Episode 25: Infusing AI into VC Funding

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So you've got an idea, a good idea, a really good idea, and you want to start a tech company. You want to start a tech company around this really good idea, but there is one hang-up: you don't have a tech background. Such is the conundrum that many entrepreneurs find themselves in. So typically, these non-techie individuals smartly pair up with some techie friends. But is that the end of line on the technical decisions? Can the non-technical influence technical decisions too?

Hey, it's Luke with SphereCast, and this week Xenia and I interview Alex Balderstone, Co-Founder and CEO at Kaiku. Kaiku is a London-based startup that features a data-driven scouting tool for venture funds, infused by artificial intelligence. Kaiku, which was founded in late 2019, works with over 300 venture funds across 50 different countries. The platform is already boasting a matchmaking accuracy score edging ever closer to 100%, and as Kaiku continues to find successes for its clients and enriches itself with data, that error margin will inch lower and lower.

As a non-technical co-founder, Balderstone offers a fresh perspective on founding of a technology company. On the podcast, Alex walks through his unique role in the building of his platform, including the hand he played in choosing of Kaiku's tech stack. Along the way, Alex also shares a wealth of knowledge around meeting market needs and gives a helpful commentary on the current state of the venture capital industry. So without further ado, here's a conversation with Alex Balderstone.

Hi everyone, Xenia's here, and today our guest is Alexander Balderstone. We're thrilled to host you on SphereCast. How are you?

Hi Xenia, thanks a lot. Yeah, brilliant. Thanks so much for letting me join you today.

I would like to start with an icebreaker. Could you share with our audience something interesting about yourself that most people don't know?

That's a really good question and a really good icebreaker that I probably don't use enough. A few things, so I used to play a lot of squash is probably a good point. We have a sport over here, squash, that was a big thing for me, had national ranking, used to do that pretty sort of semi-professionally pre-starting Kaiku as in the form it is now. So that used to take up most of my time, traveling across competitions, doing lots of coaching, and everything like that. Unfortunately, not enough time for it nowadays, and COVID doesn't help with indoor sports either, so.

I agree. So in your own words, what is Kaiku and how did you co-found this company?

So Kaiku is a smart matchmaking platform for venture funds. That basically means that we share deals with about 300 VC funds. They range from family offices to corporate venture capital funds and other VC funds in 50 different countries. We use AI, matrix factorization, to learn about their preferences and use implicit and explicit feedback to improve the quality of deal flow that they receive. On the startup side, we tend to focus on seed to Series A stage.

Awesome. It's quite a quite a product out there. But I have a question. Given the time you've been in the market, the thing that comes to my mind is are you guys using AI, full-fledged AI, or is it work in progress? Like where are you guys with the actual AI matchmaking process?

It's a really good question. You say, how's the market working? At the moment, there was a recent report out by Gartner, there's only about 5% roughly of VC funds that use AI in their decision-making processes. We know in the next five years, that's going to be more 75-80%. There's this real trend at the moment in terms of, well, how can you sit horizontally across the market as opposed to vertically?

So what we've seen is a lot of funds starting to build out their own internal tools. But evidently at the end of the day, a lot of that data is proprietary, it remains to them, and there's very few people in the market that I'd say are more academic in the sense that they'll share what they're doing and essentially sort of try and bring all of that together.

So for us, our company is less than two years old and in the form of what we focus on now really kicked off for us last summer and really was accelerated by COVID just because of remote deal flow, and most money going into the market at the moment is what we'd call emerging venture capital money. So why we focus on smaller venture capital funds and family offices that are looking to sort of diversify asset classes. But to go back to your question on the AI, it's at the beginning of it, and we're really looking at sort of API integrations at the moment, how do we get more of that data.

If you take the sort of Crunchbases of the world or the Dealrooms, a lot of their data comes in from their fund network, and we've built out a pretty big, sufficient fund network now and looking a lot at how do we engage more with them, how do we bring more of that data in. We have an 80% match rating sort of positive positivity in terms of sort of successful results at the moment, so we know it's working. But as you say, it's there's a real ramp-up there and real start at an early stage.

That's exciting. I mean 80% is a good starting number so.

It's a good start, but it can always get better, I think. We really want to be hitting up to 100 as much as we can.

