IP Group Plc (IPO) Earnings Call Transcript & Summary

Now we're in our new office here in King's Cross. And for those of you who've been to the area before, you'll know that it wasn't always like this. It didn't always look like this. And this, for me, is a really great example of a realization of a long-term vision. And it was actually triggered by the move in 1996 of the Channel Tunnel up to King's Cross. And that trigger event gave rise to a thought that maybe the King's Cross area could be redeveloped and turned into an interesting space where you could have a mix of people and offices and so they work together with a group called Argent. 1 or 2 people in the room know this from the previous conversation, Simon. But Argent came up with interestingly a big design, it was called Principles for a Human City. I thought that's quite interesting. Principles for a Human City, and they had 3 principles for sustainable development, which were the combination of economy, environment and equality. I thought that's sort of pretty interesting given what IP Group has been doing. So -- and the result of that vision realized alongside some government backing, some initial industrial partners and long-term capital has given rise to what you see today. And now we are here in the heart of the Knowledge Quarter in London. We're here with Google, with AstraZeneca. We've got the Crick Institute just over there. And it seems like a really great place for IP Group to be. And just to sort of almost like finish the story a bit, does anybody know who owns now the majority of the King's Cross development? Is anyone in the room aware of this? I gave you a bit of a clue in the long-term capital. Well, it is a pension fund. It's actually AustralianSuper, so the largest -- one of the largest pension funds in the world -- largest pension funds in Australia. And just a really great example for me about how you go through those different stages of an inspirational idea through to some initial backers through to long-term holders of capital who want to have multi-year, 10-, 20-year returns. And the reason almost for telling that story is that, that is how I see the vision for IP Group. Our real sort of skill set is understanding and taking technological risk. And so we almost have intellectual capital right at the start. We then have growth capital, and we're joined by others on the journey to growth capital, and there's plenty more. I'll talk a little bit about growth capital and the opportunities there to partner with like-minded investors as we have been doing over the recent past. But then there's a step beyond that, which is the sort of physical asset capital. And a lot of what we are doing is very, very well aligned to then physical asset deployment. And I'm not trying to pretend that that's IP Group's job or what we should do, but I see us as the thin end of a huge ecosystem. And if we're going to have an impact and build a better world, that is the sort of thing that we're going to have to do, and those are the sort of partners that we are going to have to work with. But I think there is a huge opportunity here. And part of my mission is to realize that opportunity through like-minded partners. So on to today's subject, as you know, the last sort of 10 years or so of IP Group's history has been characterized by the success of one company, Oxford Nanopore, a couple of others, but one company. And this is about the future because IP Group wasn't set up as a business to hold big positions in main market listed companies. And so over time, you will see our position in Nanopore become a smaller proportion of the overall NAV. And part of that is going to be due to some of the companies that we've got presenting here today. And this is about the future and it's about the opportunities for IP Group for our stakeholders, but importantly, for all the people watching today, our shareholders, to see what could be possible. And I hope that you leave today with a better understanding of 3 key areas about our business. The first is that the portfolio that you're exposed to. I'm delighted to have Martina here, who's the CEO of Featurespace, and she will be giving you an update on Featurespace and its prospects. The second is the capability that we've built within IP Group that I think is a great opportunity to leverage. And an example of that is Rob, who is a partner in our cleantech team, who's going to talk about the opportunity in energy transition. But then I think crucially for today's markets, the financial strength that the group has, which is increasingly a strategic asset for the business. So in terms of the running order, let's get through here. So Martina will take over -- screen working right? Very good? Excellent. All right. So by way of updating, you will all know that the mission of IP Group is to build a better future through the impact of science and innovation companies that we have identified, that we've created, that we've backed, and we have grown as long-term partners, and for our shareholders, we are a play on disruptive fast-growth technologies. Now shorter term, there clearly are some market challenges, and we issued an update this morning, a trading update, no material new portfolio news in there. But the context is that sort of first point is clearly some challenges in the global economy, and there's clearly some challenges in the public markets. And I guess just a few points to make, the public and private markets are definitely linked, of course, but they do operate on slightly different cycles. And those different cycles can be driven by the funding windows and the different methods of valuation. Venture, an asset class, does seem to be showing some signs of resilience. Maybe it's only Q1, and we'll see that out, but there have been a number of significant fundraises. We're obviously down on the 2021 position but still ahead of the back end of the 2018, et cetera. And I think for our shareholders, it's important to know that you've got a team who has managed through a number of cycles before. And we've been through at least 2 cycles. The combined experience of the cleantech team is more than 60 years between the 3 partners, and so it's -- we have been through the cycle, and we will manage our resources appropriately while also making sure that we can accelerate our leading companies to do so through this period. And then on the right-hand side, the sort of the opportunity here, we -- I think we still see fundamental demand continuing for the products and services for the kinds of businesses that we are creating. And many of those, and I'm sure when Martina speech, you'll get a flavor for that. And really, in our world, commercial progress is often the key driver of valuations from period to period. If you're raising money every sort of 18, 24 months, then the commercial progress in that time can clearly be the major driver. Of course, the macroeconomic factors have an impact on that. But I think history also suggests that those with capital in these tricky and volatile times will be best positioned to take advantage of those and to emerge stronger from the other side. And that's why it's really crucial that our careful fiscal discipline and our capital allocation policy, which we've designed to be sustainable has put us in a position where we have a strong financial position going into this current situation. So in terms of -- just a reminder of the strategy, the strategic focus and at the last set of results, I set out sort of 3 main areas of our evolving strategy. And I guess the point of today, 3 months on is to demonstrate how we are delivering against those. I'll come on a little bit to impact right at the end and the