VCs are taking on operator roles. Why?

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0:39Hello and welcome to the Sifted podcast. I'm Freya Prattie, Sifted's Associate Editor. Joining me today is Anne Schraders, Senior Reporter. Hi Freya, thanks for having me on. Where are you joining us from today? I'm joining you from Berlin which unfortunately is gearing up for a potential second heat wave later this week but I don't think it'll be as bad as the first one so fingers crossed oh no I feel like you've had a lot of that um I'm in London as I always am for the pod so it's getting kind of boring me saying that every week but I am still in London which is cooler than it has been for a while so we're lucky um though I shouldn't say that to you Anne uh so we're going to be talking about a new trend that seems to be gaining steam in Europe recently.

1:22This is VCs adding a CEO or operator title alongside their investor role and doing both at the same time. Judith Dada, general partner at Visionaries, for example, made that move last month. It was talked about quite widely in the ecosystem. She took on a role as co-CEO at AI startup LangDoc. And talk us through what we know about Dada's move, then we can get into the wider trend and why this is happening now. To rewind a little bit, Judith joined Visionaries last year as a general partner. She was previously at La Familia, which was that Berlin-based firm that merged with General Catalyst, and also was the one that Rob Lasher, who brought her on to Visionaries, founded a while ago.

2:05So it was sort of like a reunion for the two. But only about a year later, she's kind of changing job titles again. As you mentioned, she announced last month that she'll be joining AI Startup and Visionaries portfolio company Langdoc as co-CEO. While simultaneously keeping her role as an investor, she'll now be a senior partner at Visionaries. And just for context, Langdoc is this AI startup that she's really bullish on. It integrates multiple different AI models into one operating platform and kind of lets companies and organizations switch between. I saw Judith at Panathonia, this event in Greece, maybe two months ago.

2:43I asked her who the most exciting companies in Europe were, and she said Langdok, which then when this move was made public, made a lot of sense. It's interesting. Who are the other examples then? If we're calling this a trend, we probably need at least three. I think that's what we say, right? Three's a trend. Who are the others? That is the golden rule, Freya. The other examples include Uwe Horstmann. He's a founding and general partner at Berlin-based VC firm Project A. And last year, he also became The CEO at his portfolio company, Stark, which is quite buzzy. It makes attack drones. It's very big in the defense world.

3:20While still holding on to his investing title, he's still a general partner at Project A. And most recently, Carmen Alfonso Rico, who founded UK-based angel investment firm Coco, announced she's joining her portfolio company Fractile, which is the British chip startup, as VP of business operations. And she says she'll keep investing as well. How have those investors framed that move then when they've talked about it? I think it's, you know, different reasons, of course, but a lot of them have kind of this big through line of AI is such a transformational technology that they just need to be involved in it in a more, I guess, you know, hands on sense.

3:58You know, Judith, for example, said it's really about her believing AI is such a consequential technology that she really wanted to find a way to give it her all and kind of make this big bet on it personally. And, you know, she's obviously been a huge advocate for AI sovereignty in Europe in particular. And I understand that Langdok should also kind of be this sort of public face lobbying type individual at the company, you know, chatting with policymakers and advocating for AI and the company. So I think that move makes a lot of sense. And, you know, others like Carmen from Coco said that, you know, operating from inside of a hyper growth company at the front center of the AI build out will kind of help give her insights and network that will help make her a better investor for Coco founders.

4:40So I think that's kind of, you know, two sides of the same coin in a way. But I think it's, you know, they're approaching this as both a feeding loop into their investing activities and also into helping these particular startups that they're betting heavily on to do better in the ecosystem with their help. Do you believe them? Do you think that is the reason this is happening now in particular? What are your thoughts? I think it's interesting to see VCs kind of not just talking the talk, but walking the walk. I think, you know, obviously we've heard VCs banging on for years now about, you know, this is such a huge transformation shift and this is going to be massive.

5:14And, you know, I think it's quite easy for them to say that kind of stuff from, you know, slightly an outsider perspective or someone who's sort of looking over a bunch of different trends. But I think it's quite interesting to see investors kind of increasingly wanting to get their hands dirty and actually go inside these companies and help, you know, build them more directly. I think it goes back to that whole like value add question for VCs where they all talk about being founder friendly, but that doesn't really mean anything anymore. and I think it you know of course I think they see this as an opportunity to kind of be more closely involved including you know kind of on the payroll I guess in some of these potentially rocket ship companies as they ascend I think that's certainly an attractive proposition so I think it you know it makes a lot of sense for them to want to be involved in this if they really do believe what they're saying that you know this is such a transformational moment in technology and and they don't want to miss it.

