Paul Miller – Episode 10 – Green Add Venture Podcast – Full Transcript

Paul Miller – Episode 10 – Green Add Venture Podcast – Full Transcript

Here you’ll find the full transcript for Episode 10 of Green Add Venture with Paul Miller.

Listen to the episode available here.

[0:02] Jake: Have you ever wondered what happens when entrepreneurship, environmental sustainability, and venture capital collide? If so, you’re like me, and you’re in the right place. Welcome to the Green Addventure. On the show, you’ll learn from the critical insights of both founders and investors alike, not random advice or generic guides, but real stories born out of their experience with genuine climate action. We aspire to create a network of people collaborating to build the green economy, accelerating us towards this critical target of net zero emissions. I’m your host and founder of the show Jake Woodhouse. For all the notes, links and episodes, please visit www.greenaddventure.com, take care when typing that in, addventure is spelled with a double D. Thank you for listening, and enjoy the episode. 

[0:55] Jake: On the show today, we chat with Paul Miller, founder and CEO of Bethnal Green Ventures. Bethnal Green Ventures are an early stage investor focused on startups that use technology to radically change people’s lives for the future. In short, they’re a pioneer in the tech for good space. Listen in to learn about the importance of diversity, how community development leads to talent curation, and how to reduce risk in early stage investments. I really enjoyed this conversation, in particular, Paul’s vision of tech as a force for good in the world. Hi, Paul, good afternoon and welcome on the show. 

[1:27] Paul: Thanks very much, great to be here. 

[1:29] Jake: Thank you. So yeah, just to kick things off, please, can you explain from a very high level, your current role, and what it is you’re up to?

[1:36] Paul: So, I helped run Bethnal Green Ventures, we’re an early stage investor in what we call tech for good businesses. So, helping companies that we believe can be high growth, scalable, really valuable companies in the end with a valuation of over 100 million pounds, but also wants to benefit the lives of millions of people across health, education, or environmental sustainability.

[1:58] Jake: Awesome, thank you. And today I’d like to focus on the environmental side of the programs you run, the investing that you do, Bethnal Green Ventures’ certainly very well known in the marketplace when I started first looking at impact and startups so, yeah, looking forward to finding out more. To take a step back from your current role, then perhaps we can go back in time and start to learn about what got you into the space in the first place, and how you initially became interested in the space? The show is hopefully going to speak to entrepreneurs, and also founders, and also investors, in your case, you are kind of both. So, it’d be great to understand a little bit about like how you first got into impact in the startup space, and equally, how that developed into Bethnal Green Ventures. 

[2:37] Paul: Sure, I mean, as you like, there’s a bit of pre-history here, which is when I was a campaigner before I did any of those things. So, you know, university, I spent most of my time not doing my degree as I should have done, but campaigning on environmental issues, or sort of social justice issues through an organization called People and Planet. And when I left university, I did a master’s in sustainable development, threw a forum for the future, and ended up working in public policy and think tanks on environmental issues, and to some extent, social issues. And I think, partly just because I was a bit geeky, because I sort of got given the policy issues that were to do with digital technology. And we are, what does this mean, and this was in the early 2000s, I guess. And so, I found myself working on, you know, what’s going to happen because of these technologies? And over time, everything in digital was thought of as being, you know, sort of having zero impact, there was this idea that it was virtual, that it was, you know, ephemeral that it didn’t, nobody had even thought about server farms, or you know, the infrastructure that you need to supply digital products. 

[3:41] Paul: And we started pointing this out, but also started showing that there might be these massive efficiency gains in industries like energy, or food or transport, or whatever it might be. And so, I spent, like, I guess, five years writing about those sorts of issues, and eventually got a little bit fed up of writing pamphlets that, okay, a few read, but not, you know, not a huge number, and decided to do something a bit more practical. And so, I started a startup, not so much on the environmental side but, you know, really about using technology, that was, you know, social impact and that was in education. And so, I ran a startup for five years, that looked to try and improve the adult education system to give people more access to learning throughout their lives. And, you know, it wasn’t a big success. In the end, we did sell it in the end, but not for a big amount, but learn a huge amount through doing that. 

