E701 | Andy Lurling, Lumo Labs: Smart Capital from Eindhoven and Investing in AI for Health

0:00Andy Lurling:Welcome back, everyone, to the European VC podcast. Today, we have another one of our awesome pitch episodes. And we're having today Andy Lurling, who is the founder of LUMO Labs, and he will talk to us about the LUMO funds.

0:16Andreas:From first time to seasoned investors, the EU VC syndicate is not just about capital. Get involved, co-lead deals, share insights, bring in great people, and help shape the pipeline with us. Visit eu.vc forward slash syndicate to learn more. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured.

0:38Andy Lurling:Andy, welcome to the podcast. Thank you and great for having me. Thank you. So Andy, your website is lumolabs.io, not.vc, not.something, and you also have labs in there. Tell me just why is it labs? Why is it.io, not.vc? Can you talk a bit about that?

0:54Andreas:Yeah, of course. Actually, currently we are preparing our new website and it includes VC. And that's of course then starting with the name of the funds. We have labs in it and we are called LUMO. LUMO is Esperanto, Lento and Latin for light and enlighten. And that's for us a wink towards where we originate from, Eindhoven, the city of the origin of Philips. Amtronix and they started of course with the light bulbs labs because we started off in one of the labs of former FIBO's buildings labs because we invest really early stage even spin outs from knowledge institutes with tech transfer and yeah it all starts in the lab and we'll spin it out from the lab in that sense.

1:47Andy Lurling:Beautiful amazing Andy let's talk a bit about yourself in the firm how old are you what number of fund how did you get into all of this yeah i'm a so

1:56Andreas:called entrepreneur turned investor had my company sold it after taking it easy for a while together with my co-founder we thought like okay we we have to do something and we didn't have a good idea to have another startup and then we were thinking what do we have well we have all experience the network the knowledge and some money so we started kind of an angel vehicle to invest angel tickets in in some startups and give them a bit more guidance than than usual sharing our expertise network in that sense tell me tell me andy let's try dive directly into that

2:35Andy Lurling:your background tell me about the company you founded back in the days and some of the angel investments you've done, who backed you as angels, that type of thing.

2:42Andreas:Yeah. Yeah. So my company, the name was called iOpener and we developed an algorithm and had impacted the technology to bring satellite navigation data together with gyroscope data. And then you get a beam of data points and the algorithm secures that the most logical max data point was found. and therefore you could very accurately track and trace high-speed objects. We received the first investment from the European Space Agency, because think about rockets and satellites, etc. etc. And we grew from there, ending up also in the motorsports industry, where we could define ideal lanes and track and trace abnormal behavior.

3:33Andreas:And then you go quite quickly towards safety systems and young driver academies think about those kind of applications.

3:41Andy Lurling:Talk a bit about the late stages of the journey. Who did you sell to? How much money did you make yourself? Of course, as an LP tuning in, you're going to be like, who have you made money for?

3:53Andreas:We sold our company to a competitor there. and the amount, I believe, was undisclosed. Let's put it that way. I always say it was not a Silicon Valley exit, though it gave enough freedom to start something new and enjoy life. Let's put it that way.

4:14Andy Lurling:I think that's a beautiful statement and anyone interested can then ping you for more.

4:19Andreas:And I also have to be very honest. Sometimes it's always about timing We had our company in the midst of the financial crisis. So, and although we were not a fintech or not related, for instance, to get to the US and get investment to there, what people have been doing the last decade, was at that point really difficult. So timing is everything, good time.

4:49Andy Lurling:That is learning that many in our industry have had to make a couple of times.

4:54Andreas:Yeah.

4:55Andy Lurling:Then let's shift to your angel syndicate. How many investments have you done as a team, you and your co-founder? Did you do any, have you done any that really stand out?

5:04Andreas:We have done five investments and that's not too much. But already very shortly after that we started, we were approached by one of the richer persons of the Netherlands who owns the Hitek campus in Eindhoven, the former Philips R &D site. and we were in the city center of Eindhoven in a lab, in a small lab. And they want to bring us to the Hightech campus, which is like the smartest square kilometer in Europe. Some say the world, but we believe Silkeveli has a bit more patterns than here in Eindhoven, but it's a very good second place globally, I believe. And then we had on the other side the private development agency, regional development agency coming to us and they say, hey, we like what you do, you invest.

