Latest / Lab to Market Leadership with Chris Reichhelm / Deep Tech Spinouts: Inside Albion Ventures' Decade-Long Partnership with UCL | Dave Grimm

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Deep Tech Spinouts: Inside Albion Ventures' Decade-Long Partnership with UCL | Dave Grimm · Lab to Market Leadership with Chris Reichhelm

• 0:00
  Dave Grimm: Building a culture of pace, knocking down barriers.
• 0:03
  Dave Grimm: You know, 80 20 rule, moving fast is absolutely critical.
• 0:07
  Dave Grimm: And it's not something academic institutions are good at because they, they, they, they value precision in accuracy and, and, um, yeah, I being dotted and t's being crossed.
• 0:19
  Dave Grimm: And so pushing through that and pulling hard against that is absolutely critical to every startup and spinout
• 0:28
  Chris Reichhelm: Welcome to the Lab to Market Leadership podcast.
• 0:31
  Chris Reichhelm: Too many advanced science and engineering companies fail to deliver their innovations from the lab to the market.
• 0:38
  Chris Reichhelm: We are on a mission to change that.
• 0:40
  Chris Reichhelm: My name is Chris Reichhelm, and I'm the founder and CEO of Deep Tech leaders.
• 0:45
  Chris Reichhelm: Each week we speak with some of the world's leading entrepreneurs, investors, corporates, and policy makers about what it takes to succeed on the lab to market journey.
• 0:55
  Chris Reichhelm: Join us.
• 1:01
  Chris Reichhelm: Let me say upfront that University spinouts are fundamental to the success of Deep Tech as a movement.
• 1:10
  Chris Reichhelm: The research, the, the breakthroughs, the innovation that come from academics and researchers are the foundation stones on which deep tech and all its various domains rests.
• 1:24
  Chris Reichhelm: But let me also say that.
• 1:27
  Chris Reichhelm: University spin outs can be incredibly frustrating as well.
• 1:32
  Chris Reichhelm: Not just them as companies, but also the university spin out process in the UK.
• 1:36
  Chris Reichhelm: There's been a great deal of conversation around this, particularly located around stakes that universities take the time it takes for technology transfer offices to actually move through and, and incorporate and spin out companies.
• 1:52
  Chris Reichhelm: Questions around intellectual property and the ownership of that ip, et cetera.
• 1:57
  Chris Reichhelm: So it is a frustrating process and it is a slow process in many cases too, and that slowness impacts the success of spin outs and impacts their ability to move from lab to market quickly.
• 2:17
  Chris Reichhelm: Today I'm delighted to be joined by a partner at Albion Ventures, a guy named Dave Grimm.
• 2:24
  Chris Reichhelm: And Dave for the last decade has been working with Albion and one of the UK's leading universities, University College London.
• 2:32
  Chris Reichhelm: And together they've been fashioning a new way of engagement fashioning in my, a new way of engagement in my view, one that is smoother.
• 2:44
  Chris Reichhelm: One that is a little bit more standardized, one that is prioritizing pace.
• 2:51
  Chris Reichhelm: And I think this is exciting.
• 2:55
  Chris Reichhelm: As exciting as it can be for the spin out administration process.
• 3:01
  Chris Reichhelm: And yet, unless you're willing to look at this process, you can't really have a hope of making it better for young Spinouts.
• 3:09
  Chris Reichhelm: So I wanna get into it with Dave today.
• 3:11
  Chris Reichhelm: I wanna understand what exactly about their program have they done that is leading to the success and the guys are having success.
• 3:19
  Chris Reichhelm: They're producing some really interesting companies.
• 3:22
  Chris Reichhelm: I'll highlight too, Phasecraft and Oriole Networks, both of which have raised a fair amount of money.
• 3:28
  Chris Reichhelm: And, uh, and they've got a whole future of compute portfolio that is very interesting too.
• 3:32
  Chris Reichhelm: So I'm hoping that Dave is gonna get into some of the stuff that they've done to create this more organic, symbiotic relationship that is leading to success.
• 3:44
  Chris Reichhelm: If you're into spin outs, if you care about that spin out process, I think you're gonna love this episode.
• 3:50
  Chris Reichhelm: Let's get into it.
• 3:55
  Chris Reichhelm: Dave Grimm.
• 3:56
  Chris Reichhelm: Thank you so much for joining me.
• 3:58
  Dave Grimm: Thanks for having me on.
• 4:02
  Chris Reichhelm: Deep tech investing means many different things to many different people and investors.
• 4:11
  Chris Reichhelm: What does it mean to Albion?
• 4:13
  Chris Reichhelm: Kind of walk me through the history of deep tech and Albion, because they weren't always a deep tech investor.
• 4:22
  Dave Grimm: Uh, so yeah, I mean, deep tech investing to us is where you invest in sort of a technical differentiation that's gonna last for long enough for it to be valuable in the marketplace and long enough for that technology to be developed to the point where, uh, where that tech, where that will, uh, be valuable.
• 4:40
  Dave Grimm: Um, actually we've been doing it without calling it deep tech for many, many years.
• 4:44
  Dave Grimm: Um, in fact, it's only deep tech really sort of became en vogue.
• 4:51
  Dave Grimm: It was only in the last few years that Deep Tech has become fashionable.
• 4:54
  Dave Grimm: Um, but in fact, at Albion we've been trying to back, uh, companies with differentiation for, you know, for decades.
• 5:03
  Dave Grimm: Um, so sometimes that would've been technical differentiation that we believed in, um, alongside, you know, founder differentiation or, or market execution differentiation.
• 5:16
  Dave Grimm: Um, so, you know, now when we talk about deep tech investing, we're talking about what is there, is there, you know, some patents or is there some technical knowhow, or is there something at the heart of this business that means that we can't just go and get, you know, five in years skilled in the art and go to do the same thing?
• 5:32
  Dave Grimm: Um, yes, and that's a very broad definition, but in truth, deep tech is a very broad space.
• 5:39
  Chris Reichhelm: But it, it, it, it, it is true.
• 5:42
  Chris Reichhelm: I mean, I can remember.
• 5:44
  Chris Reichhelm: Probably 15 years ago, Albion had an investment in a company called Process Systems Enterprise that we actually worked with.
• 5:52
  Chris Reichhelm: And it was a university spin out from IMP Imperial, I think.
