Fireside Chat with Atomico with Sophia Bendz, Siraj Khaliq, Hiro Tamura and Niall Wass (Atomico)

Darling thank you Thanks Hi good morning Thank you all for joining us For this conversation with Four of the topmost uh investors at Atomico a venture firm which is easy to Forget it's just 13 years old given the Impact that it has had on the industry Um today we are going to be talking About the mechanics of atomico because I Know many of you in the audience are Founders and probably want to know Better how things work over there Um but we're also going to be talking About some industry Trends and toward That end well first I want to thank all Of you for coming from Switzerland in England and Sweden I think this is maybe The first time you've all been on stage Together so thank you so much that's Correct thanks for having us you Recently released a state of the European tech report which you've been Doing annually which I think is very Interesting and useful for the industry And I thought there were so many Interesting data points in it something Like 33 billion dollars was invested in European Tech startups in the last year Across 4 500 rounds Um 20 companies are now home to unicorn Startup meaning valued more than a Billion dollars was there anything in

The report that you found particularly Interesting maybe Neil do you want to Start way down there Yeah well I I think you touched on some Of them I think the the landscape of Europe has changed so fundamentally I Remember when I came out of business School like a long time ago like 20 Years ago it was considered a bit weird To go into early stage Tech and now you Know everybody wants to be in an amazing Startup so I think culturally it's Massively transformed that's not so so Much a surprise I guess but I think it's A you know just a rousing endorsement of Of Europe and what we see here that Perhaps we didn't you know certainly 10 Years ago I think the other area that is Perhaps more surprising is that Diversity is still not moved on I think We put out some figures in the report Showing uh you know just how few female Founders about eight percent of the Money that gets put into VC is going to Female Founders I actually just invested In a female founded company myself this Year called koru kids with an amazing Lady Rachel Carrell running that so we Are seeing some change but in in I think In all of our opinion not enough I mean It's maybe something that Sophia would Like to comment on because I know she Feels quite passionately about Particularly the diversity Point well

Thanks yeah I mean we all do but for me Especially I find it really important And I'm proud of atomico because we have Done stuff uh not just talking about it So last year we launched a diversity and Inclusion report so that if a Founder Don't really know how to go about it we Can point to that and say like if you Need help creating a diversity plan this Is how you do it that's terrific and Then also we met last year when I was Announcing the angel program and I'm Really proud to say that 8 out of the 12 Angels in that group are women and that Have been really good at deploying money Into female-led companies And programs like that are so important So Um the the numbers that um Neil and Sophia are referencing was yes 92 Percent of funding uh you determined had Gone to all male founding teams in the U.S frankly it's not a whole lot better Than that I think it's something like 80 Things are getting better slowly thanks To women joining traditional Venture Firms of course more attention being Paid to the issue and also more women Starting Venture funds and sort of Making sure they're funding more women Founders is that a trend that you're Seeing in Europe are women starting Their own firms increasingly yeah I see That quite a bit actually which makes me

Very excited and I see a whole new Generation of both female entrepreneurs And also female investors in all stages Both seed and Angel but also a and Growth Venture also one of the things That I wanted to achieve with the angel Program was to get more people excited About engine investing and I think we Have seen a few of those that have Already now started sort of investing After the program which is for me really You know then it comes full circle and Then it has meetings I want more people And especially more women to come into The world of VC and considering a career As an investment partner sure I think Just just for our own Fun by the way Um we've paid a lot of attention to this Because it's about how do we also Reflect what we're trying to produce in The ecosystem and we're at a point where You know we're 40 percent uh female on Our investment team at this point Um which is still not good enough but We've really prioritized you know um Bringing in uh more people who from Diverse backgrounds and and more women And it's paying off and I think it just Makes us better investors right so That's first and foremost that's Terrific do you have any idea what Percentage of your Founders or founding Teams include a woman is it is it Hopefully better than

