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Hussein Kanji MBA2007 is a US-born, London based venture capitalist who backs tech start-ups to become “giants in their field”, as he puts it. His success in doing so has made him a giant of his own.
Companies he has backed ﬁnancially, providing seed funding at an early stage, include online takeaway service Deliveroo, cyber-security specialists Darktrace and pioneering AI data analysts Behavox.
All are now market leaders, prompting the UK national newspaper The Daily Telegraph to name him Europe’s most inﬂuential technology investor. A cheque from Hussein Kanji is more than a cash injection – it’s an endorsement that turns heads and opens doors.
He is, of course, extremely selective when it comes to opening that chequebook. Hoxton Ventures, which he co-founded in 2013, is currently invested in 13 companies with a collective market capitalisation of about $4.4 billion (£3.3 billion), having made 17 investments out of the ﬁrst fund and having had four acquisitions).
Its success is good news for Europe in the race to keep up with the tech giants of Silicon Valley and China, and especially good news for Britain, where most of the 13 companies are based. Kanji has also advised the UK Government in establishing east London’s Tech City as the largest technology cluster in Europe.
Every year, he sees up to 2,000 hopefuls, eager not only for a cash injection but for the kudos that association with Hoxton Ventures brings; but out of all those bright young things there’s “probably only one or two [who] really matter”. The way tech works, he explains, is that “the three leading companies in any new ﬁeld make most of the economic gains, but particularly the number one. Look at social networking. Facebook is a $300-$400 billion (£230-£300 billion) company. Nothing else is even close to it. So it pays to win the category.” It also pays to spot that winner early on and to have the wherewithal to back it.
So, what’s his strategy? The short answer is: “We focus on a new market and try to ﬁnd somebody in Europe where we think they have a likely shot at being number one in that category.” For example, the Hoxton Ventures-backed company Babylon Health is currently working on an AI doctor: “You read about it in science ﬁction books, but it doesn’t exist as a consumer service. They’re building that now.”
“Our core business, our skill, is to realise when the right thing has walked through our door and to write a cheque.”
The longer answer involves painting a picture of the typical week of a venture capitalist: endless meetings, back-to-back. And not just with start-ups, but also with high-ﬂying potential future employees for his portfolio companies; potential new investors into Hoxton Ventures itself; former colleagues from Silicon Valley (where he worked for 10 years); with COOs and CTOs, with “middle managers” at Google and Amazon, on whose services many start-ups depend. The list goes on.
Each meeting is an exchange of ideas, data, names to watch, industry gossip. “The more information you have about where things are going, the more stuﬀ you see, the more conversations you have with people, the more you can ﬁll out the bigger picture,” Kanji says, adding: “A lot of it isn’t information you can read about in a newspaper.” Of course not – or we’d all be onto it.
What will be the next big market to emerge? “We don’t know,” he says. “If we did, then instead of funding these businesses we’d form them ourselves. The truth is, we’re incapable of ﬁguring out where the future lies the way founders and entrepreneurs can. What we are really good at, though, is listening. We’re also pretty good at collecting a lot of information. Our core business, our skill, is to realise when the right thing has walked through our door and to write a cheque.”
It helps that he has been on the other side of the fence himself. Before he became a venture capitalist, he spent a decade in Silicon Valley; ﬁrst working at a series of start-ups and later at Microsoft, where he helped pioneer speech-recognition software (some of his colleagues from back then are now movers and shakers at Apple’s Siri and Amazon’s Alexa).
Getting into tech was an “accident,” he says. “When I was an undergraduate I thought I’d be a journalist.” But – fortunately for his future bank balance – he happened to be at Stanford and, although the Californian university had yet to fully reinvent itself as a feeder for Silicon Valley, the transformation was underway. By the time Kanji left in 1994, the ﬁrst dotcom bubble was inﬂating, “and I ended up forming a web-services company, building web pages and websites”.
Clients included Apple and Hewlett-Packard, but his ﬂedgling business was soon bought out by a bigger ﬁsh. Another start-up he got involved with, Radiance, hit on the idea of video streaming years before YouTube and “raised a lot of money, but there would be no market for it until the late 2000s”.
Later, he helped put together SafeView, which pioneered the now-ubiquitous airport body scanners in which you stand with your arms raised. The company was eventually sold in 2006 for about US$130 million (£98 million), “a decent exit – we all did well – but it wasn’t until four or ﬁve years later that you saw the machines everywhere”.
‘The European investor base still doesn’t really understand venture funds. They mostly don’t want to back young people. They want to buy IBM’
After his stint at Microsoft working on speech-recognition software – while the company was still mostly preoccupied with Windows and Oﬃce – Kanji arrived at London Business School in 2005 to study for an MBA, “a rite of passage for so many people”. He planned to switch to investing and viewed the MBA as a necessary step in that direction and Europe’s nascent tech scene as ﬂush with possibilities.
In the event, his break as a venture capitalist, a notoriously tough industry to crack, came unexpectedly quickly: through Silicon Valley contacts he was approached by the US fund Accel to work for them part-time while he studied at LBS. And so he did, going full-time after completing his MBA in 2007. But two years later, it was all over: “The ﬁrm changed a lot of people, changed strategy and it became pretty clear I wasn’t going to ﬁt anymore.” For want of another job, he ended up starting Hoxton Ventures with partner Rob Kniaz, a former Google product manager.
It took three years to get oﬀ the ground. “If I’d known it would take that long when I started, I’m not sure I’d have done it,” he readily admits. “The European investor base still doesn’t really understand venture funds. They mostly don’t want to back young people. They want to buy IBM. One institution told us, almost verbatim; we were too young to do our jobs. When we beat the performance of most of their investments, they came back and invested in our second fund.
“There are few institutional investors in Europe looking to take a risk on a ﬁrst-time fund. The biggest investor in venture in Europe is the European taxpayer, whose funds get routed via the European Investment Fund or other national development agencies. This is in stark contrast to the US, where newer funds have ﬂourished because of widespread institutional support. In California’s Bay Area almost everyone works in the same industry, so knowledge and best practice permeate everything very quickly.”
His Twitter bio – “Build more tech. Eat more cake” – betrays a sweet tooth. What’s his favourite cake? “Red velvet cupcakes from Bea’s of Bloomsbury,” he declares instantly. The icing on the cake? “I own the bakery."