• 5:55
  Chris Reichhelm: And I think we would today.
• 5:56
  Chris Reichhelm: It was ultimately acquired by Siemens from memory, but it was a, it was a, you know, a classic example of the company you've just described.
• 6:05
  Chris Reichhelm: But again, we didn't refer to it as Deep Tech back then.
• 6:08
  Chris Reichhelm: The terms just weren't used and how, you know, in terms of.
• 6:13
  Chris Reichhelm: Do you take a fairly broad view of deep tech today?
• 6:17
  Chris Reichhelm: In other words, are you investing only in particular areas and not others?
• 6:23
  Dave Grimm: Yeah, good question.
• 6:24
  Dave Grimm: Um, so we have two different sort of distinct strategies there.
• 6:28
  Dave Grimm: Um, so we have our larger kind of flagship funds and they have quite defined areas of deep tech that we think are the, the most exciting to go after.
• 6:37
  Dave Grimm: Um, so those are our future compute energy transition, novel ai.
• 6:42
  Dave Grimm: Um, but we also have a university IP strategy where we're going very early in helping create businesses out of IP universities at a very early stage.
• 6:52
  Dave Grimm: Uh, and there I think we are willing to sort of look a little bit broader in our scope across everything from kind of med tech and therapeutic through to kind of.
• 7:00
  Dave Grimm: Software at the other end, and then sort of hardware sitting somewhere between those two.
• 7:04
  Dave Grimm: So, um, in our flagship funds we're a bit more, a bit more defined strategy around three verticals we think are most exciting.
• 7:10
  Dave Grimm: And then in our university strategy, we're, we're, we're taking a broader flow of IP and trying to figure out if we can match it to exciting markets.
• 7:17
  Chris Reichhelm: Yeah.
• 7:19
  Chris Reichhelm: What are the, you know, what are the challenges that you guys find in deep tech investing?
• 7:29
  Dave Grimm: I mean, there's lots of them.
• 7:30
  Dave Grimm: Uh, I think the easy answer here is capital and everyone will tell you there's not enough capital in Deep Tech.
• 7:38
  Dave Grimm: Uh, I, I'm not gonna sort dwell on that because I think that's fairly, fairly sort of accepted view.. Um, I think a lot of the time the challenges come down to, um, time, time to get kind of product market fit.
• 7:51
  Dave Grimm: Um, time from kind of taking a technology and actually getting into a customer's hands as a technology and then taking it as tech, taking it from being a technology to a product as it's a big old chunk of time, um, and requires a specific dev technological development skillset.
• 8:09
  Dave Grimm: Once you've then got a product, you've then got a completely different entity and you don't, don't necessarily need sort of technical, technological, sort of deep understanding at that point in more, you've got execution and commercial understanding.
• 8:21
  Dave Grimm: And so there's almost a skillset transition point as well.
• 8:26
  Dave Grimm: Um, and where you kind of build those skills and, uh, and experience into the business is kind of an art form, um, because it, it's, it's fairly true that.
• 8:38
  Dave Grimm: And most of the investments I've made at the very earliest stages, they're not really, the technology has not proven or advanced enough that you can go and hoover up like, you know, the best domain space, talent in the world to kind of help lead this business forward.
• 8:55
  Dave Grimm: So you gotta figure out how do you build a talent pathway, uh, and a hiring plan and get everyone on board with how you grow the business from, a piece of kit on a lab bench to a product being sold to specific ICPs in enterprises.
• 9:11
  Dave Grimm: Um, and you can see just the change in dynamic through that journey is, is kind of wild.
• 9:20
  Chris Reichhelm: Yeah.
• 9:21
  Chris Reichhelm: Yeah.
• 9:22
  Chris Reichhelm: And it's, you know, you, you offer up this distinction just there between the technological part of the journey, which is demonstrating the tech, uh, you know, building it out, and then obviously the commercialization piece.
• 9:34
  Chris Reichhelm: And, um, it, it's in our experience, so few businesses ever really complete trying to prove out their technology proposition and so few get to the point where they're able to articulate that into a value proposition with some meaning and resonance in a particular value chain.
• 9:59
  Chris Reichhelm: And so, you know, are you, are you guys in your portfolio seeing more of those companies make that transition?
• 10:08
  Chris Reichhelm: Or are you seeing the same kind of odds more or less that the rest of us see?
• 10:16
  Dave Grimm: I think, I mean, I think, like you say, the odds are against these companies getting to, um, going to a stage where they already sort of delivering product.
• 10:25
  Dave Grimm: Um, I think what's, what we, what we are trying to work on is how we, how we change that paradigm.
• 10:31
  Dave Grimm: Like particular how do you, how do you build teams that can, you know, so you can get to a point where you just sell the technology to a, um.
• 10:41
  Dave Grimm: To an acquirer and you see a lot of these kind of early-ish tech exits, um, for, you know, values south of a hundred million.
• 10:50
  Dave Grimm: Um, I mean that can be a great return if you've got in at the right stage and you know, you're small enough fund to be that work, but ultimately that's not gonna drive, you know, really healthy ecosystem that can grow businesses to scale.
• 11:03
  Dave Grimm: Um, and so again, I think a lot of the time we are.
• 11:09
  Dave Grimm: Working quite closely with leadership teams and putting talent in and moving talent around to allow 'em to make that transition and where we, where we do that successfully.
• 11:18
  Dave Grimm: And it's, it's not an easy thing to do successfully, but whereas it's done successfully, it does make that difference.
• 11:23
  Dave Grimm: So putting in a founder that's able to take with this commercial and has the ambition and the hunger, and having designed the capital so you can bring them in, incentivize 'em properly to go and do that massively exciting part of the journey is, is absolutely critical.
• 11:38
  Dave Grimm: Otherwise, yes, you're almost certainly setting yourself up for a tech exit.
• 11:43
  Dave Grimm: Um, yes, and we do a lot, a lot of that.
• 11:45
  Dave Grimm: It comes right back down to the very first foundings of the business.
• 11:49
  Dave Grimm: How do you, how do you set up the capital structure of the business?
• 11:52
  Dave Grimm: How do you, um, set expectations and how people align for what the journey might look like as it kind of goes from zero to one and a one to 10, 10.
• 12:03
  Dave Grimm: Yes.
