Angel Investing and Navigating the Oxford Ecosystem with David Ford, NED of Alcentra

Hosted by Susannah de Jager, our first episode explores the Oxford investing landscape and differences within the Golden Triangle. Guest David Ford shares insights drawn from his experience as a life science angel investor and Non-Executive Director (NED).

David discusses his initial challenges in accessing Oxford's investment scene and suggests how we might reduce barriers. They touch on varying attributes of Oxford, Cambridge, and London ecosystems while addressing the need for larger, global thinking in UK investing. They also consider the importance of network in early-stage biotech investments, the value of having a science background, and ways of efficiently facilitating diverse capital.

(0:12) Introduction
(3:02) Discussing the Golden Triangle
(15:19) Angel Investing with a Science Background
(29:14) The Potential of UK Pension Funds in Investment
(32:12) Oxford Focused Funds

About the guest:
David Ford is an Oxford-based active life sciences angel investor, currently managing and advising an active portfolio of more than 20 companies, variously focused on AI-based drug design, the application of machine learning to systems biology, nanoparticle delivery technology, to name but a few.

David is also a non-executive director on a listed venture capital trust and Alcentra, a specialist sub-investment grade debt fund management business. He has investments in Oxford, Cambridge and London, as well as belonging to angel networks across both Cambridge and Oxford.

Connect with David on LinkedIn

About the host:
Susannah de Jager is a seasoned professional with over 15 years of experience in UK asset management. She has worked closely with industry experts, entrepreneurs, and government officials to shape the conversation around domestic scale-up capital.

Connect with Susannah on LinkedIn

Visit our website to learn more and subscribe to our newsletter - oxfordplus.co.uk
If you have a question for Susannah, please get in touch - oxfordplus.co.uk/contact

Oxford+ is hosted by Susannah de Jager, supported by Mishcon de Reya and produced and edited by Story Ninety-Four in Oxford.

Creators & Guests

Host

Susannah de Jager

Founder & Host of Oxford+

Producer

Matt Eastland-Jones

Founder & Producer at Story Ninety-Four

Editor

Nick Short

Podcast Producer & Audio Technician at Story Ninety-Four

What is Oxford+?

Welcome to Oxford+, the podcast series that explores the myths and truths of the Oxford investing landscape hosted by Susannah de Jager. Since moving to Oxford, Susannah has collaborated with experts, entrepreneurs, and government to shape the conversation around domestic scale-up capital. Oxford+ aims to inform, inspire, and connect. We'll talk to Founders, investors, academics, politicians, and facilitators and explore how Oxford is open for business.