Absolutely. Okay, yeah, sounds good. It just made me curious, that particular aspect like you're using AI matchmaking. We interviewed somebody a few weeks ago, Mikiko, so they are basically providing service to the market, which is helping organizations take the AI products to the market faster. So they do the last mile API, they're augmenting humans into the process, taking over the, let's say, the use cases, sorry, the edge cases you can't really decide, and they basically take that in and give you a decision within the SLA you require. So hence why I've been learning about it, and you know, I found that, okay, it's not an easy process. So there must have been some challenges, so yeah.

And absolutely, a huge thing here, there's two things that we'd love to look at more as as the team grows: one is diversity and gender bias in the industry. I'm going to get this number wrong, but I still think I think it's about half a percent of funding, at least in the European startup ecosystem, goes to fully female-founded teams, and there's a huge thing there at the moment in terms of can we remove this bias. And the other side is we've got lots of company, people leaving ex-Uber or ex-Airbnb and Cabify, things like that, and the other thing is can you start to predict a little bit who who's going to set up companies before the first funding comes in and looking for the trends there. So that is definitely a different angle we're looking at as well.

Funny you say that. That person is ex-Uber. Ex-Uber and ex-Zoox, so yeah, okay, there you go.

So there we go, we're on the right track.

Okay. Nice one. Okay, we're off to a good start. So Xenia, back to you.

I want to dive into the product architecture a little bit more. Could you share with us your thought process in selecting the technology solution for Kaiku? What other solutions did you consider? Could you tell us which ones you settled on and why?

Yeah, sure. And just to clarify on that, is that in terms of what we're built on, or why we're using AI in that process, and—

Exactly.

Yeah, the context, you know, yeah, choices.

Yeah, it's a really good question and so we've built out in terms of the team splitting to three, we've got one of my co-founders, Trish, heads up product with our CTO, Thomas, and then we have two devs working on that as well. For us, it did take a bit of time to sort of understand, I suppose you could say, in terms of what we were focusing on.

If I take the AI aspect at the beginning, most and then I'll come a bit more to sort of product architecture, if that's all right. On the AI side, we started more out as a community-based resource, if that makes sense. So like everyone, we wanted to really help pre-seed founders, really early founders with content, with resources, with events, a toolkit essentially as well. Like every founder, we are a startup, and then we are working with funds at the end of the day, and we knew that we really had to focus.

And it was really that part of last summer when we saw that the AI was the process that wasn't really working in the industry at the moment, and there are more solutions coming out, but as I've mentioned before, most of them are vertically integrated in that sense. And then we started to look at it, and then we thought, well, actually, if we can dictate the sort of, I suppose you could say, the data input and the implicit feedback that we're getting from the funds at the end of the day, that really does leave a wide sort of solution for us to be able to work in. And we knew that we wanted to build a pretty simple plug-and-play platform to be able to work there as well, which is, I suppose you could say, what what we are today.

When it comes a little bit more to sort of the tech stack and everything like that, we were, I suppose you could say, lucky with the sort of developers that we do have working with us that are pretty full stack, pretty experienced. One of our our full-stack developer, Harjot, and our lead engineer built one of the leading scouting platforms for footballers in the UK called Scouted, which you might think different industry, but there are intrinsic overlaps at the end of the day in terms of what that defines in terms of what we're doing now.

Everything is built on the Google Cloud, so and a big thing for us was obviously microservices, so we can really scale what we're doing going up. The cloud-native applications on Kubernetes for us, which really just, I suppose you could say, keep code quality good and allows us to scale everything that we're doing there as well. Everything in terms of powering front end and back end is JavaScript, and then the front end is with React, Material, and Material, and the APIs with Fastify.

So I suppose for us, it came down to architecture that's scalable, code and data quality that allows us to allow for very high test coverage, and then everything in the back end obviously being through microservices so we can add or remove sort of functionality as we as we as we please on that as well. There's nothing that we've got in the sense that we have put a patent on for the time being in terms of the algorithm, but as we build up and as we've got more more accuracy in terms of what's coming through, that's obviously a big thing that will allow us to focus a lot more on how that works, if if that sort of answers your question.

Yeah, that that's that's that's quite a lot of detail there, so. Yeah, I mean, so I mean this is a question that we were going to kind of come to, so you've answered the the choices made, and I guess you guys were you guys you seem like, you know, that all the choices were made very meticulously, and it was thought out. So, tell me something like how did you get to that point that all the, you know, things were chosen? Like was there a process in place or and and I believe you you're the non-technical co-founder because you said Thomas is the CTO, so I'd love to know like what as as one of the non-technical co-founders, what was your part in the process of choosing technologies? Was anyone talking to you, by the way, like in choosing this? Were you were you interfering in the process? Because we spoke with a we spoke with another co-founder yesterday, and and she explained that the the CTO and her were at like, you know, they found that sometimes they were yeah, yeah, they were finding it difficult to operate together because they were interfering in each other's jobs.

