Can AI Build Fintech Unicorns Faster?

Speaker A: We invest very long term, we stay on course and there's going to be great outcomes. We made our first bet into Africa 2018 solving a Nigerian and Kenyan and maybe Indian problem in terms of car ownership and lack of financing and funding to being the largest third party EV fleet manager in the world. That's an astonishing turn. That's an unusual churn.

Speaker B: Terribly boring is where the terribly uh, exciting stuff in life.

Speaker A: So we need those founders that aim really high.

Speaker B: Will AI help compress time to build category defining fintechs from roughly a decade to maybe under five years.

Speaker A: Is that going to be a Trojan horse for the likes of Stripe and other US fintech giants? I would say yes.

Speaker B: Good afternoon ladies and gentlemen. Uh, welcome to the latest episode of Culture Nomics with Arjun, uh, joining me and he'll have to tell me where in Europe, I believe from Austria, but he'll correct me, is Stefan Klestil. Stefan is a general partner with Speed Invest, um, um, an investor who's actually being quite active in the region and as a matter of fact there are a couple of startups uh, where they've invested and um, whose founders are good friends of mine. But with that rather sort of extended uh, introduction, um, let me welcome Stefan virtually, um, unfortunately not on a couch. I don't know where you're sitting. It's a chair or a couch. But welcome, welcome to the show, Stefan.

Speaker A: Thanks so much. It's a pleasure being here Arjun. And you're very illustrious podcast, um, that I've been following for uh, quite a while.

Speaker B: Thank you. And thank you for making it even more illustrious then. So am I correct you're joining me from Austria?

Speaker A: I'm actually in our HQ in Vienna. Austria. That's correct. That's where Speed Ms. Started. Our biggest offices are London, Berlin, Munich, Dubai and very soon Doha, or already Doha. And um, yeah, we have recently changed, or I have changed my title to being the head of FinTech EMEA which um, tells you quite a lot about how important the region is to us. Uh, we do feel very strongly about the region and we see fintech really as uh, let's say one pipeline. We're looking at one pipeline across all of Europe, Middle east and Africa and we think uh, we will uh, all benefit from that Excellent respect and I

Speaker B: think that gives me a few segues actually. We will talk a lot about fintech over the next sort of 40 odd minutes. We will talk about the similarities and differences between Europe, Africa and Middle east with three, uh, quite interesting regions, ah, arguably slightly different. I'm sure there's some common threads but let me start with um, the latest news um, which I read or heard about which was back in um, you know you announced um, and correct me if I'm wrong, it's your first sort of dedicated Middle East Africa fund. It's backed by Mubadla, uh, QIA and EIB Global. So you know excellent uh, backers if I may say so. Question for you. Why do this and why do this now?

