E608 | Stephan Wirries, Ventech: Announcing Fund VI: €175M for AI, Industrial Software & Europe’s Sovereignty

0:00Today I'm excited to bring on Stefan Weirer as general partner at Ventech, one of Europe's longest-standing multi-sector VC firms. Stefan recently stepped into the GP role with the close of Ventec 6, the largest fund ever at€175 million, dedicated, of course, to backing Europe's next wave of tech startups. Ventec's portfolio spans hits like Believe, Vestia Collective, Withings, the maker of the watch that I'm wearing in every single episode, and Pre-Wave. With Fund 6, they're doubling down on AI, digital health, industrial software, cybersecurity, and European sovereignty, making 15 investments already across France, Germany, Nordics, and even a little bit in the US.

0:36Before we start the show, a quick note. If you're building or running a fund, you know it takes the right partners. At EUVC, we only work with sponsors we truly believe should be part of your tech stack. Please do take a moment to hear about them. And if you do, reach out, mention EUVC. It's the best way you can support what we do. Thank you so much. First up, Ace Alternatives. Every fund manager needs clean operations, behind the scenes. From fund admin to tax and compliance, ACE handles it all across VC, PE, private debt, and real assets. They're trusted by some of the best investors in the world, and if you want peace of mind and a scale-ready back office, ACE should be part of your stack.

1:15Finding deals and managing your portfolio is at the heart of running a fund. Synaptic helps you discover status before others do, and PortfolioIQ keeps your portfolio data sharp and ready for LPs. Together, they're essential tools for modern fund managers. When it comes to legal, you need a team that truly knows venture. Hainspoon supports LPs, GPs, startups, and scale-ups across the full fund lifecycle. Smart managers make Hainspoon part of their stack. We have two at EUVC. Tech BBQ. Oh my god, who doesn't love BBQ? Europe's startup scene meets the loudest, friendliest family reunion ever at Tech BBQ.

1:50From Nordic founders to global VCs, this is where ideas catch fire and relationships get real. If you're building or backing in Europe, Tech Barbecue is where you want to show up. And hey, if you've got a big fun announcement coming up, want to hit the headlines or just want to tell you a story about, do reach out to us because we'd love to help. And we've got some pillar partners to help you get in the right media places. They've held us land Bloomberg, CNBC, Financial Times, Forbes and many more for the EUVC Summit. And we'd love to do the same for you.

2:24It'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. Stefan, welcome to the podcast. Wow, thank you so much, Andreas. I think you said it all already. That was amazing. Yeah, I tried to make it short. Let's cut the podcast here. Thanks for joining us, Stefan. Appreciate it. No, let's get into it. Tell me, what does this milestone mean for you and the team at VanTek? Yeah, I mean, I think we as a team are extremely happy, excited and grateful to continue this journey.

3:06Number one, I think, I mean, we all see the waves in the market happening. And so it's fantastic to have our LPs come back at 95 % reinvestment rate and support us to go even further now. Yeah, and just to note, to those if there are people in the audience that don't know it, having a 95 % re-up rate or reinvestment rate from ULP base is very significant. Congrats on that. Yeah, thank you. It just means that people come back in a way, right? And they trust us and we have a good relationship. And it comes, maybe for those who are interested, through that varied base also of institutions, banks, insurance, family offices, founders.

3:46And that helps, of course, to have such a longstanding relationship with many different organizations. And so that's fantastic. That's one. And then it's very interesting times in a way. I think, of course, we're a little bit in crisis as a continent. And so that creates an opportunity to tackle new challenges. Let's put some words on the word crisis there, because I think some say that it's a crisis of confidence more than it's anything. In fact, the ecosystem has grown 10x by almost any measure over the last 10 years, which is, of course, incredible. So I think that as a VC ecosystem and tech ecosystem, we're maybe not as much in a crisis.

4:25I think there's a lot where we can say we're in crisis mode in Europe, but I don't think the tech ecosystem and the trajectory we're on in the tech ecosystem is necessarily the place where I would say that the crisis is the biggest. I think that's a very good clarification. To me, the crisis is more geopolitical in a way that surrounds us. And I think that frames a lot of the interest areas of interest in a way. It creates an opportunity to invest in European sovereignty in the widest sense. Right. I mean, of course, we can think about dual use, but let's think about infrastructure. Let's think about data centers that we have to operate here in Europe independently, you know, just in case.

