Super Angel #233 Ambre Soubiran, Kaiko

0:00Hello, everyone, and welcome to the Super Angel Podcast. Today, we're welcoming Amber. And I'm super excited to have you with us, Amber. But before shooting it to you, Anthony, Amber was a recommendation from a past guest. Am I right in saying that? It is indeed. Yeah, yeah, yeah. Julia. So very, very excited to have you with us today, Amber. I'm also a bit of a fan cheering from the sidelines on Kaiko, but you'll tell us all about that. So thank you for joining the show. Thanks for having me. Is this a dream? No, it's not a dream. I'm an angel. Why would God send me an angel? because god knows that everyone needs a little coaching now and then

0:55this show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Do you want to share a bit more about your story, like the whole backstory, and then what got you into angel investment and angel investing in the first place? Absolutely. So backstory, I'm French. I studied mathematics and computer science, and I started working pretty immediately straight after college on the trading floor at HSBC. I was in equity derivatives structuring. I started my career in Paris and then moved to London, where I stayed for about a decade. Great experience there.

1:32But generally speaking, and that kind of builds the premises of how I think about my investment thesis as an angel today, I'm generally interested in technology, especially in three fields, health, food, and money. And that has always been my kind of personal interest. And while I was working in banking in London, I've always kind of followed those interests and read some blogs and was reading some obscure newsletters and whatever. And that's actually how I got into crypto. So back in 2012, I was reading a blog about tech and money and I stumbled upon the Bitcoin white paper. It turned out there was a meetup organized a week later in London.

2:16So I went to that and that was kind of my first foray into crypto. What really kind of drew me into crypto was not necessarily the whole, you know, fully decentralized, slightly utopian, in my opinion, crypto anarchist vision, but it was rather the fact that we had for the first time a technology that could enable online scarcity. As in, for the first time, I had something that I could send to someone else through internet and not have it anymore. That was kind of the thing that I thought was fascinating. And it was the, you know, solving of the double spent problem, which was not something we were able to achieve before.

2:53Then Ethereum happened two years later. In the meantime, I did a couple of online degrees, MOOCs about cryptocurrency and Bitcoin and blockchain. And then Ethereum happened. And I thought Ethereum was fascinating in a way that it could completely transform the way we execute contracts between parties. And I didn't see that again from a pure peer to peer way, like, okay, we're going to remove the banks and people are going to loan each other money without banks. What I saw was the operational efficiencies that could be yielded from using blockchain to disintermediate middle and back office, which is really contract execution.

3:29It's really about operations. So that was my thesis. And I tried to pitch that to the bank. It was way too early. And I ended up leaving the bank and acquiring Kaiko from its original founder. So that's not really an angel investment because I actually acquired the business, but there was more management buyouts than an angel investment. But it was my first big investment decision was to put all my life savings into a startup that was pretty much bankrupt back then, which is Kyco. And I've been running it the past eight years. And then today we're post-Series B scale up with offices pretty much everywhere in the world.

4:05We're about 100 globally, and we work with financial institutions and big corporates on cryptocurrency market data solutions. Wow. I don't think I've ever heard like First Angel Investment being like an acquisition of a company that you're running. I think that's quite unique, actually. And tell me a bit more about, I mean, any of the memorable deals that you've done recently or any that you want to share, just to give a bit of a flavor to the listeners as well. Yeah. So going back to my kind of investment thesis, it's really kind of new technologies in food, in health and money. So the money aspect is very much kind of covered by my crypto investments and then later on Keiko investments.

4:46On the side of health, and it's actually hybrid health and food. Actually, that was my first, first angel investment. It was like 2000 euro investment. But by then I was probably 22 and that was a lot of money for me. I invested in a technology company that had developed a new patent to identify pathogens in industrial food processing. And I did that through a kind of angel investment platform that is French called Annexe Ego. And that's how I got started was really I registered to the platform. I was looking at the deals they were pushing. There are two categories of deals, shorter term, kind of lower yield real estate stuff, or some relatively long term, risky, more innovative stuff.

