SPEAKER_01 0:02

Today on scaling nuclearity, I'm joined by Peter Dorfner, an investor with GGF, a Berlin-based venture capital firm back in the early stage founders across food, agriculture, and generous. The firm invested from Prince D to serious day at the intersection of D tech, artificial intelligence, and consumer models, more specifically in the agri-food and energetic industry. But today's conversation is not just about climate ambition in the abstract. It is about what founders must prove, how capital should be sequenced, and what it actually takes to move a breakthrough from a compelling idea to a scalable, commercial, commercially resilient business. Peter, welcome to the stage.

SPEAKER_00 0:47

Thank you, Maxime, for having me today.

SPEAKER_01 0:49

And it's my absolute pleasure to have you on and talk about uh the work that you do. So um what's the origin story? When did you start GGF? Um, or when did you join GGF? Um, how did you get clarity on the investment thesis? Why why is this the investment thesis?

SPEAKER_00 1:08

Exactly. Um, I mean it was a very exciting year. When we started out, it was me and uh two other partners who launched um in generation fund at UN 2021. Um you know, um kind of was the golden summer when we raised the fund, almost did the entire 100 million fundraising somewhere over like four or five months. The time between the COVID crisis or the worst parts of the COVID crisis and the start of the Ukrainian war. So it was really that uh point in time. Um US administration was just in place with Joe Biden, um, where everybody was fully set to tackle the climate crisis, tackle the world's most pressing problems, um, where kind of capital was cheap and abundant, and thus money was there to make big changes. Um, me and another partner we are coming from the um classical food industry before from the food investing space. I've been personally investing in agri-food um since 2016, which is uh while ago. Um, so we did it before it was cool, and in that year it actually was the point in time when it became super hot, super interesting. There were a lot of buzz around vertical farming, alternative protein, and so on. Um, we believe that there will be such a big demand on the consumer side that um eventually change will be enforced. There will be not too much hesitation, and kind of all of those business models will go through the roof. Everything will work out, and capital will always be abundant. I mean, turned out while uh a few months later the world faced very, very different problems from saving the uh climate to basically securing our basic energy, uh securing the supply of our basic energy needs um around the globe. So, yeah, things took quite a twist. Um, but it taught uh very valuable actions uh in terms of like resourcefully scaling um companies in the space and a growing on a rational and efficient basis. Um, so the approach to investing in this other fund versus when we um where we ended up now or what we're still doing is a very different one. It's from a macro consumer trend from the endpoint driven, really from a B2B efficiency perspective, not what not only what like can we supply what consumer wants, but can we actually supply products both in the food side and the energy side on a feasible price point? So the cost efficiency, the kind of reliability in the supply, that we can very much cross the diseases. Um climate and impact still is that's only part of it now, and not uh technical on a centerpiece anymore.

SPEAKER_01 3:50

So a couple couple of related questions. So just on on the fun side, 45 months to raise a hundred million dollar fund, that's very quick. Um, how do you go about the fundraising process? How many LPs did you raise in Europe, uh like Germany? Did you raise globally? That's one question. And then um, you said that you were in you've been investing in the space since 2016. Um, did you warehouse the deals as part of the new fund? Uh kind of like what was the the formation process in terms of the the fund?

SPEAKER_00 4:29

Sure. Um, so uh I mean the luckily we had two anchor investors from the private equity industry who very much believed in us um early on, who warehoused the first three deals for us, which um yeah, they found quite exciting, quite interesting. And I mean it always helps if you have renowned fund investors or renowned people who seed actually funds, plus some warehouse assets, it gives um any kind of following investor a good feeling, like what the fund is actually about to do, what the approach in terms of like business models, in terms of um um founders they choose in terms of LPs, other LPs they work with actually, or early believers who validate the case. Um, that really helped us to be very honest. Um, yeah, we have a total of over 50 LPs, very typical for our European fund. We have 40% publicly backed by um large German and European institutions, such as the European Investment Fund, um, that committed a significant proportion to our funds' um final volume. Um so um that's a nutshell, more or less the approach. But um I agree to you. Um it's uh having anchor industries and having warehouse deals in the beginning, it's very important to start it out. And again, it was not a continuation from the corporate track record we had before. We carried on investing in some of those companies, but we didn't carry over any asset or um something similar to what was starting it really from scratch from a blueprint and building up again was amazing to start this.

SPEAKER_01 6:08

Makes sense, makes sense. Um how did you um how do you come up with investment thesis for the for the fund? Is it more of a carry over to from what you were doing before?

