ACT #186 Judith Dada from La Famiglia VC

0:04Hello everyone and welcome to At The Cap Table Podcast, a new series that shines the spotlight on the investors who are changing the VC industry in Europe. I'm your host, Sarah Finnegan. Our next guest is Judith Dada, General Partner at La Familia. La Familia is a Berlin-based, European seed-stage venture capital fund that invests in B2B tech companies, disrupting or enabling large industries. Earlier this year, La Familia raised£250 million for its combined third seed fund. Judith's focus areas include the future of work, data-driven business models and machine learning. In addition to this, she serves as an advisor to the German government on topics like technology, diversity and migration matters.

0:49Before joining La Familia, Judith was at Facebook, where she managed Amazon's Europe's marketing strategy and worked on Facebook's VC initiative. In this episode of At the Cap Table, Judith will be sharing her insights and experiences in a dynamic and wide-reaching discussion. The topics covered will include Judith's background and personal journey into investing, including a route into VC, the current state of entrepreneurship into the Dock region and Europe, given the abundance of talent moving into the space, building and strengthening a strong ecosystem in Europe, La Familia's investment focus, and a quick fire round of final and probing questions.

1:27Stay tuned for an engaging and informative conversation. And now some words from our beloved sponsors. Tactic is the leading forecasting and scenario planning software for venture capital funds. Tactic combines portfolio construction, portfolio management, forecasting and reporting into a unified platform. Investors are empowered with data-driven insights on fund strategy, reserve allocation, exit planning and fund performance. Tactic was built using quantitative techniques researched from hundreds of data-driven fund managers and is trusted by over 250 funds globally today. Tactic is a proud sponsor of the first season of the At The Cat Table podcast series.

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3:12Judith, welcome and thank you so much for joining us today. It is an enormous pleasure having you on and super excited to speak to you and dive into a few topics. Thank you so much. Excited to be here. Thank you. So Judith, you are a general partner at La Familia, a European seed stage venture capital fund. You're joining us from Berlin, where you're based, one of Europe's top tech hubs. And speaking of Berlin, I believe our paths crossed there when I was working there last year and the year before. Indeed. I still remember. I think I bumped into you somewhere in Kreuzbeck, the tech hub of Berlin, basically.

3:51Awesome. From, I guess, our time in Berlin, I really observed how prominent you were and are in the venture ecosystem there. I think you're really, really entrenched not only in the tech ecosystem, but also quite prominent and vocal at major events and conferences across Europe. I think to start us off, let's go back a little earlier in your career. Prior to La Familia, you were at Facebook managing the VC initiative there. And prior to that, you managed Amazon's European marketing strategy. But I guess maybe you could kick us off with some of your background. Happy to. So, you know, I don't have the kind of straightforward, I worked in private equity or consulting or banking before joining VC type of background.

4:35I would say I did a little bit of everything and nothing at the same time. actually originally very fascinated by everything that's social science. So started out studying for a social science degree with some economics and management mixed in, then very quickly realized that especially the kind of more quantitative side of social science was the most fascinating side of my studies. And so focused much more on kind of advanced statistics. And then also for my master's kind of changed gear a little bit and focused much more on kind of technology management and, you know, kind of computational social science.

5:06So really kind of mixing computer science with social science, always trying to ask social science questions, like always asking, how does technology actually in the end affect people? I was super interested in studying social networks like Facebook and Instagram back in the day. I was like fooling lots of data from the web and then trying to analyze how kind of networks form and how information, how power propagates within those networks. But that was really, you know, kind of a little bit of everything and nothing. And then after finishing my master's degree, I was briefly considering doing a PhD in machine learning and was, you know, I think I was kind of the classic, you know, Nigerian kind of immigrant father.

5:43You know, it's always great to have a PhD, to have kind of a doctor in the family. So it's kind of mentally going down that track. But then in the end, decided against it. I think I'm a very social human being and four years of me and my research would have been a very lonely experience. And so instead, I joined Facebook because I had done so much research with of Facebook and Instagram API. I thought it was a really fascinating company. And because, you know, of my kind of wild background of different things, I joined the sales team, which is a fairly, I think, generalistic, you know, side of things to start with.