Speaker A: So Arjun, I mean this has been something we didn't decide two days ago. This is, this has really been the result and highlight of a uh, fairly long evolution. We've been investing uh, already uh 14 years ago when Speedinvest started into EasyCo for instance the now leading payment gateway of Turkey, um, which in 2012, 2013 wasn't an obvious one uh for a small at the time, uh you know, German speaking markets focused Vienna. And um, that turned out to be a really great investment. I was uh, chairman also for a few years all the way to exit in 2018. We made a nice return. I made great friends. Barbaros, uh the CEO and I continued to invest jointly in companies and full circle we have last year also invested in his next gig uh, which is squarely uh, in the AI reconciliation space. So that's kind of where we started. And uh, clearly you know Turkey at the time went uh, through a lot of ups and downs and I sort of learned what it means to invest into a highly regulated, high growth company in a market like Turkey where you actually have very sophisticated banks. Um, and uh, you know you obviously have a regulator and uh, so we learned a lot in that journey, a lot of ups and downs. Fast forward this company is doing north of 750 million revenue, uh, north of 200 million profit. Uh unfortunately we're not shareholders anymore but we exited nicely. We, we might have sold a bit too early but uh, it was a great experience and so we felt more comfortable taking the next step. And so we made our first bet into Africa 2018 with FairMoney, um, founders really a mix of French and Nigerian, um, uh, very data science driven people. Um and then the ball kept rolling and we saw that these markets are obviously massive. Uh we saw that there's great founders anywhere in the world including those places. And despite all the obvious macro challenges in some of these markets, uh, the prize is so big that we continue to make bets in these markets out of our European funds initially. And so you know you add Move and Abby and many other great companies that I'm Sure. We'll speak about more later. Shop up, silk pimo. And, uh, some point we said, look, um, we are having a great time in these markets. Um, we, you know, the time is ripe to have a dedicated strategy for this. Um, because clearly on a European fund you can do maybe 10 to 20% other things that is not in your investment thesis, but that's it. Right. So we wanted to really put the full power of a separate fund strategy against it. And that's why, uh, one and a half years ago, we in serious launched this fundraising effort. And so all culminating early February at Web Summit, uh, being announced, um, uh, the first European VC that QA has picked in their fund of fund program. So it's not a small feat for us. It's a really big step, uh, dedicated to the region. And we're talking two continents, maybe even three continents. So this is a massive m. Um, you know, massive, massive continents with, with amazing founders. And there's no one common thread, I would say. Right. These are very different markets. GCC obviously stands out in many ways. Um, and uh, we'll talk more about it. But maybe the only real common thread is the great founders you can find there and the enormous TAM that you can address and also frankly, much less competition from Smart growth capital. And so in this new fund, we are actually not doing pre seed seed, which is at the core of Speed Invest in Europe. We're actually doing slightly later. There's plenty of friends and family and accelerators and early funds. Uh, there is sovereign capital, uh, and there are international investors that come in at some point later. But what's really missing is that Smart Growth Capital series A, B, that is clearly a gap even in gc, it has always been. Um, and so we feel, and we feel that it's improving. There's been increasing funds, um, coming in, trying to close the gap, but there's still a huge amount of opportunity. And so from a risk return, we feel right now that is the best place.

Speaker B: Okay, so I'll have to skip ahead a few questions because you were kind enough to answer some of these. Right. But, but let me try and deconstruct some of these. So, uh, I want to understand. Right, so two questions straight away, straight off, right? How does a European DNA, right. Which would, you know, irrespective of the fact that now you have a dedicated fund, but you know, the DNA of the organization is still very much European. Right. Uh, uh, how do you kind of manage the realities of these two very different environments? Right. Or you can correct me by saying that no origin, it's actually not that dissimilar. Right. So that's my. So first of the DNA, how do you evolve as an organization? And secondly, if you may, why haven't more European, um, growth capital players such as yours seen sort of the picture that you have? Right. Why have they not, over the years of the last few years, done something similar to yours, at least in the size and scale that one would have anticipated and expected? Feel free to answer the second one if you'd like to. But, you know, uh, there's two. Two parts to that question.

Speaker A: Sure. So, so the question is, as you know, speed invest as a European VC at its core, um, do we have a different strategy in that part of the world? Do we need to invest in any way differently? Right.

Speaker B: Yeah. And your DNA is the way you look at risk, the way you look at assets.