deeper thematic focus and I hope will be exemplified when Rob talks and accelerating leading companies when Martina talks. But the -- I talked about capability, and I talked about the capability we've built in specific sectors, and that's through the partners and the investment professionals, some of whom might here today, you'll get a chance to talk to them later when you mingling around, but these are people who are experts in their fields and will be increasingly thought leaders in their ecosystems. And that is how we will play and win in our chosen ecosystems. And so one of the things that I highlighted in the annual results was this plan to accelerate our track record in the sustainable future to launch the first evergreen venture investment platform, we think, in the world, and we plan to do that sort of over the course of this year. And that will be owned and funded by IP Group, very consistent with its strategy and we plan to, over the next 5 years, invest around GBP 200 million into that opportunity. We may well have got the sizing of that wrong. It could be considerably larger. But based on what we know today and our financial resources, that's the level of ambition that we have for that. And Rob will talk on that shortly. So that's the sort of the capability points. Now all of this, of course, is around unlocking value for shareholders. And so in order to try to get across to people, what's the point of owning a share in IP Group? Why do you do so? Well, I think there are 3 main areas. The first is this sort of differentiated access to impactful deal flow and companies that will then scale. We will invest in. We will make a financial return, but there are many others who would like to invest alongside us. The second is to note is that this model is primarily based at the point of inception when we first make investments at the relatively early stage. So you could be looking at today. I think in Craig, they've got another 10, 20 years to go before the next Nanopore will arise. The good news is -- sorry, 1 moment. I cycled in this morning whenever I exercised before my threat is sort of little dry. So the point here is we -- and I hope I demonstrated this at the full year results. There are a great cadre of companies. We highlighted 3 of them who are on a fast track to being $1 billion-plus companies. And then we've -- part of our transparency with shareholders was to set out the milestones that would be needed and then to report progress against those, and that's what I plan to do today on those 3 companies. Now as such, because we've got this maturing portfolio and we've identified these particular companies, and we expect our -- we are targeting our returns over the cycle, over the next 5 years to be 20% or above per annum, which, of course, is higher than the rate that we have been able to deliver to date, but that's -- there's a lot of learning that's built into that. And of course, that's the level of ambition. But if you look at these businesses and are holding in these businesses, I think this will go some way to exemplifying and supporting that as a theory. Now just finally, before I move on from this, I just want to make a comment on the discount to NAV. We are very frustrated by this but I hear many CEOs being frustrated by and the perception that their company is undervalued. And clearly, some of that underperformance is driven by the wider market conditions, if you look at IP Groups' trading over the last 6 months compared to a weighted basket of its peers, we're all trading very similar line of about -- sort of 1/3 or so over the last 6 months. And that's obviously really disappointing. And it's a big focus of ours and very personally important to me. Now the things that we're doing in the shorter are tactical things around a greater degree of IR such as this, great transparency, setting out a clear picture for our key portfolio companies. And then longer term, it's around being able to articulate and then execute against the sustainable capital allocation policy. And over the course, I mean, just over the course of the last year, we introduced a dividend policy because we know that a small amount of cash return as part of an overall capital return as a component of TSR is important. And we also included a buyback program within our armory. And of course, those tools remain available to us. And at the moment, we see cash and liquidity as a strategic strength, but we are committed to using a proportion of all the realizations that we make in line with that capital allocation policy and to utilize those tools in the future. So I talked about an opportunity for IP Group. I haven't spoken about this an awful lot in the past, but I just wanted to highlight a little bit the opportunity that we see in third-party assets under management. This is the growth in third-party assets under management and that we have been able to achieve over the course of the last 5 years. And capital is a really fundamental resource for our business. And we have -- we feel it's important to maintain access to a diverse pool of different capital sources. So we have some debt, we have some equity. We have some third-party funds, and we have a deep network of co-investors. And of course, we will draw on all of those resources at different points in the cycle. But I see, at the moment, a really great opportunity to leverage our capability in growing our assets under management. And of course, Parkwalk, and there's a big component of that. Parkwalk provides both growth capital alongside us, but also sourcing capability. Those of you who know the Parkwalk business, Moray's here today, so you can speak to Moray afterwards, but work very closely with Oxford, Cambridge, Imperial, Bristol and are the most prolific investor into U.K. spin-outs in the whole of the U.K. And so it's normally sort of IP Group can Parkwalk at #1 and 2 in the chart. So it provides both capital and deal flow. Then there are -- and there's growth providers such as Hostplus on the right-hand side, it's one of the Australian superannuation funds, and we run a single LP managed account for that business. It's been -- and very successful. And that's enabling us to provide another layer of capital over and above the balance sheet capital that we provide. And then we mentioned last year that we plan to launch a partnership fund for onshore in China with China Everbright. And again, there's a great opportunity there, that will be for funding development of companies in China through local JVs, and that gives us a very strong financial partner. But again, it's a really interesting and ability for us to take our companies and help them to grow into that market, funded locally through this fund. So there's some real opportunities here, and Dave will be delighted, sort of the other good thing about them is that they generate fees and so they contribute to reducing our net overhead, and that's been a thing, which, of course, has been on the agenda and continues to be on the agenda for IP Group. It has mutual benefits. And I often say to people, I think IP Group is sort of opportunity rich and capital pool, and to illustrate that, we have this -- during 2020 the portfolio as a whole raised GBP 1.1 billion, and we invested about GBP 70 million of that. In 2021, the portfolio raised over GBP 2 billion, and we invested about GBP 100 million of that. So we're doing about 5% of the portfolio. Now some of that, of course, is due to the cyclicality of the markets and specific portfolio company fundraisers. But I think there is a real opportunity here to get some operational leverage with what we're doing with selected private capital providers who have a -- share a similar view of