I think we're probably around the the Industry average I mean we've the more Recent ones I think we're above but you Know if you look at right everyone's Getting started better more recently uh Another thing that I thought was Interesting about the report as an American was the fact that um of all This money that's going into these Venture firms and and startups 902 Million dollars came from Pension funds Which is not a lot of money Um so I guess most of it is coming from Family offices wealthy individuals in The US it's flip-flopped as you know What's going on is it a structural issue Hero is it a is it a I think the world Is waking up to the fact that European Venture has comparative performance Today with U.S Venture returns there's You know research out there that that is Relatively authoritative in that area That you know you can kind of point to That the data is we're performing and as A function that yes you're right there's You know Pension funds in Europe roughly 4 4 trillion that they have under Management you know a billion last year Is a three-fold increase from where it Was before so it is material but as you Say I think if you think about the 4 Trillion that they are managing It's probably put the good use where you Know you're deploying Capital into

Venture Capital funds that are looking To change the world in a positive way Because that is what impacts the Pensioners who are behind that capital I Think that you know hopefully we'll We'll continue to see that Trend because It is happening and there is Improvement But there's more to do there Um before we Before we thought was interesting was That um though all those sort of lines Are moving in the right direction VCS in Europe had raised 13 billion Dollars in funding which is like a third Of the money that went into startups so That means a lot of money is coming from Elsewhere I just wondered where is that Money coming from Yeah I mean uh this is this is the way It should be right um When companies mature the companies that That we think should be coming from Europe a lot of the ones we looked at Back are by ambition global companies And uh being global companies that also Means having investors from other Regions so it's not a bad thing I don't Think we should be as investors saying Well the funding has to all come from Here I think it's a sign of success that European companies are getting Investments from Chinese investors from U.S investors which is really what's Happening

Um it's it's a hero's Point yeah and and You know to to couple to that is the Fact that there's a the universe of tech Is expanding to to involve many Industries and so You know what is naturally happening is The course of that is a lot of different Types of capital strategic Corporate you know Individuals they're all getting involved In what is actually happening I think That it's a reflection of where Tech is Going or has been going for the last you Know several years if not decade right Right well I also wondered if because of This ongoing trade war between the U.S And China you were seeing more funding Specifically coming from China if that's Something that you can sort of see quite Yet or perhaps not Um when there's there's an interesting Point there which is certain kinds of Companies which uh particularly a lot of Frontier deep tech companies that are Considered sensitive Um Europe is kind of neutral grounds Right so Um we can get customers not just Investors but also customers from the US Customers from China and Um they're examples like graphcor one of Our portfolio companies where you know This is Tech that is not labored with You know restrictions that might come

With the ongoing spat that's that's an Advantage for Europe And can I Trend in the US it's been going on for 10 or 15 years talking about tech Affecting everything and everyone's sort Of looking to invest in Tech is there's Much more money from the Middle East Sovereign wealth funds uh that has come Into the U.S I just wondered and now uh I guess you know given the sort of Lesson impeachable Um Uh uh human rights records of some of These these regions there's a lot of Debate in the US about whether that's a Good thing or bad thing whether people Should be taking money do European Startups care do European Venture Capital firms care I think so I think everyone cares not Only about you know what they're doing In terms of what you know impact to the World but where what type of capital They are choosing and I think you know More and more people are becoming and The founders and entrepreneurs are Clearly sensitive and the people who are Tackling big missions and big problems Are clearly sensitive in terms of Alignment with their investors and I Think that is something that will Continue to be a trend that we see with The matching of the type of capital the

Investor and the and the entrepreneur And and so of course I think that that Definitely will be a continued Trend That we see yeah and just we're very Selective with our LPS right I mean We're we are we're careful and a lot of Rlps are Pension funds uh which is it's A really nice virtual cycle the fact That it's like pensioners are doing well Off of the investment performance that We're working hard to deliver and then The founders can feel good about the Fact that their investors are indirectly In many cases you know majority of money May be pensioners that's great so you Anticipated my next question which was Who your LPS are so it's it's Pension Funds it's also family offices uh and It's mostly European uh or also a mix of Food we're kind of diverse I don't have The stats at hand but um it is mainly European I'd say yeah and you're right Now investing a 660 I'm sorry 765 Million dollar fund that you closed in 2017. Um I believe I read it might have been In techcrunch.com that you um are Raising another fund Um are we gonna surpass a billion Dollars this time Sophia You know what we we don't say more than That at this time we're always Fundraising and and you'll be the first To know when we have news on that field

