The Exchanges

Q that is VC. We're the innovation class. We're supposed to help Create new technologies and integrate into people's lives, make them much more efficient and better and fun. Um, but just to like lay it all out from your perspective, um, given you've spent a considerable amount of time there, what are the current trends of VC dollars, funds, companies, and success stories that have come out of the region?

A Yeah. I'm almost like, why is everyone so obsessed with this? Like, you know, and it's interesting. Like, I'm glad you asked the question. It's like, People are trying to take down Europe, calling it a museum. I'm like, come on, guys. Um, I mean, when you look at the numbers, it, it, it paints a, a great, good picture, actually. VC funding in Europe reached about thirty billion the first half of 24. That's a 12% increase to twenty-twenty-three. Um, you know, if the pace continues, I think twenty-twenty-four will become the third most active year ever for VC funding in Europe. You know, obviously those twenty-twenty-one years were Insane across the board. Um, and regionally you're also seeing a lot of diversification. The UK has raised the most in total. I think it was 9.5 billion. Um, but France has 4.3 and it's becoming an AI hub. And you look at dock region and you're seeing tons of companies come out of there. And then of course the Nordics has produced a bizarrely disproportionate amount of unicorns. New York Times just wrote a Sorry about this the other day. Um, and you know, we're seeing big deals as well in, in Q one of 20, 24. I think Europe had 139 active unicorns for new additions. Um, so wave at the big series C, Mistral's, six hundred forty million series B round. There's, there's a lot going on. Um, and you have, you know, talent flywheels emerging as well. I, you …

AI assessment note: “VC funding in Europe reached about thirty billion the first half of 24.”

Q of like a cold call center for just sourcing and dialing and dialing. And so you've gotten exposed to many founders on top of the ones that you've backed, That have had huge successes. So what I'm getting to is given that and given your direct exposure, what insights have you gotten from these kinds of founders and what it takes to build a world-class company and a world-class CEO?

A Yeah, it's a great question. Um, maybe actually just using the same, the same companies I just talked about to keep it consistent. Like one thing I learned from Emory, who's the CEO of Frame.io is, um, is that there's no match for intensity. You, you need it. And he, he once gave me this really powerful analogy where he said, if I was training for the Olympics of figure skating, um, Nobody would ask me, do you have work-life balance? Like, I would be figure skating all day long. Everything I eat, every time I go to bed, it all relates back to my figure skating career. Um, and so I'm trying to build, be not a world-class figure skater, but I'm trying to build a world-class company. And so my entire life revolves around this. Like, Every action I do throughout the day is building towards this vision, and I thought that intensity was super powerful, and I've seen it across a number of founders since then, but it is rare, and, um, and, and when you see it, I, I try to invest. Um, and, uh, and maybe, yeah, from Glia, learning there is, is kind of what I mentioned before around understanding your customers. Like, I think CEOs sometimes get a bad rap because they like to grandstand or, you know, talk, and oftentimes, you know, they might even have egos, but actually the best CEOs are the ones who, maybe they have an ego, who cares if you have an ego, but they put it aside and really l…

AI assessment note: “one thing I learned from Emory, who's the CEO of Frame.io is, um, is that there's no match for intensity.”

Q are limited options, limited number of companies, limited number of like really excitable talent. And not only that, but okay, there's a huge dislocation in late stage capital for Hardware companies and then maybe software for hardware companies. I'm sure like the sales cycles are somewhat similar. So I'm just curious to push on that like a little bit more. Where does the bullishness come from and the conviction? Yeah.

A I mean, the reason people have stayed away for many years, again, it's, it's real. Like, it's crazy when you talk to these, uh, these customers, they are using a wild set of resources. Like, A lot of them are doing, you know, jerry-rigged Excel setups combined with JIRA, combined with scribbled notes that integrate with 19 eighties on-prem software, and it's run on an industrial computer. And so on one hand, it's like, wow, how do you get them out of that lifestyle? Cause it's really, really entrenched. But also, you know, the more optimistic side of me is like the power of moving this to the cloud, which will allow for all this, you know, collaboration and compute capacity. It's super exciting and opportunities there, but, but sort of like the difficulty of it and the promise are really intertwined. Like it wouldn't be so exciting if It hadn't been so hard over the years. And, um, the reason it's so exciting now essentially is, is because there's all of this debt that hasn't been addressed and it hasn't been addressed because it's really hard. So it's like a, a bit of a stew. Um, but you have, you know, really interesting data points from, you know, the, the size of the prize as well. Like, you know, Toyota we found pays Matlab, fifty million dollars a year. Um, Boeing pays Simulink and MATLAB hundreds of millions. Um, Samsung has an eight figure contract with Atlassian. Like …

AI assessment note: “size of the prize as well. Like, you know, Toyota we found pays Matlab, fifty million”

Q Are there any specific companies that you have in mind that best exemplify this?

