EUVC #257: Greg Dewerpe of A/O on building Europe's biggest solo GP with 250m€ AUM and the opportunity of the Built World 🧱

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0:37with a unique access to some of the largest B2B customers in the industry. AO has a total of 500 million euros in AUM, an established portfolio of 23 companies and notable investments, including Span, PassiveLogic, Satu, Plentific, and Enter. At AO, Greg focuses on building world technology and positive transformation, like decarbonization, climate resiliency, and digitalization, in Europe and in the US, leads here to Series B. AO is also the first VC to ever join as a global innovator at the WET, which the attentive listener will know we are big supporters of, given our involvement with the Uplink initiative.

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2:35The nature of a problem requires a European response. Europe is a story of new beginnings. New beginnings. Let's start acting, acting, acting, acting. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. All right, Greg, with that little introduction, let's get right off where we always start our episodes, which is sharing your story about how you got into venture. Good to see you both and thanks for having me. So it's a little bit of an unconventional journey for the most part, where I started my career in investment banking at a time where it was still a cool thing to do.

3:20So pre-2008, 2009 crisis, it was a pretty traumatic experience for me. I had a great job. I spent the most of 10 years as an investment banker, but I hated pretty much everything about it. the DNA, the culture, and really what I thought was a very self-centered approach that we know it all and we're kind of the king makers. So when I turned 30, I had a little of a health scare, nothing too bad, but something that just forced me to bed in a hospital bed for a few days. And I decided now is the time to leave because I'm single. I only have myself to take care for. and if I'm taking a pretty kind of important decision to leave a well-paying job to go and figure it out, it's going to be a lot harder to do that they have a wife and kids to take off.

4:15So I did that. I left not knowing what I was going to do, but knowing at the core of my heart and my gut that what I didn't want to do was be a banker for the rest of my life. So I left and it took me a while to figure out what I was going to do, what my passion was, what my purpose was, and how I was going to get to that. When you leave a big organization like a bank, that's all you know, and then you go into the real world and you're a 30-year-old guy, it's tough. It's tough. It took me a couple of years to found my next step in my journey. I always knew that one day I wanted to end up in venture, backing innovation, backing the entrepreneurs with vision.

5:03But I knew it was not possible to go straight to that. I didn't have the credential to do any of it. So I started a real estate company that was initially mostly advisory, then became an investment company, which was tough. It took me a while. And just when I thought, that's it, I don't get my breakthrough i'm going to stop and i'm just going to go back to being a banker that's all i that's the safety one right i give up on my dreams i tried let's go back to to real life and just when that happened when i reached that point i had my breakthrough with my real estate uh company and then what followed is a few years of you know uh amazing success uh where i think we did more than six billion of transaction you know in in three years with that company advising investing deploying capital.

5:52And that was a transformational journey for me, both personally and the confidence that you get with that, the reputation, the network. And so I reached a point in my life where I could then afford to get to the next step, which is trying to build something for the rest of my life. And that was a venture firm, which I believed I had finally the opportunity to do. Can I interrupt you? Sorry, before you go into that part of your career, which will probably where we'll focus the rest of the episode, to be honest. I'd love to ask you, what was the inflection point with the real estate business? You just share like on the personal side, you're really almost about to give up and suddenly it went through.

6:36But we all know that that's how it feels, but it's very far from being the truth, right? All of it was a result of all the work that was put in before. And what was actually that inflection point? So you're right. It's the fruit of all those years of hard work that suddenly, finally pay off. But it was particularly one transaction. I'd worked on many transactions and you spend time, you spend resources, and then you think it's going to happen. It doesn't happen. And then you have nothing to show for aside from having spent time, energy, getting demoralized. And then there's one specific transaction that I've been working on for a while that worked, that went through.

7:14and that was a turning point for a couple of reasons. It gave me the energy to say, okay, I've cracked it. Let's now go all in in this. And it gave me the confidence that now I had done this and I really believe that when you approach certain situations and relationship and you're not confident, people can feel it and that usually drives a negative outcome. And I came to this really pumped and confident and I went on a call it a lucky streak whatever you want to call it and then everything I did for me here on was closed and success and one after the other and it's kind of a virtuous circle in a way of how you approach things, how you behave your body language, your success calls success and then once you can visualize success then it's a lot easier to replicate again, that would be my the way I would look at it Yeah, it's almost like a self-fulfilling prophecy, right?