It's a it's a really good question, and I think like most founding teams, when we started, we had this problem. I assumed I tried to assume responsibility for product, and it didn't go very well. So you know, we've got three parts of the company: I manage most business development functions; my other co-founder, Shanil, manages our deal side, so the investor and startup relations, his background is all client relations, so that made perfect sense; and then Trish, Trish is based in Panama, her background is more working with data, she did a thesis in collaboration with Crunchbase data mapping diversity and funding across Europe and has more of a banking background, which applies this, so pretty methodical in in scope.

And we, you know, this was probably when pandemic hit, we went, you know, our our way of doing it was build up your network. I've always been someone that will focus on find a problem and then build a solution for a problem, because if you're going to build some tech out and you haven't got enough partnerships, if you haven't got enough clients to go to, for me, it was about doing it the other way around and iterating with the feedback that we got.

So that's what we did, and we separated out quite quickly when we knew I didn't have the scope, the I suppose you could say the patience to manage the product side of the business, where Trish took that over. So Trish acts as the liaison between the business development side with myself and with Shanil, and then with our tech team, our two developers, Dan and and Harjot, and obviously with Thomas, which really has allowed for, I suppose you could say, a lot better mapping, a lot better deployment. When we got everything up and going at the beginning, it obviously took a lot of time to get systems right and everyone sorted and into a good enough rhythm.

And the point we are at now, there's currently about five roles that we're recruiting for, about half of those are tech-related. And you know, we obviously have so many different parts from project management all the way over to to machine learning. We're building out a function for research at the moment, which allows us to bring in that data a lot more from the funds and really analyze it, and has really allowed us to separate that out. But I think you hit the nail on the head at the beginning, there is a lot of founding teams, there's a lot of founding teams that we see that struggle at the pre-seed, even what you'd call ideation stage, to find that technical co-founder, and it's we we just test and tried, and that's what we we ended up with.

Yeah, I see I see that as a big big, I don't know, I don't want to say it's luck, but you have to be kind of looking for the right kind of balance when you are setting the team up, so.

I think we stumbled over it more than anything.

Yeah, it happens. That's that's what I'm hearing. Yeah, I don't I don't think like anyone's saying, "Hey, we were looking for this person, and we found him." That that is something I'm yet to hear, so yeah, okay. That's that's Well, thanks for being honest.

I'm the only one saying yes.

Okay, good one. So I'm going to pick up the next part. So so yeah, tell us something about the the business and the technology challenges that you came across. So obviously you're on the business side, did everything go to the plan, like did you—

Nothing goes to plan.

Yeah, so so I'd love to know like when you said, "Okay, we're doing this," how did you set out? And then did you face any challenges that you were not expecting? You know, maybe you can talk about an example that you overcame: luck, hard work, or just some connections you found, so how did you do that, yeah?

I mean just sort of to touch on the BD side of things, there was always this problem in this industry at the moment about acceptance, because we're in a pretty relationship-driven industry, and most referrals have always usually come through limited partners, or fund contacts, or natural organic inflow that's come on. But the problem that we found pretty early on whilst doing this and whilst working with funds was obviously the quality of what came in at the end of the day and the bias which was there as well.

So you know, some people may know Lunchclub from YC, it's an online business app to make connections online, the the main engineer, one of the co-founders, is the ex-head of machine learning at Quora. And what's interesting about that is we see a lot of similarities between how they operate and what we're trying to build in the longer term. So they give feedback and then they try and pair you with people via email, and I always recommend for people to use it, I've met some really good people through it. And you know, are you always finding the best connection and everything like that?

So that really sort of leads into, as you say, what are the tech challenges that come from that. It's integration is one, and sort of touching on what I said earlier, data is the other. For us at the moment, it's really important to make sure that we've got a solution that essentially batch-processes matches into a fund's inbox, and that's the easiest thing for us. The last thing we knew that people want to do at the end of the day is go on yet another platform, another investment platform finding more opportunities. It may be that on the second attempt, there's nothing there that works for them, because you've always got to warm up with them, you've always got to build out the preferences and everything, and then they never come back.

If you integrate straight into their inbox and they can give you feedback back from there, it's a lot easier, and that's essentially what Lunchclub does. And whilst a lot of what we're doing is still early in its deployment, that's where we're moving on the sort of integration side of things. So that's definitely a really important thing that we're looking at, that we want to build on. The second is data.

