Former academic Chris Evans is a hugely successful entrepreneur. Academics approach people like him to turn their ideas into gold. But, he tells Kam Patel, few are prepared for the ruthless, personal grilling venture capitalists will subject them to before parting with cash
At his home in a posh bit of London, Chris Evans sniffs and blows his nose, nursing a cold that has marked his South Wales accent with a nasal twang. Nevertheless, Evans's trademark gesture, the sharp slap of a fist punched into the palm of his other hand, shows little sign of being given a rest: he likes to make a point forcefully.
Evans, a former academic who started as a microbiologist and now holds visiting professorships at Exeter, Liverpool and Manchester universities, sought ten years ago to make his name and fortune as an entrepreneur. He has not done badly. Sources suggest a personal fortune of about Pounds 90 million, the result of having set up a string of biotechnology companies with exotic names such as Chiroscience and Celsis. Valued at Pounds 600 million, his firms - products range from medical drugs to kits that test for bugs in food - employ over 1,400 people. Those who took a chance on him have not been disappointed: he has created about 35 millionaires and returned more than Pounds 200 million to his initial venture capital backers.
What made him move into business? "I wanted to be in control," he says. "And I wanted to make money; I knew money would allow me to be an entrepreneur for all sorts of other reasons - freedom, fun, enjoyment, both in personal life and work." He feels sure that Richard Branson, whom he admires a lot, would say the same thing. Bill Gates, though, is in another league: "He's just stratospheric. He could do anything . .. buy a country, Chile, say; I can just see it, he loved the wine so much he bought the country," he says, laughing.
Evans may not be in Bill Gates's league but he has big ambitions. His has been a fast, brutal learning curve. "It was murder when I started out, scientists had zero credibility in business. No one wanted to back you." Things are a lot better now. He points to the Pounds 35 billion available in venture capital funds in Britain, much of it invested in companies in sums of less than Pounds 10 million - ideal for those seeking to start in business. Just last week in the budget the government announced a Pounds 50 million venture capital fund to encourage academics to turn their scientific research into profitable products.
But Evans's own experience of venture capitalists makes him sound a warning note. "Most people who go to them are ill prepared - they are bombarded with questions that they cannot handle. Testing the water with venture capital firms is something people ought to be extremely wary of. You must be really well prepared before you go in because they rarely come back to you after saying no. Ninety per cent of those who go to them do not get backed."
Having now set up Merlin Ventures, a biotechnology seed investment company, Evans is in a good position to appreciate the pressures on venture capital firms. Start-up companies formed with the backing of Merlin include the cancer treatment firm Cyclacel, a collaboration between Dundee University scientists and the Cancer Research Campaign. He says Merlin gets thousands of proposals from all over the world asking for money to start up companies and rejects most of them. "You do not know whether people are trying to con you, lie to you; you don't even know whether they are conning themselves. You have got to dig under what the proposals are, and to do that you have to ask hundreds of the most horrible questions - it's very rare when you do not upset the person. If you are an arrogant, stuffy academic and you've just been taken apart on every aspect of your life bar your science, it's tough."
Evans gives a rendition of a question-and-answer scenario at Merlin: Evans: "So, you are going to work full time on this?" Client: "Umm."
Evans: "OK. You mean to say you want me to put up Pounds 5 million - 5 million - and you cannot even give me a whole day's work?" Client: "Er.. No. I want to carry on with my lectures."
Evans: "So, when you are not there who is going to manage the work?" Client: "I don't know..."
The questioning can also become very personal: Evans: "You're happily married with kids."
Client: "Well, I am just getting separated."
Evans: "Where are you going to live?" Client: "Near the university."
Evans: "So you are going to stay at the same department your wife works at?" Client: "No, I am going to leave."
Evans: "Leave the city?" Client: "Yeah."
Evans: "So why the hell am I putting "Pounds 5 million into your department when you are not even going to be there?" "We go through everything and pick up things intuitively," says Evans. "I mean, who wants to form a company on a Tuesday if the guy's going to go through a bitter divorce battle for five months. His eye's not going to be on the ball. So you say 'come back in six months after you've sorted your personal life'."
