From AXA to $2.5B AUM at AVP: François Robinet, Founder & managing partner at AVP

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0:33Hello and welcome back to the Scaling Europe show presented by Deal. I'm Seb Johnson. Today I've got an amazing guest. It is Francois, co-founder and management partner of AVP. Francois, thank you for joining me. How are you doing today?

0:44François Robinet:Oh, very well. Thank you. Thank you. Thank you for having me. It's my absolute pleasure. And look, for those who don't know, AVP has been on a really interesting journey. It's like a longstanding investor in the European region, but I guess it's been through some changes. Are you able to kind of give a bit of the history and the flavor of AVP and where it's come from and where it is today? Yeah, no, sure. I can do that, definitely. So we started within the AXA group, you know, the insurance giant, I would say. I was myself managing a big part of the portfolio of AXA. and I realized that there was very little exposure to tech in general, to venture and to growth.

1:30François Robinet:And especially when I compared that to the asset allocation of the major US institution. So that's how the idea of starting an investment platform focused on tech started, I would say. It took a few years to align all the stars in a big group like AXA. But in the end, we did it. So we started EVP. And EVP at that time meant AXA Venture Partner. As a small platform, 80 million fund, focused on venture investment. What I call venture is, you know, typically, let's see, it's a reason. Just to, you know, yeah, just to start. And in the past 10 years, we did that, it was 2016. So it will be 10 years this year.

2:20François Robinet:For the past 10 years, we have been, you know, trying to execute relentlessly, to be very focused, to be very disciplined, to manage well our funds in order to raise the next vintage, but also to start, you know, the next strategy. So that now, 10 years later, we manage 2.5 billion. We are multi-stage. So in our different investment vehicle, we invest from venture to growth. And when I say growth, it goes until pre-IPO, I would say. So not startup anymore. We all mature companies, still growing, still developing their business in different markets. But we all mature companies, sometimes profitable, by the way.

3:15François Robinet:So that's where we are now. And the other thing that is relevant about EVP is that we invest 50 % in the U.S. Well, let's say North America, but it's mainly the U.S. And 50 % in Europe. And we have done that since the beginning. And the reason you are talking about tech in Europe, the reason was that when I started, I thought, you know, you cannot really be a good tech investor in Europe if you are not in the U.S. for many, many reasons. First, because of the depths of the US market, because many things happen in the US market that are relevant for Europe, because you get to work with other investment organizations that are actually top tier, and it's good to learn with the best, I would say.

4:04François Robinet:And also because it's a meaningful offer to our portfolio company to help them to go from one side of the Atlantic to the other. 50 % of our team is in the US, and 50 % is in Europe. Interesting. And when you look at the history that you've had investing in both Europe and the US, have you seen a difference in the success of the portfolio split by region? Yes. A difference of success, maybe not. But I would point out two things. First of all,

4:40François Robinet:there are some industries where there is maybe a structural advantage or some kind of structural advantage in one market versus the other. You know, Europe is known to be a strong place for fintech, the UK in particular, but not just the UK, right? The new wave of AI, it's fair to say that, you know, many very interesting companies, not all of them, but many of them were born in the US. So you see some, you know, differences in terms of the industries. It's true as well that the capital velocity is probably higher in the U.S., meaning that foreign raise tends to happen quicker, you know, the next round and the next round and then the exit.

5:28François Robinet:So our first exit happened in the U.S. market. It doesn't mean that there's no exit in Europe. It means that it probably takes a little bit more time. But interestingly, we have seen this changing over time compared to when we started. And I would say Europe is following the US with maybe three or four years of delay, let's say. And I want to touch on that point that you mentioned, has been about the benefit to the portfolio. So you're saying like having offices split across North America and Europe is like a real benefit to the portfolio company, maybe for expanding and launching to North America.

6:07Have you seen that change over time, the demand for that? Because a lot of investors I know that have been only European-focused, you know, but the big European firms that are not US-focused, they're now trying to think about how they can move into North America because more and more founders are moving earlier and earlier in their journey. Is that something that you're experiencing as well?

