E468 | Sebastian Pollok, Visionaries Tomorrow: Building Visionaries Tomorrow & Europe’s Deep Tech Renaissance

0:00For decades, we've heard the same joke from physicists. Fusion energy is always 30 years away. But what if that timeline has suddenly collapsed? The old adage or the old joke of physicists was always, fusion is 30 years away, regardless of when you ask. So that's not true anymore. Because our future depends on solving an existential challenge that grows more urgent by the day. One large challenge that we're facing as humanity, which is that we actually need more energy. Fossil fuels put us into dependence on other, sometimes unfriendly states. The game changer? Not just new technology, but a fundamental shift in how innovation happens.

0:36Through AI, the ability to do much quicker R &D has massively changed the game here for deep tech. According to Sebastian Pollack, continuing with business as usual isn't just ineffective, it's dangerous. We can't keep on innovating in a more linear fashion, so we need fundamental innovation, entrepreneurship, quote unquote, and then hence also with fundamental investing. His vision? A bold transatlantic alliance securing the West's technological future. I want to see the Western world succeed. Up to a third of our investments is in the US, and two-thirds is in Europe. So that we always scout the best technologies.

1:14Can one venture firm truly bridge the gap between software speed and fusion-powered industrial revolutions? Join us as we explore how Europe's destiny hinges on the moonshot bets that merge industrial heritage with deep tech breakthroughs. Only on the European VC podcast.

1:34Here's a few words from our beloved sponsor. Make an impact with the bank made for the innovation economy. We always take a relationship-first approach, bringing passion, dedication, and unparalleled international connections to everything we do. Our specialized, flexible solutions for founders, firms, and funds are built on deep expertise that are designed to facilitate growth and enhance your prospects for success. HSBC Innovation Banking. Connecting you with what's next.

2:08Tear down this wall. It's more than just an ally. This is a union of values. Let's start acting. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Welcome back, everyone, to the European VC Podcast. Today, I am excited because I have Sebastian Pollack with me, founding partner of Visionaries Club and Visionaries Tomorrow. And that is a vehicle that we all need to get or a new fund in the map that we all need to get to know. So I'm super excited. Sebastian, could you maybe get everyone just introduced to what is Visionaries Tomorrow and how does it relate to Visionaries Club and some of the core stats that everyone should know?

2:54Sure. Happy to do it. I'm super happy to be here today. Yeah, as you already mentioned, founding partner of both Visionaries Club as well as Visionaries Tomorrow. So our firm is Visionaries Club, which my co-founder Rob and I started six years ago. Below that firm, we now have two very different specialized funds. So one is our Visionaries Club core fund, which is looking at software in the broadest sense. So B2B, SaaS, B2B AI. And then there's the Visionaries Tomorrow Fund, which I have started together with my co-founders, Tong and Iris. And with that one, we are actually looking at industrial deep tech.

3:36So we are looking at the largest transformations that are affecting the physical tech stacks of the world's largest industries. Everyone knows Visionaries Club. That's just roughly 600 million under management, headquartered in Germany and UK, obviously Berlin and London. You're with Visioners Club, you're focused at seed and growth stages. With Visioners Tomorrow, it's pre-seed and seed. So there's a bit of a stage difference there. Target geography is two-thirds Europe, one-third US. With Visioners Club, as you just said, B2B technology, whereas Visioners Tomorrow is industrial deep tech, focusing on the large three industrial transformations, namely energy expansion, industrial decommunization as one, novel materials and circularity, physical AI, and robotics.

4:23And then you have a bunch of notable investments, of course, in the B2B space, which is Bassanio, Miro, Choco, Central True Layer, Pigment, Leapsome, and Hakuna. And then in tomorrow, in this world of tomorrow, which is, I guess, and I'm curious to hear this, but you have already made Proxima Fusion, which is one that I think many will know. Hestia, which is a drilling for naturally occurring hydrogen. Cosmic Aerospace, which is building an all-electric plane with a range of 1 ,000 kilometers. And SirenOpt. And a few more. And a bunch more, I'm sure. But thank you for that. That's a great pitch.