6:12It was based in the European headquarter in Dublin, loved Ireland, loved my time there. And because of kind of, you know, my data background, I then very quickly got handed responsibility for one of the global or like biggest accounts at Facebook, which is Amazon and kind of all of their European in advertising business, really supporting the company and getting the most out of every euro they spend in terms of, you know, customer acquisition and customer lifetime value and really optimizing that. So that was, you know, a little bit my journey into tech, into Facebook. And then at that time, a lot of my peers that I'd gone to uni with, you know, they were all starting companies.

6:45I was lucky enough to have been exposed in my past to some fairly entrepreneurial networks, you know, and kind of being at the right node in terms of having exposure to people who ended up, you know, starting companies in vast numbers and raising venture funding. And they were kind of all starting to knock on my door because they knew I was supporting Amazon as well as other kind of gross companies across Europe and Germany in their, you know, kind of customer acquisition and scaling on platforms like Facebook and Google. And so they were starting to call me and say, hey, can you also help us?

7:16Because we just raised venture funding and our VCs are not really happy with our performance and they think we're way too expensive when it comes to, you know, gaining reach or getting customers on these marketing platforms. And so I just, you know, together with another colleague back in the day, started this Facebook venture initiative that still exists today, which is really kind of an engagement program to support venture-backed companies and, you know, scaling more effectively on the platform, especially leveraging data and really understanding how the algorithm works, really understanding how they can influence performance.

7:44That was kind of, you know, how it all started. And then incidentally, you know, we really say La Familia is a real familia. The fund actually became the first investor in my husband's company. So that was the first portfolio company in Fund One. And so that's how then, you know, I got connected to La Familia. They were also one of the funds that joined the initiative that I was, I started at Facebook. And so it was kind of on, you know, both the private side and the, and the kind of professional work side that suddenly I heard a lot about this fund that sounded like the Sicilian mafia, but it was really, you know, kind of a B2B focused venture found that it just started out of Berlin.

8:16And so that's how I kind of stumbled into venture. I think I really have to have to put it like that. It wasn't a big master plan. I think I got incredibly lucky because it's the best job that I could ever imagine. But it was really kind of, you know, just through the different things that I was doing and enjoying that I then got exposed and, you know, found Jeanette and the other team members and yeah, decided to quit my job at Facebook and give this venture thing a try. I think actually based on some of the kind of the years of experience working for the bigger tech companies, I guess has in some ways laid the path to make a move into the venture capital industry.

8:49Moving to a slightly different topic, I guess the notion and the state of entrepreneurship in Europe right now, specifically where you're based, so the dock region, Germany, Austria, Switzerland, I think we're living in a super interesting period. We're really seeing a change and evolution in the broader kind of European ecosystem. I think some of my own personal observations from working in Berlin. It's a great place to be. It's got a real mix of raw local entrepreneurial talent. There's quite international. And I think over the last couple of decades, it's really kind of built up this thriving startup ecosystem.

9:24So we'd love to actually hear your thoughts on that evolution that you've seen and what makes you excited about the state of entrepreneurship in the region now. So I think, you know, I've sadly only been in Berlin for the past six years, which is when I started in venture. So I haven't really seen Berlin change all that much. I think I would have likely had to move here 20 years ago. I think those are the golden years of change in Berlin, both on the kind of entrepreneurial, but also the artistic and cultural side. But kind of long story short, I think, you know, Germany has a ton of potential.

9:54Why is that? I think we've got, you know, fantastic universities, we've got fantastic talent, and we also have a very vibrant industry, both when it comes to small companies, when it comes to mid-cap companies and larger corporations, which means that There's a lot of talent also that has unique insights into, you know, the way that, you know, very intricate processes, very intricate also products work, right? That's what's made Germany big for the last hundreds of years, be it mechanical engineering or anything that's really more on kind of the engineering inventive side of things. I think that's what's made Germany strong in the past.