5:29And I was obviously looking at the latter. My first other small angel investment was this kind of health tech, food tech company. And then since Keiko Series A, which was, I think, two and a half, three years ago, where I managed to do a small amount of secondary, I've kept that on the side for angel investing. I've been offered also by a VC fund to be a scout for them. So I've been trying to, when I'm convinced about a project, double down with like a personal ticket and a scout ticket, which is generally cool for the founders because I can't lead around. whereas the VC fund can. And I always try to show that I have skin in the game when I invest somebody else's money.

6:12I try to also match it with my own so that I know that I follow the investment. So Ambra, I want to backtrack this conversation a bit because you shared a story there with Keiko. And I think that is from where I'm standing, at least looking from the outside. And that is probably the most memorable deal in the sense that those are weird and unexpected and not common circumstances is to see an investment being done, right? And so I'd love for you to share whatever you are at liberty to share, but I'd love to know a bit about the story and also the decision-making, right? So you were talking about the fact that you were seeing something, you're getting excited about something, you were working in a big company and you couldn't pursue that within that setting.

6:50From there to buying Keiko, a lot happened, right? So tell us a bit about that story and how that came to be. That's super cool. Yeah, absolutely. Absolutely. So indeed, so I started buying crypto and, you know, investing in tokens, just cryptocurrencies back then in 2012, 2013. Modestly, I was again, I was, you know, young 20 something. I didn't have a fortune to invest, but I did what I could back then. And then I kind of not forgot about it, but I was not an actively, you know, managing that crypto position. But I was following a lot what was going on from a technology standpoint and thereby what I said about Ethereum.

7:28And I thought what was fascinating with Ethereum was everything about how industries at scale could transform the way they execute contract between parties, not just finance. I mean, any kind of industry that heavily relies upon the execution of contracts. So I was watching this closely and following this. And my vision was to say, actually, in a world where we increasingly use the kind of automated code to execute contracts, two things become critical. One of them is the quality of the code that represents the financial contract. And the second one is a quality of the data that triggers the automatic execution of the contract.

8:05Because basically you can set a contract between, you know, you and me, David, saying that, you know, I'm going to, you know, pay you something if something happens. Well, the information, if something happens, the contract needs to be fed that information. And so I thought, okay, there's two things that are going to be critical in the future, obviously code. And I think everybody knows that. And the second one is the data that is required to catalyze the execution of code. And if we manage to achieve those two things, then we can disintermediate so many expensive, centralized, kind of painful processes that are existing today in the way we run contracts.

8:44So that was the thesis. And I was a bit painful with telling that to whoever would listen. And that's how I got to meet Pascal Gauthier, who's the current CEO of Ledger. and he's the former CEO of Keiko. So he founded Keiko in 2014. I met him in London back then. And at the time he was looking to sell some of Keiko's data to HSBC. And I was like, you know, honestly, great idea, but just way too early. Like every time I say Bitcoin in the office, it's like, I'm going to get fired. It's too early to try to think that HSBC is going to, or any bank, by the way, it's not just HSBC. Any bank is going to start buying data to trade crypto back in 2014.

9:22Like that was a non, like completely too early. But we got along really well. And in 2016, the funny thing is when I quit HSBC, it was not initially for Kaiko or for crypto. I had another side interest, which I've been investing in as an angel since in the area of food tech, especially in the area of ag tech. So I'm a big believer in using insects to feed animals. So I'm not super keen on eating crickets myself. However, I really don't mind if the chicken that I eat have eaten crickets before. And actually, now it's also something that's more mainstream. But back then, back in 2012, I had read an incredible report from the Food and Drug Administration, from the UNFAO, about that, about insect protein for food and feed, food being for humans and feed being for animals.

10:17And it's absolutely, honestly, you can go as deep as with blockchain. It's super, super interesting, this thing. And my two things were insect protein for animal feed and blockchain and cryptocurrency. And people were joking at HSBC saying, you know, Embraer, when she's going to go, it's either crypto or crickets. and I ended up getting enrolled in a summer program at the MIT on that, on new technologies in agriculture. I did all my application about insects. I got enrolled, so I quit banking. I went to Boston, spent the summer there, and that was summer 2016 where crypto really started picking up.

