August 5, 2025 • 56 mins
Join Romain Diaz of Satgana and Joel Palathinkal as they explore the world of venture studios. Romain discusses his background, investment strategies, and operational resources. They examine venture studio models in France and Belgium, equity considerations, and development. Learn about investment screening, scorecard pillars, and identifying impactful teams. The episode covers trends in long-term impact investment, regional venture ecosystem variations, and co-investment opportunities. Romain shares insights on climate change sectors, technology, and nuclear fusion, along with career advice and thoughts on the future of venture studios.
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(00:00):
Yeah, I think there's a few ways to look at it.
(00:03):
One is to look at the spectrum of the globalemissions and see where they come from.
So a lot of it comes from energy, but if youbreak it down then within energy, that's
transport, that's industry, steel and cement,that's food and agriculture.
It's many different sectors.
So that's one way to look at it.
(00:26):
Welcome to The Investor, a podcast where I,Joel Palafinkel, your host, dives deep into the
minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.
(00:59):
All right, so it looks like we are live here.
Really excited to be here with Romaine Diazfrom South Ghana.
So Romaine, it's been great getting to know youthe last couple of weeks and excited to hear
your story.
You know, we do this a couple of times a weektalking about how people have broken into
venture.
Rodrigo, why don't you kick this off and tellus a little more about your background, how you
(01:21):
broke into venture, and really just the amazingthesis that you have at Subgana.
Sure.
Thank you so much for having me.
So, my name is Romaine Diaz.
I'm French, also have Spanish citizenship.
I'm based in Portugal.
And our fund is incorporated in Luxembourg.
I do a lot of work on the African continent, soquite global.
(01:43):
And I'm the general partner of SAD Ghana, whichis a globally distributed venture studio and
pre seed fund, which invests into early stageclimate and sustainability startups, mostly
focused on Europe, but with a keen eye oncertain emerging countries where we have some
good networks and full on funding.
I'm really excited to be here, thank you.
(02:04):
Thanks for coming here.
Well, tell me a little bit about yourbackground, your family, where you grew up and
what you initially studied and how you became aventure capitalist.
For the audience here, a lot of people arepeople that are looking to try to transition
into venture capital, people that are alreadyin venture capital that are trying to maybe
start a venture studio.
(02:24):
So walk us through the evolution of your careerand how you started a venture studio and maybe
unpack to us your definition of a venturestudio and how that has worked for you and the
founders that you support.
Cool.
Maybe just a logistical thing.
I think your sound is a little bit weird, maybeit's your microphone or something, I think it's
(02:49):
a bit buzzy.
Am I a little too close to the mic, can youhear me now?
Much better now.
Okay, yeah.
Cool, so yeah, indeed I'm gonna speak a littlebit about this thing of venture studios, which
I think is an emerging subset of the VC assetclass.
The way I see it is really being at thecrossroads of building companies and investing
(03:12):
in companies.
Another way to look at it is also to reallylook at the broad spectrum of venture capital
and saying that it's really the earliest stagesto basically helping companies.
Sometimes I refer to it as being the pre preseed, so even earlier than this new thing, it's
been a couple of years now that we speak aboutpre seed, but I think a venture studio can also
be seen as being pre pre seed.
(03:34):
That's one difference, it's coming in moreearly than what VCs traditionally do.
And also, it is about investing a lot ofoperational resources, which means that as a
venture studio, you're typically not going todo, say, ten, twenty, 30 or even more
investments into one year.
You're just going to have more of aconcentrated approach where you're going to do
(03:55):
a couple of deals per year, maybe four or five,that's typically our sweet spot.
And the goal is to invest a lot of operationalresources so that we mitigate the risks of
coming in so early, maximise the chances ofsucceeding, so we are a lot more deliberate
about the kind of companies we're going gointo, because our success rate, our target
(04:16):
success rate, is going to be more around 80%from seed and A onwards.
So that's how we define venture studios.
Now there's a few varieties of them.
Some of them do internal ideations, forexample.
I've done that previously.
I've been part of some well established venturestudios.
I also co founded one of my own in South Africaabout seven years ago, which is now fully
(04:38):
invested, fully holding company now on track todeliver very good returns, but is now no more
active.
And we were doing internal ideation.
And for a number of reasons, we've decided withSalgamand to not do internal ideation, but
rather to have more of a traditional VCapproach whereby founders come to us with an
idea, they pitch us.
(04:58):
And the good thing about being in the impactand sustainability space is that you have
founders that are super driven, super missiondriven, purpose driven, they know their thing
and why they're doing it, which is somethingthat we really like, is ensuring that people
know their why very clearly and are verydedicated to doing this for the next couple of
years.
And they come to us, they also come to otherVCs for sure, but in general, are too early for
(05:21):
other VCs and we are not afraid of coming insuper early.
But to mitigate the risk of coming in so early,we're going to be super involved operationally
in each of them to maximize the chances thateach of them succeed.
So I can also tell a bit more about the kind ofsupport that you provide to them, but I guess
I'll let you keep on leading the conversation.
(05:42):
Yeah, no, that's helpful.
I think to double click a little more, maybeyou can tell us, maybe just walk us through the
life cycle of a typical venture studio modelcompany.
So I've heard different models and differentapproaches to this, but one of my friends who's
at a venture studio essentially builds thetechnology in house.
(06:03):
They have capital in house almost like anoperating company and then they're investing
their own resources into the company to buildthe company.
So to your point, you can only do four of thoseat a time as opposed to typical 35 checks or 40
checks that you do for the life of a fund whenyou think about portfolio construction.
But walk us through the whole process of how acompany gets created.
(06:27):
Is that built in house or is it a pre seedcompany that you're working with and then
you're helping them by rolling up your sleevesand how do you source and screen those?
I think maybe that would be helpful.
Yeah, indeed.
So I think there's quite a few shapes ofventure studios.
Some of them, you can look at them as a fullspectrum of, on the one hand, might be familiar
(06:50):
with companies or venture studios like RocketInternet, although I don't think they define
themselves as venture studios, they reallyfaded the way of the model and inspired many to
take similar approaches, where they do 100% ofthe funding of the operational resources.
And it shows also in terms of how the capitallooks like, because typically Rocket Internet
(07:10):
would start the company with maybe 98% of theequity and just give a very tiny bit of equity
to the founders.
And so typically the kind of founders that theyrecruit because that's really how it looks
like.
It's like more your McKinsey Goldman Sachs typeof people, very high salaries, very little
equity, which I think has paved the way tobuilding, like to be pioneers of certain
(07:33):
models, especially in emerging countries.
But it's definitely not the way we do it.
Us, it's like looking at it from traditional VCfunnel, so we receive a lot of deal flow from
different geographies and industries, etc.
And then we skim through it, we have ourscorecard, our criteria, we look at the team,
(07:54):
we look at the potential impact, we lookbecause we're obviously impact focused, we look
at the potential commercial success, we look atwhether we vibe with the team and whether we
really see ourselves working with them becausethen that's becoming almost like a marriage.
It's a painful.
So this is an outside team that's alreadystarted to build.
(08:16):
You're coming in more on the pre seed.
So I think that's the model too, right?
So the first flavor would just kind of likerocket internet.
They just build everything in house, they payfor development, growth, everything, and they
own most of the company.
You're another flavor, which is like, we foundan interesting pre seed company, but instead of
just giving them a check and just letting themdo the work, we can mitigate the risk by
(08:38):
rolling up our sleeves.
That's exactly it.
What's another flavor outside of that?
I think one that has worked quite a while is aventure studio in France and Belgium that has
minted a couple of unicorns recently, which iscalled eFounders.
They do B2B SaaS.
In The US, they would have founded Front,Spendesk, a couple of successful companies.
(09:04):
And basically, they do like either super nichein terms of the kind of businesses that they
build.
It's only B2B SaaS and it's reallyinternalization.
And then they would bring both the operationalresources and the capital in a similar way that
we do, but they don't have a funnel for us.
Every day we receive deal flow, founderspitching us, sending us their deck with the
(09:27):
name of the company.
Sometimes most of the time it's alreadyincorporated, it already has a name, sometimes
they have the beginning of the product, etc.
So, they're a tiny bit more advanced than whatthe typical e founders, for example, would do.
So, it's a bit different.
I think there's quite a few flavors.
Some of them are more like corporate driven.
So, there's also like corporate venturebuilders where corporates on a specific topic
(09:50):
want to create new companies and then they'regoing to hire teams to build the internal
ideas.
So there's a few flavors.
For us, it's more akin to a venture capitalfund, but super early stage basically.
And then, again, we're going to invest allthese operational resources to really help the
founders, because typically they come to uswith an idea, a name, a deck, and to be honest,
(10:11):
that's about it.
Sometimes the beginning of the product, butthen we're going to plug in a lot of
operational resources.
So we have a CTO in house, someone in charge ofsustainability, someone in charge of marketing,
of finance, operations, etc.
So that we can then really work withentrepreneurs to go from zero to one.
We're going to invest the pre seed and thenwe're going to help them to build the company,
(10:33):
build the traction, revenue, etc.
Until seed, where we will reinvest to keep ourpro rata, but then we'll grow it with also
external investors that will be leading rounds.
Got it.
You're also investing like a venture size checkalong with the venture studio.
Are there other models that don't use capitalwhere they just kind of provide the resources
(10:57):
and product development support?
I think I've seen a few other productdevelopment agencies that do that.
Think what's interesting is I've seen anotherflavor where it's a development shop
consultancy firm.
And what they do is they offer cheapersubsidized developer resources to be able to
get the company at scale, to get the company toscale much faster.
(11:17):
They also have cheaper resources for growth aswell.
But in exchange, they take equity.
And then I think they actually make revenuefrom offering the developer resources.
Have you seen that?
And I don't know what your thoughts are on thatmodel.
Only issue is you're not really offering anycapital.
It's almost like a barter system.
Yeah, yeah, we've seen that.
I think it has its merit.
I think it's just a bit harder to scale.
(11:40):
Yeah.
I think what we're seeing also sometimes isagencies that use the profit the profits to
proceeds of the agency work to then spin offtheir own company, typically 100% of the
company.
But then we take these kind of companies to VCbackable models.
And I've done this mistake in the past, likepreviously being a bit naive, I had an idea for
(12:05):
business within a venture studio, I funded thecompany, I built the first version, I hired the
team, etc.
So it really felt like it was like basicallyme, myself and I, but then we hired the CEO to
run the company and we gave way too little andwe as a venture studio had like 80% of the
equity, which initially found sounded logicalbecause we did pretty much everything and we
(12:25):
funded the company, etc.
But then we raised with external VCs, then itwas a hurdle because the founder was not
incentivized enough and VCs wouldn't want tohave a studio owning 80% of the company, not
vesting and contributing to the growth of thecompany going forward.
So I think the model we have now is morescalable, it's more akin to VC, basically VC,
(12:50):
being more involved operationally during thefirst twelve to eighteen months.
And then once we raise an external seat aroundto let the company fly by in our wings, where
we take still a fairly decent meaningful stakeinto the company, but not too much so that it's
not a hurdle for subsequent rounds.
Sure, no, that helps.
And with your model too, you give a little moredetail in terms of how you source and screen
(13:16):
these companies?
Because you only have four to five companiesthat you can support at a time.
