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EUVC Podcast Episode #269 Summary
Episode Title: EUVC #269: Lucile Cornet, General Partner at Eight Roads on SME Vertical SaaS and Series B investing Hosts: Andreas Munk Holm and David Cruz e Silva Guest: Lucile Cornet, General Partner at Eight Roads
Introduction
- Context: Lucile Cornet is a partner at Eight Roads, a global venture fund with a portfolio of 450 companies, including unicorns like Alibaba and Toast. She focuses on Series B investments, particularly in SaaS and fintech.
- Background: French national, based in London, became one of the youngest female partners in Europe at 33.
Key Themes and Discussions
- Lucile鈥檚 Journey in VC
- Early Career: Lucile's entry into venture capital was somewhat serendipitous; she recognized the tech industry's potential for growth and chose to be part of it.
- Industry Growth: The VC landscape in Europe has expanded significantly since her start in 2012, now seeing around $50 billion invested annually, a six-fold increase.
- Learning and Unlearning in VC
- Initial Beliefs vs. Reality: Early in her career, Lucile absorbed common VC wisdom. Over time, she learned to question and sometimes reject conventional advice, realizing that hiring based solely on experience does not always yield the best results.
- Importance of Listening: Emphasizes that humility and listening are crucial in both leadership and investing.
- The Value of SME Vertical SaaS
- Definition and Importance: SME Vertical SaaS refers to software tailored for specific industries (e.g., construction, hospitality). This niche offers opportunities for significant upselling and market penetration.
- Counter-Cyclical Nature: These sectors tend to be less impacted by economic downturns, providing stability to the business model.
- Sales, Marketing, and Execution in Software
- Importance of Speed and Execution: Companies must act quickly in tech, with successful founders often exhibiting a high velocity of action, which translates to company culture and performance.
- Growth Mindset: Emphasizes the need for founders to be open to feedback and learning rather than being fixed in their ways.
- Building Strong Relationships
- Networking Significance: The importance of building strong relationships within the industry is paramount for both personal and professional growth.
- Positive Energy: Lucile underscores the subjective nature of decision-making in business, where personal connections often influence significant decisions.
- Advice for Emerging VCs
- Perseverance: Encouragement for VCs amid a difficult fundraising environment, suggesting that 2024 may see better conditions.
- Proof Points: Successful fundraising relies on demonstrating past successes and building a strong narrative around focus and expertise.
Key Learnings
- Speed of Action: High-velocity decision-making can significantly impact a company's trajectory, emphasizing execution over mere ideas.
- Growth Mindset: Valuing progress and adaptability in founders over static achievements fosters healthier growth and innovation.
- The Power of Relationships: Strong personal connections can often determine the success of business ventures, underscoring the subjective nature of many business decisions.
Conclusion
- Lucile reflects on the evolving landscape of venture capital and the necessity of adapting to changes, especially in SaaS and fintech verticals.
- Emphasizes that while the VC industry faces challenges, it also presents immense opportunities for those willing to seize them and adapt.
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For more insights and a deeper dive into these discussions, check out the full episode on [EUVC](https://eu.vc).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00Hi, everyone, and welcome to the EUVC podcast. I'm David and I'm joined, as usual, by Andrea as my co-founder. Today we have Lucille Cornet with us. Lucille is a partner at 8Rhodes, an 11 billion USD global venture fund with offices across the globe. 8Rhodes invests in companies at Series B stage and helps them scale up internationally. They have 450 portfolio companies globally, of which 60 are IPOs and many unicorns, which is Alibaba, Toast, Flywire, Chewy, High Bulb, Neo4j, or Fever. Lucille is part of the European team over at Eight Roads, and she is a French national born in Toulouse, but based in London for 15 years now.
0:36She focuses on anything SaaS and fintech at Series B. She became one of the youngest female partners in Europe, being promoted partner in 21 at just 33 years old. That is amazing. Congrats, Lucille, by the way. Her investments include companies such as Spendesk, Lilcare, Amenitas, Reveal, or Think Insurance. Outside of work, Lucille is a mom of two daughters, loves adventurous travel and cooking. She is very extrovert and loves meeting new people and we're super excited to meeting her as well today. You know what to do if you're listening to the show and love it. Drop us a review, follow the pod and subscribe at eu.vc.
1:11This will definitely tear down this wall. It's more than just an ally. This is a union of values. United and determined we can serve as a model for other regions of the world. The nature of a problem requires a European response. Europe is a story of new beginnings. New beginnings. Let's start acting. Acting. In a world where podcasts outnumber humans, we try at EUVC to be mildly more interesting. Tune in at EU.VC to watch this episode instead of just listening. EU.VC, where the extraordinary is just another Monday. This show is not investment advice, and the hosts of this episode may be invested in the funds and companies featured.
2:10To anyone in our audience who heard Alibaba and thought, what the fuck is that? Well, that is Alibaba pronounced in a Portuguese manner. I thought it was too funny. I think Alibaba is the Danish pronunciation. But Lucille will solve this argument. My heavy French accent. Please confirm that it is Alibaba. Alibaba. How is that? Yes. That sounded French. That sounded French. I'm sorry. I've heard it too many times in the mouth of Jason Calacanis, I think. So Lucille, with this funny introductory note, let's get into how you got into venture. Let me just say one thing to the audience. You are in for a wild ride, because Lucille has quite a personality.
3:02And when David said that she enjoys doing adventurous sports, we had a small asterisk here that said Bolivia, Uzbekistan, Iran, south of China, Lofoten Islands, climbed Mont Blanc. And she still has Patagonia and Japan on her list. So, my God, Lucille, you are quite the personality. Yeah, look, I love adventures, both in, I guess, professional life and personal life. I have two young daughters now, so a bit harder to go trekking in Bolivia or Uzbekistan, but hoping to go back on those trips with them in a few years. On the way, I got into venture to answer your initial question. So, you know, I was reflecting when you asked, and it was a bit serendipitous.
3:49And at the moment, it made me think of a quote. I'm reading this book, Amp It Up, by Frank Slootman, the CEO of Snowflake. and at the beginning of the book, he's talking a little bit about his career and how he got his first job. And he's just saying, initially, when you start your career, you should just try to pick an industry that's going to flourish. And he makes that analogy. He says, are you in a lift that goes up or a lift that goes down? And I was reflecting probably for anyone in tech, whether it was in VC or entrepreneur or joining startups, like the last 10 years in Europe, I've been exceptional.
