Well that went pretty well. Last night we opened the doors to the Tech for Good London Meetup and 150 people showed up. There’s been a lot of Tech for Evil news over the past few weeks so it was heartening to hear some stories of people doing useful things. As well as launching the next BGV call for ideas, we heard from five startups:
What was also interesting was how indistinguishable in business terms some of the pitches were from non-social startups. Winnow Solutions won Seedcamp last week with their pitch about resource efficiency and Speakset gave a very convincing argument about older people being the biggest business opportunity of the next 20 years.
At the end of the evening we opened it up for people to give plugs for funding schemes or events coming up and there were plenty of those too. It does feel like something is happening around this in London. Long may it continue.
Many thanks to Lily for making it all happen, Eze at Google Campus for hosting us, and our speakers for telling us about their ideas.
I went along to the London CleanWeb meetup last night which according to a visitor from San Francisco was quite a lot bigger than the one over there. It doesn’t surprise me. We get lots of great BGV applications for startups trying to use digital tech to reduce greenhouse gas emissions and I’m hoping for many more when applications open next week. Listening to the talks last night it seemed to me there are a few areas where we might see lots of innovation over the next few years:
I loved this piece on the BBC News site about the work of Jacque Fresco, the now 97 year old architect behind the Venus Project. It would seem to go quite nicely with Elon Musk’s Hyperloop. Perhaps you could drive your Tesla to the Hyperloop station, hop on and be out at the Fresco designed city of the future in the New Mexico desert ready to take off on a Space X Flight to Mars.
I’ve always had a soft spot for architectural visions of the future, so much so that I lived in one at BedZED in south London. The truth of these kind of clean, shiny developments though is that you need to make all the systems behind them work and that can be far harder than creating the vision in the first place. I remember going down into the basement of Biosphere 2 and realising just how much gubbins you need to even support a dozen people. Every city has its equivalent of that basement and if Fresco’s ideas are to be put into practice, that’s where the real invention will need to take place.
The top story on Hacker News yesterday was about the dangers of loneliness. I wonder whether it will spur any of the readership to think of new solutions. There’s huge potential to use technology for good here, especially as a tool to help tackle isolation and loneliness among older people. It’s why we’ve backed Good Gym and See What I Mean and try to help out other startups in this area (check out the fantastic Speakset who will be presenting at the next Tech For Good meetup for example). The Ageing and Innovation team at Nesta keep a notebook of all the projects they come across in this area which is also well worth a look.
I’ve always been a fan of Berg’s week notes and when we started working on BGV we decided to try them out – but somehow our implementation ended up completely different. We started them when the three of us (me, Glen and Lily at the time) were often working in different places but now we spend almost all our time working next to each other. Not all of us quite manage to do it every week but we find it a very useful exercise to do on a Friday afternoon. Anyway, these are the questions we each answer and then send around:
I play with new apps a lot trying to learn about them and find things that can improve my productivity and happiness. I review the ones I put on my home screen pretty often as well because otherwise they’d end up cluttering things up (I have lots more than this but they’re filed in folders on Screen 2). So I thought I’d write up what I think of the current crop. Let me know if you think I’m missing out on better ones.
In the dock:
I’ve noticed two schools of thought in negotiating startup investment deals.
The first, which comes much more naturally to me, is to agree to a deal face-to-face and all the major points and then to follow up with a legal process where there should be ‘no surprises’. At BGV we go even further and are deliberately very open about our terms so that teams can decide even before they meet us whether we’re right for them. The best tech investors I’ve come across work this way and spend their time concentrating on how best to help startups rather than how best to structure the deal.
The second way that it seems to happen is much more tactical and, in some cases, adversarial. If I was to be harsh I would say it was characterised by investors ‘trying it on’. When the email comes through with the terms there are some ‘extras’ or it turns out that they’d like special terms over other investors they hadn’t mentioned before. It then goes round and round for a while, distracting the team from making progress and making founders wonder whether they’re going to have to argue everything this way in the future.
You can probably tell that I’m not a fan of the second process. As far as I’m concerned, if you find yourself negotiating tactically, you’ve both lost. Unless a startup and its investors are on the same side from day one your chances of success go down rapidly.
Despite the good growth in the London startup scene, it still hasn’t reached critical mass and if as a startup you want to do a deal you probably won’t have a huge number of options. In the long run though I think it’s better for the startup world if investors err on the side of generosity. Of course there are limits – crazy valuations can be just as damaging as dodgy terms and institutional investors have a duty to protect their limited partners’ cash. But there’s no doubt that the power balance is shifting towards founders and personally I think that’s a very good thing.
