Cool. So when we talked about the the format session, the theme was raising venture capital.
But I was going to paint it more around my own entrepreneurial voyage creating White Star.
And even if you don't think we see creating a VC is an entrepreneurial voyage, definitely is.
It comes with some of the same challenges on fundraising and scraping through.
Talk a bit about the macro trends that we're looking at in terms of technology and where we invest and why we think that's interesting.
Talk a bit about DC and why or when you should approach.
We see but also alternative ways of funding your businesses specifically. I'll talk about bootstrapping today.
I know you guys talked about Kickstarter in different session and other ways of crowdfunding and then talk about some case
studies of investments that we've made about how you logically thought through the process of why the investment makes sense.
And hopefully that demystifies a bit of like what goes through your head as we're thinking about writing half a million, 2 million, $5 million checks.
Interactive, please, like raise your hand and ask a question if you wish.
I understand that you guys are shy and don't ask questions, so I might encourage you that at the end.
I'll be around for a little bit after the session anyways if anybody wants to chat one on one.
Cool. So it's interesting that in French and Spanish, venture capital is actually called capital raise go or capital risk.
By definition, the asset class is taking somebody's money and investing into a very early stage business with the
assumption that that business will scale and have outsized growth and therefore returns to the investors.
And if you talk to any of the academics who look at the venture capital as an asset class, they'll tell you that's not the case in general.
Venture capital underperforms the S&P 500. So it doesn't actually make up for the risk you're taking and deploying into the asset class.
And yet billions of dollars flow into into venture capital from institutions,
from pension funds, from many of the people that actually created this building.
Why? Because there's actually that chance that the outliers performed so well that they completely changed the portfolio allocation.
It's it's a parallel graph. Effectively, the top quartile funds return the majority of the investment.
Now, when we talk about a venture capital fund to be competitive, you're talking about returning X to your investors.
So for X returns over a ten year period, which by definition is not where most VCs have actually performed.
And it's actually been an interesting discussion with us and our own investors about how you think you can go build that that return class.
You have an assumption about failure rate. 50 to 60% of seed funded companies will fail.
So how do you account for those? How many write offs do you take?
You know that one company will likely return the fund and one company will give you the outsized return.
So even within a fund by fund basis, there's a power law as well. And so how do you allocate your time as an investor between the companies that are
doing really well and will actually turn the fund and the ones that are struggling?
And that that's probably the hardest emotional component of investing as a as a VC is spending
time with the ones that are struggling at that point and hopefully turning them around succeed.
So what I think about venture capital, it reminds me of this painting that I saw last year at Art Basel.
I was going to buy it until I saw the price tag, so I just took a picture of it.
It is by definition a risky asset class, and I think it's a combination.
It's actually, for me, the fun part of it, it's a combination of funding capability with what I call bills.
And you translate. And the whole point is when you have conviction in an entrepreneur and an idea back into the level of that ambition,
if I think there's one reason for the failure of many of the start-ups that I interact with is the fact
that the entrepreneur has an ambition but is not willing to ask for the level of funding required for it.
Case in point, I saw an e-commerce company the other day that was raising $300,000 to launch.
$300,000 should be the marketing budget for that company to be able to acquire the users that it needs to scale.
Or a company that wanted to scale out its team across to different geographies that were trying to raise €300,000,
which means that by the time the entrepreneur hired a team, scaled them up, he would have been fundraising almost immediately.
On average in Europe, comparing Europe to the US, if you look at Seed series and Series B funding.
The average European company will raise $5 million less and actually have to make that money last for eight months longer.
So in other words, instead of investing in growth and investing in the team,
instead of investing in actually competitive positioning in their ecosystem, they have to be fundraising almost immediately.
As soon as they raise a seed round, they have to make that money last longer.
And in a way, because there's actually less source of funding across Europe compared to the states will actually raise less.
So when we went about creating White Star, we had we wanted to bring a bit of this US ethos into the European ecosystem.
As for background, I'm not a finance guy. By background, I went to a business school and stayed away from most of the finance classes.
I took entrepreneurship of venture capital as my major.
I've worked in sci tech companies all my life from a company in the dotcom days that actually went public,
had a 30 billion market cap, 30 billion with a B, and lost 72% in one day.
Awesome to then a very large company called Microsoft.
Then I moved to Europe with Microsoft and join Google early on when we were launching our mobile efforts.
This is before Google Maps even existed.
So think about walking around lost in a city without Google Maps on your device before Android was even launched.
What is now the most prevalent mobile platform around the world? And then I spent the last four and a bit years leading our international
expansion for Facebook in Europe and what I loved about the Facebook experience.
So you had all these companies building on top of Facebook using the social graph to to accelerate their growth.
And it took them two years to create my job, two years in it,
four in which they had an internal debate about the need to have somebody in Europe supporting the local developer ecosystem.
They felt that all the start-ups would just come to the valley and they could service them from there.
So I'm pretty happy that by the time I left Facebook,
the largest gaming company on top of Facebook income is London based, while technically Dublin based for tax reasons.
The largest music partners for Facebook are Spotify and Deezer, French and Swedish companies.
The largest media partnership that we ever did was actually with the BBC for the Olympics,
bigger than the NBC partnership, despite the fact the US is much, much bigger.
And all of a sudden the team that was me at the beginning,
back in oh nine is now about 45 people supporting developers and gaming companies and media companies across the region.
And Europe actually has proven that it can build world class companies.
We I was at a panel earlier on today with a couple of other investors. Europe has definitely come of age every single month.
For the last 12 months, there's been a European company that has raised over $100 million.
That is definitely something very, very different from five, six, seven years ago.
Over the last year, you look at the exits at a billion plus valuations like these unicorns that people talk about.
Criteo kingdom come at 7 billion. Just eat here in London.
Zoopla here in London. Companies that actually are, if you will, on the top echelon,
definitely top 10% of global valuations for start up companies that started across the region in the last five, six, seven years.
And I think that you the acceleration is only continuing as more companies go public, more of you have an aspiration to be entrepreneurs.
More people like me and my old guys become angel investors than people create funds like ours to support them.
Those companies go out and have exits and the money flows back and it's a virtuous cycle, or hopefully that's the way that will work.