And here, the problem is obviously, do funds always want to give up valuations, portfolio numbers, revenue numbers, MRR, and everything like that? We think that yes, it is possible, because this is how a lot of the incumbents like Crunchbase or Dealroom do it, but their lifelines usually before they get to a Series A or B round is pretty long. A lot of these companies are 10, 12, 13, 14 years old, and obviously have to build out those data sets.

So a big part that we're looking at the moment are, what are those API integrations that we can use with other portfolio management tools, for example, that have a lot of that data? How do we engage more on the fund side of stuff to make sure that we are getting some of that proprietary data as well? But I think you've always got to educate people on this side as well in terms of what's coming through, because if a new fund sets up, separate angle, or for family office, whatever, you probably have two, three people on it max. You might have a partner, a principal, and an associate, and the whole associate's just responsible for the whole scouting inbound. So yeah, there's two things really there, it really sort of comes down to integration and then the long term of data.

So you're on the BD side, and there's somebody looking after the product. So how much focus has been put into the UX? Because I guess this is something that you, you know, I think in the financial world, it's not been kind of—

Hasn't been thought through.

Yeah, like people just give you anything, they're like, you know, it's it's counting, you need a calculator and you go, you know, so. Or or you just need me to look at the numbers, no matter how ugly they look. So are are you doing something on the UX side to to present something, you know, in a in a much more easier to understand format, or are you doing something fuzzy around that, you know, just making sure you have your user in mind all the time?

We're not trying to rewrite the rule book, we're trying to keep things as simple as possible. For for the funds that do use our platform for the moment, they'll see a lot of similarities in terms of the information that they get in the profile build that they would expect on a Crunchbase or a Dealroom, to be honest with you. There's nothing really to reinvent there. Yes, we do do a lot of regular feedback sessions with funds: Is this clear enough for you? Are we not displaying the right data? What more do you want to see?

But more often than not, the main thing is they want a really succinct summary in their inbox, and that's going to be the key decision if they're going to read further, because a lot of the referrals may be wrong industry, wrong ticket size, wrong traction, and more often than not, that's what puts users and investors off in our sense. So on the one side, yes, and the other, no, because for us, feedback is obviously crucial, but for us, it's it's about accuracy, and it's about the quality of deals and scaling the scouting side of the operations more than anything.

I got it. It's matchmaking, it's not so much the the information that's being looked at. It's it's about, yeah, making sure you What what they're getting is what they want, so yeah. Getting the food right, yeah, so you know, you don't want to end up in a Chinese restaurant when you're going for a pizza, so yeah.

Pretty much, yes.

Alex, you had quite a journey building Kaiku. What was the most valuable lesson you learned during this time? Could you share with us?

Absolutely. Focus is key, and feedback is key, are probably the two things I'd say. Because like most founders, we're a founding team of three, a wider team of about 12-13 people. We've all worked together for some time on different projects, across different startup ecosystems in Europe, so we had a pretty good solidification there. But like most founders, we try to start doing everything. So just sort of taking you back to what I said, can we provide resources? Can we help with funding? Can we help with startup legals as well? And the answer was no.

So I say this in the nicest way possible, actually some good came out of COVID for us. It allowed us to focus down, and the trends meant there was more borderless investment, there's a lot more capital going into the areas we focus on in the emerging VC scene. So that's what we focused on, and that is, you know, given us some rewards, some funding to date, and has allowed us to focus on there. So that was the main thing.

And feedback is the other thing. Get the feedback intrinsically from Try and know your customer persona. The number of, I think, founders we speak to who who will ask, "Okay, who do you focus on?" "Well, 18 to 40-year-olds in Europe." That's not going to cut it for a fund at the end of the day in terms of their go-to-market strategy. And we were, you know, we had to do exactly the same thing. Narrow down really on who you're focusing on, why you're focusing on them, and the feedback to make sure you're building something that users really want.

Interesting. I want to go back for for one sec. So you said you're not focusing on any particular vertical, you wanted to go horizontal. So could you explain that a little bit?

Yeah, so from a from a market standpoint, we focus on the corporate innovation space, the smaller venture capital funds, what we call Tier 2, 3, 4 funds, and family offices. So that's our sort of persona. The horizontal integration is more how we sit across the market. So for us at the end of the day, if we can get data and we can get implicit feedback from funds that sit across the whole of Europe and sort of wider regions and contribute that to essentially what other people see as well, and we see what the trends are, that's how we integrate. We didn't want to build a solution that was going to be used by one fund and one fund only, because there are funds that do do this very, very well, but again, it's it's for their purposes. Can their principal log on on the morning and have a number of recommended opportunities? And you know, a lot of the time that's as far as it goes.