A There's one we invested in, um, uh, more than six months ago now called GovDash, which I think is the perfect example of a hybrid SaaS company. Um, and GovDash, it's in the government procurement space. For those that don't know about the space, it's totally crazy. 36% of U.S. GDP is spent on government spend. Um, there's seven hundred fifty million of spend last year that, um, That went through federal contractors. And if you're a federal contractor, every single piece of business you do goes through a formal RFP. And that's actually a good thing. If, you know, there's a federal courthouse down the street and they need to paint it, um, they're not just going to be able to say, oh, hey, I've got a buddy that has a painting company. I'm going to give him that contract. Like this is our taxpayer dollars. They should be running a formal, really, you know, rigid and, and, uh, deep RFP process to find the best contractor for the job. Um, but if you're a contractor, if you're a painting company, you want to be out there painting courthouses. You don't want to be spending your time going through like a 75 page Government RFP contract and like, you know, putting together the case for why you're the best painting company in all of Brooklyn. Um, and so what, what GovDash does is, is they provided an AI solution that, you know, you upload the RFP that you want to complete. You have a sort…

AI assessment note: “called GovDash, which I think is the perfect example of a hybrid SaaS company.”

Q Very insightful. It's a good way to start. Maybe another touch point for getting your insights. You've lived in New York. You went to London. Love to get your, your stance on that. So do you travel back to London for work still? Any surprises from your time living there? What kind of perspective did you get?

A Yeah, so I lived in London for three years, um, and I am, I grew up in New Jersey. I was born in New York. I had been sort of an East Coaster, so it was, London's not a crazy culture shock because I speak English, but it was for me a little bit of a culture shock. Um, I think one of the, the, You know, big differences I noticed was just that people that have almost like a split personality syndrome. Um, I hope I don't offend my London friends, but this is more of the cliche. Like there's sort of this daytime persona of London or British people in general, where they're very, very polite. They love to wait in line. They call it queuing. I guess we did call it queuing here sometimes too. Um, they say like, hello, love, when you go to the coffee shop. Um, but then at night, you have this pub culture, which is super belligerent, and like very, very intense, and that delta between daytime and nighttime in London was like, shocking to me when I moved there. It was like werewolf transition. Um, but I really grew to love the city. I, uh, I still go there, you know, probably every six weeks. Um, and, uh, whenever I do, I always kind of hit up my, my London spots and eat, eat a lot of food and try to make the most of it.

AI assessment note: “that delta between daytime and nighttime in London was like, shocking to me”

Q To dig deeper into your exact thesis and your investment strategy, you've had a number of awesome hits, especially for someone who is young. Um, I'd love to know what are you investing in? What's the stage of check? Yeah.

A So for, for check size, we, um, start at two and a half million at the seed stage and go all the way up to 50, sixty million. At the growth stage, um, the real bread and butter is, you know, 10 to 20, that's where the majority of our checks happen, but, um, I do have a background in growth investing, so seeing a lot there and, um, and sometimes we do a rare, very early stage investment as well. Um, but, uh, but in terms of, you know, thesis and where I'm spending my time, I'm thinking a lot these days about vertical AI, um, and, and really, you know, the opportunity there being, um, More exciting than sort of horizontal or, or even foundational layers in AI at the moment. Um, you know, first of all, I think a lot of the foundational layer investing has been done and will continue, but, um, but going forward, there's this really, really interesting notion that the, the one drag on Virto on AI is that it lacks differentiation sometimes. And, you know, it can often Be sort of, you know, this or that, and maybe open AI will come in and build something themselves. Um, and so what I see as the big opportunity with vertical software is you have these spaces like legal tech or construction, manufacturing, software for hardware, healthcare that are very specific and you can create this sort of defensibility through leveraging that specificity. Um, and you, you have founders who are unde…

AI assessment note: “So for, for check size, we, um, start at two and a half million”