Burbidge is back! UK veteran VC launches NFG

0:04Mike Butcher:Hello and welcome to PathFounders with me, Mike Butcher. We like to look at the code, the capital and the consequences in the European startup ecosystem. And remember, you can join PathFounders Network, the new network for founders, investors and ecosystem players in Europe, where instead of just commenting on our posts, you'll be able to interact with each other. Yes, we are going to build the LinkedIn for Europe and tech. That's what it's all about. So go to pathfounders.com slash network and get all the information there, your application form and apply. Eileen Burbage is one of the best known figures in UK venture capital.

0:49Mike Butcher:As a co-founder of Passion Capital, she backed companies including Monzo, GoCardless and Marshmallow after an earlier career spanning Apple, Yahoo and one of the first five employees at Skype. She also spent eight years as the UK's Treasury Special Envoy for FinTech. And now she's starting again. Her new vehicle, NFG, is targeting a£20 million fund to invest at the earliest stages. So why launch a new fund now? What she learned after more than a decade at Passion Capital. Eileen, thanks very much for joining us at Path Founders. Thanks for having me, Mike. so it's it's definitely it's the big reveal because uh i think a lot of people were wondering what you might be doing after passion capital uh and you moved you moved on um you've also taken some roles in some other companies but now you've you're starting nfg first of all what does nfg stand for i can't say it's not very polite if i'm honest so i think i'll leave it up to audience speculation or interpretation but it could be new fund group next fund group next one generation something really nice and you know uh vanilla and uh non-controversial uh something like new go or no go or something like that maybe something like no something given maybe no no f git, as we like to say in Britain.

2:31Mike Butcher:Well, you came out of the gate this week with, I saw that there was an article in The Telegraph, and you did say no jerks, but jerks is spelt with a G, so maybe something else. But what do you, let's just zoom out a little bit, because it's a£20 million fund. I don't know if that's going to be the hard cap or not. You tell us. what's the kind of thesis give us the kind of you know the 30 ,000 feet briefing. Sure and also just a quick correction because I do feel Jill was really really good to cover it but she's with the Sunday Times not with the Telegraph but she was really good about it and actually made a mention early last year so it was her follow-up on that in fact we held the first closing at the very end of July so it's been a while and I would typically not be one to shout from the rooftops and say, oh, look, I've closed a fund because I'd rather speak about the activities I get to do with that fund, the investments I make, the founders I'm backing.

3:31And I can't say anything about those early ones yet. But it was something that felt like it was nice to have Jill do a follow up for me and also a chance to thank my cornerstone investors, one of whom is Thema, based here in the UK, and another of which is a Singaporean based family office. But then to your question, what's the point? What am I aiming to do? You're right that the target is a 20 million pound fund so it's pretty small very small really there is maybe a the opportunity to go up to about 30 million so it might be slightly larger than that but either way the thesis is therefore being the first check being very early maybe that's going to be called pre-seed for as long as i'm doing it but maybe it's going to be called something new because when we started passion pre-seed didn't exist as a term and now it's the term i don't know if it's going to be pre-pre-seed.

4:18I've heard some people talk about inception checks or inception rounds. I like to think about it as still investing alongside friends and family members and maybe angel investors, but probably before maybe other institutions if possible. And the whole point is, I just want to work really, really early with family teams as they're getting off the ground and as they're getting started.

4:39Mike Butcher:Right. Okay. Yes, you're very true. Very correct. There has been this new phrase banding about recently called inception funds which uh just reminds me of spray and pray frankly but uh everything old is new again but you've also specifically said thank you for correcting me in the sunday times that you're looking at founders in fintech health tech infrastructure was that right um what or are you generalist no so i am generalist and i think the hook or the reason the journalist picked up on that is i am going to be a generalist sort of no sector specific investor and I'm going to be 100 % founder led.

5:16So if I were to say to you, oh, I don't want to do this or I don't want to be in that sector, Mike, I'm sure that I would probably break that rule because if I meet a compelling founder, I'll go and follow and want to back them whatever they're doing. However, the other point that I make, and I think the reason that the journalist picked up on that is because I think this rush to invest in foundational AI and this rush to invest in language models and everything else, which is extremely important, don't get me wrong, but requires a lot more capital, I think does mean that there might be great businesses, fantastic founders doing other things, of which, by the way, AI has got to be a part of now.

5:55It's not its own separate thing. But that maybe will be overlooked because everyone else is trying to chase or go after the foundational pieces of AI.

6:03Mike Butcher:And also, I suppose you've also noticed teams now spin up very quickly because they can use AI to get to product market fit quite quickly. They, you know, they're leveraging the exponential nature of AI to get go go pretty fast. And so it's sort of the market has changed quite radically. And we're also getting very young founders as well, far younger than perhaps previous. Is that something you've also noticed? I have noticed both. You're right. It's definitely faster and quicker to get something spun up. I do still think, though, it requires meaningful investment and time in order to get something that's sustainable, has trust and security in it, that actually takes into account everything else that might be needed for scaling.

