Aligning Founders and Investors with David Mott

[00:00:01] Susannah de Jager: Welcome to Oxford+. The podcast series for innovators and investors brought to you in partnership with Mishcon de Reya.

David Mott, co-founded Oxford Capital 25 years ago. In 1999, the idea of investing in university startups was relatively unusual. Now it seems obvious, and in that time, Oxford Capital has invested over 500 million into more than a hundred UK startups in sectors, including ai, SaaS, FinTech, digital health, climate tech, and deep tech.

As an early mover in the UK venture capital world, David has held senior policy roles in the UK venture capital sector, and advised the UK government and the European Commission.

Tell us a bit about how and why Oxford Capital started 25 years ago.

[00:00:46] David Mott: Well, firstly, thanks so much for having me on the show. I've really enjoyed listening to so many of your podcasts and actually a lot of your previous speakers are people I've been interacting with for the best part of 25 years. So it's been a great sort of reflection on the history ofOxford and our cluster.

And we started like many startups in the garage up on the west edge of Oxford and we had a mission at the beginning to try and bring together a number of individuals and families to invest in venture capital. And at the time, venture capital was very much a an emerging asset class that people didn't really understand. We spent a lot of time explaining what is venture capital, and that led us to try and create a fund and a structure to enable access to investments in early stage companies.

That also led us to create the first ever EIS fund. So some people will be familiar with the Enterprise Investment Scheme, which isa brilliant set of tax advantages that has survived every shape of the size of government since 1996 and offers for 30% income tax relief on all your investments and various other tax advantages. We were the first people to bring all of that together into a fund structure.So bringing together some of the best practice of traditional GPLP fund structures, but making them available to private clients with the tax advantages.

And that's been a sort of, an important thread for us throughout our 25 year history. Our focus on private wealth has been a consistent thread. So all of our capital has been from private wealth. We've raised about 500 million pounds that we've invested into UK technology companies. Quite a lot of that here in Oxford as well and we've had the privilege of backing over a hundred companies and some amazing founders along the way.

[00:02:25] Susannah de Jager: Gosh, how interesting. I'm going to take you back to something you said. You spent a lot of time explaining venture capital.

What is venture capital?

[00:02:35] David Mott: So venture capital is obviously in the private markets. It's all about starting companies and helping companies that want to grow fast and need investment to cover a number of years of losses. Before they become profitable. It's today broken down into a number of different stages, Seed series A, B, C, D, and ultimately two exits. There are some kind of very rough rules around what those stages are. So pre-seed, seed tend to be, pre-revenue or very early revenues. By the time a company raises series A, it's probably looking to raise, you know, five to 10 million pounds, and probably has at least a million pounds of revenue by that point. And then series B, CD tend to be the sort of scale up rounds that, tend to attract increasingly international funds and strategic investors and larger institutions as they get closer and closer to market.

[00:03:27] Susannah de Jager: So EIS, as you described, is such an amazing incentive and it's been hugely effective, and I think many people when they look at the UK ecosystem say actually startup is very healthy.

What is considered less healthy, and you were talking about some of the phases there, is the growth scale up capital. Where there is a perceived, and I've studied it at length, I would say it's quite a real gap in domestic capital, not necessarily international.

What do you see for your EIS investors and how have you evolved your investor base around the forces at play at those latest stages for follow on capital?

[00:04:04] David Mott: Well, I think that's a really interesting area and obviously I know you've been very interested in the whole sort of DC Pension scheme, and the whole push of getting more pension money to come into this end of the sector. And it is starting to happen, which is really encouraging because we've been talking about it for over 25 years. For many years I chaired the British Venture Capital's, Association's Venture Capital Committee and DC Pensions was a major theme, but it's really only in the last couple of years that we started to see the start of some real activity. But isn't it exciting?

I think it is one of the sort of interesting sources of capital that could really make a big difference because so many companies at those later scaled up stages are relying on international money. We're seeing a lot of capital from US venture capital firms backing those companies. We're seeinglarge institutions, corporate investors tend to play a very big role at that end of the market. I think we're starting to see, you know, some involvement of sovereign wealth funds and things like that. But there has been this sort of lack of really high quality, large domestic capital.

Now, some of those funds are there.But from an Oxford Capital perspective, the little piece that we're trying to fix here is how to help more private wealth, how to help more individuals and families access those scale up stages.

