E710 | Helen McShane, Young Lives vs Cancer and Zoe Peden, Ananda on Mission-Driven Capital: When a 60-Year-Old Frontline Charity Becomes an Investor

0:00Andreas:Welcome back everyone to the European VC podcast. Today we're exploring a structural shift in how impact might be funded in the future. Young Lives vs. Cancer has spent more than 60 years supporting children and families through cancer, frontline services, advocacy and system navigation. But now through its innovation lab, they've taken a big new step, which is investing directly into startups. Its first check,£30 ,000 into Little Journey, a digital platform supporting children through hospital treatment is a great example of just that. So what happens when a charity doesn't just support families, but actually starts backing companies?

0:34Andreas:Helen brings the institutional lens, as well as Zoe from Ananda will bring the venture lens. Capital discipline, portfolio thinking, and what this signals for the wider ecosystem.

0:48Andreas:Let's start with the decision itself. Tell me all about it. How did you come to this decision, Helen?

0:53Zoe Peden:I think it's fair to say our board didn't just say, oh, let's be investors. That's certainly not where it started. It was much more about thinking as a charity, are we really using all of the assets that we have? Are we maximising them to improve outcomes for young cancer patients? Because we know from our research, from our frontline experience and our workers on the frontline, we know that there are enduring gaps and dysfunctions in the system of support around young cancer patients. And although our frontline services are amazing, they're not going to address all of those issues. So we started to think, OK, well, if we need to shape the system around young people, how can we do that?

1:42Zoe Peden:How can we build on what we already have and think differently, think of different ways to address some of those system level issues? And that's what led us to create the Young Lives Innovation Lab, which is, as you say, a way for us to partner with and sometimes invest in ventures that are addressing, you know, real world issues that young cancer patients face.

2:09Andreas:So you come from Ananda, a firm that I love. Maybe you can talk a bit about why you got involved in this and how it all matches.

2:16Helen McShane:The reasons that I'm involved are first is my experience and the second one is personal. So if I start with the experience, as well as being an investor, I used to be a founder and I was a social entrepreneur that built a venture in medical devices. And one of the first places that I got money from was a foundation called Unlimited. And they're a foundation for social entrepreneurs. They were the first people to believe in me and I got a grant from them. and then full cycle when I exited and became an investor I was invited onto their investment committee so I had experience already working for a foundation on an investment committee had looked at all the different models and I was approached I think someone had recommended to speak to me because of that experience and then what Helen didn't know was that personally I also had a half sister who at 17 had ovarian cancer and was supported by Young Lives Versus Cancer who was called Click Sergeant back then and absolutely made the difference for her to go through two years of hell and when you're a teenager that the combinations of that the hormones that you're going through anyway and then going through all the treatment it's just it's another planet that they're on and they need all the help that they can get and so I it was very personal when I was approached I had to say yes I'm sure that a lot of people listening in just as myself

3:48Andreas:have stories that are connected to this on behalf of everyone tuning in thank you for the work you do both of you let me ask you and from that go to a really tough question directly to venture is all about millions here and millions there you invested 30k can you talk a bit about the what why is it relevant that you do small investments like this like I'm playing the devil's advocate here but let's just get it out talk about it why does it make sense to make even

4:19Zoe Peden:small investments like this from my perspective you know 30k it says this is small ticket in big around and so it's not really about the money this is about the what we call the mission capital that we bring to that business we have deep expertise in psychosocial needs and how to how to support them how to deliver that those kind of really important long-term well-being outcomes for people. We have trusted reach into thousands and thousands and thousands of children and young people and their families who, you know, have experience of trauma. They're a community that want to give back. They want to be part of creating solutions for the next generation.

5:10Zoe Peden:we have you know safeguarding expertise we have credibility within the nhs so we have around 200 professional social workers who are young lives social workers but work within mdt so we are embedded within the nhs in that sense and you know close working relationship with clinicians as well as professional social workers. What we want to do is use those assets that we have as a charity that we already have and use them in a different way to support ventures that are aligned to our mission that we think have real potential to deliver sustainable, scalable impact for young cancer patients. We want to use that mission capital to support them to be successful.

6:03Zoe Peden:so it really is it's all about the added extra that the value add that we bring so any investment you know it has to have a clear we have to be able to deliver a clear value add to that company in order for us to to do that I just wanted to to dive in here to say that you know all those

6:22Helen McShane:years back when I was a founder I actually would have loved investment of this type because I did work with a charity called Mencap they were one of the first enterprise partners that I had because I was doing you know direct to consumer before then through the app store and partnering with them helped me to get venture capital money and basically it was me showing that I could grow into this enterprise level and Mencap were the first so having some investment in addition would have been like the ultimate you know signaling that we believe in you just being a customer was fantastic for me back then but you know having as an investment also you as a founder want to say yes I'm building something that I would like this charity this partner to be part of and I reap the benefits as well because that's why I'm doing what I'm doing so I think it's really aligned for healthcare particularly.

