Odin thinks it can unclog the plumbing of global venture capital

0:00Mike Butcher:Welcome to Path Founders with me, Mike Butcher, where we unpack the entrepreneurs behind the code, the capital that backs them and the consequences of the ongoing AI revolution. When you zoom out 30 ,000 feet, investing in startups can often appear as if it's a wholly global affair, with today's hottest startups attracting investor interest from around the world. But in fact, apart from the brief blip of the COVID era when some deals were done over Zoom, literally, that's very rarely the case. In practice, venture capital still gets snarled up in country-based legal structures, tax treatments, currencies and regional compliance.

0:41Mike Butcher:That becomes especially painful when capital wants to move across borders fast, whether that is US investors backing European startups early or international investors into VC funds, such as LPs, getting exposure to US deals in startups without taking on hidden tax risk. Odin, named after the Norsk.god, which is a platform which emerged out of the UK. And it's betting that this friction is now big enough to become a product category in its own right. The London-founded platform has launched an institutional-grade Delaware LPSPVs, that's a bit of a tongue twister, aimed at these global investors.

1:29Mike Butcher:And it argues that the venture market needs structures that are cheaper, faster and genuinely cross border rather than built for a purely United States domestic market. So I'm delighted to be joined now by Odin co-founder and CEO Patrick Ryan to unpack the infrastructure that is very interesting playbook presents. Patrick, welcome. Now, let's get straight into this. For people outside the rather dry world of VC fund administration and all the legal plumbing, what is the actual problem you're trying to solve here? Good question. So I think zooming out from this specific product, it's basically, can you make it really easy for anyone anywhere to run their investment firm on their phone?

2:16I think, you know, the world moves very quickly. As an investor, you really want to focus on founders and your LPs, right, your investors. And all the back office, admin, accounting, payment flows, legals, etc. kind of gets in the way of doing your job to some extent. It still is very much an industry dominated by companies that span out of accounting firms in the 80s. And there's lots of email and paperwork and documents flying around. And, you know, things aren't integrated. And really, we're just trying to put that all in one place and make it a really smooth, seamless experience and highly automated.

2:53When you say run it from your phone, are you talking in an app or just like from a web browser? Yeah, I mean, right now, we mainly use a web app. And then we're going to launch a mobile app just because you get a bit of enhanced functionality. Although, you know, that's, that's not actually so much the priority right now. I also think if you think about large language models, there's a lot you can do now where it's like, okay, let's say I need to call capital for my fund, right? So I need to email all my investors and collect money for the fund, because I'm going to make an investment. there's a world where you just kind of message our agent on whatsapp and say hey i need to call capital for fund one and then that is just it just goes away and is orchestrated so for us it's about trying to get close to where people's workflows are already you know handle things for them in as as non-interventional a way as possible like you don't really want to go out log into another product navigate through a form fill out information right you don't need to do that anymore So, yes, it's really for us about meeting people where they are.

3:52Mike Butcher:And you feel that you can actually address that with this kind of platform that taking a lot of friction away. Surely there's a lot of legal friction that probably is worthwhile being there. So some friction you need to keep. Definitely. It's a very good point. And you need to ensure you're adhering to compliance standards. But that's why this is the kind of and it's there's also just a heavy services element to this, like some things you cannot automate, you cannot do with software here. and you want humans in the loop. But, you know, firstly, that's why this isn't the kind of products you could just like vibe code.

4:25And for us as a business, it means, you know, you've got good defensibility and a good moat. Yeah, I think secondly, we like the services element of it because there are all these complex workflows that, you know, A, just aren't being done very well by some of the legacy service providers and just doing service better can already give you an edge, right? Just being faster, more responsive, that kind of thing. And then secondly, it's like, OK, how do we break down each of those ones and automate it piece by piece? Again, using, you know, kind of agents as much as possible.

4:57Mike Butcher:Are you going to have lawyers with pitchforks outside your door? So interestingly, as we scale, what we're finding is legals is probably not the first bit we see as important to automate. Fund managers like bringing their own legal structures to the platform. and LPs like being able to like redline the doc. If you're the anchor investor, the main investor in a fund, you wanna be able to review the legal terms, change things and that kind of thing. So kind of templated legals and that whole piece is not really a good fit for scale, especially when you're talking about global because it's like, okay, I wanna bring a Cayman structure or I wanna bring a Delaware structure or I wanna bring a Luxembourg structure.

