From Marhart where Innovation, money and power Collie in Silicon Vallet NBN.
This is Bloomberg Technology with Caroline Hyde and ed Love Love.
We are live from London for the Bloomberg Technology Summit. I'm Caroline Hyde and this is Bloomberg Technology. Coming up on the program, we'll speak to a range of UK based tech entrepreneurs to discuss everything from much capital, fintech, cybersecurity and so much more. Plus, China rattles foreign firms again as it opens an investigation into one of Apple's
most critical suppliers, Fox Con details ahead. Plus we go back to the picket line as Hollywood studios return to negotiations with actors this week to end the month's long strike. But first check in on those markets. And boy has there been some volatility, particularly in treasuries, abbagailty Little, what's the readacross here?
Well, there's been tremendous volatility at the surface level, Caroline, so much so let's actually start beneath the surface, because if we had been looking at this board an hour and a half ago, there would have been at least some red on it. But we've had a flip to the upside. Microsoft and Meta too. Of the megacap companies, megacap tech companies that are reporting this week, Microsoft tomorrow
and Meta on Wednesday. A big piece of this turnaround for sure from a micro standpoint and from Meta excuse me. For Microsoft, one of the keys could be their outlook. For Azure, that cloud business was a little bit disappointing, plus color on AI. For Meta, it will be all about whether or not they can maintain mid teens growth.
That could have a lot to do with price.
And we also have Bitcoin in rally mode up seven of the last ninety days that is helping out Riot platforms up ten point two percent and in video receiving some favorable commentary from a Wall Street investment bank. Now, let's put this together with the NAZAQ one hundred and see what it means. Here's this roller coaster ride. Now to your point at the lows, it was more of a macro story, Caroline. The fact that you had that ten year yield back above five percent following the two
year yield, the whole yield curve really flattening out. That of course makes stocks look more expensive, but big cap tech in particular, that growth, the liquidity, it tightens the situation overall, but as the ten year yields slip back to four ninety, take a look at the rally we have plus some of those individual movers we were just taking a look at now on the year.
It's very interesting because over.
The last three months we've had stocks down, the S and P five hundred down about eight percent so on the year up about ten percent, the Nazak one hundred at one point up more than forty percent, so about ten percent or so, very roughly coming off of both of these indexes.
You can see though, that the.
Megacap tech indexes that have some of these stocks that are reporting this week up much more. What makes us interesting, Caroline, if we go into the Bloomberg terminal, it means that the S and P five hundreds doing something that the Nazak one hundreds not doing.
The Russell two thousand.
Led it, but the S and P five hundred on the day was firmly below the two hundred day moving average back above. It looks like we're probably going to see some more weakness through the downside. The question is will the Nazak one hundred of these big KEP tech names file at some point? It could have just as much to do with yields as it could with earnings this week and.
Next Macro Charts Tech. You do it all, Abigail, we thank you. Meanwhile, of course, a key corporate story of the day has been Chinese authorities again shaking the confidence of foreign companies, in particular, that's with a series of arrests across industries and an investigation into the all important tech name that is fox Con. It's a key supply to Apple, of course, and for more. We want to
really dig into this narrative. Riva Goujon's with us director at the Rhodium Group, and really your expertise here, Weaver, is so important you advise, of course within China, and I'm interested as to whether you think this is an ongoing pushback because of well the tech issues that we've seen, the rivalry between US and China.
Is it something different entirely.
Well, lots of layers of intrigue here, of course. Now, any multinational corporation operating in China knows that there is always the risk of tax and compliance audits. This runs from technology to retail, really across the gamut.
But in this.
Geopolitical climate, of course, whenever these moves are taken. There's always the question of whether there's more of a political tinge here of economic coercion, and of course Fox Convene so closely tied to Apple is more of a question mark here in terms of targeting. There have been rumors of informal bands against Apple products. This comes in the wake of revelations around Huawei's breakthrough making it a more formidable competitor to Apple as well, So lots of different
things to entangle here. Other companies also facing crackdowns from china S data security laws. But there's a bit more to unpack here on whether this is truly a case for coercion and how it could tie into the Taiwanese election as well.