10:25And so a lot of this knowledge still exists within the heads of, you know, older generations, but also within the heads of, you know, the younger, you know, kind of entrepreneurs and researchers that exist within Germany. I think something that is also very particular about Germany is it's very fragmented, right? It's a federalistic kind of principle. So in comparison to, for example, France, where everything happens in Paris, I think we've seen a couple of clusters emerge in Germany, right? Berlin's always kind of been the startup capital. But I would actually say that relative to other cities, Berlin has kind of plateaued a little bit, right?

10:57So if you look at, for example, what's happening in Munich, where we also opened an office, there's fantastic entrepreneurial talent. Obviously, you know, also driven by the tailwinds of the Salonises and the Personas of the world, really some of the biggest outcomes in tech that Germany has seen. But then there's also other cities like Cologne, for example, or Frankfurt, where we have portfolio companies. And we, for example, also look at DeepL, a very recent kind of AI success and one of the few AI successes that Germany has had in the past when it comes to really big companies that's based out of Cologne, right?

11:25So you have this long tail of cities where you can also find amazing entrepreneurial talent. And so I think that's both a challenge as well as a potential for Germany. It's a challenge because it's much more difficult to connect these ecosystems, right? If you look at France, again, everyone flocks to Paris. And so it's just easier to build these densely interconnected circles of entrepreneurs that kind of raise one another's ambition, you know, and co-pollinate the ecosystem with their ideas. In Germany, there's still kind of, you know, much more separate ecosystems. But at the same time, I think now that the muscle is growing in different parts, we're kind of almost able to grow a bigger and wider ecosystem of talent.

12:04And so I think it might take a little bit longer to get to the same level of density is in cities like London, for example, or Berlin or Paris for, you know, the long tail of German cities. But I do think we're well on the way there. And if I look at our portfolio and kind of how non-Berlin centric in some way, it's been, of course, we're still going to invest in Berlin. This is where our main office is. This is where most of the activity in BC still happens. But really, you know, other cities are starting to catch up. And that's something I'm just immensely proud of and just excited to see. Yeah.

12:32And that's actually something that I have kind of observed in particular in the German ecosystem. But we recently spoke with Rana at Baldurton and Chet Warner at Ada Ventures recently. And they've both commented on, in their own individual worlds, kind of the flywheel effect of kind of founders, backing founders from all of the big tech companies that you've mentioned there. Awesome. I think on the topic of, and you kind of touched upon it there, of kind of building and strengthening this kind of strong ecosystem in Europe, You also serve as an advisor to the German government on various different matters relating to technology, to diversity and migration.

13:11And you've actually, I've also noticed that you've spoken very openly and candidly on a number of these topics. Could you speak to us a little bit more about what drives that and related points, what the impact of this has been? Yeah, so I think a lot of it is my personal background, right? So my father was a Nigerian immigrant, you know, came to Germany in kind of the late 80s, early 90s, and just, you know, built a life here. And I think contributed to Germany by basically having worked very hard ever since he came to the country. and has obviously given life to me and given me the opportunity to see the light of day and then hopefully make my contribution in turn when it comes to supporting the German ecosystem.

13:53So I really fundamentally just, through my own experience, believe in the power of migration. I think that's one of the topics that's been really top of mind for me. If you look at the worker shortage that is millions big that we have in Europe and how difficult it still is for startups, but also for other companies to attract talent. And of course, we have, you know, concepts like the blue card, but, you know, those are still fairly restrictive because they require you to have, you know, a certain educational background. They require you to, you know, have an exact matching, but, you know, in between what you were doing in your country of origin and what you're doing in the country that you'd like to immigrate to.

14:27And so there's all types of barriers that I just don't think are fit for the 21st century. And so that's one of the key initiatives that I've been trying to champion and really kind of raising the voice of seeing migration as a massive plus for, you know, society and the world and really kind of looking beyond the, you know, often stereotypical images that we have of migrants that are, you know, just trying to build a better life, even if they're not fleeing war and they're just looking for economic opportunity. I think, you know, there's really too much discrimination still in society. And we're not really yet realizing how dependent we're all going to be in terms of our pension ecosystem, in terms of just, you know, people kind of, you know, working in jobs that also, quite frankly, many Germans and Europeans no longer want to take.