4:57Maybe I don't even have to do anything in this podcast. You just pitch us. So that's the vision of you, you see, or the mission of ours, which is highlight the great people that we have building in European venture. But it's one thing to get the headlines, as I just stated them. Now I want to really, really drill into them. And I want to ask you, like, I think there's when we spoke the first time you described so well, well, for you, you ended up in venture doing B2B SaaS, but your parents all herald from the academic world and building real things. And you yourself have always been incredibly excited about this.

5:38So for you, it felt like always, I want to get back to my roots. I want to get back to where I think that the real transformations are happening. Let's start with your story now, and then we'll progress into a lot of these structural questions about why do you choose to do it in two different fund structures and so on and so forth. But let's get this story first. Let's do it. Yeah, so as you already mentioned, I come from a very scientific family. My parents are pharmacists. As a little kid, I already had a chem lab in the basement. And if you're the son of a pharmacist, then you can put on your wish list, you can put things that no regular 8, 9, 10-year-old can put on that wish list.

6:19So I was definitely experimenting with things that are a little bit out of the ordinary. So silver nitrate, for example, is a solution or is a substance that denatures proteins. And at one point, my mom back then, she made the big mistake of trying to clean up my experiments. So she touched my experiment and hence her hand actually turned brown and was brown for four weeks because it completely denatured the proteins in kind of the outer skin layer. So, yeah, that was me at the age of, I don't know when, 10 or 11 or so. So I was always super, super, super fascinated with all things science and nature.

7:05And there are also embarrassing pictures of me with a weird haircut at the age of 12, sitting next to the German minister of the environment, having just handed over 120 ,000 signatures, demanding a certain climate law to be passed. And then I gave Bloomberg interviews. And that was me as a little 12-year-old. So definitely, I wasn't thinking of my resume or of my LinkedIn or of at one point starting Visionaries tomorrow, but it was really what always drove me as a kid. And I was at this point that I guess all of us have found ourselves in where I had to make a decision. Do I want to double down on that for my studies or do I want to double down on the other big passion I've always had, which was always entrepreneurship?

7:51I didn't call it that way, but I was always the one with ideas. And then suddenly all the other kids in the neighborhood also wanted to save the white Siberian tiger. And so that was always me. And I decided to double down on this other passion, business, entrepreneurship. Didn't call it that way back then, but studied business first. And then I was on that trajectory for a while. So after my studies, I actually stayed in the U.S. where I had studied before and went to Silicon Valley, was a VC at Headline, so a generalist fund from 2010 to 2012, quite some time ago, 15 years ago. Silicon Valley was a great place to be for somebody who had just come from university.

8:37but I also felt that I because I had just come from university I had seen a startup from the inside the year prior before I started there but that was only for a summer and I felt I was I was in this position where I was supposed to give recommendation and advice to founders and I I kind of bullshitted my way through that but it didn't feel 100 % authentic to be very true very frank here. And hence, I said, I also really wanted to start a company. So that's why I went back to Europe, to Berlin specifically, started Amoreli in the e-commerce space, grew that from zero to a team of more than 100, turned the company profitable, had raised some money along the way, and then sold it for 100 million in 2018 to Proziden, the large European media company.

9:31And then, after a little sabbatical, joined forces with Robb, Pretty much out of my living room here in Berlin. It was just the two of us working on this concept of Visionary Stop, which we can get into in a second. And yeah, I started Visionaries first as a purely software driven fund. And then because I always liked, say, more ambitious investments and more ambitious founders and always loved all things coming from the science world and scientific breakthroughs. So I figured with Visionary's Dub, we have built such an amazing platform. We have this incredible LP base. You briefly already touched upon it, but very deep industrial access on the one hand, and then more than 45 unicorn founders on the other hand.

10:19And I think that's really great to have as a vehicle to do better software investments. But then I thought, actually, if you look at industrial deep tech, And if you also take a look at the typical founder profiles over there, where it's less the MBA type, but more, and I'm generalizing here, but less MBA type, but more from the lab, etc. Then I thought they actually need this value proposition even more. and also in terms of the type of topics that we invest in. We are straight at the tech stacks, the physical tech stacks of the world's largest industry. So this is really where improvement has a large effect.

