#173 Augustin Sayer, OVNI

0:03Hi, and welcome back to the European VC, the go-to-podcast for everything European VC. If you love the show, share with your friends and join our newsletter at eu.vc. Today, we're happy to welcome Augustine, General Partner at Ovni Capital, a VC fund specialising in France-based tech startups. Based in Paris, Augustine manages the company's investments in France and Israel. He was previously a partner at New Fund, a French-American fund overseeing 20 investments in companies such as Fair Money, the largest African Neobank, and YouMiami. a plant-based texture technology company. If you enjoy our content, do support us by hitting the follow button, giving us a review and following The European VC on LinkedIn.

1:00Gus, welcome to The European VC. It's super nice to have you here today. You know, let's kick things off with the standard question of, Gus, tell us, how did you get into venture? What brought you and attracted you to this wonderful world that we all love? David and Andreas, thanks for having me. It's a pleasure being on your podcast. What got me into venture? The very first time I touched venture capital was as a business angel, as an actual business central investor. I started my career in 2008 in New York, M &A at Lazar. And in a very uncommon fashion, I think at the time with my bonus, I didn't really want want to invest in equities.

1:38Back then, you know, equities, you had to pay to get in, you had to pay to get out, you had to pay to make every single little change. And I just felt like it was a waste of good money. And at the same time, I had weird friends who were starting startups. And I started investing little checks, 1 ,000, 2 ,000, 5 ,000. I think the largest check I invested was 10 grand at the time. So that's how I got into venture. But I never thought that one day it would become my full-time job. I think a lot of our listeners, but also a lot of the stakeholders that we interact with at UVC through our syndicates, you know, they fit into that profile that you just described you were back then when, you know, when you started doing some angel investing.

2:15So I'd love to ask you about your motivations back then. So, you know, was it a learning thing? Was it financial gain thing? Was it kind of a mix? Was it just out of kind of fun as well? Yeah, it was all of these. I was at Lazar in M &A. You're taught all these different ways to grow your business, to manage your business, to improve your business, acquire and sell assets. And I thought this skill set, I was going to be able to kind of pass it on to those investments I made. Obviously, it was completely different. So I was not the most useful person in that regard. I was more of a soundboard with whom my friends would regularly check in and say, oh, I'm thinking of doing this, doing this, doing this.

2:55So it was to learn. It was for fun. There's obviously some sort of financial interest in it, but I quickly learned that when you're investing as an angel, you got to mark down your investment to zero, you know, the day after you invest and just hope and work for the best. If not, it's going to be a roller coaster for your wallet. Exactly. Let me maybe just double click on that. So how do you move from that, right, to today, right? It's a bit miles distance, right? It's completely different. One, two K, so maybe 10 K to now being a VC, right? So after two years in M &A, I moved to private equity at Colony Capital.

3:30So I actually started investing with much bigger checks. And in 2015, you know, five years later, I said, look, I've invested over$100 ,000 of my own money in different startups. Why don't I try to invest my own money in my own startup? You know, I can do it. And so when I turned 30, I moved to Mexico. One of my good friends from New York, I had relocated there and was telling me all great things about the Mexican ecosystem, VC entrepreneurial ecosystem. I moved there. We started a very non-VC compatible business, a very non-scalable business. But, you know, when it's your first time starting a company, a lot of times you tend to get blindsided by certain obvious things.

4:09but here I am in Mexico starting a smartphone repair business. We raised$2 million and we opened 25 stores in four different cities in Mexico. So picture this, you know, it's those small stores in the middle of a mall. You give your phone and in 30 minutes, we fix it. Sounds like a great business. It's not a great business. And the truth is on top of not being scalable, having poor unit economics, I actually miss the times as a business angel or as a private equity investor, the time where every day I was faced with a different industry, a different challenge, a different entrepreneur. As a CEO of a smartphone repair business, a lot of the days were the same.

4:50Obviously, it was just trying to solve problems. It was just the same thing, smartphone repair, people not showing up to work, phones being stolen, warranty's not, phones breaking, blah, blah, blah. And I told my co-founder, I said, look, I don't think I'm a great mono-task entrepreneur, a mono entrepreneur. I don't think it's made for me. I wanted to try it, but it's not what excites me and drives me every day. So I told the guy, look, I actually want to quit. I had to try to find a way out and replace me with someone. And at the same time, I said, look, I want to make this business central investment my professional career.

