Episode Transcript
Jenny: Hello and welcome to London Stock Exchange’s Be Inspired Series. In this series we meet with founders, CEOs and business leaders to talk about their journey to IPO. We talk about how their IPO has helped them get to where they are, and we talk about how they expect it to support them moving forward. Today, we are in London and we’re with Tim Barker, CEO of Kooth plc. Kooth plc was the first digital mental health platform to list in London. Tim, thank you for joining us.
Tim: Well, thank you for having me. Thanks for coming to visit our offices.
Jenny: Oh, it’s lovely. So, firstly, can you tell us a little bit about Kooth?
Tim: Poor mental health is one of the main challenges of our times. In the UK it’s a £150 billion a year problem and by 2030 a $6 trillion problem. And there’s not enough therapists in the world to tackle a treatment-focused approach to support everyone that has a need. So, in order to tackle this you need to move from treatment to prevention. That’s what Kooth does. We provide a welcoming, safe, effective space to provide early help and intervention for people that are feeling those first signs of anxiety, depression, whatever it may be.
And we do this in a way where we offer people an open space, where they can simply go to Kooth and sign up. There’s no referrals. There’s no barriers for access. Then, we give you choice. Kooth got started supporting young people and young people are often prescribed to by us adults of what’s good for them. So, empower them. Let them choose what kind of support they want.
And so we can provide people with self-therapy support. They can read articles from people that have been where they are. They can engage in a peer support community and get support from others, people like them, same age for example. And they can also, with one click of the button, enter a live chat session with one of our 225 practitioners.
So, we can provide people with a safe, supportive space to help them work through whatever challenges and issues they’re going through and in doing so reduce the demand for more acute care in the NHS and improve people’s lives.
Jenny: And through technology. Isn’t that amazing?
Tim: Technology and humans combined, and I think that is a really powerful, potent combination.
Jenny: And what a time to come to market. COVID. It was the midst of the COVID pandemic. Mental health was obviously at the forefront of everyone’s mind, so in a way good timing. What about the process of going through the IPO? How did that compare to previous fundraises that you’d done and how on earth did you manage that workload?
Tim: It was different in two ways. Firstly, our whole roadshow was done over Zoom. We were one of the first IPOs in 2020. But, secondly, when I compare it to other investment rounds I’ve done in the past with venture capital and private equity firms, it’s a very different process. In the PE and VC world you are there to sell the vision, sell the dream, sell the hockey stick growth charts that you hope one day to be able to deliver on and it’s, to some degree, growth at all costs when you’re in those markets.
In the public market, coming to AIM, it’s about sustainable growth. It’s about being true to what you will deliver on, holding yourself accountable for that. Of course, we’re optimistic about where we’re going to go but we’re not just peddling a dream. We’re showing really where the growth opportunities are.
So, I think what you end up there is a very reflective view of the organisation, the opportunities, the challenges that it has. One small, big thing in my learning going through the IPO process is the fact that all of your investor presentations and materials are verified by a lawyer. Never happens when you’re in the PE or VC world. So, I think it brings a level of transparency and truth to this, which is very different to my previous experiences raising capital.
Jenny: That’s really interesting. What would be your takeaway, your piece of advice for a CEO about to go through and embark on that journey in that way?
Tim: I’ve probably got the biggest lesson, really, I learned from this. There’s maybe two. There’s one which is because you are entering an environment of high governance and reporting and transparency, to get your systems and processes in place, to mature your business ready to meet the requirements of being a London Stock Exchanged organisation.
The other one is also to make sure that you don’t leave your employees behind, and I mean that in a way of we’re ultimately a health company, so many of our employees wake every day thinking about they can help people. They’re not thinking about being on public markets or what interim results are or even what ARR means or net revenue retention. So, a lot of it is also, I think, an obligation and a benefit for CEOs and leaders to help bring your employees on that journey as well, to bring up their level of understanding of why you’ve floated and what that means, and to help raise their awareness and understanding of the lingo that we all use in this market to help them connect to the organisation.
And, of course, beyond that our existing employees are all shareholders in the business. They all benefit from the growth of the organisation, so they should have a vested interest to know where we’re going, how we’re doing and how we’re growing. So, I think, yes, those are some of the key things I’ve learned along the journey but we’re relatively still early in the journey as well, so more learnings ahead probably.
Jenny: It's brilliant and it’s so nice to hear you talk about the importance of people and the benefit that you’ve seen. It’s clear that it has helped you to retain talent. What about to find new talent? Recruitment is so difficult, particularly for a growing business to keep up with that pace. Do you think an AIM listing has supported that process?
Tim: I’d probably say, for Kooth, people will join us because of the purpose of what we’re doing. We are a social impact organisation but a commercial one, which is quite a rare breed in the broader industry. Ultimately, people will join us because they want to work on tackling the problems that we’re focused on. However, a couple of great benefits of being in the public domain. One is that for an employee that’s looking at joining a hot potential start-up versus Kooth, you can do your due diligence on us. It’s in the public domain. You can see the health of our balance sheet, market feedback, the reaction to what we’re doing. We’re an open book.
Whereas, if you’re going into the exciting, fast-moving world of a VC-funded start-up, all of that is closed to you. So, I think it helps people in their due diligence on us to see that we are here for the long haul and, of course, by giving people a little share of Kooth, which is also in the public domain, so they can see not the paper value of it that might be worth something in 2025, as a VC would give you, but the actual tangible value of the asset that you’ve got. Again, it just helps people recognise the value of their contributions. They can see the impact that they’re having and they can share in the growth of the company.
