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Let's get back to the investment piece now, with a particular focus on venture capital and the shift around climate, but also defense spending as well. Venture capital investors bracing a course and facing a dramatic year. The Trump administration's focus on oil and gas production, rolling back as well some of those environmental regulations and trying to act or at least gut the Inflation Reduction Act has of course
wide ranging implications for startups and fundraising. Very pleased to say, joining us now in the studio is Tommy Stadlin, the co founder of Giant Ventures, a big player within this space. Tommy, we have seen data that suggests that the flows into some of these renewable energy startups and the climate shift has started and will start to ebb in twenty twenty five. Talk to us about what you're seeing in terms of climate tech investing. Is there a chill wind now over the space?
Well, let me say, first of all, climate change does not care who's in the White House, and I don't want to alarm your listeners before they've had their morning coffee, but we're facing potentially a billion climate refugees, mass disruption, to the global economy. So climate change is real, it's happening, and I think rational actors are going to take action against that. So what we're seeing is that the long
term decarbonization trend is going to happen. And if we get anywhere close to decarbonizing the global economy by twenty fifty, that I think is going to be bigger than the Internet, both in terms of the losers, who are the incumbents who have exposure to hydrocarbons, but also the winners, right that people have exposures of these amazing new climate technology companies, and so in the long run that trend is going to continue.
What we're seeing is, yes, a.
Bit of a pause while people figure out what ex actually is going on when the Trump administration, particularly in the US, But actually we are seeing the underlying these strong technology companies in climate those who don't require a green premium, where they're not asking either governments to pay a green premium or corporate customers are certainly consumers that
businesses which can stand on their own two feet. Those companies are continuing to get funding and actually we've just been involved in some of the most competitive climate technology venture rounds we've ever seen. So it's steam ahead for the strong commercial climate tech companies.
Those who require.
More capital to scale up and get cost competitive with hydrocarbons, they are struggling at the moment.
Yeah, I mean, Bloomberg figures show the kind of dramatic decline from twenty twenty four into twenty twenty five of climate tech investing. Do you really think that europe can hold out though against what is a sea change in the White House? Or does it change the pitches from companies in order to get that funding.
We're definitely seeing companies change their pitch, and actually some of it is just a branding thing. So the words climate tech are not particularly popular in the US right now, we're seeing climate tech be rebranded as American dynamism. So trends like nuclear anything which is energy for renewable, for data centers in AI, more energy efficient AI chips, anything which fits with this kind of muscular nationalism we're seeing not just in the US but around the world is
doing very well. So look out for kind of European dynamism, British dynamism, American dynamism. These companies haven't changed, but they have rebranded their pitch. To make it work more, particularly in the US. Okay, it's really interesting around the rebranding. Isn't it to kind of cut through at least avoid some of the scrutiny that may come from the Trump and administration who's courses? There's something of an animus around this sector.
The defense space has been prominent. You're seeing massive spending from the German government adjusting their fiscal rules in dramatic fashion. You're seeing it from other nations as well to a lesser extent. What are you seeing in terms of how significant do you think that will be in terms of funding into the defense space and the startups in Europe? How are you leaning into that and is that pulling
funding away from some of these climate stories. Well, if you just look at the numbers, we've seen about a fivefold increase in venture investments into defense tech. So that's still only about ten percent of European VC which goes into defense tech and surrounding technologies, but it's a massive increase. And in order to achieve that, we've had some investors
in private managers have to remove their vice clauses. So we had a situation where LPs would say you can't invest in porn, gambling or defense right, and we've now come long way defenses escape that vice clause. And actually even for firms like Mine Giant Menus where we're backing companies that really matter, we're looking to create impact in
the world as well as financial returns. People are saying, well, actually, isn't defense tech even more important than things like climate and health Because we don't have a strong democracy here in Europe, nothing else really matters.
So it's in a complete.
Turnaround from investors, from venture firms and also from entrepreneurs. We're seeing really strong entrepreneurial talent choosing to build their next company in defense, which here in Europe is just completely unthinkable five years ago.
But is that money really now Because the money flowing, for example, from the massive German package, it's not expected to hit until twenty twenty six the UK defense space. Also the increase in spending, you know it's months years probably away from having a real impact. But you say that the investing is happening already at your level.
I think the most interesing action actually is happening with C stage investments, which have started to do well already. So a company like Helsing for example, a really exciting defense tech technology company here in Europe that was started some years ago before all of this happened, but the interest now is very, very large.
So I think what we'll see.
Is companies who've been tinkering at the edges before this was an attractive area to invest in will now start
to get the scale up capital they really need. The big question is will the incumbents in Europe, particularly the militaries, are they going to have the capacity to work with these defense tech startups in whether they have had no practice of doing for so many decades, unlike the US Department of Defense, which is so well versed at teaming up with defense startups from a very early stage.
How do you, Tommy, how do you inject rationality into these new, very hot themes. There's a temptation presumably to pile in when a set I mean it's red hot right now, and there's a bunch of startups and we've spoken to a lot of them. A lot of them are not going to survive, and a lot and a
few will do very well. How do you ensure that you have the metrics in place and the structure in place to ensure that you're putting the funding to play in the companies that really get to matter and thrive in the defense space.
Well, venture in general is so trendering, right, and so everyone was a few years ago thought that blockchain was the next big wave.