the world as we do or indeed challenge it at times, which is always useful to get a diverse opinion. So I think there's a real opportunity here for us to do more. And I look forward to updating people on progress on that front over the coming sort of 12, 18, 24 months. So then another part of the strategy that I talked about was this sort of focus on a smaller number of conviction companies and part of that manifests itself in the way that we allocate our capital. You'll see in our update this morning that we as part of our funding of companies this year, and there were 2 reasonable-sized checks. One of them was into a company called Bramble, which is fast-growth fuel cell business and the other was a GBP 10 million jet that we paid to Istesso in order for them to get on with planning for their key value inflection point, which is the Phase IIb trial. And that is a feature that you will see increasingly in IP Group as we focus down on a handful of our conviction companies. And we will update you on these regularly. And of course, when we do our next set of results, there have an opportunity for us to showcase the next group as necessary. You'll hear from Featurespace today. I'll give you a quick update on Istesso and on first slide. If there's any detailed technical questions on the fusion experiment. We have covered that. But fortunately, Rob, is on the board, and so I'll take the CEO prerogative, and Rob will answer the tough technical questions on inertial confinement fusion powered by projectiles. And so -- and I just also wanted to highlight today that this -- our stakes in these 3 companies are worth GBP 250 million, so it's about 24p a share. And so these are significant holdings for us. And if you believe in the value creation pathway as we do, you can quickly add up to sort of a cumulative big increase in net asset and these will be the key companies that will drive returns for us. So let's quickly move on to Istesso. So what we said at the time the next key milestone for Istesso will be to enter into the Phase IIb trial. As I said, we provided financing of GBP 10 million to the company and so they can get on with that. And we're currently in the planning and authorization phase of that. It's a sort of 200-plus person trial. If -- again, Sam is here, who will be able to answer any detailed questions that you'd like on the trial, but we look forward to updating you on progress of that. And that really will be a key value inflection point because that moves the asset into sort of later clinical stage once you're into Phase IIb then you're into a sort of a later clinical phase, but the key value creation point for that will be the readout of that trial. We expect it to be about an 18-month trial, and it will read out in early 2024 sort of half 1 2024. So going well, and we'll announce that when we kick off the trial hopefully in the next month or 2. Featurespace. I won't spend any time on this. Martina will exemplify here. And I think the things to look out for are the evidence of this sort of recurring revenue growth and also the scale of opportunity in the market and how future space itself will be seeking to outpace that market and they have an incredibly compelling value proposition. And Martina will do a great job in explaining that. And I hope that, that will be become even clearer. And then finally, on First Light. So we said we didn't give a timing on this. We said possibly 2022 to 2023. I mean, of course, First Light were -- we were very pleased to announce that they achieved a world first in inertial confinement fusion powered by a projectile. It's an incredible scientific achievement, like really, really remarkable scientific achievement. The things that you will all be aware that fusion and the journey to gain and the journey possibly to energy is an incredibly long and will undoubtedly be a very risky path. The things that we like about this company and this approach relative to other fusion approaches is that it's relatively simple, and it's relatively low cost, almost like an order of magnitude cheaper. And so that was the attraction for us. And we took a position in this company with a very first Investor Day with a couple of angels and we understood the technical thermodynamic processes that were going on in the modeling that they were doing. Rob particularly led that investment. And this is very typical of what IP Group does. And so we've had 10 years with this company, and we're very excited for the next stage in the journey. So just very quickly before I finish and hand on to Martina, I'm conscious I've got 1 minute, Martina. I just wanted to say a quick word on ESG and impact. I know this is something which is incredibly important to us as a business, culturally in terms of things that I lead, such as the -- the ID project, which is our diversity and inclusion work, and we aim to be market-leading in that space. But the point I made about impact right at the start is the IP Group has been an implicitly impactful investor. The things that we do naturally lend themselves to impact, and the job to do for us is to become more explicitly and purposefully impactful as investors, and that includes forward-looking measurement of impact and it's a really, really tough thing to do and lots of the industry is grappling with how we do that with signatories to a whole bunch of different standards and groups, and we're trying to lead and be in the front pack people like ESG_VC with signatories to the year-end, well it's the year-end anymore. The [ PRI ] and we've mapped our -- with Berenberg's help have mapped our portfolio to the SDGs. But we -- that market is moving incredibly quickly. We think we have the portfolio and the skill set in order to be market-leading in the front of that pack. But in order to do so, we've got to really run to keep up. But there is a massive opportunity here if we can demonstrate that our companies can deliver both incredible financial returns but also incredible impact on the environment, on a healthier future and on a tech-enriched future. So just to summarize, the market conditions are tough in the short term. We haven't yet seen that come through to our portfolio company funding rounds. So we aren't experiencing significant write-downs at the moment, but we are planning cautiously to invest during this period and are very pleased to have the financial position that we have. We think that will be a strategic asset going forward. But we are -- I'm very pleased to report great progress in our conviction companies and deep expertise in our thematic focus areas. And the next 2 speakers will hopefully give you some further evidence that, that is the case in the form of Martina and Rob. And so with that, it's my great pleasure to welcome Martina to the stage. Martina is the CEO of Featurespace.

