Irish Founders' Playbook for Winning the US; with Dylan Scully, Frontline Ventures

Speaker A: You know, we typically advise that one of the founders probably needs to be willing to spend 30 to 50% of their time in the US to properly do it. You know, this is not something you can outsource. Uh, as in, sometimes people think they can hire a head of US who will solve this problem, but like, it's, it's really, this is a founder level problem to find the product market fit in the US and another thing that could work quite well is, you know, develop a list of ICP customers that you want to target in the US and see if you can find ways for your European customers who might be subsidiaries of those U.S. customers or partners to those U.S. entities. And, um, see if you can plot your path from the European company to them. Um,

Speaker B: welcome to the Digital Irish Podcast where innovation meets heritage and global impact is the name of the game. I'm Dave Byrne, your host on this journey through the stories of Irish innovators, entrepreneurs and creators who are having an incredible mark on the world stage. We are here to showcase the incredible talent that Irish visionaries bring to the world. Welcome back to the Digital Irish Podcast. We are continuing our series about capital, uh, and startups. Today's guest is Dylan Scully, an early stage investor at Frontline vc. Frontline is a transatlantic venture fund that backs the most ambitious Irish and European founders looking to build global businesses. Now, if you've ever wondered whether the US is the right move for your startup or you've heard all the noise lately about whether it's even a good time to go, this episode is going to give you the insights to cut through that and a practical, um, playbook that you can actually use. Um, Dylan and I get into all of these details, uh, along with the so called SaaS apocalypse, what enterprise buyers really value in the age of AI, why your European traction may not land the way you think it would with US investors, and what Frontline are actually looking for when they back a founder. Dylan is somebody who's been on both sides of the table. He has founded his own company before moving into venture, so the advice is hard won. I think you're gonna get a lot out of this one. So with that, uh, I'm gonna drop you straight in it. Dylan, firstly, thank you so much for joining us today on the podcast.

Speaker A: Yeah, thanks for having me, Dave. I really appreciate it and I'm looking forward to the conversation.

Speaker B: So to kick us off, I'd love for you to tell us a little about Frontline. What makes your fund structure unique? What is different about Frontline?

Speaker A: Sure. Happy To So firstly, I'm one of the early stage investors with Frontline. At uh, Frontline, we invest out of two fund strategies spanning all across Europe and the US And I guess the core thesis that underpins Frontline as a fund is, you know, Europe and the US together account for 70% of global venture capital dollars, also accounts for over 70% of the global software spend. So we have this fundamental belief that if you want to build uh, a generational category defining company, you need to win both continents. So it's not an either or, it's you know, it's a must have. And so we have uh, set up our fund to try and intersect with founders at the point at uh, which transatlantic expansion is relevant for them. We have an early stage fund which I represent which invests typically a pre seed and seed stage all across Europe in anything as long as it's broadly B2B tech, software, AI. And generally we're looking for founders and companies that we think want to build global businesses and have the ambition to scale into the US and we support those founders on that journey. But we also have a growth fund that actually only invests in the US Series B onwards and companies that we think are on an IPO track and we help those companies win in Europe before the ipo. But because we have this dual strategy, we're trying to get into the most ambitious companies in both continents. This gives us this rich network that we can help companies on either side of the Atlantic plug into the other continent quite seamlessly. I uh, think one of our, or maybe more contrarian views of Frontline, if you hold the mirror up as a VC as well, is we think if you want to be the best venture capital investor in Europe, you can't do that without also being a great investor in the US because typically that's where the game is being played in terms of ambition, scale of capital, et cetera. So we want to kind of compete at that level so we know where the bar is and filter that down to what we see in Europe as well.

Speaker B: That's really fascinating and I'm um, particularly curious because you yourself, you're focused on Irish and European founders scaling into the U.S. so for you, what attracts you to that space? Like what's the thing that drives you to kind of support this segment for Frontline?