Yeah, let's dig into that in a moment, Honhai Precision Industry. It's the public arm of Fox Cohn basically saying they will collaborate with authorities. And indeed you mentioned this is in some ways to do with reviewing of land use and in particular tax audits. Tell us a little bit more about the added complexity that the founder of Fox gone or Honhai, has stepped down of course, because he's running for the Taiwanese election.
He is, and of course that changes up the race a bit. He's running as an independent, and this is a very complex electoral dynamic for Beijing in trying to favor an outcome for the KMT which is more friendly to mainland policies. It's hard to conclude though, that a move against Fox KHN would translate into a political favorability toward Beijing. When it comes to the upcoming Taiwan election
in January. You know, there's a question of whether Terrygo his participation in the race would divide the opposition vote in a way that undermines the KMT favors the DPP, which Beijing would not like to win. But still that's a very complex logic chain, and I doubt that these moves against Fox con would translate into Terrygo actually pulling back from the race. So again, I think there's a temptation to see everything as a highly politicized move. But here I think we need to take a closer look
at Apple's diversification moves, other electronics companies and their diversification moves. China, of course, has a very big impulse now to strike back at US led technology and investment controls. We just had another round of US led ship controls, which is putting a lot of pressure on major US tech partners, to include Taiwan. So that is really I think the hypothesis to test here.
When you put, of course you say it's easy to go for the highly political lens, go for the highly economic lens, because all of this comes in a much tougher context for China.
More broadly, absolutely so, anything perceived as retribution are falling into the scope of tightening laws around counter espionage and countering any type of perceived espionage activity, you know, crackdowns around data security. In general, multinational corporations are already on high alert, and this certainly doesn't help the souring investment climate, as we've already seen FDI inflows into China have been
leveling off, particularly since twenty nineteen. That's been very worrying, to the point where you see the State Council of China putting out all kinds of pledges to say it's okay, you know, we're doing things to promote foreign investment, to include very notable things like easing cross border flows in data regulations, a big ask for many of these companies. At the same time, every time that the US engages
in another round of technology and investment controls. There is this impulse and to strike back, and you're seeing this through landmark legislation coming out of China, everything from counter kind of espionage law, the foreign relations law. It's a form of codifying retribution. And so as we start to see things translate into actions. For example, MOFCOM export controls on artificial and natural graphite. Artificial graphite is a very
critical input for eed batteries. We've seen recent restrictions on gallium and germanium experts. Those are important for semiconductor manufacturing. And so all of this only underscores the unreliability of China in these critical value chains, and so that can energize diversification moves. But of course China's looking to show where it can create pain in the here and now.
And it infects pain on its own publicly traded companies. I'm looking at the Stall fifty index, which is only conceived of about three years ago to really try and be the rival the version, the Chinese version of the NASDAQ one hundred, and it's hit a record low since its inception. We are worried about growth concerns we're worried about global liquidity and a weak export outlook, not to mention some of these political elements to it all, So go back to what you advise clients.
In the here and now.
Ever, of course you are someone who need client engagement for Rodium's China corporate advisory. If I'm about to think about entering the country, do you say I wouldn't.
Well, it depends on where you are, which value chain we're speaking of. Even as diversification is happening. You can look at Apple for example. You can even look at fox CON's footprint and how it has a notable presence in China, but you know emerging presence in places like India, Mexico, Vietnam.
So that trend is happening, of course, But these companies are also greatly exposed Apple in particular, And as these companies are engaged in this balancing act, it is very important to understand the intent behind China's policy moves this. It's caught between trying to promote a healthier foreign investment climate to counteract the forces of its structural economic downturn, and that is something that is going to last for
a while. At the same time, to stay alert to US LED and partner moves on technology and investment controls. This is a fast evolving space. There is a lot packed into the for example, the four hundred some pages of controls that came out just last week from the US that is making it very hard for technology companies, in particular at the leading edge to continue operating in China. You only have to look at a company like Samsung for example, to see how actively they are diversifying outside
of China already. So lots of moves in play balancing acts are hard to pull off in those geopolitical climate but really depends on what where you have a credible competitor in the Chinese space, where you're at the leading edge, and where are their opportunities lie outside of China.
