E682 | Sean Mullaney (Seapoint) & Will Prendergast (Frontline Ventures): Rebuilding Europe’s Startup Financial Stack with an AI-Native Playbook

0:00Welcome back everyone to the European Easy Podcast. As you know, we're trying to go behind the craft of building and backing venture-scale companies in Europe. And today we're joined by Sean Mullaney, former CIO at Stripe and now co-founder at Seapoint. And Will Prendergast, founding partner at Frontline Ventures. Seapoint has just come out of stealth with$3 million pre-seed to rebuild the fragile financial stack European founders and also, of course, larger-scale companies rely on. With a team shaped by Stripe, Tide and Years of Seeing, where systems break and backed by operators from Revolute, Tide and Tines, we're exploring conviction, risk and what it takes to build financial infrastructure that doesn't collapse under pressure.

0:43Before 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. Starting off, HSBC Innovation Banking. If you're a founder, a scale-up, or a VC, you need a bank that actually understands your world. HSBC Innovation Banking backs innovation globally. from seed to IPO. And if you ask me, a strong banking partner like HSBC belongs in your stack.

1:18If your portfolio companies are scaling, they need infrastructure that won't slow them down. Google Cloud Starter Program offers$2 ,000 to$350 ,000 in credits, plus technical support to build better and faster. It's a key boost every fund should bring into their ecosystem. And oh my God, are we thankful to be partnering with them. Now, legal is a space you cannot lag on. legal needs to move at the speed of venture. Goodwin's team has decades of experience with startups and funds. They're trusted at every stage from formation to exit. Goodwin definitely is a legal partner every serious manager should have in their stack.

1:54For Luxembourg-based VC, PE and Fund of Fund Managers, modern funds means going digital. Fundcrafts gives you a full service, digital native platform built for today's European managers. It's a must-have if you're scaling smart. So we all hear about the Middle East. How about you go there? From AI to deep tech to summer funds, Gaitex in Dubai is where global future of tech gets negotiated. It's not just a conference, it's where East meets West, capital meets innovation, and the bold set the agenda. If you're playing on the global stage, join us going to Gaitex this year. If you're gearing up for your next fundraiser and want a placement agent who truly understands emerging managers, reach out to CFunds, their boutique placement agency that has helped GPs across Europe, raise capital from top tier LPs.

2:36We've been on the other side of the table here. They are actually good ones to work with. So I do urge you to go to cfunds.io to go and check them out. And hey, before you go, if you're looking to discover startups, raise capital, or connect with innovation leaders, do check out dealflow.eu, the EU-backed platform, bridging founders, VCs, and corporates. There's no better place to find the startups that have received significant funding from the European innovation ecosystem. Finally, tear 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.

3:25Sean, you just said I've pitched this a million times, so I'll ask you to do it one more time. Tell everyone what you're all about at Seapoint. Yeah. So our mission is to be the financial home for European startups. So I've spent a lot of time, I'm a founder myself. I founded three companies back in the early 2000s as my fourth business. And I had spent a lot of time with founders, both as a scout, as a mentor and advisor. and every time I talked to the founders about how they were running their business from a financial standpoint, what became clear is that there was really no clear financial stack and there was no clear financial software out there that helped them run their business.

4:03The amount of pain and frustration they were experiencing, we used to joke in our customer interviews that the level of profanity that founders would use when they describe all the different banks and spreadsheets and accountants and manual processes they had to deal with. Founders are not just like frustrated, they're just like emotionally really upset with the situation. And so I've been spending a lot of time with founders and, you know, I really thought that we could do better. So at Stripe, I kind of joined when there were about 10 folks, we built the European payment system here for Stripe.

4:34And what I realized is, is that there was a moment in time right now where we can actually build new financial infrastructure in Europe very fast because we have a lot of banking as a service and other financial partners that you can build on now. And I'd also just come off of a role where I was the CTO at Algolia, and we just implemented one of the first AI search engines. And so I knew that AI was one of the core kind of why now principles about how we could help founders automate finance in their business. And I definitely think we should get into the playbook of building in an AI native startup, because you've seen both building pre-AI and building now with AI, I imagine it's quite a different journey.

5:12Maybe, Will, you could just say a few words about your first conviction moment, the moment where you saw what Sean and team is doing at Seapoint and thought, we've got to be part of this. I guess I was lucky enough, first of all, to get to know Sean in advance of building Seapoint. We never had worked directly together on the same company, but he'd helped me out on due diligence on a bunch of companies over time. And so you get to form a view as to who's insightful about topics. And so a number of the companies that looked at it, you know, he taught me different ways of looking at those businesses.

