Founders need to think global from day one: Sara Rywe, General Partner at byFounders

0:00Sara Rywe:Hello and welcome to the Scaling Europe show presented by Deal. This episode is sponsored by SurrealDB, the multimodal database for AI agents. Omni, the AI analytics platform trusted by growing companies like Perplexity and Symbesia and VentureComet, the platform that gives startups and scale-ups real-time equity tracking, daily business insights and automated management information. Thank you for joining me. Please like, comment and subscribe.

0:33Sara Rywe:Hello and welcome back to the Scaling Europe Show presented by Deal. Today, I've got an amazing guest, Sarah. Thank you for joining me. How are you doing today? Very good. Sun and shining. It's lovely. It's absolutely lovely. Look, you've got a super interesting career. You're now a general partner by founders, but you're not a career VC by trade, I guess. You've had a wide range of things. Can you just give a quick, maybe one minute overview in the different roles that you've had throughout your career? Sure. I mean, very high level. I started kind of falling in love with the whole entrepreneurship stuff when I was a kid, and then worked with a few startups before going to university.

1:11There's a story to that. And then continued with the whole startup track throughout university, and then ended up on the dark side out of university so that was McKinsey and Bank and and then luckily kind of found my way back to the startup scene but through the lens of investing about seven years ago when I joined ByFounders as an investor.

1:36Sara Rywe:Amazing so some operating some founding some consulting and now you're in you're in the world of investing what's been what's been your favorite to date? oh that's a super good question um probably i i experienced a lot of crazy stuff with one of the startups i worked with in in singapore uh that was a a big roller coaster experiencing a lot i was only there for a few months but it was still one of the you know those things that i cannot talk too much about it here but over a beer once i'll i'll tell you all the details oh amazing sounds interesting um yeah i always love speaking to people who are ex-consultants because that's how i started my career as well that's often feels like the the traditional classic career path for lots of graduates um is there anything that you took from that experience because i think there's a i speak to a lot of investors who are quite critical of x uh professional professional services people who end up going into VC.

2:40Sara Rywe:And I know that hasn't been your complete strategy, given that you have done entrepreneurial and startup experience before. But do you think there's great skills that you learn from being a consultant that you're using today? I honestly think there's great skills that you learn. A lot of it around like hatching information, delivering information, the classic kind of problem solving toolbox that folks tend to mention. But to be honest, I think that's the one part of my career that is the least beneficial for my role as an early stage investor in my opinion. Yeah. Yeah. Interesting. Yeah. I mean, it's honestly like the jobs that I had growing up doing like shitty weird stuff.

3:28I mean, anything from working on factory floors to working at McDonald's for five years or working as a home helper for three years, working really, really hard around the cloth seven days a week while also studying. That kind of experience, I think, has been more formative for my role as an investor today than some of those more prestigeful stuff like McKinsey.

3:55Sara Rywe:That's super interesting. If you could go back in time, would you choose a different career path for coming straight out of university? Yeah, I think I would just have liked to spend less time at McKinsey. I was only there for three years, so it's not like a big chunk of time. But I would have rather, you know, spent a year there and then spent a couple of years building a company or working with an early stage startup than spending the full three years there. Yes. Yeah. Three years was the same amount of time I spent as a consultant. And I, yeah, well, by the time I quit, I just quit my job with nothing to go to.