Um back to the US and Trump Um it's a very polarizing experience That Americans are going through their Um I mean you're sort of living through It I guess hero a little bit in London With brexit I'm just wondering Are you seeing Founders less inclined to Want to move to the U.S because things Are a little bit less stable there in Many ways than historically I don't know if if that's A trend I do see however that Founders At least in Europe Are more and more encouraging they're They're they're very keen on building The business in Europe and I think that To me is they're building Global Businesses in Europe which doesn't mean That they you know Traverse borders they Are in the U.S their products are in Asia but they are trying to build Massive businesses here in Europe which I think is the incredibly encouraging Component that supersedes any you know Political realm I think that that is What I see I I would defer to my Colleagues as well no no I mean 100 The trend that the opportunity And the need to go to Silicon Valley to Do something is I'm not saying that's Not a good choice but I think you have As much if not a greater opportunity Here because the talent is amazing here The you know the size of the market is

Amazing here increasingly the capital is Here back to the previous coin point Point about sources of capital at the Best entrepreneurs here do have now Choice and they are being selective About where they take their capital from As well Um you know and just sort of kind of a Little bit why we're sitting here which Is that therefore even the the VCS have To be on there on you know really on Their game that perhaps they weren't 20 Years ago and we have to differentiate Ourselves and what atomico are trying to Do is differentiate ourselves by being Yes investment professionals but also a Bunch of ex-operators like myself Ex-founders like siraj and bringing a Different mix to to the game because the The best Founders do have choice you Know interesting stat I read the other Day that in UK kvc only four percent of The people in the UK VC firms had Operational tech tech company experience I'm sorry what percentage oh just four Yeah interesting and in atomic out 70 of Our investment team have been in early Stage Tech businesses Um and that that is why we try and bring A differentiated proposition yes we're Bringing you money but we're bringing You know how people you know like myself Who've been around the block in many you Know successful and you know not so

Successful businesses learned some good Things but also made a bunch of mistakes And sitting alongside people who are at The start of their journey is something That we're hearing loud and clear from The market is differentiating what we're Bringing to the table versus just pure Money and you know siraj is an ex Founder himself I mean I don't know if You want to add to that but you there's A reason probably you yeah yeah Absolutely so I mean I spend most of my Professional life in in the valley you Know 13 years and at two startups the First one was Google In 2001 and then the second was my own And and my startup Climate Corporation We had four rounds of funding Um with six top tier investor names and I got to know the VC industry from the Other side and uh it was very clear to Me the value add of uh the founder Funded VC where it's not just the money It's the experience and the collective Mistakes that people have made and can Share with you so for me the atomico Model was and still is you know the best Way which is why it was an easy decision For for me to come and join I think it's Terrific I also I'm shocked by that Number because I think in the US it's It's competitive that it would be very Hard to be a VC without operational Experience people still do it but by and

Large uh it's it's very crucial for the Reasons that you outlined um you know Another Trend Um that you kind of touched on in the Report very big in the U.S seems like It's the case here too companies staying Private longer is that good bad neutral Sophia do you have any thoughts I mean I Don't know but from my experience with Spotify It takes time to build a good company And it takes time to build a big Successful Global category winner so I Think it's it's healthy that you take The time and then you go public when the Time is right and Is that sort of the uniform I think you Know the rule of thumb is is that if You're trying to Get bigger outcomes that have a lot of Challenges along the way that you have To disrupt the existing Industries many Different mechanics of the Commercialization of some of the Services and Technology will take longer Therefore Staying private serves that me that that Serves that goal and I think It allows you to take longer duration You know execution Cycles to get there Clearly in businesses like Tech where There are a lot of you know things to Solve that is a natural fit and I think That is why over the last decade we have