And I'm thinking you look at 1000s ofcompanies.
So what are some of the characteristics thatyou'd say is a consistent characteristic of a
successful possible deal that goes through andwalk us through your process?
How do you screen them?
Do you look at certain things for the team, thetechnology, the market size?
(13:39):
Would love to, you know, share that with thecommunity.
Yeah, definitely.
So indeed, we received quite a bit of dealflow.
Think at the moment, currently in our pipeline,we have about three fifty companies, partly is
inbound, it's people just finding us online,social media, visibility, partnership, etc, and
they come to us.
(13:59):
Partly it's us doing like active sourcing andreally doing outreach to entrepreneurs that
really fit within our thesis.
So less quantity but generally better quality,that's what we noticed.
And so within that deal flow, we have toobviously analyse which one can be a fit for
us.
Some of them are just not fitting the thesis,so we just send a decline email pretty quickly.
(14:21):
We're pretty quick to respond, generally it'sjust a couple of days and entrepreneurs know
whether there's going to be a next step orwhether it's no, we don't want to keep them
waiting for nothing.
And then I think out of all of that, probablyabout 25% we invite them for calls to dig a
little further, and then we run them throughour own scorecard that we've built internally
(14:42):
that has four main pillars.
There's lots of things that we look at, butfour main pillars.
First pillar is more the commercial side ofthings, so we look at typical things like
market size, technology, barriers to entry,like trading, typical things that most VCs look
like.
Then we have a second pillar which is morearound the impacts.
So do we think that this company can have ameaningful positive impact on any of the
(15:04):
environmental sustainable development goalsthat we look at?
And the primary one that we look at is SDG 13,so climate action.
So can this company really make a dent in termsreduction or removal of carbon emissions?
That's the main North Star metric that we lookat from an impact perspective.
And then, so there's a scampular around impactand obviously also looking at potential adverse
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impact, like okay, this can have a positiveimpact, but can it also not have other adverse
negative impacts on other areas as well?
This is also something that we look at.
Then third pillar is more around the team.
So even if we're not so convinced aboutsomething, but we really think that the team is
smart, capable, you know, like more sometimesthis is as much a science as it's an art, and
(15:51):
sometimes looking at intuition of whether youthink that this founder really has something.
So really looking at the team, especially atsuch early stages is a critical factor.
What are some things that stood out greatlywhen you're looking at the team?
Obviously, there's the education, specialthere's unique characteristics, but can you
(16:13):
unpack that a little more?
You know, maybe thinking about some of thecompanies that you invested in, what really
stood out with the team?
Yeah, so I'll take a very concrete example ofthe first company that we invested in.
We actually didn't look at the education,fortunately, because otherwise we wouldn't have
invested because the founder CEO dropped out ofuniversity to found the company.
(16:35):
So for us, that's already a very strong sign.
And he is young, he's super driven, verymission driven as well in terms of
decarbonizing transport in East Africa.
This company does electric mobility solutionsfor emerging markets, and in particular East
Africa, starting with Nairobi Kenya.
(16:55):
And as soon as we saw the founder, we saw a lotof potential in him.
Very smart, very driven, in for the long term,has already been very scrappy and resourceful
to build a first MVP without really havingcapital, really managed to bring in a strong
advisory board, people around him, etc.
So all of these things were signed.
Then you look at the softer side of things, doyou think that this founder can convince
(17:19):
people?
He managed to convince us, but do we think thathe can really convince other people, whether
that's partners, talent, investors, etcetera?
Yeah.
And then the softer, do we think that we vibewith the founder?
We see this person smiling and being good?
And do we want to work with this founder?
Because once again, we are not just going to beinvestors, financial investors, we're going to
(17:42):
be together to build the company.
So actually just before that, I was on a callwith him and it's always a joy to work with him
and we have to really ensure that we work withpeople that we see ourselves working with for
the many years to come.
Yeah, what are some trends that you're seeingwith impact?
And can you unpack that a little bit as far aslike, you know, the things that you look for?
(18:03):
Obviously, carbon emissions is reallyimportant, but what are some other secondary
factors that you're looking at with impact?
And can you just tell us a little more aboutthe ecosystem?
You know, where you're investing and tell usabout kind of the people that you partner with
and maybe even just kind of the LP ecosystem aswell?
Yeah, for sure.
So for us, we really see impact as being adriver of alpha returns for the next decades to
(18:30):
come.
Yeah.
There's lots of hot trends in the ventureecosystem at the moment.
Some of them, I believe, are more short termbecause right now they're hot, but in a couple
of months, who knows?
Whereas the way we see climate andsustainability, it's not a fad, it's going to
be around for the next thirty years because inany case, if we want to survive as a species,
(18:51):
we're going to have to decarbonise oureconomies, we're going to have to do things
differently.
So I'm mentioning decarbonizing because it'sone of the key topics, climate and carbon
emissions in particular, but we think thatthere's other areas that are equally important.
Recently, I saw a cartoon around carbon tunnelvision.
So we think that carbon is obviously, if wedon't decarbonise our economies, we're
(19:16):
basically screwed we're not going to survive onthis planet and many other species either.
But there's other areas to sustainability.
There's obviously other greenhouse gasemissions, such as methane and nitrous oxide,
etc.
There are other emissions that are alsoimportant to look at.
Also, there's circular models around how canyou reuse, for example, refurbished items in
(19:43):
terms of electronics, like back market, one ofthe biggest unicorns in Europe, is around
refurbished equipment.
It is about carbon emissions, it's also aboutreusing materials for precious rare earth
metals and other circular models.
There's around access to water, pollution, etc.
(20:03):
So I'm just mentioning this because I thinkcurrently climate has most of the attention,
and I think it's a great thing, but there'sother areas of sustainability that we think are
important, so that we look at things from aholistic perspective, and we think that this is
going to be the case for the next thirty yearsanyways, because there are commitments in terms
of governments, corporates, there's innovation,there's also the younger generation, talents
(20:29):
really want to work for more purposeful andrespectful environmentally conscious companies.
So, I think everything points to this from avery long term perspective, and that's going to
drive alpha returns for investors and foreveryone involved in this space.
And can you tell me a little bit about thedifferent regions?
(20:49):
So you talked about Africa and then you talkedabout Europe and a couple of the other sectors.
How have you seen just variations in how impactis handled?
Then just the venture ecosystem, are you seeingbig differences?
I only ask because I'm in New York, so I'm notreally super plugged in.
(21:09):
I do have friends in The UK and Europe, butexcited to meet other people just across the
pond to kind of learn more about the globalperspective and then what do we need to do to
provide more co investing opportunities crossborder?
Yeah.
So we're still quarterly in our fundraisingprocess.
So, for now, we just have one portfoliocompany.
(21:31):
Portfolio in East Africa.
But going forward, we're going to focus mostlyon Europe.
And actually, I would say, two thirds of ourdeal for the moment is coming from Europe.
We're in the diligence process with threecompanies that are all based in Europe and our
investment thesis is going to be mostly focusedon Western Europe with an eye on certain
emerging countries, again where we havenetworks in terms of follow on funding and we
(21:55):
know the markets because either we have peoplewithin our team or we already make investments
there or we've worked there in the past, etc.
So we're not going go into any emergingcountry, but we have a remote and fully
distributed team which enables us to look atopportunities basically anywhere.
I would say I think timezone is still importantfor us.
(22:17):
So this is why Europe and Africa obviouslyworked quite well.
The US is a bit more challenging.
And also, think there's a different set ofchallenges.
And we don't have a track record, we don'treally have a team in The US etc.
So going forward within our fund, think itmight be that we start doing co investments,
but for now our model is mostly doing pre seed,being the sole investor at pre seed stage, and
(22:39):
then co investing at seed alongside otherinvestors.
That's going be our model.
Hopefully, I really hope we're going to bedoing more things in The US going forward.
And who knows, our setup really allows for usto be global.
So who knows, we might do more work in thecoming years in The US.
And tell, we didn't get a chance to doubleclick on this a little more, just going further
(23:03):
about you and your background.
So tell us how you pivoted into the venturestudio model and a little more about your
background.
And what did you study when you were in collegeor just earlier in your career?
Yeah, so I have a business background, both mybachelor and the master's.
And I've always been into entrepreneurship.
I had a very short stint at strategyconsulting, really didn't like it, it wasn't
(23:27):
for me.
I wasn't meant to be in suit and tie and justdo Excel and PowerPoint analysis.
I really wanted to be in the trenches, so gladto have had this experience to realize that I
wanted to be an entrepreneur.
I had so many ideas.
When I was 20, I kept a list of hundreds ofideas literally, and I wanted to do them all.
(23:48):
I think that was the first thing around saying,is there a way for me to start many ideas at
once because I just wanted to do many things?
Obviously, a lot has gone through for me torealise how to do things, how not to do things,
how to focus, etc.
Now, forward ten years, I'm really glad ofhaving founded this company, which enables me
to do just one thing because I believe focus iskey.
(24:11):
So I just do this, I say no every day toopportunities in advisory, investment etc,
because I just want to do one thing and do itreally well.
But within that thing, I have the opportunityto look at many, many things.
So again, we look at deals in mobility, inagriculture, in energy, in industry, in many
different things.
So that gives me the variety and intellectualchallenge of seeing many different things, but
(24:33):
always within one thing.
And plus we have a lot of geographical insightsinto different markets.
So it's very, very rich.
But going backwards a little bit, so that gaveme a first opening into what a venture studio
is.
Was fortunate to join the most established andknown venture studio back in the days, Rocket
(24:54):
Internet, famous and infamous, because theyalso have their practices, which sometimes are
a little bit controversial, but I was glad thatI learned through that some of the good things,
some of the less good things, some of thethings that I wanted differently.
I spoke to the very early days of what becamethe first unicorn in Africa.
It's called Junya, it's basically Amazon OfAfrica.
(25:17):
So I was in Morocco, part of the very earlydays of what then became, now it's NASDAQ
listed.
Yeah.
That was really, really interesting.
Then I joined another venture studio, wasfounded by former Rocket Engineer people, so a
bit the same philosophy, focused on e commercein South Africa.
Got an investment by Naspers, also a reallyinteresting similar model.
(25:39):
Then I co founded one venture studio of my ownin South Africa, where we started four
companies, two of which have ended up mergingwithin each other in the financial inclusion
space for the bottom of the pyramid in SouthAfrica.
One of them was an attempt to replicate acoupling peer to peer raturing model, which is
successful in Europe, trying to implement itinto Africa, raised a round of funding didn't
(26:03):
work out eventually, and won a fourth company,which is in the fintech space, doing artificial
intelligence solutions for the financialindustry, raised a couple of rounds of VC in
South Africa, then expanded to Europe.
And that company as a parallel typical VC modelis going to deliver 99% of the returns at the
(26:23):
studio level.
Right now, I think we're sitting on about 12xat the fund level.
And still there's quite a bit of value which isstill yet to be realised in terms of IRR.
The studio is sitting on a 57% IRR.
That was founded in 2015.
We invested the full fund that we had raised.
And now it's been about three years that I'mworking on SAGhana, taking a lot of the
(26:47):
learnings of what we've done previously, butsolely focused on sustainability and climate,
because I realised two things.
One is that I think it's a massive challenge.
We have to do things very differently thanwe've been doing for the past two hundred years
if we want to survive as a species and if wedon't want to decimate other species as well.