7:16Andreas:I can only imagine and we always talk about the value adders as investors and I think it could not be more clear how powerful it is to be able to say that you have an organization like yours behind you. Can you share any success stories already where you've seen that, okay, this is where you could... And to be fair, you also said in the beginning, you're both partner and then sometimes you invest. So I think it's fair to discuss both and the examples can come both from the partner side and the investor side, of course.

7:45Zoe Peden:We've made one investment so far and that's into a company called Little Journey. With that partnership, that investment and partnership, We're going to be working with them to co-design, co-develop and test a pediatric oncology version of their platform. And to Zoe's point, you know, get that out at national reach through our frontline services and kind of test and evidence the impact of that. So that's our first investment. We have a couple more that we are looking at in due diligence that we're really excited about. They're a little bit earlier stage. And so I won't go into details, but it's been interesting to see what impact our conversations are having on other investors that may decide to join those early rounds.

8:35Zoe Peden:In terms of a partnership and not an investment opportunity, this isn't with an early stage venture. It's actually with a much more established company, but we're partnering with a mental health provider called Couth in the UK. They work with NHS trusts over most of the UK, actually, to provide mental health support for young people. It's anonymous. There's no kind of referral threshold that you have to meet. And that can range from, you know, community based chats through to actually, you know, a series of one to one counselling sessions. so we're working with that company to understand what aspects of their service work for young cancer patients and how we can more systematically get young cancer patients referred into their service and and you know hopefully getting the benefits from that I think you know Zoe warned me about this right at the start she said sourcing these companies that's going to be hard that's going to be your biggest biggest challenge and yeah that's right you know we're a really small team working on this and so what we need is to meet those companies those early stage ventures that really have the greatest potential and so it's you know it's great to be able to come on onto this podcast and talk about what we're doing to kind of raise our profile and hopefully find those ventures that really could work for our beneficiary group.

10:06Andreas:So can you talk a bit about this part of it? Because on the one hand, yes, it can be a distraction, but on the other hand, it can also allow you to meet a lot of founders that are building important things for the stakeholder group of Young Lives. Can you talk a bit about how you've been advising Helen to think about this and I always on a VC from a VC perspective think about flywheels and how do you make everything tie in together so that it's all because we all know that we're typically as VCs running with low management fees you'd wish you could do more and for that reason like making everything click together is really important and it only is more important of course in a charity work.

10:48Helen McShane:Well I want to say that internally they've hired two people that have a background in investment and starting startups too so they got a couple of people in-house who are really you know formidable so my my input is much more minimal the role that I played at the beginning when it was forming was to educate the board the board of trustees remember this is other people's money it's public you know donations about the risk associated with this and to make sure that whoever they were taking that money from there was transparency around the risk that we do in this field and I was pleased to hear that you know that this was all agreed and above board and it was very much about learning and educating the charity itself was an important part so that made me feel more comfortable to to get involved because you know the things that that we do as VCs can be quite crazy with some of our money and I knew that this was we needed to find a balance with young lives around that so it's so they've got the people on board already and I think more than anything it was to talk about partnerships to be working with people you've got me and so I see a lot of the market already so I can advise what's on market what's off market when people come up with valuations I can inform whether they're out of their mind or whether this is much more where it should be and the charity are partnering with a number of other people to help them on due diligence it can get quiet specialists we know VCs we we have our paid advisors but I think we also do a lot of hustling again we don't have a lot of money so we do a lot of reaching out on LinkedIn and I've just told that you know that's what the charity needs to do as well and having that charity label should actually, if you think about it, make people more willing to want to spend 20 minutes, you know, answering the questions, helping them to make those decisions more than helping us, VCs.

12:54Helen McShane:They're like, hey, you've got loads of money, you know, why should I go and help you? But being a charity, I think you've got a much better chance of getting some very special people coming forward to assist. So that's been my encouragement on that side.

13:07Andreas:I'd love to ask both of you about the process of getting this off the ground in the beginning, because I hope that there are a lot of charities and organizations that are not normally involved in venture that will be inspired by this conversation and both probably seek the two of you out to understand what you've done and maybe get some personal guidance. But if you were to say here, like, I'm a charity, I want to get involved in venture, I think we could do something important here. I can see how our organization and our reach is valuable to founders. I can see that there's a lot of things happening as in healthcare outside of the core offering, so to say, from the public system that is making a really big change for people.

13:51Andreas:And for that reason, we want to be involved in this. Where should people start?

13:55Zoe Peden:I mean, I can give my sort of perspective from inside the charity, you know, getting something like this off the ground. I think the absolute non-negotiables are you need to be really clear about your intent. You know, what are your objectives? For us, we're not trying to be a VC. We're not trying to make loads of money. We're trying to have impact and we're trying to learn. So I think that clarity of intent is really important. You need to have the board on side, or at least a good proportion of the board on side, and for them to be informed about what they're getting into. and really clear leadership and ownership of this because the biggest challenge in my experience in charities is that they are extremely resource constrained environments and you know where if we're if you're a frontline delivery charity like we are you're dealing with needs in the here and now and and that's you know that's a big call on your your resource your capacity your headspace you know the pull the need to support those people today here and now is is huge but with this kind of work you have to carve out some time and headspace to think differently about problems and to try things and be willing to learn what doesn't work as well as what does work and really have the long game in sight and those two things are quite conflicting so you need to have that leadership ownership to carve out the time and space to do that work doesn't need loads of money but it does need protecting and so I think they're really the sort of foundational pieces you need to have in place and then of course you know you need to have develop your governance structures as we've spoken about you know as Zoe said we can't afford to erode trust through doing this kind of thing you know we need to be making really defensible decisions about how we spend money so you do need strong governance in place.

