Thomas Bigagli, EMEA Partner at Plug and Play Ventures: Europe needs bigger and faster capital to keep startups home

0:00Hello and welcome back to Scaling Europe show. I'm Seb Johnson. Today on the show we've got Thomas. Thomas is an Amir partner for Plug & Play Ventures, which is an absolute machine at finding and investing in Unicorns and has quite an interesting and different model to traditional VCs, which we are going to get into. But Thomas, welcome to the show. How are you?

0:15Thomas Bigagli:Really good. Thank you, Sam. It's good to see you. Likewise. Good to see that world. Yeah, yeah, yeah. This is it. This is it. This is the studio. Thank you for joining me. How are you doing today? You all right? Really good, man. Really good. Tell me, what is the role? What do you do? What does day-to-day look like for you? Good question. It's hard to describe a day-to-day, maybe week or month. It would be easier. Listen, you know me a bit and I've been in this company, Plug & Play, which is amazing for some time. Unofficially more than eight years, officially soon eight years. At the beginning, I really wanted to get that job.

0:55Thomas Bigagli:So I've been supporting them on the side until they send me a contract, if you know what I mean. But listen, I mean, plug and play. As you know, we originally were a family office, though we've been an institutional GP since 10 years now with nine funds. And on the side, we are also this large open innovation platform where we help entrepreneurs working with large corporations. We do far more than that. But if I would need to summarize it, this is what I would say. And to date, you know, those 550 large corporations that we have, they trust us a lot when it comes to innovation, but also investment.

1:30Thomas Bigagli:And on the side, when we invest in startups, you can imagine there are a lot of synergies between the two. So it creates kind of a flywheel where our portfolio companies, they can benefit and find their first customers, benefit from our international presence. They can also maybe try out their technologies in different industries. so our reach is really beneficial for them right and my day-to-day what it is so it's meeting entrepreneurs and investing on behalf of the family office but also i'm part of the investment committee of some of the funds that we are that we have with institutional lps we are launching additional funds as well where i'm fundraising actively and last but not least i'm also if you wish really active on the on the open innovation side as a as advisor from some CEO level executives etc that would like to shape their innovation investment mandate.

2:25Busy man very busy man there's a there's a lot going on then what's changed right you've been you know especially working with where you are now for like you know eight years or more the last three or four years feels particularly transformative how have you seen the European landscape change I guess from eight or nine years ago to when you started to today?

2:44Thomas Bigagli:so much man and to be honest i'm i'm really fond of innovation since my young age i even launched my first project i was like 19 years old so so i've been following really really closely you know how uh innovation uh exponentially grew and and and resolved a bunch of new pain points over time and how the disruptors were being disrupted etc what struck me the most uh and as you said it's been eight years so so you know i started pre-covid and drink of it and the uh the crypto the blockchain i had the the ai boom etc etc what um really struck me the most at the moment is how untapped blue ocean are being literally conquered and those for me uh you have many and but i'm gonna try maybe to speak about things that the the other people on your podcast are speaking less about is deep tech.

3:37Thomas Bigagli:And funnily enough, I'm not a technical guy. Maybe I should have studied at an engineering school. I think I would have loved it. I'm really good at math. But what is cool is like 10 years ago, even a technical funder, I mean, needed to be really crazy to launch a technical company. Even if they had the skills, opportunistically, they were not launching a deep tech company because it was too expensive. The go-to market was too slow, et cetera. for many different reasons. Now, the thing is, I mean, AI kind of made software almost like a commodity. You know, it got so democratized, so cheap, so fast that effectively, if you are an entrepreneur and you really want to crack an industry and really create an impact, where are you going?

4:27Thomas Bigagli:Well, no one really cracked yet a specific pain point. And I do think those pain points are mostly in deep tech. Not only, again, I want to be original and not speak too much about the AI scene. But what is interesting is in deep tech, I mean, you have many different things, but you have also physical AI, right? And I think the AI component within deep tech is helping those technical challenges to be so faster, cheaper, and also bring them to the next level. and we've done a lot of that by the way in hardware or deep tech since decades and a lot of them perform extremely well. And I saw that you've got offices in kind of 30 locations around OMEA.

