E583 | EUVC Summit 2025 | Reece Chowdhry, Concept Ventures: The State of European Pre-Seed

0:00Europe's pre-seed investment scene has experienced remarkable growth, with funding more than doubling from$263 million in 2018 to over$500 million today. At the heart of this surge is the UK, attracting one-third of Europe's pre-seed capital, more than Germany and France combined. Rhys Chowdhury, founding partner at Concept Ventures, has captured these transformative insights in his recent report, Zero to One. My teacher at school said to my parents, Rhys will probably not pass any GCSEs. So how did I end up here is probably back to the question. I always was very curious at following my passions and leading to this day, two passions I really had growing up was technology and exploring new things and actually investing in things from a very early age.

0:51Rhys joins us to explain the trends behind this explosive growth, the evolving funding structures, and how to win in an ever more competitive European pre-seed market. Hi, everyone. I realize I really do have the desk lot here, so I will be very brief and quick. But firstly, thanks to Andreas for putting on such a great, great, great show today. So very informative. So I'm here to convince you of two things. One, pre-seed is the best place to invest in Europe and also the UK being the best place in that segment to make your bets. So hopefully I'll convince you of that in the next few minutes. So for those of you who don't know me, so I'm Rhys.

1:34I'm the founder of Concept Ventures. We are the largest pre-seeding fund in the UK, dedicated to the UK. So one of the questions people ask is what the hell is pre-seed? It's a very different segment for lots of people, but this is how we've defined it. Pre-everything, backing crazy people, uh no product um typically raising you know up to three million and um these typical typically the valuations we invest i think that's a really important place to start uh for lots of reasons because i think people kind of misinterpret it as sometimes and one of the things we did and the team did an amazing job with this we put a very big pre-seed report together um and i do recommend you guys have a look at it it has a lot of detail about different segments of the market and you We'll dive into a little bit of it now, but here we go.

2:26So why do I think it's important? Well, I think in Europe, I think there was a stat which, compared to the U.S., 8 % of managers who run VC funds have some operating experience versus 45 % in the U.S. And the thing that I've seen over investing over 100 plus pre-seed deals is that at the beginning, people write companies off a very similar prognosis. Market size, you know, the product has lots of competition. And why I wanted to put this slide up is because all these great companies who have gone on to great things all started off with a pre-seed round. I picked the UK ones. Less than two million in valuation.

3:10So we see a lot of these kind of crazy 10 million, 15 million pre-seed rounds. You know, some of the deep mind colleagues may be here, but we see a lot of that. But, you know, I think you can start small. And I think it's even more of a case now for being nimble and doing a pre-seed round of this scale. So what's happening in Europe? Well, sorry to our French and German colleagues that are here and friends. The UK is trouncing all of you. More unicorns, more funding. And it's the place to be, I think. And, you know, we've seen that from our own selfish bias perspective, I would say. But, you know, the numbers don't lie.

3:48And if you want to dive into this a little bit more, our precede report will kind of do that. But this is all based on crunch, crunch, chase data. But I think there's a bigger iteration of this, which is about talent. So the UK, this is a report that I selfishly again pulled, but this benchmarked everything from funding, talent density to unicorn spin outs, etc. And actually, London as a city is on par with New York and a lot of a lot of principles. I think New York produces around 15 unicorns a year. I think London produces around five at the moment. and that trend is like an interesting one that I speak to a lot of our USLPs about and they they are very bullish on London as a city and the ecosystem that is thriving and this kind of flywheel effect of many of these companies and people spinning out of that.

4:42I think combine that with the university talent that we have in the UK I think it's a very interesting mix. It's not going to be the Silicon Valley it's not trying to pretend to be but I think people gravitate to you know people in high density of talent. So again I think Sequoia put Without this index, you know, London trounces everyone again. So, yeah, I think that's an interesting tack on the engineering side of things. The Sequoia Atlas report, if anyone wants to dive into that a little bit deeper. So why do Europeans struggle to invest in pre-seed? Like, this is something we've kind of experienced many times.