SPEAKER_00 6:21

You mean you need always need to to start somewhere with what you can do, but you mean if you start something something new, probably the thesis that you're investing in the future is not the one that you're more or less deploying into now, but it has to be fairly close to a certain degree because otherwise, why should people trust you? So I would call it like an evolving, more or less investment process. At the CBC, one of the partners in Ivy mostly or exclusively backed consumer brands, like better for you products, environment-friendly products. It was kind of in the the early plant-based protein price shortly before the Beyond Meat IPO and um similar kind of undertakings happening. So it was really consumer, super downstream driven. What we did with our first investments in the fund, we also did some downstream-oriented investments, but we went midstream towards the value chain, which is um everything food science, ingredient, food formulation related, yeah, and big stuff like cellular agriculture, uh biomass fermentation, precision fermentation technologies to really lead towards better, more available, and more efficient products. And after we covered that area, we went one step even further with this fund and actually started deploying into ACTEC, into precision farming or generated farming, um, smarter sea breeding and stuff like this. And with this value chain captured, we also looked at do kind of what's actually driving the main issue in food to energy process. What are neighboring categories that also fit along a consumer and food-oriented kind of investment dieses? So we ended up backing firms in the packaging space, in the um uh uh biogas power plant space, also, but also in direct energy supply space with energy traders, um energy trading platforms that also um follow a similar business model and um touch kind of our portfolio companies are interesting towards our LPI, includes a lot of agriculture and food-related corporates um who also benefit their approach. But that's also where we kind of um stopped more or less expanding and say, okay, Green Generation Fund, it's an it's an uh agri-food energy tech focused investor. This is a broad enough ecosystem to be hatched against, I think, many numbers of risks, but it's also narrow enough to um still yeah um kind of get have an expertise in those fields, really know what's going on, understand the trends, build a reliable network towards industry partners, potential buyers and acquirers of the companies, and so on. So, again, that's our day, and I think this is where we are also going to build out um looking forward.

SPEAKER_01 9:10

Peter, are you actively when you are looking uh when you're scouting for companies and looking to make an investment? Are you actively looking for companies that are creative with other companies in the portfolio?

SPEAKER_00 9:24

I mean it always depends on you know, if you're if they are too close and too close collaborating, they maybe face a similar level of business risk, market risk kind of are affective to the same like uh gray swan or black swan events that happen and can disrupt entire industries. So, yes and no. I mean it's it's always a good starting point to um to kind of go into associated categories because you already have some entry points, you have some of the business models, you know, some other players in the space whom you're going to invest, you know, some of the founders, some of the employees. Um, that's definitely helpful to get a quick understanding and to also pitch your own value position as an investor towards the company. Um but then again, as I as I outlined before, you have an incremental risk behind, um, which is manageable. I mean, typically European funds. We have 27 portfolio firms today. Um, but that's I think that's about the size most of um the funds in Europe have. Um, so you probably won't end up too clustered. You are I think less pray and prey focused and more shareholding oriented than non-American ones are simply because I mean market is smaller than than in the US comparable to and with the fund, are you primarily investing in um in European companies or globally? So, I mean, when we started out, we were a little bit more narrow. I said in the beginning, was a little bit more protein um food ingredient and so oriented. Um, I think we switched a little bit from a more global investment approach, but on a narrower field towards a more European um game. Um uh and banking companies now more in the dark region of the chairman-speaking world and neighboring geographies and less so the globe. Um this change, I think it also happened due to the underlying macro of the last couple of years. Like the world was more available, let's say, or like access was more easy, capital was more floating around um uh before um the uh Ukrainian um war crisis and everything that happened. And also when you started deploying the fund, there was still COVID, so you couldn't visit the assets that much, to be very honest, independently if they were next door or on the other end of the world. So you more or less had nobody had a really kind of location advantage in terms of investor um meaning and access and of um you also realize that we see it's an ecosystem game, so to your doorstep very often is more available to get faster into content move faster. Now today we are mostly a European focused investor, but we wouldn't rule it out in the future, go a little bit broader again, depending also on the team developments and uh yeah, market.

SPEAKER_01 12:12

I'm curious on the investment side, how do you decide if a company can scale beyond the lab? Um, that like even if they have like breakthrough innovation, that they actually can become a commercial success. Like, what is it that you're looking for, both from a technology perspective but also from a founding team leadership perspective?

