305. Meet the VC Partner Who Built A Billion Portfolio Value Investing In Scientists w/ Devika Thapar | Wilbe

0:00Amardeep Parmar:So great to have you here today. Can you tell us what WillBe does? Absolutely. Great to be here. Thank you for having me. It's an honour to be your 300 and something episode.

0:13We're a venture fund and platform. We exist to help scientists build great companies. and we do that by combining venture know-how, a great peer network, early capital and physical lab space and we've been doing that now for a couple of years.

0:34Amardeep Parmar:So you're being very modest. Tell us about some of the big wins you've had already. We've now trained to date 1 ,400 scientists who are on our platform. Naturally, not every researcher decides to become an entrepreneur but we hope through the know-how they become better off it no matter what they decide to do. And we've backed about 25 companies. They've gone on to do some amazing, amazing work. They, I think, valued it. I think when we last checked, it was 1.3 billion. But in the last couple of weeks, that's shot up by about another 100 million. And we have founders that are working on creating substitutes to rare earth metals, literally creating platinum from abundant materials.

1:21That's Asya at Milvis. We have Francesco at Proxima Fusion who is literally bringing the energy of the stars on planet Earth by building a stellarator reactor. Founders like Shamit and Anshika that are building sensory computers or a liquid brain that can literally detect liquids with an insane level of fidelity. fidelity and oh gosh I can keep going uh going on and maybe some more examples will come yeah

1:49Amardeep Parmar:through the chat and obviously a fix on the scientific founders right and it starts from frustration so what was it about those founders you felt were being like underserved and what are you doing about it yeah I did start from frustration given that both my co-founder and I don't come from venture uh don't come from VC we are both operators and have been operating in the space of essentially working on frontier tech, bringing them commercializing it, bringing it to life from very different hats. And I think what we saw increasingly, especially when we started, I used to spend time, I used to live in New York, and then I moved to London briefly, back to New York.

2:26And then eventually, I love the ecosystem here, moved back to London to start, will be with Ale. We found increasingly in the ecosystem out here, in particular, in the Cambridge, Oxford, London nexus that first we felt quite strongly that a lot of innovation this century is going to be unlocked through science. That's where we're going to see the big wins. And if we are to see that happening, then we need to unlock the asset that's been the missing piece, which is the scientists. So far, we've looked at everything in science, like IP papers, but we haven't actually focused on the human capacity of the scientists to not just invent, but also lead and build businesses.

3:08And so with that in mind, when we started spending time across the research ecosystems in the UK initially, we found that every time we met a researcher, we saw the same expensive mistakes being made. So the most common one, which folks who are familiar with the space have come across is that, you know, the equity being taken by universities was enormous. So you're essentially sabotaging the company even before it started. Or you would see companies that are surrounded, where the founders are surrounded by this whole bunch of redundant stakeholders that are adding no value to the cap table and are just extracting value, if anything else.

3:48Angels, whatever. Like, it's just not really living up to the potential of what the company can create. And then, of course, the dominant one where you're thrown into building a business, but you have no idea how to even speak the language of venture and language of business. And then there were other bottlenecks around lab space. There's plenty of it in academia, but as soon as you leave academia, there's no access to physical infrastructure. So founders spend months and several dollars in trying to set that up. So she said, all right, we're going to tackle all of them at once, even though we know nothing about teaching scientists about business, because it's not like we're exited founders, or, you know, we're going to give them capital early, we were non-venture capitalists, and we're also going to build a real estate company to provide lab space, though we don't come from real estate either.

4:42And this is really Ali, we're going to do it all at once, which is like counterintuitive to any like logical advice to get, you know, to founders saying, focus on one thing, become great at it, and then do all the other things.

4:52Amardeep Parmar:Isn't the whole thing of like, do as I say, not as I do, right? Yeah, exactly. We're like, nope, we're going to do it all together. While pretty much broke, living on an island off the coast of the UK called the Isle of Wight, because we wanted to save on our rent in London, it was too expensive. And we said, you know, it's COVID. We're like, when else could we live on an island? So we were on a farm. The rent was£800, which was amazing. And that's where we started, incorporated all the different businesses and also ran our first seven cohorts, I think six cohorts will be on the island as well.

5:36I think I have gone into a complete tangent from your original...

5:41Amardeep Parmar:Tell us more about that. So you can start three different sides of a business at once. How did you actually make it happen? How did you do that? Yeah, so we said, I think this is, and lots has grown since and has evolved since, but we said we'll keep them independent because they should be thriving in their own right. And if they don't thrive as independent businesses, then you can kill it, rather than conflating everything as one. So on the education side, we said, we don't want this to sit under the fund because we truly believe that scientists need agency and this is an educational effort and therefore more philanthropic or a nonprofit than it is a capital endeavor.