4:25There are very few industries that are growing that fast. And so I think, you know, I started working in VC in 2012. So a little while ago now. And I remember at the time, it was a tiny industry, right? So things even like fintech, those terms didn't exist. And so, you know, I vividly remember thinking it can only go up, right? Like the way, you know, you could tell how large the tech industry was in the US, but also just the way the world is going, young generation, digitalization. So I could really feel like It has to be the place to be. And obviously, I don't regret that choice. And I think the growth has been probably even faster than I had imagined.
5:03So I was looking at the numbers when we were preparing this. And even this year, which is a pretty tough year, you could tell on both the VC and the tech sector in Europe, I think we're going to be like something around$50 billion of VC money invested in Europe, which is six times what it was 10 years ago. So it just shows how big the industry has become. And I think, you know, I feel lucky and privileged to be part of it. So do David and I, for sure, as well. I want to ask you, because I know you've also been politically active, and I'd love to ask you a bit about the public sector and why you ended up going for tech rather than public sector work.
5:44Yeah, I always got really interested in politics. And I think there are some similarities with investing, because, you know, you need strong conviction. You're meeting a lot of people. I certainly love meeting people and I'm curious about their stories. So I think there are a couple of interesting parallels. And when I was 16 or 17, I think I got involved back in France, back in Toulouse, my hometown. I got involved with regional politics and got really excited at the time. And once I was in, I really hated it because I realized how slow things were moving. I was impressed by how much paper there still was, how much red tape, you know, just how slow public affairs are moving.
6:27And I think I'm far too impatient for that. And so I think it was an interesting realization that I had to be in an industry that was moving faster. And that's one thing I really like with the tech industry is, you know, it's changing by the minute. And especially now, if you look at what's happening in AI, and I'm not talking about the whole open AI drama at the moment, but more broadly, the tech innovation happening in that space, it's really moving by the day. So I didn't know anything about vector database or prompting generating a year ago. And so every week you're learning something new.
7:04It's fascinating. And on the note of moving fast, let's move fast to your pivotal moment in your life and tell us about how that shaped you as an investor. I'm not sure it's a pivotal moment. I was more thinking of something I realized probably quite late in my life. And I thought, you know, I could share today. It's a funny realization that I think in your early years in your career, there's a lot of learning. And then in my recent years, I've been unlearning a lot of these things. So what do I mean by that? if you start like early in venture, you have all those statements, right? Like you keep hearing those, you know, blanket statements.
7:40So if you want to scale up, you need to hire top talent. You need to hire people that have done it before, that have seen the movie. Even sometimes you hear the same, you know, phrases, which, you know, I find hilarious. And, you know, that's an advice that, you know, most VCs would give to their founders. And it's funny because now like having the benefit of maybe you know close to 10 portfolio companies and 45 with with the European team and my colleagues a lot of those hires didn't work out right so we we did hire in a lot of our companies the shiny cv the guy that came with the big package or the gal that came with a big package and we did the search and so on and then you realize oh like you know and of course some of them do work right so I don't want to say they're all they're all bad but there was a lot of disappointment.
8:27At the same time, I've seen people, you know, from like tier five cities, you know, that never did a job before and that I really learned on the job and like became excellent leaders. And so I think what has that has told me that you need to go and see a little bit behind those like easy statements, right? Like in VCs, you have a lot of those constantly, right? So software shouldn't have too many services or hardware is bad. At the moment, And like people hate consumer, like, yeah, just do SaaS. And why, right? Who decided that? And so I think it took me a while to probably feel confident also enough to like see a little bit beyond this thing and also to disagree and be like, you know what, like I quite like this.
9:11So I quite disagree with that statement. I think differently. And so, yeah, again, that was probably a late realization that sometimes you also need to unlearn some of those easy advice that you get and that everyone keeps repeating. David, I saw you had a note that said the importance of learning and unlearning in venture capital. I'd love to ask you if you want to come in on this. No, I was actually kind of just reading everything that Lucila had shared with us in advance and just taking some notes. And I think I reminisce whenever I hear stuff within, similar to what you said, Lucila, I reminisce to like some of our early episodes where I can't remember if it was Ennis Hooley or William McQuillan that said that VC is one of these weird careers where you do a lot of kind of you look back and you try to rationalize what happened in the past and to justify your actions based on that which is really funny it's like almost like creating self-fulfilling prophecies after they happen and I think you kind of you kind of mentioned that in some way or form it's It's like you're always learning and the feedback cycles are so long.
10:17It's nothing much to add, Andrea. It's just kind of a small note, I'd say. Yeah, I try to always think like, don't take the easy path, right? So a lot of our job is to say no. And sometimes they have an easy way. It's just so easy to say no, right? There's always a reason to say no because, you know, otherwise there would be obvious investments, right? So most companies we look at, you could look at it for a second and be like, ha, this market is too small. Or that team is never going to scale. like out of like, you know, Ghent, Belgium, or like, you know, how many companies have been built, you know, from Belgium that became Unicorn, right?
10:51So there are always like things where you're like, and so I think for us, the challenge is like, don't go the easy way, right? Like try to see a little bit behind and think the harder path and say like, is there something, like what could go right here? Like, what am I missing? What are the others not seeing that I might see? Most of the time we still have to say no, because that's just, I can't do a thousand investments in a year. But I try to remember that. It is a funny paradox that you point out that at the same time as we're an industry that heralds first principle thinking, we're also an industry with a lot of rules of thumb or generic advice.
11:28I think the truth is actually the first principle of thinking. And then we have the rules of thumb that apply sometimes and sometimes don't. and what probably makes a really good message that they're contrarian when they need to be and when it's right to be. Because we have many in our audience, of course, that find themselves in these situations and navigate them. And you're telling us it's a confidence thing. I'd love to ask you, have you had any tactics that you've employed to really build up that trust in yourself to actually say, hold on a second, I think differently on this point. Yeah, that's another thing I've been thinking a lot about is a lot of our job and similar for investors and tech entrepreneurs is to talk about what's going to happen, right?