SPEAKER_00 12:35

So I um I mean we typically seed investors, so the companies mostly have mastered the pre-seed stage, so they have found their founder market fit and their product market fit when we are investing. Um, but you're right, the question is um I mean there's interest in the product, but not at all prior, not at all costs from our from the industry side. And that's indeed the very defining point of this investment stage. Um, I mean, most importantly, it's it's the team from our point of view. Very typically, if you look into Deep Tech, for example, it's very often a university-driven founder, um, technically the background, who is starting it, who did a thesis on it, filed a pattern, did a PhD research in a specific area, and then maybe comes together very often with a young and very dynamic kind of entrepreneur, maybe not that industry-oriented, but driven enough to start something. And it's a good combination because those are like hungry people, they're young people, they can afford to live on lower salaries uh for the time being and bring the company to a certain level. But in the space where we are active in, particularly in the agri-food tech space, um, it's a very closed industry, like it's not like digital tech. Well, digital tech was like 15 years ago, something which has a very let's take a kind of own smell or kind of styles in the management. So you need to have a certain contact book value, certain level of access, a certain level of trust to be integrated in those value chains. Very often innovation is strong in the agri tech and agriful tech space, but it's not as disruptive as it's typically is it was like an additional revolution for tech, media, and so on in general. So to convince and to break through doors, you need somebody who knows the space. So when we enter this, we very often make it as a condition. If there's not somebody already in there that they hire an experienced chief commercial officer, chief sales officer to actually break through. And we spend a lot of do on the consumer, customer end to actually bring it forward. On the technical perspective, we spend a lot of time assessing those models, but it's still probably the most defining backing point after that. The team doesn't get it together, the tech seems out that it's not needed, or that it's simply kind of overtaking another innovation at level. So even if you spend lots of money on the diligence um uh advice and take several expert calls in the space verified with a half a dozen corporates out there, it's still difficult to uh have a final say if a tech flies or not. That means it's still the seed stage risk that you're taking. That's why it's cheaper than investing in in series A. But there is no unisonal um uh formula. Um, what maybe if we can add one more thing to this? What helps is the momentum in a certain space, of course, like where you are in the cycle. If too many kind of it's difficult also to observe from the outside, you can always observe commercial developments in a company if they're going well or not, because most investors can uh read um PLS, that's uh not a problem, but uh TRL, uh it's called technical related readiness levels. This is a whole different game, and from sometimes the company has an incredible crazy breakthrough, um, which is for an insider circle super value offering, but from the outside looks like nothing. Like the company was floating around for 12 to 18 months between rounds, and it seems like nothing happened, but in the end, they had this one step that brought down energy costs by a third in the production process, or that brought up yield and if um efficiency by 20%, which puts them um efficiency-wise above what's in there and the out there in the market. But that's hard to communicate, that's super hard to prove, and so um this is where the risk remains, and the best hedge in the situation still is to catch a firm in the seed investment at the beginning of the cycle. If there have been seed investments happening for specific tech for 24 to 30 months or whatever, there's a high chance that many of the predecessors have failed already, and even if there that there is no more corporate interest in partnering with more firms, then there is no more interest in the market to further fund because the the space seems to be, or the technology in particular that vertical seems to be failure kind of um effect. A good example for this is vertical farming, but now there are very interesting vertical farming cases for specialty um fruit, such as like strawberries and other high-valuable inputs, which work really well, um, which are economically feasible, where retailers and uh must take a vested interest in. But due to the earlier failures, where billions have been burned on vertical farming for more leafy green and vegetable cases, nobody's backing those things anymore, even though the thesis now validated. So that's coming back to the point. Um a good hedge against scaling risk is also um yeah, hitting at the right point in time, making sure that space is burned, and making sure that technical advantages, technical breakthroughs can be communicated properly um towards um uh following investors.

SPEAKER_01 18:01

So speaking of scaling and risk, I mean, sometimes you uh if you're a founder, you cannot choose the timing, uh, you can only pivot and react to the market. Um what uh what would you advise founders to do if if if they're coming on and to take your example, there's been 24, 30 months of uh corporate companies uh you know championing pilots and the high high degree of failure. And but you but there's a founder that that strongly believes in the technology that they developed, maybe the TRL 7, and they're looking to to grow and scale. What would you advise them if the market is against them?

SPEAKER_00 18:42

If the market's against, I mean this is extremely difficult, but I would advise that generally a more corporate openness towards those on us very often, particularly like in the states I have to think it's um further on if you take on a corporate partner already at series C to series A stages, typically for growth investing later on. Very often the right corporate and the cap table can help you to make it work. You might lose some chance out there, but the risk of dying in a certain stage is often often more dire than kind of um yeah, staying strong and hoping that the um uh tier one, tier two VC will eventually give a give you a shot and still back you. Um that that's actually, from my uh point of view, the biggest hedge to add it. Another one that I always tell founders is try to build a solid basis of investors early on who can carry you for these times. What I mentioned that deep tech is very unobservable from the outside until it actually scales, it's true. So maybe bite the sour apple and dilute 30 for the first two or three rounds, not 20%. Have one or two more on board who maybe can bridge you through the time, who send a signal who have a broader network who bring in more potential partners to get unobservability risk a little bit out there. Not that uh deep tech from is fully measurable and easy to understand from a first pitch, and that you can just optimize and grind the hours and just make it work somehow, like a kind of a food cooking boxes or any kind of stage e-commerce games. Um, this is not the case. So have to write parts enough. You see some on board which share your thesis and um yeah, speak early with corporate investors that you validate you in the worst case, so maybe actually bail you out, buy you out. Um, that this wasn't not for nothing, to be really frank, because uh I it seems like for those kind of deep tech or for those founders who who miss the cycle, that it's it's an yeah, all or nothing thing that you have the chance to actually do it. But I think that today's IP-driven companies they have a much higher value, even if they're not yet a kind of a billion-dollar company who can go handle public because you're developing something that's not only commercially valuable, but who's which tech or which approach, which yeah, innovation invention actually helps a corporate at an earlier stage if it can be integrated. So you have a maybe not the chance to go really big, but you have a better chance than 20 years ago to sell something to somebody and make some kind of success out of it in the worst case if you missed the cycle.

SPEAKER_01 21:33

Makes sense. Um speaking of building the base of investors. How like how would you like a prospective founder to go about building the relationship with you?