5:52Andreas:But in that early stage, it's not only about money. It's also about helping and guiding those new startup founders to bring the companies from startup to scale up. And they want to collaborate. And that's how the idea of a fund started to exist. And that's why we, after a few investments, immediately went into the opportunity of setting up a fund with two cornerstone investors.

6:20Andy Lurling:I love that story because it's how I always describe kind of if I were ever to create a fund, I would not do it before I have so much pull for it that I cannot not do it. Because the journey to becoming an emerging manager and getting off the ground is just so, so tough. And honestly, if you don't have people around you with money that wants to invest, it's oftentimes like it's going to be maybe you can make it happen. And a lot have and congrats to them. but the personal sacrifices that you have to make to get something off the ground if you don't have say 5-10 million around you're ready to go it's a really hard journey and my personal private choice would be i'm not doing it no and in the meantime i've been in contact with a lot of people

7:04Andreas:who wanted to set up funds and and i guess we were lucky because we had the opportunity to become a fund before we really started to think about wanting to set up a fund and what you what you said and with the first front which which was 20 million we made 23 investments really pre-seed and early seed stages and i think we did pretty well as in bringing those companies to the next phase because we don't have exits yet which is not to be expected if you invest that early as we did with the first fund so with the second fund we had immediately 80 percent of the LPs of the first fund that said okay we want to invest also in your second fund and that was for us a really a good starting point again as you said to do a first close of our current fund where we are still fundraising.

8:01Andreas:We performed the second close now last December and we are just over 40 million now going towards a 100 million fund, hopefully before the summer, but most likely it's going to be just after the summer.

8:16Andy Lurling:Timelines are always very dangerous to communicate openly when it comes to funds, but at the same time all LPs need to know because all LPs need to manage their capital and how to prioritize things.

8:28Andreas:And absolutely yeah, but of course we need the money, so it's good to fundraise. But I think the real value of us as fund manager is in deploying the money and and helping the companies to get to that next phase and eventually to an exit, of course.

8:44Andy Lurling:How about Andy, we pull up your deck now and you can just maybe shift quickly to slide two where you get a bit of an overview of what the second fund is actually about.

8:53Andreas:Actually, our first and second front have more or less the same focus. Only one thing we made more explicit in that sense. We always said, if we're going to invest, we want to be smart capital. And back in the days when we had our own company, we called it algorithm. Now we call it AI. So my background is data science and therefore we, we, every 26 year old person is a better developer than I am. but I understand the construct in that sense. And that really helps in selecting, but also in supporting. So we invest in digital deep tech companies, which nowadays are AI, AI, AI, and AI, of course, but then also cryptology towards digital security and internet of things.

9:43Andreas:But then you have to think about the infrastructure layers and the operating systems between the sensors. We are software-focused only. The last element that we invest in is augmented reality, as we call it, the display of the future. But it's always nowadays AI plus one of the other technologies. Let me just clarify one thing.

10:05Andy Lurling:When you say digital first and digital focus, does that mean entirely if there's capital expenditure, like real KPIs, investment hardware in it, you're not touching it? Or is it just, it's adjacent to you? If it's really exciting, there's a really good overlap with what you focus on, then you will take a look. But you are automatically wary of going into hardware.

10:27Andreas:We don't invest in hardware development. We don't invest in stock. So we have done some investments where initially it was a hardware component developed. But the scalable element should be in this case, AI platform. and the hardware is outsourced. So in that case, yes, we can look at it, but to keep it as simple as possible, digital deep tech, so as little as possible hardware.

11:00Andy Lurling:Makes sense.

11:01Andreas:We also prefer that the teams that we invest in can develop in an agnostic way, hardware agnostic way, so that they can develop for the different brands in that sense, because you don't know who the winner is, You don't know which clients work with which hardware. So it would be good and best. And that's what we're supporting also in the development process for the teams in that sense. But we are a digital deep tech fund. And when we started, we said, OK, we want to not invest in industry. But then we came across the SCG of the United Nations Sustainable Development Goals. We're talking about our angel period now.

