Alvaro Alvarez del Rio: Legacy and the franchise value of your VC matters

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Hello and welcome to this episode of Nothing Ventured with me, Ari Shah. Today in the studio with me I had Alvaro Alvarez Del Rio, who is the founder of Boost Capital Partners, a fund dedicated to backing ambitious entrepreneurs crafting exceptional user experiences inspired by gaming principles. With a track record dating back to 2 2011, Alvaro has invested in over 120 software startups across Europe, North America and Latin America whose aggregate exits total well in excess of $10 billion, including in iconic companies like Deliveroo, Zencargo, Supercell and Hutch Games. His diverse experience spans venture capital, private equity, hedge funds and investment banking. Alvaro and his team at Boost Capital are pioneering the use of gaming's best practices like user attraction, retention and engagement to drive extraordinary results across multiple in today's episode we talk about how Boost is using gaming principles to scale non gaming companies.

You work through your onboarding processes, your onboarding flows, you work through your retention mechanics, your engagement mechanics and all the way to actually how you are monetizing.

How in consumer how many users you have can trump how much revenue you're generating. Why once you've met a family office, you've met a family office and why legacy and the franchise value of your firm is important.

I am very driven by legacy and what are we going to build here? What is the franchise value of Boost in the future?

Diversification in venture just means your returns revert to the mean and that's not great and why all emerging VC funds being launched today should be specialist funds.

I believe that all funds that are started today need to be specialists.

Our underfunding and regulation have hampered the European venture ecosystem and why Boost uses a moral compass to back outcomes that are a net positive for society.

What we do have, however, is, I guess like everybody else, a moral compass of what we believe is tech for good and what it isn't.

Let's get straight into it. Hey guys, whilst I've got you for a second, I thought I'd just reintroduce myself. My name's Arish. I'm the host of nothingventured, the podcast where I talk to the people behind the stories that make the venture ecosystem go round. I'm also the founder of Emerge1, a consultancy that provides fractional CFO support to venture backed tech startups from C to Series B and beyond. If you enjoy the podcast, we'd really appreciate it if you could subscribe and like wherever you listen, whether that's on YouTube, Spotify or Apple. And of course, if you have anything that you want to say to me, whether that's to introduce me to a new guest or just give me a bit of feedback, do reach out to me on x or on LinkedIn. I'm always happy to have a conversation. Right, let's get straight back into it. Alvaro, really great to have you here in the studio with me. This has been a long time coming. I think we've been like planning this for about three years, so feels good to finally have got you in. Apologies that we're not out outdoors in the sunshine because it is a beautiful day out there. It is, but welcome and thank you so much. Look, you've said you're applying gaming principles to non gaming verticals, so can you give me an example of how you you've successfully used those sort of gaming UX strategies to transform user engagement in a completely unrelated sector? Because it feels like I understand, I guess at a core level what you are attempting to do at Boost and why that makes sense. But not all businesses follow those sort of trends or have those sort of economics and growth factors. So yeah, I'd love to get a real world example.

Yeah, I guess if we step back to the reason why we're doing this, we've got a thesis that is in a world where everybody has access to technology, where technology is commoditized, how can you differentiate your company? And I think there are two ways you can do that. One is with distribution and for distribution you need Domain expertise. You need to have been working in a sector for 20 years and have access to the decision makers in that sector. And that is something that very few VCs have and I don't think we have it. The second part, which is in my mind cheaper and faster to do is by creating a delightful experience. And if you think about very large companies, if you think about Amazon and you think about Apple, very, very different customer experiences. But you know why you're using both of them. One of, one of them is pretty, the design is lovely and it works better than competition. The other one just has an incredibly strong supportive team when you need anything at speed.

Yeah.

And that's what we're trying to create in the startups. If you look at those companies, they're also in very different sectors of the economy. So with that principle, what we're trying to apply is a first principles approach to how we work with our companies. So the first thing is to say, well, you need to create an iterative culture in the company, you need to be ab testing constantly and you need to create an end to end experience. What does that mean to your point on the example? So what is a company that I always think about when I talk about this? It's a company we supported, we backed a couple of years ago that is called Stitch Health. Stitch Health is a company that creates tools that help CROs, the companies that implement clinical trials to retain and engage the users, the end users who are the patients. You've got a team, world class team coming from pharma. But that also understands because you've got parts of the founding team that do come from consumer, how important the consumer experience is. And so what happens with a company like that is the problem is an engagement problem. Now you are going to market through B2B and you've got pharma companies that are your customers and CROs that are your customers. But at the end of the day it's a voluntary process where you've got patients, if they drop off, then you are losing revenue and you're actually not helping with your tools. And so what you need to do with a company like that is you need to start defining where do I start my user experience. The first thing is to identify your ideal customer profile, your user Persona. Your user Persona normally in a clinical trial is an older person than the average tech user and it actually skews female. So how do you create technology that appeals to an audience like that and how do you onboard them? We had an example where they just reduced the Length of the password that you needed to introduce at the beginning. When you create a password where you don't need a symbol, you don't need your eight characters, you don't need and it increased conversion significantly. And that is something that you would not think of for a lot of the technology that you use today. But it depends on the user Persona. And as you move along you work through your onboarding processes, your onboarding flows, you work through your retention mechanics, through your engagement mechanics and all the way to actually how you are monetizing. So it is a very complete end to end approach that we try and apply within the companies and it is also multi layered. So we've got a second layer of people that work with us that are our advisors that have a very specific expertise in one of these areas. And those are the people that have actually been working for many years helping companies on the marketing side, on the user experience side. And those are the people that we use in order to work with the companies to dig deep into the specific problem that they've got. If they say look, you know, I've got a drop off point here and I'm losing a lot of users at this point, then we use someone that is an expert in running that funnel and understanding that funnel with them to help them improve. At the end of the day what we do is if what we do works then it goes straight into the bottom line.

