E320 | EUVC Awards | Max Bautin Managing Partner of IQ Capital on why DeepTech is on the rise and how to manage the full life cycle of funds

33:02Not in the firm of the year, obviously, because they're very new, so no outcomes, how could they ever be in that category? But in the newcomer category, because it's like, it's so massive, everyone opened their eyes and said, what the? but we ended up like to anyone thinking why are they not in the we ended up saying it's a government mandated fund so for that reason we said we're focusing on private funds for that reason EIF is not getting an award for something either so that's a reflection on that. That's actually one of the challenges and I'll throw it back at you you know it's not massive in my view it's actually too small for the role that they are trying to achieve.

33:47You could easily see something done acts as big. If you think about parallels like EIC and the size of the economy and the size of investment being made, you could certainly imagine a much, much bigger fund. But, you know, I mean, and hopefully we will see a much bigger fund. You need to start somewhere. That's a very, very good point, Max. it's because when we think of it as a standalone fund, like 1 billion, okay, that's big. But if you think about it that they have stakeholders across all of Europe that expect something to come from it a little bit in this country, a little bit in that, even though it's not written as clearly as that, that's typically what you end up seeing.

34:31So from that perspective, and covering all of Europe, both in the direct and in the fund investing side, it is as you say, Max, it's actually not that massive it's a very interesting perspective. Fundamentally cornerstone player the initial player in a particular vertical which you're trying to unlock you know think about how many companies you're trying to invest in 100 you know that's already only 10 million to a company Can I ask you one thing Max you have in your slide that and maybe we'll be able to show and maybe we won't we're like they won't because it mentions uh mentioned portfolio companies but you have um you have a matrix of two by two matrix saying hardware software on the uh on the um horizontal and then on the vertical you have dual use potential and adopted or poc but you don't have like here we're looking at dual use we're not looking at only uh defense And I know from my good friend Nicholas Nilsson, his take, who's a very active defense tech investor or dual use investor, that he does not like pure defense plays too much because you're so much at the whim of governments.

35:53And that can be very, very difficult. I agree. And we've looked at a few companies in that space, which is sort of defense first. I don't think that the ecosystem is ready for that yet. I mean it's not again it's just not venture ventures when this becomes something on top of the core activity that you're doing and it's augmenting it fine you don't really care if it takes 3 or 4 or 5 years it's a good to have it's a nice thing on the cake but that's the only thing and then you're finding yourself 5 years away from the first revenue because of some of the procurement challenges if that were the outcome so But, you know, we've seen some very encouraging moves on that in the portfolio companies where the contracts being won are meaningful.

36:44Governments can be very good customers. It's just that, you know, I think they are themselves going through the motions of how do we address that and how do we... Ultimately, it's a question of open innovation, right? You know, if you think about the big corporate, how is that different from the government? You know, they're also shit at innovating. they're probably a little bit closer to the market and understanding how it all works, but they don't necessarily have as deep pockets. And it all comes down to the one outcome, which is open innovation. And I think that's where a lot of this thinking is behind it, that if you are only working with a bunch of different primes, you're not going to be moving ahead very fast and it's not going to be efficient and it's going to be incredibly expensive.

37:32So it would be great to see more of that happening. And I think it's strong down the way. So the science are very good. Let's go to space. And maybe space as a vertical, of course. I love to go physically as well, but I don't think that's on our to-do today, unfortunately. I'd love to preface this with something you said before, which I think shows the importance of being a specialist. Because when you said, like, we do space, but understand we don't do launch pad systems or how you put it. But instead, and then you described quite a few smaller components or smaller parts of the whole space value chain, which makes it so clear to me that when you invest in space as a specialist, you'll know what are the do's and what are the stay far away from these because it's not something that is going to work either in the venture model or with the size of investments we can do or whatever.

38:38So I'd love to just ask you to comment on that and then take us into space afterwards. I think it's a very, very, very challenging, very good point. As an economist, space tech is somewhat different from a lot of other things. And it has its own rules and its own network and ecosystem. So, you know, is that even worth operating in that if you're not a space tech only fund? The way we look at it is that most of the investments that we've made in this sector are not pure place, space only. I guess there's maybe Oxford Space Systems and maybe Focal Point, which are pretty space-centric. But even the latter is actually more like a data layer.