5:09Are you seeing that hardware theme come up in different places? Are there like particular hubs that have surprised you which are generating fantastic founders?

5:17Thomas Bigagli:Yeah I mean you're totally right. MEA is quite a spread zone for us but the thesis from one country to another is really different, even from a city, from one city to another, where we've seen the most of deep tech booming at the moment, even more now, because in the past it kind of changed, but I do think the Western and Northern Europe are leading the way, big time. Not only, but I think Switzerland, France, Germany, and the UK, with a bit of the Nordics as well, I mean, not necessarily in volume, because they're smaller countries, but in quality they are really high. And it seems that also the Southern Europe is trying to catch up, but I think it would still take a bit of time.

6:01Thomas Bigagli:But it's really interesting to see how the tech scene is evolving over the years. Yeah, are there places you found yourself spending more time today than maybe you were spending five years ago? Are there cities that are now like, okay, these are emerging hubs, so I've got to be more present? I mean, yes, because we've been following some hubs really closely as well. you know but for instance we have a big presence in in lithuania lithuania this is not necessarily a country of course you know you have the the the open banking back then etc that made this uh this this country extremely attractive uh but as we launched an office was maybe two two or three years ago uh we've been backing a lot of uh entrepreneurs out there and i mean i learned even myself that per capita is one of maybe the top country in the world you know you have the the Lithuanian unicorns, but then you have the ones rooted like Revolut, for instance.

6:56Thomas Bigagli:So I think they have nine or ten, which is crazy for 3 million, I think, inhabitants. Otherwise, I mean, you know, Southern Europe, like Italy, for instance, has been really, you know, active in the Italian tech ecosystem like before anyone else. And what I'm saying there is we've seen it booming, and I think this is a country where we contributed heavily to the growth of technology. And, you know, frankly speaking, I mean, as John Plug & Play eight years ago, but if you check our history, even in Germany or France, we've been also extremely active there. We entered Germany back in 2013, for instance.

7:38Thomas Bigagli:Like, we were the first investor in N26, for instance. Like, the first check. So that's, you know, just an example. But I think Plug & Play, over time, we We are a big company. We have 65 offices, 700 plus people. And we've been lucky enough in some specific countries or cities to be at the inception and to contribute heavily to it. UK, we started investing early, but we opened a physical presence quite late, surprisingly. New York, the same, by the way. Interesting. What happened there? Why did that happen? What was the thinking? That's a funny one. I mean, it's a bit hard. it's full of assumptions, right?

8:19Thomas Bigagli:My view, my take is why did we open, for instance, so late in New York and in London while they are, you know, big, big hub globally. It's simply because our model with the open innovation started later. And thus, when we open a physical office with different headcounts, we like also working closely with some partners. And I do think this is why it took longer. So we were already working with some British companies, for instance, but not in the UK. Generally, we're working with their labs in Silicon Valley, right? But we've been investing in UK startups since a really, really long time. And what do you want to see personally?

8:59What gets you excited about a company that makes you want to write a check?

9:04Thomas Bigagli:Well, it depends. You know, we are quite generalistic. So from one geographies to one typology of company or one different TRL, the way we evaluate it is really different. But the common ground, of course, is visionary and complementary funding team. I think this is something that, you know, where the founders met, how much they complement each other, their skill set and their ambition. Like this is something that I like. I think it's the thing that I like the most about my job. It's really, you know, spending time with those amazing minds that are passionate and in love with their customers and the pain points that they want to solve.

9:45Thomas Bigagli:This is just crazy. And how plug and play can help them also be more successful. Do you have, like, are there questions that you have that you kind of use for each founder to try and get to some of the root to some of those questions? Like, how do you assess those founders? Oh, I have many. I think there is something I really like asking, and I hope some of my colleagues will listen to this podcast, I'm sure, is, you know, by the end of the call, I'm always asking founders, it's a really basic question, by the way. And now with AI, it doesn't really work. You will understand why. But what's funny about this question is so basic, but no one can really answer it in a concise way.

