know, you’ve got a great idea.
Ned Wells: We are
Douglas Hansen-Luke: He was looking for money. We’ve got money. And it was partly a policy instrument from government. A policy instrument from government where government might have been willing to say, well, actually we’ll accept a lower return, but they didn’t need to. You know, if you get it right, that should make a far, you make the outside venture returns and you do good at the same time. Fantastic. And it was, it you know, it was, it was helped building that founder who’s a scientist. an entrepreneurial scientist, nonetheless a scientist, building him and then connecting him to the next level of investors, the next round and doing that where we’ve got to be very realistic in Britain. this is why FuturePlanet invests globally as well. Britain is very innovative. It does have lots of lateral thinkers, very creative, but we are less than 1 % of the world’s population, less than 3 % of the world’s GDP. So a key part of our job when we operate globally, it’s not just to benchmark against what we see globally, but it’s also to help our companies scale abroad and access the biggest markets as well. Though, know, made in Britain, proved in Britain, but let’s go global as well.
Ned Wells: Fantastic. I’d like to move us on a little bit. in the context of our listeners are typically leaders of businesses who are on a purpose led journey where they’re looking to. balance revenue with sustainability. And it’s always interesting to hear as well as successes, some of the things that perhaps haven’t gone as well and your learnings from them, how you overcame them. So I’d love to hear an example of that if you can share.
Douglas Hansen-Luke: Sure. I’m not going to be in, we certainly talked about the big success, but also the fact that although we made money on it, it wasn’t as much money as perhaps in a perfect world you should make when we talked about the vaccines, know, real world classing class science leading to real world class production distribution, but not outsized returns, not sufficiently to value. So that’s one big example. But the but it was nonetheless a success. What I will talk about now is the kind of invidious risk that I think anyone who wants to be purpose driven can, it’s a trap that we all fall into and it’s a trap that people in venture fall into. Venture is an industry where 70 % of what you invest in will either just return money or it will fail. Only 30 % will actually show real outsize returns. You know, if you invested in a Google, You’ve made a 10,000 X if you’ve invested in something like SpaceX at the same type of level. So you’ve got very skewed returns. Quite often those companies that are going to do really, really well will do really, really well. And you’ve you’ve spotted them. You can connect them to big markets, but the founders will be able to do the rest. Because 70 % of your companies will be saying we want to be an outside success, but we’re not quite making it. Please help us nurture us. spend time on us. And that’s the most difficult thing for someone who’s altruistic or wants to help. If you think of wanting to make the world a better place, shortcut that to want to help. Then the biggest risk you have is to be very kind to nurture everybody and to spend all of your time on the companies that actually aren’t going to succeed. And in reality, what you want is for those companies to work through and help with help them with very clear milestones. Have you achieved your targets? Is it going to be worthwhile? Is it worth putting more money into this? Because you are almost certainly talented people to have got where you’ve got so far. But if it’s not going to work now, stop, reconsider, work out whether you can be an entrepreneur at a big company, whether you are going to be an entrepreneur. If you are going to be an entrepreneur, go for it with something else.
Ned Wells: Yeah.
Douglas Hansen-Luke: And for us as venture capitalists and for most venture capitalists, but especially for impact venture capitalists, the tendency to work with the companies that are not doing well is something which is, it’s almost a kind of ingrained. You want to help and you want to help and the people that need the most help aren’t necessarily going to be the ones who make the most profit. And that, what I call red blooded capitalist approach, is something that’s got to be injected into venture and it’s got to be injected into impact or be very open about it when you’re setting up your impact business, your impact fund. You can be a no profit, you can be a limited profit or you can be maximizing profit. But you’ve got to be very clear what it is and very clear to your investors, to your customers, your suppliers and to your employees.
Ned Wells: And I think you’re, I suppose the point you make there about needing to have very clear milestones and a process is going to help you to remove the emotion.
Douglas Hansen-Luke: Yeah. with our latest fund, the British Co-investment Fund, which is, as the name suggests, for Britain, it’s to help with the scale up challenge. 75 % of that money is going to be in companies that are already scaling up, that have already got their technology working, that are growing fast and just need capital to grow faster. 25 % will be spread into smaller companies. but which have a shot at greatness. when they do, with the winners in that, we can quickly put money into it and keep a really fast flow of impatient capital returning money. But of that 25 % level, we’re explicitly telling them, we’ll put money into your first, maybe your second round, but we’re not putting it into your third. So we’re giving them a fire break. You have to be able to get this. You reach a milestone. We really support it. You then go out on your own, kind of grow up a little bit. And then when you have grown up, then we’ll come back again. There is a risk for much of venture. And remember, 90 % of venture underperforms. There’s a risk in venture that you provide it to those. You create a dependency culture. We want to make sure that that’s clear and open.
Ned Wells: I wanted to move us on to the role of media communications and marketing in driving long-term sustainability. And specifically when we were talking about earlier, you mentioned the Mansion House Accord that you were involved with. Talk to me a little bit about what that was and how that, the role that that played.