[00:00:00] Susannah de Jager: Welcome to Oxford+, the podcast series that takes you deep into the myths and truths of the Oxford investing landscape. I'm your host, Susannah de Jager, and I've spent over 15 years in UK asset management. My guest today is David Ford. In 2017, David left full time executive employment to pursue a role as an active life sciences angel investor and NED. He currently manages and advises an active portfolio of more than 20 companies, variously focused on AI based drug design, the application of machine learning to systems biology, nanoparticle delivery technology, to name but a few. David is also an NED on a listed venture capital trust and Alcentra, a specialist sub-investment grade debt fund management business.
David is based in Oxford but has investments in Oxford, Cambridge and London, as well as belonging to angel networks across both Cambridge and Oxford. I'm very excited to have David here today and understand more about how he thinks we can improve Oxford's accessibility and bring down the barriers between the UK's best university towns and its clusters.
David, thank you for joining today. I'm really excited to have you here to talk about Oxford+ and what we can do, in particular because you have experience not just of Oxford and angel investing here, but also of Cambridge and London. and your perspective on the differences between those but also the similarities or the ways that we could improve or indeed make them more coherent are going to be key for me and hopefully improving what we aim for.
So we've spoken before about your experience of getting into Oxford and I've been a little bit surprised by how you didn't find it that easy. Could you tell us a little bit more about your experience?
[00:01:51] David Ford: Yeah, sure, and great to be here, and yeah, thanks very much for inviting me to share some thoughts. I think I was probably very naive when I came to Oxford. I moved here seven years ago and had been angel investing for a couple of years and had a reasonable amount of investing experience professionally in the city after my degree here and thought, well, I'll come to Oxford and I've got a little bit of money to invest and I know Oxford because I went to university here and I turned up and thought, I'm just going to see lots of deals and nothing happened whatsoever and I think it was a real eye opener because I'd spent so much time, I think, cultivating a network, living in London for so long, spent so much time cultivating a network in London, and also in Cambridge to a slightly lesser extent, and then came here and thought, well, I know Oxford, it's like coming home, and then you forget that you have to, you almost have to start again and it's easy to think that, oh it's just an extension of London, it's the UK, but actually it's not. It's a very distinct ecosystem with different players, different characters, and you do need to start again and almost felt like having to rebuild a network to an extent.
[00:03:02] Susannah de Jager: So that all makes a lot of sense, albeit that I remember once having somebody once say to me that California is viewed as one ecosystem and yet the Golden Triangle is three and how ironic that is when the geography actually isn't that broad. Having now, to a degree, got networks in all three of those areas, do you see it as a necessary barrier or do you think it's something that we could work towards lowering those barriers to entry by making it more coherent?
[00:03:30] David Ford: I do think one of the things I really want, hope, looking forward that we as a country, it's not about Oxford or Cambridge or London, is as you say that to think of ourselves as a much more coherent ecosystem and the reason I think that's super important is that our competition, sitting in Oxford or sitting in Cambridge, is not Oxford or Cambridge. It is Boston, it is the West Coast, it's China, it's, you know, everyone's moving forward, everyone's saying innovation is important, there's a lot of government support across the globe, and we need to stop thinking so parochially, I think, and think of ourselves as being in competition on a global stage and I think you're absolutely right. It is the tendency to, and I myself do that, where I complain about driving to Cambridge or getting on a train to London, but actually if I'm sitting in San Francisco and want to go to Palo Alto or want to go to San Jose, I've got to get in the car and drive for an hour or so anyway.
But there we tend to think of that as being the Bay Area as an ecosystem. So I think we do need to start thinking slightly broader than just about where we live or the city or area that we actually particularly know.
[00:04:38] Susannah de Jager: And so, bearing in mind where we would like it to go to, and I think it sounds so obvious when you say it out loud, let's almost make a kind of the whole of UK, Angel Network, potentially unwieldy, but I think there could be real economies of scale across that. But taking it back to your experience when you first arrived here.
What did you do? How long did it take? When, roughly, I don't expect you to have the diary dates, but when did you get your first deal? And if you were kind of using that to give advice to somebody, what would the advice be?