5:03And so I think that is the real opportunity in a larger sense of a crisis. Not so much for us, but in a way for the continent. Yeah. And I think that obviously I have a hammer, which is content. I very much believe that we have a narrative crisis in Europe, which is something I'm trying to solve with a bunch of others in the ecosystem. And I know you're very much aligned around that. I think anyone that saw your press release would also see that. We'll dive more into sovereignty and how tech plays a role there. But let's just, I want to touch on one thing because Ventech, many know you as a French firm, But you actually have offices not only in Paris, but also in Munich, Berlin, Helsinki, and now also in Stockholm.

5:45Could you talk a bit about the importance of this pan-European presence for you and whether you're a French firm investing in the rest of Europe or whether you're a truly European firm? Yeah, I think, I mean, thank you for the question. I think it's interesting on several levels. So the partnership itself, it's co-owned by many nationalities at this point. So you have Tara Menanda sitting in Helsinki covering the Nordics together with Joel, who's sitting in Stockholm as a principal. And then you have Christian and myself covering the German-speaking countries, also GPs in the fund. And that means a lot because you have decision makers locally in every market.

6:24And at the same time, people who speak the language, who have the proximity. And as we're investing early stage, usually one to five million euros with an initial ticket. it, it's about more than numbers, right? Like we need to understand the people. We need to understand the story. We need to be aligned with the founders that we are grateful to work with. But so we need to speak the language in a way. How do you approach this localization of venture, so to say, because it's a specific approach of creating offices in the different hubs. Do you also think about it as, well, okay, we're in Germany.

6:58So for that reason, the German team is more focused on industrial software. Or do you have any type of vertical split across the offices or not at all? The vertical split is among partners in a way. So everyone builds a track record over there, you know, tracking every partner is between 10 and I would say more than 20 years now in an experience. And so you see cycles and then you start to understand and know the people in that space. And I think that enables you to deeply compete there. And then sometimes it's about making the best bet across all our core geographies. So very often we see same ideas popping up in different places.

7:33And then it's great to have one or two people covering that space and then together make the best decision as to where to invest. Yeah, absolutely. Okay, now let's dive into the big one. Of course, it's also a significant part of your PR message to the AI wave and the fact that you're dedicating 50 % of your time in capital is how you put it. Talk a bit about that. Yeah, to us, AI is everywhere. It's been everywhere already before in a way, but now it's, I don't think you get any pitch these days, almost any pitch without AI as a tagline. And so it's up on us and it's an interesting time to figure out what that means and across all the processes and things that are being disrupted.

8:11So it's just a major part of the attention that everyone's getting. And then we see that flow also through the other verticals that we mentioned, right? We talk about digital health, we talk about industrial software, cybersecurity, sovereignty. I mean, as you know very well, and I think most of our listeners truly understand, these are all big categories in a way, and there's so much under it. And the ways things get described change over time, but the opportunities are really exciting in these, you know, four or five verticals in a way. And they're not exclusive, mutually exclusive in any way, right?

8:44So very often we have cross-pollination in a way through these categories, which makes really interesting. Stefan, you're quite the data geek. I think I can say that without offending you. That's fair. We love that. I say it with all the love that I can. You've also invested in Omaha Insights, which I guess ties closely to that affinity of yours. So tell me a bit about how you think about AI across the VC stack and what's happening. Yeah, so that's a very interesting topic, right? Because now technology becomes much more manageable in a way and all these new AI no-code tools enable all of us to context switch much quicker into exciting new ideas to optimize the way we do our jobs.

9:30I think it's true for all of us and so for a VC that means so many things. Before there used to be this previous age in VC AI data where people use data to identify interesting opportunities and I think that was very exciting and now we're switching to workflows right everyone's switching to workflows and so people use the the agent to to respect what they do and reflect that into an automated solution and so that's that's happening also at ventech it's great because it gives you a bit humility i mean we're also starting to see the limitations of of the ai hype internally i think there will be a near point where of course we're getting ai generated uh pitch decks and we'll send some ai generated answers at some point.