12:16So like most of the time you look at these companies and, you know, you would never invest for what it is today, right? Like the small businesses, lots of questions. So the reason you're investing is because of what you think it's going to become, right? They're like babies or teenagers and you want to be in when they grow up and see what they blossom and become later. And so a lot of our job, and I think similar for entrepreneurs, is to really paint that story and say like, am I going to convince you about what I think will happen? So I have my opinion, my conviction, either as an investor or as an entrepreneur.
12:54And that's what I think will happen. And how good am I to convey that conviction to others? And, you know, that's something that I think sometimes entrepreneurs don't see is we also need to do that because, you know, we work in a team. And a lot of my job is to convince my partners and then my investment committee about what I see. So I think sometimes like a lot of a lot of entrepreneurs think like I convinced Lucille, so I'm good to go. But unfortunately, I have a bunch of other people to convince us, you know, as it should be. And so it's also a lot of the part of the VC is to be able to convey crisply and explain that excitement.
13:30Like, look, that's what I'm saying, right? The market may look small today, but let me tell you this and this is going to change. And, you know, there's a typical Uber story, right? Like, you know, if you were looking at the, you know, the cab market, you would have gotten it wrong because they grew in the market. You know, or same for Airbnb, like there was no market, right? So, you know, sometimes it's really more like, are you, you know, are you bringing people with you on that journey and helping them see what you what you're saying? And yeah. And also, I think to your point, the amount of conviction you have in doing so is pretty important.
14:03So sometimes and oftentimes in our team, we would, you know, say like, I don't necessarily agree, but I see the level of conviction that you have. and so I'll support you for that. So I think also doing that with a strong amount of conviction matters, right? Because it's not just a theoretical exercise. There is a lot of intent, right? Like you want to do that deal. You want to be involved in that company for 10 years, right? You want to deploy 20 million euros. I mean, it's a big thing, right? So being able to convey that excitement and show that level of conviction is pretty important in our job.
14:39I'd love to ask you, just before we go to the take a stand section. And I know that we're bombing the whole script and timeline of this interview. But I want to ask you, because you have a rather unique experience in that you're so many at eight roads. And in most European partnerships, we're talking three or four people. Only five partners, right? So it's not as big, but probably a bit bigger than others. Yeah, but as a firm, your bicker, right? How do you make sure that you have the whole firm with you? And I have a feeling that it's not only the partnerships that calls the shots, right? You want to make sure that the whole firm is with you.
15:20So how do you think about building that firm belief in a company or in a potential investment rather than just your own commitment? Yeah. And that's exactly the art for us, right? So for people who are not as familiar with the behind the scenes of a venture capital fund. Like effectively, when you're looking at a transaction and investing in the company, there are effectively like three streams that are going on. There is one stream where usually I'm actually selling myself to the entrepreneur because most of the companies we look at are, you know, great companies. They have a lot of options, a lot of other funds that are talking to them.
15:59So we need to be showing our best selves. How can we help them? you know do they want to expand in the u.s do they need help on the tech side on the people side um i want to give them references of people that have worked with me so there's kind of this you know what we call selling which you know is is where i'm actually selling myself and showing that i could be a good partner to them at the same time i'm also buying right so i'm also forging my own conviction do i really want to invest in this company and and you know you need to do those those same those things at the same time because if you keep asking questions for three weeks and then you're like oh now i like it let me tell you how great i am like you're too late right because all the other funds have you know uh built the relationship so you need to do those two things at the same time and then there is a third pass which is i also need to update my team so that you know i don't spend three weeks getting my conviction and then once i'm ready i'm like hey guys i have this interesting company in berlin you know trust me it's gonna be great we need to pay like super top dollar it's really competitive and then it's not gonna work right because people are like, I've never heard of this.
17:03What is even that market? What is Lucille doing? So I need to keep them also in check and make sure I'm bringing people with me and be like, hey, I'm really interested in this thing. So you're constantly on that fine line and doing all those different streams at the same time, which is fascinating. But yeah, you're always kind of thinking, am I telling the team I'm really excited? But am I really excited? Like, am I there yet? So you're trying to keep the balance. Let's go to the take a stand round that I promised just before.
17:47Now, Lucille, I would love to ask you to comment on this quote, a little bit of chaos is good for you. Yeah, Andres, so you asked me to pick one quote I liked. And, you know, I really smiled when I read that quote because it really resonated with me. I'm one of those people. I think you have two people in the world, like zero mailbox or 4000 mailbox. So I'm definitely one of the 4000, you know, unread mailbox. And, you know, one of my partners at H-Rod, Stavon Hebel, he keeps saying, relax, nothing is under control. and in a way you know that could you know really help me in my career because when you're in vc you know one good analogy i like to i like to take is it feels a bit like you're in a rally car but you're sitting at the back so you can choose the car but once you've chosen the car you're in and so you're in this in this bumpy road just sitting at the back you're not driving you know there are sharp turns they're like obstacles and you're kind of you can give a bit of advice, right?
18:48So sometimes you're like, ah, avoid the rocks, turn left. But most of the time, the founder, as he should be, is the one driving. And so I think you need to enjoy that journey because, you know, there will be, you know, there will be tough moments, there will be sharp turns. And, you know, I think sometimes the crunch and other media make it look like it's a linear path to success. Like it's not, right? Every single company have those moments. And so you need to enjoy the ride because it's not only about being on the podium at the end. It's the whole journey to get there.
19:25Lucille, this is probably the bit I was looking forward to the most because I know you really like SME Vertical Theft. And it's something that we haven't really spoken that much about on the podcast, but we're actually doing an investment within that space. I'm actually really curious to tap into your brain. So let's maybe start with the basics. So what is SME Vertical SaaS from a perspective and why do you love it? So SME Vertical SaaS is really this idea of building on-purpose software for a specific vertical, which is going to be a system of record, a software used every day in this industry.
20:06So, you know, I'm thinking the construction industry, hospitality, hair salons, restaurants. And if you can become the system of record, hopefully you're really well-placed to then upsell new functionalities and expand from that initial starting point to a much broader solution. The second part of that question, why do you love it? And I really want to deep dive here. And just to any listener listening in, when we did the introduction of Lucille, some of the companies that we mentioned where actually they fit the SME vertical SaaS kind of definition, right, Lucille? Yeah, we've made a bunch of investments and some very successful ones in the space.
