E623 | EUCVC Summit 2025: Samuli Siren, Redstone: Mapping Startup Opportunities

0:00What if you could predict the next breakout company before anyone else? Redstone is doing just that with data. Samuli Siren joins Andreas to reveal how algorithmic deal flow is changing how European finds, funds, and scales startups. Data, data, data. That's all that matters when it comes to sourcing the days. We all need to have AI platforms. It's all about the sourcing edge. Is that true? Is it all bullshit? Is it just what we're saying to get some LP money? Huff, huff. for sure data is very helpful and we try to use it very intensively but it's it's not the only solution for the for the problem for sure so Zamuli I want to talk a bunch with you about mapping startup opportunities that's the title of this session we could also have called the deal sourcing scouting figuring out what's the next big thing tell me first and foremost at Redstone How do you do that?

1:01Where do you start when you think about mapping out startup opportunities? Well, we have our own built proprietary database called, or analytics platform called Sophia. We've been building it for eight to ten years now, which really was the problem we tried to solve was how to handle the massive deal flow as well as GoPro actively out and find companies. And doing it by Google is not that effective. So we started to do this and that is kind of the origination of the whole thinking. What you have to see is that you have very poor data in startups. The earlier they are, you can barely find them, you don't have data points, anything.

1:42So what we try to do and what the system is very good at is to identify groups and group dynamics, which is a bit of the key. So you can understand working capital for e-commerce, there is something happening, you find multiple companies, you get after the trend, what you're asking. Very often, so you can identify groups and group dynamics. You can barely identify which company is the best out of them. But that's very helpful and that steers you a lot, helps you in your investment strategy and brings you ideas how to move forward. Scale that back a little bit, what you just said, because I think many here would have thought you would talk about, well, you cut out a niche and then within that, or a vertical, and then within that vertical you think that there's then specific technologies that are on an inflection point and then you go out and find those that might be the best teams in that.

2:34What you're saying here, it's more cohort based maybe in terms of saying spaces in which there's stuff happening and it seems like we should be diving deeper. Well, there are multiple signals and it can be that what you say. I mean our system we can use that way as well. I can go really like and kind of filter it down to figure out those are the 20 companies to look at. But exactly, you can go differently and go, there is a change in the law which suddenly creates an effect that everybody's now doing kind of real estate broker systems. And you find them cause you to see that this is happening.

3:08So it's about identifying signals and through that identifying trends. But in the end, what it is, you just want to find comparisons as many as possible. So you send me a deck, the first thing we do is we put in the system and say, who else is doing something similar? And you get to see who are the other 30 people and company and people involved in that. And you try to make sense out of all that, what you get to see and compare a lot. That's what it's good for. The systems are very bad of giving you a single grade company and say, this is the one you want to invest in. That would be lovely, but we don't get there.

3:42So it's good for the first 60-70 % of the work. And then you have to do it manually, traditionally, as always. Can you talk a bit about how geo plays into this? Because oftentimes you see, I ask this question, because oftentimes you see VCs having geographically ring-fenced where they invest. Or you see corporates focusing more on their home markets. Geography shouldn't play a role in digital business models. And we kind of moved quite far away from that. Of course, it's easier to invest in Europe than in the U.S. But basically, if you go in the big AI game, you should invest in U.S. companies.

4:25We've done quite a few. Simply because they are the winners. They get the most money. And then you shouldn't think about the geography or your home market. That's in that sense. And even if it's a non-digital product, you'd still do your search of competitive rival solutions internationally, globally. Oh, yeah. And can you bet on a national champion or is that completely forsaken? For sure, for certain areas, you can bet for a national champion. I mean, some businesses are very local. I wouldn't focus then on those. I would look for global champions. They make better returns. What's the biggest mistake you see corporates doing in startup sourcing?

5:11Corporates, well, it's a generic thinking. They always have an extreme view on their own core business and they developed an idea where to invest out of that, which is a very bad guidance very often. So that is by far the biggest mistake. That leads to the chain reaction of all kind of wrong perception. They also very often see their own value and input they can give to a startup. Very wrong level. A couple of stores too high up. Samuli, you have a bunch of corporate LPs, despite you now talking some sour truth. How do you best communicate what you just said here to leadership teams at corporates?

5:58Well, there are solutions for the problems. That's a beauty. So, yeah, we have quite a few LPs as corporate LPs. And if you do things right, they can make very much out of it. They can earn a hell of a lot of money and they can get a lot of business input out of that. But they have to detach the whole thing out of really to see it outside of their own core business. maybe in fact see that as an exciting thing, that it's not so connected to our own business, open up new opportunities, frontiers, things, how to do things differently. We have our third generation of fintech fund and we have only German banks as an investor, which sounds very, very old school and very not flexible.

6:38But in fact, it's the opposite. So they're very open-minded, they don't get involved, they just want to learn, they want to see what's going on there. They don't really try to push their own thing in there at all in the whole fund and how we invest. And I think they gain the most out of it. And that's the way to do it. So, yeah. Samuli, this was a really quick introduction to startup sourcing from our VCEA. Very much so. Very intense. Two bold guys on stage. I'll close it off at this. And then we'll go to the final talk before we go to lunch. Okay. Thank you. Cheers.