E563 | Louis Dussart, RTP Global: The Political Wake-Up Call on Tech Sovereignty, Growth Capital & Europe’s Urgency to Lead

0:0028 countries in Europe, 28 different regulations, 28 different fiscal incentives. And solving for that is just like solving a core piece of the European continent. I think you cannot solve the growth problem without solving for the liquidity problem. And the liquidity problem and the elephant in the room is the capital market. Europe's fragmentation isn't just bureaucracy. It's breaking the startup flywheel. If you invest in growth and then you're stuck with your investment forever because you cannot find liquidity, then that's a massive issue. And then the LPs will get their cash back and don't reinvest into funds and all the rest of it.

0:29But there's a fix. Two levers that could change everything. So, yes, if you can finance like fund of funds, thanks to that, and delegate that peaking capacity and that support capacity, I would be very much in favor of that. If you triple down on those initiatives, especially at the time when the U.S. is becoming volatile, let's say, maybe there is a willingness to have stability, which we can capitalize on and do an invert brain drain from that perspective. The proof that Europe needs to act, our own tech champions are getting financed elsewhere. I'm thinking about Mistral because that's a French company that's quite iconic.

1:04Like it's kind of an irony that like the sovereign piece of technology based in France is financed by U.S. funds from the get-go. Like things were too expensive or too big or too risky for the local funds to actually participate in a neutral capacity. For me, that makes no sense. The solution requires thinking like a founder. To put the country and the continent back on track from tech ecosystem perspective. No matter what, I'm going to have to take a risk where everyone's going to say, you're completely crazy. If you're building, investing, or shaping policy in Europe, this is the conversation you can't afford to miss.

1:38Join us on this episode of EUVC podcast as Louis Dussart lays out the roadmap for Europe's tech future.

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3:32This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Welcome back everyone, friends of the EUV's ecosystem. I hope you all are. Let's roll up our sleeves and tackle what truly drives our ecosystem forward, because today we're highlighting why European politicians need to wake up and stay woke to the power of our tech founders. Our guest is Louis Dussat from RTP Global, a passionate VP on the ground in Paris and deep in the trenches of early stage tech. Louis brings a fresh voice to this critical conversation about founder-led momentum, policy blind spots, and the urgent need for alignment between the startup world and political leadership.

4:12Let's get into it. Louis, that was quite an introduction, my friend. Tell me about your journey into venture and what led you to join RTB Global. Yeah, absolutely. And by the way, thanks a lot for having me today. I started quite young, actually, in BC. That was my first job ever. I joined a firm named White Star Capital when I was 20. And that was as an intern first. So I did six months over there, two months in Montreal, two months in New York, two months in London, which was very intense from a traveling perspective. but interesting because it got me the opportunity to discover the job, but also to discover it through the lens of like three ecosystems that are at different stages of maturity, I would say.

4:52When New York was one of the most, you know, mature ecosystems alongside the Valley, Canada was like in the making. London was pureheading the European ecosystem, but I could already start to see the differences between the three. And after the internship, I was going back to Paris to do a master's in data science. I might label it as AI because it's more salesy, but that's the way they were talking about it back then. And offered the founder of White Star. We were doing early stage investing in between. Basically, the idea was to invest on one side of the Atlantic and then help those companies expand on the other side of the Atlantic.

5:31and the white star line was actually a shipping line in between the two continents. I offered Eric, the founder, to basically help building the presence in France. And for a year, part-time with that master's degree, the goal was to meet with every relevant stakeholder in the French ecosystem, be it founders, be it investors, be it accelerators, be it people on the political side, to actually understand, okay, whether we had business to do in France, But also it gave me a fantastic understanding of the ecosystem at the time, which was 2017, when the ecosystem was super young. Actually, there were three unicorns back then in the country.

6:12And that was the very beginning of understanding how can we catalyze a tech ecosystem. I then went on the other side of the table because I was attracted by the building aspects for reasons which were not necessarily the good ones, to be fair. And build my own business in between Europe and China. The goal was to help Chinese customers, predominantly Gen Z, discover the European fashion through live shows organized in Europe by Chinese influencers. So think of it as you're an influencer living in Paris. You have a million followers based in Chengdu and Shanghai. You come to APC. You organize a live show as you're very familiar.

6:52You show the products. You explain the brand. And then essentially you have a million people coming live into your shop. And the goal is to empty the store's inventory within an hour or two. That was extremely complex for a lot of different reasons, which led me to actually park the business and actually go back to my first stop, which was Vici. And I didn't know about RTP back then, but they had one common investment with White Star, which was Tier Mobility, the scooter company, which essentially got them into my radar, took 12 interviews, and that was a very long process, but eventually made it with the goal initially of building their research department and at the same time to launch France a bit like I did with White Star in that dynamic.