20:46In the US, we were investors in Toast POS, which is a vertical software for restaurants. They have a strong payment component as well. Now they're a listed company, 8 billion market cap in New York. I think I was looking at their latest numbers. They have 1.2 billion AR, which is a pretty impressive size. In Europe, we've made other investments. Last year, I led our investment in amenities, which is a Barcelona-based company selling into hotels. So similar concept really being that system of record in the hotel space. You call it property management system. and starting from the, you know, the main software, but really expanding into payments, distribution, you know, website creation, channel management, and so on.
21:34A couple of years back, we were lead investors in a company called TreatWell that I think a lot of people in the UK will know, which was marketplace and software for, you know, hair and health and beauty salon. It was a great outcome. They sold to a Japanese company called Recruit. And the reason I'm smiling is because that, you know, that was actually a really good example of a company where a lot of people were like, this is too small of a market. Like, that's never going to scale. I remember also, like, it wasn't my investment. It was my colleague Davo. But a lot of people said there is no one that did it in the US.
22:08So it can't, you know, it can't be done, right? Like, hence, you know, no one will do it in Europe. And TreatWell was a really good example of, you know, scaling very successfully, you know, from like initially like a booking, you know, a booking, very simple tool initially, right? like booking an appointment at the hairdresser, but from them becoming like the system of record and then, you know, enabling payments, enabling salon management. And then, you know, you really grow your position in that industry. So there you'll see, you gave a few examples in a couple of different sectors. So healthcare, wellness, right?
22:43But also like hotels, what is that? Like leisure, whatever the term of that industry is. Follow-up question on my side is which specific industry or sectors do you think that are ripe for disruption from this vertical SaaS perspective? Yeah, it's interesting you ask that because I'm asking myself the exact same question. So we would love more investments. And so we're constantly thinking what could be good industries. I mean, I think there are probably a couple of criteria we can think about. I think it works well in a very fragmented industry. So hotels being a good example of that. but you could think like construction company, you could think like vet practices, right?
23:26So like smaller buyers, but a lot of them. So I think that's one, you know, one good criteria. Another criteria is I think there's a lot of opportunity if the industry is still not very digital. And so again, if you think about construction, the hotels were the same, like, you know, they still live in the 80s. And as much as I love the industry, like sometimes you see the screens, I don't know if you ever looked when you do a check-in, like sometimes you see the screen on the other side of the person, the receptionist, and you're like, that can't be, I mean, it looks like, it looks like something, you know, blue and blue, dark blue and white out of the, you know, straight out of the heat.
24:03It looks like V0.1 of Salesforce, right? Whatever that was. So like, it's not even cloud, you know, they do physical backups, I mean, it's hard to believe, right? And so those to me are like, you know really ripe for disruption especially as you think of new generations going into those jobs so i think that's been one very interesting factor like if you think in the restaurant industry and it will be the same in construction is you have those young people like you know going into the workforce uh now like probably in the age of like buying you know businesses like okay starting a small construction company and they're like i'm not gonna work with that right i want something on mobile.
24:43I want something that looks like monday.com, right? I want something that I can log in and out. It's all going to be in the cloud. It's all going to be super intuitive. Potentially now with AI, it might even be like, you know, just a search bar. Like there's not going to be a thousand menus. You know, another big issue in those jobs is the training. So all those companies typically have a lot of turnover. So restaurants is one, but you know, I can think construction is the same where you have a lot of people that come and go. So you can't afford to spend three weeks, you know, training someone in the system and nearly that person is gone, you know, the next week.
25:19So again, like it needs to be, you know, super simple, you know, very intuitive. And so that's why I'm quite excited about what new tools can do because, you know, now with the improvements in cloud computing and design and so on, you can do things that are super easy to understand. Like you can work yourself. You don't need training at all, right? Like you can gamify the onboarding. So there are a lot of cool things. Another thing, sorry, I keep on going, but I like that space. Another thing that I think wasn't possible a few years back is this whole concept of embedded finance. So a lot of those vertical SaaS play, they're very good for also embedding payments and fintech in general.
26:03And that's a very new concept. So that's why also I think these things haven't happened in the past, because the ability to issue cards, embed payments, embed lending, you know, credit facilities into software and to sell it to individual businesses or customers is still very new. And again, I'm really excited about what you could do. Right. Because suddenly, you know, you could do very, very simple things like, you know, improve the experience meaningfully. and you know another thing is a lot of those small businesses they they pay like crazy fees right because they don't know they're not experts right so you look at what they pay like you know in again a small probably construction company or a small hotel in fees like you know card fees for their physical pus i mean it's it's just ridiculous right like they're getting you know it's really it's really unfair and so again why wouldn't you be able to do you know uh online payments or even the come to account which is completely free uh you know there are a lot of interesting ways you could um you could you know bring innovation here you know i think you ended there with with a great example uh embedded finance and like card fees uh you know as a very specific one but you know when you talk about it fragmented customer base no that like not digital from kind of an infrastructure perspective, but even from like a mindset of the workforce and the industry as a whole.
27:27So why the hell, and here let's all put our investor hat, like why favoring SME Vertical SaaS as an investment space? Because it sounds challenging, right? It's fragmented, it's not digital, you know, it just sounds tough. Like why the hell go after it? Yeah, yeah, no, and you're right. I mean, it is challenging. I think another thing you haven't mentioned is especially in Europe, it's not easy to go international because typically those markets are quite different. So you have something that works for Spain, it might not work for France. So you're right. I mean, why go after this space? I think a couple of things.
28:00One thing is, I think they're pretty counter-cyclical. And I like that, especially in this market. So while selling to SMEs can be difficult, it's also pretty counter-cyclical because there will always be hairdressers, there will always be hotels. And so you're a little bit less dependent of the macroeconomy. Like, you know, when you sell enterprise, for example, like HR SaaS, right? Like, or suddenly, like, you know, people are like, oh, I'm sorry, like, no more budget this year. Like, it's a budget freeze. And you're like, oh, okay. Like, it might take me another year to get that contract. You know, in SME, you could, you know, you just knock at another door.