39:35How do you utilize the hardware on top? Everything else is essentially the picks and shovels. It's just how do you enable this amazing infrastructure, which has been created and is continuing to be created to be used more efficiently. So it could be a question of having, you know, graphene-based sensors that happen to be incredibly well aligned for space use because they can go to very low, very high temperatures and be very, very sensitive as well, unlike silicon-based sensors, and they don't fail. But is that the only thing that Paragraph does? no it could be it could be some great application for ai build which is which is improving how um advanced manufacturing can work by by essentially making 3d printing industrial 3d printing more accessible and reducing failure rates making it operating better but is that only within space tech No.

40:43Acceleracom, yes, the most exciting application is increasing the data transfer rates in 5G and for non-terrestrial networks integrating, helping to integrate them on the terrestrial networks. But it's not only space. No, we have terrestrial business too. So a little bit like defense as well. You could see that, you know, so far our strategy has been very much around, you know, how do you look at space as a market to sell and enable either greater efficiency or enable others to create within it. We think it will change, and we think we are starting to see more and more opportunities in the sort of data layer, whether it's upstream or downstream.

41:26I think so, you know, our thesis is evolving, and the last 10 years was mostly about hardware in the space. I think the next 10 years will be much more about utilizing the hardware better. And we will see a lot of service-based opportunities, some of which will be driven by DeepTag that will make it exciting. And I think we've all seen massive success of something like Starlink, which is exactly that first hardware and then the software service. But, well, I mean, it can go beyond that. you know i mean spacex you know talks all about flying to mars and and you know the great excitement but all it is in some from another perspective it could be just an access layer to space link yeah you know so so as in you have a big play which is space-based networks um and providing that uniquely to the ground with lots of benefits.

42:29And they can control access to it because they control the launching capacity. So they can't have a competitor or very easily have a competitor because nobody else has capacity to launch as many satellites quite as cheaply. So that's a very interesting way of looking at it. That's actually a telecoms business, not a rockets business. Yeah. And I already see something like$20 billion, I think, this year that they expect me to see.

43:03Would you take a bet now on SpaceX? Personally? Well, you know, I was talking the other day to a company in the US called Spin Launch that is trying to unlock that access. uh issue and they claim to have something like 20 times better economics of delivering a kilogram of weight to the orbit um um you know now they do have to whatever you're launching needs to withstand something like 12 000 g's which actually an iphone would so so you know some people dismiss it as being a bit sort of far-fetched but actually i think this is another example where you could look at something in a completely different way and all of a sudden there's multiple approaches to solving the same problem.

43:58So I think we'll see space-based manufacturing is a separate industry and completely not dependent on Comcy's side. But that's incredibly novel and I think we'll see a lot of So super exciting. We'll see those coming out of that, changing how we do things. I love this deep dive because it just goes to show exactly why deep tech is growing so well and there are so many opportunities. Let's get into robotics, which is another space that everyone is talking about, especially given the latest advances in AI. I'm very much driven by LLMs, but we're also seeing massive strides in other parts of AI. So maybe let's start with how do you think about robotics?

44:54How do you divide it up? And then from there, we'll get into the discussion. It's an ecosystem that could be looked in different ways. There's robots that are stationary control systems. There's mobile systems. There's autonomous systems. There's the general purpose systems. which is kind of one way of splitting it. And the opportunities in all of those spaces for venture-like investments are very different. Some of the common challenges of hardware remain because many of the systems are hardware-based, so it often means longer timeframes and so on. But there is a ton of embedded software and a lot of deep learning opportunities and already being delivered.

