Ben: All right, welcome everybody. I am here with my longtime colleague and friend, Will Schaffer, who is currently an Investment Director at Mercia Asset Management in the UK. We're going to have a great discussion around investment and startups and regional innovation. I guess, Will, tell us about Leeds. What's going on over there now?

Will: Well, I guess firstly, Leeds United just got relegated, so that's a little bit disappointing.

Ben: What does that mean? I wish I knew. I'm less of a soccer aficionado. What does that mean?

Will: It's no longer in the Premier League. I don't follow it all super closely, but anytime you get relegated, it's no fun.

Ben: Does it feel like a tragedy? Are the pubs full of sad folks now?

Will: We only recently moved back up, so I think everyone's kind of resigned themselves to a few more years back down the ladder.

Ben: Oh, okay. As a Clevelander in sports fan. I'm like, oh man, I'm glad they can't do that over here, where you can actually get dropped. That would happen to my teams. But anyway, yeah, so tell us.

For those of you that are listening, I got to know Will back in the day when he was in DC. We kept in touch and, then, he became an expat over in the UK. Will- just share that journey and your story a little bit.

Will: Yeah, I was working in Washington DC for about five years. I started out at CSIS- the Center for Security and International Studies. I was working for Dr. Harold Brown and Raymond DuBois, and just kind of a postgraduate type of position, but really got an interesting exposure to the Defense and National Security and Government Services community. And then after that two-year position, I moved over to the McLean Group, which was an investment banking house that really specialized in M&A support and fundraising support for Defense and Government Service contractors.

I was doing a lot (of work) with contractors in the National Security space, the Intelligence, really all types of healthcare, and Health and Human services contractors as well. It really ran a gamut and it varied from everything- from sort of systems that went into submarines, to armor for helicopters, to really primarily IT services. That was the largest volume of business that was going through there as well as broader services and solutions.

Ben: Yeah, I was going to ask you about McLean a little bit. McLean Group is, for folks in the GovCon/ Defense ecosystem, folks that have companies in DC, McLean Group is kind of a legendary broker around M&A. So, tell me a little bit about the types of deals that you did at McLean. What was the typical kind of profile of an acquisition?

Will: Sure. Typically, we were working with mid-sized government contractors. There's a few specialists out there that really focus on this market and relationships are important to really understand what buyers and consolidators are looking for. We would help business owners who had their businesses reach a certain phase, rather, they weren't comfortable continuing leading it on or they were looking to retire, or they were looking for something to catalyze the next phase of growth.

And we would help them usually by exit, but sometimes funding rounds, to find that next phase. So typically, they had a profile of revenues north of 10 million. They would have some balance of prime, subprime, (and) prime and subcontractors contract work. Usually, they were crossing the threshold into non-set-aside work or where they held significant subcontractor positions with major primes. Or they were actually graduating into the prime position. They had developed some unique capability or skill sets of past performance that had helped them jump into that position. There was a question of, do you deliver on that and continue to build, or do you recognize that as a valid inflection point and see it to do risk and merge with the larger organization?

Ben: So, set-aside prime and sub, maybe like share a little bit on what that means and why certain white prime contracts are more valuable from a kind of equity standpoint than subs.

Will: Set-aside contracts are difficult to transfer because usually there's limitations on them.

Ben: Like 8A, kind of?

Will: Yeah, 8A, minority-owned, women-owned, veteran-owned, certs disabled owns. There's probably a dozen or two dozen different categories. These categories are great because it means the government can't spend all of its money running it through all of the large contractors. So, big, big fan of these programs.

But when it comes to selling the business, they do provide complications because usually there's a threshold with them, whether it's revenue, employees, age, or ownership status. It means that the work can no longer continue, once the acquisition has occurred. I'm not familiar anymore with the rules exactly- how that operates around an acquisition, but it does mean that either, they're less valuable because that work can't continue. You may still be able to get a sale through because of other reasons. But those contracts often won’t transfer or won’t do, depending on the nature of the contract, which means that the buyer is not really getting full value because they won't be able to continue that work. Now they may want the employees. They may want past performance. They may want any number of other things. So yeah, that work unfortunately does not carry the value that it would other kinds of contracts.