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28:36So I like that about it. I think the second reason we, you know, we think the space is exciting is this concept of upselling. So what I was mentioning about Toast is N312 is this ability to start with a system of record. And once you have engagement, once you have users that log in every day, use your tool for bookings or use your tool for, you know, booking rooms in the hotel, then you're really well placed to add to this. And I think that's how those companies can go from being, you know, 200, 300 million company to multi-billion dollar companies like Toasted. It's not by just sending to more restaurants, because at some point you're going to run out of restaurants, but it's by really expanding the solution.
29:19And I think in the case of Toast, they do financing, they do workforce staffing and planning. They really expand it to manage most of the flows of the restaurant. And so I think that's a very interesting part of the model. And I think that's how we see some of those companies have really the potential to become larger than some people think initially. Can you ask you, Lucille, because you're investing at the stage that you are, so rather late for a year and series B, what does the how should I put it value add model look like for you in this space? Because I imagine, as you said, it's a bit about becoming, as an example, the registry for one specific type of client in this space.
30:09And then, well, I would imagine that there's quite a beauty to actually finding the one that you believe are the best in, as an example, that for restaurants. And then saying, OK, these guys that we think are the best, maybe they don't have the biggest line of customers, but they're the ones that execute best and they're the ones with the best product. So we invest in this one, we put 20 million in, and that 20 million will actually be put to work by doing acquisitions in places where they have less growth potential because their product is crabby, but they have a big installed base that you can then service with that superior product.
30:51Is that part of the value add or how do you think about your value add as an investor? Yeah, it could. I think 312 grew that way, for example. So 312 was really an M &A story where they started in the UK. They were initially called Wahanda. And then they made a lot of acquisitions. So they made one acquisition in France, one in Germany, one in Netherlands, which was called 312. And then they took their name. But, you know, candidly, a lot of the investments we make are mostly to fund just investments in growth. So, you know, it could be M &A. But I think at our stage, if I look at most of our investments, it's still like, let's grow the team.
31:28let's push the go-to market, let's spend more money to do acquisition, and let's also potentially finance those add-on products. So you may have a lot of traction on the initial product, but you haven't had the time to build product two, product three. So a lot of our money will typically go to that. Let's have two squads of product people building an add-on in payments or an add-on in distribution or marketplace, for example. I have one final question, and that is, And you touched on it, which is AI, of course, in this space. AI, and then this is probably even more of a, how should I put it, general interest question in the sense that AI for us in the VC bubble seems like it's everywhere.
32:17And we're so ready for adoption. But then every time I meet the SME segment, I'm always surprised at how far we are from adoption. I'd love to ask you, how do you think about that in this space specifically? Yeah, it's interesting. I think you're right. I've been impressed because there's some areas where I think it will go way slower than we think. And equally, there's also adoption that is very fast, right? So I'll give you a couple of examples. On the coding front, I would say probably most of the developers in our companies are already using Generative AI. Huge productivity boost. Other example, everything that has to do with content.
33:02If you're doing a community, and you probably know that being in the content business, if you're having push emails, if you're doing a market report, if you're doing SEO for your website, much better results with Gen &I, right? Like, so the adoption on that has been almost instant. So I'll give you an example, like the company amenities in the hospitality tech space that I mentioned, they do websites for their customers. So they would build the website of the property. And it used to be quite time intensive. I mean, they have like frameworks, but you still have someone who like look at the picture and like, okay, it's like in Rio.
33:43and now it's fully automated. It's fully gen AI. You say it's in Rio. I want something fun and relaxed and luxury and the website is done. The improvement is like 10x. And then to your point, there are some other areas where I think it might take 10 years because the adoption curve, especially of the end customer, might take longer. So again, I'll give you an example. There are a lot of questions which I find really interesting at the moment about what's going to happen to the front end. So if you look at your Salesforce or your Workday or all those like big, you know, SaaS companies of maybe the last decade, lots of menus, you know, even as looking at Zoom, right?
34:26Like there's like two settings, like menu bars. And so there are people now saying like, all of that is going to be gone, right? Like there will just be a bar, either it's voice operated or text operated, but you're going to be like, I just want to change my background and it's going to change your background. Like you won't be clicking around looking for where the button is again. And so there are a lot of questions around like, what is the front end of the future going to look like? Is there going to be a front end, right? So maybe then Zoom might be embedded in Windows. I don't know, right?
34:55Like, is that, you know, is there going to be, you know, icons like Windows? You know, I don't know. Like it could, you know, if everything is in one box, like there might not even be a desktop anymore, right? So there are a lot of interesting questions. that being said like do i think you know the hotelier or the the doctor operating in a small practice in my road is gonna have like something that is fully voice operated with no front end probably not yet right that's that might take 10 years so so that's that's the paradox is i think some things will be very quick and then some other things might you know take a while to really similar?
35:29I actually think that our smartphones and our computers are going to be, how should you put it, the harpinger, how fast they move as platforms is going to be the harpinger of adoption in so many other places. Because once everyone is used to not engaging with buttons on their stupid phones, but just telling it, the other day I had to put an alarm coming with a certain recurrency on my phone. And I was like, how do I do this? Because I needed it to not be every Tuesday, but I needed it to be a bit offset and that kind of thing. It's like, technically, should be so simple. But just because the UI isn't made for it, I can't do that on the alarm, right?
36:11But there's no reason why I wouldn't just be able to tell my Android, I need one on this day, this day, and that day. And then it would just do it, right? And I think that once everyone's use consumer complex products, we're going to see it adopting in our business life. I was going to say the same, a lot of innovation in enterprise software comes from the consumer world, right? So typically you see that consumers are adopting faster. And in a way, when I talk about the developer, it's kind of prosumer, right? So it's kind of, it's really interesting, right? It's coming at bottom up, right? Which I think a lot of people didn't expect.
36:47That was the big revolution, obviously, with ChatGPT. It came very bottom up, right? So it wasn't like your company who said like, hey, now let's use AI. It was just people playing around and they were like, wow, I can be 10 times more productive with this. Like, I'm just going to use that. Right. So it almost like, you know, consumer style adoption as opposed to the enterprise. And that wraps up our small segment here talking about SME vertical SaaS, where we discussed a bit sectors that are ripe for disruption. And Lucille, I love that you mentioned construction as we started the pre-recording with me bitching about my own construction project.