Yeah.

And that is, that is how we're trying to add value to the companies that we invest in.

I mean look, the thing that strikes me is that like you know, I've worked in sort of sectors like EdTech. Gamification in EdTech is massive. Like I mean that is that, that, that was the holy grail, right? Like I mean it is how all of the language learning apps kind hooked, you know, because it is all about, you know, you can onboard a user but keeping them, especially when they have so much so so many other things that are distracting them becomes the holy grail. And if you look at actual gaming companies, right like and even if you think about Angry Birds or you know, I, I kind of, I don't even know know, know what games are out there anymore. I think I deleted them all off my phone. But they are relatively addictive and I use that term or that word I think with a pinch of salt. But they have understood how to keep their customers engaged and grow from actually quite small base, grow and scale considerably. And actually with a lot of those games, monetization is sort of the last step right like if you fix the whole, to your point, the whole onboarding, retention, experience and journey, then actually, you know, there's a large, you know, there's a large argument to say that if you can fix that and you can keep those, those users on board, you will figure out how to monetize them at some point. Right. So I guess actually that's, that's, that's a question I wouldn't mind digging into. Like, especially given kind of where venture has, you know, you know, I were talking about this a little bit earlier. Given where venture has gone, we hear a lot about the need for, you know, efficient growth and traction and metrics all being positive and sustainable growth. So potentially cash flow, break even, profitability, whatever. Right. But actually from a venture perspective, do you still think that if you can build users, I mean obviously revenue is, is, is never going to be a negative thing, but do you still think that companies that are able to grow their user base significantly still have an edge versus ones that kind of try and attack the revenue from day one?

Oh yeah, absolutely. Yeah. I think, I think it definitely depends on the type of company that you are building. If you're building a consumer company, we actually have a couple of companies in the portfolio that are building products where they've got millions of active users but they're not monetizing.

Interesting.

And so on the consumer side it definitely builds up to a moment where you can start monetizing. It is different if your go to market is B2B.

Yeah, of course.

And so you've got larger customers, you've got contracts that you need to chase from the beginning and you actually need validation that what you are doing works with customers that are paying for it. And so to me that is the difference. It depends a lot on the go to market. But I believe what we learned in gaming is that you take things step by step and the first thing you build is an experience that stands out, that is, that creates a reason for the user to come back to the experience and then you hook them to that experience and they come back regularly and then they spend more time on it. And then eventually, because it is one of the apps, one of the games that they are using on a regular basis, they start monetizing. Yeah, so there is definitely that trend. That's why I talk about an end to end process, because I don't think you can just say, look, I'm an expert at monetizing unless you have all the other hooks that you need to build before already tied up properly.

Yeah. And I Think that's super important. Like I did an audit of kind of what tech I use now. I'm not a massive consumer tech type person, right? I don't use a lot of consumer focused apps.

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Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit statestreet.com im for prospectus containing this and other information. Read it carefully. SPY is subject to risks similar to those of stocks. All ETFs are subject to risk, including possible loss of principle. Alps Distributors Inc. Distributor. But there are probably five or six kind of products that I use all the time and that's all I use, right? So WhatsApp, Outlook, Gmail, Airtable, and I know you guys love Air Table as well, you know, Airtable and now some AI ads apps on top of that and maybe there's one or two others, but those, that's my core ecosystem, right? Like if you drag me out of that ecosystem, it has to be really, really relevant and really worth it for me because otherwise I'm just going to default back to like well no, I can figure out how to hack my way around whatever it is that you're doing in my own ecosystem. And from a consumer standpoint I completely get it right? Like so obviously we've got this attention economy and potentially deficit and it's interesting obviously that on the one hand you know, you've invested in be present which is trying to, you know, I guess maybe make smartphone usage more healthy versus obviously other companies where, where clearly part of that whole dynamic is making sure that they can get users, you know, to be using their products on a more regularly and for more time, right? I think one of the things that has been interesting over the last five, six years is obviously at the point where A capital was very cheap B, you know, people weren't competing for share of wallet as much like there was a way that you could hack growth via just juicing your CPA and buying customers. Right? And I've always, as a finance person, I've always argued that retention trumps acquisition, right? Like better to have a thousand users who are coming back regularly than a million users one off or whatever, whatever the right, you know, metric is. How do you think about that and how has that kind of changed in the way the companies in your portfolio kind of think about user acquisition, acquisition retention.