So we have to rethink everything.
(27:09):
And also that it's a massive businessopportunity.
And so I think there's a really interestingthing which is happening right now is the
convergence of strong returns with doing theright thing and having a positive return.
And that's really what I'm committing for themany decades to come.
Yeah, no, that's exciting.
Can you go a little deeper on what you see asthe different sectors of climate change, you
(27:34):
know, because a lot of people have differentdefinitions.
I've seen climate change also cascade out tofood tech.
So more sustainable types of food options,whether it's lab grown meat, plant based meat,
and then supporting things that are assistingwith the infrastructure of climate change.
I've also been really interested in justalternative energy sources.
(27:59):
But I'd love to learn about some of the trendsthat you're seeing in climate change as well
and what you think are going to be kind ofexciting opportunities.
Yeah, I think there's a few ways to look at it.
One is to look at the spectrum of the globalemissions and see where they come from.
So, a lot of it comes from energy, but if youbreak it down, then within energy, that's
(28:23):
transport, that's industry, steel and cement,that's food and agriculture, it's many
different sectors.
So that's one way to look at it.
Another way to look at it in terms of how farare we into the development of the technologies
needed to decarbonise and make our world moresustainable.
(28:44):
You are probably familiar with the fact thatBill Gates, Breakthrough Energy Ventures, has
raised and launched a $1,000,000,000 fund toinvest into breakthrough technologies.
So, that's typically the technologies that arenot there yet in terms of decarbonising the
hard to abate industries such as steel, cement,etc.
(29:05):
So that's more like the breakthrough, we're notthere yet.
There's a lot of interesting work happening interms of hydrogen, nuclear fusion,
decarbonisation of steel and cement, hydrogen,I think I mentioned it.
And how do you decarbonize steel and cement?
Is it like a unique process or is it moresynthetic materials that are more biodegradable
(29:28):
and climate friendly?
Is that how you decarbonize?
Just finding better options?
Good question.
So there's breakthroughs, different doingthings differently.
There's also tapping into new sources of energythat are 100% clean to power these industries.
And then you have deployment of existingtechnologies.
(29:50):
And that's more the kind of technologies thatwe're going be investing in, just because of
the nature of our team, first of all, and alsoin terms of the kind of ticket size that we're
going do.
Because if you look, for example, at nuclearfusion, which is obviously very exciting
because that would be if we managed to pull itoff, a lot of people are saying that we might
be closer than we think, or some people say itwould be a source of infinite, or close to
(30:15):
free, cheap, clean energy.
But to pull it off, it's going to require andit requires and it's already bringing a lot of
billions in investments.
That's not the kind of investments we're goingto get into because of the nature of the ticket
size we're going to do, the equity stakes we'relooking for, and the meaningful.
(30:36):
And so typically if we invest, say, dollars$05,000,000 for 20%, 25 of equity, that gives
you the kind of startups you can invest into.
And that's more into, say, deployment ofexisting technologies.
So, for example, electric mobility, once again,one we invested into, the technology is proven.
(30:58):
Has been that the price of electric mobilityand batteries has been declining for the And
past ten, twenty now there's no more technologyrisk.
It's more like a deployment infrastructure playthat we're deploying into a market where there
is no such thing.
We can also use software quite a bit.
Obviously, that's better in terms of beingasset light kind of We're looking at a couple
(31:23):
of companies that are utilising software tomake industries more efficient in terms of
methane reduction, in terms of we're quiteexcited about the company, which is into
basically helping companies to reduce, monitor,measure and reduce their plastic footprint as
(31:44):
well.
So it's more this kind of innovation which isHey
guys, can we go on mute?
Whoever it is.
Okay, I think we're good.
All right, sorry about that Romain, go ahead.
No, so basically that's more the innovationwhere we think we're going to be well
positioned to assist founders.
(32:05):
Yeah, and for the audience, I'm really excitedabout nuclear fusion as well.
Can you unpack that a little bit?
From my understanding, it's the process ofusing water to create energy.
Don't know if you've guys ever seen, this isold school, but have you guys ever seen the
movie The Saint with Val Kilmer?
This was Val Kilmer in his prime but hediscovered nuclear fusion with this scientist.
(32:30):
I always think about that.
I don't know if anybody in the audience herehas seen that movie.
And I don't know if you have Romaine, butthat's when I first learned about fusion.
But what are you seeing in the developments inthat area?
Are you seeing big universities get involved?
Who's advancing that and where are we withthat?
What are some of the updates you've seen onthat?
(32:50):
Because that's a really hot space right now.
So I think it'd good to take a few seconds totalk about that.
Yeah, definitely.
So nuclear fusion is a very exciting spacebecause it would be a source of unlimited clean
energy by basically using a nuclear reaction.
But instead of doing a fission of atoms, you'refissioning them.
(33:15):
So you're making, you're doing it in such a waythat does not produce waste, which is one of
the biggest problems of nuclear at is the that,first of all, there's the overarching risk of
accidents like there has been with Fukushimaand so on before, Chernobyl before.
(33:36):
So that's a big risk also in the public eye,although obviously I believe that the risk is
much lower than what we're seeing in terms ofrisk in fossil fuels.
That's another story I want to dig to get intothat debate, but that's a big problem with
nuclear fission.
Yeah.
And it has radioactive waste and that's a bigproblem.
Nuclear fusion would be basically a panaceabecause it would enable us to have fully clean,
(34:00):
abundant energy without producing nuclearwaste.
Some people say that it's still a couple ofdecades away.
Some people are investing into companies thatseem to indicate that we might be a lot closer
than we thought.
There's one company which raised, I think, 2.4or 2.6 recently billion Euros called
(34:23):
Commonwealth Fusion, which has received aninvestment from Breakthrough Energy, Lower
Carbon Capital, which is the new fund of ChrisSaka, which before was lowercase, now is Lower
Carbon, focus on climate, and some of the mostprominent investors in the space.
So obviously, it's more deep tech, it's a lotof research developments a couple of years
ahead before really being fully at commercialdeployment phase.
(34:47):
But that's really exciting and very muchlooking forward to seeing how that unfolds in
the coming years.
And what is the fundamental challenge of makingnuclear fusion a reality?
I guess what's the you know, these companiesthat are getting some more funding and they're
a couple decades away?
Why do you think we're closer and what is kindof holding us back?
(35:09):
I think it's really still if you look at thedevelopment cycle of any technology, you have
like the really, really early stage where it'smore of an idea and experiment and labs and so
on.
And then we're still, I think, in the fairlyearly days, there's a couple of challenges in
terms of really making it happen at scale andin a way that is economically viable as well.
(35:35):
It takes a lot of resources, infrastructureinvestments, etc.
But if we listen to people who are really inthe trenches making it happen, a lot of work
happening at MIT as well.
Some people are saying that it might be as soonas twenty twenty five-twenty six that we might
start seeing it as commercially viable in TheUS to start with.
There's a big experience in hope we can getcountries as well to collaborate more on these
(36:02):
topics.
There's always geopolitics at play becauseenergy is basically food for our economies,
it's how we power everything, and so there's alot of geopolitical interests around fossil
fuels and gas and oil and coal and nuclear andso on.
(36:24):
And obviously the renewables now.
That's going be really interesting to follow inthe next couple of years.
Yeah, no, that's helpful.
And so what you're saying is really thechallenges are the capital intensity.
And then is there stability issues?
Know with the quantum, one of the biggestissues with taking quantum commercial is just
the stability of just maintaining thetechnology to be in a stable state.
(36:49):
But when you think about the challenges offusion, along with the capital intensity,
probably just a lot of trial and error andhaving lab space to be able to test out some of
the emerging tech, I'm assuming.
They probably have to set up the infrastructuretest it and see if it's commercially viable?
(37:09):
Commercially viable and safe, yeah.
What are some of the safety issues with Fusion?
I think, like any technology that might deployat scale, especially for something as big as
energy, which powers everything from food tobuildings, to transport to everything, you
(37:30):
really have to be careful before deploying itat scale.
It's a bit like carbon removal is also having amoment at the moment because it's been said
over and over again by the IPCC and all the bigbodies around climate that we're going to need
that beyond just reducing our emissions to getto net zero.
(37:51):
There will be anyway residual emissions thatare going to be hard to abate, and we have to
remove past emissions.
So carbon removal is really having a momentright now in terms of ensuring that we have the
technologies to your audio is okay.
I think if you speak too close, it's getting abit
messy.
Carbon
(38:13):
removal is really an interesting topic at themoment in terms of both nature based solutions
and engineering solutions.
But if you really look at any of the carbonremoval solutions and you say that one is
viable but you scale it very, very quickly,there's always a risk that one solution being
(38:35):
scaled can have negative impacts on otherareas.
So, for example, if you look at one of thesolutions is injecting I think it's I don't
remember the name of the gas but it's basicallylike sending one gas into the atmosphere
because that would filter the rays of the sunto make it basically less strong towards the
(38:59):
earth cool it down.
But if you do it at scale, then it's going tomake our sky basically it's going to change the
colour of our sky.
And that would be a solution that is proven asbeing better for cooling the planet, but it can
have that impact in terms of sky colour.
So, yes, it's good for the climate, but there'sother things to look at.
(39:20):
The same with trees, if we plant many, manytrees, we're not going to have enough space.
Plus, if you plant the same species of treesinto a massive land, that's gonna kill
biodiversity.
So you need to look at things holistically andone solution is not gonna be a silver bullet
for solving an ecological crisis.
Yeah, mean, it's very similar to software,actually.
(39:41):
It's funny.
I used to have a life previously just workingin software and a lot of times when you fix a
bug, that issue is fixed but there's some otherissues with like the database and the server.
So you break something else.
So yeah, I think that a lot of these lessonsthat you learn cascade across different sectors
and industries and processes.
(40:04):
So I know we got around twenty minutes left,we'll leave a little bit of time if anybody has
any questions, but I always wrap up with anylessons that you've learned.
So if there's anything that, kind of lookingback on your career, what are some big lessons
that you'd like to share with us?
Maybe from a mentor, maybe just from yourcareer, maybe a coworker, anything you wanna
(40:25):
share, a family member.
So what kind of life advice do you have from usor career advice?
I think a few key ones that I always refer backto, one, to be very clear on our why, because I
think entrepreneurship is A, very hard.
We see the tip of the iceberg in the media andfundraising rounds, etcetera, but it's like one
(40:49):
should not get fooled that it's really hard tobuild a company.
And so you don't really know very clearly yourwhy, your own why of why you're doing it and
what gets you up in the morning.
You might do it for a while, but I think it'sreally hard to sustain in the long run if you
don't know your clear why.
I think it really enables you to go through thelows because you have a clear why, so it's
(41:10):
easier to go because as I always say, inentrepreneurship, highs are really high and the
lows are really low.
So that really helps to navigate that.
So knowing the why is also a way to ensuringthat you can do it for five, ten years,
whatever it takes to really do something atscale.
Otherwise, I think it's much easier to abandon,to just give up if you don't know your why.
(41:33):
So that's one thing that I keep on referringback to.
And now I find my why, my personal why, and I'mvery committed to do this for the next decades
to come.
So that's always something that I advise tofounders, and that's also something which is
great with the impact of sustainability spaceis that the founders generally know very well,
then why we don't even really have to speakabout it because it's very clear.