[00:05:09] David Ford: Yeah, I think when I started, and this is answering your question, but in a slightly indirect fashion, I guess, because it's how, when I started my angel investing journey, living in London, going along to pitch events, this is all pre pandemic, remember, so everything was, you know, in person and, you know, can actually meet people and shake hands and chat to people properly. I was almost blown away by how incredibly generous everyone was with their time and their network and so it almost, you meet one person and you get 10 intros out of that and so that's how I got going in London. That opened up a lot of doors in Cambridge and in Oxford, and when I came to Oxford, what I found was that there wasn't the sort of the ready made network, if you like, or perhaps more importantly, the sort of the obvious entry point in to get all of that network.
So in terms of those introductions, so I had some very key early introductions, which were very instrumental in terms of opening up Oxford, but there probably just weren't enough of them compared to somewhere like London, bigger place of course, or Cambridge. There wasn't an obvious open door, if you like, to say, well I'm going to come to this event and therefore I will be able to meet X number of interesting people across the ecosystem and then go from there. So it's taken time, if you like, for me to recreate or create, not recreate, to create that network.
[00:06:35] Susannah de Jager: Yeah, so without wanting to go against what we were just saying about sort of coherence and cohesion, it is interesting to hear you flag up what you perceive as notable differences between Cambridge and Oxford and I suppose, you know, by way of trying to be constructive about what perhaps we should do more of, what is it that Cambridge are doing differently? Is it just the depth of the network? Is it the type of people, I mean, you know, is it something structural? What do you perceive is causing those differences?
[00:07:04] David Ford: I don't believe there's anything structural. I don't believe there is any reason why there is a natural advantage of Cambridge over oxford.
[00:07:12] Susannah de Jager: That's reassuring.
[00:07:14] David Ford: Which is good. Which, yeah, which is very reassuring and pleasing to hear, isn't it? I think it does just come down to individuals. So I think if you think of Cambridge, what do people think of? They think of a great university. Well, we've got that here. You think of Cambridge Angels, you think of the various funds sort of Series A and on operating there, which there are a reasonable number now, there probably weren't 10 years ago, but they certainly are now.
[00:07:39] Susannah de Jager: How many roughly, if you were to do it off the top of your head?
[00:07:41] David Ford: I think there's at least sort of five plus which are sort of Cambridge domiciled if you like, cambridge headquartered funds, not just investing in Cambridge, but obviously have a bias towards Cambridge.
But I think it comes down to if you look at the foundation of Cambridge Angels, for example, it was a small number of exited entrepreneurs who, yes, they had money to put to work and wanted to invest in interesting places. But more importantly, they had time and expertise that they wanted to put back into the ecosystem and I think that's probably what is missing in Oxford is that it's there, but it's just a bit more dispersed is that sort of more collegiate sort of collaborative group of individuals who perhaps they're exited entrepreneurs, perhaps they're just, you know, sort of wealthier individuals wanting to invest money, but are willing to collaborate and spend their time, not just investment, but it's about spending the time sourcing deal flow, but also developing individuals, developing the ecosystem, which at times is a bit of a thankless task because you're sort of just going out and there's no immediate reward for those sort of things. But ultimately everyone benefits from all of those activities.
[00:08:58] Susannah de Jager: It's interesting you talk about the exited entrepreneurs because in previous work that I've focused on, it really came through, not really within the UK, but as a difference with the US and the UK that, you know, VC and investing here is run by accountants and sort of, you know, financiers, not by entrepreneurs and how much that can affect the experience of the companies, but also the expertise they can bring to a board or advising, so it's really interesting. I've definitely heard of a few individuals, such as yourself, who have sort of broken through in Oxford and are considered really good entrepreneurial investors. The problem, I suppose, is that once they've done all those hard yards to build up their network, there's perhaps even less than you were just articulating vested interest in them then sharing that and that perhaps the effort that they've had to put in becomes obstructive to them being, you know, this is a bit cynical, but maybe more generous that it almost becomes a gatekeeping role. How do you think one can mitigate that? Is that actually an effect? You know, and how can we make sure that those people do see it in their benefit?
[00:10:04] David Ford: I think it is a risk, isn't it? As you've just described, I think it comes down to the individuals. I think most successful people generally are generous with their time and generous with their network because we all go back to early days of our careers where we remember someone mentoring us either formally or informally who helped us out, just gave us a leg up the ladder and certainly I do anyway. I actually have been blown away over the sort of seven, eight years that I have been focusing on angel investing, how generous people are, and people who you think, you must have better things to do than talk to me, they probably do, but nevertheless they're willing to take that time out of their day to help out or make introductions. So it is a risk, but I think that comes down to one bad apple, more than a sort of systemic issue, I think.