Good morning, everybody. There are a number of things you've just said there, Greg, which just really resonated with me. The first thing is patient capital. Anybody in the audience here that's tried to set up a company run it to get it going. There's a piece of research and a professor I heard talking about how long it takes to build a good technology company. And he said he has not found one that's been really able to do it in under 10 years. And so when you find investors that back you and stick with you and go through all of the ups and downs and the trials and tribulations of trying to build a company, it really matters. And I'd like to start by saying a huge thank you to the IP Group for backing us, but obviously, particularly to Jon Edington. He's very modest person, but he's been on the Featurespace journey as an individual with us for 10 years. And so having somebody with that longevity and consistency and commitment to our company is incredibly important. So as I've just heard, you want to get 20% return on investment on an annual basis. My job is pretty clear, isn't it? So I would just obviously like to say thank you very much to the IP Group, and to you, Jon Edington, for all of your support because without your backing early days of Featurespace, I wouldn't be here today to tell you what a great company we've got. I'm Martina King. I'm the CEO of the company. I've been with the company for, coming up for 10 years as well. So I was introduced to Featurespace. I met Professor Bill Fitzgerald, who is the founder; and his PhD student, Dave Excell. I was told that they had invented a fundamental technology. And so when you hear something about that, you think goodness, but what can it do? And actually, it could do an awful lot, but trying to find a market fit for a British deep tech invention is, again, not for the fainthearted. So we have to work really hard to try and find a part of the world where we could really make a difference. And that took a good sort of 18 months to 2 years of knocking on an awful lot of doors, telling people that we've invented a thing called Adaptive Behavioral Analytics. And we know it's the future, but what on earth can we do with it? So we found our product-market fit and we have absolutely determinedly stuck to that over the years, and we make the world a safer place to transact. Here's the agenda for today, a little bit of information about us. To talk a bit more about that product-market fit, our commitment to our industry and innovation show you a little bit about the product because we've innovated there, too, obviously. And given I'm talking to an investment community, you will want our numbers. However, obviously, we are a privately held company, and we can't reveal the numbers that I would normally talk about, which is really frustrating for me, but never mind. So making the world a safe place to transact. I've told you a little bit about already, there's Bill. Bill is an extraordinary individual. He, unfortunately, developed a brain tumor, and he died in 2014. And when he died, he asked me to make his company as commercially successful as he had been academically. And Bill's renowned as being probably 1 of the top 5 people in bringing machine learning to the world globally. So that was no mean mission for him to hand over to me. And the other thing, of course, about it is he's not here any long to tell me when we've achieved it. So we just have to keep going. So a new way to fight financial crime, that's Adaptive Behavioral Analytics, and I'll show you our eureka moment. We now work with major financial institutions globally and have offices in Atlanta, Singapore, Israel and teams now in Spain, Mexico and Australia. And we protect consumers across the world from that awful financial crime that takes place. We do like to win awards, and that's really important. It's important to our customer base. I remember being on the stand at an event many years ago and somebody came up to me and said, the reason why I'm here is because your awards are up to date and lots of your competitors don't. So we would want to work with the current company. And the awards that I -- are most important to us are The Card & Payments Awards. So TSYS and Capital One, we always want to try and make our customers the hero. So that was one of our first awards and that was so exciting. And then we've continued with the best anti-fraud development for NatWest and most recently, for Worldpay, again with The Card & Payments Awards. We've invented the Automated Deep Behavioral Networks, and that's bringing deep learning to protecting payments. And I'm going to talk a little bit about that. And it's great to be honored by the Queen. So we have 2 Queen's awards. Okay. This is our eureka moment. When you're a technology company or when you're inventing technology in academia, it's actually really hard to get hold of good data sets. So you can have theory, but it's hard to actually put it into practice. And it was a gentleman who came to visit us called Roger Alexander, a really well-known payment industry veteran and expert. He took me to one side and said, "Martina, focused on the payments industry, and you'll revolutionize it." So I said, "Oh, okay. We'll do that." Then he opened up his Rolodex and off we went. We work with TSYS, and they introduced us to a customer there who said, "If you genuinely can do better than everything else out there, well then, we'll listen to you. But we have companies turn up on our doorstep all the time who say they can do this. So you're a bit different, off you go." So they gave us a data set, and this is what we learned. So if you have -- if you think about payments, this is a card payment example, so you're using your card, for every transaction that goes through, there would be 10 genuine transactions. So every one fraud that would be identified, 10 genuine transactions would be blocked. Where you're looking at card present, so modern digital payments, what we learned from that is that for every one fraud attack, 23 genuine transactions were being turned away. So that's actually a big commercial problem. So our question was, could Adaptive Behavioral Analytics make any difference to that? And it's not very often when you look at technology and you get a real wow moment. And what we could see is that we could reduce the declines by 70% but actually 80% where a card wasn't present. So that's a huge uplift for the industry, so allowing transactions to take place but simultaneously identifying more fraud and blocking more fraud. So the question then was, well, if we genuinely can do this and as transactions move into a digital environment, then surely this has got to be some -- an area for us to focus on. And the more I learned about the sector, the more we realized that it was ripe for disruption. The incumbents haven't been really prioritizing innovation. There was a real appetite for change from the customer base and a really -- and a big growing market with a big growing fraud problem. So all the components of disruption were spot on. So we focused on this area. And then our route to market. So big enterprise systems, it's -- they can take quite a long time to install. The sell-off processes are long. And so therefore, for us, we just thought this is not going to help us grow fast enough, so we need another distribution methodology. And an awful lot of the card payments, in particular, are run by the big payment processes. So we decided to have direct and indirect route to market. And this is where you can see that we have been able to be very successful putting our system in to protect payments across the banks, all types of transactions that take place and then the indirect route to market where we build technology for our customers, and they on-sell it to their customers. And there is transaction fees that Featurespace takes on the back of that. A good example of that is Worldpay from FIS, where we have 2 different use cases. One is looking at all of the transactions that go through to step up authentication for PSD2 in Europe. And the other then is globally providing for them a fraud system that they on-sell to their merchants to protect their merchants. And that in all the tests we've been able to see that we can outperform everybody else out there. So we're really proud of that relationship. And TSYS another great big payments company. They have a product called CardGuard, where they offer a variety of card scores, but the Featurespace score is called the Foresight Score, and they offer it to their customer base, and they inform us that we outperform