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Future Thinking: Defence and Security Portfolio Highlights
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Future Thinking: Launch of the BCF
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Spotting potential and commercialising academic discovery - in discussion with Patrick Chung
Here are two questions for venture capital: how do you spot potential in a sea of AI start-ups? And how do you build a university and enterprise system that really can create the next Google?
Patrick Chung, co-founder and managing general partner of Xfund, is well qualified to answer both. Patrick wrote Open AI founder Sam Altman’s first cheque and established Xfund – a VC firm that backs founders from US universities. His previous investments include personal genomics company 23andMe and AI pioneer Kensho.
On a flying visit to the UK – where Xfund is a partner to Future Planet Capital – he has straightforward answers when asked how he identifies value. “We chase the talent,” he says. “We let the talent decide where to go.”
He has helpful insight for investors and, perhaps, for a new UK government that arrives in office having pledged to work with universities to support spinouts.
Because for years, talent-spotting has been Xfund’s approach, finding fresh ideas among the students and alumni of institutions like Harvard and Stanford.
There are plenty of successful new AI-driven companies to come, Patrick says, even if another Open AI won’t burst onto the market any time soon. No one is going to compete with the established large language models (LLMs). They’re simply too expensive to build and operate. But start-ups can licence proprietary data to develop better trained LLMs.
Take Open Evidence, an Xfund portfolio company, which has secured data from the Mayo Clinic. Its AI – trained on resources from this world-famous medical research centre – will be better able to understand medical conditions than any LLM relying on information it can find freely-available online.
Or consider Delphi, another Xfund investment, which is creating digital clones. If – with your permission – an AI engine could read all your messages and observe all your work decisions it could eventually make the same decisions that you would. This digital clone could not only record a meeting you missed, but draw the same conclusions that you would have done.
There’s a reason, Patrick explains, that some US universities do so well at incubating businesses like these. It stems from a mix of culture, understanding and knowhow and it’s an approach the UK – and some institutions across the US - could yet copy.
He identifies three core qualities that drive entrepreneurial success on campus.
The first is cultural. Turning academic discovery into commercial success is celebrated in West Coast learning. That’s still not the case in every university where – for all the excitement about spin-outs – making money can still be seen as unworthy of an academic.
“We need a culture change so this commercialisation and mass distribution is an acceptable manifestation of your discovery if you’re a lead investigator,” says Patrick.
Secondly, universities need informed, sophisticated departments to licence their intellectual property for academics who want to build start-ups. Some academic administrators can still seem baffled by business.
In one case, Patrick says, a founder wanted to gift equity from his company to his university. It was an act of gratitude towards the institution that had inspired him and trained his first staff. That founder wasn’t thanked; instead, the university demanded a payment for accepting the gift. Its administrators simply confused equity with liability.
An understanding gap remains.
Finally, universities need to be places where you can get involved in a new business, but also get back out of it again.
Tenured professors would be much more likely to make the leap from academia to business if they knew they could leap back the other way afterwards. Investors should be able to invest in businesses that have strong leadership already in place and not have to piece executive teams together for themselves, then hang around forever to run their companies.
It all means that we can still do better at commercialising academic work. For now great ideas still languish in labs for want of the right structures and leaders to set them free, Patrick says. For the VCs though, that means there are still new ideas, and more Sam Altmans, to fund.
Douglas Hansen-Luke, Executive Chairman at Future Planet Capital in Les Echos
Our Executive Chairman, Douglas Hansen-Luke recently featured as a signatory in support of an article published by the French publication Les Echos, demonstrating his and Future Planet Capital’s commitment to protecting and investing in our planet’s Ocean.
Noting the disparity between ocean-based investment and current investment levels in novel technologies such as Artificial Intelligence (AI), the article focuses on the importance of our Ocean in tackling climate change – in the immediate and long-term.