Ben: It's always been interesting to me because- especially in our region- you have a lot of great businesses that start under that allow for more seamless contracting. I think it's the idea, right? More ability to have the government choose directly to work with a certain company. They'll build these great businesses, but then it is harder because of the transition point when they lose that designation or the way you're talking about, of the inability for that revenue to really create value in a transaction. It is an issue, and a little bit of probably something that the government, I don't think fully intends to with the strategy around that program.

Will: Yeah, I think the best way to approach it is- it just depends on what your intentions are with the business. If your intention is to run it more as a lifestyle business, then maybe transfer it on to another business partner or owner that you know can continue to run it with that status- then that's fine. That's the perspective that you can have. But if you're really intending to grow this into a big, large business with the intention of an exit or going through a full sort of business cycle, if you will, you really need to be looking at those programs as a steppingstone.

So selectively pursuing work that's going to build certain types of past performance that is going to let you graduate and compete on a bigger stage. Just depends on your frame of mind and what your ambitions are. And then I would say there are other options in terms of not just selling the business. ESOPs have become a popular way.

Ben: What was the ESOP?

Will: It stands for an Employees Stock Ownership Plan. And it's a tax-advantaged way to sell a material portion of your business. And so, it's recognized some gains from that. Then the employees will have a stake in that going forward. There's specific instruments with banks that help finance that. Now, I will caveat, almost always, you will not get the same value out of an ESOP transaction as you would via strategic or a different type of sale. But if your business is what it is, that might still provide liquidity for you.

Ben: Just real quick, before we move on to what you're working on now. We do have a number of listeners who may be having an early-stage company, and that difference between prime and subcontracts I wanted to spend a minute on. What's the strategy if you're a small business owner, and you can break in through some great subcontract work? What's the goal in terms of migrating to be more prime contracts in the future? And when, why do you want to do that?

Will: Obviously, it's going to depend on what sort of sector or customer you're working with then. These are sort of rules of thumb as they pertain to tier and exit, of course. But in my experience, if you can become the subcontractor because you are the best provider, as opposed to just being an approved provider that has a set of sub status. For example, you really develop a reputation as being that firm that can solve this problem. And you can become the go to group that then is solving that problem across different types of contracts.

Then, I think that reputation can build towards some aspect of you being the prime. So, you contract directly with the government rather than through Boeing or Booz (Allen) or whoever. If you can get out some of those contract frameworks that allow you to be an approved prime within that- you might be competing directly against them or you might be a key part of their bid. If you have some element of prime work that's always going to trigger some real value for it because it just sets you apart as being A) desirable from companies that almost always seek primarily prime work. So that's another prime contract that can add to their reverb. B) But similarly, you can stand on your own two feet. And it just speaks volumes to your maturity and de-risking that business and you’re not at the whims at others.

So especially through the government contracting market everyone's a competitor and a partner. Where you're a prime that sort of conflict often times doesn't exist in the same way. You can just say, “Look, I'm the prime, and I can equally too. If I'm bigger prime existing, I can start to take even more of that work.” You as a prime, as a smaller prime, might still have to sub out to some other contractors. Whereas a larger one might be able to just buy and take all of that margin itself. And so that's an added bonus- financially.

Ben: Yeah, it's fascinating. At FedTech, we work so much at the very start of companies journeys where it's literally all about can you get that first project? Can you get that first sale versus this. This is a kind of a more, it's a luxury, right? To be starting to think about how you migrate to different contract structures.

But anyway, yeah, so, okay. I remember clearly- we had you over here in DC, you were doing great work for McLean. And then, there was the moment that you moved overseas and so, describe that journey, what brought you over, over to the UK and, and what have you done since getting over there?

Will: My wife decided to do a PhD and she got a full scholarship to do it at Leeds Uni. Really, that's what it came down to. She was paid to do her PhD as opposed to the other way around, which is great. And I lived in Morsch in Germany when I was at Uni (University). There's the British terms coming out.

Ben: Uni, I like Uni better.

Will: Yeah, I always enjoyed being on the other side of the Atlantic and thought that was the time to do some time abroad. We just got married and moved to Leeds with three suitcases each and that was it. I continued to work in M&A for Defense for KPMG, where I started doing more generic M&A work.