Such complexity and you help break it down. Thank you, Va gujan O the Roodium Group for expertise. The Bloomberg Technology Summit is going to kick off tomorrow right here in London, showcasing whole range of startups, maybe in the biotech field, the healthcare stand.
That's for example.
During a series of discussions about the UK's global role in the most pressing questions in technology today, whether it be climate change, whether it be AI as well, and in fact, just in a few weeks the UK government plans it can mean hundreds of international finances executives of course, government leaders to promote well some investing opportunities in British companies, including those working on nuclear fusion, on deep tech, but most notably thinking about how AI safety can be deeped
and seeped.
Into the global narrative.
Right now, let's dive deeper into the world of the tech scene here in the UK with a standout startup.
Philip Benemoth's the leader, the CEO of Zilch.
It's Europe's fastest growing fintech company, to go from Series eight to Unicorn status in just fourteen months self professed growth. And I'm interested at this time that what have been your business model? And I know it's of consumer credit basically reducing costs. How has that managed to see that growth in what has been a much tougher time for tech more broadly form.
Yeah, I think what's interesting to note here is that the landscape, which if I kind of paint the picture a little bit, it'll explain why we're seeing this disproportion that growth to the rest of the market, and that is that the landscape today is.
That we have high cost of capital.
What that typically means is that your high street lenders, your banks tend to actually withdraw themselves from lending, so you have financial exclusion at its highest. So the demand goes crazy for credit products. At the same time, you have the cost of living has gone up, and so you have demand from the mass market is really intense for credit products. And typically what happens is you have lenders actually thrive in a market like this, but they
make a lot of money off the customer. What's unique about Zilch is that we found a way to generate ad revenue from brands when our customers shop, and we're using that to offset the cost of credit to customers whilst servicing this mega demand. So for us, we're seeing ultra high growth through the next year to two years based on all of this coming together. Of course, most
uniquely providing lots of savings. We're talking about hundreds of millions in savings in interest and fees for consumers as they use our product and move away from traditional lending products like revolving credit cards and things like this.
So that's the opportunity they can improve a credit score not have to depend on credit cards. I'm interested in Philip as well as a South African entrepreneur to come and build in London.
Why.
I mean, I think it's part of why there's the Tech Summer tomorrow. There's a lot going on in London. Obviously, we look at the market here and say, you know, we really wanted to have that was going to hours access to Europe, of course to the United States.
And you still got access to Europe, and we still do.
I mean, you know a lot of people, of course have spoken about Brexit, and what does that change the reality of the situation is is that you just need to make sure your licensing is correct and you understand how to operate in that environment. Regulation, by the way, as long as it's clear, is a fantastic thing. We've also said this for our industry, which is why Zilch is one of the only regulated providers in the space.
We're calling for regulation in B and PL and so i'd make this come in the vein that you just mentioned. As long as the rules are clear, you can engage with those rules and you can transact.
And so we do have access to Europe.
We understand Europe very well from the United Kingdom and equally the United States, which is a massive opportunity for us. So we really wanted to be in London. We think we can control what we're doing from here really well. Great unique pool of talent, lots of walks of life and different types of backgrounds in our business, and we really wanted that diversity in the company as we built this mass spirational product, something we want everyone.
To enjoy, mass rational About those that you were in for money, you just said, of course you're now viewed as a unicorn. Money has been allocated from venture capital. Is that pool of money UK based and is it firm at this moment when people are questioning those sorts of valuations.
I think it just depends on the business.
I mean, we've seen a lot of companies raising flat rounds, up rounds. You've also seen of course down rounds. There's been an adjustment, There's no doubt about that. The way we think about it ourselves is do you have enough capital and do you have a sustainable business model to get yourself to break even and beyond right now in
this market? I think that's how we see at least our company and you know, the strong view is as long as you can demonstrate that and that is the case, you're probably quite a standout business right now.
And that's not because there's a lot of.
Terrible businesses just because a lot of money was chasing high yield.
They wanted growth at all costs.
And the meant is the problem with that is they sacrifice the margin and a real business model in some cases for that. And the chickens are coming home to If you have a real profitable margin and you've got enough capital to get to break even or beyond, we still think that you can demonstrate the real value in your company and you can grow in and beyond your valuation. And that's really how we thinking about our business. So pools of capital wise, I mean, I think in the
UK we sometimes underestimate. Second deepest pools of capital on this planet are in the United Kingdom, But we certainly do see in our business are spread of capital from the US and the UK. And that begs the question where do you go next? What do you do next? As a company which we are evaluating right now.