[00:10:53] Susannah de Jager: And so within the existing structures that we have here, how could we get those people to, rather than on the individual basis as you articulate, hugely generous, like you, I've had such positive experiences as a generalisation of lots of different parts of the industry, and it's really encouraging. But I think that perhaps a problem you mentioned earlier is sort of part of it here, which is if there was nowhere to go initially, It's almost where do you go to offer back your time as well? And how do we put some structure around drawing those experienced angel investors or higher up, you know, in Seed A&B, people that have had positive experience in Oxford and could share, where should we be directing them?
[00:11:36] David Ford: Yeah, and I think that is the real challenge. I wish I'd I wish there was an easy answer to that question!
[00:11:41] Susannah de Jager: Come on a podcast, right?
[00:11:42] David Ford: Could come on the podcast and just, you know, say nice things about Oxford and...
[00:11:46] Susannah de Jager: Leave their contact details at the bottom!
[00:11:47] David Ford: Exactly. I think the real challenge actually is, and it actually comes back to your earlier question about the difference between Oxford and Cambridge as well I think, is that if you think of Oxfordshire, is that we tend to think of it being the university and the city. But actually, it is so much broader than that. You have Harwell, you have Culham, you have Milton Park and other places. So it's actually quite difficult where you think, well, I'm going to go to Oxford. Okay, you're going to go to Oxford, but where do you go? Who do you get in touch with? Because actually someone who's operating, looking at university spin outs may not be doing anything at Milton Park or Culham.
[00:12:23] Susannah de Jager: Yeah.
[00:12:23] David Ford: So it is quite, it is actually quite difficult to know, well, where is your first port of call? Because actually you'd think, well, if you're in the US, what you do is you would go to the city and you'd just sort of hang out in interesting places and you'd just meet interesting people. You can't even do that in Oxford because maybe you go to the Lamb and Flag or somewhere like that, but that is about it. So I think it is about thinking of, and maybe the university has a role to play here, maybe it's the actual city itself has a role to play, but opening up, I think, those sort of venues, if you like, to sort of introduce that element of serendipity and I think that's so important because actually, from my perspective as an angel investor, it's just a numbers game. If you meet as many interesting, talented people as possible, you know in there, there are some gems of investments, gems of opportunities. My job is to sort of find those, but I've got to see those in the first place to select them and serendipity, luck does play a large part in that, I think, and that's a very basic thing and it's not just about saying, well, we just need a pub, it's broader than that. It's sort of, it's almost creating that buzz, if you like, creating that buzz around the ecosystem to... so people want to be here, want to hang out here. That's one aspect of it. I think.
[00:13:42] Susannah de Jager: No, and I think it makes a lot of sense. I mean, I've lived in Oxford for two years now. I'm clearly, you know, doing this podcast. I'm really excited about the opportunities here and yet I wouldn't have an answer to the question as to where to go and hang out if I knew nobody already through my own network to find somebody to interview and actually, that's exactly what you're identifying is there isn't one place, there may be a few smaller ones, but it's a really good point you raise.
[00:14:10] David Ford: I think it's just to sort of build on that and sort of illustrate the situation, I... Every January in San Francisco, there is a huge global healthcare conference run by J. P. Morgan and an enormous number of ancillary events and the like tacked onto the end of it. So full week, early January, San Francisco, not greatest time of year to go, generally rains the entire time, and the last time I was there was pre pandemic, so January 2020, just before the world changed, clearly and I met more people at various receptions from Oxford there than I ever do, in Oxford, just bumping into people randomly, some of whom I knew, some of whom I'd heard of, but never met and so I'd had to fly halfway... to the West Coast to bump into all those people, and then some of those now are very good friends and so it was a perfect opportunity, but how nice would it have been to have that on our doorstep? Because they're all on our doorstep, but where are they?
[00:15:04] Susannah de Jager: Yeah, interesting. So taking a slight departure from talking about Oxford in the sort of round. You spoke about the different centres of places that one could go to look for ideas. Do you think that there's a sectoral bias? So you obviously have a Masters in Biochemistry. Is there one place where you think there are more companies that lean into your sectoral experience? Obviously you are pharma and biotech as well in your analyst career, or is it everything everywhere and you need to cover them all?