They thought AR and VR was going to be the next wave. Neither we rereadly were.
Now it's ai, Now it's defense tech. What I think fundamentally is that there are two big mega trends. There's AI, which is going to fundamentally change the economy and particularly the venture world. There's climate, which is a much slower bum which is happening over a fifty year period of decarbonization.
And you've got to pick which are the mega trends on which are not, and then just make sure you're backing brilliant founders because ultimately, the best venture investing happens regardless of what the trend, the sector, the company is by backing extraordinary entrepreneurs.
I've heard the argument also though, that Europe can simply rebrand, as you mentioned, can can sort of change the label and still get the funding and still do the work in diversity, acuity inclusion, for example. You hear that quite frequently. Do you really think that the Trump administration is going to fall for that. They have a lot of kind of business leaders that the drive is going to be very pointed, isn't it? Is that really feasible for you to do that without there then being a clash.
I think on one of the topics you've just mentioned, I completely agree with you. So diversity exctly an inclusion. There is zero appetite for those type of startups and even those corporate programs Europe in the US. That's been astonishing to witness the sort of overnight reversal of companies saying on their website, global companies saying this is a core value diversity inclusion, and overnight suddenly it's not so
much of a core value it's removed. The difference there, I think is unlike some of these diversity startups or diversity policies where the ROI is harder to prove. In climate tech, this is not a cost center anymore. We're not talking about the year two thousand here where these companies were lost making. These are seriously impressive companies that are powering things like AI and are fundamentally cheaper than the hydrocardon alternatives and.
Even in the US, people who want to.
Make money, which includes the entire Republican Party, are going to get behind those trends, and so I think that is a fundamental difference to the clean tech one point o boom and bust.
I've also got one other question around the defense and defense tech space. I mean, there is huge anticipation in the UK about what money is going to flow from Britain's additional defense spending capabilities, and there are high hopes in the SMEs that that money from the MOD will flow. But there's been disappointment for years, if not decades, in this space. The MOD underspends and then perhaps will you know, make a huge order from one of them primes and
the SMEs are kind of left to wither. Do you really think that things are going to be different this time around?
No, I don't.
I think the MOD has proven time and time again it is not capable of effectively working with startup technology, and I think what we'll see is the best UK defense technology companies will have to go to the US and partner up with the US, which is counter to everything that we're seeing in the geopolitical trends. In terms of European resilience. But I think that's just the reality because the US government is so far ahead on their ability to team up with startups. So we have to
fix that. But my hopes are not high for the mod's ability to do that. They just don't have the people in place to do it.
That's a damning It's a damag statement, isn't it about the ability for the MOD to adjust to this moment on the climate story? Is there a scenario where with the US ripping up the Inflation Reduction Act and going full bore on oil and gas, that Europe can position itself to lead and win on climate technologies.
I think it's a massive opportunity for Europe to lead and win. And one of the really exciting things we're seeing is corporate, large corporate industrial players in Europe are waking up and saying, okay, we can now partner with climate technology startups and lead this decarbonization in a very profitable way. And so a giant many of our investors RLPs are the big European industrials who see this opportunity, and so I think Europe has.
To sort of make use of the timing with.
The Trump administrations reversal on climate change and make use of our strengths here, which basically is the big industrial giants, people like BMW, who now have an opportunity to really step up and lead and stop the you know, for fatal reversal that they're facing with people like Tesla stealing their lunch.
Our decisions being stored called by the Chomp administration. I mean, we're all hesitating until tomorrow and we get the sort of tariff news. Is the startup and VC space also pausing because you know, you're full of energy and ideas, and yet it does feel like there's so much uncertainty now that a lot of the big businesses that we've report on are pausing major decisions.
I can only really speak for my world, which is a venture and a giant. We have invested more into climate technology in the first quarter of this year that we've ever invested before. Some of the rounds we've just led to sort of Series B rounds in Silicon Valley have been more competitive than any venture round I've experienced
in my career to date. So for the best assets, the best climate technology companies which show a clear return on investment because they're making money today, there has been never been more appetite than I've ever seen in my career.
Tommy, briefly on talent, because you talked about your theory, or at least your forecast that actually a lot of the defense tech companies are going to have to go to the US either to raise or to list in some form, or to get those contracts from the Pentagon. What are you saying on talent? Has the Trump administration
adjusted the flow of talent? I mean, up until the end of last year, multiple founders and I would speak to would talk about the allure of the US, whether it's to raise funding, whether it's to list, whether it's to find talent, whether it's to build headquarters, whether it's to lean into the US market. Is any of that allures, any of that shine coming off.
I think we are seeing a talent flow out of the US for sure, and that ranges from global superstars like Reid Hoffman, who we had with us at Giant the other day, who spending more and more time here in Europe, all the way down to young technical talent moving from the US to places like Canada or to Europe.
And so yeah, there is a bit of a Trump brain drain going on.
From those who frankly don't want to live in an administration which has those values. So that's another really exciting comportunity for Europe to stand up and gain in the innovation economy.
Okay, I think we'll leave it there. Tommy, thank you so much for being with us in the radio studio, giving us lots to think about.
Stay.
Tommy Stadlin is the co founder of Giant Ventures and that picture for venture capital and what money is being invested now in Europe given the Trump administration.