45:43So, the amount of industrial automation efficiency that could be brought in into the global economy is absolutely ridiculous. And we are starting to see humanoid systems. We're starting to see massive changes in the logistical infrastructure and so on and so forth. So, again, our hypothesis there is to not necessarily go and invest in a robotics company that builds a humanoid robot but try to look at you know an operating system like wave you know several of our companies in our own portfolio that are you know emulating b-brain for example with opt-around that that then helps independent autonomous robots to be drones to be much more independent and much more efficient without you know while at the same time drastically reducing the weight and complexity of the operating systems that they have to carry on because you know brains beast are exceptionally efficient creatures with only about 100 neurons they can do amazingly complex things so the new materials in this space one of our companies, Nibolt is very successful, they're building batteries but it so happens that robots have very peculiar requirements, you know, they're very power hungry, they want to be efficient for as long as possible rather than charging in corners if they're mobile and and and you know so so there's different ways of cutting cutting it and and again we're trying to find to find ways which in our view are consistent with the venture scale timelines and ventures venture venture type risks while at the same time giving sufficient upside when when these things work out can i ask you the bigger question of in the US they have like American dynamism and that some think that they might have like a second coming of American manufacturing.

48:01Do you think like in Europe, I think we have many things that might put us in at least equally good position. We have great manufacturing companies. They're quite automated already. We were quite early to also bring back manufacturing capacity from the East. Do you think that we are positioned well geopolitically for something that would mimic a European dynamism, like a refresh of our manufacturing capacity in Europe because of things like robotics? We're not exactly a leader yet in that space. So I think there are great European players or startups, but there are the likes of ABB, I guess, and some other industrial leaders.

49:00There are some early exciting venture outcomes like Wave that has just raised a billion dollars in its late fundraising round. So there are early signs of hope. But in some parts have of course been incredibly successful as manufacturing hubs, Germany for one example. I think some of the other challenges though is that clearly with the much more expensive energy, now the US has a bit of an edge and efficiency is important, but it's not everything. you know there's ultimately the cost of raw materials that Europe doesn't really have a lot of, there's the cost of energy that Europe has limited access to.

49:47One needs to think very carefully about it but a bit like the English manufacturing disappearing in the 1900s you know I think Europe needs to think very carefully about it to not find itself in the middle of two big manufacturing hubs in Asia and America and the US. Yeah, very interesting. I love venturing down those types of facts as well. Let's get away from, now maybe let me just ask you very quickly, your take on the massive strikes we've made in AIs, especially via LLMs and the impact of that on the adoption of robotics and the innovation in robotics. I think, ironically, well, I mean, clearly there are bits of robotics that come across, you know, everything relating to speech specifically, which have good affinity with LLMs.

50:46I'm not sure that this is one of the verticals where I'm not sure that LLMs and foundational models do as much. It has made quite a big difference, quite as big a difference yet, because it's highly specialist. clearly there will be and are some applications and foundational models that are applicable purely for robotics and and we'll see more of it but we'll also see a lot of very specialist novel ai that is happening in that space which is solving solving for some some of the needs is is the fact that i even asked the question and that it's on and i of course do so because it's on the mind of many.

51:27Is that one of the places where you would say, caution guys, if you were a real deep tech investor, you'd know that the AI hype that's coming from LLMs does not transfer very well to robotics. And for that reason, we have too many not knowledgeable of robotics, both investing, but especially also talking and commenting on how this will change everything. You could look at it that way, but you could also look at it in a positive spin on, you know, it's not like the five, six companies that are leader, global leaders and foundational models will just eat the whole world. You know, there are applications in life sciences which are completely different.

52:10There are applications in areas like robotics which are requiring totally different systems that have completely different characteristics and that's makes it possible for smaller guys like us to actually operate and find those opportunities that are on one hand very specialist but on the other hand big enough to actually make outsize returns. From robotics, let's go into computational biology and tech bio. Another space very different from robotics but definitely also one that has come to the forefront of many. I'd love to just hear your thesis here. How do you see the market and where do you see the opportunities?

52:47Again, it's a massive space and I think we could see at least three different big verticals within it which are quite different because there's this sort of advanced therapeutic modalities where you're essentially looking at solving either the delivery challenges for next generation medicine or also drug discovery itself where you're using AI advances in computational biology to be more efficient with your targeting of therapeutics, search for new therapeutics and finding new ways of using that. And we've made a few investments in that space. Lately, we expect to make quite a few more investments.