37:22But that's not the only sector that's rep for disruption. You're feeling the pain. Anything. Yeah, I'm feeling the pain. I'm freaking feeling the pain. I need you guys to do an investment in that space. Please solve that for me. But basically anything that is fragmented or very like not digital from an infrastructure mindset perspective being mentioned there. We also expanded a bit on the reasons for favoring SME vertical SaaS, counter-cyclical nature, core system with high stickiness, less competitive in vertical markets. And we ended with trying to predict the future and AI. We asked a lot of questions.
37:59We shared a few insights, but we gave no answers. So if you're interested about that, go back roughly a minute and you can hear that. But now it's time for the shout-out segment.
38:16Lucille, I'd like to ask you to give a shout out to a co-investor, Angel or LP for being awesome. And of course, do share the story behind that awesomeness. Yeah. So for this segment, I thought I would give a shout out to a person called Kevin Kimber. He's a venture partner with us, but he's also a fellow angel investor in a lot of our businesses. And he's a great mentor to a lot of CEOs in our portfolio. So Kevin was one of the co-founders of ServiceNow. For those who don't know ServiceNow, it's an enterprise giant SaaS company, originally from the US. Now I think there are 140 billion market cap.
38:57And Kevin was the first person on the ground in Europe. He grew the company to a huge scale. And then he left and went on to lead parts of businesses like Zora, SAP in the UK. then he became a CEO of one of our portfolio companies called Remilia, which is a company in the receivable automation space. And he helped sell that company to Blackline, another listed company in New York. So, you know, huge amount of experience from, you know, growing businesses, leading businesses, selling businesses. And the reason why I like working with Kevin is he's incredibly humble. And that's one thing I realized with people that are almost like so successful that then they're so kind, right?
39:43So they're beyond, you know, probably are they today. And Kevin is one of those people. He's very humble. He's a great listener, which also I think is something I rarely see, right? Because sometimes you meet successful people and they have to tell you, right? They feel like they know and they just like, you know, they have to tell you how to do things. Kevin is not like that at all. Like he spends a lot of time listening to people quite intently before he gives advice. And he's always super humble about like, look, it's not because it worked for me that it's going to work for you. So he's very aware of not just replicating one recipe of success and pretending that this is like cookie cutter approach.
40:23And it's just very fun, which again, I, you know, I think we'll come back to that point. But I think in life, it's important to work with people, you know, you enjoy having around and, you know, Kevin is one of them.
40:38Amazing, Lucille. Now I want to go to our three biggest learnings segment and ask you to give us the three biggest learnings in your last 10 years. Yeah, I felt a bit like a therapy when I repented these questions. And I have to say they're quite... We are LPs ourselves, so we try to be VC therapists. Exactly. Moonlighting as VC therapists. If you're interested, you can go to our website and register for a free consultation. We won't charge you for that. Exactly. Come and talk to us. You know, the first one I picked is we've been thinking a lot about what makes a great founder. Right. That's the essence of our job.
41:24Effectively, that's the question you're asking yourself all the time. And the question is easy. The answer is not. And there is a lot of literature on the topic. And, you know, there are a lot of people like saying you need people that are immigrants or you need people that are very young or you need people that are experienced or you need people that have studied or people that haven't studied. And in my humble experience, I haven't seen any of that. So we didn't see any correlation between any of these things. And so, you know, I was trying to reflect. So what did I see? What are the common traits of my most successful founders?
42:03And one that I found is really velocity. So speed of action. And I'll give you an example. It's a lot of small things, but you can notice it in the day-to-day, right? So they just reply faster on WhatsApp. They just, you know, after you make an introduction, they jump on it straight away. When you have a conversation and there is a follow-up, the follow-up is two days, you know, in two days and not, you know, in two weeks. and that you know cadence that that you know that velocity of action makes a huge difference in aggregate and i think it's not only those small things but it's more the pace that you know they they then like you know a project to the rest of the company because usually once they behave like that the whole company follows that cadence and you know i think there is really a thing that you can out execute competitors and again it's something that talks a lot about because people always talk about ideas like oh i have a special idea but idea you know an idea is not that special like what's difficult is executing and not to say obviously there is you know some products and some innovation and some you know some tech differentiation but there's so much you can do with with just better execution and i think a lot of that is speed and um you know another thing is like failing fast right uh you know something's not working fine right like let's act on it And, you know, I know it's easier said than done, but that's one thing I think that I've seen in, I guess, my experience and, you know, my learning with entrepreneurs is just, you know, great people move faster.
43:36No question. Lucille, could I ask you maybe a challenging question there? I partially agree with you. Yes. And I see that a lot with the people that we work with that we love, where we have very kind of, you know, quick lead time between a conversation and something happening. It's really easy. It's a beautiful sensation, right, working with a person like that. But taken to its extreme, it's actually a bad thing. And I remember reading, I don't know if it was today or yesterday, and I'll name it because there's no problem with naming it, but Stebbings mentioned that he was welcoming a company called Traba on the podcast and that they had a work culture like any other.
44:11Monday to Thursday, 12 plus hours in the office. Friday, 10 plus hours. And everyone's expected to be reachable and working outside these hours, including weekends, which I actually don't agree with that view. So how do you think about it? And where do you, in your own kind of mental framework, where do you kind of step the line with the limits? Yeah, I mean, there are two things in there, right? I think working fast and working hard are two different things. So I didn't necessarily mean like, you know, working 24-7 and, you know, like, you know, ignoring like, you know, the lows. uh so uh but i think you're very right you know there are certainly guardrails around culture and um you know working fast also doesn't necessarily mean changing direction all the time right so i think one danger you can have with people that are really quick is that you know they're like oh okay like you know forget what i was saying a month ago like now we're gonna do this and that can be very disruptive to an organization because they lack leadership so it doesn't necessarily mean you know being too distracted but i think it's more like the state of mind of, you know, quick cycles, let's make progress, let's see, right?