Over the last few weeks I’ve started to wonder whether we might see two trends coming together to create something new.
The first trend is the growth of impact investing (sometimes known as social investing) which aims to help create and grow new ventures that have a social or environmental impact. With investors in this group predicting that they will invest $9 billion this year, that’s a lot of ventures. It means that there will likely be a lot of big successful companies in five years time (as well as many failed attempts of course) with investors and founders who would like to exit from the businesses they create.
The other trend is increasing demand from large institutional investors for more ethical places to put their money (known as ethical or socially responsible investing). The Church of England was stung a few weeks ago and I’m sure would love to be able to put more of its money into companies that it can be sure are doing good in the world. On a much bigger scale, investors like Norway’s oil fund (worth a whopping $760 bn) are also coming under pressure to invest more ethically and large charities (the Wellcome Trust’s sits on Â£14.2 bn) and public sector pension funds (the Local Government Pension Fund is worth Â£148 bn) also have to find ways of delivering a return on capital across a portfolio of assets without causing controversy. One estimate I’ve seen says that there is Â£21 billion that is managed as ethical investment in the UK but I think we can expect that to grow substantially in the next few years.
The opportunity I can see is where these two trends meet. It’s for an asset manager that buys whole mature social businesses and acts as an ethical shareholder. I’m imagining a Warren Buffett like approach where companies are bought for their long term earnings potential rather than to take advantage of flux in their share price. These asset managers would most likely be private (ie not listed on the stock market) but probably provide information publicly and importantly they would have skills closer to private equity firms rather than fund managers with deep management and strategy skills in order to support the firms they buy.
I’m imagining they would be able to buy companies which are mature but don’t quite fit the current model of ‘exits’. Take Meetup or Etsy which were both funded through venture capital but also have strong social motivations baked into them – Meetup is part backed by impact investor Omidyar Network, and Etsy is a B-Corp. An acquisition by another company doesn’t make sense – if Google were to buy them, they’d probably lose the ‘community’ side of what they do – and an IPO would also be very risky – publicly listed companies are very volatile, especially when it comes to leadership (just ask Andrew Mason) and that also doesn’t fit with the ethos of the companies.
However if there was a shareholder who had a dual reason for owning shares combining getting a dividend over a long period of time and maintaining the social purpose of the company so that their own ethical stance is intact, I think that could work for everyone. The original founders and investors would get paid out and start investing the proceeds in the next generation of ventures and the new shareholders would get a stable, ethically sound return.
This of course has implications for the types of businesses that impact investors would back. In the same way as the venture capital business adapted after Sarbanes-Oxley to back companies that were ‘acquisition friendly’ rather than gunning for an IPO, if these ethical asset managers grow then impact investors will start to build companies that fit their needs.
The only alternative I can see is that we might see the growth of ethical stock markets and there’s some evidence of that happening. The two aren’t mutually exclusive, in fact they might complement each other nicely. But setting up new stock markets needs a critical mass while there’s nothing stopping a team just going ahead and creating something like I’ve outlined above. In fact, thinking about it, I’d be amazed if there aren’t people out there fundraising as I type.
I had a little realisation at the weekend. I used to get neck and back pain fairly regularly – at least every month or so – but I haven’t had it for about 10 months. The change coincided exactly with when I got a MacBook Air and I now don’t think I could go back to humping around anything heavier again.
In business you hear a lot about economies of scale – the idea that if you produce or consume a lot of something you can expect it to be cheaper per unit. But I’ve been wondering recently about whether there’s a different kind of benefit you can get from deliberately trying to create diversity in a group.
I first started thinking about it in relation to our cohorts at BGV. Part of the point of accelerator programmes is that they give you an economy of scale. Paul Graham and the Y Combinator team’s initial realisation was that you could make 10 small investments for the cost of one traditional angel investment and that the teams needed many of the same things which you could provide in bulk. It’s the same for us. We’d be a very expensive way to invest Â£150k in a single startup but spread across ten it makes more sense.
We’re also able to leverage more expertise and valuable connections for the teams because of their diversity – they all work in different subject areas.Â It’s classic Mark GranovetterÂ where ‘the strength of weak ties’ is really important. A team working in urban planning can help a team working on primary education because they know people who work in that world – maybe not well, but often those relationships and introductions are the most useful. Having a diverse group of founders on the programme also helps us avoid too much groupthink because people have genuinely different experiences and skills.