6:26François Robinet:Yes, I would say, and, you know, it was more an intuition when we started this transatlantic approach. It's now, you know, there's 10 years of experience. And, you know, this was probably the best decision we took to be transatlantic because it gives us really, you know, very useful angle, very useful insights about both markets. And as you said, we can meaningfully help our companies in their growth trajectories. Things have evolved, indeed. And it's true that, again, you know, probably generalizing a little bit too much, But, you know, in general, you know, it makes sense for a European company to target the U.S.

7:12François Robinet:market at one point. Not always, but very often. The one thing that is key is not to do that too early. You need to have, if you start in Europe, you need to have a strong base, a strong domestic market and a strong proof point. you need to have product market fit well established in your domestic market ideally in a few European markets before going to the US if you go too early the risk is that it costs a lot of money to go to the US and you may you know the US market is very promising, is very big but is also very challenging so if you go too early you may not be well equipped also in terms of market feedback.

8:00François Robinet:You don't want to go too late either, right?

8:06François Robinet:Because, you know, because if you want to, you know, build a very strong growth trajectory, the U.S. market is a must. And you don't want to wait too late because then you become too established in your local market. It's too difficult. It's too, you know, it's too disruptive in a way for the company to go to the US. So there's the right moment with the right amount of money to decide to go to the US. But it's true the other way around as well. We have won many deals in the US because of our European presence, because many US companies were, of course, planning to expand to Europe. The thing is that Europe is not one market.

8:54François Robinet:And very often, viewed from the US, Europe is one market. And this is a mistake. And again, I'm generalizing, it's not always the case, but US company expansion in Europe means opening an office in London and from London, going everywhere in Europe. Europe is, in fact, many different markets. Even for global products like software and so on, there must be a country-specific approach. So there are many companies, and some of them very successfully, that we helped in their European go-to-market strategies, being very segmented, having the right people in Germany, in France, in the Netherlands, in the Nordics, and so on.

9:45François Robinet:And, you know, again, initially it was a concept, and then we had several guest study, and now, you know, we have a playbook, I would say. Amazing. And when you look at some of the successful founders from your portfolio who have done it, either from Europe to the US or the US from Europe, aside from timing and getting the timing right in terms of product market fit, but not also being too late. What are the other key things that make that expansion a success?

10:14François Robinet:People. People. Very important. And let me elaborate a little bit on this. You need to have the right team. And it goes both ways, right? But, you know, in your example, if you want to go to the U.S., you need to have the right team in the U.S., the right culture. And it's difficult again because you want to have people on the ground that does the market. And there's no magic recipe. Sometimes you send a CEO or you send an executive in the U.S. and it works, but sometimes it doesn't work because you need to have somebody that from a cultural standpoint, that from a business standpoint can really work in the US.

11:00François Robinet:And the US market is a different market than Europe. So sometimes it's better to hire somebody to develop the US market. You want to have people also with a high level of trust, right? It's always difficult to, like a late founder, right? Somebody that you recruit to basically to bring the company to its next stage in the US. So kind of like a lead founder. So finding the right people is definitely critical. The second thing is, as I said, the US market is a very big one. So depending on the product you sell, you may not want to go everywhere at once. it's very expensive to have a sales team in the u.s it's difficult to manage expensive so you may want to focus on you know specific region that's another that's something that we have seen uh having a success in let's say in california in the east coast and then expanding in the rest of the u.s has worked better than to try to do everything at once so just to um two big examples but i would say you know people first the right people that makes a difference and and maybe one last thing i mentioned it before the right amount of capital uh you need if you if you go to the us you need to understand that the yeah the the reward is very high but the risk is also quite high and therefore you need to go with the right amount of capital it's expensive it's very expensive And is that something that you help with?

12:42I know that a lot of European founders, when they get to their CEDA series, they're quite keen to bring on a U.S. firm because either they write bigger checks, they can move quicker, but also because they can help them have that foothold in that region. Now, it sounds like you've got that foothold already. But is having an office there very helpful for then introducing your portfolio of founders to some of the other great VCs in the region?