Douglas Hansen-Luke: Sure. that’s a really good example where you can actually have policy impact and just good common sense working together. So Mansion House is where the Lord or Lady Mayor live. It’s the capital of the city of London. And they worked with the Association of British Insurers with the pensions industry to work together to say, can we connect Britain’s biggest investors, sound familiar if you think of Britain’s Future Planet’s vision. How can you connect Britain’s biggest investors, which is the third largest pensions industry in the world, to its venture capitalists, who are the third largest venture market or work in the third largest venture market in the world? Amazingly in the UK, our pensions who invest in long-term savings to meet long-term retirement outcomes, those pensions weren’t matched by venture capital, which is also about investing for the long term. venture fund is usually 10 years. Even Google and Amazon took 20 years to reach profitability. a natural fit. Mansion House recognized that there was a natural fit, but they weren’t connecting. Pensions in Britain put less than 1 % of their funds into British companies. So the Pure data showed that 80 % of our growth was being financed by overseas investors, which meant that those overseas investors in America, in China, Australia and Canada, which is where most of those funds came from, they were making money out of our innovations. Nothing wrong with that. We want people to invest in Britain. But what’s kind of crazy is that pensioners who are going to live in the society and retire into the society where these innovations are coming from, they weren’t getting it. So That was what Mansion House was at. It wasn’t very difficult for us to see that was a good thing. Intellectually, it’s absolutely right. Absolutely matches our vision. So we put a lot of effort into a solutions out oriented way. And everything we do, we talked about our impact as how we look at it when we go in. But what we measure and why we were recognized as one of Britain’s leading venture capitalists is we care about the outcomes. How many lives were saved? And in this instance, we took the same type of approach and said, let’s not go into Mansion House and analyze what all the problems are and say why we can’t do it. Let’s go into Mansion House and analyze what the ways are that we could do it. How can we make this successful and what are the answers and the solutions? And we took all the different stakeholders. So government for sure, civil and civil leadership, like the mayor’s office, venture capitalists, but also academic institutions. and also founders themselves put them together and said, in your experience, what are the solutions? And quite often we found around the table, we actually had workable solutions. And what one group would tell the other stakeholders, we can do that. And it’s a six month, one year process for us, but it allowed us to develop a project and a product which is first in Britain and one of the first in the world to allow venture capital to take in monthly savings from long term investors like pensions.
Ned Wells: Ally, where would we wrap this up?
Ally: Well, I think with the description of the Mansion House Accord you’ve just given us, Douglas, I think you’ve led us very nicely into some shifts there and some synergies, some work being done to join what were previously discrete areas, which I think is interesting. So I think that is a nice summary of a development and something that’s moving forward in the area you are.
Ned Wells: Yeah, if there’s anything specific in terms of future planet capital, you know, and where you think the business will be in 10 years time, wwould be great to hear just to add on.
Douglas Hansen-Luke: Okay, why don’t I give you, and I’m assuming and hoping actually that you can edit this and probably are going to edit it. So why don’t I give you three discrete soundbites. So starting off with us then for the UK and then globally. okay. Hopefully, in this long interview and meeting, you’ve got me on a thoughtful day. more than an action day. And I’ve been fairly open in reflecting on what are the opportunities and what are the challenges that we see both in the world that we see. We’ve got very enthusiastic colleagues as well. So, start again. So, hopefully, in this call, you’ve had an opportunity to hear. from me in a thoughtful and not just an action oriented way or a sales way. So where we can make a difference, where the challenges are and where there’s still work to be done. Future Planet comes to the end of its 10th year. You know, our vision of being able to move money at scale, half a billion is a lot of money, but it could be a lot bigger. Pensioners in Britain, pensioners globally need to have returns on their investment. but there are still a lot of very big problems to solve. And we’ve just seen that, for example, around security. We’ve seen that with climate change. So, you my hope is in the next 10 years, the future planet, we’re significantly growing, but with the same discipline, the same vision, and enacting that by focusing on impact, the biggest challenges, focusing on benchmarking against proven areas of success, and doing that in an objective data-driven way. And I can’t see why all three of those don’t accelerate significantly because scale begets scale. What does that mean for Britain and the Mansion House and our product for that British Co-investment Fund? It should mean, you know, I’ve talked about having your cake and eating it. This is about actually enjoying making the cake and smelling the cake and looking at it and eating it and sharing it with all your friends. Because we get this right in Britain with the strengths that Britain has. not only will it provide better incomes and retirement outcomes for members of UK pensions, but it will also be addressing the challenges that face not just the UK, but which are truly global challenges. And that’s a great opportunity for Britain, which is a small population centre, a small market compared to others, but it’s still the fifth largest, sixth largest economy in the world. And it’s a way for us to use our influence here to actually make the world a better place for the billions of people. who still aren’t living a comfortable life, who when they talk about global challenges, these are real existential challenges. And, for me, that’s what when we look back after our 20th year, we will say, yes, we’ve rolled this out in a way that genuinely creates a sustainable future for the greater part of the world and not just for us in Britain, although that’s course, it’s a nice thing to hear.
Ned Wells: That is a fantastic note for us to finish on. Thank you. Thank you so much, Douglas. That was really lovely talking to you.
Douglas Hansen-Luke: I would like that. All right. Cheers. Thank you. Bye bye.
Ned Wells: Bye.
