Unpacking the European VC playbook with Frederic Court and Luciana Lixandru | StrictlyVC London

Thank you very much thank you very much For coming to strictly VC with tech Crunch and um let's get straight into it Lucian you um you obviously you actually You are a bit of a veteran of the VC Scene in in Europe um you made your move From Axel a few years ago and to build Out the uh squer Team um here in Europe And of course that we've seen a bit of a Flood of U of us VCS come into the EUR Europe over the last few years but you Kind of quite early off the bat weren't You um I was kind of wondering what was It like introducing seoa to Europe and And sort of you know getting used to Sort of cultural differences and and Also the ecosystem well firstly thank You so much Mike and techr and local Globe for having us here on this uh Beautiful and rainy evening in London um I don't know if being a veteran was a Compliment Mike but I will date I'm glad You app it to you not to Me I will date myself and I will tell You that I've been in Venture Capital Since the end of 2011 so a a really long Time um and it's been a fun journey to See how the ecosystem has evolved since When it comes to seoa to be candid seoa Has been investing in Europe for a Really long time uh sequ invested in Clara over a decade ago and unity over a Decade ago and UI paath which is Actually how I got to know some of the

Partners at sequ because I was on the Board um so SE was very familiar with The continent and the quality of the Founders which which is why as a firm we Decided to open up an office because we Want to partner with Founders as early As possible and what better way than Actually being here physically and Having a presence um of course because Europe is so fragmented and Founders are Are based everywhere from Paris to Munich to Stockholm and the list goes on Um I think what what we now have with a Presence locally is also a bit of the Human touch you know sequa as a brand It's a privilege to be on the sequa Platform because it resonates with Founders and and founders usually no Sequa but it's yeah it's it's nice to Add that human touch by meeting Founders In person and and being here locally Being a able to help from a network Perspective locally with hiring Etc so Absolutely but did you um do you think Do you think that some of that early Enthusiasm have subsided or do you feel As enthusiastic as as ever before Absolutely not I mean as I mentioned I've been in venture capital for over a Decade um Venture Capital itself has has Ups and downs and has Cycles but what I'm always I'm always amazed that the Quality of Founders regardless of the Cycle and in fact what we see is that

Mission driven Founders you know don't Think about the environment they don't Ask themselves oh is it hard to raise Money is it easy to raise money they're Obsessed with a problem and they want to Go and solve that problem and we see Those Founders in in good parts of the Cycle and less good parts of the cycle So we're very excited we think of the US And Europe as one market almost when it Comes to Tech technology in many areas There will be one winner not all of them But in many of them there will be one Winner historically many of those Winners started in the US now I'm Delighted to say that more and more are Starting in Europe and we want to be Able to to look at this geography and Just partner the team that we're most Excited about regardless of um of Country and you know put the entire Weight of squa behind that particular Team I'm going to ask you a little bit More about um what you're investing in Right now but Fred to to turn to you you Were at Advent Capital which was L stage BC and then you started Felix capital a Few years ago you were you were doing Sort of Enterprise and B2B and then all Of a sudden at Felix Capital you were Hanging out with Gwyneth palro investing In goop so how is Gwyneth and was that a cultural shift For you actually no because bil I was

Using the goop guide early on when I was Traveling to the US it was a very good Way to to connect to the brand and it's A very very you know cated way of of Discovering a city in that case la which And goo is all about creation which is a Core investment team for us did she give You any of your candles uh I've got one In my office marvelous great but I I had To pay for it I there's method to my Madness which is that um you you've Actually you've sort of you know you've Done something quite different over the Last few years you I noticed you you've Invested in Castor leading premium Performance sportsware Brand you um You're listed in the business of fashion Felix Capital um you invested in Lassie Insurance Tech uh travel perk so you Kind of sort of V quite varied isn't it We believe in media and journalist God So it's good there is some Capital going There um I'll call you tomorrow let our Job is to call you actually um we uh so You know maybe we rewind a bit the where The decision to start phelix which was Something that was just maturing in in In my mind whe I was at uh at at Ventures at the time we were doing Venture and growth but with much more Smaller funds so I I started in VC a Long time ago just over 20 years ago the Funds were much smaller ADV the last Fund we matag was 110 million pounds in

