00:07:31 · Christoph Klink
[00:07:31] S1: It's an excellent question. We've been asking ourselves that question as well. Right? Because what what you see is quite striking. Right? I think one of those those elements that we try to understand is indeed what are these companies like? Right? Because when we talk about the fast growing successes, we very, very often look at the lovable, the legoras of this world. We look at those companies that grow their revenue at mind boggling speed. Looked at those 33 companies that we called rocket ships and we said there's essentially two different kinds of them. There's jets, which are the lovables, the legoras of this world that are actually growing their revenue base at a very, very fast pace. They're quite lean. They're AI first and usually built by relatively young founders. But then there's a different tier which we call juggernauts, which are companies like the Mistral's of this world, like the Halcyx of this world, like the Proxima Fusions of this world, that are a lot harder to build from a technology point of view. So they're deeper rooted in technological differentiation and less deeply rooted in just pure execution of growth. They take longer for the first product to ship. If you're building a fusion reactor, it's very unlikely you're gonna actually see hockey stick growth on year one and a half. So, takes a lot longer. You're gonna have to raise a lot more capital upfront. And they're being built by more experienced, slightly older founders that often, way more often come out of academia and some of the big labs like DeepMind for instance. And I think in those two distinct cases what you see is for the Jets these markets often become fiercely competitive. Because it is from a technology point of view it's not easy, but it's relatively more easy to imitate what they are building now in today's age. And so it becomes all about execution. And there's in some markets there's dozens of players that are going after the same market and it's really about those that are showing early on those breakout success metrics. And then, I think capital just accumulates there. On average, they raise new rounds every eight months. Every eight months, that's mind boggling speed. For the Juggernauts, they raise a lot more capital at an earlier point.
00:10:12 · Christoph Klink
So when you look at average round sizes or median round sizes, then the median seed round and series A rounds for those Juggernauts are pretty much twice as large. So median c is at 16,000,000, median series a is at 60,000,000, which is two to three times the round sizes that we see in in the jets. And I think for actually bringing that capital to the market, it either needs what we spoke about a little bit earlier big US funds, big miners list funds, and or it needs collusion between European funds. And interestingly those juggernauts have way higher share of European capital in it. Where I guess there may be some European sovereignty thinking in it as well where we're just as Europeans, we're we're trying to to hold together to actually make those successes that we see stand out even more.
00:11:09 · Sebastian Johnson
[00:11:09] S0: Yeah. It's really interesting. It's like, yeah, to to to to raise the money from Europe, you almost need everybody to give a little bit of money. It's like a it's a it's like a crowdfunding from venture. And, yeah, I don't know. It's really interesting. It's... And especially on the it's like the the fact that these companies are becoming unicorns really quickly, especially for juggernauts. And maybe it's just because they need that much capital. Right? And maybe unicorn is not, like, a very good term to describe them because normally unicorn did... You know, it's like a badge of honor that you've got to a certain stage in your journey. Actually, the reality is if you need $500,000,000 in compute to prove anything, you're gonna be a unicorn by default. And, actually, maybe unicorns is not the right the right term, especially for those juggernauts where it's like you you know, they need the capital just to, like, validate an MVP. Right? You know? It's like a... The the... I think the the distinction that you've made is really interesting because it does highlight how fundamentally different these two types of businesses are. But when we look at the analysis, we just, like, bucket them all in the same thing. We're like, oh, great. A unicorn here, a unicorn there. Wildly different profiles.
00:12:18 · Christoph Klink, Sebastian Johnson
[00:12:18] S1: Very much. And I think what what we haven't seen before is those juggernauts starting to exist in Europe. Right? And the... One of the one of the the areas where we're also seeing that is before 2020, we didn't see Deca coins. Now we've seen 13 DecaCoins in Europe, right? And that's something that we haven't seen before. Yes, there's a bit of inflation in it, but other than that, it really is a different quality of company and a different kind of size of outliers that we that we may be seeing there. And I think that's a great sign of how European tech's maturing, actually, and how it is possible. Most of us have always said that. Right? It is possible to build great outcomes in Europe. It may be harder. Maybe. But it actually is possible. And now we're seeing more and more of those pinpoints that are showing that it actually is. [00:13:10] S0: Do you think there'll be a split as we move forward on the Decacorn layer between those jets and those juggernauts? I think about... When I'm thinking about some of those recent Decacorns, Lovable, the ICI, Bending Spoons, supposedly Legora. I don't know. I'm not... Actually, it seems fairly balanced, Helsink. I don't know. Do do you see a world in which Europe ends up doing one thing really well over the other?
00:13:35 · Christoph Klink, Sebastian Johnson
[00:13:35] S1: I think I think we're gonna be seeing both of these, but I I feel like there's great appetite of investors for those juggernaut companies. Because a lot of it is also about building solutions, building technology solutions that make us independent and then again launching something into space, and then again building solutions of our own that are independent of the geopolitical risk around that. Right? So we've we've seen Isar Aerospace this week, actually, the the first European company launching from Continental Europe on a commercial space mission. Right? That's that's something that I think Europeans have woken up and have understood it may be strategically important for them to have that capability of doing that because it could lead to so many more things that they can stack on top of that. I think that's that's a bit of a logic that in, let's say, the the 2010 era of European tech probably wasn't there. If you build a mobile app or if you build an e commerce company, what are you gonna stack on top of that? Right? If you build a rocket company, if you build a fusion company, then this has all sorts of ripple effects that are gonna make you go further, that are gonna gonna make you more powerful in what you can stack on top. [00:14:56] S0: And let's talk about London. Right? So I saw the report that I think 43% of all jets and juggernauts are headquartered in London, which I think was like a 15 percentage points. It was 28% before 2020. What's going on in London? Why has this become, you know, such a big winner in this new age?
00:15:15 · Christoph Klink
[00:15:15] S1: It's... I think there's two ways of looking at it. One way of looking at it is this is no news because London has always been the biggest tech ecosystem in Europe and frankly, the the most competitive one as well. But when you look at kind of the last twenty years, then London has been insanely successful. However, there had been a number of really spiky outliers, and some of them two of them coming out of Stockholm were those jets that scaled incredibly quickly, right, that became visible very, very fast and that actually made headlines maybe a little bit earlier than some other companies. So one way of looking at it is just the balance of power is restored. London and The UK has always been a great ecosystem. It has always been the largest European ecosystem and it's probably something that everybody could learn from. I think the other way of looking at it is it doesn't really matter and venture has grown a lot more distributed geographically than it has been ten, fifteen years ago. When you look at globally there's been now more than 400 cities in which a unicorn has been born. That number has five, six, seven folded within just ten years. And so I think we're seeing overall a trend that great companies are being built outside of those big centers. When you look into Germany for instance, what's happening right now is that the growth of tech is way more resembling what Germany looks like from a geographical point of view. Germany is not just Berlin. The German economy by far isn't clustered in Berlin. Right? But the early stage ecosystem for a while was really, really clustered in Berlin. Then they've added Munich to it, which has become the center of deep tech for at least for Germans or for continental Europeans. And now there's a number of smaller cities that are also contributing quite well to that growth. So I think overall it is further being stretched out, but I don't think there's gonna be an argument that The UK and by that London is very likely the leading tech ecosystem that we have in Europe. But Yeah. I think overall, we... We're gonna be so much stronger if and when we work together.