Okay, leave using on the idea that we're seeing some are raising of funds from Philip Bellamont of Ziltch will be at the Bloomberg Technology Summit tomorrow.
We thank him very much for joining, and we'll be.
Talking about that wealth of more money coming from various pools later in the show.
Whether it's of course well vcs.
We've got Emily Heath, general partner over at Cybersecurity VC firm cyber starts joining us as she wants to discuss some of the trends she's seeing across the sector. And meanwhile, let's just get in the public markets for a moment as well. Let's tune into what's happening with the shares of Airbnb again, a rally on our hands, a bounce back from what has.
Been so questions regarding regulation.
We're just talking a lot about financial fintech regulation there and certainly in New York. Airbnb has been a focus in terms of regulatory pushback. We're currently go up almost four percent from New York, usually from San Francisco, usually from London.
Today. This is a bluemotechnology. Look.
We were remiss if we weren't thinking about some of the geopolitical situation that we currently live within. And it's notable that in the concerns around conflict in the MIDDLEAE. Government and private companies are looking to continue to beef up their cybersecurity and cyber startups are turning two venture capital firms like cyber Starts for backing. So far, it's portfolio is valued at one thirty billion dollars. Joining us now from London is Emily Heath, general partner at Cyberstats.
It is wonderful to have some time with you and Emily. You're British originally, so I am now based in SF.
You have worked for a whole host.
Of companies across industries such as airlines, but you've been of course docu signed being a key company and that you were chief information security officer. Now you're using expertise to allocate capital.
Yes, why are cyberstats.
Cyberstrates has a very very unique model.
We're a very small but mighty cyber only venture capital firm and there's a secret source behind this firm.
They're very small.
There's three partners, two in tel Avivan, Me and San Francisco,
and we each bring something very very different. We've got entrepreneurs, we've got a traditional venture capitalists and myself being the practitioner, so when you think about bringing the operational experience to young founders that are in the very early seed stages, we forget sometimes as practitioners how much value we can actually add to these young companies to make sure that we stress test the problem statements that they have and
make sure that they're building long lasting, meaningful companies.
Founded in twenty eighteen by a Sequoia partner but also the godfather of the Israeli cybersecurity scene. Israeli just talk to us at the moment about how you are seeing the ecosystem affected there. You must have, of course, a large Mountain portfolio company is based there.
Yes, in fact, every one of our portfolio companies is based in Israel.
And there's a sadness.
I mean, there's an absolute, profound sadness amongst the community right now. And on a personal level, I don't think I've met a single founder that hasn't been affected in some way, whether they know somebody who has been murdered, somebody that's missing, or somebody that's been profoundly affected. So on a personal level, it's struck really really close to
home for us. On a professional level, however, I am so impressed with the resilience of the Israeli people and of the Israeli startup community.
It is absolutely incredible.
I think this concept of business continuity and resilience is something that we talk about all the time.
Israelis have this natural ability.
To think about what that actually means because they're used to living in turmoil. This is, of course unprecedented, but what it means is they were prepared in able to bounce back. Now, some of the portfolio companies have had some of their stuff that are now on reserve duty.
There's people in the United States that.
Are standing in for them, but business has remained relatively unaffected.
I would not say it's business as.
Usual by any stretch, but these are resilient people who really truly have continuity plans that have gone into effect.
Geopolitics is complex, so too is the world in which you work of cybersecurity, and I'm wondering what therefore problems they are generally trying to tackle. What ways in which you're seeing your startups your portfolios managed to outperform it in a market context.
It's been very difficult, but.
It's all about the people.
I mean our philosophy first, as we invest in people, most of the companies that we invest in haven't written a single line of code when we give them seed funding. So as I said earlier, they stress test the problem. One of our main portfolio company is Unicorn, called whiz fastest growing software company on the planet, ever faster than Twitter, Airbnb.
How he's measuring that based on growth.
So they've been around for three years, ten billion dollar valuation and over three hundred million dollars in revenue in just three years.