Speaker A: Yeah, yeah, I honestly feel. Um, so I think what we can bring to the table for great founders in the region isn't terribly different from what we can bring in Europe. Um, so there's a few generic things. Uh, I always say, um, uh, that we pride ourselves anyway. And so the verdict is with the founders. You need to ask them that. We really try to hustle for our founders. So there's of course a lot of smart people in VC, conceptually, analytically, etc. They talk a great game. Uh, the reality is what the founder needs, uh, very often is immediate support. And we're talking about very parochial things. We're talking about, hey, I have these two potential elite devs, or CTOs. Can you talk to them and give me your feedback? Or, um, I am looking for a mentor that is farther along in my journey, uh, that can help me along. Um, or biz dev, hardcore biz dev. Like we constantly, uh, pester our bank and insurance company, especially LPs, but also others about taking a look, um, at some potential partnerships with our fintechs. Um, so, you know, corp dev, how to think about M and A, um, being the one actually opening up some of those M and A opportunities, as you appreciate a lot of egos, uh, on both sides typically. Right. Founders and investors. So I think on all these fronts we can bring a lot of data points to the table from Europe and now also from the region. I mean, we have 30 investments now across the region, um, and some of them had scaled extremely nicely. For instance, M and A is one of those things that I, that we know from Europe. In Europe, it's very difficult in the regulated space to scale across borders despite single European financial market, forget it, right. If you want to play in France as a new bank, you still need that French Iban. Guess what? Getting a French Iban, it's not uncomplicated still. Or going from UK to EU or vice versa. So we're used to fragmentation and you have a lot of fragmentation also in the region, even within gcc as you know. Right. And things are getting more and more political and strategic and so it gets even more difficult who you know, how you position your company, how you um, manage your cap table, what are the people you actually bring in to solve what problem. So there's that strategic component, but then a lot of it is hustling, right, and just making the right intros and so forth. And we pride ourselves having done that. Now the team, if you look at the team, um, in emerging markets as we call it, or we actually love calling it growth markets, I think it's the more appropriate term. It's a very senior team. So like Deepali Rana, uh, Alvaro Varun, I mean Tom, they all have, you know, 10 plus years investing experience. Not always just venture, some also private equity. Um, and there's a deep understanding of the financial services industry. Um, so yeah, there's a very senior team that gets to work for their founders. And so it's not dissimilar to how we did things in Europe. Um, I guess. Why are not many more European VCs doing this? I mean most of them have done a bet or two in the region just to try it out. Um, um, but very few have actually taken the step we have. Um, but also strategically I think it just makes a lot of sense. I mean I don't encourage anyone else to really do it because we want to continue to have a wide open field. But um, you know, places like Dubai or Doha or Riyadh are now great hubs obviously for the whole region, for the global South. Uh, they've done so much, so much more than Europe in many ways in terms of attracting talent. Uh, giving them free compute in these days is obviously a massive advantage, giving them a, uh, very secure work environment, big talent pool, capital. So it's, it's very powerful and you know, we are much closer to this environment than the Americans are actually physically it's a lot easier. It's a, it's a two hour time difference. That's it. So I would almost turn around and say, why would you not go there? Um, interesting.

Speaker B: Let me, let me, let me take that a little bit further. So, so we'll come back to the rules of engagement with I guess the founders in this part of the world versus Europe and if they're different or not later. But if I just looked from your Middle East Africa portfolio lens and you mentioned you've made 30 plus investments, I'm familiar with a few of them. Move Kazna Fairmoney, Abhi, PMO Flow 48, lots and lots of others. I also look at the region and I said, as you said, very interestingly, the region is not one. Um, it's different, uh, fragmented. Uh, the way I see it is this gcc, there's the rest of the Middle east, there's an interesting sort of Central Asia element, there's Pakistan. And I think that you have an ex, you know, you have some exposure there and then you have sort of Africa. If I just split it very simply into sort of North Africa and sub Saharan. Right. So in a lot of ways this is, it's a massive market, right? Massive market, huge dynamics. And it's very. And the reason I can actually speak with a certain amount of credibility is that's kind of largely my focus area from the job I do, which is around consulting. Right. And I tend to sort of come across a number of founders. Let's not talk about the common threads, right. Because I can, you know, those. To be honest with you, enough is written. But what I'm very interested to understand is that how is your thesis for these markets sort of evolving? Are these all on separate tracks, Right. Uh, or either massively diverging and in that divergence is the trade offs. Right. And so the hedge. How do you actually sort of manage this from a, um, enemy. And I'm not even talking Europe right now. Right. So let's put Europe out. Seeing at your position, how do you see, how do you see these, these uh, I may say smaller segments of your bigger market, uh, trend.

