SPEAKER_00 0:21

He's been building and parking companies for decades. As a zero entrepreneur and as an investor involved in over several hundred funding rounds in a hundred plus portfolio companies. What makes Yuho unique is that he's sat on both sides of the table, both as a founder and as a venture capitalist, giving him a rare perspective on what actually drives successful companies from ideas to scale. Welcome to Yuho. I'm super excited to uh to talk to you and learn more about uh you as well as about Waterfly Adventures.

SPEAKER_01 1:05

Thanks. It's great to be here.

SPEAKER_00 1:10

Why don't we start with just a bit of uh a trip down memory lane? How did you come to venture? So walk us through kind of like your your journey from where you started to where you are now.

SPEAKER_01 1:23

I guess it depends on how how far we can we kind of want to start, but you know um uh you know, starting from the kind of a very, very uh beginning and uh early stage, like I I have always kind of have a little bit of entrepreneurial blood in the in the in the family through my parents uh as well. Uh but uh very early on, so like mid 80s or something, I got a little bit of money from my grandfather, and uh I put that all of that money, actually not not very little computers were not super cheap those times, but you know, put all of that money kind of uh uh buying uh computers and uh started kind of uh getting into that stuff, um like mid-80s and uh you know bulletin board systems, kind of things before the internet. Um, you know, uh I was running one of the uh the most popular uh bulletin board systems in in Finland. And uh then when I got to university, uh they had an interesting uh kind of uh uh situation because they also offered a a uh fixed internet connection, a fairly fast fixed internet connection that was quite rare. And then it happened that that uh we started kind of doing an integration of that kind of a traditional bullet import system and internet uh with a uh guy from US that was developing a kind of a software software side of things. And uh that that wasn't really a kind of an entrepreneur type of thing yet, uh, but a little bit uh I got a little bit in involved in the demo demo scene uh those times as well, not a programmer as a programmer, but you know, kind of running the communication site, and the the my bulletin board system was the kind of official site of one group. And uh and I kind of learned how to do web site stuff uh early 90s when it was really, really kind of a new before the uh Netscape does and those. And uh then uh summer '96, uh I was kind of really, really bored at my summer job uh in an oil refinery. Uh and uh kind of uh it's really kind of a super boring job. Like you're having a ton of screens waiting for something to happen, and at the same time, you are sort of responsible, you need to be awake, and if something explodes or something, you know, that you you need to be really there, and yet like uh the anything happening is like every two weeks or something, like you just press a red button, and you know, usually everything goes just fine. But nevertheless, like support and uh and uh uh they allowed people to do kind of uh stuff that doesn't interfere, the kind of like um, you know, we we started a website company in in night uh in summer '96. So not yet kind of maybe officially, I didn't do a lot of projects during that work time, but started kind of diving in, and after the summer job, uh, you know, we started doing a few projects that kind of appeared. Websites were new and fancy, and uh, you know, uh before the dot-com bubble, it was kind of a pretty uh pretty fancy stuff to do do those type of things. And um that's how I kind of got into uh uh entrepreneurship. So essentially we were doing uh websites, but pretty um like quite quickly we ended up doing pretty kind of advanced stuff like what people would call rich internet applications these type uh these days, like every every website these days have these kind of interactions and loading data on the background and uh and then already somewhere in the late 90s we did a system that uh ran entirely on a browser sandbox, had a multi-threaded kernel and uh you know a ton of uh you know UX stuff, really advanced UX like windowing system, you know, really advanced UX stuff that wasn't kind of a usual on the on the browsers at times and at times. And it was really super difficult. Apparently, we were young enough and uh you know crazy enough to even try. And uh that led to a situation where one of my colleagues uh uh at the company, uh one of the other shareholders, kind of invented a few stuff how to kind of uh uh modify on the fly how the kind of a browser operates. Uh and we we filed a patent on it and uh like several years later uh spun out a software company uh that was focused on that and a couple of other inventions uh that related kind of how to do better user experience and make user creating user experience uh without the plugins and more more programmable and stuff. Somewhere in the early 2000s, like maybe 2003 or four, uh we got a little bit of angel angel money uh year after uh uh first VC investment. Uh and those times we kind of started a small operation in Silicon Valley. Uh it was really exciting times like uh like and uh good example of how how kind of uh startup world and the timing is everything. I mean, I think we started a little bit too early when the time timing was ripe. And uh then, you know, uh uh I have to say that that okay, there was like a brief period of time. I remember my US head of sales uh coming from the from a meeting of uh Chief Information Officer of Bank of America, and uh he uh kind of almost was saying that okay, they they compared our product and Oracle's and ours is better. But that lasted like two weeks, lots of money pouring in, and uh you know, I did a ton of stupid mistakes uh you know on the way, and uh, you know, uh like maybe year a couple of years after uh uh the investors started kind of feeling that okay, maybe this is not the not going to kind of a right direction, and they they started figuring out that okay, if you know uh they should uh sell the company, uh I sold my shares. Um one of the uh early investors at the time, I mean didn't come rich uh at all, uh but you know uh got enough so that I could kind of start go back to school, uh start figuring out what what do I want to do after. And it was like this uh like I was at that point I was dropped out from process engineering, uh, and then I went back to the back to the kind of uh uni uh and started from the kind of leadership and management and uh graduated uh you know in a couple of years, uh a couple of years after as uh from from uh you know leadership management side and and uh did my uh thesis from venture capital entrepreneur uh relationships and what makes it comfortable and and uh and uh agile. That was the kind of uh uh that let me. I mean, we have thought about the kind of like this venture studio things already on the with the first company. Yeah. A little bit. I'm lucky. I think we are lucky that we didn't get money uh before the.com bubble. I probably would have kind of wasted all that money uh easily, but you know, uh we were we were being thinking, I have had been thinking that think thinking that got that kind of a stuff already before the thesis. There was one more company, uh a group of my friends asked me to ask me to join in and uh help them out to kind of figure another business model and uh uh and and uh kind of uh put together the things around a company that did uh did uh crowdsourcing or market research information somewhere in 2007, eight, nine. Um that was time when crowdsourcing was a kind of a hot topic, and uh we again had a pretty advanced uh advanced uh system. We were able to kind of run on the browser uh this kind of a customization that the research results were always custom to that particular user's interest and uh and background. So uh again, um fairly scalable, fairly kind of advanced stuff. Uh but there we had a kind of a really, really group of founders, but when things got to the point that okay, now we have uh uh international multinational federation kind of willing to start providing information uh for different types of gear and few other things in place, and uh, and uh you know there were a couple of people that that were kind of thinking, I guess along the lines that okay, now I have to tell my my wife that by the way, honey, uh you're going to going to pay the entire entire home loan and uh you know all the costs of the kiddos of size I'm doing the double day compared to my current well-being job, you know, uh that sort of uh didn't gather the kind of a critical mass. And nowadays that's that's my own personal sort of uh company, but you know, that that didn't become a big either. Uh but I think I I I gained a fair amount of uh experience, and along those times also it happened that there was this program to create accelerators and VC funds. We and uh and also kind of Nokia was downsizing a lot in the city where I'm originally from all who used to have a huge Nokia site, and that was the time when uh when Apple started taking markets there, and uh they were kind of laying a lot lots of people. And uh, you know, we we basically won ABIT to run a run a small regional fund uh uh to sort of took advantage of uh of the fact that there was lots of lots of uh kind of a talent coming out at the time. And uh that was 2012 when we started Butterfly Ventures. So that's the kind of how I really got into the VC. A little bit of luck, a little bit of a kind of a personal interest, and uh a little bit of a you know, I don't know, uh maybe uh I've been the this entrepreneurially minded that that they had to grab the opportunity and uh you know start doing stuff, but uh I don't know.