[00:15:34] David Ford: It's a little bit of everything, everywhere. Although I think that it's clearly, if anything's university, then there's a slightly more central, a centralised organisation of that and working with OUI or OSE.
[00:15:50] Susannah de Jager: For anyone listening, OSE is Oxford Science Enterprises, and OUI is Oxford University Innovation. Sorry, they're just kind of lingo words here, but they may not be to listeners. Carry on, David.
[00:16:02] David Ford: Thank you, and that's clearly a big part of that sort of early stage deep tech that I invest in. But equally, I think there are lots of companies, a huge amount of companies using very flexible lab space over at Harwell, for example, because my portfolio companies are based there. They're not university spin outs. So it is about spending time in all of those environments.
[00:16:25] Susannah de Jager: And diving in, it would be really interesting to hear maybe a couple of specific stories where you sourced an idea, how you came about it, what it does, whether it's university or not, the stage that you got involved, and just a bit more of that practical journey of investing, I think would be wonderful.
[00:16:41] David Ford: Yeah, sure. I mean, one of my Investments last year, 18 months ago, a company called MitoRx Therapeutics based at Harwell, um, CEO is someone I have known for all of my angel investing career. He was one of my very first introductions to Oxford. Before I lived here, I was still living in London at the time and moving here, knowing that I wanted to build my network. So he was one of the first introductions and he was one of the people, a guy, Jon Rees, who is very well known in early stage biotech circles, particularly in Oxford, but more generally, and he was incredibly generous with his network, that you have kind of that exact sort of theme I was talking about earlier on and introduced me to a number of my portfolio companies, one of which exited last year. So, you know, he's doing something right and he's someone who's opinion I respect and he, so he came to me two years ago and say, look, I've got this idea, this opportunity that I'm interested in setting up and to move the other side of the fence and actually being the CEO of this company, as opposed to what he was previously doing, which was just a great network or an introducer of people, you know, very good scientific backgrounds are very suited to founding and running a business and he founded this business. MitoRx, which is looking to tackle the problem, mitochondrial dysfunction, mitochondrial based diseases being implicated in a or mitochondrial dysfunction being implicated in a lot of diseases such as Duchenne Muscular Dystrophy, Huntington's, other sort of neurodegenerative diseases. So very yeah, but very speculative, very long term play but absolutely the kind of individual, the kind of team that I choose to back and it's, so I think it's scientifically very interesting, but the sourcing came from within my network, but the reason it's interesting from a deal sourcing perspective is that deal, if you think about it from my perspective, was probably six years in the making, because we had the history and the track record doing other things together. So when he comes to me and says, I've got this idea, yes I'm going to back you because I trust your judgment. I wouldn't say unquestioningly back it, but there's a big hurdle already overcome there, which is that I want to support this individual on his own entrepreneurial journey.
[00:19:07] Susannah de Jager: Makes a lot of sense. You talk there about John's science background specifically, but you, as we've already covered, have a science background yourself. Clearly we talk about commercial expertise, entrepreneurial expertise, but a lot of the spin outs from the university are scientific based, not all. Do you need to have a science background to be an angel investor here, or is it something that you can supplement or learn, and if you didn't, how would you approach it differently?
[00:19:38] David Ford: It's a really good question and actually I was discussing this very topic with someone last week where I said to her that actually my biggest failing as an investor, probably, as an angel investor, is that I get too passionate about the science and want to read about the science and care too much about the science and almost need to be slightly more dispassionate and if something's not working to say it's not going to work. So I tend to believe the science a little bit too much. So I think it's, I would never overplay my scientific background, so I think that it is, doing what I do, it's an immense privilege to meet all of these amazingly talented, super smart people who are far better than I ever would have been as a scientist. I went to work in the city, right? So I set my stall out there as a scientist very clearly. But what it does is mean I'm interested in reading around the subject and so when someone comes to me with an idea, I might at least be able to ask slightly critical questions or at least be able to understand what the idea is or what they're pitching. So I don't think it is essential. I think it comes from, because at the end of the day, I think that the subject or the sector is so broad that even someone