all other scores in the industry on all metrics, all of the time. And that's led to us being able to build 2 further products with them that we now have in the market. Little bit about adaptive behavioral analytics and why it's good. As we saw during the COVID crisis, 23rd of March 2020, payments were shifted in the from a mixture of card present and card not present to all card not present. And so what the -- we learnt here is that nearly every single industry or financial services company that was using a machine learning model had to retrain on that new data set. So you manually have to reset your model and then promote it back live into the systems again that put a huge amount of burden. And of course, while you're doing that, you're opening your systems up to further fraud attack. On this chart, the one we need to look at is the zoomed-in section on Graph 2. And you can see here that our adaptive models learned automatically in situ there was no human intervention. The promise of machine learning absolutely therefore, for pure evidence. And our performance was able to bounce back within days to the performance that was achieved on the combined data set. So this is when card not present. And I love the image that TSYS created for me, which was we were able to kick back and smoke cigars while the adaptive behavior analytics model just did its work. So commitment to industry innovation, bringing deep learning to the payments sector. Always, what we're trying to do as a scientific-based company is to outperform ourselves because if we know that we have the best performing models in the industry, we've got to keep on bettering ourselves, bringing deep learning technology to payments is difficult. And the main reason for that is the time series nature of payments. It's much easier to predict, text or the next image or where am I driving those sorts of deep learning problems and some of them they are still difficult to solve, but it's easier than solving a payment fraud matter with this deep learning technology. I've talked quite a bit about cards, but of course, that led us over the years to be able to build solutions that solve half a dozen other problems. So hopefully, this is now going to build, and you can see -- so these are the problems that we're solving to the world on the outside. This is the solution that we then have, so cards and 3DS payments, merchant fraud, application and financial crime. When we talk about merchant, it's primarily providing systems for the merchant acquirers to be able to identify merchants that are out of kilter where fraud is taking place. IATA is a very good example of that, where we are monitoring all of the travel agents. And so there's a lot of clients that takes place with false travel agents setting up. Obviously, we have our platform and our promise on the platform. And then here are all the components that exist within it. And this is a video I won't play at all for the sake of time. But the idea here is that people and our customers, there's a portal online, and our customers can go and interrogate every single part of the technology that we've built. In our industry, there's huge amount of cynicism and I'm sure you've all heard of the expression vaporware or slideware. And so this to me is, again, the proof that everything that we have to offer actually does exist. And then deployments, of course, very important big shift that we've seen, the payments industry have been one of the slower, let's say, to move into cloud, hosted by third parties because the payment data is so precious. But we have been able to win their confidence with regard to that as well, and we've seen during the COVID crisis a real swing to cloud hosting. So we offer our hosting environment in a totally agnostic way. Customers want it on-prem enterprise. That's no problem. If they want it in their own cloud, that's no problem. If they want us to host it for them, we do that too. Okay, the financials. Here we are, Featurespace by the numbers. Jonathan Crossfield, our CFO, is here in the audience with us today, too. Many of you might know, Jonathan, because he was on the investor side of the fence. But like Featurespace so much he came to join us. So he's keeping us on the straight and narrow. So I always said that I didn't want to take Featurespace public until -- that it was going to be a very easy company for investors to be able to model our performance. And one of the greatest ways to doing this is what's the pipeline, which are the deals that we've got coming through. So we've got some bookings that would be total contract value, 53% growth on that. 2021 revenue grew by 45%. We've got a lot of money currently in our pipeline. We've got 53 direct customers processing in 120 countries. And of course, the indirect method enables us to reach over 100,000 customers because our customers or partners are on selling our technology. We have 411 team members, 60 now in the U.S.A., 2 proof of concepts that are coming through in new markets for us. And most importantly, 76% of our revenue is outside of the U.K. So we've really been able to take our company and scale it globally. We raised GBP 83 million in capital and with 33 new customer projects underway in '22 as well as our most recent release coming out, patents filed. And as I've already said, we've got -- we're really proud of these partnerships that we've put in place. Now I had to take the numbers of this. It's so disappointing. But nevertheless, I just thought you want to see the bar chart so you can see the trajectory of the company. TSYS, as I say, that's the bookings, and you know that we're on for a record TSYS this year. And revenue, we measure our revenue obviously in a very -- in a number of ways, but some of the big recurring revenues through transactions as well as those license fees. So we already know. One of the things I love about this business is, I don't want to wake up on a first of January and have an empty book and have to start all over again for goodness' sake. I know we call it annual recurring revenue, but there's a more sensible way to look at it, which is, can we just have contracts that are closed? We sell it once, we book the money, and we delight those customers and they'll stay with us forever. And then we just have to keep on building new business that comes in. So we've been able to pull that off. And if we look into 2023, as I stand in front of you today, subject obviously to no major issues in our market, then we can see that we're on for a record year in 2023 already. And then annual recurring revenue. Here we go. So the revenue that drops in year and then the recurring nature of that, as you can see, the color charts really show that the red at the very top and the purple at the very top is the gap between our target and our closed revenue. And all of that is already identified and in our forecast with a 50% weighting. So our customers recommend us and that, after all, is the most important thing. And I absolutely believe, totally and enoughly that if we do the right thing for our market, that's the promise that we made to our market. We promise you that we will give you better technology, and we will give you a better service than anybody else. If we do that, will you back us? Because remember at the beginning, I said that's what they asked of us. So that's what we have done and we stick absolutely to that. And so we don't have to worry about our Board because we have long-term investors. We don't have to worry about, I don't have to get distracted by thinking about all matters. I can focus on running the company and building it and that is very, very reassuring and not many CEOs are in that fortunate position. So culture, why is that important because our customers asked us for it. So we train every single personal culture, but that's reflected in the Net Promoter Score that we've been able to achieve, which is world-class. We have an incredibly high retention rate. In fact, our net retention rate is 127% at the moment. And we have a very high win rate when we are into that final stage as well. So that's a bit about Featurespace. I might have done on time. Thank you.

