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Posted 23rd May 2024

Exited Deep Tech Founders Turned Investors Forge VC Powerhouse

SCVC, an UK early-stage deep tech venture capital firm, has appointed John Williams as its partner – a move that unites two of the country’s most successful deep tech founders for the very first time.

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Exited Deep Tech Founders Turned Investors Forge VC Powerhouse
Harry and John

‘We are building the VC firm we wish we had as technical founders’

SCVC, an UK early-stage deep tech venture capital firm, has appointed John Williams as its partner – a move that unites two of the country’s most successful deep tech founders for the very first time. 

Williams is best known as the co-founder of UK-Japanese billion-dollar tech company Kudan, which paved the way for modern computer-vision based augmented reality and achieved unicorn status in its 2018 Tokyo IPO. He will now work alongside Harry Destecroix, SCVC’s managing partner and founder of record-breaking startup Ziylo which topped the ranking of deep tech acquisitions when acquired by Novo Nordisk for up to $800 million for its smart insulin technology.

SCVC focuses on deep tech spin-outs: science and engineering discoveries that transition out of research institutions to form new start-up companies that can deliver global impact across healthcare and sustainability.

With the addition of Williams, SCVC is uniquely poised to achieve its ambition of being the UK’s best early-stage deep tech investor for technical founders. SCVC already backs some of the country’s most promising quantum and biotech spin-out companies including Delta g, Scarlet Therapeutics and Forefront RF. Last year, it announced the first close of its second deep tech fund with a target of $100m.

SCVC’s foundations are similar to the highly successful founder-led VCs found in Silicon Valley, such as a16z and Founders Fund which were started by PayPal’s founder Peter Thiel and Netscape’s founder Marc Andreessen respectively. 

Research shows that exited founder led-VCs have higher success rates for their investments than any other category of VC (29.8% vs. 19.2% and 23.2% for founder and professional VCs respectively). Successful founder-led VCs in Europe are extremely rare. Just finding a VC that has experience working in a start up in any capacity is hard enough (operator-led VCs) with only 8% of firms with this experience. This is strikingly different to the US where the majority of VCs have previously operated in a startup (60%). Clearly, there is a significant difference between the experience gained working in a startup vs. founding a startup vs. founding, exiting and returning money to investors.

Most startups aren’t built off a decade of advanced research spinning out to form a new company. The challenges faced by these types of businesses are very different. For instance, most of the risk is technical (because there’s a lot more of it) and not market.

Williams said: “The partnership of two exited founders in a UK company is rare, but what is even more unusual – and in our opinion essential for any successful deep tech VC – is that the partners themselves are original inventors of the technologies. At SCVC, we leverage our backgrounds to really understand the technology in its pure state and work to identify the product that best leverages the technology’s strengths before even considering the market. This technology product fit model is unique to SCVC.”

He added: “There is an enormous untapped opportunity for UK deep tech start ups. Whilst having some of the best research in the world, the UK has only half the patenting rate per capita compared to the US, despite having a higher publication rate. This is compounded by a lower commercialisation rate, demonstrating that most of our UK deep tech opportunities are still trapped within academia. 

“Because of this we do not have a zero sum game mentality. We are barely scratching the surface of how many more startups we could be making and how much more investment is needed. The capital and investor base is rate limiting. We believe in collaboration and want to actively work with VCs of all backgrounds so together we can unlock more of the opportunity.”

“What’s tricky about a big scientific breakthrough in universities is that it’s often been researched in isolation without considering its commercial fit. It’s presented as a hard-to-understand technology with no real context, or worse, chasing a popular, but inappropriate market.

“It’s sad to see great technology die, either stuck in a university, or in a start-up where it never really had a chance. Too many VCs will wait until a later stage to provide capital, where there is more of a business plan and some traction that’s easier to analyse. But many don’t make it that far or they alter the company’s strategy to bait investors into believing it addresses current hype. It’s why it’s so advantageous when a VC has a technical founder background. They have lived and breathed the challenges of turning an idea into reality. It’s an untapped opportunity in the UK, so we encourage more founders to enter the VC space. As well as exited founders, it is also important to have more people with STEM backgrounds in VC. This is particularly true in deep tech, where the technological risk typically outweighs the market risk. ”

Between Williams, Destecroix and the SCVC team, they have expertise in biotech, quantum, semiconductors and AI – the key areas that the UK government has identified in its strategy to unleash the UK’s full potential as a science and technology superpower.

Destecroix explained: “The fund has a unique investment thesis. Deep tech start-ups are society’s most effective economic vehicle to deliver innovation and global impact for the health of people and the health of our planet. In case you missed it, the 4th industrial revolution is already here. This is powered not by a single breakthrough technology but by the combinations of several at the right moment. We believe this is being powered by the convergence of biotech, quantum and AI. Biology and quantum sensing are the biggest untapped data sources in the world and recent advances in AI are beginning to unlock this massive potential. John was a visionary in AI and sensing and our thesis has naturally grown out of hundreds of hours of discussions where we’ve crossed over into each other’s areas of expertise.”

About John Williams:

 Williams, who left school at 17, organically grew Kudan with veteran Japanese businessman and friend Tomo Ohno, to continually push the state-of-the-art and capture many of the era’s most successful applications.

As augmented reality became more mainstream, the company repurposed its core technology to create Artificial Perception, a sophisticated form of AI that allows self-driving cars, robots and drones to understand the world around them. It was this natural pivot that would set Kudan up for its unprecedented IPO on the Tokyo Stock Exchange, which was so successful that the first trading day resulted in the price soaring three-fold without a share being traded, exceeding a billion-dollar valuation.

About Harry Destecroix:

 As well as being the Managing Partner of SCVC, Destecroix is the founder of Science Creates, a deep tech ecosystem that pairs the venture fund with three deep tech incubators covering 75,000 sq ft and start-up accelerator programmes, backed by government funding from UKRI, and a charity which trains children to become future deep tech entrepreneurs. He created this out of necessity when his company Ziylo couldn’t rent lab space in Bristol.

Destecroix is a recognised expert in deep tech spinouts and adviser to the UK government. His Science Creates ecosystem generates an annual GVA exceeding £125m and has supported over 100 deep tech start-ups to-date. It is also home to UKRI’s national engineering biology accelerator programme. Across Science Creates there are now 26 full time members of staff and SCVC is one of the most well-resourced and specialised early stage deep tech VCs for spin outs in Europe.

Categories: M&A, News, Strategy

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