Despite being Earth’s largest entity, covering 71% of its surface, the Ocean’s depths remain lesser known and understood than the face of the Moon. And let's not forget that the seas produce between 50-80% of the world’s oxygen and absorb 9.2 gigatons of carbon dioxide annually – almost 30% of total carbon emissions. No doubt, the Ocean is essential for all life on Earth.
Scientists have long emphasised the importance of protecting our Ocean and, indeed, the need for collective action to do so effectively. But recent planetary and biological developments have served as a shock to the system for many.
Not least, Ocean temperatures are rising at an unprecedented rate. While this can be put down to the likes of El Niño in part, human activity is half to blame. At the same time, ocean acidification has spiked as a direct result of human-induced CO2 emissions reaching their peak in 2023. This serves as a direct threat to ocean life and biodiversity – the most important enabler in the Ocean’s capacity as both a carbon sink and oxygen pump.
Should we fail to act in reversing this damage as a matter of urgency, the repercussions will be monumental. Not just for the three billion people that live in coastal areas and rely directly on the Ocean’s resources, but for the planet as a whole.
To encourage action, engaging state and political actors in committing to addressing these issues is key. The United Nations Global Ocean Conference in a year’s time serves as a landmark moment on this journey, and will – we hope – set us on a path towards a blue-focused COP.
More than this, though: we need endorsement from the private sector and, specifically, from investors and the finance space. It is paramount that sustainable, blue solution investments become central to any investment and fund strategy, so that we are able to direct capital towards the sectors and innovations that need it most.
Find out more in the full article: https://www.lesechos.fr/idees-debats/cercle/opinion-climat-investisseurs-noubliez-pas-locean-2101005
Future Planet Capital | Partner Day – May ‘24 | Thoughts and reflections
Future Planet Capital recently hosted its inaugural Partner Day at the spectacular Institute of Directors in London. The day provided an excellent opportunity to engage with our network and the investment ecosystem, sparking conversations around how we might better position the UK as a global hub for innovation, and reap greater rewards from our most promising high growth businesses and best-in-class research and development facilities.
Our Executive Chairman, Douglas Hansen-Luke, set the tone for the day: "We do not only need to have great ideas. We need to accelerate and scale up companies. Those that raise money most regularly are the ones that succeed and win.”
At Future Planet Capital, we have frequently engaged with entrepreneurs, investors and asset managers in the UK and further afield, as well as those in the pensions and insurance industry. From this, we know there is consensus amongst all parties on the need to both improve the UK’s funding environment, and to do so with urgency.
With that, our Partner Day also served to progress these discussions while unearthing answers to the following questions: how do we build a supportive investment ecosystem in Britain? And what can we do now to help the UK accelerate its journey towards unlocking venture capital investment into its most promising scaleups?
The first step is relatively straightforward. We need to stop talking about impact investment and start doing it. At Future Planet Capital, we are led by impact, backing growth companies that are solving the world’s greatest challenges.
But it so happens that these impactful companies are often able to create the best returns. Integrating impact and societal value into investor business models and portfolio strategies is, therefore, crucial. As one of our insightful panelists, Katie Fulford-Smith, succinctly summarised, by ensuring effective collaboration between LPs and GPs we can better implement the frameworks needed for the efficient allocation for impact.
This is something we have worked hard to do here at Future Planet Capital, as our Impact Lead, Alex Shadbolt set out in the first of four panel discussions on the day: Impact Investing: Future Planet Capital’s inaugural Impact Report.
We’re striving to push the industry forward, by adopting new impact frameworks, collaborating with other investors and sharing our insights, and showing commitment to novel initiatives in impact, such as 1000 Ocean Startups’ Ocean Impact Navigator tool.
However, even with a firm commitment to impact in place, it is important that investors are directing capital to where it’s most needed. The world faces countless challenges – disease and pandemics, water scarcity, biodiversity loss, and food security are but a few.
But while all these areas deserve investment, climate change is thought to be the greatest global threat facing the world this century. As such, it is essential we move fast to find a solution to the climate crisis.