Speaker A: Yeah. I'll start with a premise. Uh, I think we, we. The venture industry operates by power law, as you know. Right. So you have to have one or two massive breakouts to, to be in the top 5% and you want to be in the top 5% globally because then you have an easy time fundraising. Otherwise it's going to be very hard. And that has actually um, become worse. Um, so. Because everybody's going to compare you to usai, right. No matter what. Um, so if that's the premise, um, and there's no exceptions to this from a regional point of view, well, you're in mia, so my return expectation is lower. No, it doesn't work that way, it's still the same. Um, if that's your premise, you have to, with very few exceptions, automatically assume you're going to invest in a team that is solving a regional problem and it is capable of spanning multiple regulated jurisdictions. And that's super hard. And that requires a certain type of founder, I guess, or founder team. So we went through so many iterations in the last few years that we feel we have a very good sense of what kind of foundry you have to be to be able to crack that. The difficulty we have a lot of times is we get approached with really cool founders that we really like. But the bar is incredibly high. They're just not cutting it because they're solving some problem that's maybe relevant in one market, but it's just not enough. And then it's also about where do you aim for? So we need those founders that aim really high. And I'll give you example. Move is probably the craziest example of them all because I'll be the first one to admit that when we invested in Lahadi and chide in 2000, uh, one, it's not so long ago, I mean these guys are Nigerian diaspora m from the UK and they solved an immediate problem in Africa. I'm talking sub Saharan Africa, Nigeria. Starting with Nigeria, around car finance and car ownership. Right. Drive to own model. Brilliant model, good margin. They rolled it out in Africa. You know, fast forward now it's, you know, are uh, closing a massive round. It's not official yet, so I can't really say much, but it's going to be a huge round. It is closed but not announced. Um, and that is public. They have been, are a, a part of the global AV movement and took over the Phoenix operation of Way More and are cooperating with Uber in several markets. So this is an astonishing journey obviously from uh, solving a Nigerian and Kenyan and maybe Indian problem, uh, in terms of car ownership and lack of financing and funding thereof, to being the largest third party AV fleet manager in the world with Waymo and others. That's an astonishing journey. That's an unusual journey. Right, and why is that? That obviously has to do with especially Ladi just having set his sights on the biggest opportunity and uh, hacking his way into that opportunity, um, uh, you know, getting to know the right people, ah, getting people excited about what they do and obviously then um, you know, bringing in amazing people that actually know what they're doing. Like Mingma in the us, uh, who comes as former president of Grab and it's just like an Operations black belt that can actually pull this off. So you know what I'm trying to say, it all starts with those kinds of amazing founders, uh, and setting your site really high. And this is in a very unusual case. We're not saying that we only will invest into founders. Let's start somewhere in MIA and go to the US eventually. That's not what we're saying. But uh, clearly we uh, know this from Europe. If you have a US angle, you have access to US growth capital, then obviously you're on a very different journey and trajectory than just being in the region. We know this from Europe. Uh, all our fintechs from Europe that have a US angle have had a much easier time to raise and to be successful. The uh, recent round of Primer for instance is a good example. 100 million, um, U.S. europe and Asia. Uh, yeah, their U.S. market is, is quintessential. So uh, and, and now um, yeah, maybe I'll just stop

Speaker B: if I was to hear you correctly then can I just add something more provocative? Why are more and more funds calling these MIA funds? Because the way I see it is they slap on Africa, right, which is 54 countries and you know, arguably the fastest growing economy. I know it's a low base, but collectively fastest growing economy. And then they tend to be very concentrated on the Middle east. And then even in the Middle east, if you see it further concentrates down to sort of three countries, right. It's, it's basically in no particular order the uae, uh, uh, Saudi Arabia and then sort of Egypt enjoying it. Right. Is it not time where people start sort of split Africa out entirely and, and sort of say that you know, Africa should be looked at as Africa uh, rather than this because, because I haven't seen many successful uh, crossovers either. Right. I've seen some very interesting Egyptian businesses coming to the GCC because their unit economics work they can cater to 100 million people, so on and so forth. But I've seen, I've sat on a boards of number of them who've tried to venture into Egypt and North Africa and suffered because they're not able to sort of meet up the unit economics. They market's quite different. Um, I guess I'm not asking for an answer, it's more of a statement saying that isn't it just time that we.