Thank you, Martina. It's a hard act to follow. Okay. So I'm going to talk about cleantech and you'll see a lot of the presentation today is about the macro picture. Investing in cleantech is always about policy and the macro sort of world. And in energy, policy just got real in the last 6 months as you probably are all aware, so we'll talk quite a lot about that in this talk. A lot of the analysis I'm presenting today is work we do with the Energy Transitions Commission, so that's a think tank with the membership shown on the screen sort of convened by Lord Adair Turner and the intention of the Energy Transitions Commission or ETC is to bring together an objective view on how it's economically possible to complete the energy transition. We're the only venture investor member of the organization and through working with them, we get a lot of these insights and the insights directly drive our investment strategy. So it's a very valuable thing for us to be part of. All of the work from the ETC is published and a lot of the preparation from today came out in a report a few months ago around how to respond to the energy crisis. So if you look at the website there, you can see a lot of this underlying data. So I'll start with the energy crisis as it's now being called. I think it's fairly obvious to this audience, but this is really about gas. So it's not a coal crisis. There is high oil at the moment. But fundamentally, the issue we're facing now in energy, particularly in Europe is around natural gas. And just a few comments on that. There's a huge consumption in the U.S., but the U.S. is more or less self-sufficient. And on the right-hand side in terms of where gas is used, a huge amount of gas now is used for power. And that's been a change over the last 25 years that we've moved away from sort of sources like coal towards gas and that means that it's not just about gas or things like heating and industry the energy crisis, the gas crisis has affected power prices as well. So I think many people have done work on what the causes of this crisis were. I'll get on to the invasion of Ukraine in a minute, but there was already a problem brewing at the end of 2021. So this is kind of the ETC summary of the factors that led to the crisis. We had a cold winter, and it's interesting how weather and climate directly interacts with energy. So starting to see those factors. So a cold winter in 2021 was an issue. There's increasing demand from Asia a recovery from COVID. So it's a demand it's a massive part of this. There have been a couple of sort of interruptions in supply in liquefied natural gas. And a big theme around what we're facing here is there's a global nature of traded commodities like LNG. We've had a low wind year and a low wind starts to become important. So as you move forward into the 21st century with modern sources, weather and wind and solar resource will start to be part of the picture. And what does a low wind year mean? It means about 10% lower than predicted wind production. We'd also had this phase out a coal and interruption in nuclear. And introduction in French nuclear is really important. I think people aren't that aware of it, but there have been significant outages in the French nuclear power stations. And finally, and maybe a little bit sinister, Russia had been prioritizing directing a lot of its gas production to its own storage towards the end of 2021, and that may have been in preparation for the action that they then took this year. So what happened? I think everyone is aware of this but 2 things, one was a sort of almost unprecedented spike in gas price. So on the left-hand side of the chart here is the wholesale gas prices. I put them all in megawatt hours so we can compare gas and power. And if you look at the diamonds there, those are the kind of normal prices you'd see in December, and these are really unprecedented high prices for gas and that's fed through into power. So I said at the beginning, there's a real connection now between gas and the price we pay for electricity. U.K. is very heavily exposed to this. We saw some of the highest underlying increases in wholesale gas prices. And it's a combination of our -- at the moment, significant reliance on gas and also the way the U.K. wholesale market works with prices on the margin. It's not just the U.K., it was the Europe who was affected and some Asian countries like Korea and Japan also saw big price increases. But primarily, this is about Europe and the price of power and gas in Europe. So looking at some of the underlying costs, it's a slightly complicated chart here. And I just mentioned all these charts are going to be available as slides afterwards so that it's make extensive notes. The recovered policy decisions made around Europe that have really affected this -- the impact of this event. So one is at its decision to liberalize gas markets. So 10, 15 years ago, the most of European gas was traded on the long-term contracts. There was a policy decision to move towards sort of gas on gas sort of to participate in the global LNG market that saved the EU and Europe tens of billions, but it's meant that we're much more as a continent, as the European content are much more exposed to changes in wholesale market prices than it otherwise would have been. There's also been a general increase in supply of Russian gas to Europe. So as a European production has come down, Europe has gradually increased its dependence on Russian gas. And I think we also underset the consequences of that. This is a chart that's been extensively studied what happened when Russia invaded Ukraine at the end of February. And of course, there was a huge spike in gas prices. It's come down a bit, but we're now still talking about unprecedentedly high sort of gas prices. Gas is still flowing. It's an important part of the Russian economy. And as we'll see a number of countries that are really dependent on the source of energy. So this chart illustrates the issue. So on the left is gas supply to Europe in 2019, the red rectangle there is the Russian supplier, so 1,800 terawatt hours. Just a huge fraction of all the sort of gas coming into Europe. And on the right hand is just to sort of overview of by country, what fraction of their gas supply comes from Russia. So you've got smallish countries, but very dependent countries like Estonia, Finland, Latvia are in terms of gas supply wholly dependent on Russia. So this is a significant issue politically. It's a huge fraction to 40% out of the overall continences' gas. But for some of these countries, it's a massive crisis in terms of the concerns about the availability and pricing of that supply from Russia. Norway is very important. It's worth appreciating that despite some of the difficult metric, U.K. is no longer in a sort of significant supplier, the North Sea is declining. Norway is important, and you're seeing LNG coming through. But really, Europe is significantly affected still by the Russian supply. So I'll just talk a bit now about kind of what's the near-term response. What is happening this year and what are the implications of that? This is the IEA plan, the International Energy Association, it's slightly easier to digest than the very complicated long