This topic was centre stage during the second panel discussion of the day, which focused on The Blue Economy: the state of our oceans, challenges, and opportunities, and was led by Future Planet Capital’s Head of Global Ventures, Ed Phillips.
As Ed made clear, if protected, our oceans hold great potential for curbing the repercussions of climate change, purely through their natural capabilities. They already produce 50% of the world’s oxygen, and absorb 30% of global carbon dioxide emissions, for example. And if leveraged, ocean-based climate solutions have the potential to reduce the emissions gap by up to 35%.
But if we are to truly unlock the potential of our oceans in the climate race, we must focus our investment on innovation in the blue economy – which, at present, sees only a fraction of all climate finance. In the UK, blue investment opportunities already exist. One of Future Planet Capital’s most exciting portfolio companies, Rovco, is already making waves in the offshore wind sector through its advanced subsea robotics and integrated survey solutions.
Of course, looking beyond the ocean economy, opportunity in the UK can be found across all industries and sectors. The third panel discussion of the day focused on Scaling Britain: supporting our most promising science and technology scaleups.
The UK is steeped in science and technological innovation – from building the steam engine to developing the Oxford-AstraZeneca COVID-19 vaccine, which was aided by Barinthus Biotherapeutics (formerly Vaccitech), one of Future Planet Capital’s portfolio companies.
We punch well above our weight. And yet, at present, many of our most promising science and technology companies are pushed abroad or held back by a lack of funding.
As Haas School of Business’ Jerome Engel argued, we mustn’t neglect our previous successes. This is a lesson the UK can take from Silicon Valley in the US, where the lifeblood is not magic – as many might believe – but a history of entrepreneurialism, perseverance, and commitment to innovation and growth.
The UK’s investors and entrepreneurs alike should look to apply this same attitude, which we at Future Planet Capital know exists, to work together in creating a solutions-based platform that encourages investors to invest, and innovators to innovate.
The UK’s approach – in particular, from its pension funds – to venture capital and private markets has a crucial role to play here. This theme was discussed in the fourth and final panel discussion: Venture Capital in the UK economy with the BVCA’s Chris Elphick.
We know that pension funds need to invest more in venture capital if we are to accelerate growth and scale as a matter of urgency. We’ve seen some progress over the past 12 months, stemming from the Chancellor’s Mansion House reforms last July – some of our largest pension funds pledged to invest 5% of portfolios into venture. However, many pension funds appear unable to step beyond an outlook of caution.
A necessary step is to bring the conversation around venture capital and private markets to the fore, whether that be through industry events, government pledges, or media. To some degree, the industry is still deemed cloudy, filled with risk and uncertainty, and it is crucial to reverse this narrative.
More than this, to further abate these feelings of caution amongst pension funds, we must leverage the abundant expertise of early-stage investors, both based in the UK and beyond, that is at our disposal.
In creating working partnerships between venture specialists and pension funds in the UK, we will be able to funnel the necessary capital towards the scaleups with the greatest potential, not just to deliver returns for individuals, businesses and the economy, but also to drive positive change through impact.
We’d like to thank everyone who attended our Partner Day. In particular, a special thanks to those who shared their expertise and insight at each panel discussion.
The conversations that were had throughout the day were hugely productive, and shed light on what we as an investment community must do next.
Most importantly, though, we need to move faster in putting these words into action. Future Planet Capital looks forward to continuing its work in supporting businesses create impact through solving the world’s greatest challenges, and driving the UK’s journey towards becoming a global hub for innovation.
Sam Altman Talks AI and Fusion (amongst other things)
By Lyle Pentith, Portfolio Manager
Last week, I had the privilege of attending an exclusive event with OpenAI's founder, Sam Altman at Harvard University, hosted by our partners at Xfund.
Beyond talk of Barbie vs Oppenheimer, discussions mostly revolved around Mr Altman’s views on AI and its profound and unavoidable implications for humanity. Perhaps what stood out most for me was Altman’s firm belief that, ultimately, the price of computational power would come to match the price of energy directly.