13:05François Robinet:Yeah, absolutely. And not only because, you know, our team in the US is part of the ecosystem, so they have their relationship, they know the people and so on. And they know which fund could be interesting by a specific company at which time of their journey. We also have a fund of fund. So we are also an LP ourselves. So we also invest in other GPs. and therefore also through this program we have built some strong relationship in the US, in Europe, but also in the US and we can indeed introduce at the right time the right fund and sometimes it works. Amazing, I want to talk about Capital more broadly especially because you kind of co-authored a letter with two other VCs, with Par Founders and my butcher all about, I guess, the key themes of the letter was a lack of growth and late-stage capital in Europe.

14:08Can you just talk, for those maybe who haven't read it, but what was the thesis behind writing that letter and what are you arguing for in it?

14:17François Robinet:Well, yes, that's a very interesting topic. First, let me, just to complete the story about DVP, I mentioned AXA, I mentioned that we have grown within AXA AXA has been an amazing partner for us. We are now independent. We had the opportunity to do a spin-off from AXA 18 months ago. We still keep a very strong relationship with them. They are a big LP of us, but the company is independent. Regarding your, I think it's worth mentioning to understand the journey of the VP. So regarding your question, yes, we did write this letter in the context, especially of the Scale-Up Europe Fund that the European Commission is sponsoring, because we have been looking at this initiative.

15:12François Robinet:And to be honest, initially a little bit with maybe cynicism. Well, another initiative, another public initiative, you know, there's already a lot in the different countries and so on. Isn't it a dispersion of resources that is not helpful? But then thinking a bit more about it, you know, we concluded that it's actually a very, very interesting thing and probably an initiative that fills a market gap that is real in Europe. And let me explain. You know, in the past, let's say, you know, many, many startups or many tech companies, not all of them, but many of them were SaaS companies. And the trajectory for a SaaS company was, you know, well-written.

16:08François Robinet:You start with a seed around, you go to market, you establish product market fit, you raise a bit more, you develop your team, and then, you know, Series A, Series B, Series C, and, you know, for the best one, IPO 20 point. the market is changing because

16:30François Robinet:and there's the whole turmoil at the moment regarding software of the market but even if I don't consider that you have more and more technologies that are of a different nature where the monetization model is different like AI, like LLM, right? Of course, LLM, you know, it's a different monetization model It requires much more capital initially. But you have a lot of disruptive technologies that are now very capital intensive initially, not in the end, but initially. Thinking about everything where there is an hardware component, for instance. So I'm thinking about a quantum computer. I'm thinking about robotics.

17:14François Robinet:I'm thinking about semiconductors. you know I'm thinking maybe also about some aspect of life science and I'm quoting these specific industries because in these industries Europe has I don't know if it's a competitive advantage but they're really but Europe is very competitive is really competitive compared to the rest of the world the US or Asia but the type of venture capital that you need for this for this type of venture is different you don't need the 2-3 million seed round and then the 5-10 million you know series A you need a 100 million series A round we led recently the series B of Feliz and Bob which is a quantum computing company in France it was 100 million and it's small and it was small compared to the US peers.

18:17François Robinet:But I think, you know, not everything is in this camp, but there's a growing part of the market that requires this type of investment. And you need to have investors that are able to do that in terms of size and in terms of risk appetite. And we don't have that in Europe. You know, it's growing. We are getting there, but we are not there yet. One of our fund, our growth fund, is part of the ETCI program launched by the EIF in order to promote funds of more than 1 billion. So we do have a fund that is more than 1 billion. But we invest in this fund, what I was saying initially, large company, major company that are growing nicely, but that have already an established market.

19:04François Robinet:We don't take venture bets in this fund. It's not the risk appetite that we have, and it's not what our LP expect from us in this type of fund. We do that in our venture fund, but our venture fund is 200 million. So, you know, when you look at our, you know, of the, let's say, you know, iconic US platform, you know, the Seco, yeah, the Andresen Aurovitz and so on, they all have funds of more than 5 billion that can take this type of risk. And it's very needed in the current environment with these new technologies. But we don't have this type of fund in Europe. And now comes the part about Europe's sovereignty.