Speaker A: Yeah, so, so 100%, there's a few blueprints, we don't have to reinvent the wheel. We've also had, you know, hasna going from Egypt to Saudi Arabia. We've had abiy going from Pakistan to UAE and to Saudi. Um, move obviously an extreme case that covers all these, all these countries. Uh by the way there's super interesting. I mean Turkey is on its own obviously a uh, much more mature tech business than most of these regions. We've had an incredibly successful, not much talked about uh tech uh play you know starting in Istanbul and then flipping into the U.S. there's a lot of very successful examples for that. And increasingly we also see uh the Turkish tech ecosystem growing more closer to the GCC one. Um so we have all these movements uh and then within sub Saharan Africa I would say East Africa can play a nice role um together with gcc. Okay. Full stop like going forward I mean and that is sort of what changes everything in our discussion is financial uh, services going on chain again big, big label. But it's true. I totally believe in won't happen as fast as everybody thinks. Uh it will take a while. Um, we will have um, traditional and new Rails coexisting for some time. We are investing in a lot of technologies that are trying to bridge those two worlds. Um, but, but this obviously changes everything also for the region because guess what? Now you have a real chance if you play in, in that game. You um, can now do it anywhere. I would say again GCC being a great hub for this. Obviously Abu Dhabi in particular has positioned itself very well uh on that front but I'm sure others will follow. And so uh, again Global south from all these regions we just spoke about going there, building something that is even global but probably more regional, not just consumer. But actually I'm even more excited about business so fueling trade, you know, swift replacement if you will. Um, it's already happening obviously but a team that you don't have to be the first team to do this. A team that really cracks this at scale. It's going to be huge in the various financial instruments. This could include trade finance. There uh, could be you know a settlement working capital component to it. Um, a lot of it is about liquidity provision uh especially if there's a currency mismatch. And so you get you know defy or digital asset market makers into the mix that have been evolving. So it, that's going to be really big and interesting and I do expect some very big outcomes. So that's what gets me exciting. And um, and, and we will see

Speaker B: big successes from no doubt, no doubt. What's been keeping me quite busy is exactly digital assets in Africa. As a matter of fact that's kind of where I'm spending a lot of my time. You know, I've been in countries like Senegal, Tanzania, Madagascar, so on, so forth. So, and it's quite interesting. Let me, let me switch back to Europe for a second. Right. So I was, I was going through some statistics and you'll correct me if I'm wrong here. So European Venture had sort of very strong Q1, right? Was up 30% year on year. Funnily enough, European Fintech had uh, a particularly poor year. It had about 30, 31% down year on year. Right. So is European fintech in the middle of some sort of, you know, a slow and a polite crisis that nobody wants to name it? Um, um, how do you see it?

Speaker A: I don't think so. Uh, you know we go through these hype cycles. Of course my colleagues from the Deep Tech and AI and even biotech space are having a lot more fun these days than I do because having a lot more up rounds and exits. Um, but you know, Fintech is not going away. Um, maybe what hits to the future is we've a year ago renamed our team Fintech and Defi. Right. We, we did those two changes. We called it FinTech EMEA, but we also call it Fintech and Defi, uh, for all the reasons we just mentioned. So I think um, right now uh, on chain in the traditional VC space is still less sexy than AI. But in reality we all know, everybody that deals with this knows every day that goes by there's new developments in that space and there is massive scaling going on in terms of uh, on chain financial services all over the world. That hasn't stopped. The train has left the station. Um, so I continue to be very excited. It's a bit less hyped than, than other topics but that's fine. We, we, you know, we invest on 10, 10 plus years, we invest very long term. So we stay on course and there's going to be great outcomes uh, there, um, and then also it's a bit of labeling. Um, yes, we have probably allocated slightly less to fintech than to Deep Tech.

Speaker B: And you're specifically talking European, you know, within Stephanie talking about European fintech.

Speaker A: Europe, yes, Europe. I'm talking European. But you know, the lines are getting blurred. And while we believe in specialization in autonomous teams within Speed Invest that know what they're doing, we are very consciously, I can see the past 12 months, the teams between, you know, Fintech, Defi and then, you know, AI Deep Tech are working together a lot. I constantly bring my sort of best AI people from other Teams to founder calls these days, right? And vice versa. You know, it looks AI, but there is some fintech monetization element in this. They obviously bring someone from my team, so it's. We so call it fintech as horizontal, as more embedded thing. That's fine, um, whatever.

Speaker B: It doesn't even matter. It really doesn't matter.