4:35Sara Rywe:Because I was like, I just have to get into tech. I just have to join as early startup as I possibly can. And I don't care if I'm unemployed for two months. I just need to dedicate 100 % of my time to it. But when I realized it was like, I need to do this. I don't, you know, it's easy to get in that sort of rat race of consulting where it's about getting to the next promotion, getting on some good projects. and I did yeah for me it was like a real pimp from the world and why I just need to get out um I've been listening to some of your podcast appearances in preparation for this and one of the things that by founders have become particularly famous for especially in the last year is the uh the the co the co-leading of the the first institutional round into lovable yeah um and one of the things I heard you talk about was how you won that deal and I thought that was really really interesting because what I took away from the things that you were talking about was it was it was all about you were able to leverage your network and your relationships and that's a big thing for by founders anyway that's a big part of your usp but you were essentially able to activate your network to help convince anton and the team that you were good investors value add good good partners to have and then you also talked about speed and how you were just like ready to go yeah and i i just wanted to get your view on those two things is like speed and community i think five or six years ago they wouldn't have been seen maybe not i don't think they would have been seen as that really big advantageous deal winners in european vc do you think that's changed do you think those two things are becoming increasingly important in european venture 100 and i mean first of all i think if we talk about lovable i just also want to ensure that i do the shout out that is needed here which is like my calling magnus is by far the person in the Buy Founders team who earned all the respect and right to invest in Lovable and did the sourcing.

6:25So I'm the background dancer here and having had the pleasure to now work with Anthony and Fabian from day one and I appreciate that a lot. But just want to ensure that Magnus gets the shout out here that he deserves for Lovable. and then to the topic of speed and community, I think honestly, this is what matters the most, both in winning, but also in supporting. So like both sides of the spectrum here. I think American investors have proven or continue to prove and they're even more aggressive than ever before how they can just like jump on the fly, get over to Stockholm in front of a founder, no meeting booked, and not leaving unless they're getting a signature on a term sheet within 24 hours.

7:22Very few European VCs does that. And I think it's a challenger fund that we tend to call ourselves because we're investing from our third fund. So we don't have this history of a way of doing things, but we can actually act very swiftly. For us, this is one of the key advantages that we can go from first meeting to investment in days instead of weeks.

7:49Sara Rywe:Yeah, I think I always talk about the speed of the Americans. And there's so many examples of us in terms of Europe. I guess losing, but maybe that's not the right phrase, but you know, companies like Lagora, Eleven Labs. I even posted about Dentio I think was it Swedish? Yeah, it's Swedish Exactly And I was speaking to Gabriel How on earth A16 don't have an office Of 4 ,000 miles From Stockholm They're like high school friends They led the pre-seed And I think it's just crazy And I spoke to Brian as well About 11 Labs and the Series A And it's just like How are these Americans Winning so many more deals And yeah, I mean, I heard that there was a lot of American interest in the lovable deal as well in the very early stages.

8:36Sara Rywe:And so even that, I'm like, wow, they really are everywhere. And are you finding that that's becoming more and more the case, especially now that the region is becoming really exciting? Everyone's been talking about it for the last 12 months. Is it making your job harder in the sense that, you know, are deals becoming more competitive? Oh, 100 percent. But I think it's a cyclical thing. So it was the same thing happened in the 21-22 boom, right? When suddenly all multistage funds decided to do pre-seed investing because it was too late to get in later. And that meant also a lot of American funds, they could do investments over Zoom.

9:12So it's not the first time we're seeing this happening. But yes, now it's happening again with the AI boom and the Nordics are just overperforming. A lot. So I think they're just doing their job. they're doing what they should, which is hunt down the best talent wherever they are. And right now we have a really high density of extraordinary AI talent in the Nordics.

9:38Yeah.

9:39Sara Rywe:Are you losing more deals to Americans or is it, you know, the classic European, you know, big players, multi-stage? Are you seeing more of those at the early stages? Are you losing deals to them? I think we're about the same level as 21, 22, high if it comes to losing deals against Americans. We've lost two deals, and they've both been to American funds in the past year. But I like it. I think this is the best for the ecosystem. I think what it does is just that It puts the pressure on all European funds, including ourselves, to just prove why we are better. And there we're lucky to many times prove that we can be even quicker, even more aggressive, even more valuable.

10:36But it's hard work. So, yeah, it's a work around the clock to ensure that we keep up. And I think it's a healthy thing for the ecosystem that it happens.

