#404 David Buller from KELES: How to Achieve Successful NHS Procurement

0:00Welcome to the Health Tech Podcast. Here we talk about everything healthcare and technology. And I'm your host, James Summeru. Hey everybody, delighted to be joined this week by David Buller, a healthcare VC who has walked the walk. He's grown, scaled, exited a business within the NHS. Don't tell us it can't be done. And yeah, delighted to have you here, David. How are you doing? very good thank you very much yeah good to good to see you again james yeah looking forward to this man because yeah i guess i've heard i've heard a bit of your story i've heard like the highlights the top lines i've heard you've you've explained you've explained what you've done but actually i've not sat down with you for an hour for an hour to actually hear this so to hear the story of the business that you built and exited and then to go on to talk about the fund that you've now raised and I know the final close is still to be done but you're doing deals you're executing you're doing all that stuff I'm super interested in what you learned growing that business I'm super interested in some of those stories and how difficult and all the nonsense and also all the impact and amazing stuff you probably did but then I guess to now to then talk about the fund to talk about everything that you're doing there the companies that you're looking to invest in obviously that experience you've had actually walking the walk is going to be invaluable to understand what businesses can actually be built and and you know do amazing things in healthcare so yeah delighted honestly to to have you to explain the story so i guess if you could start by yeah just telling us your story just wherever it begins like where did this idea for your original business come from or or did you were you a born entrepreneur did you have Were you selling suites in the schoolyard?

1:51What was your background to entrepreneurship? How did you do it? Well, interestingly, I think I first started actually doing a mobile disco when I was 16, which evolved into, well, get this, and it was called Fluid Grooves. Don't get a better name than that.

2:11That is amazing. That's amazing. But actually, you know, that evolved into a... We were doing kind of club nights in our local town. Amazing. Yeah, I mean, it was good. We were generating a couple of thousand pounds a night. Wow. It was also, you know, when you're 16 years old... It's good money at 16. Yeah, yeah. But it was also a good lesson in how you can just get crushed overnight because another disco at another hotel had started off and I was more in the centre of town. Anyway, to cut a long story short, it basically finished us off overnight. So it was a good early lesson in how you can just get completely crushed in an instant.

2:58Amazing. But you spotted an opportunity. You actually started a business. You sold something and took some money from people and built a thing. And man, good for you. at 16 that's pretty impressive well thanks yeah it was uh no it was a good start and then um did it give you the the thirst the thirst to do it again yeah absolutely well i think it also gave me the thirst to do it again but but also started that that whole journey of realizing you have to get up from your from your knocks and that's true dust yourself off and and start again that's true that's actually probably difficult pill to swallow when you're 16 isn't it well exactly exactly um And yeah, no, it is tough.

3:39And then I think, yeah, you get used to it over the course of time from different businesses. But it's not just where the businesses come and go. But I mean, even within a business that sales, it doesn't matter whether you're raising funds or you're selling, you know, you win some contracts, you lose some contracts. And the same as fundraising for a fund is, you know, you win some LPs, you lose LPs. so you know i think you'll lose more than you win right probably yeah yeah but i always try and have this um i can't remember someone said it is that uh you know you need to uh to get to get one lp um you know you need to have 99 no's so uh you know every no is a contribution towards the the yes there's a bit of absolutely positive mindset there and i guess for people that are listening that might not know or understand how VC works just to let you know that when you when you're someone like David and you want to raise a VC fund what you have to do is go to either very wealthy individuals or institutions get them to invest money they are called limited partners so they invest their money into the fund the people who then run the fund like David are often called the general partner or the general partners they will contribute a little bit into the fund but the idea is David is going to invest that money, that target close of 250 million into a load of companies.

5:07The LPs will take their share back first, then they'll take the profit on the fund and their general partners will also take a bit of profit from the fund as well. So that's broadly how VC works for people that haven't had that explainer before. And also a little bit of a management fee to keep the lights on and pay the bills and pay for the office costs, etc. is taken out of that um and for and again i guess people while i'm on this topic for people that might not know it you're you if you hear something called two and twenty that's generally the kind of baseline structure of a fund where you take a two percent management fee and you take twenty percent um well in fact david you can explain what's the what's the structure of your fund going to be you going to be evergreen you're going to be you're going to be two and twenty what's it going to be Yeah, I mean, this is a fixed term fund.

5:55We have an eight-year fixed term with two one-year extensions possible. So the idea is that you give the limited part as a fixed investment term, by which time. I mean, it is related to the expected life cycle of the investments that we get into as a fund. I'm sure we'll talk more about this later, but we're focusing on later stage investments. and look, I mean, you can't predict exactly when you're going to get an exit and a liquidity event, but the eight-year time horizon is designed around the expected trajectory of those companies going to exit either through acquisition or IPO. And then the possibility of extending by one year and a second one year.