6:27Because if you suddenly put it under the capital endeavor, then you're forced to basically view this from a lens of making investments. I guess you should pick on that because we're in this situation right now, right?

6:37Amardeep Parmar:So I was like, I'm going to get some advice from you about this. One of the challenges we have is that when there's so many founders that come from our systems in terms of education, and then it's separating them out into, okay, the fund is a different kind of thing that's going to have much more of a profit motive and much more, like, is this going to be a venture-backed business? How are you able to kind of get that communication across between those two different parts of what you were doing that the people who are in your programs didn't just think, oh, I should just get money from them too later on?

7:04Yeah, good point. And I think we almost did, it worked out very well at the start because it helped us build a very trusted community with researchers. In fact, no one even knew we had a fund. And even to date, we've never really communicated we have a fund. Of course, now it's, I mean, it's a part of the website that we have a portfolio, but we've never done fund announcements or anything of the sort. So all the researchers that would come to Willby purely would come for educational know-how on venture versus seeking investments. So it never created an adverse bias on either sides. And it also helped us align very well with university stakeholders because they, at least the folks that we would partner with at universities, knew that we were doing it because we want to help further the cause of how can we get researchers, entrepreneurial know-how.

7:56And especially from those that are familiar with the venture world rather than it being taught within universities. We raised a grant as well from Eric Schmidt's foundation, which kind of helped us, which is pivotal early on in kind of helping us scale the program, which also gave us exposure to the philanthropy world. You know, to our LPs, I think, yes, arguably it was a disservice because many may have felt that that structure is not going to hold true and may not be scalable or creates a conflict of interest as well. But I think it's that almost model building that allowed us to truly build, hopefully build something that lasts and truly understand our core stakeholder, which is scientists, rather than it being purely viewed as an asset to be extracted from, which was our kind of worry of joining it with the fund.

8:56And today, things have evolved a lot as well. So on the education side, all that programming and know-how, because we recorded it, we have so much content. And we said we were being capped. We were training, what, 80 to 100 researchers in a year coming from select partner institutions, probably 25 across Europe and the U.S. And we said this is not scalable because that means you're backing eight companies max in a year. So as GPs, we were not doing the right thing. We were doing a disservice as well. So we're like, all right, how do we how can we provide know-how still for free, but not cap ourselves to just 80?

9:35We should be able to give access to the eight, nine million scientists in the world around on what we do. And so we that's that's a decision that we took about a year and a half ago saying we don't need Cambridge's money. So Cambridge, Oxford, Imperial and a bunch of other universities used to pay us to train their researchers. So we were not just they were not just helping us promote it, but they actually valued the content enough to to kind of pay us on the nonprofit side. We said we don't need that because that's like it was ramen money at the start. But we don't need that. We would much rather if this could benefit every researcher, even if they're not even in our core geographies like U.S.

10:15and Europe and the U.S. and so we open sourced everything and that I must say you know speaking of like the the age that we live in now I mean all the tooling that exists today and you have multiple agents running all day long you can do so much more with very very little that probably would not have been possible two or three years down the line where we would have probably had to continue you know doing it in a way through through the philanthropic route but now we don't need to so in a way it's absorbed by the fund and it's absorbed by capital. And then lab on the other side remains a very independent effort because it requires expertise that even we don't have.

10:56So we have a co-founder who comes from real estate and he runs his own team and runs that as essentially a services company providing physical lab space.

11:07Amardeep Parmar:And then on the fun side, right? So when you're looking at investments, when you're training so many researchers, you must get such a high quality of deal-flowing people coming into you what is it that makes you decide okay this is somebody who you want to help through the for the the education side but what is it that makes somebody then take that step okay we now want to back you and put the money into it i think now that we have done it for so long we have we could we provide the know-how for free so any researcher can access that and then we have this weekly programming called build weeks which essentially allows any researcher that's serious about building a company, they may have started, they may be a bit along their way, but they're definitely pre-raising any capital and often pre-incorporation as well.

11:53They can go through our structured kind of venture building program in just a week. And that helps them to go from, okay, hey, we're working on something. It might just be an idea or a novel breakthrough, but we can get to an investment readiness outcome within a week. and that also allows, that same time they spend through Build Week allows us also to make investment decisions faster than we've ever had, we've done before, which is a lot of fun. And I think we're relying on a few things while making those decisions, but the first and foremost is, I feel like the science, these are all brilliant researchers.

