Haggerston Times has been blogging all week about some of London’s top VC firms, to try to help founders understand who they should be sending their business plans to, and paint a picture of where VC’s fit into the start-up eco-system. All the research conducted has been done purely by us based on what was available online and our opinions are entirely subjective.
Founders should bear in mind, that just as they must impress VC’s with their dedication, passion, and thirst for success, VC’s must wow their institutional and private investors by picking, funding, and developing early stage start-ups into comanies that dominate in their chosen industry sector, to the extent that they become acquisition targets for some of the world’s biggest companies.
Looking at how different VC’s go about their business may help founders understand who they should be partnering with, and what they should be prioritising as they look to scale without sacrificing the core proposition that that inspired them to start a business in the first instance! Today we look at MMC Ventures, who are the only VC we have looked at to date not to have their own Wikipedia page.
MMC Ventures was founded in 2000 by Bruce MacFarlane and Alan Morgan, with the objective of “backing early stage, high growth companies”. Whilst the total funds under management are dwarfed by the likes of Balderton or Index Ventures, MMC are one of the most active investors in the UK in terms of deals done, with a knack for attracting co-investors.
In 2013 MMC invested £14m but also attracted a further £54m of co-investment. The firm typically invests circa £15m p.a. with a focus on financial and business services, business software, digital media and e-commerce, or “sectors where the UK is a world leader”. “Backing ambitious entrepreneurs, building businesses and managing EIS and institutional funds” are what MMC Ventures do best.”
MMC are not afraid to “put their money where their mouth is” having personally invested over £10m of their own money on the same terms as their investors. “Our investors are individuals and institutions whose risk appetite, outlook and values match our own”, they say.
As well as being one of the most active VC’s, MMC are also amongst the most enterprising; in 2013 they won a mandate from the Mayor of London’s office and the European Regional Development Fund to manage a combined pot of £22m, christened the MMC London Fund, to back early stage businesses which can stimulate economic growth and help to create jobs. To date MMC’s 37 portfolio companies have been responsible for creating more than 2,000 jobs.
In 2010 MMC launched a fund exclusively for investors between the ages of 18 and 35, accepting investments as low as £2,500, administered by star fund manager Rory Stirling. In 2014 the firm won Equity Gap Fund of the Year at Investor Allstars, rewarded for their unique deal flow and shareholder value as well as their work with other seed and venture funds. The team appear to be as focused on building great companies as they do on securing returns for their investors; so far they have proved themselves more than capable of doing both, and are very much in the hunt for the next “unicorn” start-up, which would catapult them closer ot the top of London’s VC winners league.
Alan Morgan is Chairman and co-founder; Morgan spent 28 years at McKinsey & Co where he was Head of the Financial Services practice in UK, Europe and the Middle East, and a board member in the investment office helping to manage £8bn of staff and partner retirement and pension funds. He is also a qualified barrister. Co-founder Bruce MacFarlane, also a qualified barrister, is an ex-city banker having been MD and head of UK Investment banking at Merrill Lynch and a senior MD at the Bankers Trust.
Below them Rory Stirling joined the team from Greenhill & Co in 2009 and is now a partner, and brings a deep level of technology expertise to the team. Jon Coker, also a partner came from JP Morgan’s global leveraged fund team has led 13 of the firm’s investments into internet technology companies, and Camilla Dolan, is responsible for sourcing new deals and deal execution, having worked at Bain and Co and ran her own business.
There are just 13 team members in total, all exceptionally well qualified both academically and in terms of experience. There is more emphasis on the consultancy side than the entrepreneurial, none of the team have grown and sold their own businesses, unlike Balderton, Google Ventures, or Notion Capital. The team rely more on their stellar academic and corporate credentials.
We have already mentioned the enterprising nature of a lot of what MMC has done to date, which belies the mainly corporate backgrounds of the team. A lot of the emphasis of MMC is on partnering with their portfolio companies, and helping founders keep teams of talented individuals together during the tough times that businesses go through during their early growth phases. MMC are very likely to join the board of their portfolio companies and encourage founders to leverage their exceptional network of contacts, and take advantage of their market insight and intellect.
MMC believe in the power of technology and the game changing effect that it is having “on all markets, across all sectors”. They predominantly back business software and services, financial services, digital media and ecommerce start-ups, coming in at the Series A and Series B stages which they believe are the most crucial phases of a company’s growth. Fast, scalable companies are the target, but not quick fixes. MMC believe in maintaining long term relationships. A typical investment is between £3-7m.
Being a smaller scale VC, a sizeable chunk of MMC’s investors come through tax efficient schemes such as EIS and SEIS. They run 4 tax efficient funds, an EIS, a syndicate fund, a growth generation and a BIR (Business Investment Relief) fund. Their 2 institutional funds are the Enterprise Capital Fund, and the London Fund.
One of areas that make MMC stand out, their investment portfolio contains many of London’s best known and most successful start-ups; Hubbub, the ordering and delivery service backed by ex-LoveFilm President and Chairman of Graze.com William Reeve, ApperHere, an online marketplace for booking retail “pop-up” spaces, founded by Ross Bailey, truly disruptive and often in the news, and Money Expert, a financial services aggregator which was recently sold to external investors for a 2.4x return to investors.
Besides these, many of MMC’s portfolio investments are in common with some of the other VC’s we have featured this week; Notion Capital, for example, are co-investors in Brightpearl and New Voice Media. Additionally, Bottica was founded by Google Ventures Europe team member Avid Larizadeh Duggan and Peter Read at GV Europe is a co-investor in Wool and the Gang. MMC’s investors are doubtless grateful that they have access to this strength of deal-flow.
The research we have done suggests that MMC enjoy what they do, and excel at it because they are enterprising, educated, experienced, take a strategic approach and cultivate a strong network of contacts that gives them access to some of the best deals. They have won a government tender to run a £22m fund, attract different kinds of funds from investors, from institutional to private to tax efficient, have won or been nominated for several prestigious awards, and have been one of the UK’s most active VC’s over the past few years.
It all points to further growth and expansion, which may mean taking on more staff, and winning more investment. In fact, MMC face many of the same challenges as the companies in their portfolio; scaling efficiently, building the team, and increasing profits whilst attempting to mix it with some of London and Europe’s bigger players.
Successful exits are a huge boon to VC’s, and MMC doubtless hope that one of their 30 portfolio companies proves to be a “unicorn”; the risky nature of early stage investments means that smaller VC funds must make the successes count, as there will be plenty of failures for every winner.