15:08And so I think we just need to have a much more candid and open conversation about the types of structures, regulation, and also, you know, attraction, like I think, you know, advertising that we'll need to be able to get people to move here and, you know, build their life and build their futures and build their families here. And I think another, of course, you know, thing that's always top of mind for us as Europeans is that just the broader trend of, you know, technology and kind of not again, missing, missing the train, you know, I mean, we've missed it in the past when it comes to kind of personal computer.

15:40And we've missed it when it comes to, you know, the age of, you know, kind of web or cloud, at least in some parts or many parts, we've missed it when it comes to mobile. And now we obviously are in the midst of the next shift, which is the AI shift. And so I think potentially the AI platform shift, even though no one really knows how exactly that's going to look like yet, could be one of the most transformative and powerful shifts that we have ever seen. It could, you know, kind of diminish the potence of all the other shifts that we've seen before. And it could have many implications for the way that you get healthcare, for the way that we wage wars, for the way that you get your education, right?

16:18And so I think we're really starting to, you know, look into the abyss of how much influence technology could have and how, to some extent, it really also plays a role when you think about concepts like sovereignty. And when you think about concepts like, you know, is there a bigger kind of moral ethical codex that we want to fight for in the world that we can only fight for if we have some type of economic influence? And Europe has been fantastic and horrible when it comes to regulation. I think you can see it from both perspectives. And that's a separate conversation. But I think there's not been enough conversation in between, you know, kind of the innovators in between the builders that are trying to be at the forefront of the next technological shifts and the regulators.

17:00And, you know, typically innovation in Europe tends to really punish the small companies because all the big companies have the resources. They've got the lawyers, you know, to, you know, put structures and policies in place to deal with regulation. But it could really be the small companies and the innovation ecosystem, you know, that kind of bears the brunt of, quote unquote, bad regulation. And so that's just also something that I'm quite passionate about, just trying to understand what's happening, you know, in the space of, for example, AI regulation or in the space of technology regulation more broadly.

17:30And just, you know, trying to really foster an open innovation ecosystem within Europe within, you know, kind of the frame of, you know, the overall ethical considerations that I think have to or should be part of every single ecosystem. And unfortunately are not in every country or every continent, which is something that we can be proud of. But still, I think the primary focus needs to be on we need more innovation. We need less shackles for entrepreneurs to be doing what they're doing, to not fall behind once again. And then I think last but not least, it's really also just the kind of the growth capital landscape, right?

18:03I think if you look at the last five biggest funding rounds that happened in Germany, Refox, Personio, Salonis, N26, none of those were led by European investors. They were all led by investors from the Middle East or the US. And I'm a big fan of, I've just said it, like migration. And I think this global mindset, I think actually right now, the kind of breaking down of the global mindset and everyone's focusing back on their nation state and nearshoring, I think that's actually very, very painful to watch because I think we're losing a ton of potential. But at the same time, I do think it's also important to foster a more, you know, potentially sovereign European mindset in terms of the kind of growth capital.

18:42And also, you know, for example, you know, kind of IPO markets that we need to be able to foster strong European companies. And I think that's just still, you know, too big of a gap and too many, you know, pension funds that we do have in Germany are investing only in U.S. investors and not really, you know, kind of investing in the type of growth ecosystem. But I do think we need in Europe to be able to, you know, kind of have a seat at the table and really also, you know, foster our national or kind of, you know, European ecosystem. And so those are all kind of different hats that I'm wearing and things that I'm passionate about and trying to raise my voice on behalf of these topics.