45:19Or, you know, quick no's, right? Let's not do that, but let's decide. Because most of the time, like more time is not going to lead to a better decision. So there are some times where more time might lead to a better decision. You know, there are things where you don't want to take shortcuts, right like compliance you know uh uh uh legal things right like as we've seen with a lot of fintech like too many shortcuts you know can definitely lead to lead you into trouble but on so many other things i think being too theoretical sometimes doesn't help so i give you an idea like you know oftentimes a lot of my boards we discuss going international and usually what happens is people have this very top down you know they look at all the markets and you know they look at the size of the market and then they have like harvey balls or color coding and they're like you know this is like you know a bit larger but easier and my experience is like usually it's like it's not true like just you know just go there start selling small right like put put three people on the ground like consultants or like fly people on the ground take a rework we don't have to make it like a big investment and like we're opening an office like just just try it out validate your experience and let's do it gradually like is it working like how is the sales cycle where are you hearing okay cool it's positive let's do more like you know not three people six people right as opposed to have this grand like let's spend three months doing a whole matrix of like how deep are those different geos which you know is a bit of a you know theoretical like a bit too like, you know, yeah, theoretical exercise.
46:57I'd love to take us to your second learning because everyone in the audience here, we have so many learnings from Lucille and so much to unpack on every one of them. So that's why I'm driving us to the next one. Yeah, and I don't want to make it look like, you know, I'm telling things because I think they're very much like things I also, you know, aspire to do. So, you know, it's also like, you know, part of my goals. But the second one I picked is this growth mindset. And what I like about the growth mindset is really focusing on the progress as opposed to where things are. And, you know, it goes a little bit what we were talking about earlier about like thinking about companies for what they're going to become.
47:41I try to do the same with people and I think it's good to do that. So looking at how much someone is listening to feedback, how quickly someone is learning, as opposed to what they are today as a finished product. And so I would always prefer working with a founder that is open to feedback where I'm having, you know, conversation. And by the way, I might not know better than they do, right? But at least, you know, we're debating, we're, you know, we're trying, we're learning, as opposed to someone who's brilliant, very, very smart, but very set in his, you know, in his opinions. And I think that that goes well with one of your earlier comments as to don't necessarily go for a very senior hire who has the Rolodex and has everything because it's typically not the right move for a startup.
48:29Let's go to your final one. Yeah, the final one was, you know, not to underestimate the power of building relationships and having what I call positive energy. the reason I mentioned that is, you know, I've been amazed in my career by how subjective a lot of decisions are. And I think people don't realize how it is the case. So, you know, I find that in business, like most, even large exits or large hires or large moves, you know, a lot of them are intuition based. And so, you know, building strong relationships is so important. It sounds a bit cheesy said like that, but, you know, people want to work with other people they enjoy having around, you know, they want to work with fun people.
49:15They want to, you know, they want to work with founders that they admire. And so, you know, a big part of, you know, for example, a successful exit might also just be, I would love to have that person in my organization, right? I would love to have that energy. I would love to have that team because, because they're great, right? And so a lot of founders, sometimes I find they're building almost secretly and hoping that someone notices one day. So it's almost like, we'll go out and we'll do all the networking later. And they feel that this is almost like less priority. And I get it, right? Because you're like day-to-day hustling and you're like, the last thing I want is to be at a conference with a champagne glass building relationship.
49:58Like I'm just trying to close my quarter. but those relationships are so important because that's where a partnership might you know land that's where an M &A offer might you know happen that's where you might find a great customer because people have you know that great impression of you and they're like wow that person or that you know that CEO really has an interesting vision I'd love to spend more time with him and so you wouldn't do that just by staying you know in your in your castle and so so I that's an advice I give to my founders, like get out there. Don't underestimate the power of that side of business building as well.
50:33Just before we went into this recording, I was prepping for a webinar we're going to do on our roundtable conversation we're going to do on acing LP relationships. And what you stated here is, of course, in the way you stated it around founders and how they should built. But I'd love to ask you, how does this translate into how you manage LP relationships yourself, how you think about that, both at 8 Roads, but also you personally as a partner in the firm? Yeah, you're spot on, Andreas, because, you know, RISI is the ultimate commoditized industry. So, you know, the big difference between us and, for example, entrepreneurs is we usually don't have very different product to sell, right?
51:20At the end of the day, like, you know, money is money and series B, series B, whether it's from H-Rods or someone else. So a lot of the differentiation is going to come from the people, is going to come from the impression you get when you meet me. And, you know, candidly, that's how you win deals, right? It's, you know, of course, like, valuation need to be there. Of course, you need to do value adds. And I think those are stable stakes. But, you know, at the end of the day, it's people. It's people like people are probably thinking, do I want Lucille on my boat for 10 years? Right. Like, is she going to help me?
51:54Is she going to how is she going to behave when it's hard? Is she even going to be around? Right. Because there's a lot of turnover in VC. Right. So that's another thing like we've seen, you know, entrepreneurs, they raise and then a year later, the partner is gone. Right. So you get someone else. And so back to your question around APs, I think stability in the team, the culture you're building as a fund. Again, it's a little bit hard because those are very subjective and a little bit like fluffy topics. So it's usually a bit hard to lead by we have a great culture and we're so nice. But at the end of the day, you know, I think that matters, you know, hugely.
52:32Right. And so, for example, one thing we do at HROADS is we measure the NPS of our funders. So we ask them every year on the scale of, you know, zero to 10, would you recommend someone else to work with HROADS? And I think the last one we had 90. And we're extremely proud of that number because if there was only one thing I would show to the LPs, that would be that. Because I would say like, you know, in VC, you need money and then you need funders who want to work with you. Right. So, I mean, the rest, the rest you can make, you know, but those are probably the two main ingredients. Can I ask you a final question on this?
53:06Because I'm trying to get you to tease out learnings from your world and context to our audience who are primarily VCs at smaller firms, right? We all know the differences between being an 11 billion AUM firm versus being a 100 million AUM or 50 million. So I'd love to ask you, what do you think that an audience like the typical European venture fund, think of that as a prototypical audience here? What do you think that you at Eight Roads have to kind of not teach, but share with them on how you manage to build an as good fundraising machine as you have? because in the end, you want to do great deals, you want to win great deals and so on.