5:18We call many people to invest with us as a fund. We're very collaborative. and the common thing that we get back is, well, we don't like pre-seed, we want to see some more traction, we want to see a little bit more of a market. There's so much competition, like I mentioned. And I think that comes from two factors. I think the lack of operating mindset is definitely one and not having that kind of Silicon Valley, like risk on, I think the last presentation mentioned that. The second thing is, pre-seed is also about luck and there's no question about that. I think portfolio sizes need to be a bit larger at pre-seed, and a lot of the managers I speak to at seed and A have a much concentrated portfolio.

5:59And so those are the kind of things that are inhibiting us. So I would love more people to invest in pre-seed with us, so come and ask me afterwards. And I think the way we segmented this concept is into these three buckets. So I think every founder we typically invest in in Europe falls into these buckets, which I think they're highly you need to evaluate them in a very, very different way. And I think this is one of the things I see when I speak to other VC funds that they often precede because they can't underwrite products or markets, etc. Don't look at where the background of people have come and underwrite them on a people basis.

6:39So I think evaluating a second-time founder that maybe a failed or not failed versus an unproven PhD spin-out, you need a very different rubric. And that actually has very different connotations of the way you run the process. So I think that's something we've seen and, you know, I've tried to educate a lot of people on. So going back to something that I think is, like, interesting, a lot of people ask me about 11 Labs. It was the first investment we made from our last fund. and our last one took three years to raise and I think Mark Sims is over there from the BBB. Without him, that wasn't possible.

7:16But I think pre-seed to finish on is one of the most important data points to enter in this market. The reason why is that with the invention of AI, people obviously can do more with less, et cetera, et cetera. But the term, I think there was a term that I read recently, seed scaling. and I like the term pre-seed scaling. So like if you raise smaller rounds these days, let's take the 2 million pre-seed round that 11 Labs did. If you smash it out the park, which I think 15 % of our current fund portfolio have dubbed, you skip the seed layer and go straight to series A. And I think that that is going to be a more prevalent and prevalent trend.

7:58It's lower dilution for founders. It's lower dilution if you're a pre-seed fund. And I think it's something that will happen more and more and more. So I think as Europeans, we should encourage ourselves to take a bit more risk, invest a bit more in pre-seed. So if you are on your next IC with a 60-page memo for a pre-seed round about market size and landscapes, etc., remember this talk and tell your partners to invest a little bit more at that early stage. You never know where it might lead to. So thank you and appreciate being here. Before you go, I just want to give a massive shout out to the partners who made the EUVC Summit and awards possible.

8:40So please do not tune out. We're partnered with these firms because they're great people with offerings that we know from our friends in the ecosystem are truly world class. First up, I want to give a big thanks to HSBC Innovation Banking. They helped us incept the awards in the very beginning. And truly, they are the leading bank for anyone in European venture. There's a reason why everyone knows them. Google Cloud, they were our venue, hosted the summit. What a team, what a big effort they put on to help us. We're hugely grateful. Make sure to reach out to Arabella or Oksana at the Google Cloud team to hear how they can help you as well as your portfolio.

9:17Massive credits goes to them. Ace Alternatives, we have so many friends in the Berlin ecosystem partnered with these guys. Just the best fund ops team around. And as with any good restaurant, where the locals are is also where you get the best service. And now they're expanding across Europe, so they're definitely someone to talk to. Hainspoon, they're longtime partners of ours in both our own legal work. They're great supporters of us here at EUEC, and I definitely think that they are one of the go-to legal teams to have in your corner. CW Communications, our dear friends who helped us secure CNBC, Bloomberg, Financial Times, and many more for this summer.

9:54It's a joy working with Dan and Kathy and the team. the Fundcraft, Digital Native, Full Suite, Lux Headquarter, and a great partner as you grow your firm out of Luxembourg. Definitely a fund admin to consider in your stack. I can only say that the team are incredible to work with. I'm very thankful that I've gotten to know them. I think they're one of the up and coming fund admins that you want to be thinking about. Portfolio IQ by Synaptic. You may know them for the Discover tool, which is branded under Synaptic, But PortfolioIQ is absolutely a product you should know because there's no one that understands intelligence better than this team.

10:31And finally, Goodwin. They are a truly world-class legal partner you can trust. They're hands-on, business-oriented, and expert in everything and anything transatlantic. So those were our partners for the summit and awards. I know this might have been a bit long and boring, but really, if you have these guys on your side, I don't think your firm could be in any better hands. and also they're helping us do what we're doing every day for you.