Speaker A: It stays highly relevant. And of course, as you know very well in this crazy AI world, that license, that regulator relationship is the moat. That is your moat. Um, and, uh, and again, um, to get there, you need a certain particular founder that is very resilient and, and can hack it, you know, dealing with regulars. I know all about it, uh, various jurisdictions. Um, you know, you need, you need these founders that, that see, uh, the regulation and the regulator as your friend, also in terms of governance. And we'll talk about this.

Speaker B: If you said that 10 years ago, my God, you would have actually got pelted with stones and, and tomatoes and everything else by founders. But let me, let me not. I'm not gonna, I'm not gonna, I'm gonna come back to Europe again, right? I'm gonna ask. There's one data point that keeps coming back, right? Every European fintech round which has been above a billion euros has been led by a US investor. Right?

Speaker A: What does this tell you? Yeah, uh, so, so obviously, you know, on the one hand, I would say it's okay because if I'm an early investor in Europe and, and you know, a US fund comes along to lead the next round, that's, that's great. That's, that's cool. No problem. Especially if it's one of those where you get access to a lot of, uh, scaling experience. So we've had that situation in most of our unicorns, Bitpanda and Tide and, and many, many others in 26. Um, but, um, clearly the problem is once Europe isn't hot anymore, you know, all these people are gone. And of course I'm exaggerating, but, um, you know, the VC ecosystem also, the political establishment has clearly identified that as a problem. UK was, um, the forefront of this. Right? Um, creating additional, uh, programs allowing pension funds to do more in the alternative venture asset class. Uh, you recently saw last week, I'm sure, the two weeks ago, the announcement of EU giving 5 billion to equity, uh, to close some of that gap, um, and some of that, uh, you know, dependency growth capital. So we're starting to get our act together. Um, but of course, that doesn't mean we don't want to see any US growth Capital anymore. And of course on AI front it's been coming back in a very um, so that's fine. Now GCC and emerging markets is a different animal when it comes to that. But we'll talk about Europe uh, at the moment of course there's something that we as a citizen have, and all my colleagues here have been being very, very vocal about the last few years, which is we have pension funds, insurance companies, banks, family offices in Europe that are predominantly investing into US funds, not European ones. Um, and while from a return perspective some of that makes, makes a lot of sense like this is not any interest of the political establishment at all. And so um, you know, Speed Invest and, and you know, a few other great funds, Bolton, you know, HV and others have proven crandom that um, they can really create massive returns for their investors. So the tide is slowly turning but you know, obviously it's very hard to compete with the U S tech ecosystem and that's also as you know, true because of the capital markets. I mean we just cannot match in any way, um, the ability of tech companies to scale an I.P.O. uh, here in Europe. And that's a big problem, uh, that's going to take a while to solve. We're not going to wait for that. Um, but in the meantime, you know we have a lot of fintechs from Europe that are very successful in the US and um, and that typically makes things a lot easier in terms of, of uh, accessing that capital. But yes, that dependency is there. Uh, the gap is getting smaller.

Speaker B: Good, you bring some very good points. Um, we've got less than 10 minutes to go. We have a small format called Myth or Reality. I'm going to ask you three questions. I need a simple yes, no view. Right sir, no qualifications are standing on the, or uh, sitting on the fence.

Speaker A: No, no qualifications.

Speaker B: Yes, but no sitting on the fence. How about that? Right, so Mina is the next fintech

Speaker A: gold mine is gold mine cash returns on a uh, Silicon Valley level.

Speaker B: Yeah, well, gold mine from a VC perspective as you said, right. It doesn't matter where you invest, you have to return the same amounts or similar amounts.

Speaker A: We are going to see really big outcomes from mena. So in that sense, yes. Is it going to be, is it going to be at the scale of Silicon Valley?

Speaker B: I think we're in early cycle, we're

Speaker A: an early maturity and uh, and, and let's just say, I mean the, the real verdict is going to be if the GCC can create a deep and wide IPO market for Tech companies. Right. That verdict is still out. I'm very sorry to see Talabad not doing better because the numbers are pretty good. I'm a big fan of Tune, the CEO, um, but it hasn't translated in great star performance. So that is a problem. They need to get that.