10:11So that would be an interesting moment in time. But we're not there yet. I'd say it gets very, very exciting right now. It helps, you know, if I give a very pragmatic example, it helps me be more prepared in faster time. So in the morning, my agent gives me an idea about the meetings I'm going to have, all the context, you know, searches the founders, finds out the context. So, you know, reads the deck again, gives me a summary. So you know what's up, you know what you're getting into. And basically, we're starting to replace some of the network that used to be done by associates now on a day-to-day basis.

10:44Okay, so now let me shift to another topic, which is the other verticals that are, of course, important to you. So if you look beyond AI, digital health, industrial software, cybersecurity and sovereignty, let's pick up on cybersecurity and sovereignty first. Tell me a bit about why you focus on sovereignty and cybersecurity specifically. I think historically we've been strong in what people today call deep tech. so everything from semiconductor IP to the way software is designed and infrastructure, data centers, etc and that's what we're going to pick up in this generation again so sovereignty of course it's dual use and we do have some dual use historically also in the portfolios such as MicroOLED which is about very small displays that can be used in hunting as much as in other dual use scenarios but then in the new fund we start seeing a drive towards making our infrastructure more resilient in many, many ways.

11:43And if I take the simplest case of data centers today, almost everything's with big tech in the US. And so there is a question as to how do we organize ourselves when we need to be a bit more independent under some circumstances. And that's a huge opportunity for European founders. Say a bit more there. Are you thesis driven there, meaning you see some technologies and some trends converging that you, for that reason, know where you want to bet? Or is it more that you're seeing, no, there's strong traction in everything that comes when it comes to sovereignty, there's strong traction from both customers and regulatory, but definitely also from a fundraising environment?

12:25Yeah, maybe I start with one example. That's about AI inference. I mean, everyone's, when you're using AI today, you're shooting against an LLM that's hosted somewhere. And if you think about the government, any government in Europe, they will have natural concerns and regulatory concerns as to how they use publicly hosted providers that are not in Europe. There is already a wave of providers that will offer this with various models, various contexts, various security levels in Europe. And so that's just one very simple case where I'm excited. and that will happen all along the stack, right? You can think about how you deploy these models, how you inference them, how you secure them.

13:06Some people will try to do everything in one. So that's one. And then if you think about supply chains, for example, just highlighting pre-wave here in the portfolio, it's not just interesting for private sector to be more resilient when it comes to your supply chains, obviously just as important to Europe. And you can think about it from a COVID perspective, right? How many shortages that we have, right? And so I think there's an interesting opportunity just as much there. I just realized I'm doing a conference on robotics, which I should have invited you for. I'll follow up on that after. Sure.

13:39I want to talk to you about industrial software. What makes you focus here? Why is that important to you? So industrial software, I think we all see what's been happening with LLMs joining the physical world. It's called physical AI as a topic. And so LLMs or new generations of AI and neural networks start to understand the real world. And it's interesting how people now start to train this individual world to train machines how to use it. We see maybe you've seen some of these arms and hands that come out into the market and they become incredibly sophisticated. And so now that we see that, I think it enables a lot of manual use cases that were, you know, that, of course, could replace some human labor, but also do maybe human labor that wasn't possible before to some degree.

14:25So I think robotics in an industrial specific context is extremely exciting. I'm not so much on the, you know, bring your robot home wagon yet. So that's not so exciting to me. But I'm very interested to see how our industry, which has historically been very strong in the robotics space in Europe, will adapt to this AI opportunity. So that's an interesting question as to how the incumbents will play with the new entrance. Tell me a bit about the importance, and this is for those that don't necessarily understand the importance of small ecosystem strengths that are close to the firms that are coming out of that ecosystem.

15:09So as an example, you're in Germany. I believe you're in Munich, if I'm not mistaken. Munich is an incredible hub for everything robotics and industrial automation and so on. So maybe you can talk a bit about that importance. Yeah, actually, I'm in Paris just to be totally transparent today. You're always in Paris? Yeah, I'm most of the time in Paris and traveling from there ever since COVID. But we have two colleagues in Munich and one in Berlin. But to your question, I think it's a very important one, right? If you build, I take the enterprise software space. If you build any business process software in Europe, I mean, we have the most natural partner with SAP in Germany to work with, right?