SPEAKER_00 11:22

What um Yuho, what was the hardest uh part about your becoming an emerging fund manager, raising the first fund? Did all of the money come from Nokia Ventures? Kind of like uh or did you have to raise the money from different LPs?

SPEAKER_01 11:41

It wasn't Nokia Ventures, it was one of the local LPs. And uh uh I and I guess uh I guess that part wasn't super duper difficult because we won the bid and uh it was kind of a clear uh clear set bidding process. So I don't think that particular part sort of a getting started was super difficult. Everything before, of course, you know, that you were at the place where you could fin win a bit, and uh you know there were the right people around at the time uh to win that bit. Uh my my my co-founders and uh and uh you know and everything that had happened before, uh like being an entrepreneur, uh I think was a lot lot more difficult than that particular part. Of course, uh later, you know, once you kind of go uh you know through fund generations generations, it becomes uh a lot harder. Like you know. Um and uh well of course, if you just kind of would invent it, okay. Now I'm starting that VC fund and then started fundraising, I'm sure it would be super difficult. Uh, but I'm not sure how many people get to the business that way. Maybe people start investing their own money at first. I did a little bit that uh in a way because I got involved on my friend's kind of a company, but it just turned out that figured that they want to have me as a CEO as well. Uh originally I was just trying to help out and then you know, even without any pay, but then I kind of figured okay, I can invest a little and uh you know they wanted to be uh be on board. So I don't know. Uh I'm this optimistic person in general that that uh it's a little bit hard for me to uh even recall what was difficult or easy. Uh I think the difficult parts really were early in my entrepreneurial career where I'm almost made a bankruptcy, I had to lay off lots of people, and uh you know, when I had to kind of uh sell my shares, uh uh when it was obvious that there's no place uh in my startup to me anymore, I kind of uh still kind of had a it had a kind of a place in my heart. And that that that sort of stuff I think uh has a lot bigger effect on me that that kind of a more emotional side of things.