• 12:05
  Dave Grimm: And I think we're now at a stage we've done that enough, we're able to share some pretty cool stories of people's journeys with other founders that starts to help lubricate that thinking.
• 12:17
  Chris Reichhelm: Yes.
• 12:18
  Chris Reichhelm: Can you share some of those lessons with us?
• 12:22
  Dave Grimm: I can think of founders that have started the journey.
• 12:25
  Dave Grimm: Uh, I, right at the start, we've been able to say, this is the first two years of the journey and what it looks like.
• 12:32
  Dave Grimm: We are going to bring in a domain specific commercial leader at this point, and they're probably going to be CEO.
• 12:40
  Dave Grimm: Um, you will still be valuable to the business.
• 12:43
  Dave Grimm: You'll still look, you know, we're gonna find a way.
• 12:46
  Dave Grimm: You'll still be either CSO or CTO going forward, but as we found the business now, we need you to work really hard and take it to this stage in the knowledge that when it gets to this stage, you'll be handling your baby to someone else.
• 13:02
  Dave Grimm: Yeah.
• 13:02
  Dave Grimm: Uh, for the, it's growth and that we will care for you and ensure that your participation in the future business is, is satisfying.
• 13:11
  Dave Grimm: Um, and being able to have that authentic chat like before you've even founded the company, before you, you got a vehicle, um, is pretty critical.
• 13:21
  Dave Grimm: I've done that a few times and that's when, when you've seen the best CEO transitions have have been when you kind of put the hard yards in two or three years before you make the CEO transition.
• 13:32
  Chris Reichhelm: Yes.
• 13:33
  Chris Reichhelm: So that is, so that expectation setting right up front.
• 13:38
  Chris Reichhelm: Yeah.
• 13:38
  Chris Reichhelm: And laying out the journey of the next couple of years.
• 13:42
  Chris Reichhelm: And these founders, I'm assuming, are often technical founders who may also fashion themselves as the CEO of the business too, at that point.
• 13:52
  Dave Grimm: Yeah.
• 13:52
  Dave Grimm: And, and, and quite often because they feel they need to, rather than they're necessarily desperate to.
• 13:59
  Dave Grimm: Yes, but they feel like they're coming to the VC community.
• 14:02
  Dave Grimm: They need to project a certain type of personality.
• 14:04
  Dave Grimm: And so yeah, I like to sort of be quite open with, I'm not, don't think of me as a typical vc.
• 14:12
  Dave Grimm: You don't have to sell me a story.
• 14:14
  Dave Grimm: Let's get like actually into what, what you want and what we want.
• 14:18
  Dave Grimm: 'cause you might find that we're more aligned than you think we are.
• 14:22
  Chris Reichhelm: Yes.
• 14:23
  Chris Reichhelm: Do you feel that gives them a sense of relief?
• 14:27
  Dave Grimm: Some.
• 14:28
  Dave Grimm: Some in some ways, some don't.
• 14:29
  Dave Grimm: Some don't.
• 14:30
  Dave Grimm: Yeah.
• 14:30
  Dave Grimm: Some sometimes it does.
• 14:31
  Dave Grimm: Like some, yeah.
• 14:32
  Dave Grimm: Some founders really wanna be the CEO for the long term and they don't, they have this message as one they want, so it's not, it's not a one size fits all.
• 14:41
  Dave Grimm: And that's hopefully why I think my job is not the automated in the next year or two, is that I think it's much more of an art this bit than a science.
• 14:52
  Dave Grimm: Kind of perfect for me.
• 14:53
  Dave Grimm: Like can't often get asked particularly, you know, LPs for funds that we're raising to go into universities.
• 14:58
  Dave Grimm: I like what, you know, what are you looking for?
• 15:01
  Dave Grimm: What's the perfect value team look like?
• 15:03
  Dave Grimm: Um, and quite often you're sort of bespoke building something rather than saying, right, I need to look like business and this, because often you can't have like that to start with.
• 15:14
  Chris Reichhelm: Yes, yes.
• 15:16
  Chris Reichhelm: Are there, but having said that, are there.
• 15:19
  Chris Reichhelm: What kind of features are you looking for in entrepreneurs or in entrepreneurial teams when you're investing?
• 15:31
  Dave Grimm: Yes.
• 15:31
  Dave Grimm: There's sort of, anyways, there's a few different archetypes that, that we like.
• 15:35
  Dave Grimm: Um, my sort of favorite one is, is Mark Albion's favorite one too.
• 15:40
  Dave Grimm: I remember he said this on a podcast about university spinouts well over a decade ago, which is you kind of want your professor.
• 15:49
  Dave Grimm: You are a PI and academic leading our worlds on your research, then you wanna pluck one entrepreneurial hungry person outta his group who understands the technology enough, but is not, you know, has not become, become a career academic, kind of young and hungry.
• 16:04
  Dave Grimm: And you can build those two things together.
• 16:07
  Dave Grimm: They often really excellent, excellent foundation savings to the business.
• 16:11
  Dave Grimm: And you can get that.
• 16:12
  Dave Grimm: And, uh, that's one, that's one to, to really try and engineer.
• 16:17
  Dave Grimm: Um.
• 16:18
  Dave Grimm: The other, like seemed successful from the early stages is, um, if you bring in, uh, if you've got, you've got an academic who's world class in their field, and you can bring in a domain expert who's built a business before in that space and who's going back around to do it again, that works quite well.
• 16:38
  Dave Grimm: Uh, and that actually could be done if the, if they've been successful on their first time round.
• 16:44
  Dave Grimm: Because more their risk appetite goes up a bit because they're willing to go and do something a bit mad because they don't need it to be, you know, don't need it to secure their, their, their children's future or whatever it is.
• 16:56
  Dave Grimm: Uh, and so you can bring them into idea is exotic and exciting enough you can bring them.
• 17:02
  Dave Grimm: Um, so that's another, um, another quite, quite good sort of foundation stage of a business.
• 17:09
  Dave Grimm: Um.
• 17:10
  Dave Grimm: And then you have the, you can have academics who are entrepreneurial enough to, to get out there and start, create a business and run it.
• 17:17
  Dave Grimm: Um, quite often there's a time limitation on that one, but that, that's quite nice when you've got that because you haven't got, you haven't got lots of leadership mouths to feed at that stage.