53:33We're very excited about that area of application. And some things that AI is making possible in traditional targeting of medicine in one way it could be still challenging because ultimately one of the big challenges is that you're done in clinical trials and that makes you a pharma company and where do you find the time and the capital that is required for that but it also unlocks completely new things which make it possible to accelerate those processes substantially or create think about how you could use proteomics more efficiently and what opportunities that creates clearly the search of things like vaccines that have different things, anti-answer drugs delivery mechanisms in the cells in the body as well neurotech is also an incredible application all within that same space the diagnostics as another field where it's sort of pushing the boundaries of the sensitivity to uncover new treatment avenues that's faster results, more precise results at the point of care they again you could be looking at AI driven, augmenting the doctor essentially or matching the specialist by AI so that you're either better at finding certain diseases and analyzing medical imaging, you could be much better at diagnosing diseases, you could be discovering very sort of rapid or cheap or high quality, much higher quality or all of the above with one package so um again some very interesting opportunities on that tooling on automation um that's that's that's kind of thinking about that as an industry and that's more of a again um picks and shovels type of strategy but you know automating repetitive tasks making the making the farmer in life science industry much more efficient so from helping to grow human cells more efficiently than MITAS does to thinking about other potential things like mice for example things like bringing robotics in areas where it wasn't possible before like AIM was doing with the robots that can operate inside MRI machines and give surgeons much better ability to see what they're actually doing during brain surgery So we expect that area to, that's probably one of the most exciting areas right now in where we see a lot of crossover opportunities where technology is developed in one field, be it computational, be it robotics, be it new materials, making a massive difference for this exceptionally important areas, both in terms of value but also in terms of impact on human life.

57:08Also, just to add on a little bit, I think clearly biotech in general has gone through a big shake-up. There's been maybe a little bit of irrational exuberance in the 2020s and it was the first market that really started the rapid correction and then the knock-on effect came to the tech space several months later. But we're starting to see much healthier science coming out of that. So the pharma companies are looking very healthy. They have extensive M &A programs. They have been pushing open innovation more and more. Because again, in life sciences in particular, the challenges are very similar to deep tech, but in many ways even more pronounced because you're often looking at 7-8 years, 10 years journeys to therapies.

58:05There's often exceptional risk involved in binary outcomes. They tend to be incredibly capital intensive. So how do you optimize that? But one of the ways that this industry has evolved is by the big players being open to work with the startups much earlier and acquire those products creating revenue sharing opportunities. So that's one of the reasons why it makes it much more investable than ever before. I think I want to leave that one there and go to software trends in the deep tech space. And we won't spend too much time here because it's one of the parts that we've discussed more on the podcast and most people know more about.

58:56But maybe if you would just share with us a bit how you think about this in the world of deep tech. I think we've evolved from the base of Fund 1 and mostly Fund 2 where we were defining ourselves as a deep tech within software type of investor. So trying to not buy too much risk and too much complexity of the hard tech but focusing on hard-to-replicate software systems instead. And it has its attractiveness, and it's a massive industry, of course, some$30 billion a year at least, depending on how you measure it. And venture has prospered in this space. We think that in today's world, it's more and more difficult to carve out a product area and create defensibility in a pure software place.

59:57Some novel AI, but very often this is mixed with some unique data sets or very, very strong insights and particular verticals. data security, we continue to make some investments in that space, but differentiation becomes more and more challenging. Software is easy and easier to rebuild, people unpick models much faster, algorithms are not as efficient because again the foundational models can do a lot of things better than very specialist things. so it's much harder to create those modes than before. And for that reason, we're gradually seeing fewer opportunities in that space and we're focusing much more on the novel AI, for example, as one aspect.

1:00:51A lot of embedded systems that are AI driven but have a proprietary hardware layer so that the product itself is a combination of the two things. so probably the two main things for us and this max is actually a pretty good segue into talking about IQ as a firm because I'd love to ask you to what extent it's also because you talk about the defensibility of the startups in this space but I also imagine that there's a defensibility for you as a VC firm in this space in the sense that as we're seeing more and more generalist VCs move towards deep tech, the first place they move to is obviously pure software.