6:07Your column on the trend spoke about how previously VCs had kind of fully left their firms to take on an operator role. The difference at the moment is that they are maintaining both. And your column, again, also flagged that this could potentially bring up some issues maintaining those two roles at the same time. Can you talk us through your thoughts on that? I think the most obvious potential concern is a conflict of interest, It seems clear to me that this brings up a lot of issues, not only for the rest of the portfolio companies when this investor clearly has one startup favorite over the others, but also for the startup they're working with.

6:44I think what I'm still trying to understand is how they can kind of be active and do both jobs well. I think most of the recent examples, like Judith, for example, have said that they'll be essentially going full time at the startup, but still involved in investing or with other portfolio companies. And I think it'll really just be interesting to see how they're able to manage those different roles and, you know, whatever potential conflicts might arise. I think another example is Uwe at Project A. You know, he was kind of early on the defense investing train and has backed a bunch of startups that, you know, could compete with each other, like, you know, Quantum Systems, ARX Robotics, Stark.

7:24So I think it is quite interesting to see how these investors kind of manage that. And I think, you know, Judith did point out, which I think is a fair point, that it's not uncommon for founders to do angel investing on the side. So this isn't an unheard of arrangement. But I am curious, I guess, to see how things will work itself out, especially with, you know, carry or management fees at their firm. So, yeah, I think there's a lot of open questions here, but it's quite interesting to see them making these big statements and these big moves into the industry that they have been saying is like, you know, the next big thing.

7:57So quite, quite interesting to watch. That's a good point from Judith on angel investing. I hadn't thought about that part of it. I saw, so when Carmen announced her fractal move, when Judith announced the Landot move, I saw lots of celebration for both on LinkedIn. What have people been saying to you behind the scenes perhaps about this trend or these particular moves? I think a lot of people observed that they've seen this trend emerging as well. I think it's something that also others have pointed out is not super uncommon, like Anka from NP Hard Ventures, for example, pointed out that some of her partners have sort of been involved in running AI companies as well.

8:32So I think this is something that people generally have been pretty positive about. I think there are some who have kind of raised concerns or maybe said, you know, maybe some operators make great investors and some investors think they make good operators. And, you know, I think there's kind of a mix of, you know, excitement and also skepticism over this trend. But by and large, I would say most of the people who've interacted with my article or who've talked to me about it have thought it was quite interesting and seem relatively bullish on the trend. Yeah, and I think the three cases we've talked about today, they're all kind of star investors, right?

9:09So I feel like a lot of their moves are celebrated. And on the topic of visionaries, you and our pod producer, actually, Maya, have been reporting on wider changes at the firm. While we have you, do you want to talk listeners through what you've been writing about? Yeah, that's right. So last week, Maya and I reported that two of Visionaries investors are leaving their full-time partner roles and transitioning into more entrepreneurial positions. And it's kind of unclear what that means exactly. But this morning, general partner Rob Lasher announced that the firm is actually reorganizing into more of a GP-led structure for its upcoming fund, which I think will start later this year.

9:49And it seems to be cutting a lot of its full-time partners. So moving forward, the next fund will be led by Rob and partner Venkat, as well as Judith Dada as a senior partner at the firm. I think it's quite interesting. I mean, it's being touted as kind of this response to what's happening with AI and how that's changing everything from startups to investment firms. And I think it'll just be really interesting to see how that plays out in practice. I think that's something that a lot of firms and companies are saying is the reason for big structural changes. and I think it'll just be really interesting to see kind of how Visionaries is able to operate moving forward, how their next fund performs, of course, and just, you know, if this really is the right answer to this current AI moment or if, you know, maybe it's just another trend that VCs are going for.

10:34So yeah, it'll be quite interesting to see how Visionaries pans out in the next fund. Yeah, I think you're right. It feels like a wider shake-up moment across VC in some ways. I know you've also reported on like changes at Speedinvest, which were linked to AI by them. So it feels like there are wider shifts among the VC model, which is really interesting. Anne and I have a couple of others on our radar. If people want to get in touch to let us know where we should be reporting next, that's always very helpful. Anyway, thank you, Anne, for joining the pod. What else are you working on at the moment?

11:05What can people expect from you? Hopefully they can expect a few more insidery VC firm stories. So you and I have got some work to do, but keep an eye out for that. And I'm also looking into some defense tech fundraisers. As always, there's a lot of news right now. So stay tuned. And if people want to send you insidery tips on VC or any of the things you've just mentioned, where should they do that to? Please send to my email, ann at sifted.eu, ann with an E. Great. And if you want to follow all our other reporting on the things we've mentioned in today's episode, but in particular on the VC world, you should sign up to Ann's weekly newsletter.

11:45upround which gets sent out every Friday and it's a really good read. Thank you listeners for joining. This pod was produced as always by Maya de Rampo-Hornby.