8:13Honestly, yeah. Because, you know, when you're negative and you think nothing is working, the whole world is against you. You're very negative. You're in your bubble and negativity equals negativity also. So I genuinely believe that allowed me to snap out of this and look beyond. And so as you're so optimistic, you've thought about VC. I thought about VC, yeah. I thought about VC because I got to a place in my life where, okay, now I can project myself. I don't need to worry as much about the next day and the next payroll and making the next payment of my rent. And so I can focus maybe on having a longer term vision of what I want to build.

8:55And so I was able to repurpose a lot of my experience of building myself, building a business, doing it in real estate. having all my finance background and having this inspiration of making a difference, making a positive difference. It so happens that the built world with obviously the big role it plays in climate was a way for me to put that all together. So I decided that was my next challenge. And when I went around and said, hey, I want to do this. And people were like, there's no way. how could you raise a fund where you've you've you've not from venture you've you've never worked in venture you so basically it was everywhere i look was no no no you can't do it it's impossible you'd be lucky if you raise five million ten million so i decided okay that's it's cool i like a challenge uh i was very very clear about what i wanted to do and i was convinced that we had the tools to do it i just needed to go in and build and the vision was very clear like it's the largest industry in the world.

10:02It's the most polluting one and it's the least digitized one. So there's a lot to unpack for technology and for entrepreneurship. It so happens that I've done all those things in real estate. I had access to large real estate groups, family offices who had done business with me so they could be potentially anchor of that new fund. And they could be strategic because they could be consumer users of those technologies. So it all made sense, at least in my head. It didn't make sense for anyone else, but in my head, it made a lot of cents. So raised the first fund, raised 250 million euros for the first fund, which caught a lot of people by surprise, made me kind of happy to prove everyone wrong.

10:43I'm not bitter about the fact that people would doubt it. I actually think it's great because I can find motivation in people not believing in me. And so that was the beginning of it. We announced the first fund in January or February 2020 so just before COVID and what started as one person literally in a basement office so it's not like a it's literally it was a basement office is now you know we're 13 people we're not in the basement anymore we're on the first floor so we're moving up the ladder and we're closing in on 500 million AUM we're the largest prop tech fund in Europe and I don't know if it's true or not, apparently I'm still the largest solo GP in Europe in venture capital, which I don't take any pride in, but I know the industry likes those labels.

11:35And so not bad for someone who potentially couldn't raise 5 million. So it's a great journey. It's not as easy as it sounds when I tell it this way. It's a lot of hard work, a lot of sleepless nights still to this day, a lot of stress it's tough industry it's not as nice and rosy as anyone would like us to think and it's a very very long feedback loop so it can be a while before you know if actually are on the right track or not which which can be tough because you have no way to check yourself could I ask you Greg about that decision and I think hands down there's no doubt that you You are the biggest solo GP in Europe.

12:17My question to you would be why when you've grown to this size, normally, or even when you raise$250 million off the ban in the first fund, that would normally not be a solo GP structure. Could you share with us why you've decided to keep it like that? It's a conscious decision and has nothing to do with me wanting to hold on to economics or whatnot. The way I think about it, this was a firm that was built from the ground up, step by step, one person after the other. Every person that's joined this firm has, in my eyes, the potential to lead this firm and to be the face of the firm after me. So it's very important how we nurture talent inside the firm and to offer an opportunity for every single person that walks through our doors, that works with us, that becomes a team member to have no limits to what they can achieve.

13:12When I started the fund, I raised the first fund and obviously I set it up myself, put a lot of money in myself to set it up. It's a lot of sacrifices and investments, go raise the money and I build a team. And there was great people that obviously will work all together to build where we are. It's not like a single effort. It's not a one-man band by any stretch of the imagination. But my view was, if I'm going to open up the GP to this, I would like it to be from inside. I would like it to be from people who have gone up through the ranks and I've been part of the journey so far. I would not like, I don't think at least today, I think go outside and find someone to join into that GP because it can be really disruptive.

