The secret art of early-stage investment

Podcast transcription - 11th JuLY 2018

Peter Cowley:                  Well, welcome again to another Invested Investor. This time we have David Gill, who I've known for about seven or eight years, and I've learnt a lot from him during the period. I was a coach on one of his programs, or mentor, some years ago. David, give us an idea about your background.

David Gill:                         My name's David Gill. I'm the managing director of the St John's Innovation Centre here in Cambridge. This is the 10th year I've been managing director. The centre itself is now in its 31st year, and we claim to be the oldest technology incubator in Europe. I've been saying that for 10 years. My predecessor, Walter Herriot, said it for 18 years, and nobody's contradicted us, so I think it must be true.

David Gill:                         The innovation centre has a sweet spot that I call late-stage start-up. In other words, most of the companies that come here have probably already spent time somewhere like ideaSpace. They've got the basics of the team together, they've got a plan, they know what the product is, and they've probably got the first investment from an angel, or a grant fund or similar. When they move in there, they're head down, and over maybe four, maximum of five years, in general, they will grow from let's say three people to 15, sometimes 25, at which point we have to gently suggest they move elsewhere, because we are here for the early stage companies.

David Gill:                         The companies that we most like to see here are those who are seeking to exploit some form of innovation commercially. It doesn't have to be technology, but given that this is Cambridge, the vast majority are going to be in engineering, hardware, software. We have a few life science companies, but not many. The centre isn't really designed to have the right sort of laboratory space, but some companies do like to use us for office space.

David Gill:                         We also have an internal rule that up to one in five of the companies here can be a relevant service provider, which means that usually, at any given time, there's maybe a specialist law firm, a management accountancy firm, a design agency, a PR agency, and their services tend to be used quite a lot by the innovative firms, and the service providers understand the constraints that innovators have. If you are a law firm, you can't do the sort of thing that city law firms do, and just let the clock run, for instance.

Peter Cowley:                  Okay. Obviously, you've got some slow signs of grey hair. You've been doing it, you said, for 10 years. What happened before that?

David Gill:                         Oh, gosh. My path to where I am now is a very crooked one. My guilty secret, that I try not to tell the tenants in this building because I might lose immediate kudos with them, is that my undergraduate degree here at Cambridge was in English, and in some ways that was because I was in rebellion. I'd been sent to a French school, and my act of defiance was to go back to my English roots, but I very soon had to give up any ideas that I would become an English don or anything like that, and I qualified as a barrister.

David Gill:                         Shortly after qualifying, the city was going through major reform, and I wrote a few letters, and I ended up working in corporate finance, first for an American bank and then for HSBC. It was working at HSBC, after a few years, I realized that the world as the quoted company didn't seem particularly intellectually satisfying, and instead, I got asked to help set up the marketing department of the corporate bank. Quite why a recycled lawyer would be sent to marketing, I don't know.

Peter Cowley:                  When was this? In the late '80s?

David Gill:                         By then, it was the early '90s, so it was just after the recession, '92 or so, and in that recession, I was mainly doing workouts, which was I think one of the most invaluable educations I ever had.

Peter Cowley:                  Workouts?

David Gill:                         Trying to turn around companies that had got into difficulty. Sometimes we succeeded, sometimes we didn't. I think where we tended to succeed was with the smaller quoted companies, where we could do a deal with the investors to get more equity in, but that was an extraordinary business education at the downturn of the early '90s.

Peter Cowley:                  Right.

David Gill:                         Going back to the marketing department, one of my main responsibilities was to liaise with the regulators, government departments, people like that, and round about 1995 or '96, the Bank of English was doing a major piece of work on what they call new technology-based small firms. I got suckered in to working with them, and when the report came out, I did the thing you should never do in a big company, which is I wrote a cover note right up to main board level saying, "This is really exciting. I think we should do something about it," and after several weeks, the handwritten note came back from the COO that basically said, I paraphrase, "If you're so clever, go and sort it out."

David Gill:                         So I went round the marketing department, trying to recruit the other people who were a little bit jaded with doing big company work, and who wanted to get involved with start-ups and technology. I think back then we didn't really distinguish amongst ourselves. Anything entrepreneurial counted as innovative, as far as we were concerned.