SPEAKER_02 14:08

Yeah.

SPEAKER_01 14:08

The rest, like, you know, when you have have have been close to bankruptcy and squatted through the night like uh half a year or so and did done like like really super duper long days without the holiday for you know a year or two years, uh, you know, or when the times are such, I think quite many things uh don't feel that difficult afterwards. It's just worse.

SPEAKER_00 14:32

I mean, you this is a moment that many entrepreneurs face, and and and entrepreneurship is not for the faint of heart, it's it's for people that have the stamina, the resilience, the great to persevere through challenges because the highs are really high, the real the lows are really low. How do you persevere through this period when uh the times were tough?

SPEAKER_01 14:55

I don't know, I mean um I think it is a little bit of the ultimate nature and a little bit of the uh fact that uh we had a really good uh people around. Like uh there were people um uh who didn't get salary for you know months and yet they were around. And uh like like and I I I think all boiled down that we were pretty honest to the employees, uh you know, what's going on, and uh you know, it was very, very obvious that the uh the the uh founder team uh kind of took the hit first. Uh so so there was a kind of a very high morale, and I could imagine that people could have switched switched the company a lot quicker than uh in most other uh other places. So the people around me, uh the kind of optimist nature, uh, you know, I don't know, being young and uh hard-headed. But it's not like a single thing, or and quite often I think that that that uh startups and uh you know being an entrepreneur is a little bit like a recipe. There's lots of ingredients, a little bit of uh even this kind of uh secret magic that cannot be described in the recipe that makes a company and makes a culture company or or you know a entrepreneur even.

SPEAKER_00 16:25

So I mean I just followed the trend over about the culture. How do you how do you build a successful culture and what is a successful culture in in your in your mind?

SPEAKER_01 16:36

Hmm. That's uh uh again a hard uh hard question, but I have always personally believed that uh that one needs to lead from the front line. So uh lead by showing an example, uh and uh you know being a kind of a trustworthy and uh and uh open uh all in all and uh and kind of uh uh doing things, not just kind of uh trying to delegate and and uh like I I basically think that the being a CEO is a service uh profession. Uh it's your job to ensure everybody else can do the do their job. And uh that might be that that not all the people kind of understand that uh it's not just kind of a looking uh uh you know from the top and delegating, but also kind of a showing example and building a kind of a culture that that people don't drop a ball. And you know, if you do, you don't answer the emails, or you do you you you're kind of frequently dropping the ball. How can you expect that you know anybody below would do anything else?

SPEAKER_00 17:46

Yeah, I mean, from our perspective, couch is really um what you demonstrate. It it it's it's it's how does the organization know or how do the employees behave when nobody's watching? It's not about posters of the wall or beliefs, or it's like what do you actually do when nobody's watching? Um you also um so can we just switch gears for a second and talk a bit about butterfly ventures and what like the investment tenses, what do you focus on? Uh you invest in the seed, you often invest in companies that they pre-revenue. Um like if we if you have to reverse the lens, what is it that you're looking for in a founder, in a founding team, in a company, in order for you to say, okay, I'm gonna write a check to this company.

