00:00You have an annual budget, essentially, to invest in and lend to and support the technology industry in the United Kingdom.
00:12Why are you in San Francisco, then? What brings you here?
00:14Why are we in San Francisco? Well, look, we're here pitching to USVCs a really great new growth opportunity for them,
00:21which is based on three things. Firstly, as you say, the quality of the UK tech industry.
00:25Four of the top 10 universities globally, producing great research with some really excellent entrepreneurs
00:31and the ability to scale businesses as well, although that's where they come in.
00:36Secondly, a new pool of capital coming on stream domestically in the UK from pension funds, hopefully.
00:41And then thirdly, the opportunity to partner with the bank, which is the biggest LP in UK venture and growth equity,
00:46connected and knowing the landscape pretty well.
00:49Louis, the landscape we know so well is fintech.
00:52I think of Revolut, I think of Monzo, the standouts.
00:55But where else is really thriving? Where else should VC come in and support in the UK?
01:00Well, look, I think you're absolutely right. Fintech is very strong.
01:03And just today, GoCardless did a deal with Molly and that unicorn that we invested in 12 years ago.
01:10So you need a bit of patience on this. So fintech is very strong.
01:14AI in different places is very strong, not so much on the hardware side, not so much on the large language models.
01:19But more broadly, if I think about companies like Synthesia or Eleven Labs, all of those companies coming out of the UK.
01:27So I think those tech areas are great.
01:29But also the application of AI into life sciences is incredibly strong as well.
01:34And the UK has an incredibly strong life sciences industry.
01:37So I think we see AI as being a theme across the sectors of the industrial strategy the government announced and the UK being strong in those.
01:47To be fair, many of those companies you named, you know, they come on this program regularly, you know, and they are making advancements in their respective fields.
01:54I want to go back to what you said, a big pot of pool of money coming online.
01:59A little bit more, please.
02:00Yeah.
02:00How big, how certain is it?
02:02Yeah.
02:03And that's important, right?
02:05Because the lesson of AI in this country, at least, is the capital requirements are much bigger.
02:12Much bigger.
02:12So the UK, we incubate companies incredibly well.
02:15We scale them less well.
02:16And we haven't had the scale-up capital we need.
02:18It's not that we don't have the money because we have the second largest funded pension scheme in the world at around 4 trillion pounds.
02:24But we have an allocation issue with that pension money, which is changing.
02:29The government encouraging pension funds to invest more in the domestic economy and in the growth economy.
02:34But I think what we're looking for is some of the expertise here in the VC industry in the US about scaling those companies.
02:40As I say, we incubate well, but it's that scaling stage and the expertise needed there.
02:44Where, of course, you need capital, but you need other things as well, networks, capabilities, and many other things, mentoring of leadership teams.
02:53Louis, what is the state of brain drain when you actually do get a really successful company?
02:59Now, Eleven Labs are staying there since these years as well.
03:02But many up and leave and come to Silicon Valley or to the US.
03:05Is that something that's still happening?
03:07Well, look, I think it does happen to an extent.
03:09And I think we really want to try and address that and try and stop it and actually capture some more of the value in the UK economy.
03:14As I say, the companies have largely come over here because it's where the capital is.
03:19If we've got a new capital stream with some expertise based on it in the UK, we're going to hope to retain those companies in the UK longer.
03:25And actually, the innovation ecosystem, I think, is quite self-perpetuating.
03:29Success breeds success.
03:30We've got a lot of the right things in place, but it's just this top end that we need to really make sure that we realize more potential and keep the flywheel going.
03:38So your strategy here, and one of the reasons you're in town, is to go to the American VCs, the Valley VCs, and say, give us your capital.
03:46Come to the UK.
03:47We have something to offer.
03:48But that strategy then carries risk with what you were just talking to Caroline about, right?
03:52Yeah, we're not quite saying that.
03:54We're saying bring us your expertise.
03:55We'll help you raise capital locally.
03:57This is a growth opportunity for you.
03:59Raise capital locally.
03:59That's a key point of distinction.
04:01Absolutely.
04:02And the connections that we have with all the GPs, LPs, but also the pension funds.
04:07I mean, we actually are raising our own fund at the moment for a co-invest fund in the UK from UK pension funds.
04:14And we'll do the first close end of January, early February.
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