13:58It's hard to know the people before you spend a lot of time with them. And I think it sends the wrong message internally to the people who are working hard who have been here since the start. So what you'll find is you have a number of people in this firm that are going up the ranks. Some of them are going to become partners soon enough. and the plan is that by the time we go and raise the next fund i will no longer be the solo gp because it will be the natural progression for everyone that has been working out for the people that are mature and at the right place at the right time and that has served at a really inspirational part of our firm where everyone who comes in knows that they will get as much as they give.

14:42There's no limit. It's not top heavy. It's not all there's seven partners. And therefore, every additional partner eats in into the middle of the other ones. This is a flat structure. I want nothing more than for every single person in the firm to succeed. It brings me as much joy, if not more than some of our portfolio companies succeeding. And if we're successful in this firm, It will be by keeping our people, but also making them grow and be able to change their life through the opportunity that we bring. So it's not because I'm holding on to anything. It's also a risk, you know, when you've built something, so you bring someone else, the balance has to stay right.

15:23But also, I would say being a solo GP has allowed us as a firm to be very nimble, to make fast decisions, to navigate the storms, to navigate the difficulties of the market where you can make decisions faster. And I think we've seen between Europe and US in the last few years emergence of solo GPs. And some of them are performing really, really well, better than the ones who are becoming maybe more top heavy, more political, slower to make decisions. So I think the model makes sense. And by the way, solo GP does mean everyone in the firm, every single person that is employed at this firm has carried in the firm.

16:03I was about to ask you about your incentive structure because that's the important thing, right? And we could take this from the perspective of an LP, right? Because you've had tons of these conversations where people would ask, well, it's all right. I buy it that you own the firm. You're the only one who owns the partnership, but I need to see similar incentive mechanisms as I would in any other fund? I'm guessing that you've heard that from many or that you know that this is the thought process that's happening with the L.A.s. We hear it, not from that many, but we do hear it. And I think the way we express it, I think our carry structure is significantly above anyone else in the industry, significantly above average in multiples.

16:50So if you compare what we give in carry is two to three times what the industry standard is. So there's a real incentive there. For each seniority level. Yes, for each level of the firm. And frankly speaking, I also say there is zero value in the GP today. There will be value in this GP in fund four, five, six, seven, right? I'll have a lot more gray hair or no hair by then, but there will be value in the GP. And so it doesn't really matter if someone is in the GP today or not. It's not going to make any impact to their financial position because there's zero value to the energy P. And it's also down to how we run the firm.

17:30We're running the firm on consensus. Our ICs are running on consensus. I don't call the shot. Yes, I'm CIO. But we have an approach in the firm where it's not unanimous consent. It's majority consent. We have a firm belief that anything that's unanimous usually means we're not looking at this the right way when it's too easy to come to the same conclusion. Potentially, we're not using the right lens. And we're making collective decision on majority. And if we ever stuck 50-50, I will be the one who can tilt it one way or another. But so when you put that into the equation, it's a firm that's based on intellectual honesty, meritocracy, and transparency.

18:14It's a flat structure. There's no hierarchy per se. and in the end so it doesn't really matter who owns the GP today because it's irrelevant. Did you have Greg any other recurrent questions or kind of I don't know hindrances that LPs brought up given the solo GP structure that you could share some insights with other solo GPs listening in on how to navigate? I'll be honest you have firms that from LPs from the very first meeting will say we cannot do solo GPs. It's kind of firm decision. It's fine. There's nothing we can do about this. That's life, yeah. But I would say that's 1%, 2 % of the conversations that we have.

18:54I think the market has evolved a lot. And in the end, the key thing that comes is key main risk. What happens if you get hit by a truck tomorrow? Well, first of all, I hope I don't get hit by a truck tomorrow. But if I did, it's about having the right system, processes, having kind of, you know, who is having everyone responsible of their own kind of specific thing so the firm can run with or without me. That's number one. Because solo GP can mean a lot of things. It can mean a one-man show, one person doing everything. We're not that. We're 13 people going on 15. Trust me, there's a lot of things that I don't do.