Seen that trend of companies staying Private longer and and I do think that There's a lot of benefit in that cycle Being long and the capital is there for That Yeah I was just that I mean I I've been Lucky enough to be through two companies From early through through uh going Public through IPO one Betfair six seven Billion dollar business in London and Uber you know which you will know Um and definitely it took us a long time In both those cases to get to where we Wanted to do but also they're very Different pressures on a company once It's gone public and I certainly saw From the inside that the as I say the Manage the pressure on us as a Management team running some of these Businesses as private we're very very Different to the public pressures of Quarterly earnings and all of those Things and so in many ways the aspects That we're looking for to create amazing Companies are are protected within a Private environment because it allows People to try stuff iterate make Mistakes in a way that the public Markets are very unforgiving on so I Think that's an aspect that is that's Led to this this trend as well I don't Know if anyone here happens to know what The average age is of a company going Public in Europe in the U United States

It's hit 13 years which is pretty Amazing to me as somebody who's covered The industry for so long one issue Though uh seems to be this disconnect Between what private investors think a Company is worth and public investors uh Uber's obviously been sort of struggling With this is that something as investors Are kind of uh increasingly concerned With as you see some of these companies Go out and get sort of hammered down by Public market shareholders I think as you you know grow into a Later stage cycle of company development It becomes more and more of a a Sensitivity that that one has to think About both as a founder and invest a Group of investors who are committed to A company I think where we focus on as a As an organization as a fund is much More at the early stage you know our Primary activity is series A European companies we've doubled down on That Over the last several years because we Feel like that is where the opportunity Is now you know at that point in time I Think it's much less about the Valuations that will be the public or The the disconnect between public and Private I think it's much more about you Know the value of growing a business That is tackling A big a big problem or a big opportunity

And it's probably not as relevant in in The immediate term as for us as it is But as we all have you know either Currently or have in the past been part Of big exits and and growing companies I Think even in our portfolio you know Those are things that we need to think About as investors and and some of our Companies are growing to that nature so It's not again something that over time We currently have to deal with that as Well but you do have a growth stage Business so on that front you probably Have to pay a little bit more attention Yes I think that you know the to be Thoughtful and mindful about what a Company's valuation is is obviously you Know as that moment approaches in terms Of maybe an IPO or or or any other kind Of event that that would create Liquidity I we do have to think about That but I think it's a much more Collaborative discussion with Founders And entrepreneurs so that they succeed Um and that they have the maximum amount Of optionality as well as what we talked About before which is that plasticity to Do things in a way that only private Companies can do so that's in the Balance you know another thing This will continue to exist right and Particularly when there are charismatic Founders and large valuations involved It'll be quite newsworthy but let's not

Forget you know there are there is a Fundamental Bedrock of very good Companies that are are being built here And um we we should not over fit to the The news of the moment you know where a Particular company might have had issues A a gap in valuation what about uh Secondaries so because companies are Staying so long I mean private so long In the US you know employees want to get Some liquidity Founders want to get some Liquidity is that acceptable here are There sort of companies that have sprung Up to facilitate these exchanges there Are funds yeah there are funds that do Secondaries and and I mean for us as Investors our perspective is you know we Don't want people to be living hand to Mouth and on shoestring salaries so when We invest sometimes the right thing to Do is to have uh even as part of a round You know some some degree of secondaries But like small enough that people still Maintain their hunger but you know Living's expensive and people should be Focused on their business not because They can't make their paychecks are they Typically other Venture funds though That are buying these shares or is it Other I think it's I think it's Everybody because in in some way this Whole you know the underlying Denominator is the duration of staying Private and you know in that in value is

Still being created even if a company is Private so therefore to get alignment You know there has to be ability for Founders and those who are employees and You know all those stakeholders need to Have the ability to you know find Value Along the way and recognize and realize That value so yes it is funds yes it is The the world is becoming much more kind Of sophisticated in the layers of Different types of capital there is so Yes there are people who specialize but There are also those who are Incorporating that into their primary Investment strategy as well so I think It's a mix makes a lot of sense direct Listings anybody care about these is That the wave of the future do IPOs need To be refat I want to talk about this in Silicon Valley I think it's a great Development it's again a sign that I Think you know technology and the Underpinning Capital that supports Entrepreneurs and business Builders is Is becoming sophisticated direct Listings you know I mean I started my Career in technology and internet and Web and in the late 90s you know that's Something that we would have never Thought about I think today it allows For companies to have different types of Access to Capital in a way that you know Is every ever evolutionary and I think That's a wonderful thing sure and Sophia