David Gill:                         Over the next seven years that I ran the innovation and technology unit for HSBC, we built up a national network of managers in what we saw as the technology hotspots in the UK. You know, Edinburgh, Bristol, Manchester, Newcastle, obviously Oxford, Cambridge, London, Bristol and so forth, and we also entered into long-term sponsorship agreements with two universities. Brunel for engineering, and the University of York for life sciences, where there was a, in each case, an HSBC-sponsored professor of innovation who helped us assess proposals as they came in, and also helped us train the people around the bank in the importance of innovation.

David Gill:                         Not because you were ever going to have hundreds of managers in a large organization like a bank who were innovative, but it was part of the cultural shift, trying to make them see that new ideas matter. Just because something doesn't fit the mold, doesn't mean to say you have to say no. There are other places you can turn to and so forth.

Peter Cowley:                  And this was up till when? About 2000, or 2001?

David Gill:                         I left in 2004.

Peter Cowley:                  Okay, so you went through the bust, did you?

David Gill:                         Yes. Very much so. In 1999, I was very lucky to have received a travel bursary from the Gatsby Foundation to spend basically a month in the United States, going from technology hotspot to technology hotspot, interviewing people about how does this wonderful ecosystem work, and that led to a publication called Funding Technology: Lessons from America, that came out about two weeks before the markets crashed. It was a relatively slim publication, and I think the fundamentals of what it said were still true, but the timing was awful, and that's probably quite an important lesson for investors as well.

Peter Cowley:                  So you learnt a huge amount during that period, a huge amount. You met all kinds of entrepreneurs. We'll talk about some of that later. '04, you moved onto something else, did you?

David Gill:                         Yes. I'd been getting itchy feet. I think, despite the fact that because nobody in HSBC really understood what we did, we were given quite a lot of free rein. I thought the fun was going to be on the other side of the table. I hadn't quite defined, in my own mind, whether that would be as a venture investor or as an entrepreneur, but I knew I had to tunnel out from the corporate world, and my tunnel was to go to Stanford Business School in California as a Sloan program to do the master's of science in management. That was one of the best years of my life.

Peter Cowley:                  A year course, was it?

David Gill:                         It was a year course, yeah. We were known by the MBA students, with whom we were co-located, we were all known as the old guys. Their average age I think was 27 and our average age I think was about 38. It meant that I was getting the essence of business graduate degree crushed down into one year in the middle of Silicon Valley.

Peter Cowley:                  You shared some courses with them and some not.

David Gill:                         We shared some courses with the MBAs, indeed, yeah.

Peter Cowley:                  Excellent.

David Gill:                         I took every elective I could that related to entrepreneurship, or venture capital, or early-stage investment.

Peter Cowley:                  Then you didn't stay. I think with the weather there, and the buzz there ...

David Gill:                         Well, I think it was partly because the place that I'd enjoyed working in most when I ran the team with HSBC was Cambridge, and I probably had a slightly rosy-tinted view of just how big, and powerful, and impressive Cambridge was compared with Silicon Valley.

Peter Cowley:                  Yes.

David Gill:                         I don't think this is retrospective wisdom. I did have a sense that when I graduated, which was July '05, that the markets were overheating again.

Peter Cowley:                  Okay.

David Gill:                         It was a sense that companies like Facebook, which had only just been funded 18 months, two years before, were raising stupid amounts of money, and I know that I'm probably on the sort of conservative side of investment.

Peter Cowley:                  You were a banker and a lawyer.

David Gill:                         I was a banker and a lawyer.

Peter Cowley:                  A barrister, yeah.

David Gill:                         But I looked at those sort of proposals, and I thought, I just don't understand how they were ever either going to do anything that was any good, or make any money. So I thought let's go back to Cambridge, where there will be some element of sanity.

Peter Cowley:                  And you came back to a role, or ...

David Gill:                         I did, because one of the responsibilities I'd had had at HSBC was running the very small funder/fund operations. HSBC has invested ... I can't remember exactly how much now, I think it was 30 million, and had been matched by the European Investment Fund in nine seed capital funds, one of which was based in Cambridge, ET Capital.

Peter Cowley:                  Oh, yes.