Speaker B: I agree with you and there's a couple of few things. I think the GCC and the MENA needs to start behaving like one market too. And I think there's that whole regulatory harmonization side too, which would allow a number of these startups at least to scale in what I call home markets. Right. Because at the end of the day they should be considered as home market. Second one, European fintechs will continue to struggle to scale globally.

Speaker A: Is that true? I think that's a myth, actually. I think that's a myth. I mean, I've been thinking about this. So like if you take Revolut as the most extreme example, but then you have Klarna, you have Wise, you have Checkout. Uh, and on a smaller scale, a company like ours, Primer, I mean they're all scaling globally, they're not necessarily scaling in the U.S. but when you say global, it doesn't necessarily mean us. Um, and if you turn it around, you know, what are the US fintech superstars that have been scaling globally? Of course, um, you know, Binance, Coinbase. Although I would argue that Binance is not necessarily a US company. Right. If they've sort of morphed into a US company, but, uh, or now an Abu Dhabi company, I guess. I don't know. Um, PayPal took him 25 years to get there. So for me that's out of the VC time range.

Speaker B: The US companies don't tend to go some number of times because their argument. There's so much to do. I was with m, you know, a couple of founders in New York a month or so ago and you know, they're, they're tens of billions in, in valuation and they were like, you know, we don't really need to go, you know, we still have enough headroom to grow double, triple. So, um. No, I agree. I think there's a bit of a myth out there. Third question, and this is the interesting one because you brought in AI. Will AI help compress what I say? Uh, time to build category defining fintechs from roughly a decade to maybe under five years.

Speaker A: Under five years, maybe. Um, so I would say, I would say, I would say yes. Um, I'd like to qualify a little bit and say, you know, what are the arguments for that happening and what are some of the arguments, um, against it. So I think clearly, and we see this across the board in our portfolio with agents, especially in finops, but increasingly also, um, on the product development coding side, uh, and the customer support side, you will require a lot less people to scale. I mean, without any doubts, that is happening. Um, so, uh, that would speak. And that means less capital that you need to raise. So that's a great thing. Um, one of the most annoying things for a founder is always having to raise all the time. It takes all this energy away from them. So that's great. That would speak to the five or less years. But then, um. Yeah, what, what else? I think, I think, yeah, the on chain reality is going to make it a lot easier to scale across multiple markets. Um, it'll be super interesting to see as these AI hyperscalers continue to grow globally. Is that going to be a Trojan horse for the likes of Stripe and other US fintech giants to get into all these other markets? Let's see. They will still need the regulatory approval for that.

Speaker B: Stefan, I'm gonna, I'm gonna make this question the next one. I make this a little bit more personal to us, Stefan, rather than you as a vc, but it's in your role, right? So you, you, you know, over the years you've been involved in a number of interesting companies, right? N26 bit, Panda v. Fox Curve. Right. Um, at different stages and points of their evolution in the businesses. And a number of them have had sort of, I may say, varying fortunes. Right. I'm not going to point out which have been more successful than others that let you decide how you want to see them. But let me ask you a very simple question, right? What has been the single most uncomfortable lesson that you've taken away from all these experiences?

Speaker A: Probably one that, uh, will resonate with a lot of investors is, um, when founders and financial investors, VCs are not aligned on cash returns. So you do have, um, sometimes a tendency of founders, especially when things go really well and there is more demand to invest than supply, that greed kicks in. And you know, uh, as I Support founders over five to 10 years, you know, they get a bit older, they marry, they have kids, they need a bigger apartment. No problem.

Speaker B: Yeah.