11:40Andreas:So 2016, 2017. 17, and then we said, okay, let's invest in SDGs. And here we have 17, so we need to focus. As companies also have focus, we need to focus. We focused on health and well-being, which is our largest term nowadays, quality education, which is our smallest, and then sustainable cities and communities. And in the second fund, we added to this climate action, but we bring them together. so climate tech in and for the urbanized environment so we have a lot of good ocean funds investing in oceans we don't do that sky we can do it but it's not our our our clear focus we invest in climate technologies that that's that are there in where we work and where we live our sustainable environment.

12:35Andreas:And then you can think about examples, circular buildings, energy grid optimization, mobility, water management, very important, but also citizen participation.

12:45Andy Lurling:I'm always curious to understand why GPs pick a specific sector. I'd love to understand that from you both because some are very market-driven, some are very, this is where my network is, some are very technology-driven and think that this is exactly the space. Some say, well, for me to build a firm and a team that really builds up competence in a space, I need to have a specific focus, though my background is actually more general, but I want to build a firm that is really particularly strong in sector X or Y. How did you arrive at the focus?

13:23Andreas:I think focus is very important. And we arrived initially, what do we have around us? What kind of knowledge? said, therefore AI for us was a logical step on the technical side, but we have here Philips Healthcare around the corner. That's our neighbor. So we have quite a network in that sector and contacts. And therefore we said, hey, the digital health and medtech really will change due to the new technologies coming up. And we saw great opportunities and we saw also the opportunity to help. because we actually do two things, three things. We invest, we guide, and we are active in the ecosystem to help the startups again.

14:07Andreas:And we believe that some SDGs are creating ripple effects for other SDGs. And if you now look at how we have defined this, it's that we act on societal and environmental trends. Now, what are our major trends? costs of health are exponentially rising it's not affordable anymore and there's a lack of health workers so our focus within our health and well-being vertical is always focused on is bringing the cost down is is is is it helping with the health workers and and if you really look at that, we can only come to one conclusion, that we have to go from curing to prevention. And that's what we are focusing on with digital, with our health and well-being sector, is that we are in prevention and also in early diagnosis.

15:06Andreas:Because very simple, if you look at radiology and if you have cancer, but the cancer is like a year earlier or half a earlier detected by AI than it would have been by the surgeon. Your recovery time is so much better. You get less sick. You will be able to go back to work earlier. And it's less intensive for the hospitals also. So those are the elements that we are looking at. And if you look, for instance, at sustainable cities, It's around this time that around 68 % of the citizens on planet Earth are living in cities already. And we need to take into account that if you look at other reports, a lot of the sources from pollution, I believe also that's in the 70 % is coming from where we work and where we live.

16:05Andreas:So we need to have a systems changer. So it's really good to clean up the oceans, but it's actually not really smart to continue to clean up the oceans. It's better to not pollute the oceans. And that's more or less, we are looking at the source of the pollutions, and that's where we then want to create the changes. That's a bit how our vision has also been worked out.

16:28Andy Lurling:Andy, we have a commitment to make these episodes really short and quick. I think we've covered most, but before we close, I want to ask you, is there anything that you feel like you wish we had this set before we close?

16:40Andreas:Yeah, no worries. We have a diverse team, international team. We invest in Europe and more specifically in the Netherlands, Belgium, Germany, which we cover with the core team. And then we have also feet on the ground in Spain for Spain and Portugal and Scandinavia. and those are our prioritized markets. We can invest in other European countries, but then it's more opportunity deals. And as mentioned, we do actually three things. We invest, we have set up based on our experience as entrepreneurs, a coaching program. So we are not a venture builder, not an accelerator, not an incubator. Purely see it as a menu card based on three elements, four elements, sorry.

17:24Andreas:That's excellent leadership, product marketing, marketing storytelling and securing follow-on investment because typically we are the first funds to come on board but not normally in case of success the last and especially if you go from early stage to series a you get total different kind of vc on board and we are preparing the teams for that typically we invest in engineering teams so therefore that initially often the marketing, the commercial part is different. So therefore, we help them with also venture advisors to bring that element into their business and product markets, which we help with the first pilot clients based on our great hair and network.