How did you become a business angel?
In my 15 years of professional work prior to founding Kindred I was always involved in starting, growing and operating companies in different roles. Creating value and supporting talents on their journey of creating new things is fascinating. If you have this mindset, becoming a business angel is the logical next step. And it’s a rewarding one, because of the people you meet.

What are useful traits for an angel investor?
When you focus on technology, which is moving ever faster, you need to be nimble. But even then you must rely on the deep insights the founders have in their field. For me, the most useful trait to have as a business angel is pattern recognition, the ability to see the characteristics all successful founders have in common.

Which are…?
…the obsession to solve a specific problem and the curiosity to learn all about it. To gauge these traits, we ask the founders what happens if their plans don’t pan out. Will they turn back to the security of their corporate job or attack the problem from another angle? Another important trait is coachability. It goes together with intellectual curiosity and lifelong learning. Are founders able to take advice, not just from board members but also their employees? This doesn’t mean that they need to decide by consensus but try to make informed decisions.

Venture capital is still a very relationship-based profession. This pattern recognition you just described, can it be automated one day?
It would amount to hubris to say VCs will never be affected at all by technology. But our business is intensive in human capital for a reason, and that’s why I don’t think that technology will determine investment decisions. But it might influence them, one seat around the table might be taken by a signal-gathering algorithm. But let’s not forget that convincing an entrepreneur to take your money is a quintessentially human skill. And I think it will become even more important in the future.

Why?
Capital is cheap. Financing is becoming a commodity. It’s easier to bootstrap a company than ever. And then there is the crypto craze with the ICOs. As a VC you cannot differentiate yourself by the money you bring to the table, only by the depth of the relationship you’re able to create.

“As a VC you cannot differentiate yourself by the money you bring to the table, only by the depth of the relationship you’re able to create.”

2015, you started Kindred Capital together with three other business angels you often invested together with. How different is running a VC fund to angel investing?
There are a lot of similarities that are obvious, so I’ll concentrate on the differences. As a VC with institutional investors, you’re accountable to a wider audience than yourself. We thought long and hard about how to build an efficient evaluation process that harnesses the collective judgment but still takes into account that many of the best investments haven’t been consensus cases. As a business angel, you don’t feel any competition because it’s always possible to accommodate a check for 15’000 in a round. This changes when you deal with larger amounts. Of course, it’s still possible to work collaboratively with other VCs but in the end, in small financing rounds, you need to win space.

Kindred pays out a fifth of a fund’s profit to the founders of its portfolio companies. Do you think this financial incentive is strong enough to win them over?
The first fund we launched has invested in 27 startups until now. And not one single founder asked us to quantify how this share might add up to. The foundation of our model is not economics. It’s who we are and what relationship we want to establish. The venture capital industry is crowded. Many VCs talk about all the things they’re going to do for a startup, but often its just talk and as soon as the deal closes, the founders feel let down. That’s why we think the time is ripe for a structural change and a closer alignment of interest. We ask you for a stake in your company and we give you a stake in ours.

“We ask you for a stake in your company and we give you a stake in ours.”

Another goal of this model is to create a network of founders that help each other. Does that mean that on top of choosing in which companies to invest, you have to think about the synergies in your portfolio an investment achieves?
The early challenges of building a company are quite similar, so the exchange between the founders is helpful regardless of what they’re building, be it software or drones. The benefit our model has is that great talent gravitates towards great talent. If you’re an ace in the space of autonomous vehicles, you’ll get tons of emails from those who want to shape the future of mobility. And this, in turn, helps us.

Like investiere, which started out in Switzerland and now invests increasingly in European countries, Kindred started in the UK and ventured abroad. How far have you gone?
We made 2 investments outside the UK so far, but it could have been much more. The minute we make an investment in Berlin, it’s very likely that we’ll add another one. We’re raising our second fund at the moment, and will invest some amount outside of the UK.

The first co-investment of Kindred and investiere is CustoMem, an advanced materials company based in London that has found a solution to clean PFAS, toxic chemicals that are found in many products, out of the water. You led this financing round personally. How much did you know about the problem of PFAS before this investment?
I didn’t know the technical term, but like many other people, I’ve seen the film Erin Brockovich. I think that there is public awareness, outrage even, about the misbehavior of large corporates. The public might not know how big, endemic and ubiquitous of a problem PFAS is. But the moment is right, I think because there is a growing pull from the market for solutions to the PFAS problem. This will help CustoMem with the commercialization of their product.

CustoMem’s CEO Henrik Hageman seems very relaxed and determined despite his young age. What was your first impression when you met him?
Henrik has a quiet confidence and an air of calm about him that hides a voracious learner, who absorbs information like a sponge. One part of derisking the case was to find out if he’s able to hire world-class talent at his age. When we saw him interacting with Tali, the commercial lead with two decades of water industry experience, we were convinced about that. Having this kind of charisma, articulating your vision in a way that captivates people, that is a truly major talent.

Where do you see the biggest challenge for CustoMem?
It’s the problem of the kid in the candy store. The number of potential application is so vast, it’s an ocean of opportunities. The challenge lies in figuring out which is the best application to start with.

How did you hear about CustoMem?
It’s a classic Kindred case. The founders of our portfolio firm LabGenius introduced us to CustoMem. LabGenius is searching for new molecules in drug development. And it’s a perfect example of how biology is slowly becoming an engineering science. CustoMem is applying the same principles LabGenius is using in a different domain.
And how far will that take the company?
PFAS is a wide field. There is no solution at scale. Nobody solved this huge problem yet, and it will be a very lucrative space. CustoMem comes at this from a new angle with an approach pioneered in Biotech. I’m convinced that the next generation of companies creating value amounting to tens or hundreds of billions will come from the intersection of computation and biology.