Speaker A: Ah, um, it becomes a real problem, uh, at a certain amount. So if that incentive is too generous, and we've seen this unfortunately multiple times in all geographies, um, that is a really bad misalignment which should be avoided. Um, so that's really one. And then more generically governance, good governance. VCs are very lousy in general in managing the transition from founder led VC led to executive professional management team and uh, professional board. And it's a very difficult transition because of course it can mean that one or both founders uh, have to step sideways or aside, uh, or change their roles for the good of the company. And so that is the most difficult discussion you always have as an investor with a founder. And for that discussion to go well you need to have built a really trusted relationship because it's a very personal discussion and it involves ego and it involves understanding that I'm not just the founder of the company, it's my baby. Um, but it's first and foremost to understand it's not my company anymore. That's a very tough thing for a founder. And then I'm not the only shareholder. I have to get a few people on board and sort of embracing that in a positive way. And then the second question of course is for the good of the company, it's actually better. I maybe just do sales or maybe I just do coding. Um, we've had those situations. Um, the bitpanda uh, change, I can talk about it because it has already happened is one of the best I've seen. Um, you know the CTO, long before they really scaled and became so successful, um, realized that he just loves the R D part of things and so he wants to go back to that. And he doesn't like managing armies of coders. Uh and so he very consciously, he was very self aware and realized that. And together with the port that uh, change was done, um, the CEO went to the uh, chairman side uh, as a pre ipo, uh measure. So all of it tells you there's been years and years of discussions uh, and sort of raising self awareness with these strong characters. You have to be a strong character to even get there right to make what's best for the company. Uh, and I would say so governance very fundamentally is you're a board member, you can't just represent the interests of your fund, you actually now represent the interest of the company. And that might actually mean to agree to things that are not only in the interest of your fund. That's what it means. And so that kind of mindset, introducing that mindset is quite a challenge and it comes with a lot of things if you don't do that. The great thing about regulation in that regard is if there is not enough maturity with uh, founders and investors to get there by themselves, the regulator will the Regulator will take care of you. The regulator will force you to, to put in those planks. Find that the less attractive way than sort of growing into that mindset.

Speaker B: From the fair point, Stefan. Very, very fair point. My last question. I know we've overrun it. What is the one thing happening right now in fintech and emerging markets uh, that people are not paying enough attention to?

Speaker A: Ah, uh, so you want me to have everyone jump in it, right?

Speaker B: Doesn't matter. Only if they believe your word.

Speaker A: Right? Yeah, I mean look, um, I think there's a lot of really interesting things. I think everything on the enterprise uh, side, anything on cross border enterprise trade is super interesting. Um, I think that's not highlighted enough. There's still too much attention on the consumer side and in emerging markets consumer is obviously very, very tricky because um, because it's obviously wealth is, is, is very unevenly distributed. So you really got to know what you're doing. So I'm personally right now I think that there's we, we get very excited on sort of P2P payments, um, uh, and sort of um. Yeah, securitization.

Speaker B: Uh,

Speaker A: it's, it's a, it's a topic where people are really bored. But it's a massive industry obviously and stables and alternative rails are going to change everything in that space and you know the Apollos and black black rocks of this world is totally getting it. So um, that's very exciting. Um, what um, else. Uh, yeah, I think, I think that's probably what I would, would highlight and

Speaker B: those are good, those are good to go with.

Speaker A: So those are good to go with.

Speaker B: Yeah, I said those are good to go with. I think I, I, I, I, I,

Speaker A: I agree with you.

Speaker B: I think those are all. I always believe that the terribly boring is where the terribly uh, exciting stuff is. Right?

Speaker A: Yeah. Treasury, treasury stablecoins. Treasury

Speaker B: is.

Speaker A: It's one of those things where we you know, a treasurer got used to that. Uh, you know it's a rule of law that um, you know you, you only get a higher interest if you, if you agree that the bank keeps your floats for 30 days, 60 days, 90 days. No, it shouldn't be that way at all.

Speaker B: I totally agree with you Stephan. Thanks a lot. Appreciate you tuning in. Um, have a good rest of the week. Uh, we'll definitely catch up hopefully in person either when uh, I'm in Vienna, I am overdue. But I, I guess this time I remember. I will, I'll let you know in advance or whenever you're down in the UAE next.

Speaker A: Uh, we look forward to see or in London. I'm there all the time.

Speaker B: Right. Global citizens. Well, global no. 7. Thanks a lot for coming. Okay, ladies and gentlemen, that was great.

Speaker A: Thanks for having me.

Speaker B: Pleasure. Ladies and gentlemen, that was Stefan Klester, who's the general partner with Speed Invest. Uh, and as he said, he is now also heading the EMEA Fund, which is focused across multiple continents. Uh, basically half the world, if I was to sort of look at from a pure sort of size and scale perspective. With that, I'll say goodbye and we'll see you next week. Thank you.