• 17:29
  Dave Grimm: You can set up the capital structure such that, um, you know, they can do some time and that it can be taken forward and out, uh, once they, enough technical progress that you can bring in.
• 17:40
  Dave Grimm: Sufficiently high quality, but high caliber level of, of domain expertise website.
• 17:46
  Chris Reichhelm: Yes.
• 17:46
  Chris Reichhelm: Yes.
• 17:48
  Chris Reichhelm: I imagine that for some of those repeat entrepreneurs, motivation's quite an important feature to be looking at there.
• 17:55
  Dave Grimm: It all comes down to personality type and drive and hunger, and it's, um, it's definitely something in Europe and in the UK where something culturally that makes that a lot more difficult for us than, than it does for our us.
• 18:10
  Chris Reichhelm: I think so
• 18:12
  Dave Grimm: give an interesting kind of example of this.
• 18:15
  Dave Grimm: Um, we had a semiconductor businessin our portfolio.
• 18:20
  Dave Grimm: Um, and we were looking to bring in new leadership.
• 18:24
  Dave Grimm: Uh, and very specifically we wanted to bring in someone from the West coast who was part of the kind of Silicon Valley flow.
• 18:32
  Dave Grimm: Um.
• 18:33
  Dave Grimm: My initial instincts was this is gonna be a, it's gonna need an enormous amount of energy and drive.
• 18:39
  Dave Grimm: Um, you know, this person's gonna have to be, you know, jetting backwards and forwards from San Fran to the UK and then out to Asia because, you know, semiconductor very global in that respect.
• 18:49
  Dave Grimm: Um, and so, you know, in my head I was like, this needs to be someone in their kind of thirties, forties, like who's got just loads of energy and, and, and time for this.
• 18:59
  Dave Grimm: We went to a specialist semiconductor recruiter in the US.
• 19:03
  Dave Grimm: And, uh, you know, the first few profiles they showed me, they were all 60 years plus.
• 19:09
  Dave Grimm: And my reaction was, ugh, these guys are just not gonna be up for it.
• 19:14
  Dave Grimm: These guys are not gonna have the energy.
• 19:16
  Dave Grimm: And, um, the recruiter said, give them chat to 'em.
• 19:19
  Dave Grimm: See what you think.
• 19:20
  Dave Grimm: And I was kind of blown away by, some of them Very successful um, already, you know.
• 19:28
  Dave Grimm: Made comfortable lives themselves and yet they were very keen to go around and spend another 15 years doing the hard grind at fif at 50 or 60.
• 19:37
  Dave Grimm: Um, I mean, I think in the UK I think the majority of our successful entrepreneurs who are in their sixties are not looking to CEO their next business.
• 19:47
  Dave Grimm: Um, it's something about the US kind of culture and uh, um.
• 19:55
  Dave Grimm: American dream means that then it's kind of so ingrained that it seems to me that you work until, until the very last moments, and you're very happy to do that.
• 20:04
  Dave Grimm: That that's, you know, a huge boost to that ecosystem because they, that that recycling of talent and that, you know, um, flywheel that you need to build a really successful venture ecosystem just has a lot longer to spin in the US than just
• 20:20
  Chris Reichhelm: so do we need to do we need to acknowledge that in the UK and Europe?
• 20:27
  Chris Reichhelm: You know, what is more likely, are we gonna change the behavior of the entrepreneurial ecosystem over here and say, and you know, are they gonna start unretiring, so to speak?
• 20:39
  Chris Reichhelm: I think there was a, uh, an article it's been doing the rounds of sub of Substack or LinkedIn, someone calling, it was, um, it was the CEO of health sake.
• 20:51
  Chris Reichhelm: Calling for a Torsten, calling for the unretiring of Europe's entrepreneurs so that they can get back into the system and apply the lessons that they've learned to, uh, to, again, to make Europe great again, so to speak.
• 21:08
  Chris Reichhelm: I, is that more likely, or is it more likely that Europe and the UK's entrepreneurial talent will retire at their first win and we need to adjust to that?
• 21:22
  Dave Grimm: That's a huge question.
• 21:23
  Dave Grimm: Um, I think it is.
• 21:27
  Dave Grimm: I think because of a lot of our talent has spent time in the us I think you're seeing more and more, more and more talent willing to go the second time, third time around.
• 21:37
  Dave Grimm: You also, you know that you also get, uh, a few that have had quite short cycles and therefore able to get back into ecosystem and help.
• 21:46
  Dave Grimm: Um.
• 21:47
  Dave Grimm: I can, I think for instance of, um, Ian Hogarth, I know very well.
• 21:52
  Dave Grimm: Yes.
• 21:52
  Dave Grimm: You know, successful ex founder, um, I'm still, you know, very young.
• 21:57
  Dave Grimm: And so you the imagine value, he's now into the ecosystem across a number of different.
• 22:03
  Dave Grimm: But that's, but the value E is adding, and that's a great example, but the, I think the value Ian's adding is kind of different.
• 22:09
  Dave Grimm: He's serving as investor and kind of government advisor a little bit, and he's, he's doing a lot of different things, but not necessarily wearing the CEO pat and getting back into the fray.
• 22:22
  Dave Grimm: Yeah, that's, that's true.
• 22:24
  Dave Grimm: Um.
• 22:25
  Dave Grimm: I could absolutely see him and, and those like him doing that, I think, I don't think that's a, he wants to retire type problem.
• 22:32
  Dave Grimm: I think that's more like the opportunity to be a really great actor as a funder in, in the, in the UK and Europe is differentiated from that in the us.
• 22:41
  Dave Grimm: Um, and so I think he's serving a purpose that needs to be fulfilled.
• 22:45
  Dave Grimm: I think were, were that, were those.
• 22:48
  Dave Grimm: Already felt like, would imagine he would be probably CE something.
• 22:54
  Dave Grimm: Yes.
• 22:54
  Dave Grimm: Yes, yes, yes.
• 22:56
  Dave Grimm: No, that's right.
• 22:58
  Dave Grimm: I think so.
• 22:59
  Dave Grimm: I think the point is us making with Ian is kind of, there are those that have gone through the cycle quicker enough.
• 23:05
  Dave Grimm: Um Yes, yes, they, yes, that's true.
• 23:08
  Dave Grimm: To go again.
• 23:10
  Dave Grimm: That's true.
• 23:11
  Dave Grimm: No, that's absolutely true.