Altman discussed a need to focus our efforts on advancements in sustainable energy generation alongside the growth of AI. As indispensable pillars of technological advancement and environmental sustainability in today's world, the symbiotic relationship between AI and renewable energy cannot be overstated.
Altman showed enthusiasm for fusion and solar-plus-storage technologies, championing their potential to revolutionise our energy landscape. He also talked to fusion energy as one notable solution to the AI energy problem, an area in which Future Planet Capital has a stake as a founding investor in the Oxford spinout Tokamak Energy.
Nuclear fusion, which powers the sun and stars, promises to provide limitless, clean energy for humanity. However, achieving the pinnacle of fusion energy production – ignition – remains a significant challenge. Ignition occurs when enough fusion reactions take place to become self-sustaining, producing more energy than is required to initiate the reaction. This milestone is crucial for making fusion energy economically viable and capable of providing infinite energy.
The hurdles to achieving ignition include controlling and sustaining the extremely high temperatures and pressures required for fusion reactions. This is where AI plays a crucial role. Complex simulations and experiments are conducted to better understand the behaviour of plasma, the superheated gas where fusion reactions occur, produced in fusion reactors like those developed by Tokamak Energy and its US competitors. These simulations involve vast amounts of data and require precise control over various parameters to optimise reactor performance.
AI algorithms are being used to automate and optimise these simulations, allowing researchers to explore a wider range of scenarios and identify the most promising approaches to achieving ignition. Machine learning techniques can analyse large datasets generated from experiments and simulations to identify patterns and insights that may not be apparent to traditional researchers.
However, the immediate environmental impact of AI's energy consumption cannot be ignored. While AI offers unprecedented opportunities for innovation, it also comes with significant energy demands, which have been the topic of much negative news flow. As AI models become larger and more complex, their energy consumption is poised to contribute significantly to global carbon emissions.
Yet, as Altman pointed out, the cost of compute will be dictated by the cost of energy. The dual success of AI and renewable energy is critical to addressing some of humanity's most pressing challenges. As we have seen, AI is revolutionising how we generate, distribute, and manage renewable energy, while renewable energy sources provide the sustainable power needed to support the growth of AI technologies.
By leveraging AI, renewable energy technologies become more efficient, reliable, and accessible. AI-driven optimisation algorithms can enhance the performance of solar panels, wind turbines, and energy storage systems, maximising their energy output and minimising waste. Additionally, AI-powered predictive analytics enable better forecasting of energy demand and generation, improving grid stability and enabling more effective integration of renewable energy into the power grid.
In contrast, renewable energy is essential for supporting the energy-intensive nature of AI. As AI models become larger and more complex, the demand for computational power increases. By powering AI infrastructure with renewable energy sources, we can mitigate the environmental impact of AI's energy consumption and move towards a more sustainable future.
Ultimately, the success of AI and renewable energy is intertwined. As we advance in both fields, we unlock new opportunities for sustainable development, economic growth, and combating climate change. This relationship offers a pathway to a future where clean, abundant energy is driven by and fuels innovation through Artificial Intelligence.
We at Future Planet Capital are committed to supporting innovation across both spaces.
Unlocking the potential of the UK’s best, fast-growing businesses.
When it comes to science and technology scale-up investment, Britain has reached a crossroads.
Great potential rests in the UK’s high growth businesses – both those that already exist, and those bound to emerge from our best-in-class research and development ecosystem. At present, though, much of this potential lies dormant.
If the private sector moves quickly – with the support of the government, politicians, and the public sector – we can unlock the capital needed to nurture, retain, and develop our most promising startups and spinouts.
Not only will these companies thrive as a result, but Britain’s economy will reap the rewards.
Failing this, the consequences are stark. We risk losing our best businesses to overseas markets. It’s likely we also surrender the chance of significant and imminent economic growth.
And we almost certainly resign ourselves to the role of follower in the fast-accelerating scientific and technological revolution, rather than leader.