Speaker A: Yeah, sure. So, um, I guess it might be worth touching on my background briefly because I think it will help give some context to this answer as well. Um, you know, I studied physics in university and straight out of college I then Actually founded my own company. So it was called Match Day and it was in the sports tech space, but really it was all around enabling real time fan engagement. So we, we helped fans make predictions about what they thought would happen next in a match. They'd earn points and then we work with brands, sponsor prizes for the winners. So you know, it started off really as a B2C play and then we pivoted into more of a B2B positioning. But, but actually we really struggled to find product market fit. And, and so that left me firstly with a lot of empathy for founders, but at the time as well, I was quite inspired by what I was seeing in the us. So uh, you might remember going back, this was around the time that DraftKings and FanDuel were really taking off in the real time fantasy sports market in the us. Subsequently you saw companies like polymarket and Kalshi taking off. So I was kind of seeing the pace of growth in those companies in the US compared to what we had in Europe after Matchday. Then I decided I better get a grown up job, I suppose. I spent some years in Accenture and my role was commercial strategy lead for their global innovation team. So a lot of my work was working with Accenture's M global C suite clients, a lot of them in the US, on trying to understand what their problems were and how we could solve them with innovative new technology products. And I guess one of my big takeaways from that experience was it's really hard for enterprises to move at the pace required or that we see in terms of the pace of innovation in the markets. So I guess from those two experiences what I learned was one, I had empathy for founders because it was really hard. I saw the pace that things were moving out in the us and um, I also left with this feeling that startups were uniquely positioned to take advantage of new tech and be a disruptive force for incumbents. And you know, I also have this strong belief that there's no reason that Irish and European founders can't compete at the highest levels that we see in the us. And so that's why I kind of in my job today get a lot of excitement about helping them do just that.

Speaker B: Uh, I love hearing that because one of the things I often hear from the Irish diaspora, uh, who are trying to help support Irish businesses launch and scale in the us is that there's almost no reason why Ireland can't be the US's largest startup incubator. There's this immense talent, there's immense potential, there's almost this uh, inherent want to like scale beyond the island itself. And it just sounds like that they're, you're really tapping into all of that, you know.

Speaker A: Yes, 100%. Look, I think talent is evenly distributed no matter where you are. And often what differentiates is more what exposure you have to what that level of ambition looks like. But I think the more we can give founders access to that at a global scale, there's no reason they can't achieve amazing things.

Speaker B: So I know one area that you're particularly passionate about Is like Enterprise AI and SaaS at the moment and these are areas of focus for you. But I'd love to get your opinion on this because I do hear that there is this almost like this SaaS apocalypse ahead of us, especially as like AI continues to roll out. What's your opinion of this? Like when code generation costs go to zero, are we going to see SaaS companies going? Or do you believe that's a bit of hype at the moment? Like, what are your thoughts here?

Speaker A: Yeah, really great question and um, it certainly is a hot topic and one I think about a lot and we debate a lot internally and with founders as well. I think, you know, when I think about that question, I would almost break it apart into two because I think, you know, the first part of that is are enterprises in the future going to continue to buy from third party software or AI vendors? Or there's this alternate narrative that's going around that the future of enterprise applications is going to be some kind of a, you know, data lake plus context layer plus all the tools that users actually interact with are just bespoke and spun up on the fly by Claude code or something similar. And at least from my perspective, I think unequivocally that's not uh, going to be the case in the vast majority of instances. And you know, yes, I think there's going to be some very tech forward companies that will rip out all their SAS tools and try and do it all internally themselves. But I think for the vast majority of enterprises or traditional businesses, while in theory they could vibe code a CRM over a couple of weeks, the challenge is kind of what happens next. So then they're left with something that they have to maintain security requirements and also they have a product roadmap that they have to continue to execute on. Um, meanwhile the market continues to move at pace. So there's going to be vendors in the market that are going to be focused on the sole thing that you've been trying to replicate. And we'll just be able to do that to a much higher level. So, you know, my advice to these uh, enterprise ctos is you should probably keep the core thing and uh, in most cases outsource to a specialized third party vendor to solve for your needs. But then maybe the second part of that is, okay, even if that's true, that enterprises will continue to buy from third party vendors, the question might arise, will that be, you know, incumbents or people that already exist in the market today who bolt on or roll out AI features, or will there be new entrants? And maybe this is me speaking as a biased vc, but as I discussed earlier, I would always back the startup or the new entrant in that scenario because I think with this new AI wave, the startups are going to be optimized for that from the ground up. So they're going to have the right business models, OP models, they're going to have the right culture and go to market strategies to really take advantage of those new opportunities.

