Seedcamp’s new $320M warchest is for AI, deeptech, and US expansion

0:00Mike Butcher:Welcome to Path Founders with me, Mike Butcher. We like to look at the code from the entrepreneurs, the capital that backs them and the consequences.

0:11Mike Butcher:Before we get into this latest podcast, I just want to draw your attention to an upcoming Path Founders event. Path Founders Unpacked Understanding Sovereign AI will be in July 16th at Google's offices in London. and it'll feature James Wise, who's a partner at Baldurton Capital, Ben Peters, who's co-founder and CEO of Cogna, a leading AI company building for physical industries, and Vaish Kawada, who's co-founder and CEO of Salience Labs, which is producing low-latency optical switches. We're going to be discussing the hot subject of sovereign AI, which has obviously blown up recently with Anthropic having its models withdrawn from international consumption.

0:58Mike Butcher:What does Europe do about it? How do we build sovereign AI? How do founders get involved in sovereign AI? And how do investors operate in that world? So please join us July the 16th at Google's offices in London. Now, let's get into this new story. Seedcamp, one of Europe's best known early stage venture firms, has raised$320 million for its next phase of investing. The capital is split between a$220 million fund for new first check investments and a$100 million select fund, or let's call it a later stage fund, to back its strongest portfolio companies through Series B and beyond. The firm, which is an early investor in Revolut, Wise, UiPath, FluidStack and Synthesia, is also expanding its US presence and placing a bigger bet on startups operating where AI meets science, robotics and the physical world.

1:58Mike Butcher:Joining me to explain the strategy and what Seacamp thinks Europe's next generation of global companies will look like is Seacamp partner Tom Wilson. Thanks very much for joining us on Path Founders, Tom. It's great to be here. Thanks for having me, Meg. So I'm going to get into the nitty gritty here. You're announcing this£320 million, but it's really two vehicles, isn't it? It's£220 on core fund, which is early stage, and£100 million on select, which is, I guess, later stage. But you're wanting to sort of double down on this sort of new era, you call it. What makes you think this is a new era?

2:39yeah i mean it's a great question um in terms of like why we're so excited about this year of investing and why we think it's you know perfectly timed to have this new pool of capital both for our core strategy which is obviously what seacamp's been known for for doing over the last best part of almost 20 years now as one of the first investors uh investing that early in europe but also with our select strategy you know second fund there um doubling down on our winners uh the i mean it's you know you'd have to be living under a rock to not see what's happening in terms of like the underlying technical tech landscape at the moment around AI and the opportunities which that's creating at almost every single layer of the stack.

3:19You know, you mentioned there about, you know, some of the sectors that are, you know, particularly interesting right now, you know, whilst we're an agnostic investor investing across a wide range of different sectors, we also see, you know, pockets of interest that we've been, you know fortunate to invest in very very early um you know you pointed towards a couple of things in that intro around like how you know ai is obviously it's it's it's changing the way people work it's interacting with you know so many different um facets of life but there is still huge opportunities across like physical ai and where that is meeting like robotics and actually dealing with the real world so that's a you know very very interesting um opportunity to be investing so early right now and also draw draw kind of like a similar um stage in terms of where we're seeing things around where ai is interacting with the sciences you know very very hard to solve problems which you know we haven't actually been able to solve with current uses of technology so you think about drug discovery or finding kind of like novel materials and you know that whole deeper tech landscape i think is particularly interesting now um and when we think about our you know focus for investment across the whole of europe but with an office in in london the the talent that we're seeing around you know just those two spaces coming out of technical universities is is really really exciting and really promising but there's also you know huge opportunities in areas that either we haven't even necessarily thought of yet but we're really fortunate that founders will come to us and they'll be the person who's like you know driving that that um that interest in those areas and that's the most important factor that we see is the founding team.

5:02So, you know, we're very, very open to not just those spaces, but wherever they might be building a company.