6:44I mean, generally speaking, if you need to do that, it's probably in everyone's interest that there is additional value to be unlocked in the company at the right time. It generally makes sense for everyone to be on board with that extension in order to maximise the value of the specific investments left in the fund at the time. And so, yeah, 2 in 20 would be 80 % of the profit to LPs and 20 % to the GP. So that's the general structure. and then there are many many other ways to run a VC fund um the 220 is actually going out of date now uh from what I can gather from from the markets but anyway without getting too much into the specifics let's hear about you man so let's let's hear let's hear about your story let's hear about um going from was it fluid grooves let's go from fluid grooves to I mean the next the next obvious step in an entrepreneur's journey is to go from fluid grooves to obviously building an NHS business so a business at least focused within it so yeah how on earth do you go from to go from one from the one to the other yeah well there's another step actually which is all all linked to how I set up my company so after college that I didn't want to go to university I kind of had enough of education and I set up a mobile phone shop in my local town and And, well, it didn't work out.

8:13And probably one of the key reasons it didn't work out is the fact there was no mobile phone coverage in the town. So I have to kind of tell people that if you drive about five miles in that direction, it'll work just fine.

8:30So there's another lesson in business failure there. But, you know, all good experience. That's hilarious. Yeah, so the next step, so I then moved down to London. And actually, I wanted to start a career in banking or something like that. But I didn't have a university degree and didn't have any finance experience. And actually, a job came up working for, it was a family office, a big Swiss family office that owned, had bought as part of their portfolio, a mobile phone rental company. now people will probably wonder what on earth that is but back in the day before roaming and things like that and then five-year contracts and all this kind of thing is that if you needed a phone for flexible needs and often we had film production companies and things like that that they want 20 phones for their their team for six weeks on the production that you know it's much easier to rent phones than it was to get specific contracts, etc.

9:38So this is why phone rental existed. I think it still exists in some shape or form, but generally not much need these days with roaming and ease of access to get into mobile phones. Anyway, the link here of how I went from mobile phones into a company providing robotic drug dispensing systems, invention management systems in hospitals, is that within the portfolio of the family office, that they had a company doing pay phones in hospitals, and then added to that patient entertainment systems, the bedside patient entertainment systems. And that was a bit controversial at the time because the NHS, the government, didn't want to pay for any of these systems.

10:27So they allowed, they essentially got companies like the company in the family office to install them for free. But in order to recuperate their cash, they could then charge premium rates for incoming phone calls and all the services. I see. So there was huge controversy that some poor person in hospital, their family were getting charged on these premium numbers, 30 quid to call them or whatever. Wow. Wow. So we digress a little bit. Anyway, so to cut a very long story short is that because one of the companies in the portfolio had all this stuff going on in hospitals, then there was a connection to OmniCell in the US through one of the CEO's son or something like that and we started off looking at so OmniCell were one of the world's or are one of the world's leading manufacturers and providers of these robotic drug dispensing systems and inventory management systems in hospitals so i then well actually i had i had left the phone rental company to go and do my mba at this point in time came back from the mba and then was talking to my old company the family office and they had just started looking at the potential of bringing in these uh these robotic drug dispensing systems automation systems to yeah to uk hospitals and asked me if I wanted to work as a consultant.

12:02Interesting. And then, yeah, then to cut a long story short is that during this consultancy project that the, the, the big family office imploded, uh, and, uh, my consultancy job and everything went with it. So yes, I, but then I thought, well, look, I'm halfway through looking at this and potentially setting this up in the UK. I'm just going to carry on I'm already kind of halfway into this and I'm owed a lot of money so either I carry it on or it doesn't happen Who owned the company at that point then? The family office themselves? There wasn't actually a company at this point in time so the payphone and patient entertainment systems was like a separate entity so we were in the process of looking at the potential of setting up a new company for these robotic drug dispensing systems so how does it work then when the so the company didn't exist you were kind of consulting to i guess set this up and and did you just grasp the reins then you're just like well hold on a minute i might as well just do this myself and actually there's there's ip knocking around which i'll just take and yeah i'll just start this company because it's a good idea is that kind of how it works yeah yeah absolutely I mean we were um yeah at that stage where nothing really existed and so it's kind of yeah I mean it was yeah take the reins and get on with it I mean actually I was I was winging it a little bit because well I was gonna say because where's your where's your formal ceo training or like at this point or like any of that sort of stuff or hey I was running a disco when I was 16 you know of course how could I forget fluid grooves how could I forget?