David Gill:                         I'd worked quite closely with Martin Rigby, the founder, and he lured me back, saying, "We've got this fund that we can still carry on investing. We've got this portfolio of exciting companies, and Cambridge is the place to be."

Peter Cowley:                  How old was ET Capital at that point, before you joined it?

David Gill:                         In '05, I think it had been going for a dozen years. It started shortly before the .com, so yes, it would have been about '95, '96.

Peter Cowley:                  So you probably had a couple of scores of investments there.

David Gill:                         Yes, indeed, because there were three separate portfolios, and some of the companies were mainstream Cambridge technologies firms that you would have heard about, like Bango, which was quoted. Yeah.

Peter Cowley:                  Yeah.

David Gill:                         Also, ET Capital had taken over managing a portfolio of early-stage funds, where most of the investors, most of the limited partners, were Cambridge colleges or high net worth individuals, and that brought us into companies like Plastic Logic. Also into a company called Spirogen, which was a oncology company, which turned out to be one of the biggest successes, and is still going great guns. It was an exciting portfolio to work with. I think another example of timing, though, is because we were almost fully invested, one of my missions was to try and raise a new fund, and we were really quite close to doing that by the time the great financial crash happened, so timing, once again, is all. Yeah.

Peter Cowley:                  So you worked with Martin there for ...

David Gill:                         Three and a half years.

Peter Cowley:                  Before you came here, to St John's.

David Gill:                         Yeah.

Peter Cowley:                  Okay. This podcast is aimed at people who are entrepreneurs and angels, so let's talk more about some of the journeys that you've been on, both at ET Capital. Obviously you didn't invest much at that point, probably nothing, except follow-on rounds, and secondly, the many journeys you see going on here in the building, in St John's Innovation Centre, because what we want to do is to give the listeners a view of the mistakes they should avoid, and how to achieve better success.

David Gill:                         Right. I think one of the big lessons I've learnt is how difficult it is for entrepreneurs at the early stage to get the story across, and that doesn't necessarily have to be because the technology is complicated. From that, I think one of the best things that we do here at St John's is work with companies, not necessarily companies in the building, but more widely across greater Cambridge, so that they are at the point where they can articulate the elevator pitch, you know, the one or three-minute story that explains to anybody who might be of concern to you, whether that's an investor, or potential recruit, or a potential customer, exactly what it is you do, what is the problem you solve, how big is it, why is it you? Why do you matter?

David Gill:                         Often I think the question that they leave out is ... Let's say I'm the entrepreneur and you're the investor. What do I want from you? You know, is it that I need a quarter of a million because I'm recruiting people or because I've got to expand overseas? Is it that I don't quite so much want your money, but I want your expertise? If I've managed to articulate that, I should then also articulate what's in it for you. This is a really exciting proposal, and in my five years' time, you will make a lot of money, or here's your opportunity to build yet another business, whatever it may be, but you have to explain what's in it for the investor or the other stakeholder.

Peter Cowley:                  Yes. I mean, of course, you don't just always need external investment. Customers actually make quite good investees, indirectly, because you've got product market fit there as well.

David Gill:                         Yes, and I think quite often when we're talking to the early-stage entrepreneurs, there's that agonizing decision to make of can you hang on long enough until you've actually got some sales, because if you do that, not only might it reduce greatly the need for external investment, but it will improve the valuation because, although not all early-stage orders are validation, if you're building up a reasonable book, I think that's something that a potential investor...

Peter Cowley:                  That's a great point. We ought to take that slightly further, because I feel very strongly a single order from a large corporate is not validation at all. People think, "I've won an order for £10,000 safe from British Telecom, and that's worth something," but no. In many cases, it's just they're investigating the technology in the team.

David Gill:                         Indeed, and they can afford to take a portfolio approach. They will try many different new suppliers, and we've seen it. There's one company in this building that has now got a very good relationship with a number of the large US hardware corporations, but in its early days, it was overjoyed to receive an order from one of the largest companies in the world, and it assumed that meant it was home and dry. That was the beginning of their problems, not least because the Fortune 500 company took so long to pay, and cash is king.

Peter Cowley:                  Yeah.

David Gill:                         Yeah.