5:44And so I thought, OK, here's a person who thinks he looks at things differently. And so when he came, you know, when he came to me with this business idea, it's funny. Often as a VC, you kind of opportunities are obvious in the market, but you see teams coming along, all approaching it in similar ways. I think back to Mark Cummins in Pointy when he came to us first it was he was trying to make offline products searchable online and you know I probably had seen five or six companies that were doing the same way and then he came along with a completely different way and we went like okay different way of doing it insights and great team and so the same was true of Sean we I think back to the Silicon Valley Bank moment where everything got kind of upside down in a couple of days and we went to all of our companies and said like where's your money what are you doing and that was a revealing moment in time people had money in lots of different places and you said okay like we're going to come back to that tomorrow it's not stressed today but it became obvious that like it was a real patchwork of what people were doing there was no kind of default answer and you started then understanding that as sean said the people going through to manage their finances so so really it was about finding a team that you felt gonna change things in a fairly significant way.

6:58And yeah, that was when we met Sean and he started talking about AI intersects with some of the infrastructure that's now available to build applications. But we thought, okay, this is the journey we want to go on. Now, Sean, let me ask you, you said it before a bit about the headaches of startup founders, but maybe you can describe it completely clearly when you ran early discovery, what were the failure points that kept resurfacing? And maybe also I imagine that the strongest example is exactly the Silicon Valley bank moment where we had everyone struggling. Well, when you talk to founders about how they run finance today, the first thing is they have a very fragmented and custom financial stack that they've built from day one in the company.

7:39So if you think about a founder who's raised two or three million, it's a seed round. They'll typically have a kind of old school legacy bank where they will store their venture investment. It's considered safe, but actually the user experience of the product is just so bad and so painful to use that they literally can't do anything in it apart from make a payment. So they turn to the neobanks and think, okay, well, this will be easier to use. And what they realize is that the neobanks make it easy to open a bank account, but actually the level of service and support and the AML policies and things like this means that actually the And Neobank doesn't help support them very well.

8:21But it has a great user experience and it works on a mobile phone. So they end up using that for day-to-day payments, basically. They then turn to an expense management and a cards platform. There, they're able to submit their receipts and do their invoices. They turn to an FX partner in order to manage multiple currencies. And finally, they look for someone to help accept payments. So someone like a Stripe, for example. And so the typical founder has probably about five different financial products that they've stitched together in the stack. And their money is scattered across each of these different five accounts.

8:54They have to pre-fund many of them. They're constantly sweeping capital between them. They have no real-time visibility of our cash position. And all of their transactions and spend are also distributed across this, like, ledger of five different banks. So then what they do is they turn to the accountants, and they bring the accountants in, and the accountants spend, you know, a lot of time at the end of the month pulling hundreds of different bank transactions from these places and trying to reconcile them, categorize them, do the bookkeeping, the that. But typically the accountants don't know the business.

9:25So what happens to the founder, you end up with a spreadsheet of like 60 transactions. You have to now support the accountant and tell them who they are, where the invoices are. And just finally, there's no visibility really on how you're running your business and what you're spending money on. You might get a PDF a few days later, sorry, a few weeks after the end of the month. And the founders really have no clue about how they're spending money and what's happening. And all of the core processes, whether it's like payroll, it's VAT, it's invoice reconciliation, it's paying suppliers, it's all done manually in spreadsheets.

10:00And the number of founders who just told us like they've forgotten to pay a supplier, it's buried in their inbox, or they didn't run payroll on time, or they're missing like half of their invoices. And the other thing is that over half of them aren't earning any interest on the millions of euros that they've received from their venture investors because it's just so hard to get a treasury account in Europe right now. And even if you do, it's a sixth account you've got to deal with. So highly fragmented, they're running this custom finance stack. And often another solution is they hire a finance person way too early.

10:32I've seen, you know, it breaks my heart to see a founder hire a full-time finance person in the first 10 people in a company. because that's a seat that a salesperson, an engineer, or a product person could be taking. Maybe you can comment a bit on that, Will, because you've seen many founder journeys as well. And thus here we have a startup that is focusing specifically on helping founders on their journey on this side of the problem. Maybe you can talk a bit to your understanding of the issues around finance and the importance of solving this. Yeah, it's funny. I think in the venture seat, you're somewhat shielded from the day-to-day fatigue that goes on with managing these things.