So just the trajectory of the growth.
Because these founders, there's some of the second time founders, so they've been there don't before and that definitely helps. They listen to the market and have adjusted to the market very easily during times which are very tumultuous. And again we want to make sure we're solving very real problems.
Emily, we're going to talk about some of those challenges and opportunities a little bit more. Of course, it's going to be attending the Bloomberg Technology Summit tomorrow. Emily Heaths, general partner at Cyberstats, and look, we're going to be discussing a little bit coming up on the LP side of the equation pension funds. How are informs here in the UK going to change the game. This is Bloommeg Technology. Welcome back to Blue Bog Technology. I'm karenin Hyde, London
today and for the next few days. Meanwhile, let's get a quick check on the market instead, are training worldwide for you because it has been a volatile day with yields on the higher side, but they actually have pulled back. Now we're down some five six basis points on the tenure, having eclipsed five percent. Of course highcens more than a decade, two decades. We're now pulling back to four point eighty five on the tenure. That leaves some breathing rooms from
the growthier names. Now's that one hundred managers to rally on the day up some eight ten percent as we anticipate some key earning something some Microsoft from Alphabet after the bell. Of course, looking at that tomorrow, I'm looking at New York crude though still off by two percent.
But elevated. We're at eighty six dollars.
Of course, this is in a geopolitical context where we are awaiting whether or not indeed the conflict between Israel and Hamas is indeed escalated in any way.
For now, we damp down some of those concerns.
Move on to what is of course a key risk asset of choice when it comes to technology. Bitcoin it has been on a run where up almost three point three percent thirty thousand in excess of that now key technical level, and of course, as many anticipate, perhaps the sec it pulled back from its cases versus ripple. Are we looking towards some sort of etf in the future, Is in indeed some sort of well haven?
That's a key question.
Meanwhile, we want to talk a little bit more about some private markets, an allocation of funds. Here in the UK, some of Britain's largest pension firms have committed to allocating a minimum of five percent of defined contribution funds to unlisted equities by twenty thirty, So I think startups. The aim is to unlock over perhaps fifty billion pounds of new capital by the end of the decade. Joining us now is someone who's spearheading this entire movement. Nicholas Lyons
is the Lord Mayor of the City of London. Where you oversee basically the economy of the square mile. You try and anticipate the ways in which we can make it thrive and One way is you think allocate pension funds, of which you come from Phoenix Group a pension focus.
Why startups? Why is that a benefit?
Well, look, the starting point about pensions is to get the best returns for pension savers and that you know, we must never move away from that as a fundamental underpin. Here the most successful pension funds in the world usually you know the Canadian state pension funds. The Aussie supers have between thirty and fifty percent of assets invested in unlisted asset classes of infrastructure, real estate, private credit and
private private equity. So we need to get the pension system in the UK, of which is over four trillion pounds more invested in productive assets to give better returns for pension savers. The reason that I particularly focused on late stage venture capital is, as you've heard earlier, there is good incubator and ceed capital in the UK, but often our high growth companies, and we are brilliant at these high growth industries of tech, fintech, green and renewable tech,
clean tech, biotech, life sciences. Got four of the best ten universities in the world, so one of the best twenty universities in the world but too many of these companies, once they sort of prove their business model and looking for accelerator financing, have to go externally for capital. And I want us to marry up that need with an opportunity to get the best returns for our UK pension service.
Why should I mean, we love Ontario teachers pensions, but why should Canadian teachers be benefiting from the incredible entrepreneurial spirit in the UK.
So it's about allocating British pensioners funds or future pensioners funds to a UK ecosystem as well, because will they not therefore be able to access private markets outside of the Unitedloate?
They will absolutely And I think the idea here is that it's not just the what about allocating five percent of DC pension funds, which you know we think by twenty thirty, just because DC pensions are growing by ten percent per annum, we're going to have between a trillion and one point three trillion pounds and DC pensions, so
it is about fifty billion pounds. I'd like a significant chunk of that to be allocated to a future growth fund, which has the advantage as a collective investment fund of being able to get the enormous diversification of risk that actually you need when you're talking about companies at that early stage.
Can you give us a context system why why the UK has been reticent psychologically, culturally to invest in that way from its pensions funds.