Evans has riled some in the academic community with his outspoken views on intellectual property rights - the ownership of material and expertise relating to scientific discoveries and inventions. He thinks many academics are living in a "dream world". He would never, for instance, set up a company the intellectual property rights of which are held by a university. "Academics and universities should be rewarded. But they have no management, no finance, no muscle, no vision, no business plan and that is 90 per cent of the task of exploiting science and taking it to the marketplace. There is a tendency for universities to think 'we invented the thing so we are already 50 per cent there'. The fact is that they are 50 per cent of the way to nowhere."
He cites one example when he had to go to a university to strike a deal. The university wanted 40 per cent of the company and royalties. It also wanted to sell the intellectual property rights for Pounds 4 million. "I told them they were dreaming, that the rights weren't worth Pounds 40,000, that I was not trying to diddle them. In the end we couldn't come anywhere near an agreement and I said 'OK, we definitely cannot do business, cannot form a company, cannot employ that professor or give you equity or list the company in three years so it's worth Pounds 10 million'. I wished them good luck." In the end nobody paid anything to the university and the research team was broken up. It was, says Evans, a good example of some first-class British science now worth nothing. "I just wonder how many times that happens. Because I am not a bad negotiator, you know."
The recent big news in biotechnology has been the dramatic collapse of the Pounds 100 billion merger between Glaxo Wellcome and SmithKline Beecham, a marriage Evans was strongly in favour of, not least because of the giant British presence it would have created in the field. The gulf that might have been created between the merged company and the rest of the biotechnology and pharmaceutical sector would have opened niches for smaller firms. Thousands of jobs would have been lost but Evans believes many of those made redundant would have found jobs in other companies: "People like me would readily take them on. From a small company point of view it would have been great. The unions looked on the merger pessimistically and I just do not agree with them."
So what does he think went wrong? "Egos. Simple as that. Personality and egos. It had to be," he says, referring to Sir Richard Sykes, Glaxo's chairman, and his counterpart Jan Leschly, chief executive of SmithKline Beecham. According to one city analyst, after two failed attempts at marrying up SKB with another firm (it was American Home Products before Glaxo) Leschly is looking like damaged goods. Evans says:
"It is like a chess game and at the moment Jan's queen is off the board. He has either got to come round and agree to something of his own accord or the investors will put pressure on him to do so. If I were Sykes I would be absolutely laser-beamed on it - and he is a laser-beam guy. I would have all sorts of strategies and be thinking: it is only a matter of time."
The phone rings. It is about Evans's vehicle security firm, Toad, which last year caused him considerable grief, culminating in the sacking of the entire Toad board. Replacing the receiver, he says: "It pissed me right off, I can tell you. The biggest mistake of my life was letting that team of people have too much space to run a company." And things got worse. Evans hired a new head, Charles Parker, but he walked out after just days at the helm because of "irreconcilable differences of style". Parker's resignation last February resulted in shares plummeting 32 per cent. Evans's blow-by-blow account of the dark days at Toad is very funny. It is also probably libellous.
Newspaper coverage of Evans's problems at Toad, one of the smallest companies on the stock market, was completely out of proportion to its size, a testament to Evans's personal power in attracting the media's attention. By his own admission he has an uneasy relationship with some in the City. Analysts, he says, hate "serial entrepreneurs", preferring those who concentrate on one or two things. But that is not his philosophy. His next set of ventures will be in areas such as aerospace, microelectronics and bionics/robotics. "If I could run only one company, I think I would run it extremely well. And in that case, I would be running the biggest and most successful biotechnology company in the UK and it would simply be much bigger than British Biotechnology."
Told of one analyst's comment that he was all marketing and PR hype, that he was not a businessman, Evans retaliates by pointing out that he set up Chiroscience five years ago for Pounds 1.45 a share. He did most of the drug deals, hired the staff, all while setting up six other companies. The price per share is now around Pounds 3 and Chiroscience is worth Pounds 300 million.
"If you are not a businessman after that I don't know what the hell you are! I just don't give a **** about those sorts of comments anymore. There are lots of (analysts) who are just in jobs for the sake of it. If most them disappeared tomorrow it would make no difference to the financial world." Evans admits to having "pissed off" some analysts by telling them exactly what he thinks of them. "I have been really blunt in the past. I don't think I am that bad any more," he concludes, quite unconvincingly.