Paul Miller, CEO and managing partner of London-based venture capital firm Bethnal Green Ventures, talks to Impact Investor about his commitment to back ambitious founders using technology to tackle the most pressing societal challenges
- CEO and Managing Partner Bethnal Green Ventures (BGV) 2012-present
- Co-founder and CEO, School of Everything 2006-11
- Senior Researcher, Demos 2003-6
- Policy Adviser, Forum for the Future 2000-2
- M.prof, Sustainable Development, Middlesex University 1999-2000
- Bsc Physics, Nottingham University 1996-9
Paul Miller, CEO and managing partner of leading early-stage ‘tech for good’ investor Bethnal Green Ventures (BGV), confesses a long-term fascination with tech despite the fact he has never worked in the sector.
Miller has also been long concerned with impact. “As a student, I was an ardent campaigner, however I found campaigning frustrating because it was very difficult to actually have real impact. This is what led me towards this kind of venture capital – a combination of a fascination with technology and a strong desire to have impact,” he explains.
BGV came about following a series of weekend events Miller was organising to bring together people in the technology and impact spaces. “These were originally intended simply as networking events but very soon I was overwhelmed by interesting, entrepreneurial people coming to me saying ‘I want to quit my job and start a company. How do I do that?’. This was the genesis of Bethnal Green Ventures.”
BGV boasts that it has backed 141 ‘tech for good’ ventures, with £98 million of follow-on investment raised by their portfolio, 16.9 million users of BGV portfolio companies’ products and services, and 563 people employed by portfolio companies, 43% of which are women, well over double the tech sector average.
On this last point, BGV has a strong commitment to diverse teams. “Diverse teams develop more accessible products and services, deliver better returns and better impact. Our commitment to seeking out and engaging with diverse founders gives us visibility and access to brilliant opportunities other investors regularly miss out on,” Miller adds.
“I found campaigning frustrating because it was very difficult to actually have real impact. This is what led me towards this kind of venture capital – a combination of a fascination with technology and a strong desire to have impactPaul Miller, Bethnal Green Ventures
Why tech for good?
It is BGV’s belief that technology has the potential to significantly and positively impact millions of lives, and that better solutions are needed to achieve a sustainable planet, a good society and healthy lives. The firm sees “an opportunity for ambitious ventures to tackle these challenges and radically reimagine the future for the better”.
Moreover, like many impact investors, BGV believes that “better solutions aren’t just good for humanity, they’re also a huge market opportunity too”. An estimated £9 trillion can be unlocked each year by the businesses that ensure a sustainable and prosperous future for people and planet, according to the firm.
In BGV’s view, technology designed with the specific intention to drive positive impact has huge potential, providing opportunities for greater scale and new approaches to addressing big social and environmental challenges. Technology also “enables rapid growth, global reach and affordability through declining unit costs”.
Miller tells Impact Investor: “We have three key verticals which we focus on. Firstly the sustainability area and the urgent need to address environmental issues. Secondly, we seek to create a better society with important subgroups – education, employment, and democracy. And finally, we look to invest in technology that is addressing improvements in health.”
BGV’s investee companies are divided roughly equally between these three verticals, although “in recent times we have seen an increase in the number of ideas that come to us in the sustainability area. Five years ago health was the biggest area, now it is definitely sustainability”.
BGV’s model is to make a first investment of a set amount of £30,000 (€36,000) in exchange for 7% of the equity in any new venture. They then re-invest higher amounts into the most successful companies.
Miller says: “We are very much the providers of early-stage funding, often stepping in as ‘friends and family’ equivalent investors, particularly for new ventures where founders don’t come from backgrounds with access to capital.”
Portfolio companies will normally tap capital in later rounds from other venture capital tech investors such as Pi Labs. Apparently, “34% of our portfolio companies believe that without BGV their product or service would not have existed today”.
“We are very much the providers of early-stage funding, often stepping in as ‘friends and family’ equivalent investors, particularly for new ventures where founders don’t come from backgrounds with access to capital.”
BGV runs an application process in two rounds each year. “Every six months we get two to three hundred applications and our team, together with some of our successful founders of the past, work to whittle this down to forty or fifty who we then interview in depth,” Miller explains. This shortlist roughly translates into around ten investees for each round, or twenty new investments per year.
Miller is proud of many of the companies BGV has invested in. These include Fairphone, an ethical and sustainable mobile phone handset company based in Amsterdam. “They have done much to raise issues around the materials used in the construction of mobile phone handsets and the issues around mining – the sustainability of materials. This company has had considerable success and now has many thousands of users,” Miller explains.
Other investee companies include Piclo, focused on enabling flexible energy systems and managing the process of selling surplus electricity back into grids, and UK health company Second Nature.
Sources of capital
BGV’s original capital came from the UK’s innovation agency Nesta and Google, but “increasingly we are tapping a wider slate of endowments, trusts, and foundations together with Big Society Capital. These are our institutional investors”, says Miller.
The firm has also have also launched a fund aimed at high-net-worth individuals, with a minimum investment of £20,000 and a target return of doubling capital net of fees over a 10-year period. Miller says: “For UK investors, this has a distinct tax advantage and although European investors could, in theory, invest they would have to qualify as ‘professional investors’ as this is a high-risk investment.”
He adds: “For Bethnal Green Ventures the most important priority in the future is to increase our access to capital from investors looking for VC returns plus a positive impact. To this end, we are looking to tap capital from pension funds and are working with a company called Connected Asset Management which specialises in bringing pension funds together with interesting impact opportunities.”