[4:33] Paul: And also, I think, put a little bit of a flag out to say, you know, actually, I think doing tech startups for a positive impact on the world is a good thing. At the time, there were no investors who I think even had recognize that. But by the time we got to 2010, there was starting to be a bit of a community of founders who did want to put their skills to use around social and environmental issues. And I’d mainly found those people through organizing hack weekend for, you know, people who wants to do that, they were called social innovation camps. And we ran five of those in the UK, and did it actually in 25, other countries as well. And it was always this like, just incredibly talented group of people to end up, wanted to build something that might reduce food waste, or that might have, you know, help the renewable energy system to work better, whatever it might be. And they always had this question at the end of the weekend, which is basically, you know, how do I quit my job and like, turn this into a startup? So, that’s where Bethnal Green Ventures came from. And at the time, we were based in Bethnal Green in East London, and we needed a name for our nascent programs to support these people. And so, in 2012, we became Bethnal Green Ventures, and started investing, and made six investments that summer, during the Olympics in London, three of which have gone on to be a multimillion-pound company. So, we definitely got lucky, but we were surfing, I think, the growth of a community of founders, really were driven by a mission, not just by the idea of becoming Mark Zuckerberg.

[6:09] Jake: Fantastic. It’s so cool hearing people’s personal journeys and the different steps you take. And, you know, after 10 years of your career, you spent some time working the policy world and then obviously, as a startup, and it’s like, actually, how can I make the next step and develop something from it? It’s always awesome, just to hear about how people did it. And it brings me nicely just to talk a little bit more about investing, so to speak, than the story that you’ve been on, that first summer back in 2012, you made six first investments, and they would have all been for some reason, I assume. So, just to talk through from a kind of thesis perspective, is there any high-level rationale that you put in play when you’re looking to make investments and how has that developed over the last few years?

[6:49] Paul: Yeah, I mean, I think there’s a fundamental belief that if you can change the lives of millions of people, for the better, that is a very valuable thing financially. So, we think that the markets that were going after are big valuable markets. I think people are starting to recognize that now but when we started, you know, people really didn’t think about some of these things as big markets, they thought of them as being a bit fluffy. And like, you know, either things that government should do or things that NGOs should do or is that thing that is starting to change now. So, we have a fundamental belief that these are big markets and I think people are starting to recognize that. We believe that the best investments will be ones where the impact is linked to the business model. So, where the more of the product or service they sell, the more positive impact it has, as well. And therefore, we don’t have to worry about tradeoffs in the future. That’s essentially kind of why we do that but it’s also I think, makes good business and good impact sense. 

[7:46] Paul: And then I think the other thing is, we look for diverse teams, we look for teams where a diversity of backgrounds, diversity of like, ways of thinking, and that typically means you’re looking for teams that are not, you know, whatever, three white guys, and we’ve done very well at that compared to our sort of venture competitors. I think we were just doing the stats and I think the average for the UK venture industry is that one penny and every pound that’s invested in UK venture goes to all female teams, and as 44 P. So, you know, we’re doing 44 times better than the UK venture industry on that score. But it’s very deliberate. You know, we genuinely believe that we will get better returns by backing diverse teams, and we’re pretty unapologetic.

[8:30] Jake: Cool. So, there’s two clear rationales there in a sense. And once you put those in players and investor, you’re then looking to find companies. So, how often do you go about finding these people? You’ve already mentioned how hard it is to invest in a female founder, let alone actually find them in the first instance. So, as an early stage investment business, how do you guys look to create your deal flow?

[8:50] Paul: So, all through our history, we’ve thought about what we’re trying to do is being about community building effectively, like, there’s so much we can do, there’s only so much we can do. But actually, we know that it will be valuable to the people that we back if we can build a big supportive community around them. And by building that community, we’ve actually accidentally built great deal flow as well, because there’s loads of people in there who refer people to us personally, and actually started back in the days of social innovation camp, when we started this technology. We started a meetup group, then we called the Tech for Good Meetup in London, had a few hundred people as members, then it’s now about eight and a half thousand members in London, and it’s growing in Manchester, it’s going in Southwest. So, that’s a great source of deal flow for us, like people meeting together and talking about these issues, coming up with ideas, meeting potential co-founders, like that’s a great sort of petri dish almost first, or the kind of companies that we want to back. 

