Patrick Reeve, Managing Partner of Albion Ventures explains why socially positive investment is good for investors.
In the empty aftermath of the First World War, the novelist John Buchan tried to find a sense of reason with the words, “the only way that we can hope to repay our debt to the Past, is by ensuring that the Future is in debt to us”. There’s something about this concept that seems particularly powerful for us in the West at the start of the twenty-first century, after seventy years of extraordinary prosperity, and at a time when the future seems particularly unclear.
This applies as much in my “day job” as anywhere, because your job as a venture capitalist is to watch where the world is changing, and to gauge whether that change is going to result in growth, and above all in value. In recent years, it’s become clear to me that for value to be lasting rather than transitory, it needs to have a social resonance and to improve people’s lives in a permanent rather than temporary way.
This realisation has spread across the venture capital sector, and not least the £3.5 billion Venture Capital Trust (VCT) part of it. In fact, there is an increasing realisation amongst VCT managers that socially positive investment is good for investors, and a growing number of investee companies are at the forefront of developments in sectors such as the environment, healthcare and education. In all of these, the dynamics driving change have been huge, from the multiple pressures of climate change, the increased health demands of an aging population and the need, both technological and social, to better equip the young to a changing world.
In the environmental sector, VCTs have played a major role in smaller-scale renewable energy infrastructure, contributing to the 25% of UK power that is now derived from renewable sources. Less well known, are contributions towards agriscience, enabling more food to be produced for growing populations in a fast-changing environment. VCT investments in this area include Cawood Scientific, backed by the Northern VCTs, which is the UK’s largest independent provider of analytical laboratory testing services for agricultural industries. It specialises in the analysis of animal feed, grain, soil, composts, anaerobic digestate and contaminated land, with the overall aim of driving land improvement and providing the product assurance that is vital for UK food quality.
There are a number of areas where VCTs support the education sector, both in the provision of technology and in the actual ownership and management of schools. On the technology side, Firefly Learning, backed by the ProVen VCTs, provides software to 500 schools in 32 countries, enabling 400,000 pupils to improve their educational engagement. Meanwhile, the Radnor House group, backed by us at Albion Ventures, established a new London day school in Twickenham, catering for 11-18 year olds, which now has over 400 pupils. The group also owns and operates a 300 pupil school in Sevenoaks, Kent.
VCTs’ involvement in healthcare can be seen in a number of areas, from healthcare IT through to diagnostics. Network Locum, for instance, backed by the ProVen VCTs, helps match locum doctors with available shifts in NHS hospitals and GP practices. Antidote, meanwhile, backed by Octopus Titan VCT, has developed the world’s largest machine readable clinical trial database, aimed at matching willing participants with local trials appropriate to their condition; saving lives by speeding up the clinical trial process.
In women’s health, Create Health, backed by the Baronsmead VCTs, is a leading innovator in natural and mild IVF techniques and has recently opened two new clinics, in Central London and Birmingham, with two additional satellite clinics in Bristol and Hertfordshire. Dysis Medical, meanwhile, which is backed by us at the Albion VCTs, has developed a new system for screening cervical cancer; its products have now processed more than 80,000 examinations, enabling a significant number of tumours to be treated which would otherwise have been left undiagnosed.
In an ever more cramped (and sometimes sharp-elbowed) world, any activity that is not socially positive, can only be short term. And the potential for change is huge; as the great Groucho Marx once commented, “just think what God could have done – if only he’d had the money…”