19:15Really well said, Judith. Your passion really, really shines through there. I think let's set up a separate episode to dive into many of those topics that you just mentioned there. But I think, do you want us to learn more about, I guess, La Familia, the European seed and growth stage venture capital fund that you lead a little more? Perhaps you could speak a little bit about the investment focus there and the philosophy behind the fund. And I guess, what is the key differentiator there? What makes you unique in the broader ecosystem? So La Familia, and they might suggest that we're the Sicilian Mafia.

19:45Unfortunately, we're not. We're just a plain vanilla venture fund. But really, the reason for why we're called La Familia is that we initially started out with this concept of asking, what does it need in terms of access platform in Europe to connect what we would call the established industries with kind of the disruptors or the new entrants? And it was really, you know, kind of asking the questions, what are the things that make Europe uniquely strong? And maybe it's not building the next Amazon or Facebook. Maybe it's not in the space of consumer B2C because we have a beautiful, diverse cultural ecosystem that we, you know, that brings its own scaling challenges with it.

20:22But it's really focusing more on the B2B side on the kind of strong existing industry that we have and, you know, asking why shouldn't a company that's coming out of Europe be able to grow on the B2B side, be able to grow to the size of a Siemens or a Maersk in the future if we've been able to do that in the past. And so that's really kind of the lens through which we look at investing. We want to back the next generation of early stage founders that enable or disrupt large industries. for us that means we you know are really keen on spaces like industry for no logistics supply chain fintech insurance everything that's kind of commerce enablement so really asking you know all the trends that we've seen in b2c you know e-commerce how can we bring that to the way that trade works to the way that you know kind of businesses transact but then also spaces like you know the future of work which i think is has been one that we've been very lucky to invest in early with companies like Deal, where we were the biggest check of the seed investor at the seed stage or also Personio in the HR space.

21:22And so, you know, really trying to also ask the question, how does the future of work look like? How will blue collar workers, white collar workers be able to be more productive, get more leverage in their day-to-day work? So those are all topics that we focus on. Data is another one that's really big for us where we've made a bunch of investments. Early stage is the focus. So we just launched our third seed fund generation of 165 million euros investing into about 40 companies across Europe and the US. And then we also have a growth fund to be able to double down on our portfolio and really kind of other exciting growth opportunities that we see in the market and really kind of leveraging the platform.

21:56And again, coming back, La Familia, family businesses, you know, entrepreneurs kind of from the established industry, old economy that initially were the backers of the fund. We now also have a range of fantastic institutional investors that have kind of joined our journey over time. But we've really, in terms of origin, kind of come from this idea of connecting these, you know, kind of separate sides of the ecosystem. And, you know, the European ecosystem is very different to the U.S. ecosystem. We think here, you know, a lot of companies have gotten successful in the past by, you know, kind of just building walls and, you know, innovating on some, you know, amazing product that's like, you know, really, really differentiated in terms of like two or three small mechanical details and then get, you know, world market leadership with that.

22:36Versus in the U.S., it's a much more open ecosystem, kind of everything kind of much more out in the open. And it's like, that's just fundamentally different business philosophies. And so there still is, you know, even now in 2023, there still is a mindset of you don't get fired for hiring IBM, you know, so why would an established industry company, you know, sign a contract with a startup, you know, over, I don't know, 200 ,000, 500 ,000 annual contract value when the startup might not exist anymore in two years. And so I think it needs these kind of almost carriers of trust in the ecosystem, these like middlemen, middle women that, you know, are able to kind of vouch for companies and say, you know, you know, what they're doing is amazing and, you know, just give it a try and then kind of go through there.

23:15And I think we've seen that work extremely well, you know, in the ecosystem, obviously for companies like Salonis, which is sadly not in our portfolio, but now, you know, fantastically big. And most of their companies, most of their clients really are, you know, these big corporations, Cascarone, DAX companies, but also on the SME side with personio and so i think it's really leveraging kind of this go-to-market network as we like to call it and and helping our companies by way of warm introductions and partnerships and lots of events to be able to launch them into their respective industries you guys are backed by a selection of kind of world-leading entrepreneurs and i wanted to to really understand in in greater detail like to what extent do you actually leverage that network for your portfolio companies in particular?