[9:50] Paul: So, that’s been big, I think we’re now getting to a point where we also feel we should raise our own profile, we were a bit reticent about it for the first few years, when we didn’t really have a track record, you know, we couldn’t, you know, yet sort of show the financial upside and those kind of things, we’re now we’re much more confident about that. So, I guess we are starting to try and raise our profile a bit. So, hopefully, anybody has got a great idea and great team that could change the world for the better thinks Bethnal Green ventures, and we like them, and we can invest in them.

[10:17] Jake: And that raises such a great point pulling that, like any business, you can’t necessarily sell your product to anyone unless you have a track record. And you were trying to get into a marketplace that didn’t necessarily believe impact had anything to do with returns. And so, what you’re proving over the last few years is new territory in itself. And so, yeah, congratulations, it’s obviously some great work. Yeah, I agree. The sense of community is also so key, here today, we’re x and y, just walking through talking about what it feels like to be surrounded by other people working towards a similar mission, rather than sitting in the local caffeine area, wherever you might be. Okay, and so once you found these companies, how do you then look to understand your risk? So, there are lots of businesses out there, you can invest in all of them, if you have the money, but inevitably, some of them are better at certain stages than others. So, how do you look at understanding that?

[11:04] Paul: So, our thinking on this is pretty straightforward, we try to minimize our downside risk in when we make an initial investment. So, our initial investment into any company is 20,000 pounds, which is essentially an amount that we’re willing to lose. I mean, it sounds, I mean, it’s obviously it’s a significant amount of money for many people, but it’s not necessarily a significant amount in the grand scheme of what we’re trying to achieve. And that 20,000 pounds is really to get a much deeper understanding of what this team is trying to do. We’re trying to back them so as they can work on it full time, they can really explore all of the issues around the market, grow their team, all those sorts of things. And then we ramp up the investment amounts, as we start to understand what the risk in this market is, how big is it and all those kinds of things. So, for us, it’s about de risking it by making a small investment to start with, and then backing the ones where it starts to do well.

[12:00] Jake: So, follow the good ones, in a sense?

[12:02] Paul: Yeah, and it’s not that sounds quite sort of done with a stick or they deserve. But it doesn’t feel like that in terms of yeah, you know, there were a bunch of these that don’t work out, but the founders accept that it is not working out. It’s not like we’re sort of picking winners, in some ways. It’s just there is a natural attrition rate to startups as they develop. And we’re just sort of backing the ones that, where it does work out and the ones where it doesn’t, that’s fine. They’re still very much part of the BGV community and valuable members of it. But you know, financially, we back the ones where it is working out.

[12:35] Jake: I mean, I can feel straightaway the importance of that initial bit of funding for entrepreneurs, you know, you’ve got this idea, but is there any market fit, but at this point, you don’t necessarily know. So, you’ve got to go and try and find that out. In fact, your co-founder might be someone you met at your meetup recently, they may get married or have a baby or something can change drastically. And suddenly, the founding team has dropped in half and the impetus disappears. And inevitably, you know, things changed, okay, cool, I understood. And so, when you follow this through then, you’ve got the deal flow, you found the companies, you think you’re about to make an investment, is there anything that you do from a due diligence perspective that you’d like to share at all, in terms of how you assess teams, or what actually is important to understand about the businesses you’re investing into?

[13:18] Paul: Yeah, so our process is pretty simple, I hope it’s pretty straightforward for founders, it’s, we take an online application, and actually, that gets read by some of our portfolio founders, and some of our mentors, as well as the BGV team here. So, we’re doing a little bit of wisdom of the crowd around like, which ones are going to float to the top. And likewise, with our interviews, actually, we involve our mentor and portfolio community as well. So, ventures, again, assessed by their peers, you know, not just an investment company. And I think that’s quite important. Because founders are great investors actually, because they understand some of the like, I guess, emotional consequences investment as much as some of the, you know, more numerical spreadsheets like ways that people can explain what they’re trying to do. So, I think that’s an important part of our process.