10:47Sara Rywe:Yeah, I definitely think so. It does feel like traditional European VCs have been slow moving. And that's definitely what I've spoken to American VCs who are winning the deals. They're saying that it's easy to compete with Europeans versus Americans because speed is a key differentiator. Yes. And they will do anything. Like you said, they'll get on a flight within two hours. They'll fly to Stockholm to sign the deal. of it and it seriously happened just like a couple weeks before christmas and um and close to to the founder that was you know in this position and it was very interesting to just experience from the sidelines uh the level of creativity that a lot of fans uh youth to to win that's so interesting and what's the appeal from the founders you think you know like what you know is it do they like how quickly Americans are moving?

11:39Sara Rywe:Is there more value add to a big US name? I think no one dares to say that it's about like the brand, but I think 90 % of the times it's about the brand, to be honest. Like if you think that that can be helpful for you to recruit the best people and land the best clients, that's what you're going to go for. I think what we're seeing now is that a lot of founders who've been through the journey of building companies before have a little bit of a more thoughtful approach where they're like okay i want to access all of this that a lot of the american funds can give us but at the same time i have really shitty experiences with you know cultural shocks and not being values aligned and not being prioritized when you have like a pre-seed check in a like fund with billions in AUM and you're just like ignored and those guards kind of come follow with you in to your next venture and so I'm seeing a lot of second third time founders prioritizing to have investors on board that they believe they are more values line with and more proximity in regards of geo and everything else initially just to show you have someone to kind of have your back because it's a long journey you're gonna have like tons of investors and your board is gonna grow all of this so just having one individual who you know you can trust 100 and who you know will support you in bringing up difficult topics like if you want to take a month or two a parental leave or if you like things like this that tend to be difficult in investor founder relationships particularly if it's a nordic founder and a u.s investor uh so yeah i'm seeing a shift but it's mainly with the more experienced founders who are appreciating also to couple it up with some local support god that's really interesting And talking about the region as a whole, why do you think, you know, the Nordics, the new Nordics, Silicon Valhalla, why is it overperforming?

14:04No one knows, but I have my theories, of course. I think, first of all, we need to think global from day one. Like if you think of a Swedish founder or a Finnish founder or an Estonian founder, building to win your home market will not get you anywhere. But if you are a French founder or a British founder or a German founder, you can build a decently sized business in your home market. But that is impossible across the Nordic and Baltic countries. So just having to think global from day one, I think, is a big mindset shift that is playing to an advantage for us in building venture scale outcomes.

14:45another thing is that we have a history of being you know really on the front frontier of technology development no matter if it's like telecom with ericsson or biotech with noble or climate tech with vestas we have these like companies has been around for many many decades already who've been like global leaders in their respective technologies. And then that has been also breeding into the first generation of the real startup community, like the Spotify era with Klarna and iSettle and Plio and everyone else. So that role models, those role models and those generations that have like trained each other on what good technology looks like, I think is super helpful.

15:38and then we have really good educational systems as well good tech universities engineering schools so i think it's a mix of those things uh but clearly thinking global from day one i think

15:49Sara Rywe:is one of the main things yeah yeah that's definitely something i've heard before i've also heard that because it's small enough the ecosystem itself is really tight they're like everybody knows everyone all the founders are really supportive and you almost have these like generational tiers. I was speaking to Lucas from Tandem Health and he was talking about how he's sort of like graduating into like the next tier and now he's now supporting the next generation of young founders from the region and how there is this really close close-knit community that you just can't have in somewhere like London, which is a massive ecosystem that's incredibly spread out.

16:27Yeah, I 100 % agree. But I think Stockholm and Helsinki stands out there. I think the The rest of the Northeast politics have a little bit more way to go. But Stockholm and Helsinki are incredible on that.