13:49No, and I was also winging it as well because one of our key suppliers was OmniCell who well we'll go on to hear and eventually bought the company but at the time I think that they were probably under the impression that this was still rather connected with the big family office and everything like that so I was just kind of winging it really that I was setting this thing up on my own and managed to convince them and got a ultimately to cut a long story short is is set up the company um got several meetings with uk nhs hospitals ultimately got a distribution agreement for exclusivity in the in the uk uh and and then build everything from there really yeah yeah yeah which sounds incredibly straightforward and i'm fully aware that it's absolutely not so I think this is quite important then so what what exactly was the product what was the value proposition to NHS organisations and a big question that needs an answer how did you scale it the product and the value proposition was really two things I mean well essentially a collection of systems to manage all the medicines and supplies in a hospital and yeah it's it's one of those things that people probably don't think is a is a problem and it's it actually is a big big problem when essentially in a hospital the the medicines and supplies are the second or third biggest expenditure of any hospital behind uh estates and uh and staff and people don't realize that you know in a typical big nhs trust it can be like 100 to 200 million a year spent on supplies and medications yeah yeah it's huge yeah of course of course when you add it all yeah so and you know if you think on the clinical supplies that you have um yeah okay surrenders and bandages but on the other ends you've got uh pacemakers implantable defibrillators the 10 20 30 grand each um and then of course on the drug side you have a whole range of drugs that that are some are expensive some are not but others need control like control drugs etc etc this is a huge control you know it's so interesting actually i i can i can remember when i when i was an anesthetist um i can remember i was on itu putting a central line in uh to a patient and And I can remember that there was some issue with aseptic technique.

16:36Something got touched that, you know, anyway, that tray needed to just be put in the bin. And we had to just get a new tray out of the central line kit. And it just, I guess I was quite, I was later down the line in my training at that point. and it was only really at that point because it all completely went to waste it's not as if we tried to put it in and it failed and we need another one or anything like that the whole kit was absolutely fine but it just had to go in the bin it was only at that point really that it actually sort of hit me of like oh i wonder how much that cost and then it just sent me down a rabbit hole of like because obviously just the way i was minded at the time and doing like business cases the rest of it like a lot of quality improvement projects it then did just send me down a rabbit hole of like hold on a minute i think like clinicians just won't realize this that that often we're so flippant with with how we treat this sort of stuff or look we need a new thing or like blah blah and actually it made me think and i never actually did the quality in the end but it made me think like i wonder if you just educated everyone in the hospital on how much things cost whether it would reduce things then i thought well actually people in the hospital got enough to worry about without having to worry about that as well like at the end of the day if they accidentally touch a cannula it doesn't it's not the end of the world a cannula goes in the bin but then i was like yeah but on the other side like maybe it is like if if you if you add it up across everything but anyway it never ended up going through that but my point being it is a it is a cost on the pnl that i hadn't i honestly hadn't appreciated was so large that but then again you know stuff that gets touched accidentally is probably an incredibly small portion of that but clearly you're absolutely right like a huge huge cost and therefore a huge amount of attention and therefore i imagine when the finance directors get an email that's like hold on a minute i can drop your costs of x by y they probably reply they probably actually reply to you no exactly i mean it's funny you say you're an anithetist there and thinking about this is that uh i always remember one story though and and this is all about kind of change management and and mindsets is that we were putting the first systems in one hospital and some in the anesthetic room, and Aetatist was getting pretty annoyed that we were putting this stuff in there.

18:52It's like, why are you making my life more difficult? You're just getting in the way. I've got important things to do. Why are you doing it? But, you know, there's just, I mean, partly it's a bit old school kind of pre-technology mindset, but also it is to that point you were making there is that people don't understand. You know, for them, it's like a few bits and pieces. is like i need them for my job is like you know but when you look at it at a big level there's yeah 100 200 million spent on this yeah and there's virtually no tracking control of any of this stuff across the hospital once it comes in the back door of the hospital from an inventory management perspective literally no one's got an idea what happens to it at all and this is the problem so you have no control out of interest what was it in the anesthetic rooms because i can remember that our hospital trialed like a barcode system at some point where the drugs were labeled with a barcode and then you had to scan it and and it ended up being a bit too laborious and they couldn't actually get people to do it because you're absolutely right it became about change management so is that is that kind of what you were doing yeah so the the systems were essentially more like um a a vending machine um but not exactly like a vending machine a lot of A lot of my friends joke that I used to sell fridges because they looked a bit like the Coca-Cola fridges with glass doors.