(41:54):
Another thing that I keep on referring toalways is having a very strong sense of
integrity and selflessness in helping othersand just doing the right thing.
I think it always comes back whether youbelieve in karma, whether it's just business
sense.
I think doing the right thing always pays back.
As Warren Buffett says, It takes twenty yearsto build a reputation, five minutes to ruin it.
(42:20):
So I always refer back to just doing the rightthing, being very honest and being very fair
and trying to help others as well.
I've helped countless people as I've beenhelped by many others, and oftentimes it's the
people that I've helped that has come back tome in much bigger ways and without me really
counting or expecting anything in return, likebeing less transactional, just I want to help
(42:45):
because I believe in what you do and justbecause I think at the end of the day we're all
humans and we have to help each other in thistogether and that has been very beneficial for
me, whether that's karma or whether that's justbusiness sense, it always comes back in much
bigger ways.
Sure, that's all really helpful advice and goodstuff for us to take back with us.
(43:09):
Audience, any questions you guys have, feelfree to unmute and shout it out.
One other question I have while they'rethinking about a question is any advice you
have for career changers, people that aretrying to maybe pivot into a venture studio?
(43:31):
When you've hired some talent to help you withyour studio, what are some things that you
looked for in a talented candidate?
And what are some things that people can do tokind of become better professionals in the
venture studio space?
So, in the venture studio space, I thinkthere's quite a broad spectrum of skills that
can be needed because as a venture studio, youreally want to ensure that you can cover the
(43:55):
full spectrum of what is needed to get acompany from A to B, from zero to one.
So that can come in the form of being technicaland helping founders to build their first MVP
and product.
It can be around, for example, for ussustainability and impact, which is very
important.
It can be around marketing, it can be aroundfinance.
So either you can be really specialised intoone of the key functions to help founders to
(44:17):
get from zero to one, or it can be more justholistic in terms of I've already been a
founder, I've been through the whole process ofgetting a company from idea to getting funded,
getting its first customers and revenue, etc.
So it can be more like a broaderentrepreneurial game, more like an advisor or
(44:39):
Or it can be more like sectorial, like I knowone industry in particular, whether that's
within the frame of say climate, I knowmobility really well, so I can help you figure
out the industry, for example, that can also bea lens through which to
come in.
Doing a venture studio is not easy, obviously,it comes with its own set of challenges, but
(45:00):
it's also really rewarding.
There's not so many studios that have beensuccessful at scale.
There's a couple of them in The US, there's acouple of them in Europe.
It's not an easy model to pull off.
I think it's really sexy on paper because youget to work with entrepreneurs from zero to
one, which I believe is one of the mostexciting spaces to be in, but to pull it off
and make it work is not easy.
But when you're really committed, once again,you know your why, then we're on our way to
(45:24):
make it happen.
Yeah, okay great, well if anybody else have anyquestions.
All right, if you do feel free to shout it out,if not we will wrap up.
So Romain, I know you're super busy, Thanks somuch for your time and excited to get to know
you.
It's been great learning more about you andexcited to have you in fund accelerator as
(45:47):
well.
So for me, it's just exciting to build morerelationships cross border and internationally
to see how we can collaborate.
Oh, looks like we got one here.
Aviral, you wanna just shout that question out?
Hi, Ramin.
Thanks for the talk.
Just had a couple of quick questions.
So firstly, I just wanted to understand how doyou how do you quantify impact.
(46:10):
Right?
Because you said that you are looking atcompanies, and you're looking at whether they
are going to reduce carbon emissions in thelonger run.
Is that the only way that you're looking atquantifying impact, or are there other
parameters as well?
And as a follow-up to that, just wanted tounderstand that when you do you come across
trade offs between the impact aspect of acompany and the commercial whether it'll be a
(46:33):
commercial success or not?
So for example, it might be a big commercialsuccess, but you feel that the impact isn't
strong enough.
And if you come across cases like those, how doyou decide whether you want to invest in the
company or not?
Yep.
Thanks.
Really good questions.
On the first one, the main impact metric thatwe look at is indeed carbon emissions or
(46:54):
greenhouse gases emissions, but not only.
It's just our main one because it's the mostquantifiable.
It's also the one that many companies aretackling at the moment.
So that is the main one, but first we startfrom the framework of the sustainable
development goals.
So we look at what are the sub targets that onecompany is addressing.
It can be around, say, ecosystems monitored, itcan be around, for example, amount of water
(47:21):
needed for growing a specific crop, forexample.
It can be any environmental metric and lookingat this metric, how can we imagine, where can
the company go if it really succeeds Which atleads to your second question, which is around,
do we see any trade offs?
Obviously, there can be trade offs, especiallywhen you look at impact from a broader
(47:44):
perspective of impact investing, in particular,like the more socially driven social impact
companies.
I think there may be some trade offs, but whatwe see in the environmental and climate space
in particular is that we think that the more acompany can scale, the more it can have a
positive impact.
If you look at one very famous example,obviously, is Tesla.
(48:08):
The more they're going to deploy electric cars,the more they can decarbonize transport as a
whole.
So the way we look at it and the way we presentit to our LPs and to anyone looking at what we
do is the more commercial success one companycan have, the more impact they can have.
So we don't really want to look at or ratherensuring that one company does not have adverse
(48:34):
impact on other environmental or socialmetrics.
But if there's no clear adverse impact, then weare taking the stance that the more commercial
success means the more positive impact.
Got it.
Thanks, Rumain.
I had another question.
Can I go before Jayed, if that's okay?
(48:56):
Sure.
Roman, is that cool?
Okay.
Please.
Roman, I was just a bit curious about how howyour firm would scale in the sense that because
you're so deeply involved in the startups thatyou're investing in.
Right?
And because you said that you're not you wouldnot be able to invest in more than four, five
(49:18):
companies at one go.
I'm assuming that once you invest in them, it'snot that you take your hands off and say that,
okay, now that I've invested, I will not beinvolved, you actually get more deeply involved
in these companies.
Right?
So as you identify more potential companies toinvest in, would you need a larger team, or
(49:38):
would you need to grow your team as well alongwith it if you want to invest in more
companies?
Or is there any other way in which you'relooking at scaling Yeah.
Thanks.
Scaling your
yeah.
Yeah.
It's a great question.
So in our first fund, we're currently in theprocess of raising a €25,000,000 fund which
will enable us to invest into 20 companies, 25companies at pre seed and 20 at seed.
(50:03):
That's how our portfolio construction is goingto look like And that's going be about four to
five companies per year for the next fouryears.
And indeed, the way we are set up and the waywe intend to be involved in each company does
not allow us to do, again 20 or 40 dealsoverall, or at least not in a year.
(50:27):
Overall 20 companies, but not per year.
Now going forward in terms of scaling, I thinkthere's a few ways we can do this.
This obviously is just fund one, but we havemuch bigger goals in terms of AUM and in terms
of raising fund two, fund three, etc.
We can be a bit more specific on eitherverticals, for example, if we have one LP
(50:48):
specifically on one vertical vertical thatwould want us to launch a specific venture
studio or venture fund for one specificvertical, that's one way to scale.
Or we could be a bit more geographical, forexample, saying we're going to do a fund
specifically for emerging markets or forEurope, for example.
And also, the more I'm seeing this, the more Irealise that we're going to be doing more and
(51:12):
more later stage deals, so Series A andpotentially more onwards.
For the first fund, we're going do only preseed and seed stage rounds and we'll pass on
our pro rata to our LPs for Series A onwards.
But to scale and to put more capital to work,it's also not unlikely that going forward,
we'll also invest into later stage rounds.
(51:35):
And also more AUM means more management fee andhence more ability to have a bigger team to
support more companies.
Got it, got it.
Thanks, Roman.
All right, and Jai, it looks like you had areally quick question, right?
Yes, actually I think Romaine probably answeredit with the question with Avril.
(51:59):
But basically, I wanted to sort of know how youbenchmark sort of the benefits that a small
entrepreneur could actually bring forward inlooking at climate targets.
How are you actually benchmarking that?
And are you using specific models to make somesort of calculations of how a particular firm
(52:22):
or specific startup could do?
I'm sorry.
I'm not sure I understood what you meant.
Yeah, just more in the sense that if, how doyou actually benchmark the benefit that you're
getting that an entrepreneur can actuallybring?
Do Obviously, there's different climate changegoals and expectations.
(52:46):
For example, we're trying to reduce thetemperature of the world and stuff like that.
But have you got specific benchmarks thatyou're looking to achieve from the companies
that you bring in?
You mean like in terms of impact targets foreach
Yes, that sort of stuff, yeah.
Yes, so for each company they have to have apotential for commercial success, meaning that
(53:11):
for us we look at any company need to be apotential fund returner, meaning that for each
company they have to have the ability to returnat least £100,000,000 to the fund.
And that's in terms of commercial viability andin terms of impact.
We want to look at companies that can have ameaningful impact in the millions of tonnes of
carbon either reduced or removed or any otherenvironmental metric, but it has to be it
(53:37):
cannot be just marginal.
It has to be a meaningful impact while alsoensuring that we don't have adverse impacts on
other metrics.
Okay, that's great, thanks.
Great, and I'll just fly through these here.
So competition for the startup company, lowentry barriers.
(53:57):
I'm assuming Jesse, and feel free to correct meif I'm wrong, but I'm assuming just how do you
look at competitors when you're looking atcompanies?
I'm assuming that's just covered within yourscoring rubric, Romain when you're kind of
looking at the competition.
So that's one of them.
And then the question is, do you think thegeneral public is aware of the difference
between venture studios and venture funds?
(54:21):
I think people know of venture studios, but Ithink thanks to this talk, we're able to go a
little deeper in terms of the different flavorsof venture studios and how they work.
John, I don't know if that covered yourquestion, but feel free to chime in if you want
to double click on that question.
(54:41):
But I think in my opinion too, I think peoplethat work in product and have done a lot of
project management have been very tactical.
Those are like really great fits for venturestudios, because you're really supporting the
founder, you're a lot more operational.
But I don't think everybody like the generalpublic knows what a venture studio is.
(55:02):
Would you agree with that, Romain?
I think it's increasingly growing becausethere's more corporates that are now opening up
their corporate innovation labs, and they'reposting jobs.
But what are your thoughts on that as far asjust like the general public knowing about what
venture studios actually are and how theyoperate?
Yeah, for sure.
I think it is growing in terms of awareness.
(55:22):
There has been a couple of very successfulcompanies that spun out of studios, etcetera.
But it is still nascent.
And I think maybe a limitation is that some ofthe very strong entrepreneurs, sometimes second
time entrepreneurs feel they don't need venturestudio.
And that may also be a limitation.
So right now, we're still defining ourselves asa venture studio because we're super early
(55:46):
stage, because we invest a lot of operationalresources.
But I think that going forward, it's also notunlikely that we define ourselves as a venture
studio and venture fund because that's alsowhat we are.
We're structured like a typical GPIP structure.
And we have also the flavor of venture funds.
So that, I think, will also be a way to attractmore entrepreneurs that don't necessarily know
(56:10):
of venture studio or don't think that they'refit, but we still think that we can help them
with both the capital and the operational andstrategic.
Yeah.
Sure.
Well, is great.