7:42And that was five years back, so the rest is just progressing within that organization. And what would you say sets apart RTP Global in Europe? Yeah, I think it all goes back to the roots of the journey. So the way we're structured is we're a team of 40 people, 15 in the investment team across three regions. So essentially you have the Americans that are in the New York office, you have the Europeans between London, Paris, and Amsterdam, and then you have the Indians that are based in Bangalore. what makes us very different is because we're all in the same zoom twice a week so we really try to to instill this international dna within our operations i would say we do not have any cultural bias in the way we we invest as a team so we try to have like debates on why things are like they are and trying to go back to first principles because if you're a french investor investing only in france surely there are elements of the ecosystem that you get used to i would say But when you're being challenged by Indians and Americans on the same call, you kind of need to go back first principles on why things are the way they are.

8:50And that allows you to almost rethink the societies that you invest in. And I think from a perspective of technology, where you need to go back to indeed like first principles, like break the status quo to develop a solution that's more efficient, that's actually really helpful. So I would say the most important one for me is that of perspective, because you see the local ecosystem with a look that is, you know, enriched by a lot of different points of view. And that is extremely helpful, especially to benchmark the degree of advancement of ecosystem. And when it comes to understanding the politics aspect of it or the macro aspect of it, being able to benchmark Europe, France, UK, Germany with what's going on in the US or in India is actually super helpful, in my opinion.

9:36And let's then get into the feisty topic that I mentioned in the introduction, the political wake-up call. You've warned that politicians aren't attuned to tax potential. What do you think that our politicians are missing? I mean, I wouldn't say they're not attuned at all, but I think it's a very tough job that they have because at the end of the day, when you're thinking how to boost the tech ecosystem, you don't have a single answer. Like it's a combination of a lot of different ingredients, be it like talent, be it capital, be it like the regulatory ecosystem. Right now with AI, it's also a question of like, how do you secure your energy supply in an economically sustainable way?

10:14So you have lots of different facets. And when you zoom into those, like when you're thinking about talent, probably it's a combination of education. It's a combination of what's the existing state of the ecosystem and what skills do people have on the ground. And it gets very, very complex. What it all boils down to is like what sits at the top of their agenda. And when you look, in my opinion, at the U.S. economy and what has been the engine of the U.S. economy in the last decades, I think it's fair to say that technology is playing a massive part. I remember when I was in high school, you look at the list of the top 10 biggest market caps, and that's essentially oil and gas and banks.

10:56And now it's probably all tech. I mean, probably Aramco is in there. And so I think there is a massive urgency in Europe when you look at our biggest companies. And France, I take France as an example. You have luxury in there. you have financial services, you have manufacturing and all the rest of it. Technology is still not there. And for me, that's a massive, massive issue. And so for me, when you're thinking about the political aspect of it, it's all a question of priority. I think there is an existential aspect to it. How do we make sure that this ecosystem is flourishing and it's growing a lot faster than it actually does?

11:35And that should fit at the very, very, very top of the list, in my opinion. and I can go down into like what that means at all different levels if you want to. But that's the initial aspect is the sense of urgency and the sense of prioritization in order to accelerate this development. I actually think that what you just said, let's do that. Because there's not many that dare to lean out and give their playbook and say, I think this is what we need to do. So let's talk about those levels, line them out and then say, what do you think is the most important pillars to get built out and fully working in the European ecosystem?

12:12You can break it down into stages at the end of the day. So you have the early stage, that's inception of companies and the early days of the company, let's see series A, early B, from a stage standpoint. Then you would have the growth stage and then you have the exit markets and the public markets. So if you break it down into those three things, I think I don't see a massive impact of the political framework on the very, very inception of companies. At the end, it's all about talent and therefore their ability to build into an ecosystem that allows that. And I'm not sure it's going to be a political push that will invent Google or Mecca or NVIDIA for what it's worth.

12:58But I think it's really like, how do you allow those founders to build and build in a good environment? So it all starts with talent. And I think probably it's a function of two things. Like if you're thinking, how do we catch up? It's how do we adapt our education ecosystem so that that's going to yield fruits in 5, 10, 15 years. If you want to hack that, it's how do you attract talent that's already skilled to come to build here in Europe? I think we have an extremely deep technical talent ecosystem. When you look at France or at the UK, or even Germany and Italy, you have amazing schools, be it like Polytechnic, be it TUM, be it Oxford, Cambridge, Polytechnico Italiano, Milano in Italy, that is yielding amazing talent.