European plan. And it's fairly basic stuff. So let's not have new contracts with Russia, let's find alternatives, let's use LNG. There's a bit in there about wind and solar. I'll talk more about that in a minute. Keeping existing biomass and nuclear operating as much as possible is important. Energy efficiency as mentioned by the IEA. We need to do more on that in this country and increasing system flexibility is also an important thing. So these are all sensible measures. Frankly, there are all measures that have been talked about for a long time. The difference now is that people are really taking action on them. So what does this mean? So these are 3 views of what fraction of that 1,800 terawatt hours of gas could plausibly be reduced or displaced in this calendar year 2022. So there's the IEA plan, the EU REPowerEU Plan, and this is the E2C expert view on the right there. So remember, the Russian supply is 1,800 terawatt hours. The EU has an aspiration to place more than half of that. We and the ETC think that's a bit optimistic. So our own sort of view is on the right there. And the IEA also doesn't believe that we'll be able to get more than half of the gas displaced. The interesting point here is the key levers are things like LNG. So there is a huge sort of motivation in Europe to increase the flow of imports. It's not -- they're building new terminals that will take a while, but it's just really going out to that market and getting more LNG. The point being, this is not reducing the cost. If you've got a huge demand increase for LNG, the LNG price is going to go up. And more sensible thing to do is energy efficiency. So there are policy to try and increase energy efficiency in industry and homes. Piped gas is also important. There is some acceleration in a few months, you can do with renewables. Primarily, 2022 is going to be about getting more gas to Europe, which is fine in the short term, but it's not going to resolve the price crisis. So this we get into the medium-term sort of options. And this is really where for us as a venture investor thinking about Clean technologies. This is where we think about how do we respond to these developments. So the message from the ETC, which we fully endorse is this crisis, which is a security and price crisis is an opportunity to actually live up to the previously stated goals in terms of energy transition. So renewables and hydrogen and storage allow you to create not just a grid that's less sort of contributing to climate change, but also a more secure system for the entire continent. So focusing on the medium term. So up to 2030, you can do both. You can accelerate the transition and reduce risk. Key factors here, we'll see in a moment are time scale. So how quickly, if you're a policymaker, can these things be implemented? And a really important point, and this has been a fairly sort of dire talk so far. But the good news is, as gas gets more expensive, renewables become comparatively much more attractive. Renewables have not gotten more expensive. There are some input commodity pressures, but the overall trend in wind and solar and hydrogen and batteries has been significant price declines that have been sustained for decades now. So this stuff is getting cheaper at a time when fossil alternatives that contribute to climate change has suddenly got much more expensive. In terms of policymakers and there's a lot of dialogue between the ETC and the EU and to some extent with the U.K. government. There are obvious win-wins. I'll talk about those. There are some trade-offs and there are some things that would be counterproductive. New oil and gas E&P, does not look sensible. I'll talk about that in a minute. Germany should stick to its guns and abandon coal and abandoning net-zero targets is just long-term foolish. And if we look at the overall crisis, some of the stuff like the U.K. selling off its gas storage capacity with short-term is an -- we should have stopped short-term thinking around energy. Climate is coming, and this is an opportunity to align both security and climate together. So taking short term as an out of energy thinking has never been more important. Again, apologies another complicated chart. The real message of this is the stuff at the top of this chart is primarily around renewables and it's easy to implement. So the particular things, so rooftop solar, onshore wind, large set of deployment is all possible in only a few years with political will. I mentioned policy. So you need political stakeholders like the new German government aligned with this because there is an nimbyism and the usual sort of planning and permitting sort of blockages. But in terms of financing, there's a huge demand to invest in these projects, and we really can roll out significantly more renewables in Europe. Things like fracking, LNG terminals, gas interconnections take time. So it's possible to get more gas from new E&P fracking in Europe, which is a crowded more or less democratic place, fracking will be slow, and it won't produce a huge amount of energy. I'll talk briefly about nuclear. We've talked about fusion earlier, fusion and we think, frankly, other nuclear is a 2030 solution. And just a fact about nuclear. These are huge upfront CapEx projects. No 1 is going to finance such a project without some sort of guarantee around the pricing offtakes. So even that element of building new nuclear power plants needs to work through and does take years. So you cannot turn on a switch and start deploying new nuclear. What we can do is try to make sure the existing fleets, France, I mentioned, and potentially Germany operate for longer. The 2030 is really, and this is a lot of analysis in the report, which you can download focused on renewables, storage and hydrogen. So what are the implications of economically. On the left here, this analysis that we did last year around the cost of renewables. So this is an average number for Europe. There's a lot of detail again from the ETC website. But cost of new build onshore wind and solar is now less than EUR 50 a megawatt hour at a levelized cost of energy. It's but by far now the cheapest form of energy. And that sounds obvious to people like me, but it isn't obvious to policymakers. There's an opportunity to really double down on that source of energy. A less obvious thing is the cost of balancing. So again, we published on this last year. Most of balancing is lithium-ion batteries. There's no more complicated than that. That's happening already in this country. It can do most of the balancing requirements. There is a seasonal demand and there are various options for that, again, as I said in our report. What does that mean? It adds between GBP 15 and GBP 30 a megawatt hours to the cost of that renewable. So if you've got solar at GBP 50, you can have firm solar at GBP 65 to GBP 80, and that is way cheaper than gas at the moment. So you can have a very high renewable penetration, stable, firm system, and particularly when we're looking across Europe, we have great resources from solar in the South to wind in the north of the continent. I'm going to do this, Europe only really has to sort of deploy according to current policies. This is not about some grand new sort of plan that needs to work through. So there's a Fit for 55 policy which was published in 2019. And that basically means about 60 gigawatts of wind and solar deployed every year. And that will make a huge difference to resilience of the European system and price of energy. So that's look like -- so this is how much gas consumption could you displace. So the 2019 number is sort of 4,500, you can get down to 3,400 under that Fit for 55 plan. what's in there? There's obviously renewables, but I mentioned also hydrogen efficiency gains and heat pumps are really important areas in terms of reducing demand as well. In response to the Russian invasion of Ukraine, a new plan called REPowerEU was developed in the early part of this year, and that's sees a further acceleration of the same areas. So particularly use of more biomass and more hydrogen and more energy efficiency. And these are sort of pretty thoroughly worked-through plans. There's a good technocratic capability in Brussels. So this is a deliverable plan, and it certainly would save European consumers huge amounts in terms of the cost of spacing the cost of that gas. So what does all this mean for a cleantech investor? These are areas, I would say that we have been looking at for the last 5 years. Because from a long-term point of view, if you believe in a net-zero 2050, these are essential parts of what that entry system looks like. I would say the difference is a little bit in focus, and particularly on the focus between now and 2030. 