That fund we were doing both Tech and Life Sciences which seems just you know Incredible you think about it today uh So we're just investing a 60 million Pounds fund um and so that at least Forced ourselves to be to be disciplined And to be focused and typically the Investment was more around investment a Year um and uh and not being a Technologist by background I was in the More of a tech kind of platform but I Ended up focusing on what I could Understand and where I was interested in And it could be irrelevant and that Ended up being being essentially Consumer applications um and and Software so uh basically what we're Doing today at at at Felix and when I Was doing this um with Advent it was it Was not the obvious most obvious Platform to do this and I saw that there Was an opportunity to connect to Entrepreneurs that had more of a uh more The know creative space uh and also Building on the strength of Europe now We talked about strength of Europe Earlier Decarbonization data confidentiality of Data also AI but we have an amazing Talent when it comes to creating Experiences products um brands that have Uh you know an amazing uh impact at the Global to to Riff Off something that Saul raised on the earlier panel about

Uh brexit and the opportunity to uh you Know most of brexit's for me anyway As a remainer but uh uh that's I'll Declare my flag but um uh the but moving On it's obviously an opportunity for Things like AI regulation but do you Think that uh Talent has been an issue Um you know that there clearly if you Look at some of the the the graphs and The surveys you know Paris is very white Hot right now for AI uh London is doing Pretty well and ab Saul's got a very Good point about you know the cluster Here around this area but um do you Think there's been a talent uh issue in The UK specifically so give two two Examples I think one is I always refer To minii you know I came here in the mid Late 90s I slept on the the couch of FRS I got my first job I was in Investment Banking in the city uh I so it was easy And I was was very lucky to be able to Do this and London has been an amazing Platform for me uh me me today can't Come to the UK as easily uh and it's Very difficult to filter for talents Really early on many of the Su people Who built companies that have had a big Impact from London if you look at the Point when they enter the UK is not easy To say oh okay you will give you a Visa You I won because that talent that you Know creative Talent is very sometime Needs a few years to mature um so that's

Really an issue and and we we see rtion Of talent uh coming from Continental Europe in particular um the the the Counter example I think when you talk About Paris not a example but a Continuation of this um yes you see Paris emerging as an amazing platform For AI and fact today as we speak There's a big event at the El palace With a maon organizing a kind of big Sort of Festival around AI with many Very people entrepreneurs also large Companies um but there is also another Pool of talent in Europe around the Creative class um know we often talk About where is Silicon Valley in Europe Where the the Google and Microsoft um if You look at Paris in particular Continental Europe in France the Microsoft and Google that we have are Lvmh and L'Oreal and we've seen amazing Talent coming creative talent but also Management talent coming from those huge Platforms learn greatness and then have The ambition uh and also then have Access to the capital to take risk and To start cons consumer Brands so that Ldm is a huge magnet for talent for the Creative class when you see the Challenges here of know farfetch which Know is really sad matches fashion but Also recently bbery uh creative Talent Is also moving away fromo on the talent Point just very quickly you you would I

Know that you guys actually have some Sort of talent matching platform for Sooa for your Founders don't you what What sort of Trends are you seeing Across Europe in in engineering andal I Want to double click on on this as well Because I think it's a really really Important point if um if we look at some Of the really successful AI companies in The valley many of those Founders are Actually European or many of those Leaders are actually European in fact Open AI CTO is from Albania for example So what I'm hoping to see more of and I Think what we're starting to see more of Is these teams either Founders or Leaders staying in Europe and building Out of Europe and I think it's still Early on on this trend but I'm very Hopeful because I think we have a great Universities and we have the Infrastructure and the talent is there We need to to create the right Environment for these Founders to build Here I'll give you an example we Invested in a company in in in Paris of Course uh called dust and you know it's An excellent AI founding team one of the Founders started a company and sold it To stripe the other one and spent a Bunch of time there the other one worked On at open Ai and you know they're They're the kind of people who could go To the valley and recruit anyone they

Would like like but they chose to stay In France and start the company in France and build out of Europe so we see Some early signs like that that are Exciting and um I'm I'm really hoping That we'll see more of that um and I'm Glad that you mentioned uh farfetch Because farfetch hasn't been you know Quite the uh Stellar performing IPO Since it's since it's IPO um and Obviously you also invested in uh vanm Which actually went bankrupt Unfortunately last year the ebike you Don't always get it right you don't Always get it right far maybe just touch On far fets it was not amazing success It was very very very successful IPO it was it's the post I think it's a Com that failed at being a public Company right so it's um it's it's did You think that was Foreen uh I I was still a Shareholder I was still personally a Shareholder so I was not expecting this Outcome you wer exp our our fans exited While ago because I was on the board From 2010 to 2019 so that when invested 10 people company out of mostly Portugal Bit London you take Jose as an example When he came to London he was running a Store in London you know why would you Let someone come in and and spend time Here and then he end up you know Creating com that and a shot at could

