On The Hunt for Purpose-driven Unicorns

The billion dollar question: On the hunt for purpose-driven unicorns

Simon Lovick (2008-13) speaks to Cameron McLain (2001-06) and Tommy Stadlen (2000-05), founders of purpose-driven venture capital fund Giant Ventures, about why they are investing in entrepreneurs solving the world’s greatest problems.

p Cameron McLain (2001-06)

Every investor will know that discovering the next great startup is a billion dollar question – but it is easier said than done. They are so elusive and mythical that the investment community has appropriately dubbed them ‘unicorns’.

Once teammates in the St Paul’s First XV, Giant Ventures founders Cameron McLain and Tommy Stadlen are on the lookout for the next startup unicorn. Yet unlike the social media and e-commerce giants that have dominated investment in the past decade, they believe purpose and impact-driven companies will be the next great startups to shape the world.

“In 2021, we have some serious challenges ahead, be those pandemics or inequality or climate change, and governments alone aren't going to be able to solve these problems,” Cameron says. They believe entrepreneurs have the ideas, tools, and technologies to offer creative solutions to these problems; if successful, they will also produce great returns in the process. “We hope to lead an evolution of business’ role in the world, and within that, the role of investors and private capital,” Cameron adds.

Entrepreneurial inclinations started early on for both Tommy and Cameron, stretching back to their time at St Paul’s. Cameron ran an eBay business out of his bedroom, while Tommy helped his older brother launch a tutoring agency, built off the back of cold-calling every parent in his St Paul’s year group. This ultimately went on to spawn Holland Park Tuition, now one of the UK’s leading private tutoring agencies.

I ask if they ever talked about going into business together at that stage: both humbly admit that most conversations at that time were about who they were playing at rugby that coming weekend. But something certainly emerged from the mutual respect built from playing on the same rugby team, a very successful one at that.

“We had a shared bond as successive Captains of Rugby that stood the test of time,” Tommy says.

There is no doubt in either’s mind that this was the basis of a long term friendship, one which would ultimately end in them going into business together. Although, in the meantime, both had career ambitions and other entrepreneurial yearnings to itch.

After graduating from Princeton, and working at a talent agency, William Morris Endeavor, Cameron founded a big data social analytics company called Beehive. Tommy also found himself drawn to the US. He worked as part of then-Senator Barack Obama’s campaign for the presidential nomination, as a speech writer. After a spell at McKinsey, Silicon Valley came calling, where Tommy co-founded a photo app called Swing Technologies, which he ultimately sold to Microsoft.

The sum of these entrepreneurial experiences had a profound impact on the pair. Both had gained first hand experience of what it was like to conceive, build, launch, and sell a business – a competitive advantage for their own personal investments

“As former founders, we are hopefully more credible to the next generation of entrepreneurs and better able to identify talent as well as resilience,” Tommy says.

Over a beer, Cameron came to Tommy with his idea to start his own venture capital fund oriented around purpose and impact. Sceptical at first, Tommy was soon persuaded. “Cam showed me we were at a tipping point in European technology, where there were so many great founders, as well as talent going to build these purpose-driven companies. Cameron saw this opportunity to be the purpose-driven VC.”

Giant Ventures was born in July 2019. Launching Giant was much like building a startup, creating a brand, identity, and strategy all from scratch. The added benefit this time round? “Rather than being stuck on one product and one brand, you are meeting thousands of entrepreneurs every year,” Tommy reveals.

Their own endeavours, along with their own mistakes and regrets along the way, were important points of reflection for Cameron and Tommy when building their own VC fund.

The desire to make it purpose-driven came before anything else. “I wanted

 Tommy Stadlen (2000-05)

to build a firm that would back “companies that matter,” those that would contribute to society.” Cameron says.

“Great companies are fuelled by purpose, more than money or good ideas,” Tommy adds. “Purpose-driven businesses are wonderful places to work, and those without purpose are miserable places to work.”

Tommy already had some experience looking at businesses with a social mission at their heart. In 2015, he co-authored a book with former BP CEO Lord Browne titled ‘Connect: How Companies Succeed By Engaging Radically With Society’, drawing on interviews with global business leaders from Facebook COO Sheryl Sandberg to World Wide Web founder Tim Berners-Lee.

“The thesis was that companies can gain competitive advantage by integrating social and environmental considerations really deeply into the purpose, strategy, and operations of the business, rather than just as an afterthought,” Tommy details.

Giant was an opportunity to invest in businesses that did exactly this. Post COVID-19 pandemic, impact feels more relevant than ever, given the scarcity of resources and the impact the pandemic has had on poorer communities, the environment, and mental health, all areas Giant is looking to invest in.

In addition, purpose makes business sense. Businesses were already increasingly reoriented around what is called environmental, social, and governance, or ‘ESG’, factors. Investing in startups that had this mapped into their DNA was likely to increase returns on investment.

Calm, the mental health app, has been one of Giant’s most successful investments so far. The app combines sleep and meditation activities, as well as adult bedtime stories read by stars including Matthew McConaughey and Stephen Fry. The business is already valued at over $2 billion.

Other promising ventures include: Mighty Buildings, which builds lowcost 3D printed houses; Airly, an air quality technology company; and Starcity, a co-living startup aiming to do for accommodation what WeWork has done for offices. Going forward, Cameron and Tommy are keen to invest more in the climate and energy sector, which they feel will both be impactful and a significant revenue driver.

So what makes a successful startup? The more entrepreneurs they meet, and the more examples of success (and failure) they see, the better their idea is of the winning formula. “I wish I'd had some VC experience before I started a company. The pattern recognition you get from looking at loads of companies is really useful,” Tommy explains. It is for this reason he believes that so many venture capitalists go on to found successful businesses.

In every case, success looks different, but there are a few things Cameron and Tommy look out for when they are making their investments. Above all else, they look at promising founders. At the seed stage of investment, many founders barely have a product let alone a business plan, so you really have to look at human talent.

“We look for obsession, relentlessness, a ‘never say die’ attitude, and a deep authentic passion,” Tommy says.

If the founder has already launched a successful business, that is a big added bonus. Their chances of survival are exponentially higher. Founders also need to be “talent magnets”, people who are able to attract highly talented people to come work to with them on their businesses.

Diversity remains a key emphasis, too. “We believe that diversity of thought and background is a crucial competitive advantage for companies. Whether it's in the founding team, or the people they choose to hire, we encourage diversity at every stage. It is something we actively track,” Cameron says.

While the middle of a recession may not seem like the optimum time to start a business, both insist that now is as good a time as any. In fact, many of the last decade’s biggest businesses were launched in the wake of the 2008 Global Financial Crisis, such as Airbnb and Whatsapp. These successes come when there is a strong demand or significant change in demand from the market.

“If a great founder comes up against a bad market, the bad market always wins. If a mediocre founder comes into an amazing market, they can still build a successful company,” Cameron adds.

Their advice for aspiring entrepreneurs? Do not feel like you have to go down traditional paths before you launch a business, particularly those careers that Paulines are often ushered down. Many people launch great businesses straight out of school or university. For older founders, it is not too late either: the majority of successful founders are in their 40s and 50s.

“Entrepreneurship is an area where you learn most by doing. The experience of trying it is the most valuable thing,” Cameron believes.

“But,” Tommy adds, “don’t do it unless you're really passionate about it, and really good at it. Any endeavour will take a long time to create value, so at its core should be something that fascinates you and gets you out of bed.” 