[00:05:15] Susannah de Jager: And you've spoken about EIS.

People might associate that with angel investing, but you and I have also discussed family offices as a cohort that perhaps are not as invested in the Oxford, but also the UK innovation more broadly, cause you guys are not just Oxford focused. How do you see that families could dip their toe in if they were interested in listening?

[00:05:38] David Mott: I think my starting point is it's a beautiful day today and as I walk around those hallowed buildings of Oxford glowing in the sunshine. It is such a beautiful place and I reflect on how much love there is for Oxford. As I walk from the station to my office, I go past buildings where people's names have been chiseled into the stone and will be there for hundreds of years. The family legacyassured. Irene Tracy commented thatthe biggest donations to Oxford are not from graduates. It's not just people who've been through the Oxford education system. It's much wider. People want to be associated with the history of Oxford, with the knowledge, the quality of science and ideas and debate the global attraction that Oxford is such a magnet for the most interesting people to come and be invited to speak at the Oxford Union or come and present at the business school or come and give lectures, and what we've seen in recent times is this sort of incredible proliferation of global billionaires wanting to associate themselves with Oxford and Edison and Schwartzman and others are interesting examples.

There's something that's going really well at Oxford, at the moment, and this is something we can be really excited about. Yet, I also see a gap between these amazing, generous gifts and philanthropic activity and the people backing the best companies coming out of the Oxford ecosystem. The thing that really stands out for me is why we don't see more of those same names on the cap tables of the best companies? I've spent a lot of time talking to these investors and to the companies. What I found is that a lot of these wealthy individuals and families are unaware of the opportunities that have come out, probably indirectly, from their generous gifts to facilities to new buildings to scholarships and so on. They're unaware of the stuff that comes out of these universities and how it's commercialised and how it's building value in the market, how it's creating and developing new market solutions.

And even if they are aware of it, the next question is how do you access it? Again the analogy of all the tall walls around the colleges extends a little bit into the this ecosystem, and you are definitely trying to break down some of those walls through this podcast but it is quite difficult for an outsider to come into Oxford and know where to go.

There are lots and lots of interesting networks and activities and small pools of investors and groups andfunds and different things. But not all of them are accessible to people from the outside. At least not necessarily easily.

[00:08:07] Susannah de Jager: I think that's such an interesting point.

You have spoken to me about some of the particular sectors that you specialise in when you're looking at companies. I'd love to hear a bit more about what it is you especially look at and some of the reasons behind that.

[00:08:21] David Mott: From a sort of sector perspective, we're looking for companies that can scale up fairly quickly, and so we're looking for sectors like software, e-commerce, B2B SaaS, AI. But also areas around digital health and FinTech and InsureTech is a theme we're very keen on at the moment and we always leave a little bit of room in our portfolio for some of the weird and wonderful things that we also see in Oxford. The bits that we're sort of often less keen on are some of the biotech companies or some of the deeps of complicated material science companies, and the reason for that is that the timelines can be extremely long, and while there are some amazing businesses, and there are some exceptions in terms of the timelines, the duration of most investments we feel doesn't really match the expectations of our clients.

Drawing horrible generalisations, are our sort typical clients are people who've already made their wealth and so typically are at the later, latter, stages of their careers and when they start investing into, making angel investments or venture capital investments, if all of the investments last too long, the probability of that capital then being recycled later on really falls. Whereas if they get some early wins and they get some shorter duration investments, then it is very likely that that capital will go back into the, ecosystem and be invested again.

So there are a couple of ways of addressing this point. One is to choose the sectors in which we're going to play. So typically sectors where companies don't require large number of years of technology development and when companies do take off, they can take off and scale up very rapidly. Then the opportunities for an exit do start coming in a little bit sooner and the second thing we can do is also invest, is choose the stage at which we invest. Because if by definition, if you're investing later stage, the duration of the investment should be shorter. And the third thing is when to participate in these rounds.

So maybe coming into sort of later stage companies as part of a broader portfolio construction for our investors.

[00:10:15] Susannah de Jager: Give us some examples of some of your best and, obviously David, I'm also going to ask for maybe some of your worst companies and maybe some of the learnings that led you to how you currently structure the portfolio.