with a great scientific background is probably only scratching the surface in terms of their ability to understand what's going on. So I think where I tend to emphasise again, and directly the point about investing into healthcare, investing into life sciences, you do it via the best way to do it, certainly for those early stages, super risky, speculative businesses is via network and via introduction. So if someone comes to me, MitoRx has been a great example of someone I trust, whose judgment I trust, says this is interesting. Well, I'm going to have a look at it, and I'm going to take it. At least begin to take some trust, develop some trust that this is of interest and so I think it is... so I don't think you need a scientific background, but it does help and also, it's nice to be investing in something that you feel passionate about.
[00:21:42] Susannah de Jager: Indeed.
[00:21:43] David Ford: And there you go, I'm back talking about science and not about being dispassionate.
[00:21:46] Susannah de Jager: No it's really interesting because you as somebody with a background in science and obviously researching scientific companies would be interested and clearly looking for product market fit and, you know, are there competitors out there is a hugely relevant part of due diligence. You've spoken also about liking people, liking a team, backing a management team. If you were to weight those two things, how much do you think you put as import on the kind of IP or the science versus the founding team? And just to give you a little bit of a guiding on my views on this, I find it fascinating how often great science can be killed by bad management team because they just sort of don't play nicely with others, so I'll set out my stall there, but I want to hear yours.
[00:22:30] David Ford: I think you just answered my... you answered the question for me. I think that's exactly right and because it's, and it's slightly, it's even more prosaic than that perhaps, which is that's the big sort of blow up scenario where bad management teams, they just don't get along, they can't make it work. from a company perspective, and the science just languishes. I mean, it's a disaster for society, disaster for that interesting bit of science.
[00:22:53] Susannah de Jager: Awful to watch.
[00:22:54] David Ford: Yeah, exactly, and you can see it happening, and you think you've, and you know in your heart of hearts with a better team who are better able to exploit that technology, they'd be able to do something with it. So there's that, which is a risk and so that's where I do spend, doing my own due diligence, spend a lot of time on the team and how that's going to work and certainly where I take board roles in a handful of my portfolio companies tends to be ensuring that sort of focusing on really boring, but really important things like good governance, team structure and the like, to ensure that almost trying to ensure that we're doing everything possible we can to ensure the science can get out there and if science doesn't work well, then so be it, that's life and we move on. But the disaster is exactly as you've just described.
But the intermediate scenario is almost as bad where, and this is where I probably see it more frequently rather than that big blow up, is management teams who just can't communicate the science well enough, so can't raise enough money to get it out there and that's almost the biggest shame, which is that we can't exploit this because we can't raise enough money and that's more of a bigger problem and that's a UK wide problem in terms of that ability to raise money, whether it's, we can argue whether, is the money there, is the money not there? I think the bigger problem oftentimes is that the money is there, but companies are not necessarily able to articulate why they should be able to get that money.
[00:24:20] Susannah de Jager: And do you think that they're missing a skillset in their communicative skills? Or do you think that's a cultural problem where we're bad at self promoting in the UK?
[00:24:29] David Ford: I think it is very much a cliche, but I think it's true. I think that we are very bad at promoting ourselves and thinking big and saying, you know, why do I want to ask for twenty million pounds when I can ask for two and I can get two easily and it's going to be really hard and I've got to sell myself, sell my soul to get that twenty million.
[00:24:45] Susannah de Jager: Scary, isn't it? Because I've heard this a lot about the cultural differences. You will have seen it firsthand, just about how more ambitious American, both venture capital investors, but also the companies themselves are, and that often the difference is not the science, it's just the aspiration, potentially domestic market size. What do you think we could be doing to help founders? Do you think that we should be mentoring more, that we should literally be coaching people, telling them how to strip out their Britishness and be a bit more self congratulatory?