Your former CFO of course gets a lot of Credit for sort of inventing the whole Process so Tell me a little bit more about so the Four of you came from your different Offices how many offices are there Together uh now managed by atomico uh Well in terms of offices we're we're Based out of London Um which is where our core headquarters 80 of our people are there but we have People dotted around the place who Sophia's on the ground in Stockholm Looking after the nordics as an example We have somebody based in Paris looking After francophone region so we have Offices dotted around the place because We're a pan-european fund and and Therefore that's helpful both for Sourcing but also for supporting Entrepreneurs so yeah that's Geographically kind of how we're split And that sort of as I said Maps our Investment strategy of being a Pan-european fund primarily we do do Some later stage stuff as well which uh My great hero leads and that that can be Anywhere including the us as well but Yeah we're really focused on Pan-european you know we're one of the Largest uh VC funds I think the largest Founder-led VC fund tackling European Venture capital His own seed stage fund Martius Youngman

Why I guess what why is he doing this Separately from atomico We don't do seed stage investing and um You know Matisse is great it's been a Passion of his for uh quite some time so You know uh we are the First Investors In his new font Um so we believe in him very much part Of the family that's great I did not Realize you don't do any stage investing But you do a through later that's what Is a so I would say 70 of our our Target Investment is a something check sizes of Five to Fifteen looking at 15 to 20 Percent equity ownership at that stage We will that we will do B's and C's Um I think most people would know that About our kind of fun perhaps what they Don't know is that we're also recently This year restructured to have a bit More Focus about sectors so for example I look at consumer hero looks at late Venture siraj looks at Deep Tech or Frontier as we call it Sofia also works With me and consumer and we we also Cover Enterprise you know B2B so we've Really we've really started started to You know be much more focused on those Those separate areas we work as a team Of course but it gives us a lot more Insight and specialization in those four Areas and that's something that people Probably didn't know about us now that's Great and thank you for servicing that

And then in terms of decision making how Does that work do you and Sophia come Together to talk about consumer deals or Is this a a firm wide decision that has To be made our decision making process Is incredibly collaborative because we Have a diverse set of Partners uh with Diverse sets of experience so what we Try to do is bring that diversity of Experience into our decision making Thought process to then have one very Good decision so it is incredibly Inclusive Um or at least we we believe that to be The case totally and the Common Thread Running across all of us is you know we Have this term internally Partners to Game changers we really view ourselves As partners to game changing companies And what does that mean I mean there are A lot of great companies that are not Game changers per se for us it's which Are the companies that are really making A difference defining new categories Building Global businesses and we think That's absolutely necessary because We're at this point in time where we're Faced with these huge crises from the Climate crisis to you know the disunity Amongst people and and so on and this Next decade Um is one where it's Mission critical For Humanity to start to solve some of These problems so for us the Common

Thread is is what we're doing if it's a Net positive that's that's the best Scenario but it should definitely be not A net negative and in that we're United When we have these discussions that is This a game changing company is it not Negative to the world and then of course As investors it has to be a good Investment for us and Suraj if you don't Mind my asking you to sort of close this Conversation I wish we had more time but I know that you're sort of focused on Frontier Tech atomico's got some really Interesting bets Graf core as you Mentioned lillium the flying taxi Company which I talked to Um Nicholas about a couple of years ago When it was first announcing maybe it's Like a 10 million series a going into 2020 what's next toward uh that uh point You were making yeah so it's very much That point you know we have these these Huge challenges ahead of us and Companies that are able to solve those Challenges or help contribute towards Them Um will will really flourish and there's A lot of interesting scope for us as Investors there uh so there there are Many of these I mean AI continues to Develop we're starting to move from uh Predictions to agency that's a really Interesting step biology has got to a Point where we're not just using it to

Treat diseases now we can create systems Of biology we can create uh new Computers we can create Air purifiers we can create all kinds of Things that you know are basically built Out of biology not out of mechanics and Quantum computers there's a whole long List of interesting things but the Common Thread is solving Humanity's Biggest problems and that we really need To do that it's it's time for that Absolutely more attention needs to be Paid thank you so much all of you for Flying and we so appreciate it love Talking to you thank you thanks very Much thank you all

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