Geopolitical tensions mean dual-use and 'sovereign tech' are here to stay, say investors

19:52And AI is accessible to everyone nowadays, so I think this is really important to highlight

19:58Alex van Someren:and another tech will come that everyone will again feature in their pitch decks.

20:04Sitar Teli:Alex, the word hyperscaler was just mentioned there. You know, in the US they're building out many data centers for compute. Kirstana has said he wants more data centers and compute in the UK. I know in France that a contract was just signed to virtually hand over one of the nuclear power stations next to a data center, or at least part of its energy. sorry so that's very wrapping up into the sovereign conversation as well isn't it um and also what's so interesting as well in this area as well we started to see infrastructure startups who do things like cooling systems which used to be kind of frowned upon about 15 years ago and now they're the hottest thing since life's bread aren't they um what's your what's your impression about that?

21:02Alex van Someren:So, it's interesting what your sponsors is providing cloud GPU services. It seems to me that that's the useful way to engage with this. I'm really not a believer in what politicians actually like, which is cutting ribbons on physical infrastructure, you know, construction projects, gig and X. And that's really a problem because politicians really feel that that's what they ought to be doing and what you seem to be doing that. And I think we all probably understand that the day you cut the ribbon on some new data centre, it means that it's already like not just had a date that day, it's probably like already a year out of date.

21:41Alex van Someren:So the best way to get access to these kinds of capabilities is actually to go and get them from people whose business it is to deliver that as a service. And you can stay on top of what kind of chips do we want, how do we cool them, where do get the power from all that kind of stuff because that's it most of us don't want to get involved in that. You can't kind of ruin it on the cloud. You can't kind of ruin it on the cloud. Well this is exactly the problem. Don't tell Steve, don't tell Keith Starmer. And so I spent quite a long time when I was doing my government posts trying to explain to a succession of AI ministers that actually it really isn't actually the right thing to do to spend hundreds of millions on building out data centres as sovereign assets and it looks fairly seductive but it's actually one because it's guaranteed to be out of date.

22:30Alex van Someren:I'd also believe by the way that the same is true of training sovereign AI models pretty generally and that therefore the idea that you have a national successor such as TPT or you know it's a other brand name here. Great TPT. It's also a fool's errand because it's guaranteed to be several years out of date. There is probably an exception in national security where you need training data which is not available to anybody else and therefore you have to do it yourself so that's a kind of weird special case but they're lovely but weird people anyway otherwise i would not recommend it i think that buying stuff from people who know what they're doing and making their business down public is the smart thing and you can rent it and you can give it back when you don't buy any more and upgrade the new stuff without spending hundreds

23:17Sitar Teli:Right, okay, so sorry about Keir Starmer, he's not gonna, I mean, do you get a bit of an uplift in the local economy when the data center's being built, but then about four people end up running it? Right, right. Yeah, so that's not so great. So, I should have done this earlier, is this the year of quantum? Quick, yes or no?

23:39Alex van Someren:Last year was the year of quantum, according to the UN.

23:44Sitar Teli:Where is it?

23:48Alex van Someren:Where is it? So it's interesting. If you read the press and if you see all of the funding rounds, gosh, each one has raised more than any others. And we've enjoyed the success as well. Our companies, Photonic, has raised 134 of a much larger round already. And New Quantum Gear in the UK has raised 60 million. series A, I've got another one, Rivoli, and there's already several hundred million. So we're definitely in a good place with Quantum. But in terms of commercial, let's face it, currently a fault problem system that is going to give us the advantage that Quantum is supposed to give us doesn't exist.

24:28Alex van Someren:It just does not exist right now. There's a lot of work that's happening. We're all very excited about it coming pretty soon, but it currently doesn't exist. so it still has to... sorry? That's not what I'm going to do.

24:44Sitar Teli:Well, Gronton reminds me about many years ago, there used to be a phrase that you used all the time, which we used all the time, especially the phrase was, this was the year of mobile. And it was about 25 years ago, about 25 years, well basically it took until the iPhone was invented. I could make a contribution on this.

25:01Alex van Someren:So in fact, what happens to you if you become a chief scientific advisor, there's actually a definition for this. It's called a Hartree constant. Hartree observed that the time between now and the ground will be available is a constant. It's like it's always some way off. So there you go. So what's in the future? And so the question with quantum computing is, you know, how far off is it really? And of course, you can ask the same question about fusion now and so forth. But I would just like to quickly set in an objection to this question, because you need to be a little bit more careful with your language.

25:33Alex van Someren:Quantum technologies, as a general concept, have many different expressions, some of which are already available. So this is important. So quantum sensing, quantum positioning, navigation, and timing, quantum photonics. There are lots of kinds of quantum technologies that you can buy today and they repeat it. The thing we're talking about here, I think, is quantum computing, which is definitely not available yet. So don't diss all the other quantum technologies, because those are things you can buy. Quantum computing, where's the one?