19:35and I'm not responsible for, thankfully. The second part is I will always say, look, if you invest in this fund and in the LPA, you'll have key man risk. If Greg is no longer there for whatever the reason is, that qualifies as a termination event of the fund that LPs can decide to do or not. And so if they see that there is people that are taking over, there's succession, there's XR, it's well-organized, it's a well-oiled machine, they should be happy to continue by the way there are people in this firm that are substantially more smart than i am and that i will ever be and that they will be great at running this firm the day i'm either old or under a track but beyond that what i explain is if you invest in a fund with three l three partners three main gps and i'm an lp in a lot of funds myself usually a termination event would be the two of them or more no longer being there, right?

20:32Or one more than one. So what you could end up being in is in a situation where the main partner that you really is the reason behind you investing is no longer there, but it's not enough to qualify as a termination event. And then you're stuck with two partners that, okay, you like, but you don't love. With us here, it's very clear. Like you have the choice. It's me. If I'm gone, you can decide as an LP if you want to terminate or not, which I think gives a lot more optionality. You then purposely decide whether you think the team is what you expect to continue. So in a way, in a counterintuitive way, it's actually better in life, provided that you have the right system, processes.

21:09Our firm has changed a lot. I mean, it's not what it was three and a half years ago. It's a completely different firm. It's institutional. It's well-oiled. It will continue to get better. But I would say sometimes people mistake solo GP with one man bands. Yeah. One man bands, I agree. It's like, there's only so much you can do as one person. Solo GP is for the right reason, the right structure, I think is relatively well accepted. I think that's a really interesting and important point, Greg. And I think you raised something that's kind of more of a philosophical discussion, but the balance between key man risk and team risk, right?

21:42I think it's a really interesting convo. Let's not deep dive into that one too much. I want to ask you one question before going back on track to the script, which is in terms of the firm roadmap, right? You just shared with us, you know, this is not a one-man band. There's 13 people going to 15. People are going up the ranks inside of AO, right? And you want that to happen and it will happen soon enough. How involved or informed do you want to keep your LPs about your plans of the firm development? So as an example, if we have this principle that we're thinking of making partner, is that an information that you want your LPs to kind of be involved in and know of over time as the firm develops?

22:16Or is it something that you decide internally and you communicate? And are there also risks there in the sense of, you know, kind of LPs no longer relating to the team and they related more to you as a solo GP? So I'll say a few things. I think any LP that we have today, at least it's very true for the new fund, is investing not just because of me. It might have been the case for the first fund because I was alone launching this. but today anybody who's invested in this fund, the new one, has invested because of the work we've done as a team and because of the team. I so happen to be one member of it.

22:51I like to be as transparent as possible with what we're doing. I see ourselves as a firm that's growing in a similar fashion to the startups that we back. We're on our own journey. It's full of imperfection that we're continuously trying to improve and that's the beauty of the journey, to look where we started and where we're going and the journey towards our goals. We want to be in control of our own destiny. So we would have opinions and we'll believe what is right for the company. We'll inform our LPs. We have some LPs who are on the LPAC. So, you know, we sometimes have more thorough discussions with them.

23:29But it's important for us to have LPs who are adding value to us. I always say our LPs are as important on our success than our portfolio because they will be adding you know we're learning there will be lps in other funds they can share insights and so i like to have this sounding board because it just allows us to to interact with our lps regularly on just not the investments that we do or the investments that we do but on our journey and i always believe that if you have people buying to you and your journey and where you're going you'll create longevity in the relationship and a lot of loyalty.

24:06And I'm a huge believer in being completely honest and transparent about your flaws, your issues, the stuff you encounter with all humans. There's not a single human being on the planet that doesn't go through doubts, problem issues, that doesn't make mistakes. And so I think it creates a leveling of relationships when you do that, that again, can contribute towards healthy and long-term relationships. So we don't hide anything. We are where we are and we think we're in the right direction. We're progressing, we're improving, which is the most important. The day you stagnate or the day you go back or the day you don't improve, then that's where the problem is.