Jenny: Stepping back slightly to investors, ESG is obviously of the utmost importance to investors at the moment. Did you see a particular interest because of the nature of your business and how was the interaction with investors for you?
Tim: Look, I would love to say we were inundated with ESG funds but in the AIM market there’s not that many. It’s still a growing, nascent category and in ESG there’s probably a focus on the E more than the S and the G. However, we did have a couple of funds that are investors because of the ESG credentials that we’ve got and, look, I think everyone that’s invested in Kooth recognises that we are solving a world-class, world-scale problem and they wouldn’t invest unless they really felt that we were tackling and able to tackle the scale of the challenge that we’ve focused on. But I do think we can hopefully be one of a future breed of organisations that can have a social impact but also be for a commercial business.
Jenny: Now, thinking about growth, I’ve seen that you’re now in the US. Tell me a little bit about your growth outside of the UK and perhaps how that’s linked to your listing?
Tim: Yes, that’s right. We recently announced that we’ve signed our first large contract in the US with the State of Pennsylvania to roll out Kooth to support the school student population. For us, at that time of IPO there really are four areas of growth for Kooth. In the UK, supporting children and young people, which is where we got started, and then supporting adults. So, we primarily sell through the NHS and partner with them. We sell to workplaces as well, to support employee wellbeing, but internationally our focus is on tackling the youth mental health crisis.
So, we have a two-part game plan there. In the US a year ago, in October 2021, we hired our first employee. A year later we’ve got a team there, we’ve got our first customers and we’re starting to scale there. And I think what people like is both the values that we have and the experience we have as a company but again being a public company it gives you a much easier way for people to do their due diligence on you and really assess you as a partner of theirs.
Outside of the US, the game plan is to license our technology to other healthcare systems. So, that’s in its early stages but this is all part of how we scale up economically to tackle the $6 trillion problem, which is a global problem by 2030. And so we’ve got to be pragmatic about how we can tackle that. So, moving into the US is one key area and then licensing technology is the other.
Jenny: And, now, being a public company, what’s the difference being a CEO in that position in comparison to before?
Tim: Well, twice a year I spend three weeks out on the road. Ten times a year I’m spending time with our board. So, I think there is a governance and reporting aspect to that which sharpens you up as a business as well. I think going to the board with progress every four to six weeks as part of being a public company sharpens your business and the velocity that you can operate at.
I think for the day-to-day, the majority of the team will see no difference other than we can now fund growth initiatives, whereas before it was boot-strapped or bare bones as part of that. So, the main thing being is that we can actually look to the medium-term and we can invest for a three to five-year horizon, hence why with IPO funding we can set up speculatively in the US and we obviously are starting to see that bear some dividends.
Jenny: Focusing on the topic of what Kooth is all about, what are the main trends of digital mental health that you think are important?
Tim: Well you mentioned earlier that COVID, when we IPOed it was a time of COVID, and as you might expect mental health got a huge amount of mainstream attention, not just from the media but from other investors, venture capital investors especially. So, over that time period we saw probably $4 billion of funding go into mental health tech.
What we’re seeing now is a shakeout of that because this is hard technology to do and it’s, in fact, not just about technology, it’s about people as well. So, our service, we have 400 employees. We have 225 clinicians and practitioners working alongside technology to reach people in need and provide them with support. So, in order to deliver on that what we’re seeing now in the market is the winners will do three things phenomenally well.
One, they’ll prove what they do has a beneficial impact to individuals. We have done a decade’s worth of research and academic partnerships that underpin the efficacy of what we do. Secondly, you need to be able to do that in a margin-improving way. You need to run a profitable business over the long haul and so you need to do that in an economic way, both economically viable for us as an organisation but also for your customers. So, measuring the health economic impact, for example, of what we do. You spend a pound on Kooth, you save three pounds almost immediately elsewhere.
And the third thing is how can you scale when there is a global shortage of counsellors and therapists? This isn’t simply about just connecting people together, this is about creating entirely new digital therapies. The idea of what we call peer support, community support. Getting support from people that have been where you are in a safe way online. So, by harnessing a community within Kooth for people to help each other, we can augment the work that we do as professionals to help scale up our service to really reach the whole population in need. So, those three key things around efficacy, around economics and around scalability are the key challenges of our time now.
Jenny: Now, let’s think ahead. Five years from now where would you like to see Kooth have got to? What’s the vision?
Tim: I’ll keep it very simple. In the UK our ambition would be to become a nationwide service, that means that we are contracted by regional NHS authorities. Right now, 62% of the UK’s population of 10-25-year-olds have free access to Kooth through our partnerships. We want to get that to 100% so we can provide a nationwide service and, in doing so, we can provide back to the NHS the canary in the coal mine of what issues are starting to emerge in the society, in the community, so that they can be better prepared for whatever challenges come next.
We also want to then really grow our service to support adults. Earlier this year, we rolled out our service to adults across all of Greater Manchester, supporting two million people aged ten and above. So, our ambition would be to become a nationwide service in both of those areas and then to export our great innovations internationally. There is a huge need and urgency in the US right now. Biden’s first State of the Union called out the mental health crisis as a national crisis that required urgency.
So, we feel that we can scale up our service to really help tackle the challenge there and then export internationally so that we can have other healthcare organisations supporting their population, running our technology. I know that the word unicorn is not in favour these days but I feel that we have unicorn-sized problem to tackle, and it’s our obligation to scale as fast as we can to support everyone in need.
Jenny: Thank you, Tim. It’s amazing to hear your passion and thank you so much for giving us your time today. It’s been a real pleasure. Thank you.
Tim: Thank you.
Jenny: If you’d like to hear more of our Be Inspired Series please visit lsegissuerservices.com/spark. Thank you.