5:08Mike Butcher:Well, you mentioned this, obviously the shift to AI and these deep tech companies, but CCAP's not been known as a specialist fund. And as far as I can tell, you don't have any specialist knowledge in some of the areas you just mentioned about that might be material science or physical AI. So how are you going to deal with that problem? Yeah, I mean, so, you know, our focus is whilst we're not a specialist fund, you're exactly right. We're very, very focused on the stage that we invest. So we are specialists in terms of like the early stage. You know, we're specialists kind of like DAISY or our investor.

5:46That's what Seachem's always done. That's been core of our DNA. And that will, you know, remain the case. Where we're fortunate now is because we've got, you know, a large portfolio built over since 2007. And we've invested across pretty much all of these themes that we've described quite significantly. That means that we've got an amazing network to draw upon, whether it's for, you know, things like you described there around like diligence and getting a sense of the market, or whether it's for even more so probably like supporting those companies post-investment and helping connect them to like founders who are building in similar spaces.

6:19So whilst we are, you know, as you say, we're not a specialist deep tech fund by any means, We actually have an incredible group of companies that we've already invested in around a lot of those areas that I just described that we can use for whether it's diligence purposes or whether it's supporting them post-investment. And so we think that that network is an unfair advantage that we can bring to our companies and also from a sourcing, selecting, winning on the investing side.

6:44Mike Butcher:So you're saying you're going to rely on your portfolio founders to advise you? i mean i think that it's it's it's you know whether it's advising or whether it's you know building up expertise ourselves as investors so you know there'll be people across the art investment team you know we operate it's very much like a team so you know we we move away from this idea of a kind of super partner attribution model where you know this person only works with these companies or this person who works with these companies and so we can draw upon the experience that each of us have had working with different companies across different sectors which inform obviously the next decisions that we make when we meet those kind of companies.

7:24And then that experience is informed by the founders that we back. So, yeah, I think it's can we draw upon those founders to help with diligence and things? Absolutely. In the right circumstances. But also we've internalized a lot of that information. And then I think the other thing I'd add is, you know, whilst that sector expertise can be incredibly valuable, I think also just having the handle of, you know, what great looks like at the very beginning. And we've seen that across so many different sectors. And we recognize that, you know, that the founder and the founding team is going to be the most important factor.

7:59And we feel like we've got an exceptional way of being able to assess that. And with the way that we invest as well, because we're looking at this quite collaborative structure, however, we invest in the kind of six, seven to eight, nine percent kind of range. It does leave space for us to build incredible syndicates, investors around us to help kind of close out that round. And that might mean bringing in angels with specific sector knowledge or other founders. We backed from that kind of space as well to complement our general early stage experience that we can bring to the cap table.

8:36Mike Butcher:Well, it's a long time ago, but in 2007, I went to the launch of Seed Camp and it was only raised about two and a half million dollars as its first fund. So it's come a long way to 320. But at that point in time, I think a lot of people thought that this was going to be the Y Combinator of Europe. But it didn't really turn out that way, did it? It was more like an acted more like an early stage investor. And yeah, sure, it's had some great wins with Revolut and Synthesia and UiPath, etc. But why do you think Europe didn't get the YC model that Seacamp aspired to be in the early days? Yes, it's a great question.

9:24I think, you know, when you look at the network that we've built now, in terms of like the number of companies that we've backed that the close it's it is the closest that to a yc kind of like scale network just because of the kind of time which we've been investing at the very earlier stages the breadth of the portfolio now you know the companies that you mentioned there you know the the syntheus the food stacks the ipaths the revoluts that have now scales to you know thousands of employees themselves means that you do have a kind of what we call you know a nation to be able to tap into it's almost like its own economy and we've seen that be incredibly beneficial for the companies that we invest in because if they're looking for their first customers or even their first hires there is a an inbuilt network that they can access by being a seed camp company and probably the only network i'd say which is greater than that is something like yc but we've we've achieved in a slightly different way you know we've obviously been an early stage seed fund that makes you know higher number of investments than was typical although the markets maybe moved more in that direction so i was to build these bigger portfolios but you're right that it's not you know in any way like a programmatic approach like yc i think we just recognized early on that we saw a lot of the value that we're providing to the companies is it's it's lifelong you know these are like 10-year relationships that we're having with some of these companies if not more um because of how early we're investing and so gearing our support model more around that more around you know a seed fund just fit better um with where we saw europe at the time that you know probably around 2013 2014 or something when we maybe moved away from just like programmatic investing to something more like a seed fund and we've just been really fortunate to meet fantastic founders and be able to kind of double down that positioning um and as you said at the start you know we're extremely excited about this fund because we feel it's perfectly time for this next wave of innovation.

