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
00:12:23 · Laura Connell
[00:12:23] S1: industrialization process phase we're in, in Europe, there's quite rightly been a kind of global interest in participating in driving some of that growth. And so yes, US investors are increasingly active, but also APAC investors and The Middle East, right? And so you're seeing just across the board, more global interest in participating just from an investment perspective and for kind of purely financial return, well, purely from a financial return perspective, if you will, because the opportunity set is there and I think it's kind of uncontroversial now. I think the second big driver is back to this point around European and global resilience, because there has been this fragmentation geopolitically, and we're seeing this play out across kind of critical value supply chains, value chains for key technologies. There is also a broad based understanding that actually there is an urgency to building out different networks and hubs of critical infrastructure that, if you're based in Singapore, you may be able to rely on via Europe as well as The US. So there's also a kind of real political urgency around sovereignty and resilience, right? Which has been well documented and is not specific to Europe. So what's interesting is you see that almost play out in the mindset of founders who are trying to build these companies. A lot of them want to build global syndicates of investors. They want to have their European investor. They want to have The US investor, APAC investor, your MENA investor to try and really replicate the kind of fragmentation they're seeing on the procurement front and the interest they're seeing. So I think The Exploration Company is a very good example of that. It was incredibly valuable to the company to have experienced US investors as well as other international investors coming into the round.
00:14:03 · Sebastian Johnson, Laura Connell
[00:14:03] S0: Yeah, really interesting. It's an amazing company and I feel like there's, from a personal perspective, I'm always so happy to see when it's like a big European VC lead a growth route or later stage round, because yeah, I think we're leaving so much opportunity or value on the table by letting some of this value accrue into the hands of the regions. [00:14:23] S1: Definitely. I think maybe, you're absolutely right there to say there's a little bit of frustration in that if you look at the size of these rounds and the proportion of the rounds, the share of the rounds that European investors can take, what the biggest limitations is the size of the growth funds, right? And if you look at the average growth fund, venture growth fund in Europe versus The US for argument's sake, we are relative to the opportunity set, which is, in our estimate, there's a kind of $860,000,000,000 Euro gap in Europe in the next ten years to scale growth stage companies. We need to scale growth funds that can address that without which, as you say, yes, you could perhaps price and need things, but you're going to get a much smaller share of the pie. And obviously that has implications from a governance perspective and therefore from an IP localization perspective, from a talent perspective, everyone's reasoning about the strategic uses of capital for the political reason I mentioned before.
00:14:23 · Laura Connell, Sebastian Johnson
[00:14:23] S1: Definitely. I think maybe, you're absolutely right there to say there's a little bit of frustration in that if you look at the size of these rounds and the proportion of the rounds, the share of the rounds that European investors can take, what the biggest limitations is the size of the growth funds, right? And if you look at the average growth fund, venture growth fund in Europe versus The US for argument's sake, we are relative to the opportunity set, which is, in our estimate, there's a kind of $860,000,000,000 Euro gap in Europe in the next ten years to scale growth stage companies. We need to scale growth funds that can address that without which, as you say, yes, you could perhaps price and need things, but you're going to get a much smaller share of the pie. And obviously that has implications from a governance perspective and therefore from an IP localization perspective, from a talent perspective, everyone's reasoning about the strategic uses of capital for the political reason I mentioned before. [00:15:17] S0: And I want to touch on this article that you wrote last year. You kind of co authored an article alongside the founder of Corti, which is another one of your investments in an amazing company coming out of that is Copenhagen. The article is about like, I think it was titled Why AI's Next Phase Belongs to Infrastructure and I think you published it almost a year ago. [00:15:37] S1: Yes.