• 23:12
  Dave Grimm: Increasingly so.
• 23:13
  Dave Grimm: Increasingly so I think, yeah.
• 23:17
  Dave Grimm: Talk a little bit about, uh, the UCL fund that you've been and a very important part of, I think since it's, since it's founding.
• 23:28
  Dave Grimm: That's right.
• 23:29
  Dave Grimm: Um, you, yeah, no.
• 23:31
  Dave Grimm: Share with us a little bit about that.
• 23:33
  Dave Grimm: Uh, what was it initially set out to do?
• 23:36
  Dave Grimm: There have been lots of university funds that are out there, there still are.
• 23:39
  Dave Grimm: What did you guys set out to do with UCL?
• 23:42
  Dave Grimm: What's been achieved in the, in the time that, uh, in the time that this has been in place?
• 23:49
  Dave Grimm: Yeah, I could question.
• 23:50
  Dave Grimm: I think that's it.
• 23:52
  Dave Grimm: What we set out to do and what maybe differentiates us from some of the other efforts is that we wanted to kind of have a kind of harmonious, um, molding of a VC in sort of knitted into the fabric of the university in a way that made us a good actor for everyone.
• 24:10
  Dave Grimm: Um mm-hmm.
• 24:10
  Dave Grimm: I think for a long time, deep tech theses is sort of.
• 24:14
  Dave Grimm: Uh, approach universities and either sat too far away and just said service, like good companies.
• 24:20
  Dave Grimm: And then they've, you know, turned up once a month, looked at the IP flow and gone Well, those isn't a great company yet, so I'm not doing anything.
• 24:27
  Dave Grimm: There's certain, many examples of funds that have been raised.
• 24:29
  Dave Grimm: Universities that have not deployed because they're not, not close enough.
• 24:33
  Dave Grimm: Um.
• 24:34
  Dave Grimm: Or, uh, you know, there's a lot of antagonism between the VC and the university because they are very different entities and they don't see eye to eye on a bunch of different things.
• 24:44
  Dave Grimm: Um, and, you know, each has their own perspective, but it causes a mistrust from the university and the vc.
• 24:51
  Dave Grimm: And the vc, you know, doesn't, doesn't hold the university in regard.
• 24:55
  Dave Grimm: Intervention operates separately to it.
• 24:58
  Dave Grimm: But I think we wanted to see if we could build a fund where we solve some those problems and actually put.
• 25:04
  Dave Grimm: Like a VC that was their kind of friend to everyone in the heart of the university that allowed to sort of break the mold of, of, um, IP and innovation, not quite gaining the right profile or the right, um, formation in order to attract VC money.
• 25:24
  Dave Grimm: Uh, so we actually got much closer to the tech transfer office and the university and the departments than I think as you've typically seen before.
• 25:33
  Dave Grimm: Um.
• 25:34
  Dave Grimm: And we tried to sort of broker, um, you know, thoughts and, and programs and investments that didn't achieve everyone was a sour taste in their mouth.
• 25:46
  Dave Grimm: Um, and I actually ended up working very well.
• 25:50
  Dave Grimm: So you, I, I think people in the tech transfer off the ECL still, you know, respect us and, and.
• 25:58
  Dave Grimm: Uh, take on board our views about how much equity they should be taking, how fast things should be moving, all these things that we have opinions on.
• 26:05
  Dave Grimm: Equally, we are not out there telling the world that universities are awful places and bureaucratic are awful and slow and, uh, unable to see their job properly.
• 26:14
  Dave Grimm: So that's an unfair characterization of them too.
• 26:16
  Dave Grimm: But you often hear from the VC community.
• 26:19
  Dave Grimm: So I think we've managed to kind of build a world where we really understand each other, and that's led to us being able to.
• 26:27
  Dave Grimm: A much more kind of trusted partner of the university, and that means we've been really deep in all of the IP flow, all the conversations with academics, trying to build stuff, actually.
• 26:36
  Dave Grimm: As vc, this is how we think we should do it.
• 26:39
  Dave Grimm: And being trusted for that opinion.
• 26:41
  Dave Grimm: That's why was to create companies and create ventures at the heart of the university in a manner that means that they've got a chance to become a global category leader.
• 26:49
  Dave Grimm: But otherwise, they would never have got off the shelf.
• 26:52
  Dave Grimm: That IP would've, would've, would've rotted there because, you know, the tech transfer officer wanted to do it one way.
• 26:58
  Dave Grimm: The VC community would've seen it differently.
• 27:00
  Dave Grimm: They would've fought, they would all assumed it was everyone else's fault, and the opportunity would never have escaped.
• 27:06
  Dave Grimm: Yeah, so proud of of that, that relationship that we've built.
• 27:10
  Dave Grimm: This is, this seems very unusual, and I'll use the word unusual because there have been lots of funds around universities that have been trying to build those very same type of relationships and indeed many funds that claim, they do have those kinds of relationships.
• 27:28
  Dave Grimm: But you get further into the, into the academic ecosystem, and then you hear very mixed reviews.
• 27:34
  Dave Grimm: Um, uh, uh, with a number of them.
• 27:37
  Dave Grimm: And it's also, you know, and it's often with, you know, a similar set of complaints, stepping on toes, um, uh, this inability to, to determine ultimately if the investors are there to support the academic community, or if the investors are there to help develop outstanding companies.
• 28:00
  Dave Grimm: And there's a difference, there's a distinction there.
• 28:03
  Dave Grimm: And that's always a, you know, a, I imagine that's a, a very fine line to walk.
• 28:09
  Dave Grimm: What has, in your experience, and you know, you're a, you know, you're a a guy that's well known in the ecosystem, what has made it different for you guys?
• 28:22
  Dave Grimm: Why have you guys been more successful in doing this than other funds?
• 28:28
  Dave Grimm: I think.
• 28:29
  Dave Grimm: One thing that characterizes Albion through and through, I think our, our ING partner, Patrick, with others, is kind of sticking a long term view on things.
• 28:39
  Dave Grimm: So in each deal you can fight and kill for an extra percentage.
• 28:45
  Dave Grimm: You can, you know, you can push your agenda here and there, but if you're trying to, if you, if you've got a sort of, look, this has to work over a 20 year view.
• 28:52
  Dave Grimm: We're not gonna go and just get two or three deals and burn our bridges and go, because we, we really believe in the long term.