13:46Probably there are elements to it where the European ecosystem doesn't have the same skill set than in the US because over there you have so many companies that have done those steps multiple times over be it like on the growth stage and on the IPO and those are skills on the product management team on how to become CMO of a publicly traded tech company and the rest of it that don't exist in Europe to make it short is like how do you welcome this talent and how do you attract this talent and that goes by making visas a lot faster so we had the passport talent in France which was a way to accelerate the visa application, which I think is great.

14:22And I think if you triple down on those initiatives, especially at the time when the US is turning into a place which is becoming volatile, let's say, maybe there is a willingness to have stability, which we can capitalize on and do an invert brain drain from that perspective. So that's what I would say is at the very, very earlier stage. You will need seed capital, like three seed and seed capital, I think that's what the previous public initiatives have done, which I think is a great idea, is to have the sovereign funds investing into fund managers that are themselves very close to the entrepreneurs and are able to fill that gap at the earlier stages.

15:06So think of BPI, think of KFW, VexFundant in Denmark, GDP in Italy, that are able to write meaningful checks to put emerging managers in business and give them the ability to invest at those earlier stages. I don't think that it's the role of the government or the public spheres and initiatives to make this call, deciding so early who are the right talent to back at seed or pre-seed. But can they enable that? I think yes. What's your take on the fund-to-fund side? Just curious because now you describe it. And so I'm an LP, right? We've invested in 13 funds now or so. I am also a venture partner with Isomar Cabo.

15:48So obviously I'm also a strong proponent of fund-to-funds. I don't see Joe and Chris working for any government. Those are the founders of Isomar Cabo. And I do think that they could probably do a better job than most people that would take a job in government. And in the end, picking a good fund manager in venture is not a simple task. We've seen it. You know, there's a reason why we have such a huge disparity in performance across VC funds. do you think there maybe should be a shift to having at least some allocation going to fund funds or do you think it sits well with our sovereign institutions yeah honestly that's like that's a great question and why is because i think there is a timing component to it which is the emergence of emergence of of emerging managers as a new category which is becoming more and more deep, I would say, in Europe.

16:45And the ability that you need in order to be able to pick them well and provide them with sufficient value to help them doing their business is extremely hard, in my opinion. And that's a role that, again, I don't think that sits on the agenda of any government or public authority to do. So the answer to your question would be yes, if you can finance fund of funds thanks to that and delegate that picking capacity and that support capacity, I would be very much in favor of that. I think in Europe, I mean, you mentioned Isomer. That's probably one of the 10 to 15 professional fund of funds in the continent that are able to work with emerging manager.

17:26That's not enough at all. The question is like, is there a reason to it? And so that before, I would say five years back, you predominantly had established funds that were keeping being funded by the same institutional investors and all the rest of it. Yes. So I think the answer to the question is yes. And the reason why it's now is because I think there is this new category, which is extremely good for the ecosystem. Frankly, I think Emerging Ladder is bringing like a ton of fresh air to the earlier stage market, to them being so close to the ecosystem and so close to the founder and so helpful because they're founders of their own.

18:06So they kind of get it at the end of the day. But I think it's very recent. And indeed, I think governments should encourage that. And just in case anyone listened in and thought they heard 15 fund managers or fund funds that back emerging managers and think, well, isn't that pretty good and sufficient? The fact of the matter is that I think it's fair to say that all of them are sub-optimal size, except maybe for a couple. But then you can argue, are they really doing emerging managers? Because, yes, they have a couple of picks, but typically it's spin-off managers from the larger firms. And you can then discuss whether that's – if you ask them honestly over a beer, do you do emerging managers?

18:51Most of them would say, now we track the market, but honestly, in our full allocation strategy, it's maybe a couple of percent. In reality, we have far too little capital. Like the number of funder funds that have been tried to be stood up across Europe is astounding. Unfortunately, in total assets under management for money that's truly being allocated to European emerging managers by private funder funds, I'd be surprised if it's more than a billion. Yeah, that's actually... I don't have the... I'd be curious to have the total amount of capital dedicated to the strategies. I think there are two things.

19:31Like there is the amount. And so you're looking... I mean, those funds are relatively small, usually sub-50 million, solo GP or maybe two GPs. I think there are two elements to it. One, there is finding anchors and what I would call like anchor as a service or like funds which are able to anchor those funds. And indeed, those you have very little. And those are almost like leads into a startup. They need to take the bet of saying, okay, I'm underwriting this fund and I'm putting those guys in business. And finding your anchor, whenever I chat with emerging managers, it's always the same story.

20:01It's like you never know where this anchor is going to come from. You go, you chat with people, you meet people at some point, a high net worth individual or someone you're close to or a corporate or a bank that you've developed a relationship with is ready to stay the stand and say, okay, here is enough to put you in business. And then something catalyzes, but it's just like extremely up to anyone's guess. And then you have like a long tail of like emerging manager backers, which are putting smaller checks, I would say sub 1 million, which is starting to professionalize a bit, which was sitting usually into family offices that have such a broad mandate that they can do that.