Well, thank you so much, Romain.
And thanks for everyone else just rapid fire insome additional questions and keeping the
discussion engaging and I'll catch up with yousoon, Romain.
(56:31):
Have a good one.
So thank you so much for organizing that.
Everyone.
Yeah.
Thank you.
Yeah, I think there's a few ways to look at it.
(00:03):
One is to look at the spectrum of the globalemissions and see where they come from.
So a lot of it comes from energy, but if youbreak it down then within energy, that's
transport, that's industry, steel and cement,that's food and agriculture.
It's many different sectors.
So that's one way to look at it.
(00:26):
Welcome to The Investor, a podcast where I,Joel Palafinkel, your host, dives deep into the
minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.
(00:59):
All right, so it looks like we are live here.
Really excited to be here with Romaine Diazfrom South Ghana.
So Romaine, it's been great getting to know youthe last couple of weeks and excited to hear
your story.
You know, we do this a couple of times a weektalking about how people have broken into
venture.
Rodrigo, why don't you kick this off and tellus a little more about your background, how you
(01:21):
broke into venture, and really just the amazingthesis that you have at Subgana.
Sure.
Thank you so much for having me.
So, my name is Romaine Diaz.
I'm French, also have Spanish citizenship.
I'm based in Portugal.
And our fund is incorporated in Luxembourg.
I do a lot of work on the African continent, soquite global.
(01:43):
And I'm the general partner of SAD Ghana, whichis a globally distributed venture studio and
pre seed fund, which invests into early stageclimate and sustainability startups, mostly
focused on Europe, but with a keen eye oncertain emerging countries where we have some
good networks and full on funding.
I'm really excited to be here, thank you.
(02:04):
Thanks for coming here.
Well, tell me a little bit about yourbackground, your family, where you grew up and
what you initially studied and how you became aventure capitalist.
For the audience here, a lot of people arepeople that are looking to try to transition
into venture capital, people that are alreadyin venture capital that are trying to maybe
start a venture studio.
(02:24):
So walk us through the evolution of your careerand how you started a venture studio and maybe
unpack to us your definition of a venturestudio and how that has worked for you and the
founders that you support.
Cool.
Maybe just a logistical thing.
I think your sound is a little bit weird, maybeit's your microphone or something, I think it's
(02:49):
a bit buzzy.
Am I a little too close to the mic, can youhear me now?
Much better now.
Okay, yeah.
Cool, so yeah, indeed I'm gonna speak a littlebit about this thing of venture studios, which
I think is an emerging subset of the VC assetclass.
The way I see it is really being at thecrossroads of building companies and investing
(03:12):
in companies.
Another way to look at it is also to reallylook at the broad spectrum of venture capital
and saying that it's really the earliest stagesto basically helping companies.
Sometimes I refer to it as being the pre preseed, so even earlier than this new thing, it's
been a couple of years now that we speak aboutpre seed, but I think a venture studio can also
be seen as being pre pre seed.
(03:34):
That's one difference, it's coming in moreearly than what VCs traditionally do.
And also, it is about investing a lot ofoperational resources, which means that as a
venture studio, you're typically not going todo, say, ten, twenty, 30 or even more
investments into one year.
You're just going to have more of aconcentrated approach where you're going to do
(03:55):
a couple of deals per year, maybe four or five,that's typically our sweet spot.
And the goal is to invest a lot of operationalresources so that we mitigate the risks of
coming in so early, maximise the chances ofsucceeding, so we are a lot more deliberate
about the kind of companies we're going gointo, because our success rate, our target
(04:16):
success rate, is going to be more around 80%from seed and A onwards.
So that's how we define venture studios.
Now there's a few varieties of them.
Some of them do internal ideations, forexample.
I've done that previously.
I've been part of some well established venturestudios.
I also co founded one of my own in South Africaabout seven years ago, which is now fully
(04:38):
invested, fully holding company now on track todeliver very good returns, but is now no more
active.
And we were doing internal ideation.
And for a number of reasons, we've decided withSalgamand to not do internal ideation, but
rather to have more of a traditional VCapproach whereby founders come to us with an
idea, they pitch us.
(04:58):
And the good thing about being in the impactand sustainability space is that you have
founders that are super driven, super missiondriven, purpose driven, they know their thing
and why they're doing it, which is somethingthat we really like, is ensuring that people
know their why very clearly and are verydedicated to doing this for the next couple of
years.
And they come to us, they also come to otherVCs for sure, but in general, are too early for
(05:21):
other VCs and we are not afraid of coming insuper early.
But to mitigate the risk of coming in so early,we're going to be super involved operationally
in each of them to maximize the chances thateach of them succeed.
So I can also tell a bit more about the kind ofsupport that you provide to them, but I guess
I'll let you keep on leading the conversation.
(05:42):
Yeah, no, that's helpful.
I think to double click a little more, maybeyou can tell us, maybe just walk us through the
life cycle of a typical venture studio modelcompany.
So I've heard different models and differentapproaches to this, but one of my friends who's
at a venture studio essentially builds thetechnology in house.
(06:03):
They have capital in house almost like anoperating company and then they're investing
their own resources into the company to buildthe company.
So to your point, you can only do four of thoseat a time as opposed to typical 35 checks or 40
checks that you do for the life of a fund whenyou think about portfolio construction.
But walk us through the whole process of how acompany gets created.
(06:27):
Is that built in house or is it a pre seedcompany that you're working with and then
you're helping them by rolling up your sleevesand how do you source and screen those?
I think maybe that would be helpful.
Yeah, indeed.
So I think there's quite a few shapes ofventure studios.
Some of them, you can look at them as a fullspectrum of, on the one hand, might be familiar
(06:50):
with companies or venture studios like RocketInternet, although I don't think they define
themselves as venture studios, they reallyfaded the way of the model and inspired many to
take similar approaches, where they do 100% ofthe funding of the operational resources.
And it shows also in terms of how the capitallooks like, because typically Rocket Internet
(07:10):
would start the company with maybe 98% of theequity and just give a very tiny bit of equity
to the founders.
And so typically the kind of founders that theyrecruit because that's really how it looks
like.
It's like more your McKinsey Goldman Sachs typeof people, very high salaries, very little
equity, which I think has paved the way tobuilding, like to be pioneers of certain
(07:33):
models, especially in emerging countries.
But it's definitely not the way we do it.
Us, it's like looking at it from traditional VCfunnel, so we receive a lot of deal flow from
different geographies and industries, etc.
And then we skim through it, we have ourscorecard, our criteria, we look at the team,
(07:54):
we look at the potential impact, we lookbecause we're obviously impact focused, we look
at the potential commercial success, we look atwhether we vibe with the team and whether we
really see ourselves working with them becausethen that's becoming almost like a marriage.
It's a painful.
So this is an outside team that's alreadystarted to build.
(08:16):
You're coming in more on the pre seed.
So I think that's the model too, right?
So the first flavor would just kind of likerocket internet.
They just build everything in house, they payfor development, growth, everything, and they
own most of the company.
You're another flavor, which is like, we foundan interesting pre seed company, but instead of
just giving them a check and just letting themdo the work, we can mitigate the risk by
(08:38):
rolling up our sleeves.
That's exactly it.
What's another flavor outside of that?
I think one that has worked quite a while is aventure studio in France and Belgium that has
minted a couple of unicorns recently, which iscalled eFounders.
They do B2B SaaS.
In The US, they would have founded Front,Spendesk, a couple of successful companies.
(09:04):
And basically, they do like either super nichein terms of the kind of businesses that they
build.
It's only B2B SaaS and it's reallyinternalization.
And then they would bring both the operationalresources and the capital in a similar way that
we do, but they don't have a funnel for us.
Every day we receive deal flow, founderspitching us, sending us their deck with the
(09:27):
name of the company.
Sometimes most of the time it's alreadyincorporated, it already has a name, sometimes
they have the beginning of the product, etc.
So, they're a tiny bit more advanced than whatthe typical e founders, for example, would do.
So, it's a bit different.
I think there's quite a few flavors.
Some of them are more like corporate driven.
So, there's also like corporate venturebuilders where corporates on a specific topic
(09:50):
want to create new companies and then they'regoing to hire teams to build the internal
ideas.
So there's a few flavors.
For us, it's more akin to a venture capitalfund, but super early stage basically.
And then, again, we're going to invest allthese operational resources to really help the
founders, because typically they come to uswith an idea, a name, a deck, and to be honest,
(10:11):
that's about it.
Sometimes the beginning of the product, butthen we're going to plug in a lot of
operational resources.
So we have a CTO in house, someone in charge ofsustainability, someone in charge of marketing,
of finance, operations, etc.
So that we can then really work withentrepreneurs to go from zero to one.
We're going to invest the pre seed and thenwe're going to help them to build the company,
(10:33):
build the traction, revenue, etc.
Until seed, where we will reinvest to keep ourpro rata, but then we'll grow it with also
external investors that will be leading rounds.
Got it.
You're also investing like a venture size checkalong with the venture studio.
Are there other models that don't use capitalwhere they just kind of provide the resources
(10:57):
and product development support?
I think I've seen a few other productdevelopment agencies that do that.
Think what's interesting is I've seen anotherflavor where it's a development shop
consultancy firm.
And what they do is they offer cheapersubsidized developer resources to be able to
get the company at scale, to get the company toscale much faster.
(11:17):
They also have cheaper resources for growth aswell.
But in exchange, they take equity.
And then I think they actually make revenuefrom offering the developer resources.
Have you seen that?
And I don't know what your thoughts are on thatmodel.
Only issue is you're not really offering anycapital.
It's almost like a barter system.
Yeah, yeah, we've seen that.
I think it has its merit.
I think it's just a bit harder to scale.
(11:40):
Yeah.
I think what we're seeing also sometimes isagencies that use the profit the profits to
proceeds of the agency work to then spin offtheir own company, typically 100% of the
company.
But then we take these kind of companies to VCbackable models.
And I've done this mistake in the past, likepreviously being a bit naive, I had an idea for
(12:05):
business within a venture studio, I funded thecompany, I built the first version, I hired the
team, etc.
So it really felt like it was like basicallyme, myself and I, but then we hired the CEO to
run the company and we gave way too little andwe as a venture studio had like 80% of the
equity, which initially found sounded logicalbecause we did pretty much everything and we
(12:25):
funded the company, etc.
But then we raised with external VCs, then itwas a hurdle because the founder was not
incentivized enough and VCs wouldn't want tohave a studio owning 80% of the company, not
vesting and contributing to the growth of thecompany going forward.
So I think the model we have now is morescalable, it's more akin to VC, basically VC,
(12:50):
being more involved operationally during thefirst twelve to eighteen months.
And then once we raise an external seat aroundto let the company fly by in our wings, where
we take still a fairly decent meaningful stakeinto the company, but not too much so that it's
not a hurdle for subsequent rounds.
Sure, no, that helps.
And with your model too, you give a little moredetail in terms of how you source and screen
(13:16):
these companies?
Because you only have four to five companiesthat you can support at a time.
And I'm thinking you look at 1000s ofcompanies.
So what are some of the characteristics thatyou'd say is a consistent characteristic of a
successful possible deal that goes through andwalk us through your process?
How do you screen them?
Do you look at certain things for the team, thetechnology, the market size?
(13:39):
Would love to, you know, share that with thecommunity.