11:06So yeah, that's why we decided to start Visionaries tomorrow. You didn't describe it much now. Robert has described it in our past pod, But one of the core missions behind Visionaries is bridging what you might call the old world or the old world of money and the old world of entrepreneurs with this new generation of entrepreneurs. And that's what you described also when you then said connecting deep tech entrepreneurs to this vision is almost even more important than it was with B2B software entrepreneurs. Maybe you can talk just a bit about that because I think it's incredibly important. And I think it's also a very strong unlock when it comes to understanding the role of Venter and also some of the mission that is probably well aligned with many LPs, which I think is also probably one of the secrets behind your success.

11:58I think as Europe, we have this tremendous opportunity that we have in industrial heritage that spans such a long time where the first car was invented in 1875. And many other things that we now rely on, be it fertilizer, which was invented more than 100 years ago, etc. So great industrial heritage, but then over time, this disconnect has arisen where you have the science world, which is also doing a phenomenal job where more than 50 % of the globe's leading research institutions are in Europe. But that is its own silo a little bit. Then you have the industrialized world, and then you have startups.

12:47So what we already set out to do, Rob and me, back then, 2019, 2020, is to bridge those information asymmetries to connect the dots and to build those bridges between the different ecosystems. And we have started doing that on the software side. And now we are doing it on the industrial deep tech side where we are connecting, quote unquote, old industry. I don't want to call it that way, but where we're connecting industry with the leading science clusters in Europe and the world and with the entrepreneurship clusters. You say you don't want to call it that just because nomenclature is important and the majority that are listening into our parts are from our industry.

13:35I think there's an important thing to double down on there when you say, I don't want to call it that. Do you find that it is unnecessarily alienating or stalking down about what was there before? Do you think that is a nomenclature that we should stop using? I think it's, to me, it sounds backward looking. And entrepreneurs, the family business entrepreneurs, because they're really, they're not just family business owners, but in most cases, they're family business entrepreneurs. they are amazing entrepreneurs when you when you talk to them you you see you know this this this light that's coming out of their eyes this excitement this passion this drive and this energy and they sometimes need a bit longer to make significant decisions but once they do and trust me i mean they put everything that they have besides that this behind that decision and And typically, that's quite a lot.

14:34And they also, they don't shy away from very large decisions. They are fortunately, in most cases, they're not bound to, oh, we have to watch out for the next quarterly report and for the analyst conference here and analyst event there. But they typically own their companies and their family has owned those companies. You know, we have investors, for example, the Siemens family or the Mittal family or the Swarovski family. their only concern is the next generations. And they feel responsibility not towards some quarterly investor update if they were a publicly listed company, but they feel responsibility to the future for decades ahead.

15:19So that makes them an amazing group of entrepreneurs. So that's one why I see them very much forward-driven. And the other reason is that I think there's a huge opportunity for Europe to actually, we sometimes hear within Visionaries, we say, for example, this German Mittelstand thing, the traditional industries, they can be Europe's Google, quote unquote. So whereas in the US, they have the Amazon, Facebook, Google, etc. Maybe this is actually a huge opportunity for Europe, that's what we believe, to turn that industrial heritage into something that will become a driving force for the future.

16:07I really like hearing you talk about this. And I asked you to double-click on it because I once heard someone, I can't remember who, who said that you really got to love your customer. And it's one thing in Mancha to love founders, but you really got to also love your LP base because you are building for them in the end also. And for that reason, I wanted to hear you talk about how you think about the middle stand and the passion that you described them with, because I do think it is important because it goes to show that it's not just people that you raise from and then send a quarterly report or something like that.

16:43you're actually very mission aligned and you see how missionaries fit into their whole investment strategy as an enterprising family. And so I think that's incredibly important. All right. Now, let me ask you a structural question. So why did you at Visionaries decide to take Visionaries tomorrow into its own fund structure? And that's one question. And then afterwards, I think we should also talk a bit about how does the firm operate now, that you have two different funds with different focuses and what is worthwhile in that sense. Sure. So when Rob and I, when we discussed this internally, also with the entire team and then also with our piece, it became apparent that we are talking about two very different strategies.