• 28:59
  Dave Grimm: Um, value of what we are doing, then, you know, you, you're approaching it with an magnitude of, you know, patience and humility, uh, which are not characteristics often found in VCs.
• 29:13
  Dave Grimm: Um, uh, and we've had to really double down on, you know, emphasizing those characteristics at times.
• 29:21
  Dave Grimm: And, uh, you know, there are times when I found it extraordinarily hard, um, to interface with a public institution.
• 29:28
  Dave Grimm: And, you know, there are million different ways that universities can be very frustrating partners to deal with.
• 29:34
  Dave Grimm: Um, and I'm sure they might sort the same thing about me as a, as a sort of private, from the private sector.
• 29:41
  Dave Grimm: Um, but I think we've all sort of committed to patience and, uh, you know, open communication and taking a long term view.
• 29:49
  Dave Grimm: Um, and we've hired for that.
• 29:52
  Dave Grimm: The people we have in the front, you know.
• 29:55
  Dave Grimm: Were diplomatic with the way we, we, we work with the, the Dean University and we, everyone is in it to build a, a 20, 30, 40 year success story.
• 30:05
  Dave Grimm: Um, and that, you know, Albin has been around for 30 years.
• 30:08
  Dave Grimm: We intend to be around for at least another 30 years.
• 30:10
  Dave Grimm: Um, you know, everything about the way our partnership works and the way that our hiring works and the way our culture is, is set up for the long term.
• 30:18
  Dave Grimm: I think that is really very unusual in the BC world, and that's why we've been able to bring that.
• 30:25
  Dave Grimm: Um, attitude and culture to this, and it's made it work.
• 30:30
  Dave Grimm: And have you gotten the alignment, say, at the top of UCL, at the top of the institution so that, because creating that alignment throughout the institution obviously makes it much easier for you to be able to do your job.
• 30:44
  Dave Grimm: Yeah, I mean we, we, we relationships throughout the university.
• 30:49
  Dave Grimm: Mm-hmm.
• 30:49
  Dave Grimm: Um, it's funny though, like UCL and I think all universities in some extent are, are quite a nasty places.
• 30:57
  Dave Grimm: Often doesn't really matter what the person the top thinks anyway, because, you know, it sort of gets lost through a whole bunch of different powers, directors and stuff.
• 31:05
  Dave Grimm: So it's more, it's not just having the people at the top, it's much more about having.
• 31:10
  Dave Grimm: Worked with people who were in the doers at the university who were getting stuff done, um, and getting them to understand, you know, spending time educating them.
• 31:20
  Dave Grimm: This is why we're setting up like this.
• 31:22
  Dave Grimm: This is why, you know, with the cap tructure, the cap table structure should look like this.
• 31:26
  Dave Grimm: And we, you know, believe us that know this will be a good a I'll give you maybe an example of how that played out really, really well.
• 31:34
  Dave Grimm: Um.
• 31:35
  Dave Grimm: Quite early on, we could see that there was an issue with the way that software was being dealt with at the university.
• 31:41
  Dave Grimm: So universities in the UK predominantly have made their money historically from sort of life sciences or at least physical science, but mainly life science investments, and now.
• 31:52
  Dave Grimm: It is not uncommon that the cap tables and structured look very different from the rest of the E ecosystem.
• 31:58
  Dave Grimm: So you see founders on very small percentages and investors on very large s, and there's a different kind of mindset and you go through enormous outcomes.
• 32:06
  Dave Grimm: So small percentages kind of can work for founders in those, in those scenarios, but it absolutely doesn't work in a software spin out.
• 32:15
  Dave Grimm: So when you're, there's been lots of talk about this in the press and a place when you're taking 30% of a software spin out, um, you're pretty much killing it from the, from the moment it starts.
• 32:25
  Dave Grimm: Um, and so what you would do, the ultimate effect of that is that software's quite easy to walk off with.
• 32:32
  Dave Grimm: So if you're gonna start a software business from a university, what you do is you leave the university with your laptop and then you start your business.
• 32:39
  Dave Grimm: The university gets nothing.
• 32:41
  Dave Grimm: And actually the, the, the, the, the spin out or the what, what would've been a spin out suffers because it loses access to a whole lot of talent that typically they can bring it.
• 32:50
  Dave Grimm: Um, so we had this conversation with UCL that went on for a while because it takes, it takes time to kind of change fairly, sort of bureaucratic public institutions at times.
• 33:00
  Dave Grimm: But, um, just saying, look, you know, from a software perspective, you shouldn't be trying to, um, take huge stakes.
• 33:07
  Dave Grimm: And what happens is you get.
• 33:09
  Dave Grimm: Large stakes in two or three businesses and the rest disappear, or they don't start, you'll be far better off taking, you know, small smither, single digit low dig, low single digit percentages of every software business, which you make it so attractive and so easy to do and so small that everyone will just do it automatically.
• 33:26
  Dave Grimm: You'll get lots of small Smithers, and ultimately your return will probably be better.
• 33:31
  Dave Grimm: Um, and we did that.
• 33:32
  Dave Grimm: We, so we in instituted a program.
• 33:34
  Dave Grimm: We got signed off at ECL started Motion, which was basically a 5%, uh, deal for any, any software start.
• 33:43
  Dave Grimm: The very first startup that took that deal, uh, was a, a medical technology software startup.
• 33:50
  Dave Grimm: They took that deal and it meant that their spinout process was, uh, know a third that the length click would've been otherwise.
• 33:56
  Dave Grimm: 'cause otherwise they'd dive into these deep negotiations and it all gets better and it takes, just, takes forever Anyway, it moved it so much faster that they spun out very quickly and they were fortunate enough to be in touch, spin out in time to win quite a big grab, otherwise they would've missed.
• 34:11
  Dave Grimm: Um, and then insulted, you know, not on the back, the thick end of a hundred million.
• 34:16
  Dave Grimm: Inside three years, university made, still owned basically 5% of that business as it sold.
• 34:22
  Dave Grimm: And you know, that was a big payout back to the computer science department, back to the university, uh, and a business.
• 34:27
  Dave Grimm: Otherwise, if they had tried to take more or they, even if they had, don't have the same amount, but they've negotiated for longer, that business may well taken a different course or at the start the tool, you know, when they start to see those little wins and start to see how that works.