5:25And it was 2017. I had been in Mexico for two years and I could go back to New York where I've spent most of my life, or I could go to Paris. And I decided to move to Paris. I thought there was more of an opportunity to quickly join a tier one fund. There were fewer funds and the ecosystem was growing, whereas New York was a lot more established. And in France, I talked to literally every single VC in France, got offers from two VCs, both of them French American VCs. So the apple doesn't fall far from the tree. And that's when I joined New Fund in September 2017. That's my way from a business angel as a sidekick to super business angel as a professional job.

6:06Now that story with Newfound has come to an end and you have founded Avni. And I've been following you on the sidelines. We've been doing a couple of things together. And I was like, fuck yes. Now he's going to do his own firm. So I'm super happy to see that. But Gus, tell us why should we be super happy that you have decided to build Avni? and maybe before to everyone who has as little experience in the French linguistics, tell us what does OVNI mean and why did you pick that name? Let's answer that one first. OVNI, and I think OVNI will speak to the French speakers, Spanish speaker and Portuguese speaker, I think, because OVNI in those three languages means the same thing.

6:47It means UFO. It's an acronym for UFO. But I think those are only three languages it works in. So for everyone else, we're UFO capital. Why are we UFO capital? Because if you've been an entrepreneur, you know that you are a UFO as a person. You got to be a little crazy to become an entrepreneur. So that's who we go after. And look, I say this with a lot of goodwill. I consider myself an entrepreneur again. It's a little crazy, but it's part of the adventure. And thank you for the kind words, Andreas, by the way, with my moving from Nufon to Avni. Look, I spent five years at Nufon. I did 22 deals.

7:23Interestingly, and maybe very naively at the beginning, you know, I moved to France in 2017. And a lot of the entrepreneurs I met were telling me about building this startup for France and then waiting two, three years to move abroad. And to me, it sounded a little crazy. I said, look, if you want to build a global business, you got to start from day one. You got to have people in your team who don't necessarily speak French. You got to make sure everyone in your team speak a second language in French. You got to start selling your product to other countries in France. so that you have a more global product.

7:55And so all my deals have this in common, international team, global product day one. And the reason why I started Avni is, look, New Fund was a team of four to five investors, depending on the time. We all had our different kind of thesis. Not everyone was investing on this model. And I really thought there was a low-hanging fruit in the French ecosystem of solely focusing on international teams based in Paris or anywhere in France. And so that's why I left New Fund. Honestly, I had an amazing time there, great successes. We made fantastic investments. One of the investments I'm the most proud of is six months in France.

8:33I meet this guy, half Nigerian, half German, based in Paris, speaks English for the most part. And he comes into my office and he says, look, I want to leverage French engineering excellence and build a neobank focused on Nigeria's 170 million unbanked people. and I said, look, this is fantastic. The team was amazing, the attraction, the product. And that was the type of project that made me excited. That made me, okay, if they execute properly and they're able to do this, we can make the lives of millions of people just better. And five years later, it's the largest neobank in Africa. They have a few million clients solely in Nigeria and in India, and they've raised a series A, a series B, a series C.

9:18And the reason why I say this is I think back then in 2018. This guy was an ovni. This guy was a UFO for most of the VC funds. Everyone's like, what is this guy trying to build a firm based in France, but focusing on Africa? And on top of this, French is not really his go-to language. He's talking to me in English, and I'm used to people speaking French. There's nothing wrong with this. But in regards with the VC business model, to me, it just seemed a little crazy to pay crazy high valuation when you don't have the exits later on if you're a Franco-French startup. It's perfect, right? Because it's smacked down on your thesis.

9:54Before we started recording, I said, brace Gus, because I think we're at least going to have to say things that I know every time I say it, I tend to get a bit of heat from some people in the French tech ecosystem. For sure. From the outside looking in, France is not always the easiest place to break in as a VC, right? Because it is a somewhat closed ecosystem. I'd love you to continue down the vein of saying, why is it that you believe that there is space for ovni in the French ecosystem? So I think culturally, France is a very proud country, proud of its history, proud of its language, and really trying to defend its language.

