Being tenacious and walking through walls

Podcast transcription - 24th JuLY 2018

Peter Cowley:                  Welcome to Part Two of Jonathan Milner's Invested Investor podcast. In Part One, we heard Jonathan's entrepreneurial journey, founding a world-leading life science innovator. In Part Two, we hear about Jonathan's transition into angel investing, and his top tips to entrepreneurs and angel investors, including his advice that entrepreneurs need to be tenacious, and always keep their eyes on the goal. We hope you enjoy it as much as Part One.

Peter Cowley:                  Let's move on to angel investing. You actually started angel investing many, many years before you stood down from being full-time CEO of Abcam, didn't you, so back in the mid-2000s, was it?

Jonathan Milner:             Well, my first angel investment was way, way back, in 2003, and I co-invested again, with David. So David had just started to do his angel investing, and of course this was about the time, I think, that Cambridge Angels started.

Peter Cowley:                  It is, yeah, a year or two after it started, yes.

Jonathan Milner:             So, alongside David, I made my first angel investment, a very, very modest amount of money, because I didn't have any money at that point.

Peter Cowley:                  So, that was your first investment, when you were still CEO. As you say, you weren't very well paid, et cetera. Why did you do it? Why did you invest?

Jonathan Milner:             It was the thrill of a startup business, and I had caught the bug from David. So David gave me a number of things, and one is his generosity, and being a mentor, which I wanted to pass on. And so, when I meet entrepreneurs, I want to help them. And secondly, it's the thrill of being involved with a young company, and seeing that progress, and seeing the young entrepreneur blossom and flourish, and then the product get to market. David described it to me once. He said, "Jonathan, this is the best thrill in the world." And he's quite right.

Peter Cowley:                  Right, excellent. So you put a little bit of money in then, in 03, and were you doing one a year, or two a year, at the beginning?

Jonathan Milner:             No, I didn't have enough money to do any more, after that point, until we took the company on to the stock market, in 2005, and, at that point, I released a little bit of cash, and I was then in a position to be able to start angel investing. At that point, David said, "Well, why don't you come and join us at the Cambridge Angels, and come along, and it'll be fun?" So I did. So I started to go along to the Cambridge Angels.

Jonathan Milner:             The one thing that I didn't have, though, was enough time to really think about the businesses that I was investing, so I was very much just going along, being dragged along really, by the other investors, and sort of sheep investing, if I'm honest with you, alongside others, like David for instance, that I thought, they know what they're doing, I'll just put some money in, small amounts of money, and follow them.

Jonathan Milner:             And because I had to do this basically in my spare time, because I was still full-time CEO at Abcam, so that was probably a mistake. Because I think if you're going to do angel investing, you do need to think very carefully about which companies you invest in, and then to bring your expertise to the company, to help them, so take a position on the board, or become an observer, or just a mentor, in fact, but keep an eye on the companies, because I found that experienced business people, such as ourselves, we can bring an awful lot to young companies that are struggling to get out there into the market.

Peter Cowley:                  Yes, not everybody has to do that, and this is the principle of the Invested Investor, which we'll talk about in a few minutes, because actually money that hasn't got time, but has got a few connections, is still valuable, isn't it?

Jonathan Milner:             I agree.

Peter Cowley:                  So there will have been things, even though you were super, super-busy for those 10 or 11, 12 years, whatever, until you stepped down from being CEO, you still helped those companies, I'm confident of that.

Jonathan Milner:             Oh, yes.

Peter Cowley:                  You didn't help as much as you'd like to have done, but you still helped.

Jonathan Milner:             Yeah, oh, definitely, and I still got a good return on them, overall, and that's why...

Peter Cowley:                  Yeah, we'll talk to you ... How many companies have you invested in so far, over the last 15 years?

Jonathan Milner:             It's approaching 40 companies now, over the years.

Peter Cowley:                  And how many are still in existence?

Jonathan Milner:             The majority of those are still in existence, I'd say probably 30 ... yeah, low 30s are still in existence.

Peter Cowley:                  And how many have you sold and made money out of, or have gone on to the stock market, like Horizon?

Jonathan Milner:             I've had about ... let me see, about five exits so far.

Peter Cowley:                  So have you only had about five losses, then?

Jonathan Milner:             Yes, it's not bad.

Peter Cowley:                  Yeah, so you've done very well.

Jonathan Milner:             Yes, not a bad record.

Peter Cowley:                  And are the majority of these life sciences?