12:34Our science is that of behavioral science, So we're always trying to understand the human side of the person to see if they can actually build and lead this into something that is of venture scale and can also create huge impact.

12:51Amardeep Parmar:And what are the signals there? Because obviously there are so many people who are very innovative, right? They're building things, they're pushing forward technology, but then they can't necessarily make it into a company. They can't also get that commercial viability. yeah i've been listening to like um the media story recently as well about how the different co-founders and how they all were incredibly technical but then not all of them actually had died the drive in a way to make the business yeah true how can you how do you try to gauge that of who actually wants to make this really successful business and can adapt to that versus ones who are very purist on the science side you'd like to say i'd like to say that you start getting signals of that already on paper even before you meet and then certainly through interactions that's the most signal you can get we used to do that over like four weeks when we used to run our cohorts first and then probably another four weeks of selection and now all of that is condensed into one week in effect I think there's some things around we say we talk a lot about empathy and depth.

13:58And by empathy, apart from the obvious definition of empathy, I think for us, awareness of stakeholders is a big piece. And so as a researcher, are you aware of the non-obvious stakeholders that will be a part of the journey? And can you weave that narrative and weave that thread so that you can actually create an outcome that's often a lot bigger than the breakthrough and a lot bigger than that insight that they're starting with because ultimately that is also what's required in venture from a market perspective and then from depth we're looking at the clarity of thought in a big way and clarity of thought gives us a lot of insight into someone's capacity to think not just about the functional things that they're building but the value of what they're what they're building you said earlier too that you love the london

15:00Amardeep Parmar:ecosystem and it's interesting because you have so many people in london on linkedin who are about oh you have to move to the us and you have to move here and london is going down here all stuff like that what is it about london and like the uk ecosystem that you that makes you stay here because you've been in New York before, you've been in other places before. What is it that you think we do well? Maybe where can we improve to? I think, I mean, I'm saying the obvious, but talent in the UK and in Europe, we have some of the best research institutes without a doubt, which attract talent from around the world.

15:36So we've got really, really good talent. There's good talent arbitrage as well at the start when you're building very deep tech companies. so it's easier to hire and it's easier to hire loyal team members as well when you're just at the outset. That said, we are also strong proponents of the global mindset. So you're not building the best company in London, in Munich or in Zurich or for Switzerland or for Germany, but you want to build the best company, period. And a big part of that is getting an understanding of, let's say, the core ecosystems that have been driving this for a long time, which is the Bay area so how can you get that exposure very early on in the journey so even now when founders even before we kind of go on and raise the first round of funding we're like okay let's take a flight uh to the bay area let's spend a couple of weeks there and and just get a perspective that we may not often uh get uh even here even though london is the largest venture ecosystem in in europe so And I think deep tech in science, we have very good grounding.

16:45I can see in certain other areas that maybe being in the Bay Area can give you that speed a lot faster. But once a company does a bit of de-risking on what they're building, ultimately the largest markets are still in the U.S. in terms of customers. There are exceptions to that. So Proxima Fusion, of course, is very much an energy and a sovereign play as well. And we're building it in Europe. And we want it to be the champion for Europe.

17:22Amardeep Parmar:Hello, hello. I hope you've enjoyed the show so far. I'm Amriti Prama, co-founder of BayHQ and the host of this show. For those of you who don't know, BayHQ is the community for high growth Asian heritage founders and investors in the UK. Over 7 ,500 people have attended our events. 200 people have been for our impact programs. And obviously, there's been over 250 episodes of this podcast. If you want to join us and take part in the programs and come to the events, go to bayhq.com forward slash join. We also just released our first ever book called Startups for Outsiders, which you can get on Amazon now.

18:01Amardeep Parmar:And the link is in the bio. Hope to see you soon at our event. Hope you enjoy the rest of the episode. And we were talking earlier as well about the universities and how the landscape and the, I guess the attitudes at different universities can be quite different to each other too. Yes. And I guess we don't need to name and shame, but what are the universities that do it well and you have good relationships with? What is it about their mindset that means that it's good for founders? And then where some founders may be a bit, not to say screwed over, but a bit stuck where the university they're working with kind of holds them back and wants to change there.

18:34Yeah, I think to the point of frustration, and I shared this briefly, the kind of tax charged by universities to their inventors and researchers that are building companies was a core reason that we started teaching scientists about business before they even incorporate so they don't make expensive mistakes. And, you know, at the time Oxford was charging 50 percent. They now charge a flat 20 percent, which is still very high. And others that have more flexible policies, there are some that are doing it better than others. But there's been this tendency that we can create value from science. And therefore, we must, you know, keep it, you know, wrap our hands around it and extract value rather than saying, let's make it as easy as possible for these companies to be created, for these companies to be scaled.