[00:10:27] David Mott: I mentioned earlier that, you know, there are these, the weird and wonderful things in Oxford and I think this draws me back to one of our investments, which I think in many ways typifies the sort of incredible stuff we see at in Oxford and this was a company called Oxitec. Which maybe a number of people are familiar with, and Oxitec is a company that was founded and the first ever spin out from the zoology department here at Oxford.

And they had discovered a way of genetically modifying insects, specifically initially focused on mosquitoes in order to breed sterile males and disrupt the mating cycle. It's an incredible sort of piece of technology and when we were looking at it and doing our due diligence and the company was just started. We realised that this not only was the first company out of zoology but also the first ever GM animal venture capital investment to come to market in Europe, and we spent a long time sort of looking at this investment thinking, well,what are some of these sort of moral and ethical fears that investors may have

So one of the people we spoke to as part of our due diligence was the Bishop of Oxford, Richard Harry's at the time. Who perhaps one of the most unusual reference calls I've made in my career. But, we sat down with him and explained to him what this company was looking to do, and looked at the pros and cons, and he helped us debate it, and eventually we came to the conclusion that this technology had the potential to save so many lives and to do so much good in the world that ultimately it would be an investment we'd make.

And we went on to invest in that company alongside with aUS family office and backed the company over many rounds, over many years, along with capital from the Gates Foundation and the Welcome Trust, and then a few other investors came in later stage and we eventually sold the business having never had a dollar of revenue.

We returned about $50 million back to our clients, and it was a very successful investment. It took quite a long time, but it in a way, sort of typifies the good and bad of the time that it takes for some of these technologies to get to market, to get through regulatory pathways.

This was so new that the regulation hadn't even been created and the framework wasn't there. So even the regulators didn't know what to do with it, and that just added more time and cost more venture capital dollars to get there.

[00:12:40] Susannah de Jager: So interesting, and I think that point of when something is so innovative, sometimes the market's almost not ready, and actually, you and I have again discussed the fact that an idea, it might be something that's a bit off the shelf from the perspective of the innovators, but for whatever reason, the confluence of circumstance, component costs, the marketplace, ai obviously being a huge change moment now can mean that old tech can be applied to a very interesting use case.

[00:13:08] David Mott: Yeah, indeed.

[00:13:09] Susannah de Jager: So digging into that, what do you look for when you are looking at ideas? You know, you've got excellence and innovation, but as we just touched upon, you also need application and usefulness.

[00:13:21] David Mott: Well, I think ourinvestment philosophy can best be described as backing founders. That is what we're about. In some ways there can be a conflict with some of the areas to do, with spin outs sometimes. Because typically a spin out, historically certainly was a scientist came up with an innovation that was patented, a company was formed by a UI and then they went out to go and find some management and find some people who could run it.

Often that didn't work very well, and we've got, certainly had a few failures along the way where management was brought in, they weren't really founders, they were brought in, they only had upside with options, and ultimately the companydidn't succeed. And there were several, examples that many people would be familiar with.

But if we look at how that's evolved. I was really struck by your interview with Lionel Tarassenko. it really brought a smile to my face when he said that, when he was starting to do, spin outs, his academic colleagues frowned on him and looked, you know, looked and disdain at what the hell was this thing he was doing. And over time it slightly became tolerated and today is sort of positively encouraged and celebrated and we've seen that journey. What we've found is of all the exits that we've had over the years from the a hundred plus investments we've made, the companies where the founders were still in a leadership role at the point of exit have outperformed, other investments by over 55%.

So there's a sort of huge financial benefit from backing founders and staying with them and supporting them and making sure that thepeople we're backing right at the beginning are the founders and holding onto that founder magic. That unique passion that people have when they are the ultimate creators of a business.

Fast forward to today, one of the things that I'm very encouraged by is all these sort of founder programs and entrepreneur residents, EIR programs that have been created. We've recently backed another company, founded by some EIR executives who have this luxury of spending some time within OSE and working with the university, looking for the ideas, but really developing the business plan and owning it from the very beginning and backing them.

One of the companies we backed was Latent Logic with Kirsty Lloyd Dukes. You know, led to a brilliant outcome. An example of a company that was acquired very quickly by Waymo, part of the Google, group of companies and led to Waymo having their first office in Oxford.

And this was a spin out from the computer science department. Developing algorithms for self-driving cars to train them by training them against, online CCTV footage. An incredible piece of technology, and it led to a very sort of positive outcome in a fairly short space of time, and I couldn't be more delighted to see that Kirsty is now, an EIR at Oxford Sciences. I can't wait to see what she's going to do next.