17:31So one is a software investing strategy, which has been proven for a long time that that works. We had Fund One, which is a top qualified performing fund, which was a 140 million fund, then raised Fund Two, 315 million. And yeah, it became apparent that it's out of different reasons that it makes sense to put this into a separate fund within Visionaries Club, So within the same firm, one being to give LPs the opportunity to decide on their allocation. So we have a large overlap in LP-based, but then we also have some that really only want to invest in software. But then we also have some that really only want to invest in industrial deep tech.

18:17So that's one reason. Then two, we also knew from the get-go that this would require a specialized focused team. So my co-founders and my fellow team on the Visionaries Tomorrow side is very scientific. It's 50 % PhD quota in the team. We have here as a PhD in chemistry from Wittricht in Stanford, who was head of science at Extancia for the last years and part of the investment team. And then joined Visionaries Tomorrow with Tong, my co-founder, who's a technical university of Munich background in electric engineering business. and then spent the last almost decade before joining forces with me for tomorrow at Fraunhofer, Europe's largest research institution.

19:03He built that deep tech fund and was also responsible for the majority of the investments. And then Oscar was a PhD in nanotechnology from UCL and Imperial. He's part of the London office. He was a writer for Physics World. So that's the type of profile that we wanted to have for the Tomorrow Fund. And then last, but definitely not least, but actually most important, we also think that for founders, this is an area where you need to have a credibility as a fund, where you need to have that team and where you need to have the ability to do very deep technical underwriting for the type of companies that you're looking at and the type of opportunities that you're looking at.

19:48and you also need to be known for that in the market. Hence, we decided to have that as a separate fund within the firm Visionary Club. Which also, this last part that you touched on, also explains to anyone listening in that you also have two outward-facing brands. So you have the Visionary Club brand that everyone in B2B sees and then you have the Tomorrow.VC, at least domain-wise, but you also have a full big.website in its own. You mentioned a couple of companies earlier. So far, we've made seven investments. We did the first closing of the fund about a year ago. We are about to do the final closing sometime after the summer of this year.

20:34And in the meantime, it really is like building a fund again. So by now I'm used to it. I build a company, build a fund with Visionary Club. and I'm building another fund within Visionaries Club, which is Visionaries Tomorrow. But yeah, you need to build the team. You need to fundraise. You need to build the brand. Fortunately, we can build on everything that we've already built on the Visionaries Club side. But then at the same time, we've also done over the course of the last 12-ish months, we've done those first seven investments that we've done so far. You already mentioned Proxima. I think you already mentioned Cosmic Aerospace and Hestia, so the company drilling for naturally occurring hydrogen.

21:15But then Iris, for example, has spent a lot of time looking at plastic recycling while she was at Extancia. Didn't really like any of the concepts. Didn't make any sense economically. It was clear that those wouldn't be viable. But then we stumbled upon this company called Radical Dot, which is using a completely different chemical pathway, an oxidative pathway to turn used plastics into green chemicals. And the ability to actually look into that and to do that underwriting, that technical underwriting, is something that we can do as a team, but that not a lot of... I don't think that any generalist team could do.

21:58So hence, actually, the founders, they oftentimes refer to us as the tech translator for them. So we oftentimes got asked why they were still fundraising to hop on the call with investors that are interested in the company. And we then explain the tech and the intricacies of the tech to them. That comes from you being successful B2B investors and understanding how a B2B slash normal VC thinks. And then being able to say, well, I've always loved deep tech as well. I have a deep tech background. Now let me explain to you in plain English or at least in plain VC English, why is this an opportunity that's worthwhile pursuing?

22:40I'd love to ask you, the team then, so you have the vision as well, but are you situated in the same offices? Yeah. How much, like how much, tell me a bit about that. Yeah, it's beautiful behind you there. How much in the day-to-day do you like, do you do your IC meetings together? Do you have overlap in the partner group that joins in both? Do like, how do you do this? How do you make use of all the competence that's built up inside the established shop. And now you have this shop that definitely is going to operate differently and think about different things in the due diligence process. But still, you really want to piggyback and make sure that you draw as many learnings as possible from Missionary's Club.