20:41But this also needs to be boosted. For me, this is a very interesting shift on the way the ecosystem is going. And in fact, at RTP, we're big advocates of this shift. Let's shift to the growth stage because you laid out pretty clearly the early stage. I think that was one thing that I would maybe, and I'd love to get your take on that, tech transfer. I think this is a place where when we talk policy, oh my God, I wish that our politicians and our university heads and so on would really get their act together in terms of making it much more efficient to get IP out of universities. Because we're seeing, like I was with a university not too long ago, pretty successful one with their TTO.

21:26And when you then ask them, well, how much have you gotten in real money from the IP that you have then had 15 people employed to make sure that you are able to capture all of this? the money coming in are far less than the salaries that they are spending on making sure that they retain that IP. So it's like from a pure business decision, it's not even good. And then you think about all the companies that are not being accepted because there are just professors slash researchers that decide, no, it's like, there's no way I can do it out of this. It's an amazing opportunity with this piece of research, but I'm not spending two years trying to get it out of the university.

22:16Yeah, that's an interesting point. It's fascinating to me the difference of mentality that you have in Europe and in the U.S. from that perspective. Because I feel like universities in the U.S. have been professional at spitting out pieces of research that have a very short cycle to commercialization and to being businesses and products. when in Europe it's still like I mean the image I have of a researcher in the French university is like very very far from those problems and therefore I think there is a mentality shift to to to trigger that is for sure I think something I I also I also want to add from your I mean I would say the tone of like what what you're what you're saying I I I also need to put things into context like since I I started working in this industry seven years back I think a lot has changed.

23:05A lot has changed. And in the positive dynamic, I think it's easy to say, okay, we're so backwards and we need to bridge that gap. But I think it's also good to emphasize with some good stuff. I think now is a question to say, okay, the battle is not won. It's just like the very, very beginning. Now is a moment when we need to truly accelerate, even though it feels like we're yielding the early fruits of the efforts that have been done seven years back. I can also add the caveat, basically it's like between seven years ago And today, I think we're talking about radically different ecosystems and radically different ways of thinking, which this is positive.

23:40And this has been instilled in some countries by the public initiatives as well. No, I completely agree. It's so important to say that obviously there's been great strides made across the universities on this. I just tend to find that we're still too focused on value capture rather than enabling entrepreneurs. That's my point here. But definitely, we're many times better than 10 or 15 years ago. Let's focus on the growth stage. So some investors say we need, or some founders say, some politicians say we need more growth capital in Europe. Then there are others that say, no, no, like growth capital is global.

24:21There's not any growth fund that only invests in Europe or only in the U.S., at least not any that are not government backed significantly. So for that reason, a US growth fund, if there's an opportunity in Europe, they'll take it. They spot it and they will invest in it. So growth capital is not something we can argue that we're missing here. What is your take? I don't necessarily agree with everything you said. Because frankly, yes, it's true that at the global level, you have growth capital available. And if there are outstanding opportunities that are coming out of Europe, surely they will find the markets.

24:57And that has been proven like it's proven all the time. Yeah. I think what you also see is that I think there is a benefit into being in an ecosystem and helping this ecosystem grow and being a strong part of it rather than sitting at the other side of the world and then coming once a year for like a trip and then therefore making two checks or meeting with founders that would yield to a check. I think this is a very different mentality. Some US funds have adopted the strategy. And in fact, I think it's super hard because they've been trying consistently to come to Europe and constantly went back to the US because it didn't work.

25:34I think Axel is one of only OG US funds that came open shop in Europe and stayed there and is thriving in the ecosystem. That needs to be recognized. But traditionally, it hasn't been so easy for the US funds to come and establish presence and maintain this presence. So I think, yes, if you look by the dollar amount, there is capital out there. There are two things. One, it would be great, especially right now, that some investments are shifting towards sovereignty investment. I'm thinking of Administrade because that's a French company that's quite iconic. It's kind of an irony that the sovereign piece of technology based in France is financed by US funds from the get-go.

26:15like things were too expensive or too big or too risky for the local funds to actually participate in a miniature capacity. For me, that makes no sense at the end of the day. The question is like the gross capital and the risk that they're willing to take. Indeed, when you're supported by the governments and then you have a cost of capital as a fund that's lower because you have sovereign funds as LPs. I think you also have the political agenda that's in the back end to support the local region. And I think as the ecosystems did for early stage, there needs to be something similar at the growth stages, meaning it's not going to be like, you need to have the pump working now and you need to take a bit more risk at the beginning for the ecosystem to structure and to thrive.