• 34:42
  Dave Grimm: And you get a lot more sort of hearts and minds.
• 34:45
  Dave Grimm: Um.
• 34:45
  Dave Grimm: You can start to see, you start to get a bit more trust from the institution.
• 34:50
  Dave Grimm: You know, over the last decade we've built up, you know, really sort of deep levels of trust.
• 34:55
  Dave Grimm: Well that's, I mean, that's an outstanding result.
• 34:58
  Dave Grimm: And if only we could get the rest of the leading universities in the UK to follow suit.
• 35:04
  Dave Grimm: Think, think it, it is direct.
• 35:06
  Dave Grimm: It is direction travel.
• 35:07
  Dave Grimm: It is it's direction.
• 35:08
  Dave Grimm: Like, and, and certainly on the software side, you see more and more in the, in that real hardware is more difficult.
• 35:14
  Dave Grimm: Yes.
• 35:15
  Dave Grimm: Yes.
• 35:16
  Dave Grimm: Tell us about, uh, the insights you've gained or lessons learned from the spin out process, uh, and, you know, including the, you know, the process of spinning out these companies, incorporation and so on, and, and then also, uh, you know, supporting startups in the early days.
• 35:34
  Dave Grimm: What kind of, what kind, you know, what should people take away, uh, uh, you know, from your experience?
• 35:43
  Dave Grimm: I wanted people to just remember one thing from this conversation.
• 35:47
  Dave Grimm: It would be about pace from the off.
• 35:50
  Dave Grimm: Um, so there is a, a mode which is, um, you've got some technology in, in a universities of ip, and then there's a patenting process and that takes a while and then you've got your patent.
• 36:03
  Dave Grimm: And so.
• 36:04
  Dave Grimm: There's a sort of, oh, well we've got the patents who are protected.
• 36:06
  Dave Grimm: And so then it can take a, you know, let's think about starting the start.
• 36:10
  Dave Grimm: We're gonna negotiate the start cap table that we're gonna take our time.
• 36:14
  Dave Grimm: You, before you vote, 18 months to two years has kind of slipped by while, while it got going and you know, uh.
• 36:23
  Dave Grimm: There's a false security in the fact there's a patent there that makes people think, oh, we can, we can, you know, it's better to take our time and get this right.
• 36:32
  Dave Grimm: And, um, because we've got this kind of moat, which will, which will last for 20 years.
• 36:37
  Dave Grimm: So if it takes two years to fund a business that's marginal, um, and I always give this example to.
• 36:44
  Dave Grimm: Universities when I'm talking to 'em is that Apple patented the click wheel in 2004.
• 36:50
  Dave Grimm: So you are, I think you are on this as my to remember, the iPod with the little, the clicky wheel, um, song selection, pre pretech screen.
• 36:58
  Dave Grimm: So patented that in 2004, finished a bunch of patents for, it's like it getting a 2005 and then they launched the iPad Touch and the iPhone in 2007.
• 37:11
  Dave Grimm: Those patterns became basically worthless.
• 37:15
  Dave Grimm: They actually out innovated and destroyed the value of their own patents, which is the right thing for them to do.
• 37:21
  Dave Grimm: Um, but you know, you could easily have been an academic patenting it and thinking, oh, I've got this great way.
• 37:27
  Dave Grimm: Now I've, you know, you know, I've got, I've got all this time and protect you from one very specific attack vector, which is someone doing exactly the same thing as you.
• 37:37
  Dave Grimm: There are many, many ways people can do something which destroys the value of what you were trying to do.
• 37:43
  Dave Grimm: And so taking your time or being slow in the first, first case is, is, is a false.
• 37:51
  Dave Grimm: It is false security and patent.
• 37:52
  Dave Grimm: So you need to build an idea of pace and execution to the business from the, and then it, the problem with that sort of slow process is it builds, it doesn't build a culture of PAC and execution.
• 38:04
  Dave Grimm: It builds.
• 38:05
  Dave Grimm: A culture of dotting the i's and crossing the T's and you know, you don't have to read any of the most kind of, uh, la tones in, in VC and entrepreneurship sort of writing to say that isn't, that isn't, you know, the right way to execute.
• 38:19
  Dave Grimm: And so, um, yeah, building a culture of pace marking down barriers.
• 38:26
  Dave Grimm: Yeah.
• 38:26
  Dave Grimm: 80 20 rule moving fast is absolutely critical and it's not something academic institutions are good at.
• 38:35
  Dave Grimm: They, they value precision in accuracy and, and, um, you, I being dotted and t's being crossed.
• 38:42
  Dave Grimm: And so pushing through that and pulling hard against that is absolutely critical to every startup.
• 38:48
  Dave Grimm: Every now.
• 38:50
  Dave Grimm: Yes.
• 38:51
  Dave Grimm: Do you get the sense that changes afoot and that they're taking these, they've accepted the desire to ch for a change of behavior.
• 39:00
  Dave Grimm: Sorry.
• 39:01
  Dave Grimm: They've accepted the need.
• 39:02
  Dave Grimm: This change of behavior and that they're doing something about it.
• 39:07
  Dave Grimm: I think, I think the leading lack of dairy institutions, I think like in London, know there's, you know, across Imperial and others.
• 39:16
  Dave Grimm: I see, I see a lot of that attitude, a lot of ex acceptance mean, certainly on the kind of cap table stuff.
• 39:21
  Dave Grimm: I think there's been some strong positive movement there.
• 39:24
  Dave Grimm: Um, the pace thing is a harder one, I think.
• 39:30
  Dave Grimm: I think there's next, there.
• 39:31
  Dave Grimm: I think it's an acceptance that, that that's needed, but actually how you do that when you have some complex structures, legal departments, um, and incentivization structures, which maybe don't reward the upside so much as just avoiding the downside.
• 39:49
  Dave Grimm: Um, you know, those things, those things are difficult and, you know, putting in place a different incentivization structure in a university public body is complex and so there are some.
• 40:01
  Dave Grimm: Underlying structuring challenges, which means.
• 40:04
  Dave Grimm: That's never easy.
• 40:05
  Dave Grimm: And that's, I go back to the thing that we built with UCL means that we understand that, right?
• 40:10
  Dave Grimm: So I can go to, yeah, the tech transfer office or to the university say, I understand this is why it is, but we need it to look like this.