Jonathan Milner:             Yes. The most recent one, just to recap a bit ... I stepped down from my full-time role as CEO of Abcam, I'd spent 16 years being the CEO of Abcam, in September 2014, and at that point I could then actually really start to concentrate on my angel investments. And it was then that I made the strategic decision that I would stick to the type of business that I know, which is all in life sciences, and especially in the areas of life science where I thought there was a momentum and a wave, and where all the exciting things of the future are actually happening. So I made a strategic decision there to stick to the...

Peter Cowley:                  Apart from, of course, SyndicateRoom, which I led you into some time ago, which you're on the board of.

Jonathan Milner:             Quite right, Peter, yes. The only exception to that is actually SyndicateRoom.

Peter Cowley:                  We'll come to that-

Jonathan Milner:             It plays a very important role, SyndicateRoom.

Peter Cowley:                  It does, exactly. Excellent, so you're investing alongside other people, but you're also leading deals, I suspect, even before you stepped down as CEO.

Jonathan Milner:             Yes, that's true, because I now have a position where I'm quite well-known, so I get a lot of business plans, and I get a lot of young entrepreneurs coming to me to help with funding, and also with mentoring and a bit of advice. So I do see an awful lot of early-stage investments, and if I like those investments, I will take the lead and be the lead investor on those.

Peter Cowley:                  Yeah, so you're actually building the round from that, as in deal leading. So, can you talk about Horizon Discovery? This was something I think you found, in the States, didn't you?

Jonathan Milner:             Actually, no, this came out of Cambridge Enterprise, and in conjunction with Chris Torrance. Chris is a Cambridge ... I think he was working for Vernalis, but out of that, he then recognized there was a piece of technology at the University of Washington, for gene editing. And he managed to secure a license for that, just for Europe, for this piece of gene-editing technology, in conjunction with Cambridge Enterprise. So they had the exclusive license, so they still needed to raise money.

Jonathan Milner:             So I met with Chris, through Geraldine Rodgers, and she introduced me to Chris, and I said, "Chris, let's go to the pub." So we went down to The Eagle, so we sat in The Eagle, and Chris said, "I've got this incredible piece of technology out of the University of Washington." And I said, "I have no idea, Chris, what you're talking about." So he then explained it to me, and then I said, "Chris, I still have got no idea what you're talking about." But gene editing is going to be huge, I knew that much, didn't know quite how the rAAV gene editing worked, but I knew gene editing was going to be huge, and I said, "Okay, I'll put some money in."

Jonathan Milner:             And we spent the rest of the evening arguing about the valuation, and I started off by saying, "Your company is worth 700,000 tops." Chris was saying, "No, no, no, it's 900,000."

Peter Cowley:                  By modern standards, those are low numbers, yes.

Jonathan Milner:             We could have saved an awful lot of time, just ... because we ended up, of course...

Peter Cowley:                  … at eight hundred thousand, yes...

Jonathan Milner:             ... at the end of the evening, after quite a few pints, yeah.

Peter Cowley:                  It should be pointed out, The Eagle is where DNA was worked on.

Jonathan Milner:             That's right, yeah, Watson and Crick.

Peter Cowley:                  Great pub in the centre of Cambridge, yes. And Horizon of course has gone on to great things, and floated some years ago now, didn't it?

Jonathan Milner:             That's right, yeah. That went on the Stock Exchange, I think, 2012, and has gone on to great things.

Peter Cowley:                  Okay, let's not just talk about the successes, let's talk about some failures. So, the investments that you've made, and you haven't had many failures anyway. You've probably got some in your portfolio that are not doing very well, but what have you got wrong? What should you tell your 15-year younger self?

Jonathan Milner:             The one characteristic of all of my failures is when I haven't backed my gut instinct about the entrepreneur, and it actually comes back to when David actually invested in me. And afterwards, I had a very frank conversation with David, and I said, "What did you see in me, to invest in me? Because on paper, I'm the last person you would ever invest in, pure academic, no business experience whatsoever."

Jonathan Milner:             And he said, "Jonathan, it's very, very simple." He said, "I saw you as a person that could just walk through walls, to get things done." My philosophy has therefore been, I want to spot entrepreneurs that can walk through walls, and every single time I've not done that, it's not ended well.

Peter Cowley:                  It's very difficult, there's a lot of gut there, isn't there? How long did David get to know you before he decided that you could walk through walls? He can't have seen you walk through a wall, I don't mean physically, clearly, beforehand. How long was that courting process, before he wrote you the cheque?