26:02Sitar Teli:Thank you for putting me right on that subject. Now, we've remissed me to having someone who was on the European Innovation Council to ask you quickly, and also to get the rest of the panel's opinion about how we are benchmarking ourselves these days in Europe. out something about brexit or whatever it was um means that what's very annoying is whenever you see those eu stats there's a kind of a black thing on the map where you the uk is and doesn't no longer appears on the map so i'm like where is the uk on this list oh yeah i remember now um so but and that we've seen actually you haven't you uh you've mentioned about like the the uh AI native Gen Zers.

26:49Sitar Teli:I mean, Lovable was obviously, it's been such a hot company, come out of Sweden, and everyone there seems to be under 26 in these companies. And so Sweden quite clearly is like, you know, got the religion. What else is going on? What kinds of thoughts do we have about how all of the European countries are benchmarking against each other? I hear Munich's really hot right now for defense blah blah blah i mean what what are our thoughts about the kind of the european landscape at the moment starting in another really easy question right so i think

27:25Alex van Someren:i mean first of all like i think uk and europe cannot go without each other in this context of you know tech and and you know leadership um when it comes to you know sovereignty topics when it comes to like stuff like quantum AI and things like that. It really sucks the situation at the moment, but just, you know, some really positive news from the EICs that I know there is a lot of misconception about who can actually apply for the funding. UK companies can apply for every level of the funding except equity, which is totally fine given, you know, like all the complexity that comes into negotiations with the EIC fund and so on.

28:04Alex van Someren:But basically in terms of the EIC accelerator, the grant component is 2.5 million which is a pretty sweet deal I think for the UK companies still. It's very competitive though I've seen and actually I've authored the first bias study in the EIC where we looked at variables of geography and gender and how our evaluation and our evaluation pool actually selects deals and of course we found all sorts of statistically significant biases. I think there's obviously a lot of fragmentation that we are talking about. And we might at least focus what I was focusing on while on the board, it was widening countries versus non-widening countries.

28:48Alex van Someren:So kind of New Europe, like for instance, Estonia, Poland, Croatia, even Portugal, and countries that underperform on the allocation of the EIC budget and versus like for instance france germany and some other associated countries like israel and um i think uh you know france and germany obviously are on the top of the list when it comes to tech but it's not only about the eic right there's a lot of public money going into that um you mentioned munich there was the security conference uh the other week and there was actually qb and the quantum business network uh event as well and that was super interesting so a lot of stuff is happening there also in the VC space.

29:31Alex van Someren:I mean, fragmented, you know, we still have it.

29:36Sitar Teli:You're talking Europe-wide, we've started a problem of finding the growth capital though, don't we as well. What do you think about, do you have any thoughts about what's going on in Europe right now, where's the involvement centre?

29:51Alex van Someren:So I think early stage is very well served in Europe, there's no doubt about that. There are enough funds, there is enough government funds, especially for deep tech, and I think that's fabulous because quantum is one of the only technologies I think that has actually got so much government funding worldwide, something like 40 or 45 billion across the world. So I think Europe and the UK together, I agree, they have to be together, are doing really well in propping that up. Growth capital, all different story. Every time one of my companies wants today's Series B onwards, I typically ask them to go get a lead investor from the US, inevitably.

30:35Alex van Someren:There's a lot of follower money. It is rather hard to get more lead investors, especially in deep tech. And I think that's something that we just need to sort out. Cesar? Yeah, I mean, I...

30:47Sitar Teli:London's pretty hot for AI right now, apparently.

30:49Alex van Someren:London is, Stockholm is, Paris is, I think it's all, actually, Munich, Berlin not so much, actually, I haven't really seen as much coming out of Berlin yet, but we'll see. But then Spain, we're seeing some amazing events happen all over, actually. There isn't, I think, a real epicenter. It's really, really well distributed, what we're seeing. And so I think, similar to what Manjir was saying, I think early stage is really, really well-funded people always complain about growth stage but actually i have a different view on this i think even if you brought 10 more growth stage funds or 20 more growth stage funds it's actually kind of similar to what alex said you want to go to where the best are and so like having 20 new growth stage funds unless they're all super experienced you know u.s or international investors i'm not sure you're getting the best money and it's going to take a while and so great like bring them in or they're going to have to go through everything you know You want U.S.

31:48Alex van Someren:money, like for the best companies, and the best companies will probably still raise from the U.S. because you want the most experienced, the best, the most successful, blah, blah, blah. Especially the top founders always want that. And I think that's actually, like, so, you know, no founder I know would be like, I'd really like to raise from a French growth stage investor. You know, like, you would never say that. You would always say, I want to raise from the best. Yeah. Thanks for the French. No, no, but, like, you know, right? I'm sorry. But you always want to raise from a French growth stage investor.

32:17Sitar Teli:We don't want to cause an international incident.

32:19Alex van Someren:We don't want to call it an international incident. It's just a joke within the venture. France has a lot of funds that are, you know, has a lot of French, you know, larger...