10:32And I'll give you a small example. My wife is Mexican. We moved to France in 2017, and she's a product designer. And everyone was like, look, you can work with us, but you need to speak French. I was like, why does she need to speak French? She's not in a customer-facing position. It's fine. It's cultural. It's the country. But I think we're missing out on something bigger. We're preventing ourselves from working with the best in their field just because we want them to speak French. And to give back to Cesar what he's owed, I think France has gone a long way to modernize itself in this regard.

11:08Station F, I don't know if you guys have had the chance to visit. They opened in 2017. And by default, their language was English. Everything was in English. And I think at the time, it was very disruptive. People are like, I still remember. It's funny. I remember at Station F, I did the onboarding at Station F. There's 20 French funds, 20 French VC funds, two people from Station F. And everything is done in English. And it seems a little weird because, look, we're all speaking French. Why do we need to speak English? But they really insisted. They never gave up. And then there's also Macron. on, Macron started an initiative called the French Tech Visa, where anyone who's willing to work in tech and create something in France can come and work in France.

11:47And so I think these are little things. They're changing the country little by little. And you see now a lot more entrepreneurs realizing that they need to be more global more quickly. They need to work with people, non-French speakers, more quickly. And so where I think there's a space for Havni and other funds who may have similar strategy, although ours is 100 % on these people, is I think today 80 % of my deal flow is really Franco-French, but it doesn't mean that 80 % of deal flow is bad deal flow. There's a lot of great startups in those 80 % where I could say, hey, have you thought of maybe applying to this accelerator in Boston?

12:28You know, have you thought of applying to YC? You've got an amazing idea, you know? Why don't you try to leverage US capital, British capital, Nordic capital, German capital to create this French-based international champion? I'm biased, and I think you've heard me say this, Andreas, but we're at the dawn of this, at the dusk, rather, of a third revolution in the French ecosystem where if the French ecosystem is going to keep growing on private capital, we need more international mindset, DNA, companies going global. So that's why I think it's a perfect time for an ovni to kickstart this revolution, to pursue this revolution.

13:06And I really think it's a revolution. On that topic, Gus, I'm really enjoying this, but I want to kind of try and play the devil's advocate here, right? Because if we're all agreeing, this is a really fucking boring interview. Go for it. I see what you're saying, but is there a point to questioning to what extent there's enough deal flow today? Not from the perspective of talent and expertise. I think it goes without saying that, well, from a macro perspective, Europe has amazing talent. France has amazing talent and Paris is like the main hub, right? So it's not on that point. It's more great talent without right mindset.

13:40Adventure doesn't really add much value, right? So if they don't have this global mindset, at least regional dominance mindset, right? They're not really a good match for what you just described. So how would you explain to maybe a skeptic on that topic that, no, there is actually enough scale here for a fund like OVNI to exist and to back the, let's call them the French OVNIs, Franco-French OVNIs, as you call them? No, I love the question. Look, we're a fund. We did a 15 million euro first close. So I think in that respect, hopefully there's enough deal flow. And I think there is enough deal flow.

14:14I see enough deal flow. I think if all of a sudden everyone started to do this, then we might get squeezed out or an OVNI might get squeezed out because there's all of a sudden all these funds focused on international. But I don't think they will. And it's part of the new generation. I think if you look at a lot of managers in the French VC ecosystem, they're smart, experienced investors, for sure. But their experience rely mostly on scaling French businesses at the growth level and not early on. I think where we're different is we're saying, look, by default, we're managers with an international experience.

14:49And so we're going to help you in that respect. So I don't think anytime soon the entire ecosystem is going to shift. is going to gradually shift with the new generation of managers. I think a lot of the younger managers, the 25 to 35-year-old managers, they have this international DNA in them, more of them have it. And as they become partners in funds, they're going to bring it. And they're going to say, look, enough with the local French marketplaces that ends at.fr is a French name, and there's no way an index or an Excel will be interested in Series A. And so it's gradual. And I think that's where we're positioning ourselves.