I think it's a combination of things. Part of it is cultural. I think since you know two thousand and eight, we've been pretty risk averse as a financial ecosystem. The regulators have been given a primary objective of making sure we didn't have a repeat of that. We looked after customers' interests, quite right, but we need to give them and we have now given them a secondary objective of competitiveness and growth, so they have another lens through which to look at
these things. But I think one of the biggest issues is that we've not had that sort of culture, particularly of investing in late stage venture capital, and North America has really stolen a march on us in that regard. So we get a lot of our companies going flight, getting on a plane, going to the West Coast and looking to raise money over there, and they can continue to do that, and they should continue to do that.
We should still.
Get lots of international capital coming into the UK, but I want us to get some UK money. Working to fifty billion is a good start.
It's interesting that, of course, this comes hot on the hills of m a UK based company listing in the US for deeper to capital reasons. Also in a global context of the technologies sector having been pretty hard hit in the rise of yields, borrowing costs going higher growth, your names have been hurt unless your AI focused in some way. What has been the conversations, like with the pension industry, of which you're somewhat apart. We're not on
sort of loan to the City of London. What have they been like, where's the reticence been in this world?
There hasn't really been much reticence. Nine of the largest players representing sixty five percent of the DC market have been supportive of this and signed the Mansion Has Compact in early July when the Chancellor was at Manchien House and was able to announce this. So I think there are very big players like Aviva LNGMG, who got big asset management capability, including in the private equity sector, who would like to say, well, yeah, we're happy to sign
the Mansion Has compact. But we think we can do that ourselves. There are lots of others. Because we have a very very broadly diversified pension system with lots of small players. They need a collective investment fund that they can use as the vehicle through which to invest in this asset class. But I think by creating a fifty billion pound war chest, if you like, and with much of this going into a future growth fund, we'll be
able to change the culture. We'll be able to develop a real ecosystem.
Not just of It's not just about capital.
It's about making sure that we've got really strong non executive directors and mentors who can help these companies and also prove the equity research that we write on tech companies. I'd say there's actually a significant differential at the moment in the quality of tech research that happens in the US and in the UK. So this is not just a silver bullet. We have got to change the culture and there's a lot of work that's involved in this.
No to the cell side, I'm interested just to end it.
Law mare on the idea of whether this money automatic goes to British based venture capital companies or are we going to suddenly see a flock of SF based funds come in and want to make the most of this poor capital.
I think we again if you come back to this first mover, which is that we have the desire to deliver the very best possible returns for pension savers. Therefore we need to make sure that they have a diverse and not just UK but also international exposure too. But we have got such good companies. The fact of it is the most sophisticated investors in the world come here
to invest in the best of British. So let's let's invest alongside those sophisticated investors and deliver great returns to pension savers and get some of these companies listing in the UK. In five years time, if we're successful with the Mansion has Compact and what we're doing with DC Pensions, we'll have five five billion pound ten billion pound twenty billion pound tech companies in the foot.
See one hundred not just a delivery, Nicklas, Lions delivered. We thank you so much for joining us, the lawn Mayor of the City of London ahead of what is a big event that they'll be throwing on Wednesday coming up in fact, we're going to be talking with a key venture capitalist who does allocate money into the UK and Europe more broadly of VC. Spotlight time is upon us and we're going to be talking about the tech scene in here in London with Harry Nellis of Excel
Partners from London. Today, we're going to be watching the shares of certain companies related to crypto. We're just showing how bigcoin is uperforming for a variety of reasons. Well, a lot of the key names that are invested in the crypto space, whether it be right Platforms for example carrying up eleven percent on the day. One of the key out performers from London. There's a Blomberg Technenergy time
now for talking tech. First up, Apple is hoping to incorporate artificial intelligence into some of its key services thinks Siri of course the App store as well Apple Music. In fact, Bloomberg's Mark German says Apple is exploring new features such as auto generated playlists. Are the LM functions
similar to those already found in Spotify or Microsoft Office. Meanwhile, Benge Capital firm Peak fifteen Partners of course previously Sequoia Capital in India, says AI startups are dominating its accelerated program PEAK fifteen and indeed it was present in Southeast Asia as well.
Says that ten of the thirteen.