20:16But essentially, I mean, they were in various different forms of like a computerized cupboard. But anything that you whatever form they were in, essentially you had to log in with fingerprint ID and select the patient you were taking it for. And then you would go on and access the drugs. or I've used one I locum for a bit yeah I locum for a bit in A &E in a few different A &Es across London and the southeast so I yeah I've um I've yeah I've used on I know exactly what you're talking about that's really interesting so when you're when you're selling that and again I guess thinking about principles here for anyone listening that's got a business that's NHS facing that might be of a similar ilk what what was the key to selling that how did you do those sales well i'm taking a breath here thinking back on the the long the long hard journey i'm going to reach re-traumatize you now if i go back i mean you know it is a kind of fact that uh enhs is is quite far behind and trying to convince them to you know adopt new technology i mean you know first i'd say like health care is far behind in as much that these kind of systems will come place in industry 50 years before but then they were probably commonplace in uh health care in the u.s for example 25 years before um so you know i think health care and then the nhs is particularly slow um and and then so yeah i mean somebody it really is this this new technology that the problem is as well is that you know the structure of the nhs is there's no centralized body you're selling to you're not selling you know so you are having to go to every individual trust uh and probably more than that you're having to go to individual departments within the trust uh to really build buy-in and interest and particularly when you're starting off i mean look some of this is not just about the nhs it's about bringing in new technology anywhere so you know you have to you have to get the key opinion leaders you have to build evidence case studies etc so you really have to build it from the ground up so i think that you know not to be all about knocking the nhs because the reality is if you could bring to bring in a new technology into any industry and if you want to give a message to anyone listening that you know it's it's a it's a battle you know people people don't just kind of change what they're doing overnight and the legacy systems and processes and mindsets and everything like that and uh you also have people's people's job roles i mean for example you know entire i don't know about sort of departments but you know you had people dedicated to managing stock in the in the you know in the operating room and and things like that and i mean that also points to some of the madness of it you had for example in in theaters is what was commonplace is that one of the more senior nurses was responsible for managing the stock.

23:24So you've got that hugely qualified person that's spending their time managing stock, but then is not particularly qualified or focused on managing stock. And if you look at the stock in an operating room, for example, or in the storeroom there, you know, some of those examples earlier, whether they're defibrillators or orthopedic implants, I mean, these things are running at hundreds if not thousands each and you know the total stock in there can be several million and and yeah this this requires proper inventory management but you've got a nurse doing it on the side as a kind of part-time role you know i mean it's crazy it's one of my biggest frustrations that remains in in the nhs and i think one thing about the ai scribes for example the ambient scribes that are coming out you're starting to see this bottom-up demand now from people that are the the the actual losers in this equation are those individual clinicians that can't practice at the top of their license they therefore can't deliver the standard of care that they want to and i think i think that's part of it as well is that i don't know i speak to people in other industries and i sometimes get this pushback of like yeah but doctors are just arrogant because and clinicians just arrogant because like they just want to they just want to sit and like think and do and like and everyone has to like do something at some point i'm like do you realize that the only reason they want to get freed up is not to make more money or charge more hours in their day because they're on a nice hourly rate or get a promotion or any of that stuff it's because they've got more patients to see that means that they're making either slightly more impact if you want to tell this positive story or indeed just go home a little less anxious that they weren't absolutely terrible because they're on ward cover like they're on ward cover overnight and and they're the med reg and like it's just an absolute like shit show basically like we're just trying to avoid we're trying to get out of that like come on like why is someone that's like a band eight band nine in theaters like managing stock because it's just ludicrous no exactly exactly and i'm sure you know in yeah the actual you know doctors and surgeons there yeah how much are they doing that is kind of uh you know admin or non-frontline clinician work i mean it's crazy so yeah there's enough of it to go around david honestly as you as you well know um so you're selling you're selling the vending machines and they're they're they're doing a good job they're improving clinical safety they're also improving the inventory management you're not double ordering like the postul's running a lot more efficiently so i imagine once you've done that once or twice that kind of case study element that you mentioned becomes incredibly important because this is the other thing about sales in the nhs isn't it that people will buy if the person down the road's got something similar and they've seen the results because they start to see like oh okay so that there's a bit more network effect i guess so with that in mind and and kind of you know growing growing the business to a point of sale like was was that the story of how you scaled it were there any other bits that you can point to that are people that are on that more growth side scale side of their journey were there any bits that you can pull out from that part of growing the company that stick out to you as important yeah i mean i think you know particularly for a health tech business doing this in in health care i mean i think that's very much the the the story you know whether it's directly in hospitals or or generally in in in health care that you know you are going through this this process of changing mindset starting off with key opinion leaders building evidence and interesting yeah i mean it's a layering approach i mean we put in so many free trial systems and i know there's an argument interesting probably Yeah, it's contentious.