6:49But absolutely getting started, getting going, getting something prototyped, testing it with users, whether that's B2B or direct to consumers is much faster. and therefore with that barrier to entry probably coming down I think you're right that we're seeing younger founders come through that we're seeing people who might not be even finishing academia or maybe skipping academia or deciding to try something just out of secondary school or high school or whatnot I also think it's bringing in older founders as well or it's just bringing greater diversity across the board so you're seeing younger you're seeing older you're seeing repeats people who might have been operational for so long because they thought they might have lack the technical skills to start a company, but realizing they could do that now too.

7:31People who came from other sectors that are thinking they weren't technical enough and now realizing the technology piece at least to get started is a little bit easier to reach. So I think we're seeing breadth across the board.

7:44Mike Butcher:I might have missed it earlier. Did you say 20 million or 30 million you've raised already or you've raised 20 or you're just announcing it so far? Yeah, so the target is 20 going up to 30 and we held a first closing which is less than either of those numbers based on the first two cornerstone investors which which has allowed me to already sign a few term sheets and start writing checks oh okay so right so it's basically you're building out from here now you i think you described in your announcement as being founder friendly but let's face it every vc says that um what kind of what's that going to mean in practice from your end yeah you're absolutely right.

8:22Of course, everyone's going to say they're founder friendly. Why would they not? And they do need to be these days. But I would like to think that my reputation and maybe the sort of way I've acted in the market for the last 15 years. So we set up Passion Fund. One was a 2011 vintage. So I've been doing this for 15 years and I'm hoping that my track record and my reputation amongst founders will speak to the fact that I do try to be founder friendly. That doesn't mean, by the way, just letting them do whatever they want. It does mean hopefully being aligned from the start supporting them with their ambition and potentially just not adding overhead if that's not needed so if in the early stages my value can be to leave them alone to maybe run screen or a filter from other people or to help them be heads down and focus i'll do that and hopefully when it comes down to decision making governance future rounds future investments i'll be aligned with the founders again it doesn't mean i'm going to let them do carte blanche whatever they want but But I'll try to be as aligned as I possibly can, because I understand what it takes to start and run a business.

9:27And hopefully I therefore don't add the sort of net negative things.

9:31Mike Butcher:Well, yes, you certainly I'm glad you mentioned Passion Capital. You certainly did get a very have quite a vintage reputation in the UK tech scene and in Europe as well. And I was just doing some quick research prior to our conversation that since 2011, Passion delivered a net IR of 23 percent and a 2.5x DPI, backing over 100 companies from seed and producing five fintech unicorns. So pretty good, you know, vintage there. and obviously it did have issues when one of the partners, Stefan Glenza, ended up being arrested and charged for sexual assault. And there was definitely a wobble there. And you have since moved on.

10:22Mike Butcher:The company, Passion Capital, continues under Robert D 'Giro and other new partners. partners um what's your relationship with passion now and do you think you'll be uh investing alongside them with your new fund yes so obviously i feel like as one of the co-founding partners of passion it was my baby as well and so i feel really protective of it and i'm proud of what we did and of course i realized and i tell myself i can't necessarily be held responsible for maybe what other people do but i do hope the way we responded the way we reacted and how we've behaved as a firm, a fund and a brand since those wobbles as you described them, hopefully speak to our integrity and our character.

11:07And I am still part of passion, by the way, in terms of the historical funds and the sort of trailing commitments or the legacy investments. So I do still have all my board seats that I held for passion. I'm still on the board for Monzo, for example, and I'm still working with Fund3 companies, some of which we invested more recently and, you know, 2020 up to 2022, 2023 even. So I'm still doing all that for passion. And I think it's just better for the ecosystem for there to be even more choices and more opportunities and more early stage funds for founders to choose from. So I do hope that, yeah, we'll both continue to have great track records.

11:44Mike Butcher:And so now effectively, I suppose you're going to be a solo GP or are you looking to build out the partnership in some way? No, that's right. I am looking to be a solo GP. I mean, I do have a longtime collaborator who's helping me. Giuliano was with me at Passion Capital and has helped me on projects, including for TIFAT and other things since. So he's helping me with much of what I'm doing at NFG. But in terms of general partners and how we're going to be set up, I do have it set up as a solo GP fund. I do want to be able, therefore, to behave like an angel would. And I had been making angel investments in between when I stopped investing on behalf of Passion and setting up NFG.

12:23And I really think that cohort is fantastic. It includes, you know, companies such as Instant, Lightyear and the like. And so I'd just like to continue doing that, but with a bit more of a meaningful check out of energy now.