Startups in its cohort are in the AI and deep tech field. The VC firm has invested as much as three million dollars in capital to startups thus far, plus Microsoft will invest roughly three point two billion dollars to grow its Australian data centers. The US tech company plans to expand its cloud computing and AI infrastructure over the next couple of years. Is largest investment to their country
in forty years. In fact, Australian Prime Minister Anthony at Albany's is currently on a four day visit to the United States. Oh, there's lots of billions and millions being thrown around. Let's do a little bit more in our venture capital scene here in London. Axcel has been on the ground in Europe for twenty three years, opening its London office all the way back in the year two thousand and The firm has made investments.
In some of the key standout names.
That about performed, you know, Spotify, super Cell Delivery. Axcel partner Harry Nenness is now joining us to discuss an evolution in the ecosystem that has exited founders, has money that gets reinvested into the tech scene, does it get reinvested here in Europe? Do you founders leave the likes of Spotify Delivery to go build their own companies?
Absolutely?
Recently that are study and I showed that two hundred unicorns in Europe have in fact generated twelve hundred new startup companies.
And that is critical for the.
Ecosystem because for an ecosystem capital entrepreneurs, but also repeat management teams. And that is finally now starting to happen, which was very different from twenty three.
Years ago when the market was very very early.
Yeah, and it took a while to build such unicorns.
I mean when you say that there have been more than two hundred, I think it's exactly two hundred and twenty one unicorns in the region. People might be soly surprised by that, do you think, I mean, what key areas have we seen billion dollar companies founded here in Europe?
Yeah?
Well, it was our conviction twenty three years ago that it was indeed possible for Europe to generate these billond dollar outcomes.
Our investors doubted it at the time. In fact, we had.
To wait five years for that first Unicorn to show up, and then three more years for the second one.
To show up.
What was the first one here?
The first one was Skyper, of course, and then my SQL.
In two thousand and eight.
So the big sectors that have generated is online games, super cell, enterprise software, click tech, consumer technologies including Skypes, so a variety of things in fact, which is one of the things that characterized at very early market you couldn't really specialize in anything. You have to be very broad because innovation happened across the board, but very shallow. Later there weren't many companies of the same type.
It's interesting, of course, of Skype was Nicholas Zenstrom, who's gone on to found his own VC. When you think of Atomaco and I'm interested in like that was early days sort of artificial intelligence, before AI was cool to be saying in every single Lexican, but what are you seeing in terms of AI proficiency here? We're about to have an AI summit about the regulation, the safety is that key AI expertise and businesses being built.
Absolutely, there's many universities across Europe that have generated very interesting founders and deep technology insights into artificial intelligence.
We've been funding a number of those.
And artificial intelligence is really impacting a number of themes that we're investing in already, enterprise automation. With artificial intelligence, you can actually improve that. Cybersecurity powered by artificial intelligence, you can actually make that better. So we see artificial intelligence as a major paradigm shift the new platform, if you will, after many of the others. So we had the Internet, we had mobile, we had cloud computing, Now we have AI.
Why then, let's play the cidic and the counter or to this narrative of one that is optimistic. Why then do you think there is this worry about post Brexit London not being an ecosystem for Europe. Why then do you think perhaps in a current market cycle has been very difficult, we're not getting companies raising their funds in Europe instead arms going to the US for the deep pockets.
Yeah, I think there's been a We've gone through very strange period during COVID where there was enormous amounts of capital available and enterprise is actually over bought software that is now over So we're going through this transition period where people are trying to find a new price at.
Which deals will be done.
And the reality is that many software companies and other tech businesses just had so much money that they hadn't didn't have.
To raise more money.
So we're now entering a stage where they are running out of money. We think in the year to come, we all have to raise more money and then we'll discover where.
That price is.
Does that mean?
And we actually had for example, anow Doogils of the Female Founders Fund in New York saying that there are going to be about a thousand unicorns that are going to have the rubber hit the road. They're not going They're going to run out of money and likely won't find new funding. Do you think that we will see an awful lot of unicorns suddenly exploding?
You know, there's two hundred billion dollars of dry capital on the side clients.
Waiting for market discovery of new prices.