It’s a positive sign, then, that there is consensus across much of the financial services industry on the need to improve the funding environment for these high growth companies. So, too, is it encouraging that unlocking pension fund capital is considered key.
Most importantly, though, there is acknowledgement of the need to act now, to make Britain the best and most accessible location for major investment – both domestic and overseas.
At Future Planet Capital, we’re able to say this with confidence, having consulted with leading entrepreneurs, major investors and asset managers in the UK and beyond, and key figures in the insurance and pensions industry.
As a result, we’re able to set out a clear five-step plan of action for realising these shared goals:
Managers of insurance and pension assets should work closely with the wider investment industry, to ensure they have the necessary skills, expertise, and partnerships to direct capital towards the UK’s high growth businesses.
Insurers and pension funds should look to move quicker than set out in last year’s Mansion House reforms, aiming to outperform the current goal of nine funds allocating 5% of capital into unlisted and early-stage companies by 2030.
Investors should look to deploy capital in every region of the UK, with LEPs and local and combined authorities offering investors a single point of contact for investing in their areas.
Ministers should make investing in the UK more straightforward by implementing in full the recommendations of the recent Foreign Direct Investment Review by the end of the current year.
Politicians should set clear and consistent priority sectors for investment and provide long-term support for these sectors including public sector co-investment.
If Britain is to support its high growth scaleups – and see the results from doing so – we must take these steps. Our industry-wide conversations have provided confidence in the appetite to do so. It’s time to act on these discussions and get much-needed capital moving in the right direction.
Engineering Biology: High Impact, High Growth
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Dinner is Served
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Future Thinking: Securing Food for the Future
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Future Thinking: Defence & Security
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Future Thinking: Supply Chain Security
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Future Thinking: What lessons can we learn from COVID-19?
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Future Thinking: The Nexus of Innovation and Global Health
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Future Thinking: The Next Generation Healthcare
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Lord Wei and Future Planet Capital call for global shake up of investment rules in new report
The Wei Forward Report II, which launches today, curates industry and academic insight from leading investors, regulators, policy makers and thought leaders, providing recommendations as to how best encourage capital allocation to impactful solutions for global issues. The research was led by the Conservative Peer, Lord Wei of Shoreditch, and his research was commissioned by Future Planet Capital, the impact-led global university venture capital firm.
The Wei Forward Report II is based on extensive research and interviews with a wide cross-section of industry participants and experts. Leading VC investors, pension funds, insurers, sovereign wealth funds, policy makers and academics have all contributed to the report, the second in a series of three.
“Our latest report takes the reforms set out by the government in Edinburgh even further and suggests ways in which investors, regulators and governments can upskill, collaborate and make impactful investments. A tougher funding environment means we have to raise our ambition higher than ever and demand more of investors.”
The findings come after the UK government announced the Edinburgh Reforms, a substantial package of policy initiatives aimed at making the UK’s financial services sector more globally competitive, sustainable, and technologically advanced.
The Wei Forward Report backs the reforms, viewing them as a golden opportunity to bring down regulatory barriers to innovation and competitiveness in financial services, which are currently holding back institutional investors – such as pension funds and insurers – from pursuing fixing long-term problems with private capital.
By calling for a radical rethink of the impactful investing policy framework, the Wei Forward Report II provides a range of recommendations to accelerate the commercialisation of innovative science and technology-based solutions to environmental and social challenges. The recommendations seek to capitalise on Prime Minister’s Rishi Sunak’s recent announcement of a £20bn increase in R&D funding for innovations that solve challenges such as energy security and net zero.
“In this report, I very much hope that the solutions advocated by Lord Wei, and many contributing experts, can be quickly studied, evaluated, improved and implemented. Most importantly, this report is a call to action. Our industry, governments, scientists and savers must and need to act now.”