Peter Cowley:                  Let's just talk about SyndicateRoom for a moment, because we've interviewed Goncalo before, and I'm an early investor, but you're more than an investor. You're also a board member. First of all, how did you meet Goncalo? Why did you get involved? Why are you still involved? What value you are adding?

David Gill:                         I'd meet Gonzalo because so many people that I know in the investment community kept saying, "You've really got to meet Goncalo. He's got this great idea, and it will solve so many of the early-stage investment problems." When we did finally meet, it was one of the those chemistry things. I immediately clicked with him. I thought, "Here is somebody who understands his own proposition inside out, who can articulate it with great clarity," and I was with two or three other potential investors at the time. We gave him a fairly difficult interrogation. He remained completely cool and completely convincing all the way through, so that was the background.

David Gill:                         I took the view that it was worth being more actively involved than simply being an investor, exciting as that is, because I still think that the business model that SyndicateRoom has got will go a very long way towards solving a long-term conundrum in UK early-stage investment: how do you enable funding rounds to be closed where the core of your investors haven't got enough funds amongst them? You know, it could be three or four people who've each decided to put in 20, 30, 40,000, but you still need that last 100,000 to close it.

David Gill:                         On the other hand, it's one of those ways in which the novice, the newbie investor, can learn by seeing how people with more experience go about it, and I think, given that early-stage investment is much more of a craft than a science, then ...

Peter Cowley:                  A black art, almost.

David Gill:                         It's a black art. You've got to learn by working with other people, and I think SyndicateRoom has really got the scope to make that happen on that big scale.

Peter Cowley:                  And you've been on the board since I think about the time I invested.

David Gill:                         I think about the time you invested, yes.

Peter Cowley:                  What do you think you've added to that board? Clearly you have, but I just want you to say that.

David Gill:                         I think probably what I bring to it is a longer-term perspective, and that's having been involved in this world for more than 20 years, and I'm going back to the mid-'90s. I was a non-executive director of what was then called LINC, the Local Investment Networking Company, which brought together the syndicates of syndicates of business angels around the UK. I think it's partly having that experience to say, although your solution on paper looks good, here are some practical things that might need to be implemented to make it work.

David Gill:                         The other thing I think is complementarity, and this would be even more true of founder teams than it is of non-execs. There are three of us who are non-executive directors, and we each bring a different perspective to it, so the chairman, Tim Bellis, is very much a chairman. He's somebody who can take the view in the round and who...

Peter Cowley:                  He was a senior lawyer, wasn't he?

David Gill:                         Yes, and our third non-exec is one of the major investors in SyndicateRoom, Jonathan Milner.

Peter Cowley:                  Who has an entrepreneurial career.

David Gill:                         Who has an entrepreneurial career, and I think because several of his previous companies have really made it to the major league and become publicly quoted, he is instilling at the early stages of SyndicateRoom that view of you need to start as you mean to finish. In other words, you need to run yourself as a company with ambition, with process, with transparency, with integrity, right from day one.

Peter Cowley:                  Good. No, that's been great. That is obviously on the successful rise at the moment. We will come back in a few years time and decide whether it was a success or not.

David Gill:                         Yes, yes.

Peter Cowley:                  Amazing. Let's just talk about some figures. Obviously you may not want to be too specific about that, but the listeners are very keen, we've found, in the anecdotes about the failures, because they then show what they should be looking at to avoid.

David Gill:                         I can think of about 10 companies in which I've invested without actually having to look just look in and think, "Oh," and several of them are still going. They're going strong, and I'm an arm's length investor, and that's fine. There seems to be a bit of a pattern where I've got it wrong, and some of it is to do with having distance from the company. My second biggest failure was in a US start-up set up by one of my business school classmates, and it's based in San Diego, so it breaks rule one. I can't actually go and see it more than about once a year. It breaks rule two because I invested in John on the basis of a personal relationship rather than because I'd actually investigated his idea in great detail, and I think it breaks rule three in that it's in a domain that I wouldn't claim to have any expertise.

David Gill:                         He has allegedly found a way of making how the US real estate market works much more efficiently, and I don't really come from a real estate background, despite managing a building, and I certainly don't understand how the US regulations work. The company is still going, but it has had so many funding rounds that even though I put in an amount of money that would give me a very, very nice new car if I had it back, I think I'd be lucky to see 10 cents on the dollar, eventually.