SPEAKER_01 18:44

I mean, I have always been a fake enthusiast. I've got interested to kind of uh and I I I guess I'm slightly unusual VC in a in a sense that that okay, I don't have a very deep engineering background, but I'm really, really interested in how how stuff works, how it really works, and what does it mean uh that what the product is, how it works from the kind of a business point of view. And uh, like yeah, I had programmed 20 different languages, but I was never a good programmer, but I was kind of okay at that's why I became project manager, kind of a customer-facing person in the kind of first company in any case. I started, I did programming in the in the beginning as well. But but I I think that that uh I have always kind of had a good eye on how things connect together connect together. And uh and uh for me it's quite important to understand the product, the technology, how it's differentiated, and then kind of uh start uh kind of uh getting a little bit of perspective on the kind of a business model and stuff. And I I think in early invest being an early investor, that's actually quite important because quite often you don't have a set business model yet, or you don't have kind of a matrix or years of numbers that you could kind of uh uh see. I mean, of course, you need to look into numbers, you need economics, every everything that that, but I think that the understanding what's the opportunity here and how it's different to everything else. I I that that at least for me for me has been quite important. It's not to say that everything else wouldn't be important as well, uh, but I think that that little bit kind of lends a baseline also for kind of a starting look, okay, what's possible from the market size point of view. We definitely look a lot the the the market science, how big of an opportunity it can be, but uh quite standard from the kind of VC point of view. But I try to kind of build it from the uh the the kind of a where this technology is coming from and where it's applicable to. And then, of course, I mean uh uh there are things like founder chemistry. I mean, we have a kind of an official scorecard even that we use more it's more of a discussion tool, to be honest, to standardize the dimension of the discussion. Uh but you know, pretty usual uh VC stuff uh like uh but but uh as said, uh at least so far uh these funds have uh have uh oftentimes invested pre-revenue uh more often than invested pre-revenue. And uh we've done a ton of cases literally day one after they spun off from the university or so forth. So uh yeah, that's uh and uh for me it's kind of important. I I I guess it comes a little bit of uh we are relatively small functions, 50 million vehicle, the latest one. So uh we can't brute force too much. Like there are these big big boy players that that uh have a you know. billions under management that they can kind of uh take this little bit of a proof force approach and make more whereas uh we we we maybe need to kind of uh be a little bit more sensible on uh for example differentiation how this is different better than everything else on the market it's not that we can uh kind of a brute force uh like better executing team uh in place and brute force like uh bigger marketing budget in place even if you know we are kind of building a decent sized syndicate and uh and uh and the investment run necessarily are not that's that's that small but we cannot kind of account on that okay if it flies we can put that yet another hundred million uh to sort of uh make it or break it and the and the second best will do so we need to be quite sensitive second best with best team will do we need to be quite sensitive that it's the kind of not just the kind of a best team but also the best technology and product and of course you know being a bit bit smaller it gives a little bit of leeway okay if of course we like if there is a billion dollar market uh but we can also take a kind of a smaller niche niche which is in the range of hundreds of millions on on total addressable market size type of thing so uh so uh that will still uh move a needle for uh for our our size fund and I guess uh anybody who's kind of uh uh below a a a a a few hundred million uh uh fund size no I mean all of this makes sense in terms of uh the areas that you focus focus on the opportunity in the market size the founder chemistry all of this makes sense now out of curiosity question uh I guess it's it's two questions not one but do you primarily invest just in Nordic companies and then the second one is because you are in in in some cases you are chasing opportunity that they're smaller um and and and and that this is going to be that it it's really hard to compete with a larger fund that have a lot of capital that they're chasing the big opportunity are what what is the most common uh liquidity event or exit for your portfolio companies do they sell to strategic do they exit do they sell the companies um do they go public kind of like what's what's the most common scenario um or is it like a a subsequent VC who comes in and just kind of buys out uh buys you out we have had a bunch of uh this kind of a uh pre-list IPOs and uh uh and then um like I don't know 15 some uh um MA cases and I have to say that the best exits have been the uh MA based that kind of uh someone bigger bought a uh the company for uh one reason or another uh I mean I don't want to say that we are kind of focusing on smaller smaller kind of opportunities per se it's just that uh that we need to put emphasis uh it's not just that it it the size and execution capacity is enough and we have a little bit more leeway uh in terms of size but of course we are still aiming at those kind of a big wins any any VC one uh fund that that does well needs to have a uh you know uh at least one one of these kind of outsize 20 uh 50 80 times money back uh and uh that that that that that's and it's interesting it sometimes i i just uh just had a chat some uh maybe a year year and a half ago with the with the lb that has invested nearly 100 funds uh since 80s and it's funny that even in their portfolio the uh the the funds that they form uh it's like four funds uh fought in 80 percent of the uh of the kind of the the money money above the 1x let's put it this way and uh there were four underlying uh assets or yeah essentially four underlying assets on those so one fund yeah and uh it's quite strange that that that that is even in the fund of funds uh side it it might be good might be working that way but it's a uh it it's quite this power law is quite uh quite strong in in particular what comes to this kind of a tech VC yeah uh type of game so so uh definitely the kind of a size from that perspective matters so let me then ask you a question around um uh I I guess it's a multifaceted question but if the the the typical um fund performances if you have 10 if if if a fund invests in 10 companies do fail six or steady to drive the outsize returns um what is uh how has AI achieved how you invest or how you monitor how you evaluate decisions but also like what is your tax tax looks like in terms of evaluating where to put money um evaluating the decision that you've made as to how how the company's performing and then looking back to develop kind of a pattern recognition like what does it look like uh from very early on we have had a this kind of a fairly systematic system where uh where we kind of score all of the companies before the investment uh right after investment and then every quarter and always in the same dimensions and uh uh and uh that kind of a gives a discussion framework so that that's what we've been doing since 2013 or uh 14 or something and uh I mean yeah we use AI these days uh but I think it's really about the system uh that uh we