[00:16:01] Susannah de Jager: So you spoke there about the importance of founder teams and you spoke about the differential you've seen in performance, which is so important.

What do you do as an investor to support those founders who often, this might not be something they've done before, where's your kind of value add if you are on the cap table to help those teams?

[00:16:19] David Mott: It takes teamwork to build a successful business. As an investment partner, we're not there to tell people what to do and we are there to support them, to help them tofacilitate and hopefully accelerate the growth of their business.

But the founders are really at the heart of all of our decision making. So I have a sort of rule, a personal rule of never giving advice to people. Instead, I look to share experience as much as possible, and having made a lot of mistakes along the way, having had many successes along the way. I do believe that there is quite a lot of experience that we can share, not just my experience, but also just connecting founders to other founders within our portfolio or people that we've backed in the past who in turn can share their experience about how they face specific situations.

So it may be about, you know, how do you raise your next round? Well, let me plug you into three other businesses that have been through exactly this stage with this type of company and business model and how they went about approaching things or companies expanding into the US for example.

So I'm off to the US next week for a board meeting of one of our companies that has very successfully transitioned over there. We encouraged the founder team there to spend a lot of time with other companies in our portfolio who have also made that bridge,to the US market. I don't want to stand here and say, well, we help them with A, B, C, and here's the list of, you know, pick your services. That's not what we're about. It's about teamwork and how we can support each other.

I think the other things that, I would also say is as a venture capitalist, we are by definition, minority investors. Therefore, we don't control situations. It's different to the private equity end of the market where typically funds are buying control situations, either you know, 51% or more, or even a hundred percent of a company, and they're in a position to dictate who are the people running the company, who are the directors, what loans and debt and business plan they should have or not.

But in venture capital, we're in the business of influence. We're in the business of trying to bring together a team of people to support the founders to go from A to B. That takes great teamwork. We never invest alone. So we'll always co-invest with at least one other fund.

We try and build syndicates that are useful for the founders. So this can sometimes mean having investors with different skill sets. Maybe they've got an international perspective or a sector specific theme, or they're a strategic investor who can help market entry or they're a US investor because the company wants to expand into the US.

So we try and bring together these teams of sort of useful and supportive investors, ideally, where that group of investors can do at least 50% of the next round of funding. Cause that massively de-risks, you know, one of the big challenges for investors. Which is raising money. We try and bring it all together to help those founders to feel that they've got the right group of people, that when they've got a challenge, they can pick up the phone to any one of us and discuss it and have a good sounding board.

[00:19:09] Susannah de Jager: So I think it's really interesting because you're not just giving money and I think this is quite well understood, but you're trying to increase the probability of success by who you bring around the table and with those network effects, both between peers, which I'm a huge fan of, and I've used that in my executive roles to a really large degree, but also the networking effect of investors themselves, and funnily enough, it comes back to something you said earlier. Which is that some of these really big kind of names on the buildings, they would be such amazing co-investors for some of these ideas for roots to market in their specialist areas.

[00:19:44] David Mott: And this is where often families, family offices, can have these extraordinary networks, and so if you can bring them in, they can be very helpful and bring a lot of profile to the companies as well, especially if their families maybe have a, some kind of a link to that sector.

[00:19:58] Susannah de Jager: You have also spoken about the fact that you have a preference for the structure of the founding team. You spoke about outperformance of keeping the management in, but you also mentioned that you look for co-founding teams. Can you talk a little bit more about that?

[00:20:14] David Mott: Yes. I guess it goes back to ourdata as well, and I've looked at some more research around this. But we've found that firstly two co-founders tend to outperform solo founders and solo founders tend to outperform three or more founders. So there is a sort of an optimal number around two.

This is not a sort of complete stipulation, but I think if I was starting a business again,I would definitely do it with another co-founder, and I always encourage other people to do so as well.

There was some interesting sort of data from McKinsey as well around success rates. So if you've raised money, your probability of success is apparently around 18% to get to a successful exit. If you've failed in your previous business and are going again and raise money, your probability of success only increases to about 20%.

Really? So it's still one in five, which really surprised

[00:21:03] Susannah de Jager: I would've thought that would've been higher.

[00:21:04] David Mott: Yeah, and if you've been really successful and you've had a positive exit in the past, and you are going again and raising money. your probability of success increases massively by 50% to 30%.