Yeah, definitely.
So indeed, we received quite a bit of dealflow.
Think at the moment, currently in our pipeline,we have about three fifty companies, partly is
inbound, it's people just finding us online,social media, visibility, partnership, etc, and
they come to us.
(13:59):
Partly it's us doing like active sourcing andreally doing outreach to entrepreneurs that
really fit within our thesis.
So less quantity but generally better quality,that's what we noticed.
And so within that deal flow, we have toobviously analyse which one can be a fit for
us.
Some of them are just not fitting the thesis,so we just send a decline email pretty quickly.
(14:21):
We're pretty quick to respond, generally it'sjust a couple of days and entrepreneurs know
whether there's going to be a next step orwhether it's no, we don't want to keep them
waiting for nothing.
And then I think out of all of that, probablyabout 25% we invite them for calls to dig a
little further, and then we run them throughour own scorecard that we've built internally
(14:42):
that has four main pillars.
There's lots of things that we look at, butfour main pillars.
First pillar is more the commercial side ofthings, so we look at typical things like
market size, technology, barriers to entry,like trading, typical things that most VCs look
like.
Then we have a second pillar which is morearound the impacts.
So do we think that this company can have ameaningful positive impact on any of the
(15:04):
environmental sustainable development goalsthat we look at?
And the primary one that we look at is SDG 13,so climate action.
So can this company really make a dent in termsreduction or removal of carbon emissions?
That's the main North Star metric that we lookat from an impact perspective.
And then, so there's a scampular around impactand obviously also looking at potential adverse
(15:27):
impact, like okay, this can have a positiveimpact, but can it also not have other adverse
negative impacts on other areas as well?
This is also something that we look at.
Then third pillar is more around the team.
So even if we're not so convinced aboutsomething, but we really think that the team is
smart, capable, you know, like more sometimesthis is as much a science as it's an art, and
(15:51):
sometimes looking at intuition of whether youthink that this founder really has something.
So really looking at the team, especially atsuch early stages is a critical factor.
What are some things that stood out greatlywhen you're looking at the team?
Obviously, there's the education, specialthere's unique characteristics, but can you
(16:13):
unpack that a little more?
You know, maybe thinking about some of thecompanies that you invested in, what really
stood out with the team?
Yeah, so I'll take a very concrete example ofthe first company that we invested in.
We actually didn't look at the education,fortunately, because otherwise we wouldn't have
invested because the founder CEO dropped out ofuniversity to found the company.
(16:35):
So for us, that's already a very strong sign.
And he is young, he's super driven, verymission driven as well in terms of
decarbonizing transport in East Africa.
This company does electric mobility solutionsfor emerging markets, and in particular East
Africa, starting with Nairobi Kenya.
(16:55):
And as soon as we saw the founder, we saw a lotof potential in him.
Very smart, very driven, in for the long term,has already been very scrappy and resourceful
to build a first MVP without really havingcapital, really managed to bring in a strong
advisory board, people around him, etc.
So all of these things were signed.
Then you look at the softer side of things, doyou think that this founder can convince
(17:19):
people?
He managed to convince us, but do we think thathe can really convince other people, whether
that's partners, talent, investors, etcetera?
Yeah.
And then the softer, do we think that we vibewith the founder?
We see this person smiling and being good?
And do we want to work with this founder?
Because once again, we are not just going to beinvestors, financial investors, we're going to
(17:42):
be together to build the company.
So actually just before that, I was on a callwith him and it's always a joy to work with him
and we have to really ensure that we work withpeople that we see ourselves working with for
the many years to come.
Yeah, what are some trends that you're seeingwith impact?
And can you unpack that a little bit as far aslike, you know, the things that you look for?
(18:03):
Obviously, carbon emissions is reallyimportant, but what are some other secondary
factors that you're looking at with impact?
And can you just tell us a little more aboutthe ecosystem?
You know, where you're investing and tell usabout kind of the people that you partner with
and maybe even just kind of the LP ecosystem aswell?
Yeah, for sure.
So for us, we really see impact as being adriver of alpha returns for the next decades to
(18:30):
come.
Yeah.
There's lots of hot trends in the ventureecosystem at the moment.
Some of them, I believe, are more short termbecause right now they're hot, but in a couple
of months, who knows?
Whereas the way we see climate andsustainability, it's not a fad, it's going to
be around for the next thirty years because inany case, if we want to survive as a species,
(18:51):
we're going to have to decarbonise oureconomies, we're going to have to do things
differently.
So I'm mentioning decarbonizing because it'sone of the key topics, climate and carbon
emissions in particular, but we think thatthere's other areas that are equally important.
Recently, I saw a cartoon around carbon tunnelvision.
So we think that carbon is obviously, if wedon't decarbonise our economies, we're
(19:16):
basically screwed we're not going to survive onthis planet and many other species either.
But there's other areas to sustainability.
There's obviously other greenhouse gasemissions, such as methane and nitrous oxide,
etc.
There are other emissions that are alsoimportant to look at.
Also, there's circular models around how canyou reuse, for example, refurbished items in
(19:43):
terms of electronics, like back market, one ofthe biggest unicorns in Europe, is around
refurbished equipment.
It is about carbon emissions, it's also aboutreusing materials for precious rare earth
metals and other circular models.
There's around access to water, pollution, etc.
(20:03):
So I'm just mentioning this because I thinkcurrently climate has most of the attention,
and I think it's a great thing, but there'sother areas of sustainability that we think are
important, so that we look at things from aholistic perspective, and we think that this is
going to be the case for the next thirty yearsanyways, because there are commitments in terms
of governments, corporates, there's innovation,there's also the younger generation, talents
(20:29):
really want to work for more purposeful andrespectful environmentally conscious companies.
So, I think everything points to this from avery long term perspective, and that's going to
drive alpha returns for investors and foreveryone involved in this space.
And can you tell me a little bit about thedifferent regions?
(20:49):
So you talked about Africa and then you talkedabout Europe and a couple of the other sectors.
How have you seen just variations in how impactis handled?
Then just the venture ecosystem, are you seeingbig differences?
I only ask because I'm in New York, so I'm notreally super plugged in.
(21:09):
I do have friends in The UK and Europe, butexcited to meet other people just across the
pond to kind of learn more about the globalperspective and then what do we need to do to
provide more co investing opportunities crossborder?
Yeah.
So we're still quarterly in our fundraisingprocess.
So, for now, we just have one portfoliocompany.
(21:31):
Portfolio in East Africa.
But going forward, we're going to focus mostlyon Europe.
And actually, I would say, two thirds of ourdeal for the moment is coming from Europe.
We're in the diligence process with threecompanies that are all based in Europe and our
investment thesis is going to be mostly focusedon Western Europe with an eye on certain
emerging countries, again where we havenetworks in terms of follow on funding and we
(21:55):
know the markets because either we have peoplewithin our team or we already make investments
there or we've worked there in the past, etc.
So we're not going go into any emergingcountry, but we have a remote and fully
distributed team which enables us to look atopportunities basically anywhere.
I would say I think timezone is still importantfor us.
(22:17):
So this is why Europe and Africa obviouslyworked quite well.
The US is a bit more challenging.
And also, think there's a different set ofchallenges.
And we don't have a track record, we don'treally have a team in The US etc.
So going forward within our fund, think itmight be that we start doing co investments,
but for now our model is mostly doing pre seed,being the sole investor at pre seed stage, and
(22:39):
then co investing at seed alongside otherinvestors.
That's going be our model.
Hopefully, I really hope we're going to bedoing more things in The US going forward.
And who knows, our setup really allows for usto be global.
So who knows, we might do more work in thecoming years in The US.
And tell, we didn't get a chance to doubleclick on this a little more, just going further
(23:03):
about you and your background.
So tell us how you pivoted into the venturestudio model and a little more about your
background.
And what did you study when you were in collegeor just earlier in your career?
Yeah, so I have a business background, both mybachelor and the master's.
And I've always been into entrepreneurship.
I had a very short stint at strategyconsulting, really didn't like it, it wasn't
(23:27):
for me.
I wasn't meant to be in suit and tie and justdo Excel and PowerPoint analysis.
I really wanted to be in the trenches, so gladto have had this experience to realize that I
wanted to be an entrepreneur.
I had so many ideas.
When I was 20, I kept a list of hundreds ofideas literally, and I wanted to do them all.
(23:48):
I think that was the first thing around saying,is there a way for me to start many ideas at
once because I just wanted to do many things?
Obviously, a lot has gone through for me torealise how to do things, how not to do things,
how to focus, etc.
Now, forward ten years, I'm really glad ofhaving founded this company, which enables me
to do just one thing because I believe focus iskey.
(24:11):
So I just do this, I say no every day toopportunities in advisory, investment etc,
because I just want to do one thing and do itreally well.
But within that thing, I have the opportunityto look at many, many things.
So again, we look at deals in mobility, inagriculture, in energy, in industry, in many
different things.
So that gives me the variety and intellectualchallenge of seeing many different things, but
(24:33):
always within one thing.
And plus we have a lot of geographical insightsinto different markets.
So it's very, very rich.
But going backwards a little bit, so that gaveme a first opening into what a venture studio
is.
Was fortunate to join the most established andknown venture studio back in the days, Rocket
(24:54):
Internet, famous and infamous, because theyalso have their practices, which sometimes are
a little bit controversial, but I was glad thatI learned through that some of the good things,
some of the less good things, some of thethings that I wanted differently.
I spoke to the very early days of what becamethe first unicorn in Africa.
It's called Junya, it's basically Amazon OfAfrica.
(25:17):
So I was in Morocco, part of the very earlydays of what then became, now it's NASDAQ
listed.
Yeah.
That was really, really interesting.
Then I joined another venture studio, wasfounded by former Rocket Engineer people, so a
bit the same philosophy, focused on e commercein South Africa.
Got an investment by Naspers, also a reallyinteresting similar model.
(25:39):
Then I co founded one venture studio of my ownin South Africa, where we started four
companies, two of which have ended up mergingwithin each other in the financial inclusion
space for the bottom of the pyramid in SouthAfrica.
One of them was an attempt to replicate acoupling peer to peer raturing model, which is
successful in Europe, trying to implement itinto Africa, raised a round of funding didn't
(26:03):
work out eventually, and won a fourth company,which is in the fintech space, doing artificial
intelligence solutions for the financialindustry, raised a couple of rounds of VC in
South Africa, then expanded to Europe.
And that company as a parallel typical VC modelis going to deliver 99% of the returns at the
(26:23):
studio level.
Right now, I think we're sitting on about 12xat the fund level.
And still there's quite a bit of value which isstill yet to be realised in terms of IRR.
The studio is sitting on a 57% IRR.
That was founded in 2015.
We invested the full fund that we had raised.
And now it's been about three years that I'mworking on SAGhana, taking a lot of the
(26:47):
learnings of what we've done previously, butsolely focused on sustainability and climate,
because I realised two things.
One is that I think it's a massive challenge.
We have to do things very differently thanwe've been doing for the past two hundred years
if we want to survive as a species and if wedon't want to decimate other species as well.
So we have to rethink everything.
(27:09):
And also that it's a massive businessopportunity.
And so I think there's a really interestingthing which is happening right now is the
convergence of strong returns with doing theright thing and having a positive return.