SPEAKER_00 21:54

I mean that's that that's very difficult to say. Um we have founders where we had a very short And we invested after like kind of eight to twelve weeks. We had found us we met for two years before we invested. Um, uh, so it's it's difficult where when they meet us, how they meet us. Um, but uh generally it makes sense, or we like in a perfect world for us. Um, we very much like to speak early about your plans and then follow you for a while, follow the company a little bit. Since we are more niche-oriented, less generalist investors, we we can do it because we bring a certain value to the table and the asset doesn't fly away, probably um too fast, or that they would not let us know if the role starts. Um, if we had a good conversation with them before. So um, yeah, approach us early, even if you're not fundraising, keep us in the loop, tell us about what you're doing. Let's check in a couple of times, meet at a couple of events, meet some common people, have some chats together, let's vet each other. Like we present you to each other, we present our existing portfolio to you as a founder. Uh, the founder presents um themselves and their network to us, and then we see how it actually works together so that we can make an informed decision about about uh um about the team, how it acts, reacts, that we we actually know you before we write the check. That it's best well for us because it's a seat stage again, still the biggest risk team falls apart, but but that they don't get along, that they have other things in mind, so we really want to get a good feeling about you. If you think this is the way how we get together, then by just bonding with each other, yeah, then this is the probably the best approach to eventually closer deal with us as a VC.

SPEAKER_01 23:44

Makes sense. What are some of the um missteps that that founders have taken when trying to connect with you or get you interested? Or I don't know, like one thing that kind of stands out and like being like a no no, he never do this, and then maybe one thing that absolutely has astounded you, amazed you in terms of the novelty and creativity that the founder or founding team has taken in in uh connecting with you.

SPEAKER_00 24:15

Sure. Um I I think um absolutely no one was like being being dishonest on certain facts, or like I very often have the feeling that founders tend to oversell because they have the feeling that they have to check all of the boxes, they need to be perfect in everything and all the criteria, um, and then at a certain point in time, just some facts are being banded until they yeah still barely truthful, and that's probably the worst thing, um, because this simply leads to leads to um yeah, mistrust or or or distrust actually. Um on the other hand, what really amazes us or what we find exciting um is uh if I mean if we can figure out early together, uh or if the founder kind of brings an idea together how we can fit together. Like it's not only like pitching themselves and telling the same story over and over again, but actually bringing it early to the point why we would be a good partner for them or what they think makes us different to the market out there, because then it feels like we are in a process, they have deliberately looked for us with one of 100 oysters that want to kind of um open to find the curl finally, but actually coming early dedicated to us with questions in the first pitch. Typically, they pitch first. We talked, we can ask questions if they ask for specific questions, if they are like figured out what we did before, if they understand how we work, how we act, um, by our portfolio, have met us before to references and us before that. The first call that I find almost interesting because those make seem to be like diligent people who take it serious, who take their best relations serious, and we have also been that they take their product and their IP serious and their customer serious, that just has our feeling. Um, if if you behave that way.

SPEAKER_01 26:09

Um bit of geo geography um uh question for you. So you're you're based out of Berlin, correct?

SPEAKER_00 26:18

Yes, exactly.

SPEAKER_01 26:20

Um couple of questions that they're pertaining to is how how would you describe the the Berlin uh ecosystem and two where where would founders find you? Like you go to like what what kind of events um you go to every year because they're absolutely worth your time?

SPEAKER_00 26:43

Sure. Um, so I think the Berlin ecosystem, it has been the most prevalent ecosystem until a couple of years ago in continental Europe, say like there was rocket internet, there was cheap, cheap brand prices, um, there were was the e-commerce hype, was Berlin was poor but sexy, how they how they called it. I think that's a little bit um again, it it fitted a certain level of time when kind of hustle culture and scaling kind of fashion brands to the moon was very much at the cornerstone of building a startup. Um I think it's a little bit gone. Um Berlin still has the potential, but obviously City became more expensive, it became a little bit more chic and not so kind of mixed up as it was before. Um, and then particularly um to be relevant today's market, I lost a little bit um the technology edge. Like there are places in Germany like Munich, Stuttgart, um the Deep West, um, with um universities in the Rhein-Ruhr area in Germany, um, who have a better advantage now to build companies because they have university access, they have proprietary researchers, they have know-how, they have many large corporates as partners there. So it's falling a little bit behind. I think AI leveled this since a couple of months again. The burden is picking up again, but still hard to say if it will ever reclaim its um kind of leadership position, or if it just goes down to Munich, who has obviously a little bit more advantages now in terms of yeah, location than they had before. Um, yeah, that's that's that's my take, but I'm still remaining optimistic. I'm I'm staying here. So um I come from Unico originally, but I moved here um uh almost uh 10 years ago. So um that's why I'm a believer that this somehow turns back eventually. Um the uh where to find us, yeah, obviously the local ecosystem is important to us, and we go to local events, um mingle with local VCs, it's just available. There are a lot of kind of cheap, accessible evening events in town. Um, Berlin is still a sustainability, it's uh it's it's it's a hostile energy also plays a certain role since there's a lot of policy and politics going on in South Capital. Um, policy also always tries to want to mingle with with um with startups and so on and with corporates, and then also stuff gets together here. So look at those sector-specific events in town, but particularly look at sector-specific events and trade fairs um now verticals. Um I personally mostly cover the agri-food tech side, which for us has three pillars. One of them is consumer goods, the other one is the sort of the very um uh downstream part, the upstream part with the food science, food ingredients, and the agri-tech space. So, for consumer brands, obviously, we go out to trade first, um visit them at um food ingredients europe's and conferences like those where there's not that much um VC, maybe, but where we see the startups in a more um live environment, let's say it's not like a suit actually, so where they may have the customers and where they benchmark with their own industry and they're saying agriculture. There are also conferences all across Europe, um, very kind of um either very commercial oriented or very closed universities, um, which we like to visit most. Like Wacheningen for us is a very important conference to to attend to, because it's uh the intercept of corporate preservation in the Netherlands and the University of Wacheningen, which is really strong and breeds a lot of good founders. And this is also very good conversations. If they're not only startups, they're not only investors, but whether like startups and corporates and particularly in universities, and where you get all of the mix and you somehow figure out who has a good approach and who is listened to, who does the industry like, who has a good scientific backing behind, um, also makes it easier for us to make good picks than pure investors matchmaking places that very often doesn't help that much today.