So it goes from 20%. It's still only a one in three chance. So you've got one in five chance at the beginning and a one in three chance if you've been successful. So this is a difficult game. This is high risk and our approach and the way we try and address this isby investing fairly small amounts of money at a very early stage in the company, and then as our conviction increases in that business, as we continue to get to know that team and work with them and see how they perform in terms of execution and fundraising, which I think are the sort of two biggest factors of success, then we make much more informed decisions about deploying more and more capital.

So if they don't succeed, we can cut our losses early, and so the aim is to try and lose small, but win big. That's our approach to handling this.

[00:22:05] Susannah de Jager: Sounds simple.

[00:22:06] David Mott: The more we can keep things simple, the better.

[00:22:09] Susannah de Jager: So going into the data that you have found around keeping the teams in, what's your belief behind the why those management teams are so important to the success and that outperformance that you've seen?

[00:22:22] David Mott: So anyone who has sat on boards with me and knows me well, will know that I talk about the word alignment a lot. I really do believe in trying to keep life fairly simple around how do you bring founders and investors together and make sure everyone's aligned?

I'm always surprised and shocked when I see term sheets issued by other investors who maybe come from a debt background or private equity background or even, an investment banking background and they you know, build in lots of bells and whistles and show off how clever they are at structuring these amazing deals, and they can look very sort of interesting at the time and you have a sort of preferred return of this or that and anti-dilution and ratchets and...

but actually what happens is when things go wrong, when a company hits a bump, which almost every company does, suddenly the alignment of interest falls apart because everybody looks at the articles and sees where is their position on the cap table? What is their ownership? What happens in this scenario? And very quickly management and certain investors are just no longer aligned. If you can bring together founders with early investors and keep the terms simple. The best exits we've had have often been in companies where the terms were the simplest.

Oxitec that I spoke about earlier, we only ever had ordinary shares. That was pretty unusual. Normally you would have a one-time non participating preference, which is a pretty sort of plain vanilla venture capital deal. But more recently, we just sold part of our investment in a company called Money Box, which was co-founded by an Oxford graduate, and we were seed investors in that company before it had a single customer, and this is a business which helps people to save and invest for the long term, and they've gone from zero customers to now 1.5 million customers who've invested over 15 billion pounds into pensions, investments, ISAs and mortgages. We're helping around half a million people to save up money to buy their first home and get onto that housing ladder, and this is a sort amazing, impactful business, and we've invested in every single roundsince we started. And that business has really been characterised by a very simple capital structure. A very harmonious group of investors who've all been very aligned with the founders, and we've taken it from zero to an extremely valuable business, and we've recently sold some shares at 17 times return. So it works, simplicity works.

[00:24:48] Susannah de Jager: I'm a huge fan of looking at incentives and unintended consequences of bad ones can be dire in all sorts of settings.

[00:25:00] David Mott: And it is the School of Warren Buffett and he's the master at this, and I think we can all learn a lot from his teachings there.

[00:25:06] Susannah de Jager: What would be the arc of a typical investment? Can you speak me through from sort of nascent stage right through to exit and an example? I think it's really fun for people to hear.

[00:25:15] David Mott: The money box example that I just spoke about is the sort of example of meeting founders at the beginning who've got an idea. What we were looking at then, because they had no customers, no revenue. they developed a little piece of software, which at the very beginning was an app, which every time you made a payment. It would round up your payment to the nearest pound and put the pennies into your savings or investment account. Pretty simple little gimmick. But what we found is even while they were developing it, they were able to test the software with a sort of,pre-launch audience, and we found there was a very strong network effect. People enjoyed it. So we were looking, not at financial indicators at that point, but at engagement indicators.

[00:25:53] Susannah de Jager: It's almost a gamification of something.

[00:25:56] David Mott: And again, we don't have a crystal ball to see what the future was.

But what we did see in the founders is that they were two school friends. They knew each other well. One of them was an Oxford graduate. They'd both been involved in launching a business previously. Ben Stanway was one of the co-founders of Bloom and Wild, which has gone on to become a unicorn.

He left that business halfway through the journey. Handing it over to his co-founder there to start Money Box.

We saw this early data of engagement. We got pretty excited about the potential there, and gave them a relatively small amount of money. I think at 1.2 million pounds at the beginning was our first cheque. We then found some other investors. We brought in a fund called Bregal who came in fairly early after us.