15:26There's a gap in the market. We're in that gap. And hopefully, you know, we'll grow with it. What does that mean? Maybe that means in seven, eight years, we'll have to raise a Series A fund, even though that's not the focus, but to continue supporting this ecosystem. And hopefully, you know, in 10 years, we'll be comparable to the Netherlands or the Nordics or Israel or Berlin or I mean, all these ecosystems, but it's going to take 10 years. Can I ask you just because I consider myself to be relatively well-versed in who are the players across Europe, but I do find France a bit hard, right? Hard in what sense, David?

15:59To map out, to get to know, to build relationships with, right? As I wouldn't put myself in the LP bucket, but I would put myself in the VC bucket as a player in the industry, right? It's not the easiest one to build relationships and get to know who's doing what, understand what they're focusing on. And so I'm not asking you to compare yourself to what exists in France, but I'd love to ask you, would you give us a hand here? How would you map out the French ecosystem in terms of the VC players from pre-C, C, Series A, you know, who's who, who's what, what is happening that's exciting? And obviously I'm asking you to detach yourself completely from OVNI and take a bird's eye view on French tech ecosystem.

16:35Whatever you feel comfortable. If you want to name them, name them. But also just understanding, is it, you know, the exciting funds focusing on specific verticals? Are there specific areas that you think are most exciting from an international perspective? So if I'm an international VC looking in, what is exciting? I can say that about Portugal, my ecosystem, where I think we have strong players, the verticals that I think we're kind of really strong. But I have a hard time with France, to be honest. Yeah, there's been a lot of evolution. I think if you talk to a fund five years ago, historically, I feel like French funds, the way they've done this is we used to invest at the seed level.

17:10the French Series A refinance and the French Series B refinance. And most likely it's going to include, you know, the BPI, you know, the French public bank, which has been an amazing actor in the ecosystem. And then we'll sell to an American or German or British company. And then people will say, oh, you know, it's too bad. We had this great French company and we sold it too early. And so then the French started putting money in creating those growth funds. And so now we're finally have those growth funds and the growth funds now are able to help this company go international. But going back to your question, look, I'm biased.

17:42What's exciting is I think this low-hanging fruit of convincing entrepreneurs to go international. One fund that moved things around two years ago when they started was FIRST. I'm sure you've heard of them. Because FIRST had a different, you know, they had a different speech. They said, look, we have to stop being shy with our startups. Let's try to aim for Europe and Europe as your home country. And I really like that. I do think with experience, it is extremely complicated to scale a business in Europe. And to go back to what's exciting in France is France has an exciting pool of engineers. But the problem with France is you put someone who went to a business school and you put someone who went to an engineering school, the engineer will always be the smarter guy.

18:22There's something historical, cultural in France where if the engineer says one thing, the business guy has to follow, where it should be the opposite. You know, at least in the VC world, we have this great idea, but let's try to sell it. Problem with France is a lot of time we have those great ideas and we never sell them. I mean, I won't name it. And so I think that's where there's an opportunity is leveraging the younger generation of French, you know, again, 20 to 35, they all speak English. They've all lived abroad. They all love, you know, the US, UK, the Anglo-Saxon way of life. And I think they understand a lot more the risks and benefits of going global.

18:55So what I think is exciting is nurturing local engineering talent, matching it with the right support, whether it's investor or a co-founder, and building global product base in France. There's another peculiarity to the French ecosystem, and that is the dominance of Paris. It is more dominant in France than Berlin is in Germany and London is in the UK. So I'd love to ask you, you know, your take on why like that and also of this take, are you just saying, well, Paris is the place where it happens? So yes, if someone comes from Lyon, I'm going to take the call, but I'm not going to set my expectations too high.

19:38How do you think about that? You know, I love this question because it is a potentially controversial question, but I like it and I'll tell you why. I think having Paris as such a dominance of the city of Paris on the ecosystem is an enormous positive on the country. and we have to leverage that. You know, you look at the US, everything happens in San Francisco, right? And I think the fact that everything is concentrated, you got capital, you got human capital, you got talent, you got a lot of concentration to build the best startups in the world. So Paris can offer that. And where I think it goes hand to hand with the little cities in France that also have really smart entrepreneurs with fewer talent, fewer capital, there's nothing wrong with starting your business in Lyon and opening an office in Paris because you're only two hours away by train to leverage, you know, product.