10:27Thomas Bigagli:And it always struck me. I always ask them, okay, guys, like you want to raise that much and this valuation, great. But effectively it's to do what? Like, what are you planning to achieve with this cash? Tell me effectively, you know, of course, you know, they all know basic answers like, yes, we raised to have 18 to 24 months of runway and we're going to spend our cash 80 % in whatever and 20 % there. Sure. But effectively, what you want to do, you raise to finance milestones. I want you to send me precisely what's your plan. And funnily enough, no one can answer it. I mean, it's rare that I find entrepreneurs that can answer these questions.

11:11Thomas Bigagli:And trust me, I have some entrepreneurs that could not, in a concise way, answer these questions, but managed to be extremely successful. And some of them told me, you know, this question that you asked me at the end of the call, I'm glad you asked it because it made me really reflect on why we are raising and what we want to achieve effectively. Yeah, it's interesting. I guess maybe, I don't know, you tell me, maybe they just get very focused on the raise itself. Well, I don't know, focus on the milestones. So I guess it's a really interesting question. Yeah, interesting. All right. Well, what other things do you want to see?

11:42Right? Like if there are founders out there who are listening, what is it that you would like? Who should be getting in contact with you in the plug and play team? Who's a good candidate? Yeah.

11:52Thomas Bigagli:Any crazy entrepreneurs that want to solve a pain point that is big enough, you know, with global ambition better and B2B better. But this is because, you know, that's where we are the best. and you know if you have a complementary team and you think you found this pain point and again it's big enough and you would like to first find design partners if you do not we are here to support you and help you to validate your your your assumptions with the market directly and if that's the case and you know our partners will be happy about what you guys are building we are more than happy also to to invest and to continue supporting you along the way and that that piece that built on the global ambition.

12:34Do you think that's changed in the last sort of five or 10 years? Do you think more European founders are coming out trying to conquer the world?

12:41Thomas Bigagli:100 % and to be honest, we've been investing in a lot of companies. Some were extremely localized. You know what I mean? An example that I like often saying and funnily enough, we did not invest in any of the two. But as you know, I'm French. I mean, you can hear that from my accent. I'm French actually. It was in 2023, I think. there was two unicorns that popped in France. Only two. And it was one of the hardest year, right, for the takeover. And all of the two, so to be a unicorn that year, you need to be solid. And those two unicorns were Penny Lane and Pigment. Pigment, they were global since they won.

13:20Thomas Bigagli:And I think back then, I mean, I know some team members extremely well, but I think like 90 % of their turnover is abroad, all of which more than 50 % is in the US. Like, it's crazy. Like this company, I mean, it's French, but could not be French effectively. And the other company, Penny Lane, they just entered Germany like recently. And funnily enough, like the second round, Sequoia was already in. And you are like, a fund like Sequoia that always said, we want global ambition, blah, blah, blah. Back those guys because they know, they understand, they are smart enough to contextualize. and of course generally we want global uh you know ambitions but sometimes the pain point is extremely localized and this is also good so it depends yeah that's so interesting i want like i sometimes think that where europe has built category leaders or global winners is where there is a sort of like localized issue to europe right and i sometimes think about maybe like um 11 labs is obviously a great example right they were doing like dubbing and so that problem wouldn't exist in a region where you just have one language right no you won't in that's for sure exactly right so that company could never have been built in the us and i think similar to like revolute with like currency exchange that's probably not a problem that a lot of americans have with like you know somebody's sitting in the finance and that's interesting that balance between finding a problem that is localized but can go global or it's just big enough localized to build a huge company.

14:53It's interesting.

14:54Thomas Bigagli:To surf on our strengths or weaknesses, see, the way you want. But the fact that we are so fragmented in Europe sometimes is a weakness, sometimes a big strength. So we need to surf on that wave and benefit from it too. I mean, we have amazing talent. I just think we, unfortunately, most of the funds, they are too slow and they cannot commit to huge tickets versus the American ones. and it creates a negative flywheel, in my opinion, where, you know, because you cannot invest in the best startups because you lose it versus an American fund, it's harder to raise bigger funds, right? Or, you know, I think this flywheel, unfortunately, is not working in our favor.