The way it works in the UK is that there's a lot more information on companies and the market is of a much smaller size. M&A is provided mainly out of the accountancies. There are some independent advisors as well, but a lot of the mid-market are supported by your big four accountancies as well as the scale-tier around them as well. So that's obviously your KPMG, your PWCs.

Ben: Oh, interesting. Okay. I didn't realize that. So, you have less of like on the McLean Group kind of organization in the UK?

Will: Well, there are specialists, but because the UK market is so much smaller comparatively, if you just wanted to do, say, Defense, that would be quite difficult. You would do Defense across Europe if you would. There’re a few specialists in the tech space. It's not that they don't exist, but the volume of transactions (is small).

And I think the big part, too, is the US doesn't have the equivalence of what we have in the UK called Companies House. A) As any limited company, you have to register it. B) After a certain size, you have to report publicly your earnings and your financials in the summary format. There's just generally a lot more information about UK companies.

Ben: Basically, you could be a private company that is forced to have some standards that are like a public company.

Will: Yeah, disclosed balance sheet, P&L. Not in huge detail, but you do need to disclose it. And so, anyone in the public can look at that. In the US, obviously, you don't have anything like that. It's much more about proprietary knowledge and relationships. Not that that doesn't exist in the UK but there is a lot more than that knowledge that is publicly available. It's just the nature of how transactions are done is just a little bit different due to the size and scale differences.

I was just finding myself wanting to focus on technology and enjoying the earlier state side of things, and obviously a lot of M&A really focuses more on mature businesses. I started talking to Mercia Asset Management, and they recently won a fund mandate called the Northern Powerhouse Investment Fund. They previously managed a number of other similar regional funds, which I can get into in a second. It was a chance to be a venture investor, but to do it within a region in the UK instead of moving to London, which otherwise I would have probably had to do. But my wife was doing a PhD at Leeds, and so kind of, picking up sticks and moving to London wasn't really an option. It was a chance to get my foot in the door and to do it in my local community, which was a win-win.

Ben: Yeah, and we were talking earlier. I wonder if we can kind of unpack. To me, it's a fascinating model. You worked for Mercia. Describe the relation of Mercia to the UK government, and why does the UK government want to ultimately be investing in startups?

Will: Mercia is a publicly traded company. We managed about $1.4 billion. We were started by Dr. Mark Payton, who's a PhD pharmacologist out of Oxford, and he was managing some of the commercial spinout funds. He was involved with the commercialization strategy at Oxford.

You had these innovations spinout funds to try and get technology out of universities. But there wasn't much to follow on, which is reflective, really, of the market at the time when there wasn't as much venture funding to see novel ideas, whether they were coming out of university or not. Meanwhile, in the US and other parts of the world, it was really starting to thrive. The UK ended up setting up a program, and I believe it happened here, it was across the EU as well, a program called the Enterprise Investment Scheme (EIS). And there's an earlier state fund called SEIS (Seed Enterprise Investment Scheme).

And what those funds allowed for was people who wanted to put funds in the early-stage businesses could get significant tax reliefs based on the funds invested. They could claim back a portion of those funds invested in their tax returns immediately. And then they could also claim additional amounts if the business didn't make it within a certain timeframe. Similarly, if the business was successful and it sold, there was a further tax relief, which was done among cap gains. That scheme was getting set up as well at the time. What ended up happening is, Mercia ended up managing some of the early-stage university spinouts focused on IP commercialization. And then we started managing. We raised our own balance sheet.

Ben: How long ago was that? When did that all start?

Will: It was back when we listed and I wasn't with the business at the time, so I couldn't tell you the exact year that it listed off the top ahead. But then we also started managing EIS funds. Instead of an individual managing a bunch of 50 or 25 or 1,000- or 10,000-pound EIS investments, they could put a block investment with a fund manager, who would then deploy it according to the rules. And Mercia, then, later, not long before I joined had acquired a business called Enterprise Ventures that had managed a number of the regional investment funds. One of the main ones that stands out was the Northern Stars Investment Fund. That was one of the most successful of these regional funds. Ultimately through an asset called Blue Prism, which is currently traded publicly, and really pioneered the automatic robotic processing market, it became a unicorn. That was an early-stage investment that they invested in from those funds.