Speaker B: And um, thinking of that piece where you're saying like, oh, working with third parties for certain specialisms and that kind of thing and um, I imagine that there's a lot of uh, folks at these enterprises that are thinking, well, you know, I probably have the ability to actually build this in house or maybe even I have the capital to buy a small third party operation and, and integrate this in. Is this moment with AI creating an environment where enterprises are more likely to make build decisions rather than buy decisions, partnership decisions? Um, or do you think that. No, there's still a place for enterprises to really focus on their core competencies and to um, look beyond themselves?

Speaker A: Yeah. The way I would think about that is because we talk about this a lot, this idea that the cost, the code generation, um, is going to zero. So therefore, what's the value in buying software? But I think if an enterprise is weighing up a build versus buy decision, they have to ask themselves the question, well, what is it that they're actually buying? And again, my view would be that they're not just buying lines of code, they're buying much more than that. So they're buying things like reliability, repeatability, security. They're buying a brand which is, you know, someone to point the finger at when things go wrong. They're buying the ongoing service and maintenance, they're buying a, uh, product roadmap that's going to be maintained and ultimately they're buying opinions as well. So one of the challenges that enterprises will have when they try, and if they try and do everything in house themselves is they have to figure out the best way of doing that. Whereas a third party vendor will have tested their use case across multiple different customers and should come with a well formed opinion of no, you know what, this is actually the best way to automate this work flow, for example. But I think in the medium term how this plays out is probably more of a hybrid approach. So maybe to give you one example, we invested in a company in Belgium called Donna. And what Donna do is they build a multimodal AI agent for field sales teams. So think about traditional industries like insurance, manufacturing, medical devices and sales roles where they're on the road a lot in their car a lot. And uh, these people really don't like doing the admin of updating their CRM. They're driving in the car, scribbling notes in between meetings. And so Donna have developed an AI assistant that will call them to prep them before their meeting, capture their notes afterwards and execute orders back into the CRM or ERP when they go home. And what we're seeing now is, you know, Donna will typically sit in front of an incumbent system of records, like an SAP or a Salesforce for example. And increasingly those systems of records are going headless. So they will remain as the store of data and business logic. But all of the interaction layer and user, user context is going to be owned by Donna's AI assistant that sits on top. And this kind of hybrid approach works well for both parties because from a system of record perspective, they're actually getting much richer context and data back into their system and they're actually seeing their usage increase instead of decrease with these tools sitting in front. So I, I think this kind of, yeah, it's quite interesting to see. So I think this hybrid approach of incumbent plus adding on the modern AI vendor is what we're going to see over the next couple of years.

Speaker B: And thinking about, let's just say this, um, these new AI companies coming in, like, let's just say if there's an enterprise AI founder and um, uh, they may have created something that's really spectacular, really providing incremental value, but it feels like that they may be entering a world where everybody's talking about how they can build stuff for the AI and that buyers themselves are probably overwhelmed with the amount of people that are coming to them going, hey, we've got the best AI tools and blah, blah, blah. How does an enterprise AI founder stand out in this kind of market today?

Speaker A: Yeah, it's a really great question because I think the overriding theme we're seeing in the market at the moment is AI is a board level topic in every organization and buyers are actively out, uh, in the market looking to spend money on AI tools. So I think you have to be in the mix for those conversations or you're not. So what is the things that are going to put you in the mix and get you over the line? And I think it comes down to a couple of things. One is you have to be solving a number one priority pain point. And if you are, you have to be doing it at least 10x better than the alternatives that they're going to look at. And uh, maybe, you know, I bear the scars from on this point myself from my experience with Match Day. So towards the end of Match Day we were trying to sell our solution to OTT sports broadcasters. So people who are doing live sports streams online. And anytime we would pitch these people and uh, we asked them, is this solving a problem for you? Invariably the answer would be yes, it is. But it's actually only if you go a step deeper and say, okay, well can you name your top three priority problems today? They would say something like, it's number one, we need to secure sports rights, which is complicated and expensive. Number two, it's something like we need to get the latency of our streams down, which is hard because they're laggy at the moment. Number three is we're trying to distribute to users and it's a competitive, crowded market. And so those three topics were taking up all of the, you know, executive airspace, uh, and budget. And so really we just weren't in the mix. And so I think it's a similar thing that we're seeing with AI founders today. So make sure that when you're doing your, your customer discovery calls that you're identifying not just what the problem is, but is a top priority problem. And if you can do so, I think you can unlock significant enterprise budgets.