[00:25:19] David Ford: That's right, and I think there is that cultural issue, which we need to be alert to, and it is about... and it is changing though. I think when I was at university, it was, there was never an idea that you would go off and run a startup, or come up with an idea. So that was never an option. Whereas now, everyone's got a startup, everyone wants to be involved in a startup. So it does take time to shift. So I think it is changing and a lot of that is, I think, giving people license to think big and so many times I've seen over many years, and continue to this day to see them, where companies talk about your pre seed, you're just raising money for the first time, and you're talking about your exit. I don't care about your exit. I do care about your exit because I want the money back and I want to make some money out of it. But I don't care when it is. I just care that there is going to be one and I care that we sort of maximize that sort of value, if you like. But we're still conditioned to think about if I'm asking for money, I should be giving a return in three years, or five years And people thinking that's what investors want to hear. Actually, some investors do want hear that.
[00:26:25] Susannah de Jager: Yeah, I definitely have heard that some do.
[00:26:27] David Ford: But actually there are a lot of investors out there and I'd certainly put myself in this camp, who we want to just build something great for the medium to longer term and that doesn't mean that 20 years from now, you're still trying to make it work and you're still taking your money and you haven't, and it's not gonna go anywhere. But actually, rather than thinking of if only I can raise 5 million pounds and then I can get, I can deliver an exit in three years or five years, my investors will be happy. Whereas actually, it's that license to think, well, actually, if I can raise 50 million pounds, go to the US and try and do something, and I can be worth 500 million in 10 years time or 15 years time, that's okayas a route as well. So I think, and again, I think it's also that is changing the idea that actually thinking bigger is okay and there are investors out there who will support you on that journey.
[00:27:16] Susannah de Jager: Yeah, true long term capital. It can be difficult I imagine as a founder trying to find enough of those people because arguably, and I've heard criticism of the UK system and that it's very much demarked by the cycle on funds and when they go back to their investors and it comes back to that point around investing being run by financiers and private equity as opposed to by entrepreneurs, which is the perception, perhaps, of the US, not necessarily entirely the reality. How do you think, again, going back to the point of sort of cohorting groups, perhaps we should be trying to identify who is more long term when we split out groups so that we can align that better, but is that a bit optimistic?
[00:28:00] David Ford: I don't think it's optimistic. I think it's very difficult because actually most funds will tell you they're all, they're long term investors. They're long term investors until they're not long term investors. But I think your question actually comes down to, again this is not an Oxford thing, this is just a UK wide problem, is the sort of diversifying sources of capital, and whether that is, you know, rather than thinking of it, angel money, VC funds, whereas actually it's broader than in terms of family offices, great long term supportive patient capital so family office money, sovereign wealth funds, not necessarily based in the UK, but coming into the UK, investing into UK science, sovereign wealth funds, you know, other sources of sort of quasi or governmental funding again can be sort of long term patient capital, pension funds, I know, a subject very close to your heart. Again, that's a key part of that sort of long term patient capital. So, but rather than thinking, we just need to think broader, I think, than thinking of it in angels to funds to an exit. Well actually, let's focus on where those alternative sources of capital are going to come from, because they are there.
[00:29:08] Susannah de Jager: Yeah, and it's interesting because it's about to be a big area of evolution and change, hopefully, in the UK. So, for listeners out there, currently UK pension funds, and David joked it's close to my heart, and it is, I've been working on this for a couple of years trying to release more capital into exactly these kind of opportunities and we have four trillion dollars of UK pension funds and less than one percent of it is invested in UK equities at all. I don't think that's even just unlisted, that's the number overall and to compare that with Canadian pension plans, hold more like 19 percent in unlisted companies and if you think about what that could mean for domestic capital that's focused on these areas, and clearly the Mansion House Compact, which has recently been signed, focused on DC pensions is looking to release some of that. If we think about this, hopefully huge amount of money that's going to be looking for somewhere to play and there are some structural difficulties with UK pension funds in so far as, they're not all sophisticated enough to have their own investment teams, they're not large enough, quite frankly, they don't have the scale to afford that really sophisticated team. How do you think we, as angel investors, VCs, incumbent, university and broader cities that can spin out these brilliant companies, how do you think we should be facilitating that money coming in?