Ben: Interesting. Probably similar to a lot of Americans, I think of the UK, and I think of London, right? But there are a bunch of distinct regions and ecosystems. You mentioned Oxford, obviously - a great tradition of R&D and commercialization. Maybe give us a walk around the country and what are the regions and what are some of the identities of those regions?

Will: Yeah. Similar the US, the UK has urban centers that tend to dominate the narrative. In the UK, obviously London and the London regions are probably the most well-known. But I would say that in the regions broadly, you've got London and the Southeast. And then you've got the Southwest, which will have areas like Bristol. Then you've got Cornwall below that. Up from there, you have the Midlands, which is home to Birmingham. That's the Coventry. And then obviously over further east, you have Wales. And then you'll have a block above that called the North. And winter is coming.

The North is kind of broadly split into Yorkshire and Lancashire. The old school War of the Roses. On the Northwest, you'll get major urban centers, the big Manchester and Liverpool. Then over in Yorkshire, you'll have Sheffield, York, and Hull as some of those main urban areas.

Ben: And outside of London, where do the most ventures come from?

Will: I saw some stats when I went to a BBB (British Business Bank) presentation yesterday. Just the volume really tends towards London. It's called the Golden Triangle- between London, Oxford, and Cambridge. That's where a lot of the money is, the startups are. You've got the power of university presence there. But at the same time, not unlike the US, you've got the North as a block similar to sections of the American Midwest- are huge, huge sources of industries with significant large companies. You've got Rolls Royce, you've got significant food manufacturers, different types of major industry. British Aerospace (BAE) is based in Preston, which is in the North.

Ben: It's interesting. We've been seeing that the US Defense Department is very aware of better capturing some of the great tech startups that are better engaging with them in the UK. So even we had a couple of my folks from FedTech over in London last week for a big pitch competition that we were helping with that was around the US Army giving a prize to international companies that could in theory be kind of solution providers. So, there's a lot going on. And it's definitely something that we're very aware over here that we need to do a better job of working with UK based tech startups.

Will: Yeah, so there's a lot happening in the regions. There's a lot of really great universities. Especially in a COVID era, you've had a lot of people who moved back to their hometowns after spending a few years in London. You've had a lot of other folks who have been commuting from Leeds and Manchester down the London quite often, who decided they were done with that kind of up and down lifestyle. There's a huge amount happening in the regions, but it's just not big because you don't have that concentration. It's a bit like the effect of if you were spreading across Indianapolis, Cleveland, Detroit - Detroit is obviously huge- but different parts of the Midwest, you know. Throw in Memphis. Not that these cities in the UK are necessarily as always as big as those, but put them together and they are economically immensely powerful, huge part of the UK economy.

Ben: It's such an interesting thing. I wanted to get your reaction to something I've told you before that. In the US it's this unique point in history in terms of regional innovation. There's really to my knowledge never been this much of a government emphasis on growing venture creation outside of just the coast, outside of your San Francisco, LA, Boston, New York kind of ecosystems. We have these programs that are just really well funded- the National Science Foundation engines program is just getting off the ground where they awarded, the NSF, awarded 44 contracts that would be a million dollars each to establish regional innovation engines and get engines launched in pockets of the country that you wouldn't always associate with R&D and tech ventures. It's really interesting time over here and I was just interested.

The UK and your work you, kind of, approach that in a slightly different way. So maybe, share a little bit about the way that Mercy approaches regional innovation. Then just being an American, what would you like to see maybe the US adopt over here?

Will: Similar to the US, in parts of the 60s and 70s, there was a real decline in industry. Where I'm at in Yorkshire, in particular, there was a real history of textiles and wool. A lot of those mills and that industry saw real decline. So really ever since then, there's been an effort to try and reinvigorate not those industries per se, but those regions and find what was going to be the next economic growth. There's been a number of different programs. For a while there was quite a lot in grant funding to try and get new technologies, new businesses off the ground. I couldn't pinpoint exactly when it started but they started pursuing more of a commercial investment model. One that I mentioned earlier was the Northern Stars Fund, which was an earlier iteration of those funds.

