Smart Capital: Why money is just the start
‘MMC’s dedicated research team provides the Firm with a deep and differentiated understanding of emerging technologies and sector dynamics to identify attractive investment opportunities. MMC’s research team also supports portfolio companies through the life of MMC’s investment.’
David Kelnar, The State of AI: Divergence 2019
MMC Partner and Head of Research, David Kelnar, presenting at a recent event with MMC Venture Partner Dr Janet Bastiman.
In a competitive venture market standing out as a fund of choice can be the difference between top-quartile and mediocre returns. Capital alone is no longer enough, money doesn’t win the hearts and minds of the best entrepreneurs and doesn’t create a sustainable brand within the ever-evolving entrepreneurial UK venture market. Fund success is based on the performance of its portfolio companies and the ability of the fund to achieve exits. To achieve our goal of being a venture fund of choice we must identify and back the best companies, have a deep understanding of markets and technologies, and support our portfolio through its journey of growth. To support this goal we established a research department in 2016, led by David Kelnar (former CFO Babylon Health and Tech Analyst) and Asen Kostadinov (former Barclays Equity Analyst).
Through research we explore core technological themes which in the words of Steven Roberts (Barclays UK Ventures Chief Scientific Advisers) are ‘transforming business and society, changing how we live and work’. We have produced two ground breaking reports into artificial intelligence, reports which have been heralded globally (Wired, CNN etc). Research enables us to navigate through the hype, wastage, and mis-labelling, in order to identify the best early stage companies. In a world full of ‘white noise’ and false information, research gives us truth.
Alongside proprietary deal flow (e.g. Senseye, Peak), we share learnings with our portfolio companies and the wider market. MMC Ventures - ‘The State of AI: Divergence 2019’ and MMC Ventures – ‘The AI Playbook’ are prime examples of publications which can add significant value to CIOs, CTOs, CEOs of not only our portfolio companies, but also the wider venture and enterprise sectors. We actively disseminate our research work and learnings between our portfolio companies giving them a competitive advantage, enabling them to benefit from a research function to ‘get ahead’ of peers. Research can become a powerful resource; the team’s skillset is utilised in other areas for example they run a piece of market research into every deal which reaches our investment committee. This report is shared with founders, regardless of whether we make the final investment. The research team has also taken on short term consulting projects on behalf of our portfolio companies. This level of engagement is becoming common knowledge within the founder community and is increasingly separating MMC from the rest of the pack. To attract the best companies, we must demonstrate our expertise, knowledge and network.
Combined with research we have invested heavily into our investment team, employing specialists such as Tom Moon (medical doctor and former BCG strategic consultant) who naturally focuses on UK Healthcare Technology, read about his work here. We have grown our investment team from 6 to 11, including two other recent hires from BCG and the hire of Oliver Richards (Investment Director, former MD of Myvouchercodes.co.uk, MD of Monitise Create and COO at Localistico).
Within UK venture there are less than a handful of funds which have standalone research teams. For MMC it has become a key function, one which makes us unique and it's starting to pay dividends.
You can find more information on MMC's unique approach to investing here.