Alex, you said you started Kaiku two years ago. How has COVID-19 impacted your business? We've briefly talked about it, but could you tell us maybe what steps you have taken to adjust to this situation?

Really interesting question. I come from a background of running events, so it sort of was a bit odd to to to sort of change things there very much so. We were a remote team anyway before COVID. So the team's spread out in about six different countries with probably about eight hours of time difference between the two sort of furthest away geographies. So for us, it was pretty normal to be operating in that sense.

From the one hand, it has been hard that we haven't been able to meet certain individuals for 12-plus months just because of travel rules, and things in the UK at the moment are pretty restrictive for for leaving, so that's one angle of it. The other is, as I sort of mentioned before, it's the focus that had to come out of it. It's given us, you know, there was a I suppose you could say a bit of dead weight and other projects and other initiatives that we were operating on, which we got rid of and really focused down on our key mission.

But from a market standpoint, funds now, I mean the typical structure would be they'd have venture partners or scouts traveling around countries, meeting founders and things like that. That obviously doesn't really happen in the same remit anymore. So funds have had to learn to sign term sheets and and essentially invest without meeting founders person-to-person. And so we've really been trying to ride that wave, and that's that's really where we see things going.

I see. So in terms of I I heard that, you know, last year in September, we were supposed to have this boom in the market that the the investment kind of went up because I don't want to say this in a negative way, but the it was supposed to be like a lot of the companies were not doing well, let's say the startups, so there was the opportunity for venture capitalist organizations or private equity houses to invest or acquire these companies into their portfolios for for less evaluation than it would be otherwise. So did you see that trend, that because of COVID, you saw the increase in this activity across market?

Yeah, there's a there's a few things out of that. I mean I think numbers have recovered, and they're a lot better than they were obviously a year ago. I mean I think the first thing to say there is it was predominantly portfolio management at the beginning when everything started. Funds had to go you know, typically if a fund's investing half of its funds on its first 20 investments, for example, it's then going to the other half of the funds there for late-stage investment, Series A if they've originally done seed and things like that, so they really had to focus on, you know, are the companies going to survive, because that's just how it how how it was all working.

From a PE standpoint, which I think from a private equity point of view, yes, that is obviously much more later-growth stage, which we don't focus on because we're seed to Series A stage. But I do think it is a right assumption and but again, it really depends on the market. I don't think the valuations, if we compare the US to sort of European scene, are as as obscene as they were. I mean if we take again, it really comes down to the industry. If we're coming to sort of last-mile delivery companies at the moment, or companies like Gorillas, and things like that, I mean that justified would mean that the valuations are pretty high in that industry at the moment.

So yes, I do think again, but it depends on territory. But your point's interesting in terms of, where's money going? We've seen funds like Sequoia, I'm going to get these wrong, but Sequoia and Index set up scout programs across Europe, and the point is we've seen a lot more US-based funds really try and expand into Europe at the moment, set up offices, and and really try to have a bit more of a of an overview of what's happening over here as well. So really, US money going into Europe, and equally we're seeing all the US money going into Latin America, especially in fintech at more sort of growth, Series A and on to growth stages onwards. So absolutely, there's been a lot of that happening here as well, but again, you know, we're seeing a lot of that cross-borders.

Yeah, okay, great. I just wanted to ask because there was a lot of fear, but I didn't nobody followed up, because I didn't see anything so drastic that happened, you know, back let's say towards the back end of last year, so yeah, I thought I'd ask.

It's a really interesting point as well. I mean I don't know if I'd go as far as expert, but you know, I think the EU—

No, you're there, you're there and thereabouts. Close to it, so yeah.

The the the EU's recovery fund, for example, is still yet to come out, and off the back of a call I was on this morning, you know, I think we'll see a lot more. The UK was pretty fast to react. We had something called the Future Fund, which was a convertible loan scheme, which was really good when things started. That's changed since since that period from last year, but the EU's still got to sort of bring out its recovery fund and things like that, so I still think there's there's a lot in the woodwork that's coming out from there as well.

In south-west, yeah. Yeah.

I want to jump into the future for a second, if no one minds. Alex, where do you see Kaiku, let's say, in five years?