SPEAKER_01 31:02

Makes sense. Um wondering on um kind of like when companies are building their capital stack, what um what are things that they should keep in mind? I mean, like it you were describing what an example you gave is gonna be being an Orthodox and maybe giving out more in the initial rounds, like give giving up 40% of the company just to get a strategic partner, corporate vision, or something that can give you open doors. But like if if if if a founder is listening to to this and and they're in in your space in agri-food tech, kind of like what um what would you advise them? How should they think about like stacking grants and strategic investments and venture equity or debt or project financing?

SPEAKER_00 31:51

Yeah, I mean, first of all, I would always recommend those founders to um be realistic about valuations, like in early stages, there's no such thing as a down round. You can maybe, if you're an AI hype startup right now, you get a crazy valuation. In two years, maybe two years, um Claude, um ChatGPT, Gemini, whoever replaces your functionality because we couldn't foresee it, and then you're stuck at a very high valuation, you haven't fully delivered maybe on your commercial um results, you haven't developed that far, and then you won't face a down round because there's a lot of seed stage innovation happening out there, and series AMS can be very picky, so you cannot hope that somebody funds you through. So once you if you jump too fast in the beginning, if you swim out too far in the ocean, um you have a very high chance that this doesn't play out well for you. I think the down rounds are for B C D and later rounds, of course. But in the beginning, it's just you grow or you you fall out. So start with something feasible, plausible. Um, I would also always recommend to take a close look in Europe in particular, on university grants, on research grants from the government, on European level grants. Get fast in the grant game, figure out how this works. Once you're seed stage, you can hire an employee for this. It more or less finances itself from the grants that it gets. And grants are self-polluting system. You have one, you get another, the third one grabs your attention. You know, those grant writers also want to see success before the money happens, and money tends to pull in successful firms. Um, so it doesn't make sense to start this early and to invest resources into this topic, actually, even though you maybe could get on equity funding, or maybe equity funding would be enough for a certain point in time. Speaking about equity um funding itself, as I did before, have a broader base of investors, maybe go for higher dilution, take in a little bit more capital, just to have a cap table that's synergetic, look for parties who can do follow-on investing. Okay, go forward to do like single checks. So if you have you can have the best business angels, but they tend to be one and done in particular. You're they are affected by the personal economic situation, they might not be able to support you through in the future. So have reliable backers, have partners that understand you and have a good mix in your cap table. In a niche vertical, you can find a niche investor who also implies in that space, but maybe you actually find a generalist, which is good because if you grow to a certain level, generalists tend to attract other generalist investors, and then yeah, in a mixture, maybe one of the investors you are agree startup, so maybe one of these investors knows agri tech very well, but the other one comes from a pure SARS fund, more or less background-wise, and then you get something together that kind of builds a matching and unique expertise. Then I would also recommend in today's economy in particular, you're in the deep tech space, uh, to start early building out capabilities in terms of debt funding or um yeah, uh project finance. If you're going for pilot plans, commercial plans, figure out how your market thinks about it. Who's the more the main partner? It's I can most speak for Europe, but it's very fragmented. In some European countries, the best access is still on European level, go to the EIB, investment directly. Other ones, it's the country level itself. Netherlands, for example, if investor now is very strong, and um in Germany it's the county level. Yeah, various counties um uh who um have their own development banks and who are very best partners uh to help you develop something about this early and uh figure out what where you want to build, where you want to grow it, and what the that financing partners will be, and build those expertise is probably CFO and today it's not a seed or pre-seed, it's a series A plus hire. So maybe you can get something with that funding to um helps you in series B uh with a kind of larger plant to actually um finance it from the from the counterparty, so have these expertise within your team, and then first and foremost, what I always kind of telephone is like to have a plan in mind how to make it work. Not everybody gets US money in their in their company in Europe, so maybe think about it if a single round of 15 million can be enough to turn you profitable one day, because that's I would assume is what you can raise in Europe higher over the past couple of years. Everything is a good luck shot, but if you're doing well, if the company really performs, if it's not top one or two or top five percent where global interest flows in, but you're still a good company, you're in the the the upper third, upper half, you're doing well, then figure out how how how fast can you turn this break even? Maybe the moonshot is not possible, but as a founder, personally, also think important for oneself to make this a success, how to give it a one and a hundred chance to build a deck account out of it, but actually build something that that that lasts and that can be sold and that fulfills you end of the day, that's running it and then that doesn't just disappear after five to six years because money is running dry. So be mindful about it and have a plan in mind how this you can you can build it smaller and build it. That's not the logic of a VC, that's not what necessarily all we see push founders to. But but if I would be a founder, I would have tried to have this in mind. Um, in a constraint capital market, um, how can I still manage to build something that that works in the last even if I'm not the lucky one percent who gets the big shot money?