Jonathan Milner:             I think it was at least six months, of-

Peter Cowley:                  Okay.

Jonathan Milner:             Yeah, he wrote the cheque pretty early on, and then he was taking a gamble. And then, he had to see if I could actually walk through walls. And the first wall was that he said, "Have you got any money?" And I said, "Don't be ridiculous, I haven't got any money. I've got no money at all. I've just bought this house with Rosie and we're mortgaged up to the hilt, and I get paid absolutely peanuts from the university, so where am I going to get some money from?"

Jonathan Milner:             And he said, "Unless you've got any money, I can't help you, so come back to me when you've got some money." So that's what, the next week-

Peter Cowley:                  So you remortgaged, having just mortgaged?

Jonathan Milner:             I remortgaged ... well, no, this was the first remortgage. So we remortgaged the house, and I skipped back into his office, a week later. So, a week later, so the test that he gave me was, find some money. And so he was absolutely massively impressed when I came back with this £11,000, despite the fact it wasn't going to be enough, but I'd passed the first test. So that was the first wall-

Peter Cowley:                  But have you ever done that to another entrepreneur? I certainly haven't. I haven't said to them, "Within a week, raise some money." Have you?

Jonathan Milner:             No, I think, to be honest, even the most entrepreneurial person, in an environment where it's impossible to raise it... And back then, you could remortgage, banks were throwing money all over the place, very irresponsible, as you know, which led to the 2008 crisis, but it's very, very, very hard to say to entrepreneurs, "You have to hit this hurdle," when you know it's impossible actually.

Peter Cowley:                  Yeah, exactly. So, it's done on gut, it's done on getting to know each other, et cetera, all the things we talked about. So each failure you've had, you ... having not got to know them well enough, or ignored your gut?

Jonathan Milner:             Yes, it's where I'd been seduced perhaps by the technology, and been more focusing on that, and then making excuses for the team, for the entrepreneur, for the management team, and that's when I've found there's problems. No matter how good the technology is, if you don't have a really good management team, founder, entrepreneur, then it's not going to work, in my experience.

Peter Cowley:                  Excellent. Let's just talk about SyndicateRoom now, because we've interviewed Gonçalo, and we've interviewed David Gill, actually, in recent times, and these will both be broadcast before this podcast is broadcast. I remember sitting next to you at a dinner, a pitching event, and suggesting ... and you said to me, "This isn't for me." Which it clearly wasn't, because there wasn't anything life, totally off-topic from life sciences. It was a platform. Can you explain the process in your mind between us sitting together, and you being the largest individual investor apart from the founders, and on the board?

Jonathan Milner:             Absolutely. So, this comes back to the walk through walls. And I started to get to know Gonçalo. Gonçalo would actually seek me out, and I didn't really know why, at events, through your introduction. So I got to know him, and I really liked him. I thought, "Gosh, this guy's really energetic. He's very forceful, I think he could walk through walls. He's a really good entrepreneur."

                                             But I didn't know anything about what he was doing. I didn't know anything about SyndicateRoom or equity crowdfunding, or finance fintech. I didn't even know what fintech meant. I thought it was something to do with Finland. So, the point where it gets interesting is when it was actually ... so, Gonçalo got my ... I don't know how he managed to get my phone number. So credit to him.

Peter Cowley:                  Possibly me.

Jonathan Milner:             Possibly, but I don't know. But then, I'm on holiday.

Peter Cowley:                  In Greece, weren't you?

Jonathan Milner:             In Greece, yeah. And I can remember it, we were taking a walk up the mountain, to the monastery at the top of the mountain, and I got this call from Gonçalo, and he said, "We need funding." And I said, " I can't help you, Gonçalo, because there's no way that I can do any due diligence whatsoever. I'm on holiday, I've got no email, I've got nothing."

Jonathan Milner:             So he said, "Well, we're really desperate, we really need your funding." So, I said, "Well, look, because I like you, going to give you 24 hours to come back to me with an offer, bearing in mind that I'm not going to be able to do any due diligence, an offer that I can't refuse." And he went away, came back the following day-

Peter Cowley:                  He went away, and I was in the meeting, that was making that decision, with the other shareholders. So I know the other side of the story, where we had to decide, as shareholders, what offer we were happy that you could see, and also, we had to try to outguess you, to work out what you wouldn't say, "No," to.