You know, it's an interesting question, because a lot of people are backed by corporates in our space, which is not really always what I should say, because we're trying to democratize what we do. You know, I want us to be the solution that sits in the in the in the market for for new venture funds. The problem that new venture funds have at have at the end of the day is they work on something called a 2/20 structure, so a 2% Oh, light's gone. Have have a 2% We okay on light? I think we're okay on light.

Yeah, yeah, it's good, it's fine.

They work they they have 2% of the total fund size and AUM to essentially manage everything they're doing. So if you've got a fund of $2 million, that doesn't leave much to to run, you know, a full sort of team at the end of the day.

So for us, it's it's really focusing on that, because we know most of the money is going there equally at the moment. And and on the other side, we really want to have that data and be doing something with it that's constructive for founders. Most of the time, people forget the founders. We do have to put an emphasis a lot of the time on the investors, because we're trying to pair both sides, and the investors have the cash at the end of the day. But a lot of founders will spend, you know, six months talking to the wrong type of fund, they won't have the right way to introduce as well, and that's really what we want to be pairing up, because it's just so really good companies with funds overseas that they wouldn't have known of a lot of the time.

So again, it's trying to democratize the data of it, it's trying to sit horizontally across the industry and and pair up opportunities as and when we can. If I had a crystal ball, I'm sure there would be a much better answer I could give you there.

No, no, that's I mean there is the there's that vision of yours, and I think most of the times we find in that, you know, start startups or scaleups, they just, you know, the course can change and you know, you never know. So you you you probably might know something like what you are doing in the next 12 months or so, but things can be different, so I I appreciate the, you know, the answer in in a very much more diplomatic way, so you're not going very aggressive on it, so. Yeah.

I'm British, so.

So so yeah, so this is this is understandable, I think we can we can assume that.

Right, we've come to the end of business and tech part, I guess, Xenia, is that right?

Yeah. I want to shift gears, and maybe get a little personal here. So Alex, how do you manage your time on a daily basis? Can you describe your typical day for us?

I actually use something called the Eisenhower Matrix to prioritize work. So you know, not many people know that a lot of our team came from a one of we set up a conference called Warwick Congress. We all studied at University of Warwick in the Midland region near Birmingham and set up really what became one of the largest student teams and student conferences in the UK. So we took that from a team of 10 to 70. You know, I was much younger then when I did it and feel like I have gray hair now, but you know, it was a very good lesson for us in terms of managing a large team and and team departments and things like that.

A lot of that has translated through, but I think the prioritization aspect of it has become a lot more important, so that's how I why I use certain ways of managing tasks. You know, we're working across an eight-hour sort of time difference as well. We're pretty, I'd say in a good way, regimented with catch-ups that we do across the team. So if it's product and and BizDev for example, or if it's the founders talking, or if it's catching up with the tech team, we've got pretty regular intervals in terms of what that happens as well. We do team stand-ups, which is really important to get feedback on what we're doing well and what we're not and how can we change, and equally making sure I'm passing that back to our partners and everything like that.

From a personal perspective, I've actually become, I think, a lot better in terms of regime than I was before. Because so we used to work I used to work from the Google Campus in London in East London, which sadly shut yesterday for the long term, and I used to live on the other side of London. So well, you know, the commute and everything, you you just get into this routine. But now, I'm now doing a few days a week from from the new office in London that we have in Whitechapel, and equally the other days from home.

So I make sure that those days that I am at home, I'm getting a lot more productive work done, and equally now that we can meet up with people, I think that's a really important aspect that we just make sure that we're still doing. So is there a typical day? No, because something will come into my inbox, it means for the two, three days I am doing something that I didn't plan at the beginning of the week, which I can promise happens every other week minimum. Or a team member wants to jump on another call, there's a problem or something like that. So you know, it's and the team's we're recruiting for five different roles at the moment, so you know, we're sort of really trying to ramp up what we're doing.

Yeah, no day is ever the same.

Which I'm sure is the same for you guys, so.

100%.

It keeps things fun. I mean this is the whole reason I've always done my own thing. A lot of people don't know I used to run a photography company. So you know, I've done a few different things as well. I used to do the management as opposed to the actual photography, but you know, there was a few different things there, and I've always enjoyed doing my own thing, which is really important to me, which is why I suppose you could say I don't work for someone else.

What what is the other, you know, your thing that you do right now? Do you have anything else? Yeah.