10:55It was one of the first big bull cycles. It was the beginning of the ICOs where everybody was issuing tokens. And so the activity and the level of excitement around crypto really surged at that point. And also price wise. So at the end of the summer, I was like, I actually have some wealth now in crypto. I don't have that much in euro and starting an insect farm is very capex heavy. So I was like, okay, I'm going to pivot back into my crypto thesis and I'm going to start a crypto fund. I wanted to kind of cash out some of my crypto to invest in equity of crypto companies. And I reached out to Pascal telling him with the ICO boom and everything happening, people are taking much more of a professional slash quantitative approach to crypto.

11:38So data is going to become really valuable now as much as it was too early before because it was very retail. Now people are trying to be smart. People are trying to arbitrage price of crypto on different exchanges. People are trying to model the price of tokens, whatever. So I think data is going to be valuable now. So I spoke to Pascal, we reconnected and he was telling me, you know, I've been funding this business for two years. I believe in the vision. I think it's a great idea, but I'm going to join Ledger soon and I'm going to be off Kaiko. And actually, everybody at Keiko is leaving because they've been working pretty hard for the past two years and there was no addressable market.

12:15So we're kind of, you know, shutting down. And he was considering to sell Keiko to another crypto company because Keiko had essentially a very unique database containing every single transaction that had happened on all cryptocurrency markets since inception. So it was a pretty unique database, but that nobody wanted to pay for back then. There was a company that had made an oral offer to Pascal. And Pascal told me, if you can sell the business, I'll give you a cut of the price. And it was an interesting price. I said, OK. And so I committed to a three-month kind of consulting job to sell the business.

12:54And three months later, I told him, we cannot sell this thing. This is amazing. This is a gold mine. It's going to be worth billions one day. data is super key to the future of blockchain. You know, I cannot buy the company at the price you've agreed to with the other company. But if you sell me a part of it for less, you get the upside if I manage to turn the business around. And that's what we did. So he essentially sold me 51 % of the business at a lower price. And he retained a portion of the company. He's still at the board today. He still owns a minority stake in the company today. And it's been win-win for both of us, but that's kind of the genesis.

13:30So sometimes when people are like, you know, share your story about starting a business. And I'm like, that's hardly repeatable because there's so many coincidences and kind of stars aligned for, I think, both Pascal and I in very weird ways. I love this story. I mean, so many things unpack. I do want to actually, well, first of all, I want to make a comment about, and it's also for other angels and maybe even other investors about how you can't put, let's say, the ideal path of a new founder or founding a company into a mold, right? Like a lot of investors like to say, I'll invest only to the one person that found this problem within their company and made it their life's mission to solve it, right?

14:08Like at some point you were between, you know, insect-like food, like sustainability and crypto with very specific motives, very specific passion areas, right? But it's just something to touch on. The other thing I will say, actually, which is quite interesting is and I would love to hear your thoughts on that and maybe that's a nice segue on how you think about like the space. It's like every single investment I've missed in the past in the space of like crypto, web, 3.0 and DeFi was initially about market timing and then I realized I'm completely thinking about it wrongly and I actually started having an active thesis around investing in infrastructure components that expand the market if they do well.

14:47I don't know if this, I mean, this, like what you've built and what you're building really resonates and really fits that. Would love to hear a bit more if you had more thoughts around that and if this is definitely a lens upon which you see the world and maybe we can expand a bit beyond on how you think about also thesis in angel investing in the space. So yes, absolutely. I completely agree. And I've kind of stuck to that within my crypto investments. Like I've invested as an angel in another business called Kiln and they do Node as a service. They're growing pretty fast. French company, but they're going pretty fast now.