Peter Cowley:                  Right, because of A, dilution, and B, some down rounds, I suspect, on that route.

David Gill:                         Yes.

Peter Cowley:                  But you probably invested in that over 10 years ago, did you?

David Gill:                         I did, so even if I got my initial capital back, when you take into account the time failure of money, I've gone from having a very nice car to a reasonable car.

Peter Cowley:                  Okay.

David Gill:                         Yeah.

Peter Cowley:                  That's good, actually. You've just mentioned three rules there. Distance, the fact that you did it on a personal relationship, i.e., part of the family, friends and fools, possibly the fool part of that, or certainly the friend part of that, not family, and then lacking domain skills. Does that set of rules ... Have you broken one or more of those in any of the other ones you wouldn't class as successes?

David Gill:                         Yes. I think my biggest failure of all, which was painfully large, was involved in entertainment and social media, and I don't think even my closest friends would say that I have much understanding of either of those markets, so although I was a big investor and was on the board for quite a while, I think it was probably more to do with personal relationship than with an understanding of the sector.

Peter Cowley:                  So distance, probably in that case, you didn't break the rule, family, friends, you might have done, and domain and knowledge, you definitely did.

David Gill:                         Absolutely.

Peter Cowley:                  Okay.

David Gill:                         Yeah.

Peter Cowley:                  You obviously helped a lot with the SyndicateRoom journey. You've also been on other boards, haven't you? How have you helped those entrepreneurs?

David Gill:                         I think particularly when I was the representative of ET Capital on a couple of the boards on which I served for two or three years, I thought the role of the investor was much more like that of a coach or mentor than simply somebody who was there to monitor, and in retrospective it seems slightly hubristic to say that I felt I had more experience than the founders, but probably simply by having been around a cohort of companies at HSBC over a dozen years, and having been to business school in California, I did have some insights to impart. Part of that, I think, is enabling them to maintain confidence.

David Gill:                         There's a strange thing about entrepreneurial psychology that you almost have to have a skewed view of the world. I mean, if you looked at the statistics, you'd probably never leave the day job and start up a business because ... pick a number somewhere between 70 and 90% of new start-ups never get beyond year five.

David Gill:                         On the other hand, if it weren't for entrepreneurs having a strong sense of self-belief, and being prepared to take advice and guidance, whether it's from their investors, whether it's from their peer group of previous founders, then we wouldn't be creating new businesses in the first place, and that's, I think, the real excitement of this activity, that you can make a difference to the world, and if you do that, and you do it well, you'll make money, but if you start off by saying it's about making money, you probably won't actually succeed as a business.

Peter Cowley:                  That's a good statement. Yeah, so the social outcome or the actual outcome for the world or the population should be the driver rather than necessarily making money.

David Gill:                         Absolutely, and I feel very privileged in the sense that in the day job now, almost all the companies I see have that view of life, and to a limited extent, I contradict myself in the sense that I have to get them to think commercially, but it's thinking about customers, thinking about markets, rather than necessarily thinking about becoming rich. That's probably the key distinction.

Peter Cowley:                  Excellent, and one or more tips for angels?

David Gill:                         I think with angels, I would suggest a rule of asymmetry where your gut instinct is concerned, and by that I mean don't necessarily trust your instincts if you feel very positive about a proposal. You know, if you are feeling very positive, that's a very good reason to do even more due diligence.

Peter Cowley:                  All right.

David Gill:                         But if, on the other hand, you're looking at a proposal and you think, "It's not one for me," or you don't think it's right, you're probably right to think that, and even if somebody else, another fund, another angel, does go on to make it a success, if you didn't believe in it in the first place, you would have been the wrong investor for that company.

Peter Cowley:                  Yes, the fear of missing out. We talked about that in a previous podcast. That's very important. It's very important to learn that.

David Gill:                         Yeah, so even though other people might be getting a little bit carried away, if you don't get it, then probably don't participate.

Peter Cowley:                  And then don't regret should it be a success.

David Gill:                         No.