I yeah, there's a small part of my time is heading up venture and an accelerator in Birmingham called Birmingham Enterprise Community, which I think it's fair to say is a pretty fast-growing regional accelerator in the UK, ran 10 different programs last year, and my work there comes down to portfolio, funding support, and I suppose you could say more the sort of strategy side of that, which again, it's a completely different size, because the regions in terms of startup activity are very different to what happens in London, what we'd say within the M25, the big ring road around London, because 80% of funding, I'm going to get it wrong, 75% is in London and the South East. That's a problem that we have in this country, as I'm sure, you know, lots of other countries do have as well where the funding's really centralized, so.

Yeah. We know where the money sits in the UK. The the the economy's like, you know, tilted down towards London.

You've got to balance that, you've got to balance it. But it's it's interesting, because I think you have lots of really, for Birmingham for example, you have lots of really good companies starting at ideation, pre-seed stage, and then there's the valley of death, because any growth-stage stuff Birmingham is fantastic for talent, for instance, there is a lot of resources up there, and people don't really realize that. Gymshark, which is one of a UK unicorn in the UK—

Oh yeah, I listen to True Geordie, so I know that.

There we go. So it's it's based locally, and we've had a few collaborations with them before with Ben and Steve and the wider team there, and there's a lot of really good stuff going on, but you get to a growth stage, a lot of people come to London or or set up a base elsewhere.

That's that's where they want to be ultimately. Yeah. Yeah, I mean Gymshark got valued over a billion recently and—

General Atlantic, I think it was 1.3, yeah.

Yeah, well, so yeah. Yeah, okay. And—

A way to go for everyone else.

We we always find a moment of shaming ourselves, you know, on the podcast, me and Xenia, so yeah. This is one of those times, I think, Xenia, again.

Thank you.

Okay, good, good to know. Right, okay, moving on. So Alex, you you've been in this industry for a while. So which one thing would you, you know, you would you would wish you had known before you started this? Is is there any anything that you think going back you should have known? Because most times people say that if I had known this, maybe I wouldn't be doing something that I do today. So which which one is it, or you know, is there any experience you can share with us?

Yeah, I mean I think rather naively, a lot of first-time founders, you know, for for first-time founders like we theoretically are, we've done a few things, but you know, first full-time startup sort of thing, really think that I suppose the business is going to come to you, and and equally things will be moving faster than they are, and that obviously doesn't happen. And equally with the tech.

You know, we took a bit of time at the beginning to, as I said, we changed we wanted to be a community-based resource and then we changed to really what we're focusing on today. I kind of wish we did work that out earlier and and got more of that validation. And and I think the other thing is the European startup ecosystem and you know, wider world sort of startup ecosystem is very decentralized.

So for example, here in the UK, we're pretty local in terms of how we how we do investment, you know, France is pretty focused on France, the Baltics focus up there, the Nordics is pretty focused, they're all pretty focused as well. It's the same, correct me if I'm wrong Luke, cuz you're in Ukraine, if I'm not mistaken. There's a lot of local funding, for example, that comes from the European Commission, but the rules at the end of the day that go into the funds there mean that the startups have to be local, or the Ukrainian founders that maybe have set up a C-Corp in Delaware or something like that.

So you know, that I suppose you could say regulatory aspect, just those those dynamics. You know, we we do sit behind the US on that on on that aspect, got lower valuations, founders can't just have an idea and it's going to get funded, which as a founder over here you do learn, you know, it'll take six months to do though easily to be able to get there.

Yeah, this is I mean I I we speak with lots of different founding teams, you know, across the globe, so we always find this difference that things are slower and more diligent, you know. We spoke with some Swiss Swiss, you know, organizations, and they get funding from the local governments, etc., the seed at least the pre-seed stuff.

The cantons do very well there. We've worked for some time with START Summit, which is the largest startup conference in Switzerland, and that's in the canton of St. Gallen. And you'd go to St. Gallen, for example, in the east of the country, and you'd think there's not a lot here, but it's I mean it's a lovely place. But again, the startup activity is mental in terms of what comes out of it. And then you find Valentin Stalf, one of the—

They're very successful, yeah.

Valentin Stalf, I mean if you look at the founders, Valentin Stalf who is an ex-St. Gallen alumni, so you'd go to START Summit, he'd literally will be walking behind you. You know, it's a pretty powered ecosystem.

Yeah, yeah. I I I think they're successful, and also they've created these little hubs. So if you go to a certain region, you find certain, you know, fintech is there, pharma tech, med tech is here, so they're they're very organized in that way, so. But I don't know if it's if it's you know, if it will come in the way of innovation, because you can't just put the talent in certain areas. I I like to think that, you know, the innovation could be anywhere and people, you know, ideation and all those things.