• 40:17
  Dave Grimm: So how can we figure out a, where to get through it rather than just shaking, got this and all and saying, well, yeah, um, you know, it isn't working and you know what you do, you just need to do your job faster because there's not, that's not a really expectation of a public institute.
• 40:33
  Dave Grimm: But also demonstrating that the alternative leads to success like you did with this medical software startup.
• 40:41
  Dave Grimm: So if you, if you go down this path with us, look a really good example.
• 40:47
  Dave Grimm: This is what can happen.
• 40:49
  Dave Grimm: And then of course they've got to create the association between the pace that you identify and that win.
• 40:55
  Dave Grimm: So if that, but.
• 40:57
  Dave Grimm: Given that, uh, you know, the government, you know, that grant wouldn't have come forward had they not incorporated in the time that they needed, then you know, it, you know, one could surmise that the rest wouldn't have followed, uh, or would've been less likely to follow.
• 41:11
  Dave Grimm: But that, you know, it's an education process and they need to see some precedent as well that if we move faster.
• 41:19
  Dave Grimm: If we're willing to be more entrepreneurial in our own dealings and move these out, or at least create a set of standards, that means that a lot of this is boilerplate.
• 41:30
  Dave Grimm: Yeah.
• 41:30
  Dave Grimm: And so we can move really fast and uh, and then, you know, and that may be the best way of supporting these young companies when, when they spin out.
• 41:40
  Dave Grimm: You hit the nail on the head on the standardization though, like, 'cause that really does help with pace.
• 41:44
  Dave Grimm: Um, yeah.
• 41:45
  Dave Grimm: And you know, that, that require, that requires a lot of buy-in from a lot of different people at universities and takes time and energy, but it's absolutely worth it.
• 41:52
  Dave Grimm: And yeah, something that we, we record a lot about, not time at ECL.
• 41:55
  Dave Grimm: Yeah.
• 41:56
  Dave Grimm: And in the wider university cases.
• 41:58
  Dave Grimm: So It is, it is slowly coming, um, certainly soon you day.
• 42:03
  Dave Grimm: Have got some interesting programs, try do similar things.
• 42:06
  Dave Grimm: Baptist Choice, other bits and pieces.
• 42:08
  Dave Grimm: Um, you know, there are, there is a, a recognition of this and I think the closer that the universities are to the BC ecosystem, the more that like trusted bridges have helped rather than antagonistic, like fish shaking.
• 42:20
  Dave Grimm: I think the valley chance you've got of everyone moving and accepting slightly different paradigm to get things done.
• 42:27
  Dave Grimm: Yes, yes.
• 42:29
  Dave Grimm: Let's, um.
• 42:30
  Dave Grimm: Let me switch tack, uh, a bit.
• 42:32
  Dave Grimm: If you don't mind.
• 42:33
  Dave Grimm: Let's take a step back and look at kind of UK deep Tech, generally speaking, and, uh, and, and its progress.
• 42:42
  Dave Grimm: We are, and this will be no surprise considered, generally very good at the fundamental invention and, uh, uh, and, and innovation.
• 42:53
  Dave Grimm: Uh, and, and, and perhaps getting to a kind of a, a good pilot.
• 43:00
  Dave Grimm: Um, TRL six or seven and then, you know, we have that valley of death to get to a commercial grade first of a kind and we really need to be ramping up commercialization efforts.
• 43:12
  Dave Grimm: And then generally we see a lot of fallout there, so we're re so all of that is a long way of saying we're really good at the early stage stuff.
• 43:19
  Dave Grimm: We're less good at the growth stage stuff.
• 43:22
  Dave Grimm: And we had this issue, we've had this issue for as long as I've been in the UK 31 years.
• 43:28
  Dave Grimm: Uh, we had it in software.
• 43:29
  Dave Grimm: And, uh, and now you know, we're, you know, we have it in Deep Tech even more, and you can understand why we'd have it in Deep Tech more because it's far more complex.
• 43:38
  Dave Grimm: It involves a lot of operational challenges, manufacturing and scale up challenges, new materials and the like.
• 43:44
  Dave Grimm: What, you know, funding is a huge challenge for us, and I'd like us to talk about that too.
• 43:52
  Dave Grimm: About what you think can happen to unlock.
• 43:56
  Dave Grimm: Additional funding, but putting funding aside right now, what are some of the other challenges that you see holding us back, preventing us from being able to scale more of these businesses?
• 44:10
  Dave Grimm: Yeah, good.
• 44:11
  Dave Grimm: Good question.
• 44:11
  Dave Grimm: Um, so firstly, I would say I don't think it's ambition quite often.
• 44:18
  Dave Grimm: He sits, well, you know, the founders here don't have the sort of ambition of, of, uh, of the US and therefore they don't build these huge companies and they're willing to sell out and all that stuff.
• 44:29
  Dave Grimm: I think that is actually just a function of they're not big enough capital.
• 44:34
  Dave Grimm: Like if you go out to raise money and the market is only willing to put 10 million in as opposed to put 40 million in, you have to scale your ambition to what the market can fund rather than, um.
• 44:48
  Dave Grimm: Rather than sort of try and try and shoot for the move when you haven't got enough money to actually get to, to, to achieve what you need.
• 44:54
  Dave Grimm: Um, and so I think we have some very ambitious founders, but, um, I wasn't allowed to mention funding as the main reason, but like I would say, uh, funding that lack of funding.
• 45:07
  Dave Grimm: Just sort of tailor the ambition that founders have and they quite rightly sell out when they can't raise more money, or they certainly, or they tailor their business to reach a point where they can sell because they know they can't raise hundreds of millions.
• 45:19
  Dave Grimm: Dave, thank you so much for joining me today.
• 45:21
  Dave Grimm: This has been a lot of fun and really, really interesting insights, and I thank you for your time.
• 45:27
  Dave Grimm: Thank you.
• 45:27
  Dave Grimm: Find me enjoyed.
• 45:28
  Dave Grimm: It's been really, really great to chat.
• 45:31
  Dave Grimm: You've been listening to the Lab to Market Leadership Podcast, brought to you by Deep Tech Leaders.
• 45:37
  Dave Grimm: This podcast has been produced by bowhouse.
• 45:40
  Dave Grimm: You can find out more about us on LinkedIn, Spotify, apple, or wherever you get your podcasts.