15:50If you work in robotics, there are so many who work in terms of customer base, but also robotics companies that you should consider working with. And I think, again, just as our thesis is around cultural language proximity, that just as much works to the trust that you need to build when you're a startup and you need to find a larger corporate to partner with. So I think that's a big opportunity. Obviously, when you want to build big companies, you also have to think about your independence and your own path. But in a sense, to be close to a hub is very important. That's why we're all a bit envious of the Silicon Valley in a way, in many regards.

16:26But the opportunity for us here in Europe is a multitude in industry, right? So we have so many great industrial giants across so many sectors. And so that's really exciting. And that proximity is key to make the next generation fly. Stefan, I appreciate you're one of the younger GPs at the Ventec team, but I want to ask a question about the Vantec history as well, because Vantec was founded on the eve of the dotcom bubble. And that means, of course, that Vantec has been through multiple cycles. I'd love to ask you to comment a bit about the institutional knowledge that's built up over cycles and how you bring that to bear, but maybe also comment a bit on the current cycle we're in, whether we're in a compute cycle or we're in a hype cycle when it comes to AI.

17:11Yeah, I think my older colleagues bring that up occasionally so so and i think it's it's uh you know it's a it's a good you know it's something i really appreciate about about us and us as a team right like so i'm i'm just about 40 and then the team ranges into the late 50s and and so that really helps uh to to exchange right and and talk about things that have been but things that are also different now and have a very interesting discussion about that because that's that's the exciting thing right because almost all ideas have been tried at one point or another. And if they're being tried again, it's easy to say, hey, I've seen that.

17:49It didn't work. And then it's good to say, hey, but I have new data and let's have a discussion about it. And so, I mean, that's something that's very reoccurring at Ventech. And I think it requires openness and drive from everyone included, right? And so just like you said, or you were alluding to, you know, sort of say the first bubble and the current bubble, I think it's obviously true. I mean, people compare in terms of size and opportunity, but at the same time, it is a huge opportunity. So I don't see any, like if you use AI, any multi-agent step workflow these days, and you realize what that means, and the ability to just work with unstructured data across industry, that alone is probably as big as the internet opportunity.

18:34Is it overvalued to some degree in some instances for sure, guaranteed? Some people will lose money in some unfortunate situations. But overall, something very exciting is being created. And I think that's the opportunity, right? And that's why you have to find your own path and your own strategy in that context. I mean, it's historically the reason why we've not been the biggest backers of traditional GTM marketing games. But we've been always rather deeper in the stack and the B2B close to value creation. We don't fund any LLMs, even though we think that's very exciting technology. we think it's much more interesting to be closer to the customer and generate actual business value with the customer.

19:13I think it's a bit how you position yourself when you're flying through these waves over the years and then using what you've learned from the previous waves, which is really informative to that strategy in the new waves, right? And then have a discussion once again. Hey, I see new data. Should we do it this time? And that's always interesting. Are there any areas in AI that truly excite you more than others that you think this is actually quite open space right now? And are there areas where you say not completely steer out of it? Like as an example, the LLM level, it's gone. Its infrastructure is not like the winners have already been picked.

19:51And on the other hand, some say, well, consumer has already gone to open AI. We're maybe going to see niche plays, but we're not going to see anyone on the foundational model layer be able to compete. Yeah, I think the foundational model layer is something that's, I'm extremely happy that we have mistrial in Europe, but then other than that, it looks a little bit bleak, at least in terms of what we see in terms of VR, right? So we're not really focusing on that part of the space as an opportunity. And maybe you can just expand on why you're not. Yeah, I think it's extremely capital intense to a degree that's hard to fund in Europe, to be frank.

20:29I mean, we've come a very long way, but at the same time, capital concentration is not the same in that space as it is in the US. And it's fortunately or unfortunately not a question of talent because much of the talent that's being used to deploy these LLMs is actually coming from Europe and moving over to help these teams there. so that's in a way a big loss from a geostrategic perspective but as an investment opportunity the exciting part is if we think about DeepSeek and that moment and what it meant to the wider ecosystem at least that's when it became extremely transparent there's a drive to zero in terms of cost and if you look at your API cost per token call and the quality that you get in return it's been drastically improving it continues to improve, the competition continues and and so it's an interesting moment to build on top of that right because the counter could be hey this is all vc subsidized it might be more expensive down the line to infer tokens and insights but i don't think so i think the the efficiency the computational efficiency is just getting better and better and we will see ai throughout all interesting business processes where it makes sense to apply right to leverage that it's not not by all means done in a way but But the opportunity is right there right now.

