Seed Haus celebrated its ﬁrst year in operation last month, so we thought it would be a great time to catch up with one of its founders – Calum Forsyth.
Calum gave us his take on the investment scene in Scotland and how Seed Haus ﬁts into the equation.
What inspired you to start up Seed Haus?
I’m actually a pretty unlikely candidate to be doing something like Seed Haus. I am a scientist by trade and secured my MSci and PhD in Organic Chemistry from Glasgow and Strathclyde respectively. I’ve always been interested in achieving maximum impact from my work and was attracted to domains that would impact the lives of people at scale. I specialised in drug discovery for a number of years versus training as a medic, as this allowed me to work on a scale that could potentially impact millions, versus working one-to-one. This philosophy is at the core of why I do what I do with Seed Haus.
To give a little more personal backstory, I looked into commercialising parts of my scientiﬁc research and realised how little I knew about the commercial world. I struggled to get things moving with a hardware project I was working on and was advised to enhance my commercial credentials. I think I misinterpreted the advice and ultimately joined KPMG in London. Knowing what I do now, I doubt I would have taken this step; I spent my time doing analysis for asset and wealth managers which wasn’t particularly exciting. It sounds arrogant but I needed a job whilst I played around with a few projects and it was better than most alternatives. When I left, I thought I’d never do anything in ﬁnance again but some of the knowledge I picked up there has helped me in building our investment vehicles.
UltimateIy, I was attracted back to Glasgow when a role at the University of Strathclyde arose. Once in post here, I looked after the startups emerging from the university. I supported a number of exciting young businesses – including Pick Protection, Storiicare, Estendio, and many others.
In my mind it was clear that many early stage businesses across the Central Belt were getting some pretty bad advice, particularly around investment. Many were selling far too much equity for comparatively small amounts of money which resulted in relinquishing the control needed to fulﬁl the vision of the entrepreneur. Additionally, I found myself protecting many of the founders from the inevitable stream of predatory advisors and was tired of seeing people prioritise competitions over building real businesses.
So, during my time with Strathclyde I became determined to establish a proper investment vehicle and advisory community that provided the support businesses needed for comparatively small proportions of equity.
How do you choose the businesses to join Seed Haus?
We obviously have a criterion in terms of those at the pre-seed stage where we feel we can add real value to embryonic businesses. We have looked at our processes as our initial approach was to offer a six month stint with us at Seed Haus, which naturally created a six month cycle of applications and a biannual cohort, but this was restricting us to those that were available at that time – which wasn’t making sense. So, we have decided to take up a more reactive approach towards investing.
One of the things, I’m most proud of is our ‘disagree and commit’ philosophy when backing founders. One of the drawbacks of having such a strong angel syndicate network in Scotland is, that by deﬁnition, most companies that are backed, have reached some form of investor consensus. This is a great way of ﬁnding solid businesses but perhaps not the best way to capture outliers. We are looking to capture outliers.
And what about the founders – who are you looking to engage with?
We are looking for driven founders with high levels of emotional intelligence. There are attributes you can reﬁne and polish but there are some that are nearly impossible to impart. Perhaps, simpler still is my view that startups are effectively long-term experiments – the founders I want to work with need to be learning machines. They need to be deﬁning hypotheses, testing, and reﬁning. I can help founders design systems that will shorten feedback loops but I can’t impart them with the willpower to keep driving on, that comes from a different source.
The simple question I ask myself is – “would I want to work for this person? If it’s a no, then I have my answer. It’s a privilege to be able to invest and work with great companies and I never lose sight of this.
What does success look like for Seed Haus when you engage with these companies?
Our aim is to give the businesses we work with proper, trusted support at a vital stage in their development. It’s important that ambition is driving these businesses as there will be a lot of difﬁcult times in the early years and you don’t just need thick skin, you need to be driven by ambition to achieve.
Success for an investor is obviously about creating a solid business with a healthy return. However, key to our success here at Seed Haus is to change investor behaviour and move away from the traditional approach which we feel has hampered some small businesses in Scotland.
We seem to trend towards backing IP-rich businesses in Scotland which means that many ‘execution-plays’ go unfunded. This may seem a little left ﬁeld, but, in a previous life I operated as an institutional patent-breaker which has perhaps warped my view of their value. In other words, I see patents as something that can be iterated upon and broken. I have a theory that there is a linear relationship between someone’s ability to generate novel IP and the value they place in patents. While there is no doubt that there is value in safeguarding your products and services, it has dominated some investors’ approach, I’m more interested in execution.
Which brings me to the zombie businesses that we have created in Scotland as a result of, amongst other things, endless grant funding tied to a bit of IP most people don’t understand. There are too many businesses continuing to operate that aren’t creating value. They aren’t adding anything to our ecosystem and they’re certainly not creating a worthy investment opportunity.
I would love to see more private activity at the early stages of company creation. Scotland is vastly over-indexed towards public sector interventions and there is no shortage of initiatives or business plan competitions. At Seed Haus, we are now making tentative steps towards a new collaborative, private, project that will stimulate the development of a new breed of deep-domain & deep-tech startups.
Founders interested in applying for investment can do so through the Seed Haus website.