5:41So you need a platform that's very kind of composable. So really the bit you wanna focus on automating is like, okay, once you've got those legals in, how do I ingest all the information and figure out what parts each investor needs to sign, what tax information they need to provide, and then plug into the bank accounts and make it easy to call capital, handle the accounting, the payment flows. Those things are fairly standardized worldwide or with compliance controls in place. Whereas legals itself, I think is, we see them as partners, law firms. on simpler structures like spvs there are fairly off the shelf ways of doing things you know it's become a bit like a safe agreement right but like the safe agreement hasn't really like killed work for law firms it's probably automated the work that was like lowest value for them like pre-seed rounds um and creates more of a pipeline actually of work at the later stages

6:37Mike Butcher:for stuff that's more valuable so um and also i noticed that in your announcement you said that there was a starting price of six,$6 ,000 per deal. So what's the sort of sweet spot here? Is it solo GPs, angel collectives and syndicates, family offices, scouts? What's going on? Yeah, I would say we do a lot of work with angel syndicates, solo GPs. We also do a lot with people doing secondaries. So let's say you want to do a vehicle to bring a bunch of family offices, businesses, high net worth, whoever from your network into like SpaceX, Anduril, you know, open AI, Anthropic, those kinds of businesses.

7:17There's a very active secondary market for shares in those businesses and people are using SPVs a lot for that use case. But it's a fairly scalable structure. So like if it's a simple seed investment for an angel syndicate with five or 10 investors, you can do that very cost effectively. If it's a complex, you know, 40 million transaction involving more institutional partners and they're buying something a bit less standard, we can do that. It just costs more. But a lot of the underlying technology and workflows are the same regardless of the deal size. So, you know, broadly, we start at that price, we charge kind of a percentage and a cap, and where the fees land is based on the complexity of the deal, how fast you want to get it done, what regulatory environments you're engaging with, and compliance.

8:10And then there's a bit on AUM as well, bigger AUM, we charge a bit more, we take more risk and liability there, obviously, as well.

8:17Mike Butcher:So there's obviously a bit of an aspect of bridging the Atlantic here. So why do you think this is especially important right now for connecting US capital with European deals, when there seems to be a lot of talk because of geopolitical machinations, as I'm sure you're aware, about Europe sort of going further out on its own these days? Yes, it's a good question. So I think, you know, people can say that politically. But if you look economically at how things operate in reality, we are deeply embedded in the US economy as a trade partner. And the US is deeply embedded in Europe as a trade partner.

9:01And that's not going anywhere just because of what people say, I don't think. And also, you know, the current state of affairs isn't going to last forever, I don't think. And, you know, you kind of need to think long term about these things as a business.

9:20Secondly, we just know that there's tons of investor interest in getting into the next, you know, lovable Eleven Labs, Revolut, you know, Spotify, whatever, at the earliest stages. and US investors are kind of dumbfounded at how cheap pre-seed and seed, you know, series A's are in Europe. And I also think founders in Europe are starting to become more ambitious and global from day one and are recognizing earlier that like, okay, maybe then rather than launching in like the UK or Ireland or France or wherever I am, I should just go straight to the US as my target market. it, you know, they realize that at different stages or it makes sense at different stages, but it kind of tends to happen eventually.

10:07And providing structures that make it easier for U.S. capital to get into European opportunities, I think, is a win-win. If you think about the other way around, American capital markets just kind of dominate globally, right? Like if you look at stocks, if you look at ETFs, like everything's in American stocks, so much global capital capital is, you know, we're almost over, we are overweight, you know, US stocks. If you look at tech, like we don't offer a US legal structure right now, but 25 % of our deals on our platform are in US companies. So European and UK investors already are investing a lot in the US.

10:49And what we're offering here is like a structure where let's say, for example, you're a fund manager and you want to do an SPV like a sidecar into a deal you're already doing through your fund you know alongside your fund you want to put in under the 500k or a million or whatever whatever and you've got some european lps but also some us lps this is a really great structure that allows you to do that very easily and get cash into those those deals um or let's say you're a us fund manager and you have some european lps um it's very easy to put them through this structure into a US company. So we're basically making something easier that we already see happening a lot.