[14:10] Jake: Cool. And for any founders out there that might be listening, what would you advise to them in terms of the best way to, I guess it’s a sales process, isn’t it? How do you like it when founders approached you guys in the first instance, is there anything that you could give in terms of tips or advice for people to approach you, as an investor?

[14:27] Paul: Tell us something about the problem that we don’t know. So, like, show us that you understand the problem you’re trying to solve in a way that we might not have thought of, because that shows us that you’ve got a deep understanding of the problem that you’re trying to solve. And to be honest, like when we’re making that first investment, where we are definitely making it around, do we think this problem is an important thing? And do we think this is the team that’s going to like, completely go after it, you know? And so, if you can show us by the way, you explain the way you talk about the problem, that you’ve got something new on this, then that’s super helpful.

[15:04] Jake: Interesting. And you mentioned kindly team, it leads me on nicely to the next thing I wanted to understand slightly better was around talent. And people often talk about this stage of investment has really just been all about the people. And yeah, I’d love to know, I mean, so how do you spot the talent to invest into? Is there any, you know, tricks of the trade, so to speak or is it just a case of throw it as wide as possible and see what happens? But yeah, is there a blueprint of character or certain types of personality, I mean, you mentioned diversity already has been critical. But you know, talent is obviously the driver behind the value creation of these businesses so a really important thing to get right, as an early stage investor.

[15:42] Paul: Yeah, I mean, we have a fairly straightforward no asshole rule, in terms of, you know, we don’t, if there are people that we’re not going to want to work with, or then it’s fairly likely that other people aren’t going to want to work with them either. So, that’s a pretty big red flag. I think other than that, I don’t think we really assess individuals, we do assess teams so it’s looking at the dynamic, it’s looking at, you know, does it feel like this group of people all respect each other and can see what they all bring? Because if it’s overloaded on one particular person, or if there’s something missing, then there’s going to be a lot of time spent trying to fix that, which is fine. But it makes it less likely that we’ll invest because if we’ve got two teams to choose from, where there’s one where we’re like, yeah, they’re working well together, they’re like, you know, they’re getting stuff done. And there’s one where we’re still not quite sure who does what or we think we’ve got a real blind spot in this particular area, and might be a difficult area to hire for, whatever it is, then that’s tricky. So, I guess it never is perfection, but we’re looking for a balanced and a team, where the co-founders or the management team, whatever you want to call them really do have that viable, wanting to work together and wanting to progress together.

[16:59] Jake: And such a poignant area, I guess, people don’t necessarily realize quite how much work as an early stage investor, you end up doing with teams, and I’ve interviewed a few other people, it’s come through very clearly there as well. You know, you’re no asshole rule, that’s a pretty good one and that actually, once you invest, you’re in it together. And you have to be able to work towards the mission the company had set et cetera. Great to hear that insight, thank you. The next stage I’d like to go through is really around the impact of this whole project and your own personal reasons for getting into it. I think we covered a little bit earlier, but great to hear more about. And that also, I’d like to understand in the light of some context being the kind of businesses that certainly from an environmental perspective, you have got involved with, which I looked at here, and there was just a few I wanted to understand from your side, which was, well, Piclo, which we spoke about briefly was a business that I’ve also been lucky to invest in through Green Angel Syndicate, but also Fairphone and Let Us Grow being two different businesses to the first day. So, perhaps you could talk a little bit through some of the environmental investments you’ve made and the reasons for them, and then equally to go on to what the impact of those businesses might be as a result of your investing?

[18:07] Paul: Yeah, definitely. Well, let’s take it in that order, so Piclo to us was, I mean, actually, the idea has changed over time but ultimately, what James and Alice and other others will come up it, Andy

[18:21] Jake: Yeah, that’s right. Set just take a breath and just said again, James, Allice, and Andy.