21:48We have teams working on trying to build a very interesting box around NLM and do interesting things with it. Stefan, since you're in Paris, I got to ask you. I don't want to ask you about Mistral as such, but I'd love to ask you about what you infer from the ASML backing of Mistral. What's the thinking there? I'm sure that's something that has been discussed heavily in your Paris office. So I'd love to hear your take on that whole, and for those that, of course, I think for almost anyone, it's top of mind, but ASML just invested 1.7 billion in a Series C of Mistral. Yeah. To me, this is fantastic because it means we're building around our own geostrategic interests.

22:35So I think, I mean, if you look deeper into the value stack of ASML, you look at size, I mean, it's a truly European story, right? I think I can only encourage everyone to check out ASML and what it means to have something like that in Europe. It's such an incredible story. And for them to go behind Mistral and say, hey, it's strategic for us to be part of this story and make sure we do have something fundamental here in Europe on the LLM side, that's a great sign of strength, right? And I think as Europeans, we have to think more along these lines and use this opportunity to now build up fundamental things that we maybe neglected in the past because we just always were sure we could get them from elsewhere.

23:16And so that's going to be a bit painful because it's going to take us some time sometimes, but it's an opportunity nonetheless, right? So we need to have, and so by the venture models, also so useful here, you know, to have five, five or seven years to, you know, build a new technology out and bring it to market. That's exactly what venture is for, right? And to now bridge these gaps. Let me ask you about the next 10 years. What do we need to get right in Europe? Do you think, what's the role of Vente? in the next 10 years? Yeah, we're continuing our strategy. So it's going to be more of the same, like a continued re-evaluation all the time about new sectors coming up and enhancing our focus, making more early stage investments because that's historically what we've focused on.

24:01You know, usually seed, Series A. What used to be Series A is more seed today. So that trend will probably continue. We'll see what that means. Maybe the next fund will have to, again, to be a bit larger. But for the moment, we're very, very happy with that bun size. What I'd love to see, what I hope for Europe is in a way that the growth capital that was so much arriving in that last hype and dissipated a little bit will find a new consistency to grow. We don't need the big wave in a way, but we need continuous growth and sustainable ambition to be able to fund through. And then our probably biggest weakness, and you've probably discussed this in various points, is the financial markets.

24:47We have a big gap here in Europe to bring markets, to bring public companies to public markets. And I wish we had more strength, more concentration, that we have something in Frankfurt and in Paris and in the Nordics and Stockholm. But does it really make sense? That's what I'm wondering. Yeah, you bring up a very important point there. There's the IPO market on the one side, and I think that we are all backing and screaming in the venture ecosystem if we could just consolidate, agree, let's put it one place and actually get behind one core strong market. At least I think the majority of us would dream of that scenario.

25:22I don't think any of us can see the path there easily. There's another part, though, that I'd love to get your take on, and that's, of course, the M &A market, because that is also a bit missing. For some reason, even though we have a ton of large corporates and banks and so on, that could actually be very active M &A actors in the market, they're not really stepping in. Do you have any view on that and what we need to do to get closer there? I think that's a bit correlated to the wave we're currently in. So when you see cash being tied for a moment, then it affects the corporates just as much as the public markets.

26:02it's a matter of cost of capital. I think they will come back. They've all built more strength and more capabilities in that space and function over the last 10 years. So I don't see the M &A functions issues these days, you know, the inactivity be a long-term issue. I'm very excited or very, very confident in their capabilities that they've built over the last 10 years to continue investing. To me, the gap is more on the financial market side. I think the moment we have more fluctuating, more functioning, more liquid markets, I think investments and acquisitions also become more reasonable and more obvious.

26:49If you know that you can sell something that you've bought, which is today not so obvious, then it will become much easier. And I think there's some other very interesting initiatives that will help on this. If we think about pension funds and how these are being used, And I think these are continuous discussions all across Europe. If we can just allocate a little bit more of that, you know, towards building exciting opportunities and funding them, that will also be a huge booster, right? And I think the right ideas are floating. So let's see how they land. We're actually kicking off an initiative specifically to try and help that along.