SPEAKER_01 37:44

Peter, we we we talked a fair bit about your due diligence process and kind of what are you looking for when you're investing, but once you have invested in a company, what are the things that you're looking for from the founding team? Um be it communication, being results, milestones, uh transparency, kind of like what are you looking for that gives you the signals, the high trust signals that that this company really is on the right track?

SPEAKER_00 38:17

So um I think we are typically we're lead or co-lead investors, we have a board CDO or board observer role typically, and um the more transparent the company acts throughout those those events, I think that's very important. This is a structured process, and um, I mean it's a little bit old school. Um maybe if you benchmark the Silicon Valley where communication happens on WhatsApp, which is very different. Um, but let's assume that Europe is a little bit more of a trust-based, slower growing space, where you cannot just hope for hypergrowth always, um, but still build decent companies. Then I think those investor board meetings with when they're properly prepared, when you have solid information, when they're taking place in person at the company's office, where you can meet the employees, where you occasionally bring in customers, where you discuss customer cases, where you trustfully discuss what went wrong, what went well. Yeah, this doesn't make sense if you have a board meeting and they tell you how great they're winning on all ends. Yeah, it's unbelievable. It's that it does not happen. You always have more losses than wins as a startup in the early stages. More stuff goes wrong. Tell me about what goes wrong, tell me why it happened, and tell me how this helps you to avoid it in the future. But if you hide those losses for too long, maybe end up hiding a big loss eventually, not getting line to what's happening in your firm, and then you are on the point of no recovery. Like discussing small to medium losses or mistakes um every month, every quarter, depending on how often that those meetings are. I think that's uh very helpful, very healthy, and it all helps to really shape the firm structure. Nobody's always winning, so um, it's it's better to talk about this earlier and get everybody in the boat. And that's for me the most important. Um get a good feeling how the time goes. Um, but also delivering stuff on time typically have no sometimes it's not always possible, and yeah, what that comes um the 400 in the morning before the board meeting, that's also how how things can be. Uh, but it gives a better feeling if this is well prepared, if it comes before you know the numbers, the information that's correct. So it also helps a little bit with transparency. So, yeah, that's this is but maybe this is a very German, very European approach. I think a second-based investment is something a little different about it. Yeah.

SPEAKER_01 40:46

When it comes to the relationship between um a founder and uh VC or an investor, what product do you wish that exists to help this better, to make it easier? Is it communication, is it transparency, is it reporting? Kind of like what do you wish that exists? What would strengthen this relationship in a talking technology perspective? But yes, I mean, this is not to say we want to negate the the in parts and the physical, the analog relationship. I'm just saying in addition to the part the physical world relationship, kind of what do you wish exist to make the the relationship with portfolio companies and founding teams better?

SPEAKER_00 41:31

I mean it's difficult to say. I think technologically, I think there's not so much you can add from my point of view. There's little that I can think about it right now. I mean, um it's very different how a good relationship works. Some again some founders are also very tech sexist on WhatsApp, they text you at night, they text you in the weekend. Other ones are more difficult, they they just they just pick up the phone and call you, some tag you in your LinkedIn post, some just shoot around emails um to touch space, other ones they dive and need to um pick them, pick them up again. I think that um this is I think this is relationship topics are a very human and very personal topic. But if you have a great idea, what that could be, tell me, and maybe we can discuss it. That's turn it around here. I I can't think about anything right now. There's so many options, and maybe too many options to stay in touch with founders already. But yeah, for sure.

SPEAKER_01 42:26

Um future. Where do you see the future headed? What are you the most excited about in the space that you invest in?

SPEAKER_00 42:36

Like I think it's the intertwining of those spaces. Um, uh energy costs are 20 to 40 percent of any food products cost of the day, so it's very expensive energy-wise, and I think there are so much stuff out there in the energy space, like cold fusion, reserve renewables, um more efficient grid systems, um uh that can make it possible to lift up agri-food innovation, which wasn't possible for we're talking about large-scale vertical farming applications, we're talking about cellular agriculture, which is very uh heat intensive. We need a lot of forms that the cells grow. We're talking, uh, we're talking about um kind of uh yeah hardware in the field which needs to be electricity powered, all those kind of things when energy costs go down, availability of innovation rises actually for the for the agri tech space. So energy costs going down, uh this will happen um very, very foreseeably, and then there will be a bloom for the entire space. Um and I'm I'm very very excited to to see this this very broad bloom happening actually. Um that will make food more we will have better food, we have more environmentally friendly food. More options in retail catering to every consumer need, and we have less less shortages. So it could really lead towards if properly distributed this could lead in a couple of years, but then probably even this decade to a sharp decline in prices for food um yeah input sources and therefore a broad availability of food kind of availability, which makes me excited. That's what drives me always, even if the space is sometimes tough. You know, the space has been a little bit stalling investment wise last couple of years, but I think there's a big, big light on the horizon, which makes can make it very attractive very soon to be in there.