Jonathan Milner:             That's right, yeah, yeah. It was a really good result in the end. Any more, and I would have felt uncomfortable, because I really didn't know anything about the business, we were a very, very early stage business, and not being to do any due diligence, then any higher valuation than what we settled on would have jeopardized it, so-

Peter Cowley:                  No, it was wonderful. Yes, we were very pleased. So, at that point then, you start to get to know the business, start to mentor, along with other people, Gonçalo, and join the board. Can you just tell me how you feel you've helped his journey?

Jonathan Milner:             Absolutely. Gonçalo comes to me very often, so we meet virtually weekly for advice. We might go to the pub, have a chat, and I can give him advice on how you can actually scale a company, how you can hire and fire people, how you can strategically build a company that can scale. And this is one of the things where SyndicateRoom really needs help from people like myself, because it's all about being able to scale.

Jonathan Milner:             So I'd like to think that I've added a great deal of value, in being able to bring that advice, and then also in building the board, as well. We've built a very strong board now. We've got Tim Bellis as our chairman, we've got David Gill, of course, of St John's Innovation, on the board-

Peter Cowley:                  Who's an ex-banker and VC.

Jonathan Milner:             Absolutely. So, I'd like to think I'm able to bring that type of advice to Gonçalo, and also be able to help him through the times when things aren't going so well. And there's always times with startups, with founder entrepreneurs, where things are the bleakest you can possibly imagine. And you've got to have people around you that are going, "Come on, it's fine, you know, we've all been through this, pull yourself together, we'll get through it, we'll work out what to do, and re-organize the business."

Peter Cowley:                  There's a lot of naivety, as we both know, as we've mentored hundreds of people, in entrepreneurs, isn't there? Entrepreneurs who've been on this podcast have said the same. It's just much, much tougher than you can ever imagine.

Jonathan Milner:             That's right, very, very tough for entrepreneurs, indeed.

Peter Cowley:                  So, Jonathan, you are a prime example of an invested investor. You're investing both money and your time and expertise, real smart money, and you've got into that role because you really enjoy it, and you can see a future in doing that. Can you give me some tips for angels? Imagine the audience are angels who've done a little bit of investing, but want to learn from you, to improve the outcome of their investments, and ones that want to help with the journeys of the startups.

Jonathan Milner:             Yes, indeed. I like to keep this very, very simple, because I see a lot of companies, and I don't have a lot of time, so I need to be able to make decisions very quickly, and I've boiled it down to three things. They come down to the team. The team could just be one person, the entrepreneur.

Peter Cowley:                  You do single? I don't do single-run teams, when I can avoid it.

Jonathan Milner:             If I think that they can walk through walls, I will do. Rarely, but I do. Then I look at what sort of technology they have, and this is important, because I shy away from single-product technologies. I really don't like them, because they're very risky, things like drug discovery where there's just a single asset. I shy away from those. I like to see a platform technology, something that can scale and be put into multiple markets, and can expand, et cetera.

Jonathan Milner:             And then thirdly, it's just an interesting one, which is, you have to remember, it's all about customers. So, the businesses I like to invest in are the ones where the entrepreneurs or the team comes back and says, "We've got a customer." They might not have a product yet, but they've spoken to a customer, and the customer has said, "If you built me that product, I would buy it at this price."

Jonathan Milner:             This is such a valuable piece of information, because you can then bring that back in, and you can actually build a whole business plan around, what is the customer willing to pay for this product? And, how am I going to be able to do the supplies, the manufacturing cost, et cetera, what's my gross margin going to be, but, most of all, it is market validation, that what you're actually building is actually going to sell. A lot of the companies that I see have not even gone and spoken to any customers, no matter got any orders or any access to...

Peter Cowley:                  They just assumed the market will want it, they will...

Jonathan Milner:             That's right, they make an assumption that the market wants the product that they want, and I realized this very early on, and coming back to the ice bucket story. The most wonderful thing that happened to me was when I went and spoke to the customers, so I got all of this information, and then I could tailor the product to fit what the customers needed.

Peter Cowley:                  Some angels require the customers to actually have paid over some money as well. Are you not so worried about that?

Jonathan Milner:             It depends, because I think if you've got a very highly technical product that has got good market validation, as in, customers are saying, "If it was there, I would buy it," but you still have to develop it ... but as long as you've got customers saying, hopefully written, saying, "Yes, we would put in an order for this product if it fits," that's enough for me. You can't always have a product that's ready to go to market.

Peter Cowley:                  Exactly, particularly in life sciences, where it may be even multiple years. My wife works for a company called Kymab Monoclonal Antibodies, and that's been a seven-year journey already.