Have been you must have had high hopes For vanm as well obviously van MO is It's a it's a it's very different it's Hardware I think we we just realized It's hard to invest in Hardware the Economies of scale are are challenging The other thing that was difficult is Supply chain during covid um it was very Difficult there was I mean people love The product the community know we are Product and Community Driven brand Driven uh there was so much customer Love for it you know I had one the People who stop me in the street um but Then you have to be able to deliver the Product at scale they didn't manage to Uh they didn't manage the growth then Back a couple of things firstly I'm a Farfetched customer and and a very happy One so I just want to say that and I Still shop there great very nice to see Um I do want to touch upon Hardware a Little bit because I completely agree It's really really hard but I also think There is a very interesting opportunity In particular in robotics I you know After a decade of investing in software About a year and a half ago I um I was Lucky enough to partner with a company Out of Germany called robco and it is a Hardware plus software company and when We looked at this opportunity we are Quite active robotics investors but when We looked at this opportunity there were

A few things that really stood out you Know truly European um the Technical University in Munich is one of the best Robotics universities globally and the The three co-founders met there also Truly European because they're Automating manufacturing and where else To start rather than Germany where the Middle Stant is such a big part of the Economy so you know if you have three People studying robotics in the US I'm Not sure they would understand this Problem that manufacturers have because They hear manufacturers are their Doorsteps so there are so many nice Things coming coming together together But I completely agree with you I think It's so hard to scale and what we looked For was a team that we thought was Absolutely incredible and not only Special on the robotic side but also on The commercial side and and on the Execution side so we're Actually I I I didn't think I would say This three or four years ago but but We're actually quite excited about Robotics and I do think that there is a Really interesting angle in Europe as Well to to hopefully start building here Recruit the best talent here because There is as I mentioned in Munich in T it's a very good University for Robotics as well and then scale over to The us as well is now staying as opposed

To thinking the only place they could go In Silicon Valley and presumably I think Actually to riff off that there's a sort Of quite an interesting early sign isn't There in the idea that uh wave just Raised a billion dollars with the um Autonomous self-driving technology which Actually is basically been copied by Tesla um now uh and uh yes I can say That I'm a journalist and uh Honestly held opinion mud and um uh also The idea that um uh yeah and the Generative AI is is going to you know Enliven this whole new world of Robotics And autonomous driving um but we I was I Was I was a bit cheeky with you um uh Fred about Uh and Van M but Luciana what do you Think is has been your um uh you know Less exciting moments investing in uh Startups you know we we have no favorite Children Mike and we cannot have Favorite children and these Journeys are Really really long we invested in stripe 13 14 years ago with seed we invested in Airbnb oh goodness over a decade ago um And for all those companies of course There also businesses that don't become These generational businesses that are Going to be around for our children to Use I think that's very much the nature Of our business but when we partner with A Founder we have to be able to dream And stay optimistic and and you know

Believe that if the stars align Something special can happen um and yeah It takes a really really long time yes Absolutely and also we're all waiting For cl's IPO eventually aren't we um What do you what do you think was the Sort of teachable moment with the recent Uh Matt Miller and Mike meritz incident In terms of the bo board board Reshuffle um Clara is an amazing company It's doing really well my partner Andrew Reed is on the board my partner Andrew Had has been working with Michael for a Very long time we're delighted Shareholders the companies performing Really well and in fact speaking about AI they're one of the companies that Have adopted AI on a massive scale and The efficiencies are really impressive I Think we can really look into the future If we look at uh what they did with AI So do you think that Clan is going to be One of those companies that will be able To unplug the the blockage in Europe Around exits obviously I can comment on On timing what we care about is are we Investing in really high quality Businesses that are going to compound For really long time and absolutely the Answer is yes with Clara but I think It's important that it succeeds because We need more success stories uh it's Been challenging for a number of private Companies in on the public markets Tech

The delivery Journey here in the UK for Instance um and we uh we need to crack The public market you take you know Going back on faret was a very Successful private company it was not Successful public company so you need to Create that no education as well have The talent of no CFOs who can match Public companies having the right boards Having that kind of so that's what the The comedi crack at some point um so we Need very Su we need know more adans More spotifi there's um there's been a Really that's well said sorry M no no Absolutely and um there's been a very Interesting debate that's ignited Recently online on social media around Founders around Europe so-called European Accelerationism um sort of some all Sorts of discords and websites floating Out around um and perhaps riffing off This you know um a A3 I always get this Wrong a16 Zed um uh uh talk about American dynamism you know so how do you Feel that we can create sort of European Dynamism in the same same sense or are Are we still going always going to be so Fractionalized across countries and Across Borders I think we have Europeanism in a in a Not in the con same concentrated way so We have pools different pools of talent