12:35Mike Butcher:Well, the whole landscape has changed quite a bit, as I'm sure as you realise since 2011. And you had U.S. funds coming over for a while, putting down offices. Some of them left. I think the AI era means that there are actually quite a lot of US funds playing over here without an office. There was a founder the other day who had Kostler Ventures in there as an investor. They don't have an office here at all, I don't think, as far as I know. So it's a very different sort of ecosystem, isn't it now? I mean, what's your impression of where things are at the moment? I agree with you. It's certainly a very different ecosystem than it was in 2011, no doubt.

13:18But actually, what's interesting is that specific example, Khosla has been pretty active. And I guess at the time they were forward looking in investing here for a while, even without an office. So they're a follow on investor or co-investor of ours in Poly AI, for example, when I say passion capital portfolio company. So they have always been looking further afield, which is brilliant. But you're right. US firms have come set up offices, closed shop. New ones have come through. I think the ecosystem is far richer, deeper and broader than it was in 2011. It's to the benefit of entrepreneurs. I also think from the entrepreneurial side, we're seeing founders that have been through some of the scale ups from previous generations.

13:58You're seeing cohorts that were with companies that had become unicorns. You're seeing founders do it again, go back and be serial entrepreneurs. And so it's to everyone's benefit that we have more fantastic talent starting businesses and contributing to the scaling process or the scaling stage. And then we've got more investors for them to choose from as well. It's all good, I think. It's all positive.

14:20Mike Butcher:There's a lot of talk at the moment about Europe being behind in AI, behind in compute. The EU Commission keeps releasing ideas about how it can transform itself and a lot of it gets poo-pooed online, especially on X, unfortunately. where do you think the opportunities are now especially in Europe if we're lacking in compute energy is expensive what are the other ways that especially European founders can get ahead? Yeah so if you're asking about Europe more broadly and not just the UK I think there's lots of opportunities so we do still have some European players going after foundational models We do still have a fantastic alumni cohort from companies such as DeepMind.

15:08And so I do think you're going to continue to see innovation at that level. Do we have the volume and the numbers of the U.S. or China? No, but I still think we have opportunities there. I don't think it's closed to Europe or the U.K. And then more crucially, I do think we continue to have more opportunities in application level sort of AI. So whether that's applying to healthcare, whether it is to financial services, whether it is to multicultural, multilanguage, multisocietal types of use cases, I think we're better off here in the UK and in Europe than those in the US who might be a bit more insular and feel like users, consumers or businesses behave around the world like they're used to in the US, which is clearly not the case.

15:52Mike Butcher:right yeah and so so application level ai there's plenty and there's a lot of verticals i've seen uh keep somebody doing green screen converting green screen technology in industrials industrial settings into you know ai apps which is quite amazing so that's that's a very very good point um and what about the uk specifically there's also been talk about the new labor government um maybe putting more taxes in place, making it less, you know, desirable to start up in the UK. You spent quite a lot of time in government and talking to government people. Yeah, I'm optimistic. I mean, I've always been optimistic.

16:35And I guess that's why, like you alluded to, I was happy to work with or collaborate or advise with the government for some years. I'd love to be able to do that again with the current administration. I'm an optimist. I've seen, of course, that the best founders are the greatest builders. They're going to build irrespective of the macro situation and what's happening politically. They're looking to solve problems that they have experience with, whether it's firsthand or otherwise. And they'll do that irrespective of tax breaks, tax relief or whatever the situation could be. But I have witnessed how much easier government and government departments can make it for people who are building.

17:12And so I do think it seems like the current administration is open to that. At least they want to hear ideas. they're working with you know Alex de Pledge for example they've continued to ask for her advice she's a fantastic representative for founders across the country and so hopefully they'll continue to take that feedback on board and they're going to have to look at what they can balance with the other demands that they have right they've inherited a pretty stacked deck and they've got a lot to have to sort of balance out and weigh out but I'm an optimist otherwise I wouldn't be an investor.

17:44Mike Butcher:A comment and also they've also started the Sovereign AI fund as well. Any quick impressions? I think it's great that they set up the Sovereign AI Fund and that the government continues to invest in the British Business Bank, because I think they've demonstrated they have a model which is really effective in deploying capital and allocating capital. And I think that it's fantastic that they're continuing to do that. So I'm really hopeful that the Sovereign AI Fund will continue to help companies scale, that will help Britain continue to build on its strengths. And yeah, I look forward to seeing what happens with the investments that they make.

18:17Mike Butcher:Well, it's great to talk to you, Eileen. I've known you for a very long time, and it's great to see you back on deck with a new fund, NFG. And thanks very much for joining PathFounders. Thank you, Mike. It's great to chat with you again, and I hope we're going to have lots more conversations in future. I'm sure we will. And remember, join PathFounders Network, go to pathfounders.com slash network, where we're building out the new LinkedIn for European tech.

18:51We'll be right back.