Key recommendations from the Wei Forward Report II include:
A government stimulation of funding from pension funds and insurers, into investments that can solve short-term global issues such as the cost-of-living crisis. The UK’s Local Government Pension Schemes, administering 77 pension funds and serving public servants, represent a powerful source of impact capital for governments determining their governance. It is estimated that if the government matched this 10% impact pledge, it would generate £35 billion of positive impact.
A plan to drive impact investment by encouraging pension funds to require their investment committees to include trustees with a comprehensive and robust knowledge of impact investment. This will transform pension funds from the top down and drive them to always put impact at the heart of their investment strategies.
A new educational programme centring around regulation within the impact space. Emulating the success of the Teach First programme, this proposed scheme will bring individuals with STEM backgrounds into regulatory technology roles.
Calling for Sovereign Wealth Funds to align their investment strategy with positive impact frameworks, by providing a mechanism that underwrites part of the impact-related income of pension funds and insurers. This would ensure that regulators can relax rules such as Solvency II for such purposes, without concerns that this would increase systemic risk.
Encouraging insurers, who are acutely aware of the adverse effects climate change will have on their business models, to set aside profits that can be put into a joint industry-wide foundation established to invest into alternatives such as venture and PE for impact.
“Finance can be a huge force for good, driving impact that changes people’s lives and environments for better – but we need both government and finance to adapt if this impact is to be fully released. This is an important report with key recommendations that are well worth the consideration of institutional investors and government alike.”
The final Wei Forward Report will focus on impact measurement frameworks and will be released in 2023/early 2024.
Future Thinking: The future of Fusion Energy looks bright
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Climate Change: Can renewables do it all to get to NetZero by 2050?
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Investing in the blue economy
Investing in the blue economy
By Lyle Pentith, Portfolio Manager
Change is coming to our oceans and not before time. Covering two-thirds of the planet and absorbing over 30% of the CO2 from the atmosphere, they will play a crucial role in addressing the climate crisis. The Ocean Innovators Platform panel that I attended this week at COP27 showed how investors and entrepreneurs are taking on the challenge of building a sustainable, blue economy.
The event, organised by the Prince Albert II of Monaco Foundation, set out how innovation, and how we use our oceans, can drive climate mitigation and adaptation. It showcased both the new solutions and technologies in this area and the investors who are actively tackeling vital issues.
Often, discussions about global warming focus on land use. Deforestation and intensive agriculture go hand in hand with a rapidly increasing population, driving urbanisation and increasing onshore renewable energy development. Scaling up the use of our oceans will help to relieve our reliance on land for energy generation and carbon sinks, mitigating climate change's impact and nourishing marine ecosystems.
The solutions can be incredibly effective. According to the World Economic Forum, we are generating more renewable energy than ever, and the incredible progress in offshore renewable energy technology, such as floating wind and solar farms, is shifting our focus and dependence from land to sea.
These technologies play a pivotal role in reversing years of damage and maintaining our oceans, as well as introducing new ways of utilising this vast resource. It is a rewarding space for investors, and one which will continue to grow, providing substantial profit and ROI.
This work is increasingly appealing to larger institutional investors. Previously considered niche, the ecosystem is now better established and is delivering strong financial performance. Larger funds are being raised with the participation of institutional investors, such as SWFs, banks and CVCs. Barclays, Deutsche Bank and UBS Global Wealth Management’s contribution to the Ocean Innovation Platform demonstrate this.
Future Planet Capital was an early and enthusiastic backer in this space. We are pleased to be contributing our own investment in the blue economy, recently announcing the close of a new €20m Blue Ocean mandate aimed at tackling key issues affecting the world’s oceans in partnership with the Prince Albert II of Monaco Foundation and the Monaco Government. Through this mandate, we are actively addressing one of the greatest challenges faced by our society today – climate change.
The Prince Albert II of Monaco Foundation has developed a successful platform and community to positively serve the blue economy. By partnering with Future Planet Capital and committing its capital, the Foundation sets an example for other institutions by addressing a key global challenge while pursuing a market return.
We’re pleased to share that we have been invited to participate in the Foundation’s next Ocean Innovators Platform event in March next year.