we've tried to play uh build a kind of a game plan that sort of automatically uh puts the better cases on top so in a sense I'm not trying to figure out uh you know if this this particular one case is uh you know every dimension and full depth good or bad I'm trying to figure out uh uh whether it's a uh you know top three case or not or top five case or not and it's more important to get the kind of order right than any given time than you know get exactly whether the market size is 2.45 six billion or 2. you know 1 billion for example and these kind of scales matter and uh that kind of a process approach and systematic process approach that that we have a certain process steps that the companies always go through and we have a always a kind of a discussion frame of reference uh that kind of standardized the uh the the uh the uh discussion as well as points out like uh like everybody gives a score so we can immediately identify if there is a divergence in opinions and discuss because usually that means that there is something in between the lines uh that the us partners see differently and uh and that way it's uh and again it's a system that allows us to kind of uh uh discuss the more relevant relevant stuff and that that's what we've been kind of driving AI has been more on the sort of uh that we validate against okay do you know did our thinking uh matter or did did we get it right is there any kind of uh uh gaps in the thinking of course there's a ton of tools that we use like uh like and then they run the day to day operation like CRM side uh not so much on sort of uh making decisions but gathering information and uh organizing information that that's uh that's what we've been kind of using AI uh AI more I mean personally as an entrepreneur a little bit I I wouldn't like to be in uh uh uh fighting against a some kind of uh AI shield I have always felt that that we need to be pretty open to the startups and uh you know how they who they are and quite often this particularly these early startups don't know how to explain their stuff very well so and at the same time they are thinking doing stuff that doesn't exist yet anywhere else yeah so and these and these type of uh more unique more creative things uh ai tends to do lots of uh lots of kind of mistakes and uh you know uh you you really need to know how to ask or you know you need to have a tools that that kind of a structure uh make it structural how do you kind of ask in a way that that um you know the fact that these are early and you know they do stuff that that doesn't exist uh you know uh you you go on the doesn't exist part um where do you get the data set to to evaluate opportunities um because I mean if it's uh nascent technology and they invented obviously you you like you you said you're not deeply technical but you're technical enough to be able to evaluate how this fits within uh a business environment but um where do you get information or or how do you go about building out a data set to help you make a decision you talked about market size you talked about opportunity size like um what other uh data points do you ingest in terms of building like okay this is like top one top two top three or like this is how they come they fit on a market map vis-a-vis other competitors or if it's an Aston technology what other technology exists to to to complement or substitute? Well first of all we source uh RDLs um I didn't answer earlier but at the moment different Nordic and Baltic countries and uh the it and mainly different universities of those countries so over 75% of the DFO it comes from those universities. So typically the science part is is solid it's more like uh getting that into a context and understanding what's the opportunity there um I don't know I mean I guess that's the part of the VC that uh I've been uh meeting uh one on one meetings this one are one on one meetings now uh how many years since 2012 three four hundred three four hundred a yeah so any given you typically for of any given type of company you've seen at least five to ten others that are kind of tackling the same problem but a little bit from a different angle or with a little bit different kind of a product or value proposition or you know market entry entry logic. And quite often things happen like like my second startup was at the time when everybody started kind of pouring in money and there were certain kind of factors in the market that that sort of aligned starts so to say that things start happening. And quite often used that that uh there are uh the market is sort of right for a certain thing yeah and uh and uh and and and that's the reason why oftentimes it's not that you have to kind of uh discuss just one with the one founder of a certain uh about a certain problem but you get the view uh from the several different angles and good at being VC is that actually people are quite eager to you know explain and help me understand. I mean I I understand I I don't understand the ton of stuff that that that that that the people do but typically uh there is an interest of sort of uh trying to help me and help me in in in in understanding so that that that's a kind of a uh good spot to be i i mean i don't know uh uh and you kind of develop a view like uh i mean when we started doing websites i'm sure we wouldn't have started doing a product that uh helps uh making difficult websites if we wouldn't have been doing difficult websites and that wasn't a kind of a short story like it took like eight years to get to the point that the company got found so there's a this kind of a and I think people oftentimes uh don't uh value enough uh the background and I actually I think that quite often the case is that startup doesn't emerge like okay uh in this odd Sunday last week I thought about this and uh you know let's start start a startup but usually there is a longer story and a bigger background like that how people discovered that this is a problem yeah for sure and it's it I mean those are the best ideas that they've been percolating um in in in the background and the founder has been working on it and they might have been hoping that somebody else comes to the scene and solves the problem and then when they see that nobody's emerging they're like okay well let me tackle this problem because it is a problem that I'm facing um what what are some red flags for you that you would say uh like this is this is a no-go territory for me that I'm going to pass and this is an investment well of course if it's a off focus uh uh case for us like there's no kind of a uh deep tech or the tech technology stack is uh that's partially because uh because we need to rely on that tech stack because we we we cannot kind of a generally brute force things uh uh uh team dynamics if there are kind of a uh I mean we I don't think we ever invested a single founder. Uh we have a founder to find another founder that happens and quite often uh we have helped a a technical team to find find a commercial founder before the investment that that that happens quite frequently but single founders we we we we we we we we we don't invest and also if if somehow there is not not a kind of a feel of a positive team dynamics within the team that that that that's definitely a red flag we don't do uh class free medical devices or drugs uh i don't know uh i generally i'm quite open minded we are kind of uh industry agnostic uh you know we are technology agnostic uh uh and uh you know uh it's more about the kind of a stage being being within the kind of a sandbox that uh is ours like it doesn't make sense for us to invest a company in let's say in in Italy because we don't have anybody in Italy so that we could be confident that we we are kind of uh have have kind of unfair advantage sourcing deals from Italy.