16:40Sara Rywe:That's interesting. And how do you think the ecosystem is going to change over the next 12, 18 months? I think when we look at the last year, so many amazing sort of like application-led companies coming out of the region, like the Love Wars and the Agora's and actually so many others were spun up and raised money in the last year. It feels like in the last three months, even when you look at the funding rounds across Europe, there's been a not like a maybe a bit perhaps a slight shift and we're seeing a lot more fundraising going to deep tech uh frontier labs you know whether it's ineffable intelligence chip it's like we've seen olex we've seen a couple others like with if you and defense of course i think we've had two defense unicorns already so we're seeing like defense deep tech uh yeah frontier chip we're seeing europe invest more and more into this hard technology category do you think the new nordics can play a big role in that category as well oh wait hunters and here i would say finland is you know one of the best in the world um i think i know that they're very famous for their gaming history but when it comes to deep tech fins are incredible robotics incredible now with Verda as well from Finland like we're seeing a lot of extraordinary companies in deep tech coming out of Finland and then of course rest of the Nordics as well it's fantastic now to see you know One X out of Norway and we're seeing a lot of defense now in Denmark Denmark is really really good and everything defense related and space so yeah we're seeing hopefully my view is that and deep tech and hardware and just things that is more difficult in that sense will give the rest of the nordics a way to shine because i believe sweden has very much been leading the way in everything ai on the software layer and so i hope to see the rest of the nordics shine now when it goes into the hardware layer can we talk about verdicts i saw you posted about them it seems like they're having they're in this moment right now of crazy exponential growth and you know when you see a story like that they're still relatively early i think you posted about them being at 50 million of kind of like annual recurring revenue yeah or revenue run rate you know that's big but it feels like they they went from 30 to 50 in two weeks yeah four weeks which means that four weeks four weeks which was given where they are now i mean the rest of the year continuing that trajectory is going to be insane so can you talk about a bit like who they are what they do and where this worth is coming from yeah i mean uh virtus um becoming you know europe's hyperscaler uh and is up against the core weaves of the world and um they are just incredible executors when we initially invested they had bootstrapped themselves to five million in ARR which is like rare to see nowadays and we had a big question like if we now invest will they be able to give them like take on this very much accelerated venture journey that we expect venture cases to be on and and we invested and clearly they they've achieved that so yes when we talk about the the contracted ARR numbers they the end of December uh around 30 mil and then ended January around 50 mil.

20:12And now they have clear line of sight for 75, 80 mil and probably reaching their 100 million ARR target before the summer. And that was their end of year target, right? So it's pretty crazy to see what they're achieving right now.

20:32Sara Rywe:That's amazing. And I guess maybe part of their play is being European and sovereign in this kind of like sovereignty discussion that we're seeing where else do you think this growth is coming from and why are they why are they being seen as a good alternative to players like Coral Weave? No so of course sovereignty is one key thing here um I don't know how much you know about the Patriot Act etc uh of I think a lot of companies are afraid of how much the US intelligence and services can actually access all the data if they need to, if it has anything to do with an entity or sub-entity in an American company.

21:09So that is one thing to ensure that this is a European play and in this case out of the Nordics to start off with. But then they've also really understood how to land those large enterprise contracts. and it's a little bit of a it's a complex situation where you need to buy all of these gpus and build these data centers that like you need to be of a certain size in order to be able to sign contracts with large customers and they've just kind of gotten over that first milestone of having enough power to provide, so to say. And hence now they are just like enterprise customers are just kind of rolling in on huge contracts, which is really, really nice.

22:07Sara Rywe:Amazing. Could we see that becoming one of the big breakout companies of 2026? I mean, yeah. I mean, we really do think so, right? Of course, we are extremely biased here, but I think this is one of the most underrated companies out there. Ruben, single founder, probably the least person that you see or hear about. He does not spend any time on anything but executing in his company. So yeah, for sure a very underrated company that we believe can be a unicorn this year.

22:51Yes. No, likewise, thank you for having me.