11:32Mike Butcher:What is it material difference does it make to the startup entrepreneur themselves? Is it about you encouraging them to have their investors on your platform or them listing on your platform? And how does it work for them? Yeah, good question. So it's first about offering the tool that like solves the problem i think for the investor is how we think about it longer term we've got some ideas around how we could like more actively connect the dots um you have to think about like how you do that in in the right way um but but i think um making we work with a lot of founders you know a lot of investors um and making them legible to each other through our platform and able to connect through our platform in some shape or form is something we're planning to do.

12:23You've got to think about the right way to do it. You know, the private markets also work because they're kind of private and referral and network based. And I tend to find like open platforms that are like, oh, connecting you with VCs or connecting you with founders don't really work. And there's an association with kind of the quality not being high. But I think done the right way, you should be able to try and engineer some of the same serendipity you get from like being in Silicon Valley, you know, in the same physical location or being in London in the same physical location as like other founders and investors, right?

13:03The reason those ecosystems work is because they have a very high density of people. And then there are people just at parties, that kind of thing, you know, bumping into each other talking like that's how we first met right like we met at a party in London um so it's it's kind of I think you got to think about how you how you solve that problem and I don't think that's a super easy problem to solve so it's not like top of our list right now but we do definitely have

13:29Mike Butcher:some ideas we're thinking about it well it's interesting you've also announced that you're opening physical spaces in New York and London what's the uh what's the thinking behind that because it's not often that you know online platforms do these physical spaces yeah it's a good question so i think two things like as uh online gets more saturated with slop in person becomes more valuable as a distribution channel to everyone so providing a venue for people in the ecosystem to come together and and meet is valuable and then we also just know if we put ourselves in the middle of communities that exist anyway and give them a space to congregate it's a good go-to-market strategy for us it's kind of a win-win you know like they get something they need you know also like startups don't have tons of money even though emerging fund managers right angel syndicates are not drowning in cash by by any means right that emerging managers it's almost worse than being a founder in terms of what you pay yourself in the early years i'd say probably is.

14:32So giving them a free space is valuable for them and valuable for us.

14:36Mike Butcher:Very interesting. Well, I look forward to you taking on WeWork with that idea. But just finally, if an investor or an entrepreneur were looking at the market dispassionately, and there are other products out there, by the way, that do similar things to what Odin does, what would be your pitch about how different you are, maybe how different this particular new announcement makes you, and where do you see things in the next few years? Yeah, good question. So on this specific product, it's about making it global and multi-currency. There is no Delaware limited partnership structure available that you can run deals in like euros, pounds, other currencies at the moment.

15:15There's also no platform with a good understanding of UK and European regulation that would let you run a Delaware structure compliantly. The other thing I would say is if you're like a European or UK investor and you use a US platform, not only do you run some regulatory risk because you don't understand what regulatory perimeter you're engaging with and it's more heavily regulated here. You're basically running a fund unregulated if you're not careful. They also use a structure called an LLC a lot there, which is fine within the US because it's considered tax transparent, but it's often considered tax opaque in Europe.

15:48There's a good case law on that in Germany and the UK and there's a lot of people doing SPVs through LLC structures at the moment from the UK and Europe and I think they're running unnecessary risk.

15:58Mike Butcher:And so what's your hope for how do you think things will look in the next couple of years if this takes off? I mean we want to enter the US market and focus on the US within the US and go up against the players there you know Sidecar and Angel List are probably the two main players you know we see as as competitors, Carter to some extent as well. We also want to continue to expand geographically by offering more legal structures in different domiciles and really having a flexible global platform. And then I'd love us beyond that to start to see more of that connection between founders and investors happening via the platform.

16:38That's the other ambition we have. But you've got to take things one step at a time. As you know, entrepreneurs have lots of ideas. It's all about how you execute and how you do that, you know, with focus.

16:49Mike Butcher:Well, it's very interesting to see you doing this sort of multifaceted play, not only with the online platform, but obviously it's all the legal structures. And also a European and UK company, you know, going across the Atlantic and maybe being more counterintuitive against what's going on geopolitically right now. but fascinating to talk to you. It's very interesting, a quick deep dive into what's going on under the hood of this investment scene. But thank you so much, Patrick Bryan, CEO and co-founder of Odin for joining PathFounders.