SPEAKER_00 37:58

Yeah I mean we might uh you know uh one or two funds down the line if you know we figure out the way to the deal flow and uh probably have a person on the ground um probably we are kind of expanding the scope on Netherlands uh with the next fund and the kind of a nearby areas there's been a person year and a half kind of building the base uh for the sourcing uh sourcing operation there uh already so that that that seems likely but uh but you know if it's within our sandbox uh usually we are more than happy to kind of uh listen to the story and then it's about the kind of getting to the uh figuring out whether it's top three case or you know not yeah uh Joch you mentioned that one of the red flags for you is if it's uh if it's one founder rather than a uh uh a team of co-founders maybe two or three um typically if the if the idea is coming out of university I'm assuming that the the the the primary co-founder the primary co-founder is is somebody that's really deeply technical and you said you will you will help them find a co-founder that's on the commercial side kind of like what are the most common challenges that deep tech teams are facing in terms of commercialization go to market generating the the first dollar i i think the usual challenge is that that uh first of all uh um maybe where where where should i start first of all uh i'd say that that uh I mean in Finland we actually have a pretty good system these days they have this research business program which basically is made to uh package uh research programs into startups and uh government is basically financing a if it uh if it kind of meets certain thresholds and there's a kind of a business opportunity there universities have have these kind of entrepreneurs in residence uh programs and uh government kind of finances um I don't know million two million within the kind of a scope of university think how this will become a business and quite often in those cases there actually is uh you know the technical founders a and and a commercial founder that's one of the requirements to kind of qualify on that program if there is a commercial champion and uh but still I'd say that oftentimes the problem is that the the uh the founders don't uh sort of attack the customer early enough and involve with the customer deeply enough. I mean that that that and and uh quite often uh particularly here in Finland people are a little bit shy on uh what they have if it's not perfect in every possible sense that they can think of uh they they tend to sort of uh think that okay it's not good enough yet even though uh personally I think that earlier you start uh discussing with the customers uh more likely earlier you get the kind of uh the the first dollar in as well okay it it's kind of funny that you say this because I think this is a common challenge regardless of what geography your company is or what industry you are like we we regularly publish leadership on futureventures.ca that that pertains to two different topics what is like organizational development leadership what is around customer discovery um the number one article that we have on our website is the forward deployed engineering model it generates thousands of equits every month and and the same thing goes with kind of like our town leadership around customer discovery and this is consistent with the advice that we give our farmers and portfolio companies like focus on understanding the problem intimately well um like you it's kind of interesting that the things that you had built like you focused on the user experience but user experience to you is like you put yourself in a customer shoes to kind of understand what is it like like from their perspective so yeah even but it's also the kind of approach that the product is so like like really seeing it kind of a whole that that that's definitely a thing yeah fully agree out of curiosity question uh like how does Finland and the academic institutions deal with IP if the company is born in the at university does Finland or the university uh maintain some kind of rights over the IP so so in in Finland and it varies a little bit of between the different law recurrences in Finland typically the university owns the IP there are a couple of except exceptions where it's the uh the the founder kind of legislation guarantees that uh if you're an inventor uh you get some kind of a compensation if if it becomes commercially valuable uh but the lawyer in general kind of owns the IP and typically the IP gets transferred uh to the startup uh and most most of the time is it is that it goes as a as a uh becomes as a part of the equity uh at the time of the funding or at the time of the uh first investment ground and typically the company then owns uh the the the the uh uh the entire IP and uh university then has a uh a small share of the uh uh the the uh shares or or universal research institution has a small part of the shares I mean this is a beautiful way to uh to drive incubation and drive research and commercialization like because different countries approach it differently and um Canada is experimenting a bit in terms of how we approach it. Now is this the same model in the other Nordics or Nordic countries? Or is this unique to Finland?