Speaker B: That's actually really interesting because. And um, you know, just to delve into something there's. Because I feel often hear a lot of founders talking about like, oh, I am building the best solutions. But it almost kind of sounds like that what you're saying there is like including a little bit of healthy curiosity when you're going out is actually a potential big differentiator when you can actually go out and just simply ask like, what are your key challenges? And then like meet them there.

Speaker A: Exactly. I think you need to go in with an open mind and not anchor your questions to the solution. You're already bringing to the table. So almost start with a blank sheet and understand what their priorities are and then position your product direction in line with that.

Speaker B: That's fascinating. And now I do want to bring something up because obviously you are supporting Irish and European businesses that are like, looking to expand into the US There. There seems to be a little bit of a conversation, uh, going on at the moment of like, this a good time or a bad time to make the move over to the US like increasingly we're starting to see a lot of companies looking eastward as an alt, like as an alternative route. But they're also saying like, well, if we look at the US it's under the current administration, it's not the ideal time. There's a lot of other considerations to take in mind. But like, uh, thinking about it from the actual data perspective, like what, like what we're actually seeing is this narrative that this is a bad time, like incorrect, or is there something to this?

Speaker A: Yeah, really great question. I think, um, maybe starting with the point of, you know, why should you even consider moving to the U.S. in the first place or expanding to the U.S. i should say, and then we can come back to, you know, is it a bad time to do so or a good time to do so? I think, you know, from our experience in working with founders, there's a few characteristics about the US market that make it very attractive. So firstly, typically customers make much quicker buying decisions and so the impact there is, it means your sales cycles are shorter. Secondly, there's a culture there of innovation, which means buyers, even enterprise buyers, are more comfortable and willing to partner with early stage startup companies. And uh, so therefore that impacts your ability to win larger accounts earlier. And thirdly, their budgets are bigger, which means your ACVs tend to be higher. So I think these three things combined mean that you can, you know, the prize up for grabs is much bigger and you can reach there much more quickly. Also you have to remember that the US is over 50% of all global software spend and over 50% of all venture capital dollars. So there's also this risk factor of not doing it or maybe, you know, an opportunity cost question, which is where sometimes we see founders too focused on other markets and suddenly the US competitor that you haven't heard of raises 50 million, uh, and they're coming into Europe and they're going to steamroll you over the next couple of years. So there's also this sense of you want to be competing in the most competitive markets to see where the bar is and ensure that you're competing at that level and keeping pace. But I want to come back to is it a good time or not to expand? And I think what you're touching on here is there can be a lot of negative sentiment or perception of negative sentiment in the media right now. And so at Frontline, one of the things we did is we wanted to dig into this data to see if it's actually true. So, uh, we have a portfolio company called Signal AI and one of the offerings they have is, um, sentiment analysis of media and social media. And so we got them to run an analysis on, you know, looking at European, um, articles discussing US tech and US articles discussing European tech. And what we found was for every one negative piece of media in the US about Europe, there was about 14.5 positive ones. And secondly, yeah, which is very surprising. And then the corollary stat was for every one negative European article about the US there were 13 positive ones. And so, uh, I think that's quite interesting to think about because I think sometimes the negativity can dominate the media or there's certain voices that have a lot of sway, but I don't think it's necessarily the sentiment of most people. And the next point I would make on that is just how intertwined and dependent our continents actually are on each other. So again, we did some analysis and we looked at for European B2B software companies that IPO, what percentage of their revenue comes from the US when the IPO, and probably unsurprisingly the answer is something around 40%. So quite a large number. And maybe that's not surprising to people, but what was super interesting was the reverse stat. So for U.S. software companies, that IPO, what percentage of their revenue comes from Europe at the time they ipo? And when we chatted to a lot of our VC friends or founders, I think most people expect that number to be like 5 to 10% maybe if they were to give a guess. But actually the data would say it's also 30 to 40%. And um, for the higher performing IPOs, it's closer to 40% of US software companies revenue come from Europe. So I think there's this interdependency that people often underestimate. And so if you do want to build a generational software company, it's not an either or question, it's an and you need to think about how you can build a hybrid operating model to win in both markets. And it's likely about 40% of your revenue is going to come from the other continent. Anyway, wow.