11:09So I think the more time I've spent with Seapoint, the more my eyes have been opened as to the waste of time that's been going on in the background. So actually, I'm motivated for many reasons. One is the financial investment. Another is just the accelerating companies where the founders aren't kind of dragged aside to kind of deal with some of this stuff. But it seems the more you spend time kind of working with Sean and Seapoint, the more obvious it becomes that, of course, there's like one fan should be one financial home for all of your activities in the same way that if you've got a you know a sales stack or a technology stack like there's one place where everything is and so i think people have just accepted things they're kind of going that's just the way it is like i just have to deal with this you know i'm going to try and solve these problems i'm trying to change the world i'm not going to try and change the banking system thankfully sean stepped in as uh you know superman from seed points to uh to solve the problems on their behalf But I think they have been accepting rather than loving this.

12:05And if you think about it, like across Europe, there's just, you know, there are thousands of banks, you know, in any country that we're based in, you know, you think about the five or 10 banks that you might go to open up, but there are thousands of business banks. there's just so much opportunity there in general, starting with startups, because they'll be early adopters of the technology and get great feedback. But longer term, there's just such a huge opportunity to change how companies manage their finances. Well, we've done a full episode before on the power of frontline being investors, both in the US and Europe.

12:41And I'd love to ask you just to comment a bit on, because we could get caught up in thinking this is a solution to a European and problem because we're fragmented and so on. But I know that you're using your US presence and focus to also have an edge in terms of understanding what's going on in the US, what's actually important and viable there as well. The thing that we looked at a lot when we were looking at Seapoint is just the developments within AI. So how do those apply to fintech? How do those apply to the financial stack? And so as we looked into the US market, we were seeing some things happening.

13:15but actually what Cpoint were working on seemed to be kind of more advanced in how they were thinking about it. So, you know, the classic why now question, I think was, is kind of somewhat obvious, but finding a team that's thinking in a very forward way about it. Yeah, we just weren't seeing that as much in the US right now. And this is why, you know, we wanted to work with Cpoint specifically. And even like, Sean, it's worth going in a little bit about how you manage your team to embrace all of the aspects of AI, because the different founders that we work with are trying to figure out what does this mean for them internally, never mind their product and how it works, but how do they orientate internally?

13:52And I think Sean and team have been doing it quite differently. Yeah. And our approach to solving this problem is not just create another bank account. As Will points out, there are like 5 ,000 places you can store money in Europe. And it's really approaching the financial processes that a founder, a startup that's scaling has to adopt. And so when you look at financial processes first, it's really clear that you reach a scale limit when you're in a business. Like if you're a plumber or a gardener or run a coffee shop, there's not a lot of financial processes. You're a small business. And that's where the neobanks have been able to serve the market well.

14:28But as soon as you start to scale your business out, you've got 10 or 15 employees, and you've got hundreds of bank transactions and monocle suppliers and taxes. What's fair is that AI is the solution to be able to automate at scale these types of financial processes. So we've tried to look at every single one of the core financial processes that a founder needs to run their business and take an AI first approach to solving it. And one of the really exciting things in the early days is that we didn't know it was technically possible. And I think this is, if you're building an AI right now, you have to accept that technical discovery is a really important part of your product development process.

15:03Just trying a bunch of stuff and finding out what works today. And then, you know, you have to retry as well. Every three or six months, the models change, the architectures change with agents. And you have to do a new technical discovery process to find out what's possible. And when you see something promising, you then have to double down on it in terms of trying to get users to use an early version of your AI so you can collect data, You can get real-time feedback from humans. You can create training and evaluation data sets and then optimize the AI and the processes again. So it's a very different kind of process than a typical kind of software development process where you're like, you spec out a feature really clearly.

15:44The engineers go and build the feature works. So it's been a lot of like, you know, exciting experimentation. And some of our early results and how we're kind of like automating invoice payments, automating kind of like management reporting. it's been incredible to see how great AI is actually taking these tasks and then literally a matter of minutes automating it for founders and I think also you know Sean's been getting the team to allocate time to go and explore the tools which I think is a hard decision to make so everybody's trying to ship ship ship you know so take the time out to and I think we'd all probably like to do that but I think the culture and z point is go explore spend a week going deep on this new technology and what might that mean for us and and so i guess as an investor in the investor seat you're seeing that investment in that kind of discipline of exploring these tools pop up six months later where you know they're they're doing things that you didn't imagine that you know the team would be able to it was one of our hypotheses when we started cpoint was if we fully embrace ai agentic software development that we'd be able to ship a large amount of product with a small team in a short period of time.