27:21Yeah, yeah. But I mean, it's kind of, we got what we could, but, you know, it worked to our advantage. I mean, it was very strategic. You know, some of those systems that we actually left in there for probably the longest one, about five years, free of charge. Because we were taking people around to that hospital twice a week. Okay. Okay. You know, so for us, it's kind of like, yeah, of course, we would like you to pay for this at some time and roll it out across the hospital. But for us, you know, we could bring other NHS hospitals around there. And, you know, this is the whole thing. And I suppose if you look at how this layered up to scaling is we put in these trial systems that in several hospitals, we probably had trial systems in 20-plus hospitals.

28:09Some of those hospitals then went on to roll out across the whole department. Some of them went on to roll out across the whole hospital. All the time we were bringing people to visit those various hospitals. And it also made sense as well that if you've got a trial system in a hospital right up north or right down south, is that it's easier to bring someone to their closest hospital. And again, because there's no sort of centralized purchasing kind of concept at the NHS, is that then it's all about this network effect and people know the procurement director or the head of the operating theater or something at the hospital.

28:51So down the road, they start to share and this is how you build awareness. And then we're getting, every time we put a trial system, it wasn't just there for bringing people to visit. We would also write case studies around it and show that they'd manage like 500 ,000 of stock and they'd reduce the stock by whatever, 100 ,000, and their savings are then 50 ,000 a year on what they use and stuff like that. So the value of a free system, free, I mean, it still sits on the balance sheet, so it's not like we've lost it. But the value to us, that seeded the entire market, and we just built up like that.

29:37Very true. until it became the norm, the gold standard. And I think this is the terminology, the gold standard, you need to get what you're doing, you're providing your technology to become the gold standard or the new standard of care. And once it becomes the standard, then you kind of sort of turn the tables a little bit, is that the adoption starts driving itself. people people want to be having the the you know the new gold standard or the new new standard of care amazing and just one thing to pull out there as well you you showed people around you met them in person you brought them in real life to come and see something so this wasn't done on just numbers and just theory and just written case study or online stuff like it sounds like that was actually a key part of the strategy because i you know again your first thousand anything first thousand podcast listeners or your first thousand buyers of your thing from your merch store or indeed your first thousand nhs customers it's all the same thing it's blood sweat and tears isn't it just buy whatever means necessary and you know i i can remember dom from tortoise talking about this when he came on the podcast that you know he used to just go around the wards just asking people what they were worried about about the technology coming in that he was piloting there or whatever this this incredibly sort of personal approach i think can be forgotten in a world of online stuff and a world of wanting to do everything from behind the keyboard that actually you know taking people to show them around and like you said you know you get to know the procurement director you get to know the person who answers the door you get to know the you know there's a there's a network that you're building on a very individual basis by doing those sorts of things and it's a very smart strategy as you say it still sits on the balance sheet it's still there it's not you know it's got some sort of cost and depreciation i guess but it's not huge and actually if that was opening the doors to all those different tours all those different people that you're building that network with that talk very highly of you afterwards because you treat them well i think there's a there's a lot to that as a as a sales strategy there's a lot to as a lot to us now in a world of ai and in a world of doing things online to actually think about our role as human beings and to actually think about where the valuable parts are of us interacting with each other in person.

31:56I've talked about it on the clinical medicine side and it clearly rings true here on the sales side as well. But I did just want to pull that out because I think that's something that can be forgotten. Yeah, I mean, it is all about relationships. I remember actually one of our very first customers that I'd had several meetings with them to sell the system. It was a bit more to get them to accept to do the trial. And once we had this meeting and then they agreed to do it and signed off, they said, who's coming to install it? And I said, me. Interesting. You know, so the reality is that, you know, you're rolling your sleeves up.

32:33But I think also that it's kind of appreciated by them. They kind of feel that, you know, they're really, you know, this close relationship working together and care enough about it. I mean, obviously, as the company grows, you know, things change. But I think, you know, when you're starting off is that, you know, it's kind of the reality. You have to roll your sleeves up and do everything. but I think you know that also helps build really really good relationships as well I love this I love this I can remember I did um I did a presentation at the I think it was the very first time Giant did their health care conference I can't remember when that was maybe 2017, 2018 it's like something maybe even slightly before that it was it was it was around there it was in like an old like theater um like I remember I wrote this presentation um on like how to sell to the nhs because at the digital health.london accelerator at the time and one of my slides was was a chicken and an egg and then just two arrows going from one to the other and one to the other and just saying that in the nhs there's a there's a there's a challenge that you will all have which is there's a huge chicken egg between getting in evidence and getting a trial because to get a trial you need evidence and to get evidence you need a trial and then this thing that then broke that apart was the word relationships and i said if you can build a relationship someone and build that trust in you where you don't have data if they can trust in you as an individual person and as an individual department there's a chance there's a chance that you can shortcut this and you don't need to get involved in this chicken and egg because you can just be trialed or you can get something on the back of a trusted relationship and at the time that was very true clearly yeah yeah that made me think of another thing there actually is uh just building on relationships it's also about the right relationships and as much that when you're starting off something new you need those the vanguard, the early adopters the visionary thinkers and my advice often whether it's my portfolio companies or new companies I'm talking to say if you're selling to the NHS for example don't get hung up on every single NHS trust go and find the first five that want to move with something and you might have to speak to all of them, but you will find five out of that that will move forward with something in one department somewhere.