Peter Cowley:                  Okay. I had that with SwiftKey some time ago.

David Gill:                         Right.

Peter Cowley:                  But that's another story. What have you learnt? You've been involved in finance in the early stage. I mean, I've been involved as an entrepreneur for nearly 40 years, but the finance in the early stage for 20 years. What have you learnt? If you were to go back and tell your 30-something year old self something, what would that be?

David Gill:                         The first really serious thing, and this came up with the publications about Silicon Valley, and then later Germany and Israel, is that everything, one way or another, is connected to everything else, and I think in the early days, when I got involved in this activity, and I was partly doing policy work and working with government, the view tended to be, right, okay, this part of the country needs to be entrepreneurial. Let's put in an incubator, or let's put in a C fund, because we've seen the correlation elsewhere. We've seen what goes on in Silicon Valley. We've seen what goes on in Israel. If you've incubators, C funds, that sort of thing, you will develop an entrepreneurial ecosystem."

David Gill:                         That's not enough. You need to do, so to speak, the middle wear as well, which is people. You've got to change the culture. You've got to do it for a long time, and you have to recognize that you need all the components of the value and the funding train. It wouldn't, for instance, be enough just to put in the venture fund. The venture investors need people to feed them good deals, so you need to have a very strong background in angel investment. You need to have somewhere that the businesses can grow into, and finally on that idea, I think there's the role that governments and regulation can play.

David Gill:                         I doubt we'd be having this conversation if it hadn't been the case that something, like 20 years ago, the tax rules started to change, which made angel investment slightly less painful as an activity, because there are tax breaks with things like the Enterprise Investment Scheme. Even if you lose out on most of your portfolio, you've got something to cushion the blow. Likewise, if you go back to what British taxation was like in the 1970s and early '80s, successful entrepreneurs would not have had the money to reinvest in the next generation of entrepreneurs.

Peter Cowley:                  Because of the taxation being huge. I remember at one point it was 97% tax on earned income.

David Gill:                         Absolutely. I know it is difficult to quantify exactly how much of a difference the EIS makes, but schemes like that make angel investment possible. Angel investment makes venture investment possible. Venture investment leads to the creation of new businesses, and businesses that will change our society.

Peter Cowley:                  Yes, and even if they fail, these businesses, they've taught the entrepreneur something.

David Gill:                         They have.

Peter Cowley:                  They become a serial entrepreneur, even if it's a failure, providing that failure is in the open, and that's something I feel very strongly about.

Peter Cowley:                  Okay, you've done a number of other things. Can we just talk about the ecosystems? Obviously, you had this project a long time ago in the valley, I presume, in the states.

David Gill:                         Yes.

Peter Cowley:                  You're quite well known for investigating, researching, and writing about ecosystems. Can we just talk a bit about, say, Israel, or Singapore, or ...

David Gill:                         By all means. I think the fascination for me of ecosystems is understanding how they work as a whole, and it's a little bit like reading a business school case study. In other words, you can't read across directly from one company or one geography to another, but by reading up generally, studying and understanding the way it goes on somewhere successful, like Singapore or Tel Aviv, you can extract policies, practices, cultures, that could be applied elsewhere, and increasingly I think in a world where we're moving more and more towards knowledge rather than making, in the old-fashioned sense, that will be the dominant strain in society.

David Gill:                         The puzzle remains for me that success seems to be success, so you have places like Cambridge which, 20 years ago, were relatively small as clusters, which have grown and grown, and yet it would be very difficult to say to a company in Cambridge that wants to expand, "Why don't you just go 30 miles away?"

Peter Cowley:                  Yeah.

David Gill:                         There's something about the nucleus of a cluster that seems to be self-reproducing.

Peter Cowley:                  That sort of urbanisation is something that's happening more and more throughout the world, isn't it?

David Gill:                         It is. It is.

Peter Cowley:                  It's a similar feeling that people want to live close to each other, despite the fact that house prices, transport, and potentially space available is reduced in those situations.

David Gill:                         Yes. Very much so, and we've several times surveyed our tenants to say, "If, for instance, we had a follow-on building that was 10 miles away, and the rents were half, would you be interested?" On the whole, companies say they want to squeeze in where the action is, and above all, they want to be with people like themselves.