19:50François Robinet:It's super good that these top US players look at European startups, European startups, and so on. but it's also a pity that Europe cannot finance itself these ventures and there was no way of course that's something that we had in mind in the future at EVP and I'm sure many other funds in the market or organizations in the market want to do the same thing but it would take 10 years to be in the same position so I think what the EU is doing with this scale up Europe fund is to bridge the gap, basically. It's to, you know, provide Europe with a fund that even if it's called a growth fund, it's actually a big venture fund that will be able to, you know, finance these technologies where Europe has indeed a competitive advantage, but that requires a huge amount of, oh, you know, a significant amount of risk capital.

20:59Yeah, it's amazing. I couldn't agree more that we need it. You know, I look at so many of the great companies that we have across Europe, whether it's people like Eleven Labs or Lagora, and so many of the late stage investments that they've had, some of those big rounds, even the recent Eleven Labs won half a billion, led by Sequoia, which is an amazing result for a European company. But it means so much of that value ends up getting captured and transferred to, you know, American VCs and American LPs.

21:24François Robinet:Absolutely. And, you know, I couldn't say better, actually. And again, these funds, I mean, we are, as I said, for the fund we are helping some of them, they are amazing. They are amazing organizations. They are, you know, I said iconic. They have met the history of venture capital. So there's nothing to say about their quality and so on. That's perfect. But we should be able also in Europe to have the same type of investment organization that can compete at one point. Because the reality is when you have an investor from one region, you know, there's a tendency to move the center of gravity of the company towards this region.

22:03François Robinet:That's, you know, that's a matter of fact, right? And I think it's important, especially at the moment where we talk a lot about sovereignty and so on, to be able to protect sovereignty. And it doesn't mean to create walls, right? But it means to have some balance, let's say, with an organization in Europe that can basically do the same, right? Yeah, and not just that. It's also, well, and that, the capital compounds, right? So if the US firms end up making a lot of money from the European companies, you know, 5X, 10X, 3X, whatever it is, they then have even more capital to invest in even more European companies.

22:44You know, so it's, you know, the sooner that we fix this problem, the sooner that we fill that gap, the better we'll be off in 10, 20, 50 years. Sorry, go ahead.

22:53François Robinet:No, no, absolutely. I completely agree. It's really about creating a virtual circle, right? Because you invest in companies, they, you know, they do well, they create value for the investors, they create value for the management, and then, you know, there is a positive collateral impact for the whole ecosystem. But if the investors are mainly in the U.S. or if the LPs are mainly in the U.S., it benefits more to the U.S. ecosystem. And there needs to be some balance. You know, one example, and it's true for the management as well. One example, we have in Germany, we have the defense company Essling, right?

23:37That is, you know, we can say it's a success.

23:41François Robinet:You know, it's complex, but it's a success. You know, this company was made possible because of Daniel Heck, right? Because of Spotify. So that's what we want at scale. We want to have more of the success of European companies benefiting the US ecosystem and in the end, the European ecosystem and in the end, the European societies, let's say. Absolutely. Well, look, I'm conscious. I've taken... Sorry, go ahead. Sorry, I was going to say, you know, there's a lot of talk about sovereignty, let's build wall and things like that. and, you know, US, we don't invest in. No, I'm not at all saying it's not the point.

24:28François Robinet:The point is to recreate in Europe or to be at the same level, to have a fair competition or to be able to have a fair competition, right? Exactly. And I think it's got to go both ways. You know, at the moment, there's a slightly unequal relationship. We want to get to a place of parity where, you know, it's okay to have American investors in our companies and we're in their companies. But it's about making sure that we've got enough of our own skin in the game, that we're seeing the benefits and we're reaping the benefits. And at the moment, it feels disproportionate. Absolutely. Indeed. Well, look, Francois, thank you so much.

24:58I'm conscious we're over time, but I've really enjoyed chatting and it's great what you guys are doing. So let's stay in touch.

25:04François Robinet:Thank you very much. Thank you. Thank you for your time.