So I think there's plenty of money available for unicorns. I think it will be an environment in which flat is the new up. So if you can raise money now at the price where you raised money three years ago, that will be victory. In fact, in the subsector of software. We did a study and of the two hundred unicorns in software, only ten percent of them actually had to do financing, and half of those actually financed at flat or up prices, and only a.
Fraction of them down. So I don't think it's going to be that bad.
What about more international funds such as yourself, you allocate money around the world accel as a.
Worldwide known name.
Are more international vcs West Coast bace vcs those in emerging markets?
Are they coming here to Europe?
Yeah?
Absolutely, because Europe has become a really interesting market. What we saw twenty years ago people are seeing now, namely Europe is a real innovation happens everywhere, including Europe. It's a great market to be at. It's a great advantage for us who have been here for so long. But many of our competitors are now here as well, which is good because you cannot have an ecosystem with only a few investors.
What does this ecosystem seem like, look like, sound like from a diversity perspective, How does Europe, for example, compare with Silicon Valley where people are always bringing their hands and rightly so that there is a lack of diversity in founders, and indeed the VCS allocate to them.
I think Europe is not different from the US. It's very similar in that sense.
So underrepresented can do better. How are you seeing it try to do better?
I think.
I think everybody is making a considered effort in order to get it into the right direction. But it also has a lot to do with what happens before we meet entrepreneurs, like education, primary education, college education. That all is up to the people whom we end up seeing as entrepreneurs.
So fix it in several steps before as well. Harry Nas, it's great to have some time with you. Thank you for joining here in London. Of course, he's of Axcel and a key BC here in the UK space.
Now.
The film version of Taylor Swift Stadium Tour held onto the box office lead for a second straight weekend, out
drawing a new Martin Scorsese drama from Apple. Of course, Taylor Swift the Area's tour brought in thirty one million dollars in North American ticket sales, while Killers Are the Flower Moon, first ever big screen released from Apple Original Films, it opened to sales of twenty three million dollars Meanwhile, sticking with the film industry, we've got to be talking about the Hollywood studios and the SAGAFTRA Actors' Union apparently
resuming negotiations tomorrow, more than a week after suspending talks aimed at resolving a month long dispute.
Joining us Now, as Blomberg's.
Felix Jennet, who you know, we must key think through some of the sticking points. What is a stumbling box still remaining for the actors when the writers have moved on.
It's mainly two things that are remaining. One is the compensation from streaming services and how that will go to actors. And two is protections from artificial intelligence.
Okay, a lot of the AI concerns, for example, have been held by smaller acting positions, bit parts and the like.
But now we.
See big actors coming and weighing in to try and push on those studios.
How are you seeing George Clooney's.
Voice and now others added to the arena Scott Hanson.
In the Night.
Yeah, I think that's just evidence of the mounting frustration in Hollywood. I think there was a lot of hope that when the writers reached an agreement a month ago with the studios that the actors would be able to take that template and follow quickly. But that's been a month now it hasn't happened.
So, you know, last week you saw.
George Clooney and another a bunch of other A list Hollywood actors jump in, you know, set up the zoom call with the union leadership, you know, toss around a bunch of ideas, hoping maybe that would resolve things.
It seemed to have done nothing.
I think the consensus was that their ideas weren't going to move the needle enough.
It was interesting that some of the big wigs on the other side of the equation, so JOHNA. Langley or of NBC, or whether it be Bob Byger himself for Disney, they got around the table with the writers. Do you think the same thing's happening here with actors.
Yeah, I think they're involved.
I think, you know, again, the main problem is that the union has this idea of you know, initially they proposed taking the percentage of all streaming revenues.
I think it was two percent, then one percent.
Then they came back with this idea, Okay, we're not going to take a percentage. We'd like, you know, a pern assessment per subscriber, and you know, I think the top studio bosses, including people like Ted Surrandus and Netflix has said that's, you know, that's a bridge too far.
It feels like tax.
We're not going to do that, and that was really the last thing that broke off the negotiations.
Well, we'll see how they reform tomorrow. Felix. Great to have your perspective on it. We thank you.
Meanwhile, that does it for this edition of Blombag Technology. Do not forget to check out our podcast and you know it tomorrow because we've got the big event, Bloombog Technology Summit