34:57And if you get hung up on trying to get something in whatever it happens to be your closest one or the most prestigious one or whatever, because there are so many barriers. And again, it's not just the NHS, but there's current practices, legacy systems, there's procurement processes, there's so many barriers. There's the IT department that will do their very best to grind it to a halt uh you know so you've got all these things so what you need to do is kind of keep uh just you know hunting for the one you know the handful that are that are gonna provide the least friction to your early adoption uh and then get going with those and then over time you can you can build momentum as these things embed and become the the norm that's a good lesson actually because i think there's there's i've seen this a lot where there's a lot of sunk cost fallacy there's a lot of oh but we're so far down the line that we might as well put the time in and it's like if they're starting to say no they're probably saying no so yeah as you say there are barriers that can be put up at all the different points and actually if you've gone so far it can be incredibly frustrating to have to reverse back and start again with a new place but if they're a bit if they're more welcoming and there's more green lights then yeah well exactly yeah very good very good tip um so to move on from this then you you built it you scaled it you exited it you sold the business and in a position now where you want to where you want to start investing so tell us about the idea you met a guy called laurent at some point um tell us about laurent tell us about your uh tell us about your relationship with him your your co-founder and your fund uh or your co-general partner whatever the term whatever the term is i'm sure you'll tell me um co-managing partner i guess uh yeah tell us about tell us about meeting laurent tell us about the idea of the fund and yeah how does one go about raising a healthcare fund so well i'm going to take you back a little bit from the uh the exit from uh uh my company avantech and then i wanted to get on on the other side of the fence and be investing and so i went over to san francisco and was living and working out of there for a couple of years and embedded myself in the whole San Francisco startup ecosystem nice so this was this was my my first uh step into the into the world of were you angel investing were you part of a fund out there uh no I was primarily angel investing but I I was I mean this was all very new to me I mean I literally just jumped on a plane and said I want to get into venture capital and I knew nothing and I Neither do they David so I won't worry about that.

37:38I literally just went to the Startup Grind conference I think in Redwood City was my first stop. It was good in as much that, particularly when I was totally green to the whole thing, that it was a good conference in as much that you really got a sense of the whole ecosystem and the VCs and the startups and accelerators. San Francisco, Silicon Valley is such a great place for startups and venture capital because it just lives and breathes startups. It's amazing. When I went to live there a few months later, you can do something every night. There's some event, whether it's drinks or this or a pitch event.

38:22It's just happening all the time. I think this is probably a lesson for what Europe can try and emulate or certain centres within Europe. But, yeah, so I just went through this very deliberate and systematic couple of years doing everything from the Venture Capital Program at Berkeley, did the National Venture Capital Program, VC University, became a mentor and entrepreneur in residence at 500 global the big accelerator so yeah the analysis was just me just sort of systematically going going through the the steps to uh build build something in in venture capital amazing so how so obviously angel investing initially and then thinking about the fund um how did you sort of go from one to the other i mean was it meeting leron that you then just thought oh i want to start a fund with this guy or or yeah did you wait until a certain point like how at what point did did callers become the idea so just one more step in the story is that uh in between san francisco and callers that um i'd actually joined uh ascension ventures in in london so i'm sure oh your venture partner yeah ascension so yeah so an adventure partner and uh um uh investor there and obviously ascension one of the leading seed VCs in the UK.

39:46So yeah, great, great venture firm, great, great team there. And then it was actually through that relationship there set up in 2020, the Ascension Life Fund with two other partners. And this was a kind of spin-off fund under the Ascension umbrella. So this was my first stepping stone into an actual fund. And yeah, built that up portfolio of 17 companies um and uh yeah built you know quite a good brand for early stage digital health and tech buying investments in the in the uk so yeah i mean this was great and we've got a portfolio of 17 companies we had one company called aperito exit to eli lily so yeah this this was the the stepping stone to to keller's nice um so So tell me about Kellers then.