15:21I'm recently, it's not finalized yet, but I've just committed to another company that is working around tokenization of real world assets, which is also very much part of my vision. Like my vision is not that crypto is going to stay crypto. My vision is that we're going to use all of the, you know, DeFi for me is the most incredible sandbox that the world could dream of to prove that blockchain works. Because you can do lending and borrowing, decentralized exchanges. You can do so many things on chain now that, you know, DeFi is about maybe taking decentralization very, very far. I believe in a world where we use all of the mechanisms of DeFi while still having some big regulated, you know, centralized entities that provide balance sheet, that provides counterparty risk.

16:08That's the old banker me talking. But I don't see a world without banks. I don't see a world without regulated exchanges or regulated custodians. But I do see a world where sending faxes and having people manually check stuff doesn't make any sense. And I think in the same way that 40 years ago, we moved to electronic trading and we stopped yelling at each other on a trading floor. I think that we're going to see a next wave of financial engineering that's going to be more blockchain based for the execution part. I just recently invested in a business that honestly, it's a long, long shot, I think.

16:42But they're, first of all, brilliant founders. And second, working on infrastructure services around that long-term vision, which is if we manage to tokenize assets, we need to pretty much reinvent all of the financial services that exist today. And notably, as you rightly mentioned, the market infrastructure providers. And Keiko, I intend to build one of the biggest financial market data providers that understands how to read and write from into a blockchain. Right. So it's not changing the nature of what we do. I mean, a data provider is a very old business. You know, you have Bloomberg, Refinitiv, you have Market.

17:24They just got, you know, all of them are$50 billion plus companies and they're pretty much leading the world of financial market data, but they don't speak blockchain. And I think what I want to do is look at the existing market infrastructure providers and, you know, invest in the same kind of businesses, but blockchain influence in some way or blockchain compatible. And I think that's clearly how I think about the industry when I invest. I'm not at all a metaverse NFT degen. You know, I've never bought an NFT in my life. I do think that the instrument, the NFT as in a non-fungible token is a very powerful one because it means anything that needs to be uniquely characterized.

18:07So if you think about application for blockchain in real estate or shipping, you know, a ship, a container on a container ship is technically an NFT if you tokenize it because it's unique. It's not the same as the container next door because obviously the inside of the container is different. So I don't have anything about NFTs as a concept. I do have something about the misuse and the marketing that has been made around that over the past couple of years. So I'm really focusing on that kind of market infrastructure, future of blockchain, institutional applications, etc. You know, we ask this in most podcasts, but I think here is a bit more unique given how nascent the market is.

18:45But like, what does angel investment and angel investing give you professionally, right? Also personally, I mean, it sounds a lot like, you know, you have a thesis and you're passionate about the evolution of the market, you know, and a lot of the investments you can make shape parts of that. So we'd love to hear, you know, how do you think about that? Honestly, I would say it's 90 % personal. Obviously, it's tied to my professional interest, but none of my angel investments have served Kaiko, just to be very blunt. I'm not making those investments because I think it's going to help my business.

19:22I'm making those investments really because I'm genuinely convinced about, and especially with crypto, I have a strong view on where I think it's going to go. So those investments are very much tied to my own personal interests. And if Kaiko were to IPO tomorrow and I was asked to leave for a better CEO, or if Kaiko failed or whatever would happen, I know that I would still be interested in investing time and resources into these businesses. So that's really not directly tied to Keiko as a business, but it's obviously tied to my personal and professional interests. So I'm thoroughly enjoying this episode because I'm learning a bunch.

19:59So that's why I'm sitting back and just raveling in some knowledge. But now is the time for the investment thesis segment. And Amber, we have spoken about it, but I will ask you to just restate it as shortly and quickly as you can.

20:19What is your investment strategy in terms of, you know, what are you looking for, number of investments, countries you have invested in, et cetera? Just share whatever you can. So first of all, I'm trying to, you know, keep my angel investments as a proportionally to my, I would say, capital, my investable capital. You know, here it's more about angel investment, but I try to do a bit of real estate. I do a bit of crypto and I do a bit of angel. And then I have a bit of cash that I place, especially since interest rates have risen. You know, I'm trying to be pretty balanced in my personal kind of patrimonial approach.