1:01:38And you, on the other hand, started a decade ago and have then since only specialized further. So I imagine you're much stronger in the real deep tech or the very deep and hard tech, whereas the ones that are now doing the transitions that are bringing over both their experience and brand and firm capabilities into deep tech will necessarily go into software as well. How much of that, you know, is that something you think about as well? Is that something you're seeing? Absolutely. I mean, the competition in software is increasing all the time. People are picking, you know, while, you know, 10 years ago, the bulk of B2B SaaS companies were just enterprise applications, some of them B2C applications.

1:02:26Now people originating from that to find it much easier to expand into things which are quite deep tech at its core so so so yeah i mean that's we're seeing more more competition in terms of capital although again we we actually welcome that and it's it's a lot of a lot of this capital appears rather than competitors per se it's not so much competition on a deal-by-deal basis it's a competition in the sector where similar things get created very, very quickly and then all of a sudden a market opportunity is carved out by just a handful of players, one of which will become the number one and some of them will be amazing outcomes.

1:03:09The challenge for us as a seed Series A investor is how do you know which one it is going to be? What's the information layer that will give you a better chance than average at being in the company that ends up being the best outcome? than the one that are backed by the others. Yeah, I get that 100%. Okay, but then maybe because I, of course, described in my introduction of you the size of you and for how long you've invested in this space, but maybe if we just recap your team with more than 200 years of experience investing and operating since 1996, you have a billion in AUM, in dollars, and you've done more than 20 exits to date, and you've done more than 200 equity rounds.

1:03:57I'd love to, and maybe very importantly, you have a proven strategy, not only given that you've lived this long and performed as well as you have for this long, delivering top decile net returns in the deep tech space. I think it's just incredibly cool for us to now dive into what is it that have allowed you to build this with IQ capital? I mean, the thesis is clearly evolving. I think we'll see how we're fair with much more capital being deployed in this space. But we see our edge in several areas. One, I think ultimately, yes, we do see a lot of the best deals in this space. Yes, we are very good at connecting to the entrepreneurs, convincing them that we're the right partner for them.

1:04:52but the core of it is actually our decision-making engine and how do we think about these opportunities, the learnings that we have had in this space, the ability to unpick technology very deeply and understand its productization perspectives, understand the likelihood of competition, understand the size and realism of the markets. And for that, we need to have a very talented team that understands tech, that understands commercial applications, understands, has high EQ, which are not, scientists are not very well known for, but we as an investor need to combine those skills together. And I think we, I'm very proud of the team that we have built over the years because I think it's a very well functioning machine operating in this space.

1:05:44Yeah. And we will of course show the whole team on the EUVC show notes for this. So you can all go in and see who are these people that make up the IQ capital team. I think it's incredibly important to highlight each individual team member as it is a team effort to build a firm like IQ. I'd love to ask you a bit about managing the full lifecycle of being a VC at the stage that you're at. Because you have Fund 2, which is currently in its late stages. And then you have, of course, fund three, which is managing the transition from early stage to growth. And then you have growth fund one, which is driving value and midterm liquidity.

1:06:31And these are three different beasts that you have to manage at the same time. And it's not too often that we can talk about that on the podcast. So for that reason, if we start with Fund 2 and managing a fund that's in the late stages of its life, if you could kind of share with us, first of all, the learnings from managing Fund 1 when it was in that, and then the troubles and the challenges and the things that keep you awake at night when you think about where Fund 2 is. Venture capital has never been a get-risk-quick type of business. In Deep Jack, we do have an edge that we see some early exits driven by technology, but there are rarely massive multiples.

1:07:20And it ultimately does take a good 10 years to build a big scale up, which is worth billions of dollars or at least hundreds of millions of dollars. in any part of venture market. Because in conventional venture, you tend to accelerate a bit in the early days, but then it becomes more competitive later down the line, especially in today's world. So growing becomes harder. In deep tech, you have the productization journey first, market entry. So it often takes three to five years before you really start seeing meaningful revenues building up on businesses. but hopefully much faster growth beyond that and in that sense it's quite interesting to reflect on how do people think about fund timelines because there's a lot of focus on the 10 years and what happens but then you talk to big funder funds and see the data that they have and I think average age of a venture fund to termination is something like 18 years.