And that's really what I'm committing for themany decades to come.
Yeah, no, that's exciting.
Can you go a little deeper on what you see asthe different sectors of climate change, you
(27:34):
know, because a lot of people have differentdefinitions.
I've seen climate change also cascade out tofood tech.
So more sustainable types of food options,whether it's lab grown meat, plant based meat,
and then supporting things that are assistingwith the infrastructure of climate change.
I've also been really interested in justalternative energy sources.
(27:59):
But I'd love to learn about some of the trendsthat you're seeing in climate change as well
and what you think are going to be kind ofexciting opportunities.
Yeah, I think there's a few ways to look at it.
One is to look at the spectrum of the globalemissions and see where they come from.
So, a lot of it comes from energy, but if youbreak it down, then within energy, that's
(28:23):
transport, that's industry, steel and cement,that's food and agriculture, it's many
different sectors.
So that's one way to look at it.
Another way to look at it in terms of how farare we into the development of the technologies
needed to decarbonise and make our world moresustainable.
(28:44):
You are probably familiar with the fact thatBill Gates, Breakthrough Energy Ventures, has
raised and launched a $1,000,000,000 fund toinvest into breakthrough technologies.
So, that's typically the technologies that arenot there yet in terms of decarbonising the
hard to abate industries such as steel, cement,etc.
(29:05):
So that's more like the breakthrough, we're notthere yet.
There's a lot of interesting work happening interms of hydrogen, nuclear fusion,
decarbonisation of steel and cement, hydrogen,I think I mentioned it.
And how do you decarbonize steel and cement?
Is it like a unique process or is it moresynthetic materials that are more biodegradable
(29:28):
and climate friendly?
Is that how you decarbonize?
Just finding better options?
Good question.
So there's breakthroughs, different doingthings differently.
There's also tapping into new sources of energythat are 100% clean to power these industries.
And then you have deployment of existingtechnologies.
(29:50):
And that's more the kind of technologies thatwe're going be investing in, just because of
the nature of our team, first of all, and alsoin terms of the kind of ticket size that we're
going do.
Because if you look, for example, at nuclearfusion, which is obviously very exciting
because that would be if we managed to pull itoff, a lot of people are saying that we might
be closer than we think, or some people say itwould be a source of infinite, or close to
(30:15):
free, cheap, clean energy.
But to pull it off, it's going to require andit requires and it's already bringing a lot of
billions in investments.
That's not the kind of investments we're goingto get into because of the nature of the ticket
size we're going to do, the equity stakes we'relooking for, and the meaningful.
(30:36):
And so typically if we invest, say, dollars$05,000,000 for 20%, 25 of equity, that gives
you the kind of startups you can invest into.
And that's more into, say, deployment ofexisting technologies.
So, for example, electric mobility, once again,one we invested into, the technology is proven.
(30:58):
Has been that the price of electric mobilityand batteries has been declining for the And
past ten, twenty now there's no more technologyrisk.
It's more like a deployment infrastructure playthat we're deploying into a market where there
is no such thing.
We can also use software quite a bit.
Obviously, that's better in terms of beingasset light kind of We're looking at a couple
(31:23):
of companies that are utilising software tomake industries more efficient in terms of
methane reduction, in terms of we're quiteexcited about the company, which is into
basically helping companies to reduce, monitor,measure and reduce their plastic footprint as
(31:44):
well.
So it's more this kind of innovation which isHey
guys, can we go on mute?
Whoever it is.
Okay, I think we're good.
All right, sorry about that Romain, go ahead.
No, so basically that's more the innovationwhere we think we're going to be well
positioned to assist founders.
(32:05):
Yeah, and for the audience, I'm really excitedabout nuclear fusion as well.
Can you unpack that a little bit?
From my understanding, it's the process ofusing water to create energy.
Don't know if you've guys ever seen, this isold school, but have you guys ever seen the
movie The Saint with Val Kilmer?
This was Val Kilmer in his prime but hediscovered nuclear fusion with this scientist.
(32:30):
I always think about that.
I don't know if anybody in the audience herehas seen that movie.
And I don't know if you have Romaine, butthat's when I first learned about fusion.
But what are you seeing in the developments inthat area?
Are you seeing big universities get involved?
Who's advancing that and where are we withthat?
What are some of the updates you've seen onthat?
(32:50):
Because that's a really hot space right now.
So I think it'd good to take a few seconds totalk about that.
Yeah, definitely.
So nuclear fusion is a very exciting spacebecause it would be a source of unlimited clean
energy by basically using a nuclear reaction.
But instead of doing a fission of atoms, you'refissioning them.
(33:15):
So you're making, you're doing it in such a waythat does not produce waste, which is one of
the biggest problems of nuclear at is the that,first of all, there's the overarching risk of
accidents like there has been with Fukushimaand so on before, Chernobyl before.
(33:36):
So that's a big risk also in the public eye,although obviously I believe that the risk is
much lower than what we're seeing in terms ofrisk in fossil fuels.
That's another story I want to dig to get intothat debate, but that's a big problem with
nuclear fission.
Yeah.
And it has radioactive waste and that's a bigproblem.
Nuclear fusion would be basically a panaceabecause it would enable us to have fully clean,
(34:00):
abundant energy without producing nuclearwaste.
Some people say that it's still a couple ofdecades away.
Some people are investing into companies thatseem to indicate that we might be a lot closer
than we thought.
There's one company which raised, I think, 2.4or 2.6 recently billion Euros called
(34:23):
Commonwealth Fusion, which has received aninvestment from Breakthrough Energy, Lower
Carbon Capital, which is the new fund of ChrisSaka, which before was lowercase, now is Lower
Carbon, focus on climate, and some of the mostprominent investors in the space.
So obviously, it's more deep tech, it's a lotof research developments a couple of years
ahead before really being fully at commercialdeployment phase.
(34:47):
But that's really exciting and very muchlooking forward to seeing how that unfolds in
the coming years.
And what is the fundamental challenge of makingnuclear fusion a reality?
I guess what's the you know, these companiesthat are getting some more funding and they're
a couple decades away?
Why do you think we're closer and what is kindof holding us back?
(35:09):
I think it's really still if you look at thedevelopment cycle of any technology, you have
like the really, really early stage where it'smore of an idea and experiment and labs and so
on.
And then we're still, I think, in the fairlyearly days, there's a couple of challenges in
terms of really making it happen at scale andin a way that is economically viable as well.
(35:35):
It takes a lot of resources, infrastructureinvestments, etc.
But if we listen to people who are really inthe trenches making it happen, a lot of work
happening at MIT as well.
Some people are saying that it might be as soonas twenty twenty five-twenty six that we might
start seeing it as commercially viable in TheUS to start with.
There's a big experience in hope we can getcountries as well to collaborate more on these
(36:02):
topics.
There's always geopolitics at play becauseenergy is basically food for our economies,
it's how we power everything, and so there's alot of geopolitical interests around fossil
fuels and gas and oil and coal and nuclear andso on.
(36:24):
And obviously the renewables now.
That's going be really interesting to follow inthe next couple of years.
Yeah, no, that's helpful.
And so what you're saying is really thechallenges are the capital intensity.
And then is there stability issues?
Know with the quantum, one of the biggestissues with taking quantum commercial is just
the stability of just maintaining thetechnology to be in a stable state.
(36:49):
But when you think about the challenges offusion, along with the capital intensity,
probably just a lot of trial and error andhaving lab space to be able to test out some of
the emerging tech, I'm assuming.
They probably have to set up the infrastructuretest it and see if it's commercially viable?
(37:09):
Commercially viable and safe, yeah.
What are some of the safety issues with Fusion?
I think, like any technology that might deployat scale, especially for something as big as
energy, which powers everything from food tobuildings, to transport to everything, you
(37:30):
really have to be careful before deploying itat scale.
It's a bit like carbon removal is also having amoment at the moment because it's been said
over and over again by the IPCC and all the bigbodies around climate that we're going to need
that beyond just reducing our emissions to getto net zero.
(37:51):
There will be anyway residual emissions thatare going to be hard to abate, and we have to
remove past emissions.
So carbon removal is really having a momentright now in terms of ensuring that we have the
technologies to your audio is okay.
I think if you speak too close, it's getting abit
messy.
Carbon
(38:13):
removal is really an interesting topic at themoment in terms of both nature based solutions
and engineering solutions.
But if you really look at any of the carbonremoval solutions and you say that one is
viable but you scale it very, very quickly,there's always a risk that one solution being
(38:35):
scaled can have negative impacts on otherareas.
So, for example, if you look at one of thesolutions is injecting I think it's I don't
remember the name of the gas but it's basicallylike sending one gas into the atmosphere
because that would filter the rays of the sunto make it basically less strong towards the
(38:59):
earth cool it down.
But if you do it at scale, then it's going tomake our sky basically it's going to change the
colour of our sky.
And that would be a solution that is proven asbeing better for cooling the planet, but it can
have that impact in terms of sky colour.
So, yes, it's good for the climate, but there'sother things to look at.
(39:20):
The same with trees, if we plant many, manytrees, we're not going to have enough space.
Plus, if you plant the same species of treesinto a massive land, that's gonna kill
biodiversity.
So you need to look at things holistically andone solution is not gonna be a silver bullet
for solving an ecological crisis.
Yeah, mean, it's very similar to software,actually.
(39:41):
It's funny.
I used to have a life previously just workingin software and a lot of times when you fix a
bug, that issue is fixed but there's some otherissues with like the database and the server.
So you break something else.
So yeah, I think that a lot of these lessonsthat you learn cascade across different sectors
and industries and processes.
(40:04):
So I know we got around twenty minutes left,we'll leave a little bit of time if anybody has
any questions, but I always wrap up with anylessons that you've learned.
So if there's anything that, kind of lookingback on your career, what are some big lessons
that you'd like to share with us?
Maybe from a mentor, maybe just from yourcareer, maybe a coworker, anything you wanna
(40:25):
share, a family member.
So what kind of life advice do you have from usor career advice?
I think a few key ones that I always refer backto, one, to be very clear on our why, because I
think entrepreneurship is A, very hard.
We see the tip of the iceberg in the media andfundraising rounds, etcetera, but it's like one
(40:49):
should not get fooled that it's really hard tobuild a company.
And so you don't really know very clearly yourwhy, your own why of why you're doing it and
what gets you up in the morning.
You might do it for a while, but I think it'sreally hard to sustain in the long run if you
don't know your clear why.
I think it really enables you to go through thelows because you have a clear why, so it's
(41:10):
easier to go because as I always say, inentrepreneurship, highs are really high and the
lows are really low.
So that really helps to navigate that.
So knowing the why is also a way to ensuringthat you can do it for five, ten years,
whatever it takes to really do something atscale.
Otherwise, I think it's much easier to abandon,to just give up if you don't know your why.
(41:33):
So that's one thing that I keep on referringback to.
And now I find my why, my personal why, and I'mvery committed to do this for the next decades
to come.
So that's always something that I advise tofounders, and that's also something which is
great with the impact of sustainability spaceis that the founders generally know very well,
then why we don't even really have to speakabout it because it's very clear.
(41:54):
Another thing that I keep on referring toalways is having a very strong sense of
integrity and selflessness in helping othersand just doing the right thing.
I think it always comes back whether youbelieve in karma, whether it's just business
sense.