32:30Sitar Teli:I think the French is systematically sealed. Exactly. It's a bit well answered. Sorry, did you make an answer? But Alex, I suppose, if you're going to talk about defence these days, you just say are you in the Ukraine all right here basically defense technology well I don't

32:47Alex van Someren:know I think that's mostly about drones and that's pretty important you can understand why but I think that leads lots of other kind of defense technologies that are going to continue to be important so it's interesting that some of the biggest new kind of defense tech startups have have started out doing different things you know Helsing started doing electronic warfare software fighter very but often as well as rapidly pivoted into making drones and scale, which makes sense because that's where market demand is. We hope, I think, that the market demand is going to stop, right? We don't want this war to carry on forever.

33:18Alex van Someren:The Ukrainians certainly don't. We need to help tidy that up, get the Russians out. But the future of land war in Europe is now different. It will definitely involve drones, but it will also involve lots of other stuff. And so I think there's plenty of other defense opportunities for people to get into. and you know I'd also like to encourage people to look at what the intelligence opportunity is there's lots of interest in doing things with AI doing things with quantum technologies doing you know the cyber security where you know these things are definitely dual use there are government customers and there's really significant amounts of money to be spent by those customers buying these kinds of chemicals but they are also useful for you know completely classic civilian application so you can build the banks services both markets right so you know I think by the way we should say like defense as a target market is you know still quite niche right probably building a sustaining business in just defense tech it's not really as big a market opportunity as you could get by selling to all the other kinds of customers in the world so you know let's remember that actually that's how it used to be that you know one kind of wanted the other 90 % of the market as well and I think it's quite risky to say you're only going to build a business that's about to benefit, unless that's exactly the entire purpose will be sent out to the set up.

34:40Sitar Teli:Right, I'm just going to ask my co-organisers whether or not I have five minutes left maybe or not.

34:48Alex van Someren:Not really but you can bring it up next two or three.

34:53Sitar Teli:Okay, I wanted to give you some time for questions but I think what we'll do is we'll, these are many of these are apparently sustained for the round tables so you'll be able to quiz them there and but I just wanted to squeeze one last question in before we go to the round tables which is the US. Now what do we do about the US? It's a simple easy question. Yeah. What do we do? Do we wait until he leaves? What do we do right now? Because, I mean, it's absolutely bananas. Antropic right now is being threatened with God knows what legal action for not deploying its AI in the department of war, for heaven's sake.

35:40Sitar Teli:And, you know, there's David Silver, a guy with DeepMind, just raised apparently a billion from, was it A16? Which is, last time I checked, not a UK or European fund to do a new AI startup. So, very interesting there. So, what do we do? I mean, and the traditional path for a lot of European tech companies was to, you know, raise a few rounds in Europe, scale up, get product market fit, scale in the US, probably get some big US investors. And if everything went well, you know, effectively become a kind of US looking company and float on the Nasdaq or get acquired by Microsoft or Google or something.

36:24Sitar Teli:So what do we do about that? I'm going to start with you, Alex. So what do we do about the US for Mr. T?

36:29Alex van Someren:You've got to decide whether you're going to hold your nose and keep going in the way you just described, because it is still the single monolithic, largest monolithic market there is, and it is still also the biggest source for the venture money areas. So in that case, if you're willing to hold your nose, then you have to just kind of keep your head down, get in there, get busy, roll with the constantly evolving punches, exactly.

36:54Sitar Teli:Well, I have to keep that answer short, I know. Sorry. What do you think?

36:57Alex van Someren:I like to focus on where the companies are building and hiring, because I think that's what puts a lot of the economic benefit for the country. Right. A VC making money, not making money is good for the ecosystem. But like, you know, jobs and scaling like really good jobs and those jobs, then those people then going off and building their own companies. That's what really excites me. And so, you know, if a company is funded by the US or not, if they're deciding to scale their team in London or Paris or Berlin or Munich, that's what makes me really happy. Yeah, I agree with both of those. The third thing I'd add to that is this is, I think, a chance to not just hold on up, but also try and get the big companies here in Europe to engage more of the startups.

37:47Alex van Someren:Typically, the early adopters have also been quite often the US companies. Why is that? Why can't we get companies that are based in Europe to be more engaging? And once you have customers here, if genuinely your revenue is 50-50, US versus Europe, why wouldn't you continue here? Right. Ana, what do you think? Well, I think on one side we need to be globally competitive in Europe and things like the EIC and all these kind of support mechanisms for boosting the ecosystems are super important. what I think it's even more important is that you know we talked a lot about investment and you just mentioned customers I think it's so important just to build something that someone is willing to pay for and you know not I mean obviously investment is important and everything but I think clients are the most important really so that would be my...

38:33Sitar Teli:Well there you go I hope you thought that was interesting and useful I've tried to make it so please give a big hand...

38:46Thank you.