1:08:26The big question though is how much of your core assets do you realize at what point and for us the target is to get to at least the one x dpi within eight years bearing in mind that of course we don't take the money on day one uh we deploy it over the six seven year period so we're looking at five five year ish from the point that we take investor money to the point that we are hoping to return it to back to the investor and then focus on creating the upside beyond that and um beyond uh 10 years uh we we don't charge fees um so we focus ourselves on management fees i should say uh just upside um and we try to align ourselves to the lps um in in trying to achieve the outcomes in the optimal way, not necessarily the fastest outcomes, but how do you play those opportunities that are growing very strongly with potential, with the investor needs.

1:09:33And so in fund one, I think the fund was, the fund had its biggest outcomes in year 10. So beyond that, we saw essentially just the earn outs and relatively small elements in the fund's portfolio remaining. And then essentially, by years of 2013, it becomes a vehicle that can be liquidated and all the assets could be distributed or terminated. I think in the second fund, we have interesting challenges because in fund one, we had one fund returner that returned two times the fund company called great shop that we sold to oracle and of course in any venture scenario you want to have those outside returns the the dragons that return the whole fund at least and that what helps you to get to 5x plus outcomes and that fund we we reached three and a half acts not return on fund one but in fund two we have several very large performers one of which is a company called Thought Machine that has already returned that fund three and a half times over as a single investment and has potential to go beyond that significantly beyond that which is another sort of reason why we feel so excited about DeepTech because you could see companies that could return that could be a 30x returner on the whole fund as a single investment once you get into the right trend this could go very far But the question is, at what point do you sell?

1:11:15At what point enough is enough? How long should you expose your investors to the continued growth? Because some of these investments could go forever. And that's where I think the maturity of this industry comes in, because we're starting to see much more secondary liquidity in growth stage rounds, and we certainly have taken advantage of that. you're starting to see all sorts of continuation vehicles where LPs could choose whether or not they want to stay in a particular asset as it continues to scale or take some or all of the upside converted to cash here and now. Can I ask you about both of those things?

1:11:59Because first, if we look at the secondary opportunity, Do you have any principles that you apply? Or at least if you... We all say it's a case by case, and obviously it is. But you go to that conversation or thought with some inclination. Do you have a rule that says we always try and when we can, take off the table the first invested amount? But then anything after that we hold? or like oh yes i think i think there are some milestones within that so first is is whatever money you have invested in the company uh we've actually had one outcome uh that that was a big learning opportunity where we saw an early stage company raise over 100 million dollars at the very excellent you know so far 400 million valuation where we were a continued investor but at the same time for our seed stage vehicles it was very attractive to sell some of the secondary in that round and for various reasons we decided not to do that and that company actually ended up not making it and then because because covered and a bunch of other things but you know so it wouldn't have been material in terms of realization because we wouldn't have sold more than 20 % of at that point but just the psychological effect of look i could have returned a couple of times of my investment versus i walked away with nothing is is is is very painful so i think our thinking is that once once there is a genuine secondary opportunity because more capital is trying to come in that the company is prepared to raise and thankfully we are seeing seeing those reasonably regularly.

1:13:52If we're talking about the valuation, which is at least five times of what we paid for it and hopefully more than 10 times that we paid for it, we are taking some sort of secondary capital. Typically, either enough to certainly repay the initial investment by a factor of two, generally not more than the 20 % of the stake that we have in the business. And then you start thinking, you know, when is the next 20 % potentially available? And you're probably looking at valuations north of a billion because, again, you know, how long can the company scale? And at that point, you might want to take a bit more off the table and distribute it to your investors.

1:14:44but the balancing thing is that of course it's always easiest to sell most of your successful investments you don't want to do it too early and then if we go to the continuation vehicles could you maybe just elaborate a bit on how the dynamics work for those and then how you think about them yourselves for transparency we haven't actually done that ourselves we've been thinking about it and how to make it possible. I think there are clear, you know, there are some structures where there could be a conflict, an LPGP conflict, and that's one thing that we're generally very, very careful about conflicts of interest.

