The Future Planet Fund backs growth companies emerging from innovations developed at some of the world’s leading academic institutions aimed at solving pressing societal challenges
- Executive Chairman, Future Planet Capital, 2015-present
- CEO MENA, bfinance, 2011-16
- CEO, Robeco Middle East, 2007-12
- Global Head, ABN AMRO Asset Management, 2001-07
- Various emerging market roles, 1991-2001
- MA, Philosophy, Politics and Economics, Oxford University, 1988-91
Future Planet Capital is a global venture capital firm that invests in high growth potential companies from the world’s top research centres. It provides venture and growth funding to entrepreneurs and businesses “profitably solving the world’s greatest challenges” in climate change, education, health, sustainable growth and security.
Executive chairman Douglas Hansen-Luke tells Impact Investor that during his many years as an emerging markets banker, he “realised there were some things about capitalism that didn’t work. This together with the gathering crisis around climate change let me towards an impact-driven business”.
Thanks to his banking years, Hansen-Luke has close relations with several sovereign wealth funds and large pension funds.
“Talking to them, I realised they had a strong desire to get access to the top innovations that were being made in academic institutions, and to harness that power for positive impact. I soon realised that solving the world’s biggest problems had to have significant financial value.”
Hansen-Luke worked with several large institutions to create Future Planet Capital. “We were motivated to build something that would allow the deployment of large amounts of impact-focused capital in a profitable way. And at the same time to build the business in a way that would reduce risk.”
He declines to indicate who were the initial investors but says a Middle Eastern sovereign wealth fund was involved and that this was “the first example of a sovereign wealth fund investing in university related venture capital”.
Future Planet’s operating model
“We looked at the top ten centres of innovation, each of whom had spawned their own boutique venture groups. We then worked to build relationships with those venture funds and connected them with investors.”
The list of educational institutions involved is impressive including Oxford, Cambridge, Harvard, Yale, Stanford and Berkeley.
Hansen-Luke says: “Using our twenty-strong research team, we seek out those ideas coming out of academic institutions which have the greatest potential commercial value. I regard this process as a ‘triple distillation.’ The brightest people at universities are themselves sifting through the best ideas, their own venture capital groups on the ground are then choosing the winners from them, and then finally our own research team picks what we believe are the most commercially viable.”
Future Planet runs several core strategies, with the Future Planet Fund as its flagship fund. In addition, the Challenge Response strategy, in partnership with Barclays Private Bank, is designed to provide a rapid investment response to immediate global challenges.
The UK Innovation and Science Seed Fund builds “companies from the science developed in publicly-funded laboratories and campuses across the UK” and has a portfolio of over 60 businesses with a combined market value of £1bn. Also, the West Midlands Equity Fund managed by Midven, part of the Future Planet group, helps businesses across the West Midlands region start-up and scale-up.
Future Planet’s time horizon for its funds is normally ten years, and five to seven years for some of the co-investment vehicles.
Hansen-Luke comments: “We very much believe innovations in these areas are going to offer investors significant returns. Impact has significant upside here. We seek to achieve a return of 18% per annum net, 25% per annum gross.”
Successes and challenges
Hansen-Luke highlights three successful investments in his portfolios.
Vaccitech is “perhaps the most impactful thing we have done as it is the company behind the Oxford AstraZeneca vaccine”. More than one billion doses have been administered worldwide to fight COVID-19.
Tokamak Energy is “working on the holy grail of energy”, accelerating the development of fusion energy using spherical tokamaks – a device which uses a powerful magnetic field to confine plasma – and high-temperature superconductors to achieve net gain.
Finally, Guideline, “America’s fastest-growing 401k provider, allowing businesses to offer the thousands of employees without retirement savings a full-service retirement plans”.
Hansen-Luke says: “The biggest challenge for us is dealing with the anti-commercial bias one finds in many academic institutions. In the United States and Israel this is not such a big problem, but UK institutions are much slower at seeing the financial opportunities. Often, they are very attracted by the impact, but are not hungry when it comes to commercial upside.”
Hansen-Luke also admits “operating globally with so many different institutions is obviously also a challenge, and we have to work very hard to maintain good relations across this global network”.
Democratising impact investing
Hansen-Luke believes “it is very important to persuade institutions that if they want to have impact, they can’t just put their money in safe liquid investments. They also must consider venture capital”.
Hansen-Luke thinks European investors need “to take longer time horizons in the way that US investors do”. He asserts European institutions and the government bodies which regulate them have a structural bias against this.
“One of our main objectives in the future is to find a way to democratise access to impact investing.” At the moment, Future Planet has government and sovereign wealth funds, pension funds, large corporations, and ultra-high net worth individuals and foundations involved. “But our hope is to bring in ordinary individuals in the future. To this end we have partnered with the UK’s biggest crowdfunding platform Seedrs.”
New initiatives and new funds are very much part of Future Planet’s thinking. They recently launched the Blue Ocean Mandate with the Prince Albert II Monaco foundation, because as Hansen-Luke says “the oceans absorb 80% of the world’s CO2”.
“We intend to launch other funds as we believe the combination of impact and innovation makes a lot of sense and is also in fashion. Impact investing is here to say and to deliver high value returns.”