SPEAKER_01 44:40

What is your perspective? I mean, um uh I'm originally from Europe, I have European Union passport. Um so uh I think I I live in Canada and so if I juxtapose my experience as a European, food is readily available from local farmers and markets, and it's it it you know, food in Europe lasts two or three days, like food in Canada or North America, I mean, like you can have a brand that's fresh or looking at fresh for like a month. And and so um in North America there is uh fair bit of conversation around food deserts, uh, like those geographic areas, what it's low income or what it's like where accessibility to food is just not abundant. Um do you see this as a key priority for some of the companies that you invest in in terms of like making food more accessible? We're working with uh, for example, we're working with Caribbean nations, and over there they have top three priorities waste, food, energy. And and ideally, we ideally we want to combine all three of them. So, can we have a circular waste management system that drives zero waste, that generates synthetic gas or biogas that that powers out the power? That's kind of like the the pants here, that's what we're working towards. But it kind of like what is your perspective on it? I'm just curious.

SPEAKER_00 46:03

Um, so in terms of that that that food desert in the US or that yeah, I mean, um it's uh it's a big problem. I mean, but it I think it's more uh it's a consumer problem because you're feeling the consumers very unhealthy, which is also related due to the US market structure um of consumers, um retailers in particular, the brands behind lack of regulation or the wrong regulation in place, and also the the income uh problems that we have. Like in the US, the gap between rich and poor, I think it's it's it's even higher. And uh there's been a saying that I mean if you want to look super sharp, you have to go to home every day because if you go to to Walmart to Costco to Target, um it's really difficult to find stuff with no additives. Um I hope I can say this here, but on my previous uh occupation, I had uh I was working for a corporate CVC, we did some US West Coast investments, uh mostly like natural channel whole piece, listed brands and so on. And um, we were presenting them to a German retailer, not natural channel, normal conventional channel, normal retailer. And um they were interested in the US stuff, you know. You have like those rotational items and say, Hey, can we bring in some of your portfolio brands for some time, some peanut butter, some banking, and so on. That sure. So I sent over the specs and everything, the price sheets, the calculations, how this could work, what could be would be a really nice promotional items for our portfolio to support. And then the lady from the purchase department got back and said, interesting brands, very cool stories, very nice influencers, but we cannot take this ingredients in there. This does not fulfill our standards. We could not even give this to our discount brands, and I was astonished because I thought it's the natural channel in the US. You're you're you're from Whole Foods. Why can't we this a Whole Food list of brands? Why can't there be an informational channel here in Germany? No, the ingredients are too bad, it does not fulfill European standards to be listed. And that made me surprised because that really shows like if the the top level uh of team products in in the US doesn't fulfill the minimum level of what we require here in Europe, it makes me it made me really astonished um that that this happens. So I think this is the what the bigger crisis to serve before, maybe stop um yeah feeding crap to your people, go for a little bit more natural stuff, less processed stuff. It's okay if broad bread rots after after uh four or five days. Um it doesn't need to last um uh for for months. So um and then let's go solve the other problems. But in this case, I think it's really about keeping the consumer healthy first and then tackle the other issues afterwards, makes it easier to to to re group, recollect them first on what they eat, and then make them aware about what was going on environmentally wise for sure.

SPEAKER_01 48:59

I mean, a couple of things that come to mind, and and I don't know, this is just uh uh urban legend or not, but like with the FIFA World Cup, yeah, some of the news reporting was that the Norwegian team flew in all of the food that they were feeding the team rather than behind what was locally available.

unknown 49:19

That's that's a commitment.

SPEAKER_01 49:21

And the other thing that comes to mind for me is um Europe is uh heavy-handed on regulation, and and and some of it is obviously really good, and some of it is I think it's holding the continent back. But um, I just look one of the recent regulations, the common agricultural policy reform that that drives the transparency as to what's in it. I'm like, that's fantastic. Uh there's no reason why North America can't adopt the same level of requirements to force producers to drive transparency and clarity in terms of what what's in it. What's in a particular product?

SPEAKER_00 49:54

Yeah, and in that sense, startups would help. Because a startup you have the choice, you have an innovative product. Of course, you're you're you are in any case more expensive in the beginning. You have a more niche market, but you can make the liberal choice in the beginning how you want to construct your product. And you maybe cannot cut out all of the stuff, and maybe not everything is available, but you can start building better products. Once those startups scale, once they grow, once they develop, the even the playing ground. I mean, those corporates certain things that the big players do and put into products, they do it for cost reasons, obviously, to maximize their profits. But as I said, with energy becoming hopefully more available, energy being the biggest driver behind it, we maybe get a chance to drive down costs with technical kind of solutions that are less chemical, less artificial, and make the world uh make the system thereby halfier again um without having yeah imposing regulation too much or importing all the food from Europe um on our personal plane flights. So um that's my first yeah.