The government, through the British Business Bank, is the most common string. But other forms of local government have pursued a similar model of regional finance. Ultimately, via the government, entity pools of capital have been created to be invested commercially. But according to the terms of those government entities, the terms of service really would have to stay within a specified region. It couldn't be used to support certain industries which would either conflict with different types of, what at the time would have been EU law but other types of subsidy rules.

Ben: Just to be clear - public dollars go to business British Business Bank?

Will: British Business Bank will manage- So the in the case of the Northern Powerhouse Funds, the British Business Bank will be the source where the capital from the different government entities go to sit. It is then packaged and contracted to suppliers. So, in some way, British Business Bank is our client, and we deploy the capital according to the rules of British Business Bank. British Business Bank has set those rules in line with the entities that have supplied the capital.

They've agreed that everything with their sources of capital - which is UK government primarily and then other sort of quasi government entities. They will then set up the terms of deployment of capital. And to be clear it could be that other non-government entities package, say a pension fund, could be a packaging to those funds as well.

Ben: Would it be fair to say like the US equivalent of this - and I don't think this is really happening at any scale- would be, US government contracts with like an Andreessen with which to make regional focus investments and then is basically kind of a limited partner alongside other limited partners.

Will: It would be slightly different in the sense that Andreessen raises a lot of its own capital, if you will. Like a lot of big funds will have pools of its own capital as well as capital that they manage. This is one big client. I suppose, similar in the sense that if you had one big pension fund that was putting a load of money into one sector and they said right, I really care about education, I'm going to contract you to deploy one billion capital into tech. It would be something like that.

Ben: In a certain region?

Will: The California teacher one.

Ben: Okay, interesting. I don't think this is happening over here. We have the intelligence community - think CIA you think NSA funding. It's a lot of profit. It's really interesting.  What's the size and kind of structure that yields that you're typically doing?

Will: Yeah, so for that I'll stick to the fund that I know best which is the Norther Powerhouse Fund because that's the one that I spent my time on. So, the Northern Powerhouse Funds - I believe in round numbers - was around a 400-million-pound fund that went roughly 200 million to - in rough senses- resulted in a split between debt and equity. Then roughly split of 50-50 into Northwest, think Manchester, and then the right and the other part going into Yorkshire, Leeds, Hull, Middlesbrough, and Sheffield area.

And the way it's deployed is- it is fundamentally commercial fund. I think sometimes people would get confused. They would think it's government funding. I'm entitled to apply for it. If I fill out the paperwork, I should get it.

Ben: That would be a fun conversation to have with that.

Will: Yeah. In that instance, they were running that in the old school way, which is I don't have any way to say yes or no- I just set the rules. And so, if you tick all the boxes and you spend six to twelve months filling out paperwork for me, and you meet all of the requirements, of course, you will get a loan.

That's not how this works. We operate in the marketplace as any other private investor. We at Mercia, are deploying other funds as well. We operate separate to this fund as an investor deploying funds.

This is one tool in our chest as an investor. As part of that, we have a sizable office in the region that we're deploying. We've got employees, like myself, who have been here for a while, and we have relationships with lots of different businesses and understand the business ecosystem and what businesses are coming and what individuals to work with and what individuals not to work with. Then we deploy that in a fully commercial fashion.

Our equity states once we're on the cap table, we negotiate and act like any other, with a few stipulations. The business has got to stay in the region. We’ve got to stay away from certain areas like gambling and firearms manufacturing, that kind of thing, which isn’t usually a problem. We can't do other things, like very traditional businesses that are already strong- things like property, banking, and insurance, because those industries don't need any more additional support. If you, if you could go into those, you probably would, and you'd make a nice return.

Ben: What happens when things go well and the fund produces a ton of value, does that go back to the government or how does that work?

Will: It goes back to British Business Bank or the LPs. Those that invested via British Business Bank package will see return on their investment. Instead of (the) government handing out 100 million grants, they will have deployed 100 million and they may get back 100 million, they may get back 200 million, they may get back 50 million. They've done it on commercial terms, they will get something back almost certainly if that capital has been deployed commercially and even if you have really fully struck out, you should get something back.

When it goes really well, the example I said with Blue Prism, that was roughly a million-pound investment. And ultimately that resulted in 100-million-pound return to the client. And then similarly, we just exited a business called Faradion, which pioneered some interesting technology in sodium ion batteries as opposed to lithium ion. We just sold that for 100 million pounds. So again, that will return a sizable amount back to our shareholders across a couple of different regional funds.