Jonathan Milner:             That's right, yeah.

Peter Cowley:                  So that's tips for angels. What about tips for entrepreneurs? So, entrepreneurs who are approaching people like us, who are seeking money.

Jonathan Milner:             My biggest piece of advice to entrepreneurs is to just be tenacious. Be tenacious, never give up, always think about what the bigger prize is. So, really concentrate on that big prize, because there's going to be times when it's going to be so tough that you're just going to want to give up. But you've got to keep your mind on that big prize, and then be willing to adapt your business model to the circumstances that you find out there in the market. Because I have never, ever had a company, and I'm sure you haven't either, Peter, where the first business plan was the one that five years later, is exactly the same one that you delivered on.

Peter Cowley:                  Gonçalo actually claims that is the case, in his podcast.

Jonathan Milner:             No, it's not.

Peter Cowley:                  Still not.

Jonathan Milner:             No, it's not, definitely not. Every company has to adapt to the strategy there. And then, there's also the networking as well, which I saw very early on with David, when he introduced me to all the network in Cambridge. That's essential. So you've got to get out there, be like Gonçalo, find people like myself, find people like yourself, find people like David, get plugged into a network. Because we know people, and we can put people in touch, and it's all about networking. I spend an awful lot of my time just simply introducing people, young entrepreneurs to the people that they need for the journey.

Peter Cowley:                  Yes, I do as well. Okay, obviously you've got to the point now where you're still deputy chairman of Abcam, aren't you, so that's a role?

Jonathan Milner:             That's correct.

Peter Cowley:                  And you've got other board positions, but you haven't really got time on your hands, because I know it's been difficult enough to try to book this slot. But, you are giving back, so you've given money to, I think, to your university in Bath?

Jonathan Milner:             That's correct.

Peter Cowley:                  Also to Cambridge University. Talk a little bit about the Milner Institute.

Jonathan Milner:             Yeah, well, this comes from my belief that we have to give back, and, since 2005, when I've been able to do that, there's a big charitable part of my philosophy in ... two arms to it, it's not just the investing, it's the charitable arm to it as well. And I have three passions that I can indulge there. One is human health, because, what happened to my father, because of my background, because that's the life sciences area that I'm in, so being able to make a difference there, and to address some of the problems that we now face.

Jonathan Milner:             And this is how the idea for the Milner Institute came about. So Tony Kouzarides, who I was in his lab with, came to me and he said, "Jonathan, we've got a problem with drug discovery. We've got all this wonderful biology within the university. We've got all of this chemistry within the pharmaceutical companies. The two aren't talking to each other. We need to bring them under one roof. I want to start an institute."

Jonathan Milner:             So I said, "Tony, you know what, you're pushing on an open door here. I've been thinking exactly the same thing. Let's bring in an institute within the university, where we can have an open collaboration between all the scientists within the university, to bring their biology with the chemistry from Big Pharma companies." And it's gone fantastically well. Now that's the Milner Institute, and that's going to be, again, right down next to the Abcam building, in Cambridge Biomedical Campus.

Jonathan Milner:             So, that's been wonderful, and that's an ongoing project, and then my second passion, if you like, is in education, and education especially around evolution. So I gifted some money to Bath University, to start a centre there, it's actually called the Milner Centre for Evolution, which has been tremendously exciting, with the aim of teaching evolution properly, so teaching it to the students properly, but also to be a world-class centre for evolutionary research.

Jonathan Milner:             And there's a third one, which is my passion for conservation, and so I've been working a lot with the Galapagos Conservation Trust, for instance, with the Natural History Museum, down in London, and that's an area that's ongoing, so I gift quite a bit of money yearly to various conservation projects globally.

Peter Cowley:                  Excellent, Jonathan, wonderful, wonderful. And then one last question, which you haven't prepared for. I am 10 years older than you. What are you going to be doing when you get to my age?

Jonathan Milner:             I hope I'm doing what I'm doing at the moment, because this has been such an incredible journey for me. And I do realize how hugely lucky I am, to be able to do what I do, and have so much fun, and meet such interesting people, and work with such incredible companies, that I suppose I don't want that to end. So I would like to think that I am going to do this for as many years as I can possibly go on for.

Peter Cowley:                  That's an absolutely great answer. You're giving so much now to entrepreneurs, to charity, to education, that long may that continue. Jonathan, you've been absolutely wonderful, interesting, educational, talking to you today. I've really enjoyed it.

Jonathan Milner:             Thank you. 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.