[18:27] Paul: Actually, with Piclo, one of the things that’s the idea is changed over time. But the problem that they came to us in the first place was, there were barriers to us transitioning to a renewable electricity system, just at this all software and coordination level that actually we weren’t able to properly match supply, demand and storage. And I when they first came along to us, they what they were thinking of building was a real peer to peer marketplace for buying and selling. As time has gone on, it’s because obvious, actually that the idea of a flexibility marketplace, or the idea that you can sell flexibility to the grid is actually the way to achieve what they wanted to achieve in the first place, which is to unleash the ability of renewables to really take up a large proportion of the electricity system. So, what I mean, that is there, what we’re looking for is a complete change in international electricity provision, to be a much greater proportion of it to be renewable, and to be more distributed.

[19:31] Jake: And such a big problem as well, I mean, widely reported the main bottleneck to the adoption of renewables being the intermittency of generation. So, it’s not always sunny, not always windy, until we work out how to balance those two facts against the use of fossil fuels, it’s going to be very difficult to decarbonize energy and it’s such an important area to get right.

[19:48] Paul: And they were real pioneers in some ways of showing that digital technology was part of the solution. Because I think there was a lot of investors got burned over investing in renewables per se, like 10, 15 years ago. And so, the idea of like, clean web, or clean tech was definitely unfashionable. But actually, one of the things that Piclo have done, and there’s other companies as well, by showing that actually, digital technology is a really important part of that transition and it’s becoming a much bigger market again now. So, I think they’re a super interesting company, and now doing really, really well. But for them, it actually has been quite a journey to find the right product market fit. And that’s not unusual, I think in the environmental space. If it was Fairphone, they came to us as campaigners, again, a little bit like my story, they’ve been campaigning about the environmental and social impact of the consumer electronics supply chain. And it got to the point where they were just so frustrated, we’re trying to lobby these big companies to change and nothing really happening. And they remember very clearly, one of the co-founders sort of saying, we just got to the point where we think we’re going to build our own phone, and we will, you’re mad, you’re mad you like you know, this, that’s going up against—

 [21:05] Jake: So exciting about this particular business, though, isn’t it? It’s when someone sits down and says, I’ve got this idea, you’re like, okay, that sounds mental. And they’re like, and they go and do it. 

[21:13] Paul: But the interesting thing there was, I mean, I spoke to various people in the mobile phone industry who all said, that’ll never work. But then I suppose, people said, would you buy one? And they were like, yes, all right. So, yeah, there’s something here that we back them. And they’re a Dutch team that moved over to London came and spent three months with us. And the thing that we cracked in that time was the idea of crowdfunding through pre-sales, and actually using this idea of the people who wanted to buy it. And investors were at that stage weren’t really like, you know, willing to back them. But the crowd was, and so they managed to raise I think 11 million euros to build that first version of the phone. And they’ve, you know, they’ve gone from strength to strength in terms of launched, and was sold out, actually at the second version of the phone and about to launch the third version. So, they’re an interesting story. And also, now I would say quite a mature company in terms of their reporting and their impact reporting, particularly, you know, they’re very, very good at knowing what their impact is on all the different aspects of the supply chain that they touch. And they’re a real exemplar, I think, to other companies.

[22:17] Jake: And a great story of all groups of context to looking back to what you said earlier about, if you see someone has a different angle on the problem and that problem can potentially affect millions and millions of people if it’s solved, a great example of that in practice, the last company I picked out was LettUs Grows so I’d love to hear a bit about that.

[22:36] Paul: Yeah, LettUs Grow really interesting. I think we’ve been really interested in the food supply chain for a little while, I think it’s about a third of global gas emissions. And one of the things that seems obvious, but is that actually like, we really need to get more efficient in terms of energy and water usage and food production. There’s also obviously massive growing urbanization that’s going on. So, actually, there is this opportunity to bring food production closer to people, which, you know, seems to be known as vertical farming, indoor farming, whatever you want to call it. And what LettUs Grow have done is built this designed and built this brilliant piece of technology for doing indoor farming using aeroponics rather than aquaponics or hydroponics, which is a liquid substrate for growing food. So, they’re using a mist, and what the technology they’ve developed is the way of creating that mist in such a way that it has very, very accurate levels of nutrients and water. So, you can give it just the right amount of food and water exactly the right time and it turns out that that is way more efficient than anything else that’s on the market at the moment. And so, you know, it’s still an early stage company, but there’s a lot of interest in them. And I think, you know, as we see more and more supermarkets, more and more food producers starting to really explore indoor farming, I think LettUs Grow is very well positioned to getting that.