40:44Obviously, you said 250 million when you do final close. What's going to be your ticket size? What stage are you going to be investing in? And I guess broadly like the thesis. So you've mentioned digital health and tech buyers, what you were in. Are you being broad? Are you focusing down? Talk to me about that stuff. So just set the scene connecting with Laurent that after the Ascension Life Fund wanted to build a bigger fund, a later stage fund, so the growth stage is where the funding gap was. And also something more European-wide, I think, in reality, to have the depth of deal flow. The UK, even though it's one of the leading places in Europe for life science and healthcare startups, is really to have that breadth of deal flow.

41:37you need to be operating right across Europe. And then it was rather serendipitous, really, meeting Laurent and Laurent van der Berg, who is my fellow managing partner in the fund. He, after a long career in pharma with Abbott and then most recently the chief strategy officer of Sanofi, he had just left Sanofi wanting to set up a venture fund and had just set up Kellers. and um yeah i mean it was a serendipitous meeting that you know we we both had exactly the same vision and both in a position to um you know totally commit and focus on this and build it so that that was the the inception i guess you've got quite complementary backgrounds as well because you're not you're not over i mean you are overlapping obviously in you know a relatively large amount but but you're coming at it from two different sides obviously through your your knowledge very much based on that kind of nhs and infrastructure side and all that sorts of stuff and the rom from pharma and and that kind of side it's it's quite complementary right yeah exactly i mean and and not only was that a starting point but but this is really what we've tried to do is we build out the team with keller so yeah exactly the you know the entrepreneurial and uh um but you know in health care and and the the the vc digital health on my side And then on that whole career in pharma and reaching the highest levels of pharma, so really understands the whole kind of pharma and healthcare inside out at a really kind of high level strategic stuff as well, of really what is understanding what is behind the change in the future of healthcare.

43:21And knowing where the pockets of money are in pharma, that's what your portfolio companies are going to want to know. Yeah, yeah, well, exactly. Well, I suppose as we get on and talk about the thesis, this is an important thing because we haven't just picked the investment thesis for Kelley's for the fun of it. It was very systematically built up from where is the need and the opportunity in the market. So, you know, the areas we're focusing on, we've got kind of three main pillars. One is under what we call new R &D models, which is things like AI drug discovery, digitized clinical trials, and various different applications, platforms that fall under that.

44:11And then some new tech drug manufacturing. then the second pillar is under what we have diagnostics and there we have ai diagnostics ai imaging and digital med tech and then the third pillar we have as patient care which is platforms and technologies in acute care chronic care and aging care so quite i mean a generalist investor would call that quite niche it's you're actually covering quite a lot in health tech which is ideal um because yeah you're you're going across you can see how it kind of relates to both of your sides of the table actually like you started with with Laurent's side of the table and then then it comes to yours uh latterly as you go through your diagnostics and into patient care it's it's really nice how you're able to have a single fund that can plot what is essentially the journey through someone's healthcare as well which is really interesting so i'm into i've got two questions the first one um and sorry if you can hear my baby crying in the background um but my first question is a guy called david i think it was david fogel said to me once that a good vc does three things they scout them they select them and they support them and they have to be very good at those three things so how are you doing those things i imagine you're both in for scouting i imagine you're both very well connected i imagine you're both you're plugged in to a lot of ecosystems and you know a lot of people to scout them but obviously there's a vc unique deal flow becomes incredibly important because that's what's going to set you apart so yeah yeah this is going to turn into a bit of a viva now so how are you how how you get i'm i'm going to be the lp and you're gonna you're gonna ask these questions so how what where is your unique deal flow coming from david first of all um and then how do you select them what's the secret source behind selecting them and i'll come on to support later yes i think scouting is right i mean and then there's probably access is is a two-go go hand in hand i mean we i mean yes as you say you know network is is important from uh you know previous funds our team our wider network yeah you know this is important.

46:32What we've also done as well is done a very deep market analysis across the whole of Europe and mapped over 3 ,000 digital health companies that we're closely tracking all of them. So, I mean, I wouldn't say that it's captured 100%, but I think that we've got visibility on 80 % or something like that right across Europe. And I think as a growth stage investor as well is that you um you know there's more chance to get visibility on these deals because if they're straight out yeah of course because they're later it's hard to see so you you know yeah you you see them kind of progressing through the through the ecosystem which perhaps means actually that at the you know i scout them select them support them scout and select really i guess that that the importance of that is higher at the earlier stage whereas actually perhaps then if you're competing for deals at your later stage i guess it's more than on that support element and what you can do for them like what comes alongside with the capital that's actually going to help that business which becomes more important yeah well i think so there's a couple of things there i think just one in in terms of the the scouting and the access is that as a growth stage fund that you know one of the reasons for selecting growth stage is that there's a big funding gap and therefore an opportunity particularly for a dedicated digital health fund is that you know there isn't really another digital health fund that's dedicated to digital health with an expert team investing at growth stage across europe so it's a real gap in the market so the hypothesis there being that currently there are good companies that just don't get funded because the capital isn't available yes or the they're getting funded from the from the us So I think something like 40 % of gross-day companies in Europe get funding from the U.S.