2030 is very important in terms of the whole Russian gas crisis and the broader gas crisis. 2030 is also critical in terms of climate change in general. If you want to keep temperature below the [ never mind ] 1.5 to 2 degrees, we have to kind of more or less half emissions and particularly from Europe by 2030. So this is -- the 2030 focus is not new. What's been helpful in a way is these events have really focused policymakers' minds on actually delivering on these things. So I mentioned green hydrogen electrification efficiency. Residential comes into focus in a very strong way. That hasn't been a great area, but I think that's changing. We're seeing people working in that space. And finally, power, which is fundamentally about renewables starts to become even more important. So what do we have in existing portfolio? Some of our companies that we already have are going to benefit from this. We referred to this new company from Australia, Hysata which has the world's most efficient electrolyzer that science was recently published in Nature. That's a very, very exciting company. And because the technology there, the Hysata stack is plastic, such as injection [ molded ] plastic. The ability of that company to scale into this demand is really quite distinctive. So that's a very, very exciting thing. We're just doing a funding round into them. Mixergy is a company, which is a spin-out from Oxford, we've been in for a while. And that was all about up until recently, the fairly sort of Mandan area of domestic heat. Domestic heat suddenly become really important. So Mixergy has the best sort of hot water tank we think globally and certainly in the U.K. There's a huge opportunity for them to pivot their approach, which is a digital platform into heat pumps. And heat pumps are about to become a huge part of the solution. Then in terms of power, I mentioned storage was a big part of -- sorry, storage is a big part of enabling renewables. So RFC Power, which is a spin-out from Imperial founded by Nigel Brandon and one of the founders of Ceres Power has a very relevant long-duration storage technology to manage sort of into seasonal challenges. And Magnematics, which is a long-standing investment up in Sheffield, has a very interesting transmission technology for offshore wind. So all of those companies are seeing a lot more demand as a result of the crisis, and we're very excited about their prospects. We also have a very, very active pipeline. So there are a couple of deals that we're going to announce. Greg mentioned earlier, we want to make cleantech and the transition a real area of focus of the portfolio. So there's a big announcement next month about that. And there are 2 deals, 1 is around ammonia, ammonia if you like, a convenient form of hydrogen. So we're going to announce the details of that joint venture. We talked about it in Glasgow, but the actual company and the plans, they will be announced shortly. And there's a heat pump technology. So Mixergy is about the control of heat pumps. There's a fundamental new solid-state heat pump technology, we just invested in which we're going to talk about more next month, which would be very relevant to that domestic side of things. And then I'll just give you a snapshot of the current pipeline. It's very busy. So with things working hard on sort of triaging lots of deals, but there's a lot of stuff in there now. So different forms of hydrogen, white hydrogen is a new area. I won't go into too much detail now because we're under some confidentiality here, very exciting, hydrogen storage, HVAC, so air-conditioning incredibly important, building-based stuff, so sort of PV on roofs are -- will be an area of focus and a very exciting built environment. So how do you sort of fundamentally build -- new builds with low-end body carbon. There's an AI-based way of doing modular house building that we're looking at, heat battery, domestic [ and seasonal ] energy storage, all of these technologies, we looked at 1.5 years ago, and these markets are high, the markets have just changed. So the whole domestic side is really exciting. And then on renewables, we have existing technologies in renewables, so silicon photovoltaics and conventional wind turbines, that industry is going to get so large that the companies that provide if you like, picks and shovels into that renewables gold rust -- gold rush can be very attractive. So several things there where it's sort of how do I reduce the O&M costs of large wind turbines? And finally, boosting the productivity of photovoltaics is another area of great excitement. So we've got very busy. It's a big opportunity, and the team is kind of growing as a result. So final key takeaways. So this is a fossil energy crisis, and we are here in Europe in the main stage of that. It's not about renewables. It's about fossil resources. Short-term thinking has been a real problem, and we're sort of feeling the pain of that short-term thinking now as consumers. The invasion of Ukraine is a massive tragedy, but it has galvanized action in Europe, and that's very important for cleantech. There's going to be a lot of LNG this year. I think that's fine. Gas is less carbon-intensive than coal. But the medium-term opportunities where we're focused as IP Group has cleantech, there's an opportunity to reduce the cost of energy and make it more resilient. And that's what we're going to be 100% focused on for the next sort of 8 years. Renewables are cheap and a key message, which we published on but hasn't landed entirely as you confirm renewables. And there's a 200-page report on the ETC website and how you do that. We're pretty confident on it. We've worked very closely with National Grid in producing that report. So it is economically affordable to have firm renewable power, and that's going to be a huge area of investment over the next decade. And so what areas that mean for cleantech investors? So hydrogen is even more important. We've done a lot in hydrogen before. That's going to be a big part of the solution. Solar comes back into focus. Solar and batteries, most domestic solar now and in places like Germany comes with a battery, just people -- just the batteries and they work pretty well. Energy efficiency should always have been a priority. It's now becoming much more into focus. And heating and cooling the buildings, a massive issue in this country, which has just been the sort of climate elephants in the room in terms of our plans and suddenly come back to focus. And so in conclusion, Energy has got real. We with -- or the clean energy stuff that we do can make a real contribution to delivering secure energy as well as low carbon energy.