[24:04] Jake: Fantastic. And in those kind of free companies, you can really see, from me sitting here, I can see how diverse the investments have been and the impacts that you’re having are completely, I don’t know how to describe it, they’re very, very different.

[24:17] Paul: Yeah, very interesting. So, what we do now is we actually map them on to the 17 UN Sustainable Development Goals, which, in some ways, it sounds ridiculous to have 17 categories of investment, actually, we find it quite helpful, because you can sort of then see, okay, well, you know, this, some people call that Sustainable Development Goals, you know, it’s the strategy for the world. It’s not a power point deck, we can all–

[24:39] Jake: Nice graphics.

[24:41] Paul: And it’s interesting to see like, where our companies fit across those 17 sustainable development goals. And that’s how we started to think about naturally over time.

[24:49] Jake: Yeah, cool. And so, from that perspective, then how do you measure impact? Because, of course, you know, what’s really brought us to the table and just in general is this overarching issue we have with the missions and trying to reduce the uniquely the social impact your tech for good work does as well. Just taking the environmental investments you’ve done, once you’ve met them to the SDGs, etc, do you have a way of actually looking at total emissions reduced versus how those companies not got into existence? Quite a technical and difficult thing to do I admit so?

[25:17] Paul: So, the way we think about it is we help each company to try and measure and demonstrate their impact. We don’t set the metrics that we think that they should necessarily measure and say, right, we’ve invested in you, therefore, you should report on this metric, we do it in collaboration with them. Obviously, the environmental ones, like the ones are related to climate, tend to choose some measure of greenhouse gas emission reduction, which is great. So, that means we can start to aggregate it a little bit. But actually, to date, we haven’t done that. But one of the reasons for that is the quality of the data. So, actually, we’re working with companies who are at different stages and even though they might all be measuring the same thing, they might not be yet the measuring it to the same standard of evidence. So, to date, the only a metric that we aggregate across the whole portfolio is just the number of people using the products and services. But I think over time, as the company’s mature, we will be able to combine data as they get to the right standards of evidence. But there’s just such a big difference between a company that’s three months old, and at Fairphone, who are now six years old, so we don’t aggregate yet the data in that way.

[26:24] Jake: Will it be so amazing pause in 10 years’ time to see where some of these early stage investments have ended up and you look at the journey those businesses have been on and the impact they would have had. I’m aware of time, so one final question, Paul, where do you see the next 10 years?

[26:39] Paul: I mean, we certainly aim to be, hopefully the best, you know, tech for good investor in Europe. That’s what we’re trying to build, we’re trying to build a company that provides both the financial and non-financial support that most ambitious talented founders need in order to build big, impactful businesses. So, that’s the sort of BGV aim over that time scale. But to some extent, I kind of hope it’s gone become normal, like actually, the technology industry becomes more associated with tech for good than tech for bad. You know, if that happens, if we’ve got less Cambridge Analytica stories in the news and more Fairphone stories, and I think that’ll be a very positive thing, and we’ll have had an impact as a company. But I just happen to think that there is a big financial opportunity in that conversion. And that’s what we’re trying to sort of maximize, I guess, as a BGV.

[27:28] Jake: Great, well, thanks so much for taking the time to chat. 

[27:32] Paul: No worries, thanks for coming.

[27:33] Jake: That was the Green Addventure, thank you for listening. If you enjoyed the show, then please help us out by sharing this episode with your networks and rating us on the platform, wherever you may listen in from. For any questions at all, we’d love to hear from you, so please reach out on social media or email. Whether you’re wondering about a technical term that’s being discussed, would like an intro to a guest from the show, or even perhaps feature yourselves, we’re here to help. My Twitter handle is @JakeWoodhous, spell as it sounds, but drop the final e, my email Jake@Greenaddventure.com. Remember that ‘add’ spelt with two D’s. Finally, for the notes, links and episodes that will be coming, visit www.greenaddventure.com. Remember, that’s add, with a double D. Until next time, we’ll be back soon. Thank you and goodbye.