[00:30:31] David Ford: Yeah, so I think if you look at any, not any, if you look at the vast majority of large funding rounds, institutional led funding rounds, they're always a syndicate. So you, absolutely there is a need for a lead investor, but I would argue that's the role of that, of the blue chip VC fund with a long term track record. You know, that's who you want to be as an investor coming in. alongside. So, I think it's incumbent on certainly a lot of those funds to record, to build their relationships with and vice versa with that pension fund money, because that's where they leverage their own capital knowing that there's a large pool of untapped money there, which is willing or waiting to be deployed.
So, I think that's clearly a big part of that, but it is an education process. That's absolutely right. If you look at the shift over the last decade or so from sort of public to private capital, that took a long time to get going, but now it's had in the equity markets, but also in the debt market and the credit markets. It's been a long term structural shift away from the public markets into the private markets and a lot of that was about education and track record and, you know, money tends to follow returns, right, so I think there's a persuasive case, there's a moral and a societal good to do so and why we should be supporting UK smart, innovative, young UK companies. There is absolutely that need as well. But actually the reason, the way they're going to do it is because the returns are there and the returns absolutely are there.
[00:32:07] Susannah de Jager: If you have a large enough portfolio.
[00:32:09] David Ford: If you have a large enough portfolio.
[00:32:10] Susannah de Jager: Interesting. So, just thinking about what you said about the teams and the VCs, obviously that's an amazing opportunity for VCs. Going back to something you said earlier about Cambridge having more established, incumbent Cambridge based firms, does that put Oxford at a disadvantage that we're not actually going to have Oxford, or as many I should say, Oxford based vectors for that money to come in here?
[00:32:37] David Ford: I think it does because I think it's, you know, Oxford clearly has OSE which has a huge amount of money and has been hugely positive for Oxford in terms of putting Oxford on the map, Oxford Science on the map, getting a lot of those companies funded and out there, and that's fantastic and been brilliant for Oxford Science, but it is one institution, and I think what you need is, we talk about diversity of capital, funding sources, but also you need diversity of thinking and OSE clearly can't do everything, nor should they do everything and also they're only university focused and to my earlier point exactly about thinking about the broader ecosystem and that's what I worry about. That's where I spend my time, probably non-university focused, because actually they're the companies that do need that capital and need to go elsewhere and look further afield for funding. So I think having more Oxford focused, Oxford dedicated fund money, doesn't have to be dedicated but with a bias towards Oxford, I think it will be hugely helpful in terms of non-university spin out companies being able to get funding from their local environment.
[00:33:48] Susannah de Jager: Yeah, and coming back to your preference earlier. So an example I'm thinking of that is entrepreneurs themselves and scientists themselves that's based in Cambridge is Ahren, which I've always heard just such fabulous things about how they do it and how engaged they are as investors. Can you see a place for something like that here in Oxford, where it's the entrepreneurs, the scientists themselves sitting behind the desk and being that vector for family offices, sovereign wealth, and hopefully pension capital as it becomes available?
[00:34:18] David Ford: That's right. I mean, Ahren's a great example of just the sort of power of network actually, and the power of profile, it helps if you have a bunch of Nobel Prize winners.
[00:34:27] Susannah de Jager: Yeah, casually, you know, as always.
[00:34:29] David Ford: Dropping into meetings. But it does open doors and again, Oxford has that. It's not as if we don't have that. So it just created that lightning rod, if you like, for people, well, actually, if I'm going to go to Cambridge, I do want to meet Ahren because they're doing something really interesting and there's some really interesting people, but we joke about Nobel Prize winners, but also on the board or as part of the sort of founding team, they have multiple entrepreneurs who've founded, you know, a number of companies and keep on going back and back around. So you have that sort of interesting mix of experiences of people.
[00:35:02] Susannah de Jager: No, it's so true. So when are you going to found it, David?
[00:35:05] David Ford: Need the Nobel Prize first.
[00:35:07] Susannah de Jager: No, you just need a partner with one!
[00:35:09] David Ford: Exactly, that's true.
[00:35:11] Susannah de Jager: Okay, David, thank you. This has been such an interesting and wide ranging conversation. I hope that people listening will get a really good snapshot of what Oxford investing can be like and what the opportunities are. Is there anything you wanted to add as a final thought?
[00:35:28] David Ford: It is just, my hope for the future is that we think globally and we think more ambitious thoughts. I think that's probably my, the one thing I would leave you with.
[00:35:40] Susannah de Jager: Wonderful. Thank you so much.
[00:35:41] David Ford: Not at all, thanks very much for having me.
[00:35:43] Susannah de Jager: Thanks for listening to this episode of Oxford+, presented by me, Susannah de Jager.
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