SPEAKER_01 51:02

Yeah, a curiosity question. Um if you look at all of the um CPT brands that have emerged over the last, I don't know, five to ten years, they they were all startups that the the final way to to grow in scale. And then they were obviously in many cases they were acquired by big corporates. You spend time in corporates, now you're on the other side investing in startups and scale-ups. Um, why are corporates struggling at innovation or coming up with new brands and products?

SPEAKER_00 51:36

I think there's no reason to take a take a risk. Yeah, you only for the consumer world, those consumer brands, like those RX-bars of this world, which which became super successful and were hundreds of millions. Um, as a corporate, I mean you have a good product, um Hero SQU on the retail shelf. Let's just assume the CPG world, you have a permanent listing there, and you would this product is turning well, and more or less you're kind of you're exchanging maybe sometimes one or two SQUs, you put in a seasonal item on the line. But why should you take big risk if the game still works? Why should you take um crazy kind of yeah next next steps to do something? I mean, the product has a fairly large audience behind it, and very often it's purely simpler to strip costs and improve processes and expand reach of the current portfolio than develop too much too much innovation. Plus, also often, those product lines or those companies that do not have actual potential of innovating. The the ones like the shelf is limited. There are many commodities in food which cannot be replaced. You cannot make somebody drink more milk. People have a certain level of milk intake, people have a certain amount of life to eat every week, have a certain level of uh yeah, beverage juices they drink and some vegetables they eat, but there are some items for which this is different, like for example, snacking products, sweets, convenience food like pizzas. You can bring people to the point that they eat more ready, like frozen pizza every week if it's really tasty for them or this protein-rich or whatever, and replace the other meat. You can uh squeeze in many more snagger bars into a person every day if you if you actually wanted to. So there are actually segments where innovation is happening. And if you go through the ale, you see the same milk brands you ever saw, you see the same meat brands you ever saw, the same price. The snacking ale on the energy drink ale, uh, cornflake muesly ale. Um, you see um more innovation actually happening. Um, and uh again, um, in the commodity space, you you optimize for for uh uh the bottom line efficient, and you don't necessarily the culture doesn't have it in your itself to breed new products. So then fresh mines from the outside come up with some crazy idea to produce an oatmeal milk, for example, but that doesn't help hormal foods in the US to actually produce oatmeal uh oat themselves because they don't have the capacity to do it, they have dairy cows, don't have steel tanks to to brew up the oat and and and package it. Um and this kind of innovation stops, yeah. So that's that's uh I think that hopefully summarizes it somehow. But this is my um my perspective on why there is coppers not doing it themselves. Simply they don't think they can't do it, they don't have to do it, and yeah, everything's running well for them because they're on the shelves for years. So why should you change it? You don't being distant, yeah.

SPEAKER_01 54:35

Yeah, so I mean, but sometimes it sounds like a lot of their capital allocation decision is very much driven by uh risk and protect the base rather than um taking swings for the fences and and and coming up with new products that could become billion-dollar business.

SPEAKER_00 54:50

Exactly. I mean many of them are big enough to just buy it. Same like in pharma, and if something is really successful, you just snatch it off the market.

SPEAKER_01 54:58

Um, yeah, makes sense. Um, I know we're almost at time. Uh just uh uh like my my closing question, and you can choose between and between the two of them. Like, what's the best advice you have ever received, or what's the kindest thing that anyone has ever done for you?

SPEAKER_00 55:16

So um, I mean the the kindest thing from a professional perspective is obviously uh our first investor specing our fund. We had some track record, um, but it's a still big belief from going from a CVC structure to starting your um starting an ONVC firm and the first people jumped on the cold border um when this industry was still fresh and evolving, and just saying, I believe in it, it's very kind. Um, I mean, because it's a lot of money to believe in, like it's maybe a fraction of their money only, but overall scene it's a lot of money and it it needed a time to be earned, and getting this trust from somebody is feels incredibly kind, at least to me. Um people trust us, they believe us with the money, the limited partners, as little they can do, just need to open it right. Um, and I think this is a very, very kind thing. Um, yeah, and the the best advice um I've ever received um I mean it's more or less that the the next trip will come. So in VC you very often tend to ah, I missed out on this, I didn't see this deal. I was too late, too clingy with the valuation and didn't buy it. But um the next one will come, and there always was a next one, next opportunity to back to look onto. Um maybe we missed many great ones, but we also got some great ones for sure. Um, that's just how it is. So once a ship has sailed, um, don't don't wait to wait, wait for the next one.

SPEAKER_01 56:43

Makes sense, makes sense. Um, on this note, um really appreciate you coming on the pod and talking about your talking about GTF, um your investment. This is the fact of uh and what what is your cross industry? So thank you.

SPEAKER_00 57:03

Thank you so much, Maxime. It was my pleasure. Thank you for taking the time. So that's about