24:47I really like the long-term thinking that you're sharing with us. I think it's really important, especially where the market is today and where we came from. So I love that. Thank you for sharing, Greg. We spoke a bit about this, but I do want to shine light on pivotal moments in your life and understanding how they shaped you today as an investor. So I'll let you take it from there, Greg. There's a few. So I'll try to be concise. I think the very first one was early on in my life. I think one year old, I was diagnosed with cancer. This was early 80s at a time where it was something that was A, taboo, be not as curable or easily curable as it is today.

25:25I think I don't obviously remember it. I was one year old, but my parents basically were told that I had very little chance to make it. And so I believe that although I wasn't conscious of that, I was, I think, between one and three years old, you know, the treatments, the radiotherapy, chemotherapy, all that stuff, obviously that there was a big a lot of adversity for me as a kid i remember the aftermath aftermath of it which is you know you're you don't grow as quickly you're smaller you're weaker you're this and i had to deal with bullying in a extreme extreme way for a very very long time after that because you know bullying is quite common in schools at a time where people were not necessarily educated about cancer they thought i was contagious there's that kids refusing to sit down next to you at school nobody wanted to talk to you uh and me not being able to necessarily go to gym and exercise because i was had to go to do my test every week and then it became every month and then every three months and then obviously life became better but i was you know i until 13 14 i was smaller i was small uh and tiny and then i grew up thankfully later but that whole period was quite horrible for me probably much more horrible than actual illness a because i remember it but b also because it's very lonely uh bullying can be devastating for for any person i still believe it's it's conditioned some of my behavior today as a as an adult but that's also told me a lot about resiliency that's told me a lot about being an underdog having bad odds stacked against you uh having nobody believing in you all those things i've had to build a thick skin.

27:11And I also know that eventually, if you go through it, the light always shines on the other side, and it certainly did for me. And so every time I've gone through different periods of my life that were tough, I always know, okay, I can do this. I have thick skin. I've seen worse. I've seen the worst. Nothing that will come in front of me today can be worse than what I've gone through as a kid. Therefore, I can deal with it. And I know that if I deal with it eventually the sun always shines. And that's been a big driver of my life. Can you ask you, Greg, sometimes we call this Andreas' parenting section of the podcast.

27:49And we spoke just before to the audience, you have a three and a half year old and a one year old. And I have a six year old and a three year old. And we always tend to kind of end up in this conversation about parenthood. And one thing I often think about is the struggling. And since you've been through this yourself, right and now you have your own children that you're thinking around every single parent is thinking about how was my kid doing in in kindergarten are they being teased are they being bullied more than what would be good for them am I putting too much pressure on them or should I just give them that ice cream now that they're asking or should I not so I love to I love to ask you how do you think about or reflect on your experience back then and then apply that to your own parenting?

28:36Yeah, it's a tough one. I'll tell you that I don't regret anything that's happened to me as a kid. If I had to do it again, I would do it again because I believe it's been a net positive for the trajectory in my life. And equally, I'm a bit scared that, you know, my son started nursery last year, he's going to go to school, the bigger school like next year. I'm a little scared to see how I would react that he's facing bullying. whether I'm going to be very aggravated and emotional about it because I've suffered so much from it. So I'm doing a lot of work on myself to make sure that when the date happens, I'm going to be there to support him, but I should not go and fight this fight for him because it would not do him any justice or service.

29:23But it's tough. And I'll tell you that, you know, the thing that helped me go through all those tough moments as a kid is I had a very happy home. My parents were so loving, are so loving, too much loving sometimes, but they're so loving that, you know, at least I had a safe place to be. I know that no matter how bad my day would be, I would go home and there would be a safe place. So I think as a parent, that's what you can do is provide that safe place, provide that guidance. I'd be able to share with him that I might have gone through also similar experience on bullying and, you know, it turned out okay and try to instill wisdom into it i hope i can instill wisdom i hope i don't lose the plot so i'll let you know when and if that happens but it's a tough one you know if you ask me i think i would like to be as tough as reasonably possible for my kids so that they're prepared for life and life is tough life not easy and i think it's challenging because at the same time when you're in a great position in life.