16:02Zoe Peden:The investment committee is chaired by Zoe and we have another independent member with experience as a founder and health tech and investment but then we have two trustees on the investment committee both of them have experience in this field in this broad field and we've actually brought these trustees onto the board before doing this work so we had some expertise you know set around the table and our chief exec is on is on the committee

16:30Helen McShane:as well so they are the decision makers yeah she's the important one so you do you do need that

16:37Zoe Peden:level of ownership and visibility.

16:40Andreas:Sorry, I would love to ask you about the importance of having the chief exec involved. It's something that, and to anyone tuning in, we talk a lot about the importance of having executive buy-in on the podcast every time we talk about corporate investing. We have a series dedicated only to corporates that get engaged in venture. It's the same piece of advice, but I'd love to hear your take on it and why you're amplifying it here.

17:05Helen McShane:Well, I mean, when I signed up for this, I wanted to speak to the chair as well of the trustees. So right at the top, spoke to him, wanted to get comfortable with the risk appetite that was required for this, felt better about that. And then with the CEO, because I've worked for charities as well. I've done the charities, public sector, startup, corporate. I've worked in all sorts. But I know from working in charities, you are pulled in many directions, similar to a startup. But there's an emotional draw as well. Their lives are on the line often. And you have to make choices about where to put your resources all the time.

17:47Helen McShane:and my concern was that if we were going to invest the charity's money into this and actually work with them strategically you know similar to how a corporate VC might would that be able to be carried out could we do that could we deliver on the promise to these founders and to make sure that that was possible and that's when you need the CEO there to make sure if this decision is made that it will be carried out because she has the authority to direct the resources. So that for me was key to the success of this program, experiment, whatever you want to call it, that we're learning from, having her to make sure this is carried out.

18:28Andreas:I'd love to ask both of you before we close, if you were to say that there's one core litmus test for initiating something like this. So anyone tuning in, if you want to say, should we look further or should we not? What's the question you should ask or what's the answer you should come to?

18:47Helen McShane:For me, it's about innovation. If you're finding, you're running programs as a service provider and it's the same every year, but you're not seeing the impact and you know something has to change and you want to act as a catalyst and you want to have put some of your funding towards being catalytic capital, this is one of those solutions that you can deliver.

19:10Andreas:If I should just give my take, and I think that it will probably resonate with some people that are, let's call it highly liberal, because sometimes we operate in systems where we can see that technology can really make a big difference. And the people that are building startups are often incredibly mission driven. But they've also seen that there are breaking points in this case, in the public sector and in the offering that we can get from the established system. And I am just seeing that there's so much we can do through these startups that if they are just brought into the world and scaled, wow, are we in a better place.

19:52Andreas:And I've worked actually a little bit with people that did a lot of procurement for the health sector in Denmark. And they kept seeing it again and again and again that the startups need in this space. You have so many founders that are building incredibly daring projects, but it's often in the procurement part where it gets very, very difficult for the established system to get involved. So anything that will allow the players around the public system to build up credibility in startups so that they can better get through these heavy processes oftentimes is just incredibly important. And I think that we have many places where this is where the system kind of breaks and where we need to find a bridge.

20:36Zoe Peden:If you're a charity and you want to get into this, you have to you have to be comfortable with holding this kind of tension between the here and now needs. and, you know, people's draw to meeting those needs. You need to hold that with the long-term view that, you know, that you're talking about the future and how are services in the future going to work. You know, it could look really different and we have to engage with that long view as well as continuing to, for us, deliver the services that are needed today. and you know will probably always be needed because there are some complex needs that are going to be solved by you know a scalable tech venture so you need you need to be able to hold both in your mind at once and I think you also need to be prepared to sort of fly in the in the face of convention as well because this kind of work is not what people think associate with charities, you know, it's sort of a dissonance in their minds.

21:45Zoe Peden:And so a lot of energy goes into telling the story, telling the narrative, trying to shift people's perceptions and mindsets. You have to be willing to engage in that as well.

21:57Andreas:In five years, where are you ideally?

22:00Zoe Peden:In five years, I'd love to have a broader portfolio of ventures that are, you know, delivering real impact. I'd love to, you know, really have learned how to bring our value add in the most effective way to have that model nailed. I would love to have seen, you know, some financial return that we can recycle back in. I think that would be, that would be great as well. And yeah, I'd love to see more charities doing this work and charities collaborating together to get a bit more scale and to kind of share those expertise as well.

22:40Andreas:Helen and Sori, thank you so much for doing the important work you're doing. And thank you so much for coming on the podcast to hopefully inspire some more to walk in your footsteps.