I think doing the right thing always pays back.
As Warren Buffett says, It takes twenty yearsto build a reputation, five minutes to ruin it.
(42:20):
So I always refer back to just doing the rightthing, being very honest and being very fair
and trying to help others as well.
I've helped countless people as I've beenhelped by many others, and oftentimes it's the
people that I've helped that has come back tome in much bigger ways and without me really
counting or expecting anything in return, likebeing less transactional, just I want to help
(42:45):
because I believe in what you do and justbecause I think at the end of the day we're all
humans and we have to help each other in thistogether and that has been very beneficial for
me, whether that's karma or whether that's justbusiness sense, it always comes back in much
bigger ways.
Sure, that's all really helpful advice and goodstuff for us to take back with us.
(43:09):
Audience, any questions you guys have, feelfree to unmute and shout it out.
One other question I have while they'rethinking about a question is any advice you
have for career changers, people that aretrying to maybe pivot into a venture studio?
(43:31):
When you've hired some talent to help you withyour studio, what are some things that you
looked for in a talented candidate?
And what are some things that people can do tokind of become better professionals in the
venture studio space?
So, in the venture studio space, I thinkthere's quite a broad spectrum of skills that
can be needed because as a venture studio, youreally want to ensure that you can cover the
(43:55):
full spectrum of what is needed to get acompany from A to B, from zero to one.
So that can come in the form of being technicaland helping founders to build their first MVP
and product.
It can be around, for example, for ussustainability and impact, which is very
important.
It can be around marketing, it can be aroundfinance.
So either you can be really specialised intoone of the key functions to help founders to
(44:17):
get from zero to one, or it can be more justholistic in terms of I've already been a
founder, I've been through the whole process ofgetting a company from idea to getting funded,
getting its first customers and revenue, etc.
So it can be more like a broaderentrepreneurial game, more like an advisor or
(44:39):
Or it can be more like sectorial, like I knowone industry in particular, whether that's
within the frame of say climate, I knowmobility really well, so I can help you figure
out the industry, for example, that can also bea lens through which to
come in.
Doing a venture studio is not easy, obviously,it comes with its own set of challenges, but
(45:00):
it's also really rewarding.
There's not so many studios that have beensuccessful at scale.
There's a couple of them in The US, there's acouple of them in Europe.
It's not an easy model to pull off.
I think it's really sexy on paper because youget to work with entrepreneurs from zero to
one, which I believe is one of the mostexciting spaces to be in, but to pull it off
and make it work is not easy.
But when you're really committed, once again,you know your why, then we're on our way to
(45:24):
make it happen.
Yeah, okay great, well if anybody else have anyquestions.
All right, if you do feel free to shout it out,if not we will wrap up.
So Romain, I know you're super busy, Thanks somuch for your time and excited to get to know
you.
It's been great learning more about you andexcited to have you in fund accelerator as
(45:47):
well.
So for me, it's just exciting to build morerelationships cross border and internationally
to see how we can collaborate.
Oh, looks like we got one here.
Aviral, you wanna just shout that question out?
Hi, Ramin.
Thanks for the talk.
Just had a couple of quick questions.
So firstly, I just wanted to understand how doyou how do you quantify impact.
(46:10):
Right?
Because you said that you are looking atcompanies, and you're looking at whether they
are going to reduce carbon emissions in thelonger run.
Is that the only way that you're looking atquantifying impact, or are there other
parameters as well?
And as a follow-up to that, just wanted tounderstand that when you do you come across
trade offs between the impact aspect of acompany and the commercial whether it'll be a
(46:33):
commercial success or not?
So for example, it might be a big commercialsuccess, but you feel that the impact isn't
strong enough.
And if you come across cases like those, how doyou decide whether you want to invest in the
company or not?
Yep.
Thanks.
Really good questions.
On the first one, the main impact metric thatwe look at is indeed carbon emissions or
(46:54):
greenhouse gases emissions, but not only.
It's just our main one because it's the mostquantifiable.
It's also the one that many companies aretackling at the moment.
So that is the main one, but first we startfrom the framework of the sustainable
development goals.
So we look at what are the sub targets that onecompany is addressing.
It can be around, say, ecosystems monitored, itcan be around, for example, amount of water
(47:21):
needed for growing a specific crop, forexample.
It can be any environmental metric and lookingat this metric, how can we imagine, where can
the company go if it really succeeds Which atleads to your second question, which is around,
do we see any trade offs?
Obviously, there can be trade offs, especiallywhen you look at impact from a broader
(47:44):
perspective of impact investing, in particular,like the more socially driven social impact
companies.
I think there may be some trade offs, but whatwe see in the environmental and climate space
in particular is that we think that the more acompany can scale, the more it can have a
positive impact.
If you look at one very famous example,obviously, is Tesla.
(48:08):
The more they're going to deploy electric cars,the more they can decarbonize transport as a
whole.
So the way we look at it and the way we presentit to our LPs and to anyone looking at what we
do is the more commercial success one companycan have, the more impact they can have.
So we don't really want to look at or ratherensuring that one company does not have adverse
(48:34):
impact on other environmental or socialmetrics.
But if there's no clear adverse impact, then weare taking the stance that the more commercial
success means the more positive impact.
Got it.
Thanks, Rumain.
I had another question.
Can I go before Jayed, if that's okay?
(48:56):
Sure.
Roman, is that cool?
Okay.
Please.
Roman, I was just a bit curious about how howyour firm would scale in the sense that because
you're so deeply involved in the startups thatyou're investing in.
Right?
And because you said that you're not you wouldnot be able to invest in more than four, five
(49:18):
companies at one go.
I'm assuming that once you invest in them, it'snot that you take your hands off and say that,
okay, now that I've invested, I will not beinvolved, you actually get more deeply involved
in these companies.
Right?
So as you identify more potential companies toinvest in, would you need a larger team, or
(49:38):
would you need to grow your team as well alongwith it if you want to invest in more
companies?
Or is there any other way in which you'relooking at scaling Yeah.
Thanks.
Scaling your
yeah.
Yeah.
It's a great question.
So in our first fund, we're currently in theprocess of raising a €25,000,000 fund which
will enable us to invest into 20 companies, 25companies at pre seed and 20 at seed.
(50:03):
That's how our portfolio construction is goingto look like And that's going be about four to
five companies per year for the next fouryears.
And indeed, the way we are set up and the waywe intend to be involved in each company does
not allow us to do, again 20 or 40 dealsoverall, or at least not in a year.
(50:27):
Overall 20 companies, but not per year.
Now going forward in terms of scaling, I thinkthere's a few ways we can do this.
This obviously is just fund one, but we havemuch bigger goals in terms of AUM and in terms
of raising fund two, fund three, etc.
We can be a bit more specific on eitherverticals, for example, if we have one LP
(50:48):
specifically on one vertical vertical thatwould want us to launch a specific venture
studio or venture fund for one specificvertical, that's one way to scale.
Or we could be a bit more geographical, forexample, saying we're going to do a fund
specifically for emerging markets or forEurope, for example.
And also, the more I'm seeing this, the more Irealise that we're going to be doing more and
(51:12):
more later stage deals, so Series A andpotentially more onwards.
For the first fund, we're going do only preseed and seed stage rounds and we'll pass on
our pro rata to our LPs for Series A onwards.
But to scale and to put more capital to work,it's also not unlikely that going forward,
we'll also invest into later stage rounds.
(51:35):
And also more AUM means more management fee andhence more ability to have a bigger team to
support more companies.
Got it, got it.
Thanks, Roman.
All right, and Jai, it looks like you had areally quick question, right?
Yes, actually I think Romaine probably answeredit with the question with Avril.
(51:59):
But basically, I wanted to sort of know how youbenchmark sort of the benefits that a small
entrepreneur could actually bring forward inlooking at climate targets.
How are you actually benchmarking that?
And are you using specific models to make somesort of calculations of how a particular firm
(52:22):
or specific startup could do?
I'm sorry.
I'm not sure I understood what you meant.
Yeah, just more in the sense that if, how doyou actually benchmark the benefit that you're
getting that an entrepreneur can actuallybring?
Do Obviously, there's different climate changegoals and expectations.
(52:46):
For example, we're trying to reduce thetemperature of the world and stuff like that.
But have you got specific benchmarks thatyou're looking to achieve from the companies
that you bring in?
You mean like in terms of impact targets foreach
Yes, that sort of stuff, yeah.
Yes, so for each company they have to have apotential for commercial success, meaning that
(53:11):
for us we look at any company need to be apotential fund returner, meaning that for each
company they have to have the ability to returnat least £100,000,000 to the fund.
And that's in terms of commercial viability andin terms of impact.
We want to look at companies that can have ameaningful impact in the millions of tonnes of
carbon either reduced or removed or any otherenvironmental metric, but it has to be it
(53:37):
cannot be just marginal.
It has to be a meaningful impact while alsoensuring that we don't have adverse impacts on
other metrics.
Okay, that's great, thanks.
Great, and I'll just fly through these here.
So competition for the startup company, lowentry barriers.
(53:57):
I'm assuming Jesse, and feel free to correct meif I'm wrong, but I'm assuming just how do you
look at competitors when you're looking atcompanies?
I'm assuming that's just covered within yourscoring rubric, Romain when you're kind of
looking at the competition.
So that's one of them.
And then the question is, do you think thegeneral public is aware of the difference
between venture studios and venture funds?
(54:21):
I think people know of venture studios, but Ithink thanks to this talk, we're able to go a
little deeper in terms of the different flavorsof venture studios and how they work.
John, I don't know if that covered yourquestion, but feel free to chime in if you want
to double click on that question.
(54:41):
But I think in my opinion too, I think peoplethat work in product and have done a lot of
project management have been very tactical.
Those are like really great fits for venturestudios, because you're really supporting the
founder, you're a lot more operational.
But I don't think everybody like the generalpublic knows what a venture studio is.
(55:02):
Would you agree with that, Romain?
I think it's increasingly growing becausethere's more corporates that are now opening up
their corporate innovation labs, and they'reposting jobs.
But what are your thoughts on that as far asjust like the general public knowing about what
venture studios actually are and how theyoperate?
Yeah, for sure.
I think it is growing in terms of awareness.
(55:22):
There has been a couple of very successfulcompanies that spun out of studios, etcetera.
But it is still nascent.
And I think maybe a limitation is that some ofthe very strong entrepreneurs, sometimes second
time entrepreneurs feel they don't need venturestudio.
And that may also be a limitation.
So right now, we're still defining ourselves asa venture studio because we're super early
(55:46):
stage, because we invest a lot of operationalresources.
But I think that going forward, it's also notunlikely that we define ourselves as a venture
studio and venture fund because that's alsowhat we are.
We're structured like a typical GPIP structure.
And we have also the flavor of venture funds.
So that, I think, will also be a way to attractmore entrepreneurs that don't necessarily know
(56:10):
of venture studio or don't think that they'refit, but we still think that we can help them
with both the capital and the operational andstrategic.
Yeah.
Sure.
Well, is great.
Well, thank you so much, Romain.
And thanks for everyone else just rapid fire insome additional questions and keeping the
discussion engaging and I'll catch up with yousoon, Romain.
(56:31):
Have a good one.
So thank you so much for organizing that.
Everyone.
Yeah.
Thank you.
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