1:15:31But fundamentally, from my perspective, entities where the manager is not necessarily taking any cash off the table, and where these LPs are given an opportunity to either continue in a company, potentially even double down on it by becoming buyers rather than sellers, and others are given flexibility to take some or all of the commitment to that business off the table. I think those are healthy. You could have a debate on whether this should be treated as real exits and so on and so forth, But if you think about it through the prism of a limited partner, especially if they're not an endowment, if they are an individual, people are different.

1:16:22Some have certain circumstances that require liquidity, others don't. And you want to give people that opportunity. And what are the advances or the good things with a continuation vehicle versus facilitating a sale between limited partners? Is that possible? In some situations it is, sometimes not. It is, of course, possible, but it's more of a case-by-case basis. So it's harder. It's better to have some sort of a platform that unifies it where it's clear what the options are for everyone. Because when it's one-off, Of course, NLP can choose to sell their stake, and there are plenty of secondary specialists that would be prepared to do that.

1:17:18Whether or not that reflects fair pricing or not, I think that's a question mark. And in today's market, clearly, with liquidity being so limited, there's many secondary players who are pretty keen and expect significant discounts.

1:17:40there's this of course also when you IPO a company and you've done that a couple of times there's the question do you hold or do you not like i'd love to ask if you just have any reflections there you know generically in terms of of what you think is the best strategy for you guys we would be delighted to have more IPO experience we haven't we have one company that ended up in nasdaq eventually um through through um for another market so but the the reality is that we haven't actually exited massively through the ipos yet um we have a few candidates that i hope will will will get there but one of the challenges that well one you have a lot lock-in period be are you on the right platform where the market gives you enough liquidity to be able to sell afterwards even if you want to even if you want to because very often that is not the case at all um how do you broker those deals because again very few of the meaningful stakes are sold on the open market they are sort of brokered behind that the scenes but equally i've seen VCs that have seen 10 times return since they had been all the business.

1:18:58And they were delighted by the fact that they were not able to sell as soon as possible. I think the rule of thumb is that if you don't see the business doubling up every year in terms of value for you then you should be looking at realizing as fast as you can. I think we should end here Max because we could dive a ton into where you're at now with front three but that's a much more commonly described topic on the European VC podcast because we have many more that are at that part of their fund life cycle. But I thought it was incredibly exciting to dive into how do you think about liquidating fund two?

1:19:40Liquidating might not be the right word but creating liquidity is probably more correct. So Max, first of all, congratulations once again on being one of the finalists in the Firm of the Year category. And secondly, thanks a million for being a friend and coming on the podcast again. I'm delighted and I hope that some of the things that I've said today are of interest to those that are looking at deep check as an investment strategy. Yeah, so to everyone, Max has been very conscious of whether he just babbles on about what he thinks is interesting. But I have assured him multiple times that this is exactly what I want from this podcast.

1:20:25And I do hope that that also aligns with you as our audience. I am much more self-aware than you think, but I do think that this is the right decision. So thank you, Max, for indulging me in diving into every little aspect of the different verticals or sexes within deep tech. My pleasure. Thank you so much. Thank you for having me. Here's a few words from our beloved sponsor. This episode is presented with our good friends at Haynes Boone, proud sponsors of the Firm of the Year Award. At Haynes Boone, they understand the complexities and challenges faced by VCs. Specialising in fund formation, they expertly manage the establishment of multi-billion dollar funds and innovative private fund products, ensuring their VC clients are equipped to attract global investors and excel in competitive markets.

1:21:14Beyond fund formation, Haynes Boone is deeply involved in the life cycle of startups, providing nuanced guidance on everything from entity structuring and capital raising to navigating exits through IPOs and strategic acquisitions. Their comprehensive legal services support VCs in maximizing their investments and achieving successful outcomes. Whether you're looking to launch a new fund or invest in cutting-edge startups, Haynes Boone positions you at the forefront of the European venture ecosystem enabling you to capitalise on opportunities across health tech, AI and beyond. Stay ahead of the curve by tuning in to the European VC Podcast.

1:21:54Join us in celebrating the art of venture capital with Haynes Boone, where strategic legal insight drives investment success.

1:22:06Tear down this wall. It's more than just an alliance. This is a union of values. United and determined we can serve as a model for other regions of the world. The nature of a problem requires a European response. Europe is a story of new beginnings. New beginnings. Let's start acting.