Speaker B: So there's so much that we can delve into there. But thinking of the opportunity there, then like, let's just say 40% of your revenue can come from this market. It's like, how does a founder actually think about that from day one? Like, how should they be exploring the US as a market, as the future potential revenue earner from day one? Like, what does that look like in practice?

Speaker A: Yeah, great question. I think one of the mistakes we sometimes see people make is saying, okay, I'm going to focus on these markets in Europe first and then that's going to translate to what I need to do into the U.S. i'm not going to expand into the U.S. but I think it's dangerous to assume that what you learn in Europe and your case studies in Europe are directly applicable to what's going to happen in the US market. So instead, what we advise our portfolio companies to do is to at least explore the US from day one so that you can take the learnings from your US customer discovery. I mean, you almost need to treat it like a separate product market fit activity, but take the insights that you're learning from those US customers and market and feed it into your product development and go to market strategy early so that when the time comes for US expansion, you're ready to do so. And then in practice, you know, what does that actually mean? So typically from the earliest stages, it's probably one founder doing something like four to six trips a year. You know, we typically advise that one of the founders probably needs to be willing to spend 30 to 50% of their time in the US to properly do it. You know, this is not something you can outsource. Uh, as in, sometimes people think they can hire a head of US who will solve this problem, but like, it's, it's really, this is a founder level problem to find product market fit in the US and another thing that could work quite well is, you know, develop a list of ICP customers that you want to target in the US and um, see if you can find ways for your European customers who might be subsidiaries of those U.S. customers or, or partners to those U.S. entities and see if you can plot your path from the European company to them. So, for example, one of our portfolio companies, Work Vivo, which went on to be acquired by Zoom. I think they did this very well, where they won a lot of Irish customers which were subsidiaries of US entities, and they'd identify a champion who would then take them to the global HQ in the US and pitch alongside them and That's a nice way to get some early know runs on the board in the U.S. that's very cool.

Speaker B: Such a great way of getting uh, in. I love that. Uh, some nice, like actionable, practical tips there. I love that. But you've said something interesting there about some people think they can hire a GM of America and like do that. And um, it made me think of, um, when we've done like Irish Tech Week and we bring over founders and we do sessions with them where we talk them through the costs that are involved with hiring in the US the cost of scaling in the US and the amount of times you have founders then going, whoa, I didn't realize it was going to be this expensive. And they almost like pull back their aspirations as a result, uh, of that because of just the feeling like this costs too much. Uh, I feel like that they're missing something from that cost calculation though. So, uh, you know, because again, there is a huge wealth of opportunity. But I'd love to kind of pick your brain on this because, like, what would you say, uh, what's your opinion here? Like, what do you think that they may be getting wrong in that moment about the cost calculations? Especially when it comes to hiring and scaling in the US for sure.

Speaker A: Yeah. This is something that comes up a lot. So I think firstly, it is true that European founders underestimate the cost of doing business in the US And I think there's a number of reasons for that. But the primary driver is salaries are just higher in the US Particularly for sales roles, for example. And sometimes European founders balk at that when they're not expecting it. There's also a lot of hidden costs. So when you factor in different agencies that you might need to work with, visas, uh, travel back and forth, hotels, like, all these things add up and sometimes people miss the whole cost of doing business in the U.S. but I think there's another side to that equation, which is there's cost, but then there's also the value, half ah, of that equation. And I think while people underestimate the cost, they also dramatically underestimate the value of being in the U.S. firstly, as I kind of touched on earlier, the U.S. is one big homogenous market. They all speak the same language, it's less fragmented than Europe. And that means you can actually be much more laser focused on your icp, who tend to have bigger budgets than they do in Europe. And so therefore you can actually scale a lot more quickly and a lot more cost efficiently. So I think that's one part of the equation that people often underestimate. And the second part is the opportunity cost of not being there. As I alluded to earlier, I think the US is often where the game is being played in terms of the pace of change, pace of innovation, level of capital available. And so I think it's a mistake to ignore that, uh, and sit that out if you want to build a truly category defining company.

