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20 January, 2016 - 14:35 By Tony Quested

Tech entrepreneur shines light on far-sighted PM

Cambridge entrepreneur Mike Lynch

Prime Minister David Cameron is looking 10-15 years ahead to identify game-changing science & technology that could benefit the UK economy, one of his key advisers – Cambridge entrepreneur Mike Lynch – has revealed.

Talking to Numitas, the Cambridge business that helps companies build finance teams, Dr Lynch said machine learning was just one of the sectors under the microscope at No.10.

Dr Lynch (pictured above) told Numitas: “My role is part of what is called the Council for Science and Technology. So when the Prime Minister wants to understand the science behind a particular issue we at the CST find the best experts in the country and together prepare a report for the PM who makes decisions based on this.

“It’s a fascinating role as the subject matter varies widely, especially since the current PM is very forward looking and wishes to know how a particular issue will look in 10-15 years. “An interesting area that we have looked at recently was the world of machine learning, which will lead to the replacement of some jobs and the creation of others.”

After leaving Autonomy Dr Lynch set up the investment vehicle Invoke Capital, which has a large Cambridge operation scouting European software technologies.

And, as he explains, Invoke doesn’t mess with the ‘Mr In-Betweens’ of the startup community. It takes a hard-edged approach to investment opportunities and Dr Lynch pulls no punches in his assessment of the calibre of certain entrepreneurs and their ideas of the ‘next big thing.’

He says: “About 90 per cent of the proposals which we receive don’t have any ‘clever’ technology behind them. Half of the remaining 10 per cent are outstanding pieces of technology but are of no use to anyone.

“Only about five per cent of what we get is both clever and useful and we tend to concentrate on it. Me-too technologies are already too late to the market so we are not interested in them.”

Launched by Dr Lynch in September 2013, Invoke has already raised $1 billion and has a precise business model, as Mike explains.
“Invoke Capital has a team of specialists in each area of the business. We have people who are very experienced in taking product to the market, experts in M & A transactions etc.

“Many of the entrepreneurs we deal with have a wonderful idea but no experience of running a business. We use our contacts and expertise to develop their product further and get it to the market, also ensuring that is sold at the right price. We have people with financial expertise of the European markets to help introduce these products on the Continent.”

The company has a dedicated in-house R & D division, based in Cambridge, which Mike regards as a unique asset in the VC marketplace.

Invoke Capital has a close relationship with its portfolio companies from day one to ensure rapid scale-up. “We mentor the entrepreneurs and help them solve various business problems so that they don’t waste time on them. However, we only get involved in fundamental technologies that are likely to become ‘big’.

“We make sure that we can help entrepreneurs grow their ambitions, which is particularly important considering the fact that in the European technology market, the companies get sold very quickly.”

When considering future investments, Mike and his colleagues “look for businesses with fundamental technologies because we like having ‘an unfair advantage’. We wish to invest in a company which is likely to make a big impact in the world.

“The most important factor is the entrepreneur who can combine both self-belief and ability to listen to advice. We want to make sure that they will be making as few mistakes as possible.”

Among the most interesting companies in the Invoke Capital portfolio are Darktrace and Sophia Genetics.

Mike explains: “Darktrace is probably the fastest growing cyber defence technology company in the world, growing 50 per cent month on month at present.

“It’s a reflection of a growing understanding of global cyber security. You can no longer build a wall around your company and keep threats out while every day the systems allow in new entrants.

“What companies need now is technology which will act like an immune system. It assumes that viruses can get in but is able to fight it. Such software gives organiaations the ability to detect emerging cyber threats, allowing them to defend themselves against cyber attacks which are already in progress.”

On that subject, Mike warns that 80 per cent of FTSE 100 companies are already infiltrated with standard security threats. 
“Therefore, it’s no longer a question of being able to defend yourself against these threats. The issue is now about being able to handle these threats.

“The most significant of them come not from the theft of credit card details but from international terrorism or so-called kill-switch, similar to those recently experienced by Sony.

“The irony is that these terrorists don’t use existing codes so security systems cannot recognise them. That’s why we need technology that acts like an immune system and is able disable the threat in progress.”

Darktrace technology has been developed by Cambridge mathematicians working on cyber defence systems for the UK government. Mike says: “None of these experts had the experience of managing such fast growth, so we were able to help, although even for us managing such a fast growth rate is a challenge.”

Darktrace is already used to protect some of the UK’s key transport and infrastructure systems, such as Virgin trains and electricity supplier Drax.

Another fast growing technology in which Invoke Capital is involved is the analysis of genetic testing.

Dr Lynch says: “We have also noticed that the science of genetic testing was going to have a big impact on things such as cancer treatment. We met an ambitious young man who decided to develop a clinically useful product which means that the quality of results would be much higher than usual.

“In the early days, he didn’t employ any sales people but we were able to explain to him the importance of being able to communicate with doctors and of automating some elements of the development process.”

Since then the company has grown exponentially and is now known as Sophia Genetics and recognised as a leading provider of genetic sequencing material for routine testing by laboratories and hospitals across Europe; while providing the best medical outcome, it keeps patients’ personal genome data secure.

Among Invoke’s more recent investments is Luminance, a system that applies machine learning to the process of dealmaking. It automatically reads thousands of contracts and identifies anomalous entities, greatly reducing the amount of manpower needed in the due diligence process, whilst simultaneously increasing accuracy.

So what does it take to become a successful entrepreneur? Mike says: “Entrepreneurs wishing to succeed must strongly believe in what they are doing. However, they also have to be able to listen and learn.

“It is also crucial to realise that your success depends on the people around you. The biggest mistake entrepreneurs make is when they surround themselves with people who are just like them.

“The real skill of building a team is choosing people who are very different and bring diverse skills and attitudes to the table. For example, Steve Wozniak and Steve Jobs couldn’t be more different. Once I found the people I wanted to work with, I took them with me from Autonomy to Invoke Capital. Our team often has very different views and this results in lively debates but this also helps us make the right decisions.”

Meeting people who were passionate about science, technology and business is what Mike considers to be the turning points of his own life.

Among them were his teachers and his PhD mentor, Peter Rayner, in the signal processing laboratory of the engineering department at Cambridge University, as well as a senior colleague and successful businessman.

“He taught me the boring financial fundamentals, like cashflows and spread sheets, but he also infected me with an enthusiasm for business and its possibilities.

“I am 50 this year and I grew up in a world without even a mobile phone. The world has changed so much since then, which makes me sad to think that the transition is going to be even greater moving forward.”

If he were to start his career again, he “would be more confident. If I had a launch now, I would know that the people around me who are saying they know what’s going on all exaggerate. This knowledge is very freeing. Once you realise that nobody knows anything for certain, it creates opportunities.”

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