54:00But in the end, if you don't manage to raise well, and in the end, that's where many funds in Europe struggle the most, you're not going to get off the ramp, right? So I'd love to ask you, kind of telling us a bit what you can do. Yeah, you're right, Andreas. And first of all, I'd say this year is very difficult, right? So whether you're like an 11 billion US fund or a 20 million fund, it's hard for everyone. So I'm saying like, you know, don't think it's easier. It's been a very difficult year, right? For obvious reasons. So, you know, keep it up, I would say, for everyone who is fundraising.
54:39But back to your question around advice, I don't know how much I can give advice, but maybe one thought is, it strikes me as very similar to entrepreneurs where the easiest way to convince someone is to have proof points, right? So, you know, showing something is much better than telling something. You know, that's just the simple fact. And so I would always try to, you know, start small. The issue is obviously if you're like a very first like emerging manager, you don't have any portfolio company, right? But as soon as you do, and sometimes... Yeah, for three seconds. Yeah, as soon as you do, and, you know, sometimes also you could, you know do a first close do a couple of investments and then continue raising the the fund i would really make sure that you know you have milestones that are proving your story right so what does that mean i would stay focused initially and then widen the aperture so whether it's a geo whether it's a sector that you're investing into whether it's a thesis like oh we're only going to back repeat entrepreneurs.
55:43Like whatever is your secret sauce or whatever is your pitch, I would really make sure that your first investments are proving the point, right? So we're great at backing second time entrepreneurs. We've done it already with one and two, you know, please give me money to like do it with 15 more. It will help the trajectory. I think if you start too broad, like I'm going to do everything SaaS across Europe, like that might be too broad, for example, in this market, right? Like how many, now there are a lot of people that understand SaaS, like, is that specific enough? So it is for people that have been around for decades, like 0.9, that are great franchises.
56:20But if you were a very new emerging manager, I would try to pick something a little bit narrow just to show that I can be good at doing it. And then build from there and say, okay, now I've proven this in, you know, in, I don't know, in Estonia, let me go and do Baltics. or now I've proven this in, you know, this part of, you know, healthcare sass, then I'm going to write, if that makes sense. Lucille, we are up on time, so let's head on into the quickfire.
57:00Lucille, what advice would you give your 10-year younger self? Pick more risks. I know it sounds funny as a VC because our job is to take risks, but I wish I had taken even more risks. And that's also why I love working with founders, because all they do is taking risks, taking that, you know, hard pass, as I mentioned earlier. And I really, I really respect them for that. What are, and this might be a tiny bit repetitive, but what are your top tips for emerging VCs across Europe for now fundraising? I would say keep it up. I think this year might sound a bit discouraging if you're out there raising, because I think a lot of the institutional LPs haven't been investing at all.
57:39I truly think that 2024 is going to be better. Maybe not on the exits, but certainly like the market, you can see like, you know, more transactions, more liquidity. So I do think that, you know, some of the best vintages will be, you know, those done now. So, you know, don't give up. And yeah, good luck. What's the most counterintuitive thing you've learned since you've been an inventor? Yeah, the most counterintuitive thing I've learned is really that this concept of valuation is a bit like, you know, a false precise concept. So, you know, my learnings have been that the valuation of something is really what people are prepared to pay at that given point.
58:20And, you know, it could be if no one wants it, it could be zero. if people you know really want it it could be high so i keep reading like articles about why like adobe paid 50 times for sig for figma it is insane you know or equally like this shouldn't be trading at this multiple and you know i mean at the end of the day i'm not sure there is like you know a precise science like it's just a given point in time and there's no there's no point in debating it too much i think it's just you know you just need to take it as it is and i think it's an important learning because back to what we were saying about unlearning a lot of my career like in the initial days in finance you learn a lot about the comps and you know how to like do multiples and it's it's funny because even at the public market you realize you know i think some companies that were trading 40 times a year ago are now trading six times right so you know same company same market probably like has grown its revenue and the market has changed tremendously so i think what I've learned in all these years is that, you know, valuation can be a very like, you know, spot intent about what people are prepared to pay for something.
59:31And I wouldn't give it too much importance. I know it sounds funny because a lot of what we do is around like, you know, negotiating time sheets and valuation. But, you know, I think people should realize that, you know, there's no like huge science into it.
59:48so anyone out there if you are with a bunch of grit but no internship at goldman sachs or mckinsey head on over to your email and send lucille a message everyone i hope you enjoyed this episode of the european vc podcast do drop us a review follow the pod and subscribe at u.vc thanks for Thank you for having me. Acting, acting, acting, acting, acting, acting.
From the publisher
Eight Roads invests in companies at the Series B stage and helps them scale up internationally. They have 450 portfolio companies globally, of which 60 are IPOs, and many are unicorns: Alibaba, Toast, Flywire, Chewy, Hibob, Neo4j, or Fever.
Lucile is part of the European team of Eight Roads. She is a French national (born in Toulouse) but has been based in London for 15 years and focuses on anything SaaS and Fintech series B. She became one of the youngest female partners in Europe, being promoted to Partner in 2021 at just 33 years old. Her investments include companies such as Spendesk, Leocare, Amenitiz, Reveal, and Thinksurance.
Outside work, Lucile is a mum of two daughters who loves adventurous travel and cooking and as you鈥檒l see, a dazzling extrovert who thrives in meeting new people.
Watch the full interview on eu.vc 馃憖 and read our core learnings 馃
Chapters
00:00:00 - Lucile鈥檚 journey in VC & Eight Roads Venture Fund intro00:06:30 - Moving fast in the tech industry
00:07:07 - Learning and unlearning in VC
00:15:07 - Building firm belief & conviction ahead of an investment
00:18:00 - Why a little bit of chaos is good for you
00:24:02 - The Potential of SME Vertical SaaS
00:29:49 - The value ad model and investing in growth
00:35:59 - Sales, marketing and adoption in enterprise software
00:38:59 - The importance of Humility and listening
00:42:17 - The importance of Speed and execution
00:45:03 - On Leadership and decision-making
00:48:04 - Building strong relationships in business
00:51:11 - People and culture in VC
00:54:16 - Advice for emerging VCs across Europe
00:57:27 - Don't give up on fundraising