Ben: Wow, interesting. Okay. Yeah, and this was kind of why I wanted to have you on the podcast because I think this strategy could be really interesting over here in the US, where we have so much happening in terms of facilitating regional innovation. There's the National Science Foundation program I mentioned, there's others like EDA (Economic Development Administration) which is doing a bunch of programs to empower regional innovation and that infrastructure. The funding piece though is a piece that I don't see quite as much, where you would actually, in theory, say, “Okay, government funds are going to get managed by very proficient VCs,” who know how to do this and create return.

Flipping that around a little bit. If you had kind of a blank check, and we were able to get you back over here in the States to build a new program. What would that look like if you had a thought exercise- the unlimited resources and you wanted to empower regional innovation here?

Will: I think it would be interesting if you could run a similar program in certain regions of the US that would pick a spot like Detroit, or Cleveland or Indianapolis, or Wisconsin would be really interesting to see something run there.

Ben: Well, Cleveland's fine. Okay, Cleveland doesn't need any.

Will: I'm not trying to- I'm not picking on anything as economically challenged region. I think all of those cities are doing fine, but they do represent cities that have had core industries ripped out from them. Sheffield used to make a ton of steel, Yorkshire used to make ton of textiles, those industries are gone or significantly reduced. Not nearly there in the capacity that they were 50 years ago.

Ben: Yeah.

Will: I think it would just be really interesting to take up, if you just say you had a billion dollars, and you picked two or three sort of states. It's difficult to say whether it's a state or certain region, but you pick the region and you say, “We're going to have people there. We're going to be very careful about the people that we pick, who have got relationships with. They’ve got the best experience. They're going to be on the ground, and they're going to deploy capital in a completely commercial fashion instead of giving out a billion in grants and just another round of national science grants or whatever, that is invested commercially.”

You set a framework for how you pick certain regions that would be acceptable in, you would exclude certain areas that don't need support, and you would identify the gap that you feel like is in the market, either regionally or technologically, or combination thereof, and you start deploying that capital and see where you get to. I mean, a billion is a big number to start with, but I think if you divide that across a couple of regions, I think it could be massively impactful because you could start making.

I imagine a pilot program would be smaller than a billion, but even if it was $100 million, you could start making some of those smaller initial bets that get businesses off the ground, because there's a huge amount of innovation in the states and in the regions. Not everyone is going to have a wealthy parent or wealthy uncle to give them the first couple hundred thousand to get off the ground.

You asked earlier what sort of check sizes am I writing? Typically when I'm writing check sizes, you do anything from 100 K to 2 million, and on average that tends to be 500 K to 1.5 million across an initial check size. That is really that starter capital to approaching some kind of scale.

And really, we're pro-investing as well, so you can create funding size rounds of a couple of million, but being an anchor investor can help catalyze that. We co-invest with our own funds as well as other funders, and just recently, in January, I completed a three million round into a digital twin technology business that was a spin-out of Leeds University.

That started with initial investments from just the Northern Powerhouse Fund, but managed to pull together that blended three million raise from across three different funds for that round. You can see that journey which has helped get the business spinout of the university, get it up off the ground, and now was able to raise a full three million pounds from different funds.

Ben: What's the right number? And I know this is kind of a loaded question. What I see over here, there's a lot of money for startups right now, and that's a great thing. I see maybe a lack of a unified strategy around how to deploy that. You'll see there's prize competitions for startups. Go to challenge.gov, you'll see a bunch of wonderful prize competitions. FedTech gets to work with a lot of the companies that kind of go through those. You'll see check sizes that are $10k to $50k pretty often for ventures. That's great because that's an injection of capital. And then on the other end of the spectrum, you'll see some of the more mature, your DARPA (Defense Advanced Research Projects Agency) kind of structure, will sometimes do a direct-to-phase to SBIR (Small Business Innovation Research) that's like, “Hey, write a proposal, here's a million dollars” kind of thing. That’s great but I don't see as much of a unified strategy of why do you pick 50 versus why do you pick a million? What do you think? What could that strategy be in your experience?