20:56And so I would say the angel part is about 15, 20 % of that. And out of that, I've been only putting relatively small tickets until now, around 10K, which is small. I try to bring value as an angel and I try to be as available as I can. And, you know, I don't, I honestly, I think I'm very, very hands off, but if I'm there, if people need me or if founders need me. But for me, it's more about, you know, do I trust the founder? And obviously, does that fit my investment thesis? So that's more from the theoretical standpoint. And then from a practical standpoint, investment thesis is really same thing, technology, food, health, money.

21:37those are my three investment thesis and I try to not deviate too much. Yeah. I want to ask a question that we oftentimes don't ask, but I think given where you are in the angel investment journey, it might actually be something interesting. How did you come up with that 15%, 20 % mark, right? Because it's not that I disagree with it. That's not the point. It's just, where does it come from, right? How did you come up with it? I guess it's just, you know, it's let's say you have 100. I just try to keep a balanced mix between some say I have three kids. So a bit of savings, a bit of real estate because it yields.

22:14Basically, I'm trying to not have stuff that's going to bring potential returns in 10 years, but have a part of my wealth that yields. And that is the basically a part of for me, you know, if you have a capital, you have to have a piece of that where it's about capital gains. And that's clearly for me, the angel part and a little bit the real estate part, but the real estate can also yield. And then a piece that yields and that is liquid, right? So then that's kind of the cash component or the even crypto component that you can stake and you can get some yield out of that. So it's really about keeping a balance.

22:51And I'm passionate about real estate. I love exploring and looking at stuff. So I just want to make sure I reserve some place for that too. I think it's good to be prudent with that stuff for sure. Going back to the angel investing side, when you think about founders, right? Investing in founders, what would you say would be like one element you look out for, right? When you meet those founders, what's the one trait or one of the things that you really kind of look out for when it comes to founders you'd like to battle? I think values and by values, I would say intelligence, curiosity, open-mindedness, and hard work, honestly.

23:27I think you can learn everything as long as you're smart. I think being an entrepreneur takes much more than just brain or network or working hard. I think it takes a lot of grit and a lot of adaptability and agility and an ability to create relationships with pretty much whoever. You should be, as a founder, you should be comfortable talking to a regulator, comfortable talking on a podcast and stay human and a normal person working with your colleagues. And the ability to hire, that's one of the things I love about Kiln. I think Lesleau, the founder, is a great people person. He hires well. I think that's a very important skill for a founder.

24:06So for me, it's really about personality and values when it comes to the founder, more than track record, background, serial entrepreneur kind of aspects. How do you think about borders in the sense of internationalization? How international of a net are you willing to kind of cast, let's put it like that, in terms of your investments? Given that, you know, you are a small ticket investor, you're not institutionalized as an angel investor, you know, you have a full-time job. So there is a limit to your ability here to both source, but also DD. I've never sourced. It's purely when people tell me about something or, you know, it's purely a word of mouth deals that I've made.

24:47It's true that my network, I think I've had more UK, French and US deals, but I would be completely open to anything. I really don't have a geographical boundary. But because I don't source or actively look for anything, it's more my network bringing me stuff. And so I guess it's collaboration, right? A lot of that word of mouth. Do you want to elaborate a bit more on that? I mean, are you systematic? Is it opportunistic? Is it other VCs, other peers in the market? How do you think about people you collaborate with? 100 % opportunistic and I could be at a dinner and somebody tells me about someone who's you know I recently I invested in somebody who's building something to well that's a bit outside of my scope but to work on regrowing coral reefs with some super high-tech stuff but that can be installed on existing power plants and water you know there's those big well anyway industrial things near the sea, there is something about a chemical reaction that you can change to make the water less acid, basically.

25:49And that was completely random. I was at a dinner and I heard about it and I thought it was super cool. I really don't have a very professional approach to angel investing yet, both because I don't have time and also because I'm not actively looking for that yet. I hope that in five or 10 years, I'll have built enough savings that I can do that more and probably work a bit less. But today, Kaiko is still 200 % of my time. I will say, and maybe that sounds a bit controversial for the listeners as well, but one of the really interesting parts of being an angel is that you can be as raw as you want.