Speaker B: And m, you know, so how do they then think about like, okay, well now as I'm kind of looking to expand into the US I need to figure out what the right level of investment I need to bring in to like achieve success. Like, because we're talking there about like the opportunity that's ahead of them. The worst thing that I think founders could potentially do is maybe arrive in the US and um, undervalue their business or ask for too little to actually scale up their business. How should a founder be going about doing this properly? How can they set the right level of investment that they need to really launch and scale in the US Are there core factors that they should be thinking about?

Speaker A: Yeah, I think the way to budget this first of all is, you know, for any round of funding you should be trying to raise enough to give yourself 18 months Runway. And if you're also looking to do US expansion alongside that, you need to consider it this way. You know that 18 months of funding needs to cover you still running your European HQ business as usual and hitting all your targets. But in parallel doing this, you know, us firstly exploration exercise and ultimately expansion exercise, which is going to include those things we talked about, which is one of the founders spending 50% of their time there over probably six trips a year ultimately then that moves into making your first U.S. hires. You know, from our experience, the first hires that people make in the US tend to more so be on the sales side or customer success side. But people are kind of biased towards more, let's say mid to senior level US salespeople who can lead, who have the competency to lead a team down the line, but also probably bring with them um, a book of business as well. But you know, I'm m going to do a shameless plug here which is Frontline has released a, uh, US playbook that kind of covers these topics in a lot more detail. So it kind of goes through things like, you know, when's the right time to go? Where should you go? Who's the first hire you should make, should you do a Delaware flip? And all the costs associated with that. Uh, so, uh, and for any founders Thinking about the level of investment required, that kind of checklist would be a good place to start.

Speaker B: Amazing stuff. And then kind of thinking about then once they've started spending the 30 to 50% of their time in the US thinking of what US buyers and US VCs are thinking of. We heard very clearly from you that there is a very big positive sentiment about European, uh, businesses. But like how are they, uh, assessing European businesses? Are they thinking about things like what traction that you already have in Europe? Are there factors there that can really help companies in their storytelling when they speak to US buyers and US VCs when they come over?

Speaker A: For sure. So I think this comes back to a couple of things. So, um, one of those things is I think there's a difference in the expectations around scale and ambition levels and outcome levels that US VCS would have compared to a lot of funds in Europe. And you know, the European ecosystem has changed dramatically over time. So we have, I think something like five times the number of unicorns we did just about 10 years ago. But where the US is still ahead is the next order of magnitude of outcome. So when you look at decacorns or even trillion dollar companies that we're seeing now. And so as a result, you know, if you're pitching US funds, a lot of US funds have larger sizes and an expectation, an outcome expectation that's greater than you might expect as a European founder. Uh, so it's really important to firstly qualify the size of fund that you're speaking to. I might just give a kind of rough idea, uh, of how this works, just as a quick sense check for founders. So typically for any fund, for any individual investment they're going to make, that fund needs to believe it has the potential in the positive case to return the fund at least once. So, you know, if you keep the math simple, let's say you have 100 million seed fund like Frontline does, and assume you own 10% of the company at the time it exits. That means you need to believe it has a billion dollar outcome to be able to return the fund once. So that also translates to what US VCs would expect. But some of these US funds are set up so that they need to believe in DECA CORN type outcomes and they might have already had a DECA CORN outcome or maybe their peers have. And so if you go into a meeting underprepared for that or realizing that the expectation, you're not really setting yourself up for success. I think that, you know, the second part of your question was around what is it that US funds or buyers want to see before getting to conviction on you as well? And again, from our experience, it's extremely difficult to raise funds or to sell into the US Unless you have strong US proof points already. You know, we had a really, maybe an extreme example of this in our portfolio. And um, a few years ago, but one of our companies was going to pitch in the US and they had a thousand customers in Europe and 20 customers in the US and they were explaining this to a US customer and the customer turned around and said, okay, so you have 20 customers. And I think that that kind of brings the story to life. But they're not going to assume that your traction and credibility that you've developed in Europe directly translate to the US and um, and so the result of that is we often advise our founders, you know, if you want to raise money in the US or sell into the US you should probably weight your US revenue and users 300% higher than you do your European revenue and users 300% higher.