Peter Cowley:                  Yes, you say that, but of course Silicon Valley is something like the same sort of size as London, Cambridge and Oxford together, isn't it?

David Gill:                         It is.

Peter Cowley:                  From 60 miles, I imagine.

David Gill:                         Yes.

Peter Cowley:                  That sort of survives, despite the horrendous traffic that one ends up with, as I have done in the past, if you're around during rush hour.

David Gill:                         I think probably two points come out of that. The first one is that, as a general rule, Silicon Valley is almost impossible to compare with anywhere else. More specifically, if you were thinking could we do around here what's happened around Menlo Park, you know, could we spread the Cambridge effect to 50 miles, I think that would destroy some of the creativity of Cambridge.

David Gill:                         There's something about this place where you're probably no more than two phone calls away from the person you want to reach, as well as that sense of it being not nearly as concreted over as Route 101, that means that we're very, very good at doing the start-ups, and maybe we should accept that the idea that a lot of policy makers have that we should be creating an Apple or an Amazon around here is not the right thing to do. We can build companies to the point where they employ a few hundred people, and then maybe they have to go somewhere else.

Peter Cowley:                  Yeah, good question. There's a lot of philosophy behind that, and there's a lot of work going on in Cambridge, which I'm involved with and you're involved with independently on that. You've also written one or more books, haven't you?

David Gill:                         Yes. The one that leaps to mind is called Show Me the Money, and that first came out, oh, four and a half years ago. Partly because I was approached by our mutual friend, Alan Barrell, who'd been asked to write a book that was about entrepreneurial finance for entrepreneurs, and Alan wanted a partner in crime, so he involved me and Martin Rigby from ET Capital, and in putting it together, I was drawing on a lot of the work that you and I did with together with a program that we ran for three or four years here in the innovation centre.

Peter Cowley:                  Understanding Finance for Business.

David Gill:                         Understanding Finance for Business, yes, and it seemed a shame that so much of that knowhow, which had really only been summarized on the slides that we used to torture the participants with, shouldn't be perpetuated in a book so that the slides got turned into connective prose, and it was a delight to find that the first print run, which wasn't massive, I think it was something like 3,000 copies, sold out within a year, so we had to do a second edition that brought in things like crowdfunding, which had only really just taken off at that point. Then we got translated into simplified Chinese, so there's a huge market out there of people in China reading about how British companies raise money. I hope we managed to abstract the fundamental principles enough.

Peter Cowley:                  David, is there anything else you'd like to say before we wind this up?

David Gill:                         I think the one other general observation that I've found to be true over 20-something years is the importance of Hofstadter's law. In other words, everything always take longer than you will think, even when you factor in Hofstadter's law. I think just about every start-up I've ever worked with thought it was going to raise money within six months, and it was took nine months. Thought it was going to get its product out in two years, and it took three years. Thought it was going to raise its next round the following year, but it had to mark time, and so on and so on. Hofstadter's law I think is something that any entrepreneur needs to take into account when they're planning.

Peter Cowley:                  We'll put something in the show notes about a link to Hofstadter's law. Just before we close, what are you going to be doing in 10 years' time? Have you any idea?

David Gill:                         Gosh. I think in 10 years' time, I would love to be doing more of the same, but I would imagine by then I might have slipped back more towards being a part-time investor rather than a full-time incubator manager. I wouldn't say it's a young man's game, running a business incubator, but sometimes you do feel it's a question of mileage as much of the years.

Peter Cowley:                  Excellent. Thank you very much, David. You did me a great favour when I moved back to Cambridge in '04 to actually allow me to be a mentor on the program, which was paid for the local regional developments agency. That gave me the access to the various people in the community because that was an important part of where I've got to here, so I owe you a tremendous amount for doing that. Thank you, David.

David Gill:                         I think we've had more out of you, Peter, than you had out of us, so thank you.

Peter Cowley:                  Thank you very much.

Peter Cowley                    Thanks for listening to another Invested Investor podcast. You can subscribe to all future podcasts via our website,, or via a number of online podcast platforms, and be sure to follow us on Twitter, LinkedIn and Facebook to get the most up-to-date, interesting and insightful content.