SPEAKER_01 44:02

So in most Nordic and Baltic countries this is the case that the kind of operates this way that the IP gets transferred. I mean, there are a wide variety of uh, you know, some universities, some some some countries, uh in some countries the licensing agreements uh of some kind are more sort of uh common than in others. Uh but personally I kind of prefer the full ownership uh of the IP in general. Because if it's a licensing agreement, there is often kind of a uh challenge that relates to kind of how how much the company can pivot from the original idea and you know uh what happens if the company gets sold and uh and and so forth. So there are these question marks that that uh are not always easy to tackle. And the other uh other uh element kind of uh relates to the to the usually it's very uncertain how early companies can really start paying for the license fees fees. And as a VC, uh I'd kind of prefer to uh spend all of that money in the growth instead of uh uh buying royalties. And until the government is fully settled, uh it's hard to decide what is a kind of uh right uh model or right kind of a way of uh defining the royalties and all that stuff. So so personally I have preferred to on the IP. In Sweden, uh Sweden is a notable exception because they are the inventor, and quite often in university cases, it's the it's a professor and the primarily the professor and then some uh some other science in the team on the IP. And that's a little bit of a problem because professors often don't want to become entrepreneurs. And uh that often means that but they still would like to kind of own a major part of the company, and it's kind of hard harder to uh harder to make standards how IP gets transferred. Particularly in the, I mean, I have colleagues who look at the kind of Sweden or the Baltic countries, and they know that those countries a little bit better. But if I look at kind of Finland, uh the fact that there starts to be market standards uh on how this is being done, uh, what kind of should we do, how the kind of evaluation of IP happens, all that stuff, uh it makes life a lot easier.

SPEAKER_00 46:22

Makes sense. Um just to continue, I'm super curious about the Nordics, but like my my perception based on the research I've done is that the Nordics are punching above their weight in terms of startup. What are these, what are the Nordic countries doing right at other ecosystems that aren't in what should North American founders learn from Nordic startup culture?

SPEAKER_01 46:45

Uh hard to say. I mean, uh there are definitely pockets of a very, very, very, very good, high quality uh you know startup ecosystem in North America. Uh Silicon Valley, of course, is a kind of a particular example. Uh, but if we look at the Nordics, it's it's certainly true that that uh per capita likelihood of a Nordic uniform is like uh seven times higher than the rest of Europe, and that they generate like 17 times more value than the rest of Europe, and even in absolute terms, this kind of a new Nordics area is like double the UK and uh uh in terms of value generation, double the UK and uh and uh something like nine times the Israel, which is not well known, and uh Nordics is kind of uh a little bit you know not very well appreciated in this respect. Uh but yeah, like like very early on, things like MySQL, uh Linux, they come from Finland. Uh uh Skype, Spotify, uh bolts, and you know the rest. Uh I think the secret actually is that we had to go abroad. We are relatively small and very open markets. Like there is like Finland's five million people. What kind of a company you can make within a market of five million people? You know, it's certain that not everybody will buy a supercomputer or you know um I don't know what else. Magnet limiting bearings for turbo compressor. So we very early on had to go outside.

SPEAKER_02 48:28

Yeah.

SPEAKER_01 48:29

Um and at the same time, because a small language uh group, you know, everybody pretty much speaks okay English. So that's kind of an orientation type of a thing. But I think also uh we've always been this kind of a problem-oriented, particularly in Finland, that we like to solve problems, and uh we are very open to technology in general. Uh that's probably the reason why we started the mobile phones a lot earlier than uh many others. And uh then there's a little bit of a luck as well, like if there is a big company like Nokia that that that makes a kind of work-plus business, and then people and it was a little bit two-edged short. We had a startup ecosystem before Nokia started really, really growing and sucking everybody in, it was so large that it it took kind of outsized role in the market. And uh there was a kind of period when not a whole lot of startups came up uh from Finland. Uh, but these days, uh again, when it's not as outsized. I mean, uh, and of course it it generated lots of wealth, and you know, uh it was a pity that the that the the fall, I'm not saying that, but in a in a way, uh also I I think originally the Silicon Valley got started in a way that there were lots of people coming out of the uh the uh military industry and then starting to figure out how to kind of start businesses, and a little bit like the same type of a cycle, we had a downturn uh and that forced us to uh you know start thinking this way, and uh so so I think it's this kind of a mixture of different types of things, yeah.