And then Fidelity led a series B round, and then we brought in some other institutional investors in the series C round. Raising large amounts of money along the way and then more recently, and this is actually an interesting little Oxford link. I got a call from one of my former interns who, was now a partner at a international global FinTech fund.

And he called me and asked for an introduction to Money Box. And this led to a 65 million pound secondary transaction where we were able to sell a few of our shares alongside some other shareholders, and we brought in this new investor into this round. So it's a nice little Oxford story cause you know, this was a former intern who'd come to us for a few months after graduating from his MBA, at the Saïd Business School, and I'm now doing some business with one of our best ever exits. We've had the pleasure of having about 60 interns come through Oxford Capital over the years, and it's been brilliant following their career paths, and many of them have gone to start companies, to work in private equity, some have gone into academia and become politicians and things from all over the world. So it's a rich little vein in my network of Oxford connections.

[00:27:41] Susannah de Jager: I love that. Thank you, that's been such an interesting sort of understanding of Oxford Capital.

Just before we finish up, I really want to get some of your perspectives because it's Oxford Capital, but I know that your investible universe is actually not just Oxford, it's much broader than that, and that you are a big advocate for the fact that we shouldn't be running them as separate little fiefdoms or separate, quite large fiefdoms even, and that it really should be a super cluster.

And you've obviously, as you already, touched upon being involved with

the BVCA, and I'd love to hear a little bit about how you think we should be viewing that because it often is seen as sort of little bit competitive.

[00:28:21] David Mott: And a bit of competition is always good. It means that there's something to compete about and people are excited about something. I studied at Durham, although I've lived in Oxford for a long time and I sort of always look at this Oxford Cambridge rivalry with great interest. But we've made lots of investments in Cambridge, with several Cambridge Angels are active investors with us and clients of our firm.

I do believe that we are part of the same cluster, what we're competing with is not Oxford versus Cambridge, even versus London. But how are we being Oxford, Cambridge, London, Amsterdam, Paris, Berlin, how are we competing against China, against the US, against other parts of the world?

Well, we want to create a rising tide here. We need to take a step back and look down at our globes and think, okay, well actually that little island at the top of Europe is a pretty small place, and actually let's try and bring it together. I'm very excited. We've recently made another investment in the Cambridge area. We're always keen to try and build bridges between, the two ecosystems and beyond.

Obviously I think Oxford is the best bit of the golden triangle, with, London and Cambridge cause we are the most centrally located point of the UK. I've always found it brilliant being so close to London, but also to Manchester and Bristol and, all the other sort of amazing clusters around the UK. That sort of led us to, over time, leaning in and out and back into Oxford.

A lot of spin out investing, in the early part of Oxford Capital's life, was pretty difficult. There was amazing science that has always been amazing science in Oxford and that is internationally recognised and known, and we've spoken about it lots on this podcast in the past.

But the reality is that companies were often launched too long before they could reach the market, and the failure rate therefore was too high. Now, lots of things have happened since then. The cost of computing has come down, the whole access to the cloud, support frameworks around companies are much better today. The amount of capital and the access to capital is much higher. We recently saw a hundred million pounds series A round into one of the OSE health tech companies. That's an amazing round that would never have happened 10, 15, 20 years ago. So lots of things have changed and that's really helping to make it easier for companies to get to market quicker and compress some of those timelines.

But the fact is, I think that the data is, that it still takes an average of 14 years for spin out to go from startup to exit. And this goes to the point I was making right at the beginning around, that's just too long for most individual investors. It's maybe better for pension funds who have those longer time horizons.

This is something that Oxford Capital is very interested in, is how do we compress timelines? How do we help investors get into companies at a point where durations are a bit shorter? And maybe also where, we can start engineering more secondary exit opportunities. And I think this is of a recent phenomenon in the world of venture capital. Capital is still hard to get, but really good companies are often seeing that their rounds are oversubscribed, and in those instances, it is becoming more acceptable for founders and early investors to be able to sell some of their shares in later stage rounds. And we've done that on now four occasions where we've been able to lock in returns of over 10 times for our early investors through secondary transactions.

And we only sell part of our holding, but it locks in a decent chunk of profit early and allows us to then be more patient and sit on that investment until we get to the ultimate exit where all the investors can realise the maximum value.