When our LPS asked me you know as what's The impact of brexit my first answer was We're going to travel more um so I think That's what we're doing now we see know People in very different parts of of Europe and people stay in Munich stay in Romania stay in Paris and stay stay in Barcelona ask Mike I think American Dynamism also ref refers to investing in Defense is that where you were going With a question or I think it I think it Does include that yeah but I think I Suppose it's sort of hking back to sort Of a 1950s era of building dams and you Know Ford Motorcars and as well as and I Think obviously defense is clearly part Of that it's sort of more of a Nationalistic approach to investing do You are you is that something that you You chimes with you I think um when it Comes to defense unfortunately for us as A society the wi now is very strong Europe an governments have underinvested In defense since the end of the Cold War Um and of course a lot of governments Have been public like the UK recently Germany as well have been public about Wanting to invest more in defense um Which I think is the right thing um and And in fact I think it's the right thing For peace that's that's the end goal um And uh I do think that there will be Some interesting companies coming out of This trend and coming out of these extra

Budgets and extra euros and pounds to That that will be in invested I will say I think building a defense company in General is incredibly difficult when we Look at the space and we're spending a Little bit of time and when we look at The space there are many things that we Look for I don't think that too Ambitious MIT graduates are just going To be able to go and and break into Defense I think or or I should say poly Technic graduates um I think we need a Really f a real founder market fit and Founders that can speak to these buyers In the same language and have gravit With these buyers um so sorry just to Wrap it up I do think there is an Opportunity I do think there will be I Don't know one two European Defense Primes created in the next decade um I Think the the founder market fit is Always very important to us when we look At Investments but in this particular Case it's extra important because as as We talked about Hardware building and Defenses is quite difficult do do you Think it's a strong conversation you Know with Russia at uh potentially at The our borders in Europe that's uh a Strong conversation that you'll have to Have with your LPS Fred uh in I don't think our LPS Necessarily expect us to to invest in The space we are thinking about it but a

Bit differently everything we do at Felix start from human needs and you you Look at the the Pyramid of needs uh of Human needs safety is pretty high up so I think people today don't feel necess Safe at know at home in big cities in Um you know at home with Al issue with Data and P piracy and that kind of Things uh I think Corporation definitely Don't feel feel safe you know there are All kind of issues of around that at the Corporate level and then there's the Same issue at the state level so that's A major theme there are a lot of ways to Play it and I've got no doubt many Entrepreneurs are going after that it Would be remiss of me not to ask both of You about AI of course where um this This part of London seems to have been Definit totally concur with soul that You know you've got Intel AI you've got Microsoft you got Met's AI uh uh staff Here You've Got Deep Mind um it's and You the graphs are pretty good you know London is pretty much a center of AI in Europe um what are your think thoughts I Know I noticed that uh you've invested In Penny Lane fintech AI $40 million From sequ sorry Euros from sequ and DST Global um coana uh you did a preed round Helm guided energy um What are your thoughts is it still Whiteart in Ai and how are you getting Into those deals we've been investing in

AI for a long time so the the short Answer is yes we are absolutely Investing in AI in the last year I want To say it's about 60% of our investments That are AI native companies so you Mentioned some great companies there we I mentioned dust before um even robotics The why now is AI to some extent in in Terms of unlocking autonomy and use Cases and many others V and um in Browser video editing with AI the list Goes on there is AI talent and there is AI opportunity in Europe as well and in The UK as well I will say we're seeing More opportunities in the US but I also Think that this is slowly changing and And they're more and more high quality Founders so yes we're investing I just Want to to make one note we're talking About sectors and sectors are incredibly Important we're talking about AI Robotics defense at the end of the day We invest in Founders we try to invest Really early on and partner with Founders for the long term um so yes if If the sector resonates that makes our Job a little bit easier but sometimes Founders Zig and zag and sometimes Founders come to us with an idea that Seems totally crazy like sleeping in People's houses which apparently was a Huge debate that's in sequest Partnership way back when when we Invested in Airbnb and at the end of the