Speaker B: Wow.

Speaker A: Yeah, for sure.

Speaker B: That's great. Like I uh, hadn't thought of it from that scale. That is a great learning. Like are there other things like that, and I'm going to ask a very general question here. Are there other things like that, that Irish founders, if they're looking to raise a Series A in the US or looking to grow their business, that they should keep in mind, are there factors like that that are like really crucial in these conversations?

Speaker A: I think, yeah. So, you know, I touched all it on it already, but it comes down to a couple of things. It's like one, really qualify your investors and make sure you understand their fund size and the size of outcome they're expecting. Because probably the biggest reason they're going to say no to you is because they don't believe that you can deliver the type of outcome ah, that they expect. Two is giving too much weight to your European traction and proof points and feeling really good about yourself and going over then, you know, getting a bunch of nos and asking yourself the question why is uh, that just happened, you know. And I think the reason this does happen, by the way, if you put yourself in the shoes of a, of a US vc, you know, they have such a large pipeline of deal flow of really high quality US companies that they have that they could invest in. And so if you're coming along as the European founder, you're going to be compared along that mix. And uh, you know, Quite frankly, sometimes VCs are looking for any reason to Deprioritize companies so they can focus on the compelling ones. So if there's any question marks or open doors about, well, have they actually done this in the US do they have case studies? Do they really know what the level of pace and intensity that is required in the US Looks like? You're just giving them an easy reason to say no. So to come back to your question, I think that's probably one thing we see European or Irish founders underestimate is that somehow if they're struggling to raise in Europe, it's going to be easier to raise in the US because there's more capital, when actually if you're coming as a European founder without the proof points, it's probably going to be a lot harder.

Speaker B: Uh, that's a great one to take away. I do want to go back to something that you said there because, you know, you mentioned about like the uh, the VCs, like their expectations of like what they're looking for. And it kind of reminds me again of like, hey, like healthy curiosity is probably a good thing here of like understanding what they are looking for is also crucial to making sure that like you come in then and um, match their expectations. So making sure you do the research before you even set foot into the

Speaker A: room, you know, 100%. I think it's one of the biggest mistakes we see founders make and we try and help them with. It's just not properly qualifying your investors and being ruthless in that prioritization as well. So for any round that you're trying to raise, you should be trying to probably speak to 50 to 70 funds we would recommend and um, create a kind of sales pipeline where you're starting with 50 to 70 funds and you're trying to get it down to a point where you end up with, you know, one to three term sheets. But when you're qualifying the funds that go into that list, you know, you need to really look at the fund size in terms of the outcomes they expect, the check size that they invest, the stage that they invest in, the sectors that they invest in. And um, the kind of ruthless piece here is funds will say a lot of things on their website that might make it look, you know, cast a wide net. So as much founders are interested to speak to them as possible. But unless you can, you know, find data to show have they actually made an investment at that stage in that sector in your category in the last 12 to 18 months, I would just be ruthless and rule them out.

Speaker B: Interesting. Yeah. Again, sounds like research is crucial here, but you know, this has been fascinating conversation and like I love like the talk about like the support that you kind of help with founders and startups like looking to expand into the US But I want to bring this back to Frontline because we're talking there about the research that folks should be doing before having a conversation with US VCs. But thinking about this from the perspective of Frontline, um, what are the kind of companies or founders that gets Frontline excited? Like what is something that uh, you can share about what Frontline are interested in that could help with some of the research for folks that are looking into Frontline today?