15:35Thomas Bigagli:But I'm, you know, I'm foolish enough and always optimistic to think that Europe will become a better place and it will be more consolidated in the future, hopefully. Have you seen an increased level of US activity in Europe? Are there more US firms, more US investors today than maybe there were five or six years ago? It's a good question, actually. Yes and no. Yes and no, I do think that the wave, it's hard to judge in volume or per number of funds, etc. Because the U.M. also grew. But what struck me the most is a few years ago was during COVID time, right after COVID, a lot of US investors came.

16:23Thomas Bigagli:And they opened really tiny offices to scout what was going on. They tried to connect better with the local market, hire local people too. And I think they continue doing that too. And they try, of course, to invest in the big AI companies that we are building here. And they managed to do it. But I see also some big funds fighting big time. You know, like a lot of AI mega deals right now are also being, you know, won by some big European VCs. So it's a bit too early for me to answer your question. But when it struck me the most was more in 2021, 2022 versus right now, surprisingly. Maybe it's not, again, in size of tickets.

17:07Thomas Bigagli:It's just like by number of funds coming in Europe and launching their offices and hiring people. That's interesting. And so go back to your earlier point, you think that maybe you're not quite moving fast enough. Is that right? Like when you look at, is that true? Like I know a lot of founders I speak to have said that, that Americans will write a ticket within 24. And like Europeans are just in Islam. Yeah. Yeah. But yeah. Yeah. Will that change? I don't know. It's a really good question. And I'm super European and really proud to be European. but I work for an American firm with, you know, I mean our founder and CEO is an immigrant himself, etc.

17:46Thomas Bigagli:So, you know, we are American but we have this international prism and all of those local offices with local people as well. So it's really good to have both sides and compare but I mean, yes, unfortunately European VCs are still slow and at any given, you know, stage of maturity of startups unfortunately even early stage they can write maybe you can write as fast but they will write a bigger check effectively so you you have a ratio of speed and size of tickets and we'll always lose to date it might change but to date i think we'll always lose it's going the right direction we improved yeah and that's kind of why i was asking about the increased level of competition because i think that would be a good thing you know like more active American investors it's probably a good thing for Europe to sort of like okay you need to up your game a bit um so I think yeah I think we'll see but I was going to ask are there European firms that you look at who you think okay this is a they're moving quickly they've got it they're able to sort of match Americans either in speed or size or at least really trying to no no for sure I mean, like from startups that we are looking at or, you know, past success stories in the AI space, for sure.

19:06Thomas Bigagli:You're totally right. I think we can. The problem is it's good to create European champions. And I think it's, you know, creating a snowball effect also to have more in the future. But there's two issues. The first one is, are they going to stay in Europe? Because a lot of them, they started in Europe, but then they moved their HQ elsewhere. Yes. Right? And the second thing is, I mean, if their latest series for, you know, European company that is not yet moving their HQ in the US, but on their cap table, their series D, it's only American VCs, you're like, what's happening? We are missing something, you know?

19:47Thomas Bigagli:Yeah. So, again, I think we, it takes time. We are less capitalistic, though, and we are far more fragmented. but you mentioned two beautiful examples that sometimes we can capture from this fragmentation in Europe and we know we have an amazing talent pool. We have great education. We already have amazing success stories. We just need to continue building on that and it's going to come. Yes, we are not as big, of a unified market as the US, though Europe altogether, we are also really strong. I'm really bullish on that. Maybe I'm foolish. I don't know, but I'm really foolish and I know you too.

20:28Exactly, right? You've got to be foolishly optimistic, right? You're just naively optimistic pushing forward. I think that's a great note to end on because I could not agree more. But thank you so much for joining me. Thank you, man.

20:38Thomas Bigagli:Let's do it again sometime. With pleasure. Thank you so much, Seb.