Day that's the exciting part of our job And and sectors matter but people matter More oh we um by the way I'm going to Ask you all to come up with a question In a second but my last question to you Fred with just to just in the last 24 Hours open I open AI has been exposed For uh what potentially uh ripping off Uh Scarlett Johansson's voice for their Their Sky voice uh do you think that the Foundational models are going to start To not look so shiny and new uh in the Near Future I would it's hard to to answer That question the it's still a startup They will they will make mistakes and Then they will PR act act on it quickly Which is it looks like that's what they They did she has a great voice I guess It was tempting but she does I agree With you and but I I said that I was Last week with a with a company uh we're Working with which is uh you using voice As a way to connect with um with Consumers um and the voice they'll be Using we had the demo at the board Meeting is going to be uh various type Of know influencers and and sort of Celebrity typ voices so you'll be um You'll be able to order products while Talking to your favorite uh famous Person which is really interesting and So the the last I think the last launch That we saw from open AI with GPD 40 we

The ability to not use uh no Hardware But just use voice and interact with Technology uh you know let's go back to Our shopping experience it's still Really clunky we use that Mouse the that Keyboard or the mobile we can't see Anything Etc now you'll be able to talk To uh to an inventory and to a friend That will be in the in the middle which Will be know technology enabled friend But that friend will know everything About you and will know everything about The inventory and will be able to do That matching so personalization Curation a assisted is going to be Amazing uh just like you know Planification is going to be chance so We are very excited by the consumer Applications to come using Ai and then The beauty of it that AI will be Invisible well it's certainly I mean it Really is just such an incredibly uh Pivotal moment I feel that we're living In with that story ladies and gentlemen We've got time for a couple of quick Questions before we move to our next Panels easy ones go ahead sir do you Want to stand up uh we'll try and get a Microphone to you and then you can Everyone can hear you go for It thank you hey I'm Gary co-founder and CEO of tangent we are an employee Referral platform fantastic great love That what's your question it's coming

It's coming Mike I got Mike one time um Byy video technology Ai and a dynamic Marketplace to make referrals accessible To everyone and not just a privileged Through with the best networks we just Announced our preced round back by Google uh zinc VC I'm in that's a Question and a squad of super Angels Including Catherine lenson from Sports And Andrew Rob who was the former CE of Faret my question is around um you just Mentioned luchana around kind of youest In Founders primarily right my question Is around ambition there's often times a Discourse between the ambition between European and US Founders I'm curious to See what are some of those CH Differences if there are any Frederick What are the um is that changing anyway And what are who's a Founder that you Met recently from Europe that you Thought had really good ambition that You like to sh thank you you know I Think I'll I'll jump in and please let Me know what you think we get asked this Question so often and I just I don't see It I meet Founders every day and I'm Lucky enough to work with Founders who Want to build really large companies and Take over the world so I I know this Used to be a topic a decade ago and some Founders might have been or that was the Perception that might have been tempted To sell early I don't see it I think

What we have now which is great is Role Models so it's it's it's much easier to Project yourself uh where is know Someone to illustrate the level of Success um and that's what we've been We've been missing and then so you able To get also time and money from someone Like Andrew Rob who is really Exceptional so that's that there was no Andre rub 15 15 years ago so that's That's a big difference that's a great Point we have large public companies now From UI path to Adan to Spotify and the List goes on and I think that helps a Lot you're absolutely right and those People who've seen that it's possible to To go big and and they've made it happen Uh so so that's what silicon valet only Silicon valet had before now we've got This in Europe that's a good point okay Quick last question go ahead hi I'm Rob And a macro question which is we're all Kind of waiting for race race cuts and Kind of what's the Playbook when we Start to see central banks cutting rates Is it a rush for those kind of later Stage tech companies to head to equity Markets is it waiting for a strategic Exit or with the regulation risk Mentioned earlier or is it perhaps Trying to raise new capital and funding Them a bit longer in the journey Interested to hear question I'll be very Honest do you know how often interest

Rates come up in our partnership Discussions not very often we try to Focus on the company the fundamentals When is the company ready ready to go Public and and really focus on on what Matters in driving that particular Business as opposed to interest rates Which are just not in our control first Of all second of all we are very Long-term shareholders we tend to hold Our positions long after companies go Public and yes sometimes there will be Up sometimes there will be down but you Know we were fortunate enough to invest In Apple 47 years ago and and you know We wish we were still on the board there So that's how we think about the World I think the the the past few years Has been a good reminder that macro Matters we got zero influence on it so We focus on what we can control that we What we can't control but um for I think There was an is huge issue with people Who thought it was easy that Venture Capital was was easy and the making Money part of it when there was just so Much money uh people Lo lost sense of Valuation where things were worth U and It was it was not that we were certainly A super smart investors that it was just Macro driven so it matters in that sense But uh yeah we don't spend any time Thinking about it we were all very Smart always focus on the founder I

Think apparently ladies and Gentlemen Please give it up for Fred and Luciana Thank you so much