20:26If you're in France, you got to put your sales in France, in Paris, your product, they're going to be in Paris. You know, maybe your devs are going to be in Lyon. But the truth is most of them are going to be in Paris if you want a global pool. So for me, it's a force that we don't, that we should explore more. And with regards to Avni, look, our first investment is in Montpellier. We already told him, look, you got to build an office in Paris. He's built an office in Paris where he put all his sales and product. and he's opening an office in the States now. And, you know, Trippiner in France, wherever they start from, at some point, if they want to be successful, they need to open a satellite office in Paris.

20:59It doesn't cost that much money. You know, the beauty about France, as you guys know it, it's a very centralized country. So from every single city in France, you're two to three hours by train to Paris. You could go for a day, you know? And to answer a bit more specifically your question, Avni, you know, we're two co-founders. I'm based in Paris. And funny thing is my co-founder is based in Montpellier. And he covers literally the southern part of France, where there's a great pool of potential entrepreneurs. And he spends, you know, two days a week in Paris. I was going to say your co-founder is the lucky one that has the nice weather and the sea every day.

21:33So we know who actually works then. Okay. Whoever wants to go to Paris. It's funny you say this because he enjoys, what, 300 days of sun. I enjoy, you know, 130 days of sun. So a lot less. You have to enjoy double. You have to enjoy double. That's that. I was about to say, but you enjoy them three times more. Yeah, exactly. And when we talk with them, he's like, look, do not move to the south. We need someone in Paris. Look, I love Paris. I love the energy. You know, I spent 20 years in New York. I spent two years in London, too. So, you know, I've known exciting, dynamic cities. I think Paris is definitely not as dynamic as London or New York, for that matter.

22:15But it is dynamic. There's a lot of international people. It's a lot of new ventures, new restaurants, new businesses, innovation. And I'm challenged every day. You know, I'm challenged every day and it keeps me young. And I think there's nowhere else in France I would want to be if I were a VC. So it's one of those, you know, it's like the language in France. People say, oh, you know, 80 % of businesses in Paris, it's not normal. I'm like, it's called competitive advantage. You know, 80 % of sun tourism is based in the south of France. Everyone has their own advantages and disadvantages. So, Gus, now we've spoken a lot about the French ecosystem, and we're very thankful for that because I don't think that there's many that have a better eye to that and where it's headed than you do.

22:57But I'd love to dive a bit more into Avni and ask you and challenge you a bit to tell us what exactly is it that's the unfair advantage of Avni? Because Gart knows that there's many funds out there. There's not that many seed funds in France. You're right. There's a lot of funds in France. but there's not many funds that assume, that basically say, look, we're only seed fund and we're going to do seed fund well. One of the reasons is, historically, it's been tough to get some good numbers if you're a seed fund only. And so a lot of seed fund in France, they moved up to series A, series B growth, AUM accumulation.

23:30What makes us different is, for one, it's our investment thesis. I think we talked a lot about this. We're focused on international. The second one is we're focused on tech, on what's called tech-centric products. So we want proprietary technology at the core of the product. So we're not going to do e-commerce. We're probably not going to do marketplaces. We're probably not going to do PropTech. PropTech is very local. And SaaS B2B, it might be a shocker. We're going to find a B2B SaaS that has some sort of proprietary tech element to it that makes you different from a potential overcapitalized Israeli or American competitor.

24:07So in that thesis, I think we're very different. On the French ecosystem at the seed level, no one does that. No one is focused purely on tech. And a lot of people say, okay, but how can you do tech? You guys are two business school guys. And what we've done is we've surrounded ourselves with a network of 50 LPs. And I think a lot of people will tell you this. They've surrounded themselves with a network of XLPs, right? And we're actually trying to leverage them. And so hear me out before you laugh. The first one is, you guys are familiar with it, we're using Affinity as a CRM. We're giving every single one of our LPs access to our own OVNI network alliance so that they can use it themselves to meet other people.

24:48But obviously, the idea is to help our own startups. For anyone who's not familiar with Affinity, Affinity basically scrapes your email and then creates a big network of people. It's kind of like a LinkedIn on drugs, basically. So that's the first one. The second one is I really want to continue this trend, but we're trying to organize events every two months, not expensive events, where we bring all our LPs together, some of our LPs together, some entrepreneurs, other VCs, business people who may be interested to invest. And, you know, just this year, we've done this three times. Two times at something called iFly.