Will: Well, I think there's a difference between pure startup, where it's just conceptualizing, in which case grants are probably the right thing because you're just saying “Can I do this? Is this something that's possible?” Where I'm investing is, where you're at the stage of trying to deliver a commercial return. That can be as extreme as “We've got something. It's a type of biofuel and have developed a new process for developing this biofuel into jet fuel. So, you have a bio jet fuel.” That's pretty long-range and crazy (compared) to a really interesting software business that did hospitality software but was doing something really interesting. But that would be much more traditional tech.

The consistent theme across that is where is the gap in the marketplace. The consistent theme is filling a gap in the market for businesses of either a certain size or a certain technology or in a certain region or combination of those three. They are seeking to bring something to market commercially. They've got enough traction to say that there is commercial demand, there is commercial interest, but there's no other entity willing to fund it. But you believe enough in the team, the plan, and the product that they've developed to try and close that gap and take on that risk. That gap oftentimes is there because of those three factors I mentioned.

The quantum really varies based on what your thesis is. Within the Northern powerhouse, for example, they have small startup loans programs, some 50K, to fill that gap. They have debt as well for small businesses that the banks aren't lending as much anymore. They don't have efficient programs for those and their risk profile around those has changed. They want to ensure that there's enough working capital on a debt basis for qualifying businesses. And then there's the equity bottom.

Ben: Interesting. Okay. It's a fascinating question. I guess the only unifying theme that I see is that the speed of deployment is the important thing, right? Whether you're giving a small or a large.

Will: I think speed is huge. And I think that’s the big difference is because we are operating as a commercial entity. That's what's interesting about the structure is that because the funds have been allocated and deployed. They've been worked through BBB. We, as a private entity, are making investment decisions, so you're not going to get or you shouldn't get if you do it. You won't get a Solyndra, for example. Even my understanding of that is, it was a bad decision, but there was nothing illegal that happened. It wasn't a good decision, obviously, but they're not familiar enough with the case to comment thoroughly. But you had an instance where then Congress used that situation as a whipping boy and they're still using it today in different instances and holding it up and saying the government backed this and that was a waste of taxpayer dollars, right?

In this instance, I don't know that you could do that because you said, right, we've allocated this POP capital. It's, you know, in this instance, Northern Powerhouse, it's 100 million pounds. We don't go more than 2 million into any one business before going back to them, go up to 5 million, it's a single business, and that'll be on over the lifetime of that investment. There's not a “The government backed this.” No, it was Mercia. I was deploying the capital, according to the rules, we make the investment decision. So, no one can go back and say British Business (Bank) backed or British or the UK government backed because that's not the case. They created a fund, and we backed them. We, as Mercia, have backed them.

Ben: Yeah, really, really interesting. Well, just to sort of finish up, we always ask guests what if you're sitting and having a beer with a startup. Picture, okay, you're just at the local pub, right? And you have a first time founder. What do you say? What advice do you give that founder on the journey and what to focus on?

Will:  I think the one thing that really comes to mind that I've seen over and over again, is investing in your relationships. Invest in your customer relationships and supply relationships, obviously, especially in your employees as well. Because they're the ones that actually get something done. You can come up with the greatest technology in the world, but if no one's using it and no one's helping to deliver it, then, it's all for naught.

Especially your employees. They're the ones that are going to be with you up late at night, especially in the early days, getting those bids out, getting the technology delivered, or the solution or service or whatever it is, on time, and to spec. And yes, you really just make sure you take care of those relationships, treat people right, pay it forward if you ever have the opportunity to do so.

Ben: Yeah, it's great advice. It's often the part that I think it's easy - when you're building a product building a customer base- it's very easy to forget to do that or to not prioritize the interpersonal piece. When you do- it is actually the part that I think founders are going to reflect on as being the most rewarding, right? It's not necessarily the product that you sell or the financial gains that you make, but it's the people that come along in the journey and what you do together.

So, with that, Will, we know it's getting close to pub o’clock in the UK. We'll let you go and just want to say thanks for the great discussion here. Keep doing the good work you're doing. We'll bring you back over to the US at some point when you're ready, but really happy that you've found such a good home in the UK. Thanks, Will.

Will: Yeah, thanks so much for having me.

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