Oh, 100%. Unfortunately, you know, if you take the DACH region, for example, in Switzerland, Austria, and and and Germany, most of it's obviously in Berlin. Again, I might get this wrong, but I think it's about two-thirds of funding in Germany is from Berlin, which makes sense, because it is the startup capital over there, but then again you know, there are a lot of other larger cities: Munich with insurance, in Hamburg sort of maritime, logistics. Exactly, exactly, so.

Yeah, okay. Well, we we hope this monopoly and, you know, the—

Moves on, yeah. But I mean look at the States. Look look at Austin at the moment, look what's happened with Florida. Precisely. You know, look at DeFi. I mean, in in Florida, I mean it's it's what it's just it's happening.

Nashville up-and-coming as well, so yeah, we hear that as well, yeah. A lot of people are moving there, our colleagues, you know, they're like, "Oh, I'm going to Nashville, I live there now," so. Anyway. All right, cool. Okay, Xenia, over to you, last part.

All right, Alex. You're dangerously knowledgeable CEO who understands their tech stack and business development process. How do you stay on top of the latest business technology innovations? Are you subscribed to maybe Medium or any other online magazine, or perhaps there's a podcast that you listen to?

Sifted, which is the Financial Times startup publication in the UK, is really good. That's one thing. EU-Startups if I want more of a European context, if I want more American, TechCrunch. It really depends on the region. I mean luckily with what we do, because our job is to look and assess startups, we kind of get a bit of an idea, I should say Shanil does, because he manages that side of the company, where the trends are, who's focusing on what, where the activity is.

One thing that I always recommend that's good for people in in the VC space is is it is subscribe to sort of your local venture capital association in terms of what they're doing, because you'll find all constituent members are pretty much the biggest funds in that country. So you know, if I take Latin America for instance, LAVCA, the Latin American Venture Capital Association, is the one to sort of follow in that remit, and then you know, it's good to be sort of acclimatized with what's happening over there.

But no, from a news basis, I'd say more sort of things like Sifted and EU-Startups, and it's and it's always good to subscribe in our world to to fund newsletters and things like that, because you get a bit of a you get those vibes of where the trends are going and who's focusing on what in that sense.

Also, we are speaking with a lot of startups, so you can subscribe to SphereCast. We have a lot of yeah, we're doing a lot of episodes with up-and-coming companies and well-established ones as well, so I think so far 80% of the companies we speak with, they're either raising funds or have just raised them, so there's always something happening there. So you can, you know, get some inside knowledge there, so yeah.

Yes. Very good point.

All right, everyone. We have come to the final part of our podcast. This is where we ask tricky questions of our guest. So Alex, what continues to be your biggest challenge from a tech perspective? How do you wish technology would evolve to make your business more efficient? And what advice would you give to someone who's just starting out?

So the first part of that question might be a bit boring, because I'm going to say data again. Unfortunately, there are lots of regions where the, I suppose you think there's a database that, without naming names, that has an API that's going to have some very good data locally in a certain region, like Latin America, and it doesn't exist. So I really from an unstructured data point of view, if you're trying to use scrapers and things like that, it's pretty difficult to pinpoint what data where the pointers go and everything like that.

So I wish there was more democratized access to data to commercialize things like we're doing on machine learning algorithms. That's me being biased of course, because that's what our business focuses on, but that's that's definitely a really big thing that we're continuing to explore and build out our own internal tools to help on that. So that's the one side.

In terms of the advice to first-time, is it first-time founders or really ones scaling up?

Someone who's just starting out, first-time entrepreneur.

Go and get feedback before you build anything, 100%. Make sure that there's a market need, some element of market validation, which will take you, you know, if you've got a survey, if you've got a SurveyMonkey that says 500 people, whatever, say there's a need in this market or whatever, there's a high percentage, that's going to give a lot of validation. Then build out.

But I I I do always say to founders as well, you know, two feet in, make sure as well that you've you've got a don't forget business development, don't forget partnerships, don't forget your community, because you can build a lovely solution, but then not have any clients to pay for it. And I and I do find a lot of people that do that. It's a long slog, so.

Thank you so much for that. All right, I think we're done.

Pleasure. Well, Xenia, Luke, thank you so much for having me. Really enjoyed this. And if anyone wants to get in touch with us, it's kaiku, k-a-i-k-u.co, and always happy to sort of hear from you founders.

A special thanks to our podcast guest this week, and once again to our sponsor, Sphere Partners, for bringing this episode to life.

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