16:53And in our first nine months, we've been able to automate three of the core processes, bring business accounts online, and build a product that honestly in the pre-AI era would have taken us two or three times longer, probably with two times the number of engineers. So it's been incredible to see the early results of it. As Will says, last week, we just did this experiment where we asked our engineers to stop building features and figure out how we can take Figma designs from our designer and automate the creation of front-end components in a production level quality. It's been experiments like that that keep our software development and our product moving fast.

17:30And as a startup, speed is the only major advantage you have against your company. And I'm obsessed about trying to get the team to take the time to figure out how to build stuff and find processes and hacks so that we can move as fast as possible. I'd love to ask you both about the consequences of this, because here you said very clearly, I was about to ask a question about what is the impact on pace of development and what is the impact on the team that you need and thus the recruitment needs and thus also the funding needs and so on. But you've said very clearly, well, here we're shipping faster and we're shipping with fewer people.

18:07So I'd love to ask both of you to reflect a bit on the impact of this on the venture model. And maybe I'll leave the venture model to you, Will, but you could talk a bit, Sean, maybe about, well, now that you are seeing that you have all of these productivity gains and the speed gains, did that make you think differently about the money that you had to raise in this round and maybe the money you'll have to raise later on and the scale at which you want to build? So on. Yeah. And I have a kind of contrarian opinion on this, which is that a lot of people say, okay, well, you can build faster with smaller teams.

18:41So therefore, go and raise less money, right? Have smaller teams and just deliver faster for a smaller amount. But the way I look at it is every one of our engineers, the return on investment of having a new engineer to our team, just like quadrupled. And what it means is, is instead of like bringing the same ambition level and bringing it in with a smaller amount of money to smaller timeline i would rather look at it and say we can massively expand the ambition of what we can do we can build four times as much product right in the same time period the same team and actually when i think about what's the roi of bringing on a new engineer it's substantially higher now than it used to be so therefore like the calculation of the value we can deliver to customers by expanding goes up oh you know a lot and so actually i think it the counterintuitive idea is we should go out raise more money because the roi of us investing a product and value has just increased massively we should just expand the ambition of what we're doing rather than keep the ambition same and then you know reduce the number of people of capital yeah well uh reflect on that specifically what you see across the portfolio and then we can go to the venture model afterwards which is a bit abstraction level yeah i'm lucky enough to have a kind of a sideline sees um with you know the companies that we we work with and the journey over the last let's call it nine months on this productivity question it's funny i remember receiving a text message like late at night from sean i think it was in like september last year it was like you know some profanities in there as well but like this stuff is amazing i can't believe the productivity gains that we can get out of this and it feels like since then it's kind of been on a little bit of a roller coaster which is and i remember sean you talking about the the moment when the next moment when you realize It can get us 80 % of the way there, but the last 20 % is hard because we don't know how we did the first 80%.

20:33So we're kind of going backwards again in order to go forwards. So I think it's kind of been a bit of an emotional roller coaster to understand what is the true productivity gain. What I find interesting is there's different types of teams. And I think some teams are very in the tools, hacky, changing tools every week. And then there's some people who are not really embracing AI properly. I think what Cpoint have got right is they're investing heavily in understanding the tools, but are thinking about production-grade scaled systems. And you need that. And I think those are the companies, and when we're looking at teams, it's like that's what we're looking for, that kind of magic intersection of this has to work at scale in production and let's say in a regulated environment.

21:14But that doesn't mean that we're not going to go super deep and be on the edge of all of these new tools. I don't think anyone could answer that question properly six months ago, but I think we can now see it. But it is only those teams who are stepping back and saying, how does it change the software development lifecycle? And if we understand that and where it intersects with that, now we're on the path to true productivity gains rather than prototype productivity gains, which is where we were six months ago. Sean, I'd love to ask you, because you've seen kind of the growth of startups before, obviously, with Stripe, an incredible journey.

21:51Could you contrast a bit the talent that's needed for a startup that's building today versus earlier? Because I imagine that when you do experimentation, that also impacts culture, of course, and where you as a leader lead the team. but it also definitely impacts the personalities and the proclivities that you want to find people that have. As we built the early team here at SeedPoint, about half the team were at Stripe, which really helped in the early days. And we're starting, we have shared culture, shared value, shared quality bar in terms of shipping production products. We also understand how to build financial infrastructure.