48:25And, you know, this is something with the European government is a big issue that they've been trying to tackle. So that's a key thing. And then so in terms of visibility and access to deals is that a lot of our funnel comes from other VCs because they're investing at seed stage Series A, but they, you know, maybe apart from their pro rata or something like that they don't have the capacity or the mandate to to write uh you know lead checks at series b so yeah in some respects you always kind of get the pick of the bunch because these early stage vcs which are the kind of predominant um you know vcs they're incentivized to put them on your radar of course exactly exactly yeah and then we come to the second bit which is yeah you know so why why do they want to want to take our money and this comes back to our our expertise and and you know i have to say in terms of the the doors that have opened with with other vcs or or companies that will talk to us even before their fundraising has been really quite you know an immense response and and you know that is i mean in a way it's been quite deliberate that we've put together a team that you know as we were talking about before has got that health tech experience, the entrepreneur experience, the VC, the big pharma experience, the doing the big pharma M &A.

49:51You know, the team goes beyond that as well. That, you know, our other partner, Mark, is, you know, run a 120 million biotech fund that we've got other people on the team that have done all sorts of things across biotech and digital health venture. We've got advisors. So if for any company that we're looking at, if they look at us and see the team that we have and the value we can bring them in terms of everything from the kind of story of an advice, how to scale, like we were talking about earlier, or getting into new countries like the US and also the ability to support them all the way through to exit.

50:43And often as a seed stage fund, you're not that aligned with the exit because it's so much further down the road. Here, investing at kind of Series B or C, the exit trajectory, the exit is always on the horizon. So bringing that expertise as well and whether it's like Lauren has done, worked on transactions, M &A transactions, Big Pharma up to several billion. You know, we have connections across PE, some of the big med tech, et cetera, et cetera. So, you know, we're aligned with that exit journey right from the beginning. And so all this value is what we add. Amazing. And on the selection piece, so what is it exactly that you look for?

51:29and normally because we i tend to talk to earlier stage vcs on this podcast so it tends to be the same thing of like yeah we look at the team we look at the strength of the team we don't care about the idea we don't care about the business we don't care about what the business is doing really it's all about the team the team the team the team and sometimes it's just like yeah i don't know just fancied it and like that's a completely reasonable thing to say at seed stage investing of just like and you'll know from your angel investing of just like yeah i just spoke to them once and just sort of fancied it just felt like it was fine don't know can't really put my you You can't really say that when you've got a 250 million fund and you're putting in tens of millions.

52:03And you've got to surely be like data starts to creep in and the sector that they're in and the opportunity and how you analyze that and all that sort of stuff. So what goes into that for you guys? How do you crunch that? How much is it team now versus data and finances and academically figuring out opportunity? What's the story there? Yeah, I mean, the team one is always interesting because I think a lot of people like to make a lot of sound bites. I mean, it's an easy thing to say. It's like the team. And I think often what people mean when the perfect team is a team that's so amazing that if anything ever goes wrong, they're so good that they'll just turn out product after product.

52:54and the real world is different from that. If you can find these perfect people, I mean, in reality, the world is not perfect. And you need to be smart about this stuff and it's about looking at the team. Of course, you want to make sure that they have the right capabilities, but when we're kind of looking at a company, we're also looking at them, what are the gaps in the team or is the CEO going to be the CEO that's going to take it on to the billion dollar company an exit and it's and it's not necessarily a red flag i think that the biggest thing with the ceo is that you align on these challenges and the journey ahead so you know where it's a problem is if you've got a ceo that really is not capable of taking leading that company as a billion dollar company but thinks they are um whereas where you think you feel you have much more alignment with the team and the CEO is where there's a much more open discussion of kind of, you know, I'm much more scientific for, for example, there is a point in time where I think that I would like to take the kind of CSO role and someone else would like to do this.

54:08I mean, some people are totally capable of doing the whole thing from start to finish, but it's more about kind of just, you know, being aware of the, you know, where are the, where are the gaps? And I think particularly where we invest at this kind of scale inflection point that they, and of course, we're, you know, we're investing in deep tech scientific technology. So there's, there's a history of scientific technological development that, you know, that's been a core of the journey of the company that, you know, that they've just started on their journey of commercialization and have probably got it embedded in one country, one healthcare system or something like that and are looking to scale beyond that.