Speaker A: Yeah, sounds great. So I think, you know, anytime we're looking at a company, there's probably four dimensions that any VC will look at you with. So you know, they're assessing the team, assessing the market, they're assessing the product and they're assessing the amount of traction you have. And you know, in Frontline our view is probably that's the order of importance and team and market is probably 95% plus of our decision. And so maybe, you know, to unpack, what does that actually mean? So maybe I'll start on the market. So like I discussed earlier, we're looking for markets that can support multi billion dollar outcomes for our fund. And typically what's getting us excited in markets at the moment is things that are attaching to some kind of AI tailwind. So there's just so much demand in the market for AI and associated spend up and down the value chain all the way from the kind of chips all the way up to the final uh, AI agents and deployment. So I think anything that attaches along that supply chain, there's just so much tailwinds of demand behind them that they've the potential for breakout scale. Secondly, you know, another area we're interested in in terms of markets is the intersection of AI and kind of regulated spaces or spaces where a lot of depth of domain expertise is required. Because in a world where it's easier and easier to build software products, we do think some of the durable moats are going to come from having some kind of regulatory or compliance mode, unique access to data, depth of domain experience to be able to fully implement these AI solutions in like healthcare settings or financial services settings broadly, they're the type of markets getting us excited at the moment. And then maybe to come back to, you know, the most important part, which is team, what does that actually mean when we're say, when we say we're assessing a team? Firstly, it's ambition level. So does this team or founder have the desire and credibility and resilience to go on a journey of building a multibillion dollar company? And, uh, that's kind of a hard to assess thing, but it's something you try and build up a muscle for over time. But there are some characteristics under that that I would say we would look for as a leading indicator. So one is just the ability to learn very quickly. From our experience, the best founders are constantly absorbing what they're learning from customers and from their team and, uh, being able to iterate quickly and feed it back into their product. And the second thing I would say is a strong leading indicator of success is just the strength of opinion. So we find, you know, again, from our side of the table, hundreds of pitch decks a week, a lot of the same stuff starts to come up time and time again. But every now and again you see something that you're like, wow, that's slightly controversial, or that's something I haven't heard before, or. But if you know something that's controversial, if they're right, they're probably really right, which probably correlates with some kind of outsized outcome. So. So, yeah, kind of unexpected opinions, but backed up by data is another thing that, that would get us excited.

Speaker B: That's a great one. Where it's like, hey, everybody's saying X, but we see that it's actually Y.

Speaker A: Exactly.

Speaker B: Which, funnily enough, in my head, I kind of pictured if you go into ChatGPT and type in something and you ask it to write you a paragraph, it usually comes back with a structure where it's like, it's not this, it's this. That's actually one of the ways you could potentially approach a conversation with Frontline.

Speaker A: It's not this, it's this 100%. I mean, it's a great way to get someone's attention. And then it's like, can you back it up with real insights?

Speaker B: Love it. Dylan, I can't thank you enough for this conversation. This has been really fascinating. I just love the practical guides that you've given here. I think there's so much here that founders can utilize, both from a approaching fundraising at an early stage in Europe, like approaching the likes of you at Frontline, and also like looking at the US in the future. So this has been excellent. Uh, if there's a founder listening today that wants to find out more about Frontline, but also hear more from you, where should they go to? Like, where can they find out more?

Speaker A: For sure, yeah. So you can find more information about Frontline at Frontline VC is our website. Look, I'm always interested in meeting founders, no matter how early they are, and seeing how we can intersect and help them. So the best way to get in touch is probably on LinkedIn. So you can find me at, uh, LinkedIn. Dylan Scully. I also occasionally try my hand at, uh, writing as well. So if anyone is interested in following any of my writing or blogs, I also have a substack that's Dylan Scully too.

Speaker B: Excellent stuff. And we'll link to the substack in our show notes, so do check that out. Uh, but Dylan, thank you once again for joining us on the podcast.

Speaker A: No worries. Thanks for having me, Dave. I really enjoyed the conversation.

Speaker B: And that is it for today's episode. A massive thank you to Dylan Scully from Frontline for joining me. Genuinely one of the more practical conversations that we've had. I love how he came in with data, not just opinions. So if you're an Irish founder and the US Is somewhere on your horizon, even if it's the distant horizon, I would encourage you to go back and listen to that section on exploring the market from day one. The stuff about treating it like a separate product market, fit, exercise, and using your European customers as bridge to the U.S. that's the kind of thing that sounds simple but makes a real difference. You can find Dylan on LinkedIn and there's a link to a sub stack in his show notes. Well worth following if you want more of this kind of thinking. If you enjoyed today's episode, please do share it with someone you think would get something from it. And if you haven't already, hit subscribe to wherever you get your podcast cast. We'd love to have you back for the next one, but until then, Sangafal.