22:30The area where you're talking about is like when I interview folks, I spend my entire interview talking to them about how their job has changed through the use of AI. Everyone who joins Seapoint has to rethink the role based on how AI can make it more efficient, higher quality, higher velocity. And whether that's obviously from the engineering side, I'm looking for folks that are deeply curious about experimenting and trying new things and doing technical discovery work. because that is going to be the difference between us like kind of experimenting, discovering and figuring out what works and what's differentiated.

23:05Not just folks who are great at shipping a feature where a product manager and designer have like specified really clearly. So we tend to skew higher in terms of the seniority of the folks that we hire. And what we're finding is that like senior engineers with the AI tools are able to own feature development and shipping and discovery work kind of end to end like it used to be that you meet a team of two or three folks one one who was doing front end one that was doing back end one that was maybe doing some ai and the coordination overheads of three different people trying to time them get them to collaborate and just slowed everything down and now we can hire a more senior engineer who can really understand the technical design product problem and individually with the use of agents ship the entire feature end to end.

23:51It's interesting to hear, Sean, because we're literally now hiring on the content creation side. And I'm seeing the same thing. There's a whole group of potential hires that are completely ruled out for me. And if I should call them one specific group, I would almost call them journalists. Because you become a journalist because you love writing and you love the craft of writing. But it's just, that's not what you want anymore. You want people that love the output of writing and are perfectly fine having chat gpt and and other things doing that for you and then what you're doing is overseeing and making sure that you produce at a higher level and and so on incredibly interesting to see how that it plays out in the same way but in two completely different industries the same with engineering is in like every single role you become a expert in a craft an individual contributor has spent years getting experience being the best at the craft.

24:47And now with AI, your job kind of turns more into being a coach, a reviewer, and the person who's coming up with a high level strategy and structure. I kind of like describe it as a senior engineer. Actually now that you're, you're more like a staff engineer or engineering manager, and you have like multiple junior developers who you're coaching who are the AI agents. And your job is given the context to give them clarity and to give them the feedback so that the agents can do their job better in the future. Sean, you had a comment on seniority before, and I see that as well. Another thing I see that I'm also very much looking for lateral thinking, so to say.

25:27I don't know if that's the right way to call it, but the capacity, because you're able to have 30 things running at the same time. Some people really thrive in doing three things every week, and that's what they really nail. and then there are others that are really good at having 50 things going on at one time and remember to come back to them and proceed i'd love to hear both of your take on this will you're about to say something go yeah just it's funny because internally in frontline we talk about the the team that sean's brought on and you know when you talk about ability to move across a lot of topics that's often what we see in founders and so the the people that sean's hired into the seed point team like a lot of them we would back you know frontline would back as founders themselves.

26:09So they're of that caliber. And so I think, you know, Sean has hired this kind of founding type team with that level of curiosity and ability to move across to us in each of the functions kind of reporting into him. And that for us is a real force multiplier. So it's like having a portfolio of investments within one investment. You can see that the hiring kind of bar and style is quite different in Seapoint. Yeah. And, you know, typically in a startup pre-AI, you would have probably hired a lot of junior folks to do the work. You kind of pay them less, the salary is lower. You can just throw tasks at them.

26:44They get stuff done. That's how you move fast. And I do think now when folks are doing startups, it's better to have a smaller number of, as Will said, you know, kind of generalists who could be founders who can take ambiguity and ownership and are curious to use the new tools and discover how to do their jobs again. And I think with us, that's how we've been able to like build out cpoints so quickly is by focusing on more senior journalists and giving them the tools can you sean talk a bit about managing such a group of senior founder mentality people because that's very different well first of all like it's actually a lot easier as a founder when you have people that you know and trust can do the job my role turns from you know often the founder can feel like you are responsible for everything and you need to spend your time like micromanaging every single person, the company, what they're doing, checking their work, making sure that they're on strategy, they know what they're doing.

27:40And that can be exhausting and consume all of your time. I think when you have more senior folks who have like autonomy and, you know, can handle ambiguity, I feel a lot more like I'm a kind of support to them. So like my meetings every week are much more like, how do I help you? Like I'm there in your service. your job is to do the great work and I'm here to help you do it, unlock things for you. And they're obviously still things that a founder is uniquely placed to do. But I think that list is much smaller now when you have folks that are really, you have that founder mentality and you can trust them to like run with stuff.