[00:32:06] Susannah de Jager: Really interesting and to that point of perhaps capitalising on some of the returns early, not just for investors, but very important often for executive teams not to drive misalignment, as you touched upon.

Have you looked at the Pisces platform that the London Stock Exchange is promoting and what are your thoughts on that?

[00:32:26] David Mott: So one of our portfolio companies is pretty engaged in that already. I'm cautiously optimisticon the Pisces platform, and my caution is that I've seen dozens of liquidity solutions platforms be proposed over the years in the market. The really cynical side of me says, well, if there is an opportunity for exit, people tend to list their underperforming investments cause they want to get out of them and if someone's dumb enough to take the value off it that's good. So very quickly, these platforms get filled with poor performing investments and ultimately they fail because people don't necessarily want to sell their 10 x investments. Their best performing companies. They want to hold onto those until, Google or Amazon or Roche comes to buy them.

That's the sort of caution of it. The fact that the London Stock Exchange is behind it is I think really interesting and it has been thought through, really well and I really hope it is successful and I will be supporting some of our portfolio companies in addressing this because the other thing that's also changed is there is more institutional capital that is aware of and more interested in participating in the private markets. People need that for their long-term portfolios.

Private capital has outperformed public markets year in year out for a long time nowand so many investors have been locked out of it. If this is a way of DC pension funds participating, getting more access, if it's a way of getting more individuals, families, institutions to engage into the sector. Then I think this really could become successful.

[00:33:57] Susannah de Jager: Yeah, and actually it's something, the phrase that Sir Nicholas Lyons, who bought in the Mansion House Compact as Lord Mayor of the city used, was democratisation of access to these returns, and so I think I agree with you. I'm hopeful.

[00:34:13] David Mott: And ultimately From speaking to founders every day, you know, their biggest worry is raising money. But,if we can unlock some of the capital that's tied up. Then that will definitely benefit our ecosystem.

[00:34:25] Susannah de Jager: And then additionally on the other side with some of those sectors that, as you pointed out earlier in this podcast, are by their nature, longer term duration. The crowding in of pension capital is going to be also important because what you don't want is the wrong investors in the wrong tenure, and then nobody feels like they're winning.

So I think your point is really well made. There's an opportunity for those correct sectors that serve those private investors to become more liquid and to allow more access and then for the longer term duration that slow, but it's now coming, arrival of pension capital, which is more patient. I'm very hopeful for both sides of that equation.

[00:35:09] David Mott: I sort of bring it down to quality and quantity. On the quality side, we've got Oxford being the number one university in the world, yet again. We have morekudos and just a fantastic brand around Oxford at the moment. Which is attracting big name philanthropists and increasingly attracting more investors. I often joke when I was in, you know, spending time in London and I say, I'm from Oxford. People think we're from some small village outside the M25. But if you are in Paris or Shanghai or California, and you say you're from Oxford, they say, wow, you know, that's an amazing place, and the international brand of Oxford is much greater than the local brand in many ways.

But Oxford is associated with extraordinary quality as a destination place for ideas, for philanthropy, for investment, and on the other hand, you've got quantity where we've got more spin outs than any other university. I think for Oxford graduates today, the top career choice beyond doing more studying is being a founder. Is getting involved in some entrepreneurial activity. I could not be more excited about that. I believe that some 27,000 companies have been founded by Oxford graduates now, and that's far more than the 255 Startups we've had in the last few years. There is a much broader definition of Oxford than just IP backed spin outs. That's an opportunity. So quality and quantity. We've got this extraordinary qualitative assets that come with being in Oxford and part of the cluster and I really believe that we need more quantity.

So I'mexcited about seeing more companies come out. Ultimately, we probably need to have more failures in order to have more successes. But we just need more of it.

[00:36:48] Susannah de Jager: Thank you so much. I am like you, so hopeful. This has been really enjoyable, thank you.

[00:36:54] David Mott: Well, thank you very much indeed. It's been really real pleasure talking to you.

[00:36:57] Susannah de Jager: Thanks for listening to this episode of Oxford+, presented by me, Susannah de Jager. If you want to stay up to date with all things Oxford+, please visit our website, oxfordplus.co.uk and sign up for our newsletter so you never miss an update. Oxford+ was made in partnership with Mishcon de Reya and is produced and edited by Story Ninety-Four.

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