19:29And hey, one day they're going to be amazing alumni and they're going to dedicate a building towards us, which is very much the U.S. approach. At least this is when we started five years ago. I think things, the narrative has shifted a lot because there was a lot of noise made on this side. We've also been kind of championing the rights of scientists, founders since we started. So there's been some positive momentum into universities realizing that it's not the right thing to do. But there's so much scope. I mean, I think I shared this. The next call is with a founder, you know, building something brilliant in AI infrastructure.

20:07Amardeep Parmar:It could be pivotal for the UK as a whole, but where the double-digit equity being taken by the university. And this is not double-digit equity plus investment. This is just dead weight on the cap table, if you like. ETH, Imperial, these are universities that are trying to do things differently. you know, Cambridge to some extent as well, but it's not easy. It's not like a safe, you know. And like with these universities too, right? So when they take a big chunk of the cap table, right, what effect does that then have on like future investment? Because I guess for some scientists, sounders might be listening at the very early stages.

20:47Amardeep Parmar:They might not fully understand what the negative effect of that is. Yeah. Yeah, it's a good question. um it's uh i mean cap table you ought to always try and use talk about cap tables with the pie analogy you know like bigger uh you want to you want to share that pie with those that are basically going to increase the size of it uh over time and i think universities they've they're very good at doing fundamental research basic research some amount of applied research as well. But it's not necessarily their jobs to be commercializing. Otherwise, they won't be universities. They should just become full-time venture capital funds.

21:29They're not incentivized to do that. The folks that work there are very well-meaning. They're not incentivized either. They're not GPs. They don't have carry. It doesn't work the way VC does. And so it's almost the best form, therefore, of validation for a company, if it's a business, are the markets. and therefore it needs to get validation in the way the markets operate, which are from players that solely operate in that space, which are investors, private investors, not public bodies, and also not grant bodies either. I think there's a lot of grant funding in Europe, which is given to early stage ventures before they have even validated whether that company has a reason to exist because there are customers that want to use it.

22:27There are the classic, you know, there are customers that want to pay for this, they want to use it. And they have demonstrated that they can raise money from private investors. But rather you see the reverse, which is founders getting grant money and often coming to you, researcher founders coming to you saying, hey, can you provide match funding. And to us, that's the exact opposite of the mindset that we want to spend time educating or sharing our know-how with researchers saying, if you're building a business, then you operate by the rules of business, not by the rules of how you did grant funding when you were in academia, which is a totally different world.

23:03Amardeep Parmar:Let's say a founder, they need more research to really validate the idea. And I think I know a few people like this who are stuck in this phase, maybe they've had quite a bit of grant funding. Now they're trying to raise VC, but at the same time, they still need to prove their actual tech. And it's like, it's kind of, I think they're kind of stuck in a limbo mode where for grant bodies, they're like, well, you need to match the funding. And then for VCs, they're like, well, we don't even know if this works yet. What do people do in that kind of space in between? Yeah, I think if you've got a very credible, a very credible vision, a very credible insight, a novel insight into what you're trying to build, and there's validation that this will be picked up by the market, that doesn't have to be in the form of contracts, because that's impossible in deep tech and science at the very early stages, then you will attract capital.

23:59So sometimes it's doing the hard work of figuring out, do we have the right story do we have the right plan in place and is this something that truly is venture backable I think a lot of time we spend as well during build weeks and on the platform is sharing how venture funds work as well and trying to understand that not every business is going to be a venture backable business and that's okay there are other ways of building companies as well. So let's figure out what that is. And then also in order to do that, let's figure out how a venture fund works so that founders can also understand why a lot of VCs say no.

24:42And in fact, larger the funds, the more the chances they're going to say no, because they need to return that fund, perhaps compared to a smaller fund. So I think kind of having that awareness of understanding the kind of business you're building also helps researchers or actually any founder understand what's the right way of building this and the right forms of capital for

25:02Amardeep Parmar:it i think it's interesting too because i think sometimes the founders maybe get stuck in that space it's where they can see the scientific breakthrough and how important science is and they're like but maybe she's just back because in science is important and like i said it's that understanding like well actually they need to make a return so and it's i've seen it before where it's a kind of matter of principle. You should back me because I'm doing important work, not because I'm going to make you money. And that's just, it's like you said, exactly the gap you're filling, right? If you don't understand how VC works, that's not the point of a VC.