11:18Mike Butcher:Well, you're also making big play of this transatlantic bridge. You've got a US team. Reshma moved over to the US some years ago. One of your founding manager partner. You've got good relationships in the US. But in the era of sovereign AI, don't you think that your strategy is going to start to bump up against some of the geopolitics that are going on right now. Yeah, it's a fascinating time in the world of sovereign AI. And I know you've got this event coming up soon, which sounds like an excellent event that I'll have to try and make along to. We've been part of some of those conversations as well.

12:00Our view is that with the Transatlantic Bridge that we're building out, it's kind of like an evolution of what we've been doing for a long time. right you know c camp has been regularly spending time in the us uh traveling over there helping companies and scale at the right time to to access that market which is obviously incredibly important um and then with this band as you say russia has been over there for a number of years hillary who is is leading on a lot of our initiatives leading on the initiatives for for the select strategy and building out that team and we'll be we'll be hiring into to that group as well it means that we've got a really fantastic like next step for companies at the right time you're traditionally that's been at the kind of series a b stage where companies have found a market fit but increasingly we're also seeing you know some companies want to make that step earlier and so we're well placed to be able to serve both both of those kind of scenarios um and the you know the the sovereign piece is is an interesting one right i think our view is that the company should go wherever the company needs to go to maximize its its opportunity to build you know like a hopefully market defining company um i think there will be opportunities for some businesses that we invest in to double down on you know sovereignty and actually playing that as the angle for why they win and there'll be others which you know are more of a kind of like typical journey where they recognize that europe is a fantastic market but us is at a different scale and they need to move there really really quickly so we hope that by having this kind of as part of our offering that we're well served to capture either of those founders you know building the best companies probably with some form of european starting point but

13:40Mike Butcher:ultimately building global winners surely also in this era a lot of people talking about the the merger of hardware and software and chip design we saw fractile come out of the uk with an inference chip for instance it's going to be a bit harder for you at that early stage with only 100 million at the early stage to really join those kinds of rounds is it not when you're talking about hyperscalers kneeling billions in in or chip design needing billions um it's going to be tougher for you guys to to get involved in that isn't it yeah i mean i think the you know the 220 million dollar um core fund which is you know our where we're looking to invest it pre-series a so kind of like everything first round um it's i mean i'd be lying if it's not a conversation we have very regularly when we see you know some of these companies come out with probably rounds in the 50 100 million ish kind of range as a starting point when you see kind of spin out neolabs coming from you know the likes of deep mind and others um i think some of those rounds you know will be challenging for us um as a starting point just from an economics but we are now open to definitely investing in larger seed rounds um we i think the question which we'll ask ourselves is that for businesses that are you know at that kind of level um and maybe not in the hundreds but definitely in the tens of million in terms of a starting point it has to be something which is you know 100 billion dollar potential really you know where you know the a smaller stake can still have a material impact on the fund um obviously with some of these and and there's a justifiable reason why they're raising that capital and you mentioned some of those there around like specific innovative forms of compute and hardware which may justify that as a starting point and absolutely you know we want to be part of those journeys as well if they if they are going to be some of the most meaningful companies and if they are as big as they could be then you know even with that kind of economics we can still make a meaningful impact in the fund but increasingly as well though there's i think there's there's op it there's we're very very bullish on the opportunities for companies not raising those size rounds, but raising rounds that are more in the kind of typical, but still a lot larger than back in 2007 when Seekam got started, seed rounds, because we think that with that amount of capital, they can de-risk the business hugely and set it up for success.

