00:04:24 · Laura Connell
[00:04:24] S1: Yeah, it's interesting. If you think about the markets now that are being disrupted by the nature of the technologies that I referred to earlier, that are really being addressed by this generation of founders, we're talking about people going after enormous industries and actually much less pro cyclical kind of consumer based industries in many ways. So just by nature of the technologies being built, total addressable market overall market addressable market generally is much larger. I think what's also really interesting is, one of the reasons these investments used to be really the preserve of deep tech funds is because they were so long duration that you needed kind of specialist capital. One of the things that's been most compelling about investing now increasingly in deep tech, and I think why you've got a lot more generalist VCs coming into frontier technology investing, is because actually that duration timing to realize the value of the technology is also compressing. So, if you think about developing next gen lithography or kind of some part of the semi value chain, it used to be that it would take you kind of ten years to get something to market. And now even kind of top of funnel engineering simulation, you can massively compress marrying say classical machine learning with generative AI in such a way as to really bring things into market, into reality much faster than was historically the case for many of these types of technologies. So you are seeing kind of compression in life cycle addressing kind of ever bigger outcomes, potentially ever bigger markets. So yes, I think the kinds of outcomes that we're going to see in this generation are going to be potentially much, much larger than have historically been the case.
00:06:05 · Sebastian Johnson
[00:06:05] S0: I think traditionally growth investing was often associated with a lot of analytical or like financial analysis, Looking at the financial, I don't know, makeup of a company and assessing that and pulling that forward. Now that to your point we're seeing this fundamental change in technology and often you can have growth investing that is still theoretically pre revenue, right? Especially when we're talking about some of these like frontier technology companies. Has that changed your role a lot? Now are you having to be a lot more in the business of the technology and going really deep on the industry itself?
00:06:37 · Laura Connell
[00:06:37] S1: Yeah, I think maybe just to take a step back about what do we mean when we say growth investing, because it's a great point you're making, but there are different types of growth investors as you've alluded to, you know, what we're seeing increasingly first in kind of traditional VC is almost a kind of replicating a little bit of what we saw in the buyout world where you've got the kind of two ends of the market now. You've got one end, which are the kind of specialist, perhaps smaller boutique VCs that are focused maybe on a given industry or kind of type of technology or type of stage. So they're to focus on pre seed seed. So they keep their funds small, often the investor role overlaps with the operating role. So benchmark would be a prime example of that. And what was at least because they're also now scaling into the later stage. At the other end of the VC market, you've got kind of platform VCs. And so what we saw over the last five to eight years now is that actually a lot of those funds that had started earlier stage were bolting on funds to address the life cycle. And those types of platform VCs of which Atomico is one, really reasons about growth as still thinking about it from an always thinking about it from a tech first perspective. Now, what is true of course, is when you're writing much larger checks in theory, do need to, and there is more meat on the bone potentially in terms of commercial traction, then there's some kind of de minimis type work that you need to do to really get your arms around the financials, but VC growth and that end of the VC market is still focused on companies that have tech as the kind of key driver of potential value, increasingly IP and R and D, as we just talked about the shape of the pipeline in Europe and globally. But then there are other types of things, the dynamics that are impacting the market, even for this end, that really requires some level of financial understanding as well. So specifically, I'm referring to some of the changes in business models. So meaning we're seeing more and more early stage growth companies look at models that used to be really kind of buyout. So buy and build roll up strategies.
00:08:42 · Laura Connell, Sebastian Johnson
And one of the reasons for that is let's say, you're building a company addressing physical AI and maybe you're looking at some part of the value chain and you're selling a fundamental transformation in the end market that creates enormous efficiencies. You're talking about billions of dollars, say for some of the biggest industrials in the world. How do you price that? And how do you really tackle distribution there? And actually maybe the best way is to own the outcome, right? Which is why you're often seeing take Prometheus from Amazon as an example, you're seeing people raise JVs deploy codes alongside kind of a top code that is itself, really just tech first, but in order to drive and kind of accelerate adoption within that base. So that, you do also need some expertise that really touches on some other part of co traditional growth investing and buyout, frankly. So it's interesting because these things are kind of, this fungibility between VC and private equity and buyout is really playing out as we speak. But if you're in venture kind of growth investing, you've really got to be tech first. [00:09:46] S0: Me through The Exploration Company then. I guess this is your latest investment, an amazing company. There's got a lot of excitement around Europe. What got you excited about that company?
00:09:55 · Laura Connell
[00:09:55] S1: Yeah. So, I mean, the first thing is that we have a monopoly in terms of accessing space and from a launch capacity perspective and no one, no buyer in any market, be they American or European or Asian or Middle Eastern wants to operate in a market where there's single source dependency. I mean, that generally is not a market anyone really wants to have to, a market structure that anyone wants to address. And so what does that imply in terms of the market, likely market structure required over the coming decade and to really realize the potential of space exploration and communication? That implies you're going to have a handful of players at least that will be built. And so then the question became, who has a right to build and specifically heavy launches and who has the kind of both the technical capacity, the ambition and the execution to really do this. The team that kept coming up time and time again was Hélène Huby and her team who are really extraordinary. And I think what was particularly interesting back to the procurement point around no one wanting to face monopoly necessarily, it's actually that the company already has over $2,000,000,000 of contracts, specifically on their next capsule, which is the transportation capsule, the kind of envelope that carries cargo. But this vertical integration around another player that can really meet the increasing demand that we're seeing to get things into orbit is critical. So incredibly exciting company, extraordinary team and commercial viability already at this stage.
00:11:37 · Sebastian Johnson, Laura Connell
[00:11:37] S0: Talk me through some of the fun dynamics or like the round dynamics for a raise like that. In many ways, it's just like incredibly exciting company really pushing the frontier forward. We're hearing this narrative that we are, and maybe you don't need to go into the specifics for this round, but we're hearing this narrative that American investors and a lot of your data backs that up, think from the state of European tech that like a lot of American capital is flooding the market at the late stage. Is that what you're seeing? And maybe not for this deal specifically, but in other deals that you're leading, is it often American investors that are very active or present at those rounds? [00:12:11] S1: Yeah, I think we're seeing international investors become increasingly active. So I think for many of the reasons that I mentioned around the nature of technologies being built, the criticality of the infrastructure build out and kind of [00:12:23] S0: re