23:22Yeah. I mean, it's great that we're able to build on top of five, six years of learnings from operating in the most cutthroat investing market in the world in B2B SaaS investing. which obviously, Rob and I, we built Fund1 together, we built the team, we made the investments together. So everything that we've built in terms of structure, shared service teams, finance team, platform team, operations, et cetera, the offices, London, Berlin. But most importantly, I would say the investment process, the human itself, the ability to go very deep in a very short amount of time, more or less regardless of topic.

24:09That is something that we are in each team that we're using a lot, where we continuously work on process templates, where we share the same back office infrastructure, so that all the software that we've built, all of that is shared. It's one LP base, one network, one knowledge base, etc. So it's actually massively helpful to a very large extent. And then you need to also massively customize. We would never be able to take the blueprint from the software world and put it on top of our industrial deep tech companies or vice versa. That definitely doesn't work. That's why we have the different teams.

24:51What have you learned the most? What has been the biggest eye-opener or the place where you had to make the biggest differences in how you operate in B2B SaaS to then now in deep tech? As a B2B SaaS investor, you have at least one advantage, probably more. But one is that typically you have data and numbers quicker than on the industrial deep tech side. But on the B2B SaaS side, even for a pre-seed or seed company, we could typically rely on data, on numbers, on benchmarking that than against the numbers we've already seen as part of our other DDs or looking at our portfolio companies. This is something that's harder in industrial deep tech.

25:43You have to look at science innovation. You have to look at technical roadmaps. You have to get to the core of the technological innovation on the product side. And then you have to, very similarly to the B2B side, you then have to reference that to a market demand. So in our case, as visionaries, that means lots of interaction, lots of communication and conversations with our industrial LPs. So I would say that's probably one of the biggest differences. However, on the other side, we spend a lot of time when we look at B2B SaaS companies or software companies in general. We look at total addressable markets because you have to make sure that the addressable market size is really significant enough.

26:39For the type of companies that we invest in with Visionaries tomorrow, we also look at it. typically when you take a look at Proxima Fusion for example and when you take a look at energy, when you take a look at Cosmic and look at 50 % of global air traffic at Theleron which is a 200 billion market in energy storage, Cention 130 billion market in green ammonia and fertilizer or a radical dot 1 trillion in the plastic space or Hestia almost 1 trillion in hydrogen then you don't And the Excel calculation is not as sophisticated. And it doesn't have to be because you're talking about massive tabs.

27:20How have you changed your processes? And I ask these questions because we have so many journalists that are moving into doing more deep tech. So what I'm trying to get at is what are your core learnings around taking the playbook of Visionaries Club to now being Visionaries Tomorrow, where you're looking at tech, where it's all about the tech risk. You've got to kind of all the time you spent before on the numbers and on the execution risk. It's kind of here, it's more about the technology risk. It's more about the roadmap and whether you can actually meet those milestones. And then can you underwrite when you don't?

27:58What parts of your toolbox have had to really change the most? Where have you seen that, okay, now we're actually completely rethinking how we're thinking? Deep tech companies have one big advantage, but you have to make sure that they actually do have that advantage, which is that they have, when you find the right ones, they have defensible IP. So the intellectual property that's behind it is not as easily copyable as when you're doing, say, lighter tech. So that's one area where you really have to go into the technology side, the IP side. You have to make sure that you are aware of the patent and IP situation.

28:45You have to figure out what the IP strategy is going forward. So that's one area. Many areas overlap. You're looking at a team. You're looking at a problem. So you need to make sure that the problem is big enough. And same goes for the market. Are founder characteristics the same that you look for? We are once again looking for well-rounded teams. So we want to have a team that can operate on its own when no fundamental puzzle piece is missing. But here, the fundamental puzzle pieces are typically different. So we have less teams that consist of only business folks or of, say, developers and business people or just developers.