16:06So it's only going to be some of those real outlier categories, which justify an extremely high kind of like initial round. And then, of course, whilst we have a model for investing you know in the space that we described in terms of where those economics sit you know that model is is there to to be challenged and you know we're open and flexible to to participate in those rounds where it makes sense for us well it hasn't all been plain sailing

16:32Mike Butcher:has it because you also invested in hop in uh during the pandemic which uh really kind of became a busted flush um have what have you learned from that experience yeah i mean look hoppin was at the time fastest growing you know company in europe throughout the world um you know captured a huge amount of investor interest raised from you know the the tier one of tier one investors i think you know what we learned from that is the the founder of that business johnny was an exceptional entrepreneur um we backed him you know at the very very earliest stage so i think from our perspective we found kind of we did the piece that we wanted to do there which is find the best founders building the companies with ultra high ambition which can you know scale to a massive part of the market um but obviously there was a big part of that business which was fueled by an era that you know didn't continue in a way that a lot of those investors who invested follow on after us anticipated would um because that was a world which they thought everyone would you know stay online and experience events in a way that had to during covid but obviously when covid um started to to to clear up that that wasn't how people wanted to necessarily experience events and whilst that business was still very successful um even when it was like exiting the the growth was not going to kind of like continue in the way it was during that period of time and so you know the learnings there are there's there's many there's many learnings right i think that you know when i look now now i've been fortunate to be investing at the 80 stage with secamp for 12 years and it was part of that um situation with hoppin and and it's an interesting you know um bit of experience to be able to to to relate to some founders who are raising very large rounds in this market and saying you know when everything's up here it's fantastic but when things can start to slow down um you know you you you can limit the opportunities that you have to be able to navigate through that period if your valuation is extremely high and obviously that's what we saw in hop in and um it's it's a you know it's i think it's something that in any kind of a cycle um where you start to have those companies which you know reach the very very top of it you'll have some companies which you know fall foul of that situation and so that was an example of one of those.

18:54Mike Butcher:Well, presumably you'll be trying to dodge the hopping bullets next time around with this next fund announcement, but it's definitely a long way from 2007 and a two and a half million fund from back in the day. So, and it's certainly been very interesting to watch Seacamp's journey over the years. And I'm sure that London is also being such a centre of AI is probably going to play well into your strategy over the next few years. What's your last quick thought on what's going on with so many announcements about tech companies arriving in London? Yeah, I mean, I think that this is a really, really good point to end on because I think that London in particular, Obviously, we invest for Europe, but our office is here.

19:45And I think it's an amazing position to be because you've got arguably one of the most important companies in the whole AI space in Google DeepMind. And that being such a key pillar for Alphabet's AI strategy being based in London. You've got now Neolabs spinning out from that. You've got other large hyperscalers investing in setting up heavy research offices in London. and you've got kind of mashup with some of the best universities in the world. So, you know, we think a lot at SeedCamp. And I think we've been really fortunate since 2007, since you've known us, Mike, about the kind of flywheel across kind of like technology.

20:23And what I mean by that flywheel is obviously companies which are successful and then having people who are early at that business or the founders of those business go off and set up other things. And then you've got investors and you've got angel investors come out of those. And I think you've seen that when Seacamp was set up that didn't exist in Europe. We've seen that play out across different spaces. But the density within the AI community in London now is a phenomenal example of that. You've got all these companies which are spinning off and setting up from early employees. You've got this kind of world class experience.

20:55You've got angel investors. You've got new sources of capital coming into that ecosystem. and you've got a real density that is probably only matched by what's happening on the West Coast of America. So I think it's a phenomenally exciting time. I think it's all there for London to have a huge impact in this next technological wave that we're all living right now. So, yeah, we've just got to go and do it.

21:18Mike Butcher:Well, exactly. Well, good words to end on. Thank you very much for joining us on Path Founders. Tom Wilson there, Seacamp partner. Thank you. Yeah. Yeah.