SPEAKER_00 50:06

Yeah, it don't make sense. I mean, uh obviously the silicone valley, everybody's referring to the PayPal mafia and things like that. Is there a similar term in Sweden, like for the Spotify mafia or for like Nokia Mafia? Like kind of like a group of uh it'll be facetious, but kind of like people that have been part of companies that have achieved like commercial success and then have exited this this company and so they started new companies.

SPEAKER_01 50:35

There is this, and that's the kind of a thing that you need, like I don't know, 15, 20, 30 years of the first of those few first of those until that kind of uh knowledge and that kind of uh attitude has been diffused into the ecosystem. And uh so so it's not like very it usually doesn't happen very quickly. I think it was a similar similar process when when kind of Israel got uh uh got their uh sort of a startup ecosystem up and running. Uh they started generating these funds and uh you know uh and and that kind of a got uh so you need to kind of do a very systemic uh wide-ranging work on the ecosystem side, but but I mean I don't know Canada that well. I I always assume that you are enjoying the your uh American uh uh markets and American you know sort of uh benefits of the ecosystem, the VCs are relatively close, whereas we always had a little bit of a lack of uh capital here.

SPEAKER_00 51:40

Given the numbers that you that you shared with us, Yuhu, around the the startups per capita, like the success that the the the Nordic countries are having, um the export orientation that's kind of by necessity. Um do you see the opposite being true in terms of like external capital flowing into the Nordic countries? So we're kind of like if you look at your LP base, are they mostly Nordic LPs or are they from all over the world?

SPEAKER_01 52:08

Uh we have a few international LPs, but honestly speaking, most EC funds here uh vast majority of money is coming from the kind of uh hello Nordic uh sort of uh LPs. Uh in terms of the uh direct investments in the startups, uh particularly the larger rounds, uh it usually actually comes outside of the Nordics. And that's a little bit of a problem because there aren't really many, if any, uh this kind of uh full life cycle uh Silicon Valley style of funds that could kind of a macro company uh you know all the way to the sort of uh uh series C or D. So in a way, we we are still quite dependent on on uh outside capital, particularly what comes to this kind of uh uh latest and uh and and uh bigger runs. And this SLUS has made a big difference in in terms of the uh visibility. Uh these days I think SLUS is by far the the best uh uh VC startup event in the world. Uh and it's not just the kind of uh uh Europe or or finland, but in the world. Uh there are there are no there's no other event that would put together so many thousands of VCs in the same place looking at startups than that than this particular one. And I think it's great that it's actually a student student-run organization, so you know, uh non-profit student-run organization, so they really could put a lot of effort and fresh thinking, you know, how to make it better and uh you know how to make it kind of uh really work for the for the audience.

SPEAKER_00 53:45

Amazing. Would you be able to make introductions into the organization? I mean, we'd love to have them on the pod. It sounds like it's somebody that's really important for building out the ecosystem.

SPEAKER_01 53:57

I mean, Slus, uh I I don't know. I mean, I haven't looked at who because the people change every year. I don't know who's today running it, but I'm sure that they are kind of rather easy to uh reach out. I I can of course check and probably get the the guy is someone I I I know, so or you know, uh have a kind of a direct connection. I mean, we are pretty pretty uh diffused into the into the university ecosystem here, but uh but you know uh if you're asking who's the guy to talk to, my name member is like two bytes, but I I cannot.

SPEAKER_00 54:35

I know we're coming to uh to to to to time. Any parting thoughts, Yuhu? Um anything that you want to share?

SPEAKER_01 54:44

No, no, not really. It was a pleasure to talk, and actually uh I noticed I I have a meeting starting around, pretty much like the coaching startup to do their funny round.

SPEAKER_00 54:53

So well, it was a super fun conversation. I'm glad too that that you were able to join us on the podcast and and share a bit of what's happening at Butterfly Adventures and a bit of what's happening at in in the Nordic countries. It was a pleasure.

SPEAKER_01 55:11

Thanks. Um my pleasure as well. Uh all the best, and uh, you know, hopefully we'll stay in touch.

SPEAKER_00 55:17

For sure. Thanks.

SPEAKER_01 55:19

Okay, thanks, my