Yeah. So I think this is all a numbers game. So what's important is to be extremely data driven in how you analyze how you're acquiring your users, what channels you are using, how scalable that is and then how you make money out of that. There are subscription services to give you an example, where you've got the seven day free trial and then you convert. And so within seven days you already know what you can expect to make in the first year out of that, out of that customer. Right. If you don't manage to create a profitable loop where you are already making more money from the, from that customer than you are spending to acquire that customer, then you depend on revenue renewal rates 12 months down the line. And you don't know that today. So scaling that, marketing that user acquisition without knowing what's going to happen 12 months down the line is a very challenging thing to do. So how we look at it, how we advise our companies to look at it is from again that first principles approach, which is, you know, you've got money going out on one hand and you've got money coming back in on the other. And depending on, you know, you were talking about games, for instance, there are more hardcore games that monetize people over a much longer period of time where you've got some users that are playing for years and years on end and that profile of the LTV that you can calculate on that user is very different from that of a subscription service. There are other apps that are just meant to squeeze something out of the customer in the first day or the first week and then after that you're done because effectively it's been profitable. Then again, what's really important is to try and understand how that scales depending on the channels that you are using, depending on how deep that audience is, the audience that is actually purchasing your product, then you can scale that more or less. So all those elements you need to consider when you're thinking about how to compare your cost of acquisition versus the lifetime value that you're going to generate.

Yeah, I think we've had it, we've had guests here in, well recently actually but you know, they talk about it and from a very consumer focused angle, first, first purchase profitable. Right? Like how do you, how do you make sure that you are making money off that first purchase? Especially in a, in a consumer good. Where you know, if I'm buying this, you know, this Kano, can we get some sponsorship? Thank you if I'm buying this Kano, like that might be the only time. Right? So therefore, they've got to ensure that whatever they do, whatever they've spent to acquire me, they need to make sure they're making back on that first purchase because they've got no idea if I'm, if I'm coming back. Obviously, it changes from industry, industry to industry. And I think, you know, consumer goods is, is a very specific example. I think with software we have recurring elements, then it becomes slightly more, you know, you have, you, you maybe can play around with that a little bit more because you have other ways of retaining and hooking and so on and so forth. It doesn't come down solely to, you know, do I need a can of water or not. Right. But I want to move on because there's a bunch of stuff that I want to talk to you about, which we actually rarely talk about on this podcast. But I think it's useful to kind of open the curtains a little bit on some of this stuff. Right. So you have a globally recognized family office as one of your principal LPs, and you yourself have worked in a family office environment, investing in early stage ventures. So how do you balance that kind of typically really conservative risk profile of a family office with the high risk, high reward kind of nature of venture investing? And what changed, if anything, when you moved from allocating directly for them to managing their capital at Boost? Like, how did that dynamic change?

Yeah, so I think family offices are institutions that work individually. So, you know, there's a saying that says, you know, once you've met a family office, you've met a family office. So every single one, there are humans behind family offices. And so every single one of us will be focused on different things and want to allocate their capital differently. However, when you think about larger family offices, they are sophisticated and they hire professionals to allocate capital for them. And how these professionals think is just the way that other institutions think, which is, I've got a pool of capital and I've got a number of different asset classes to allocate. So I'm going to go to, you know, public equities and private credit and real estate and whatever, and I'm going to have a pocket that is for alternatives. And so what you need to understand is if you're talking to a billion dollar family office, what they're thinking is, I'm going to allocate tens of millions of dollars to alternative assets, which might.

Be 5% of their total.

Exactly. And once They've got their allocation, which is going to be tens of millions of dollars to alternative assets. Then you are competing with growth and private equity and everything else that falls under alternatives for them. And so the reality is that effectively, as a fund, at least as an emerging manager, as a small fund, you just need, you know, single digit millions of dollars from them. And that is as part of their allocation to alternatives and as part of their allocation to venture capital within alternatives. So you shouldn't focus on, I need this amount of money from this family office or they've got this amount of capital to allocate, but rather, how are they thinking, how is their kind of thought process trickling down to this is how much I'm going to allocate to them. And it is like any other institution in the way they evaluate you and in the process that you need to follow with them. It is definitely one. Family offices are in Europe in particular, one of the main types of institutions backing venture capital in Europe.

They make up a. Not disproportionate, but certainly a large amount of the LP base, especially when you have, Certainly in the UK, restrictions around pension funds, being able to invest, etc. Whereas in the US you have, you have more, more scope to attract those sort of LPs. Right?

Correct. And then in terms of what's changed since I started Boost, a lot of things have changed. So I guess when you start your own fund, we now have more than 30 LPs, so you are not part of any one institution, you are making your own decisions, you form your own criteria to make investments, you put your team together in your own way. And as I mentioned at the beginning, I am very driven by legacy. And what are we going to build here? What is the franchise value of Boost in the future? And that is something that you can do more clearly when you've got independence. Now, what has not changed is that they continue to be very supportive and help us. And I was meeting them in person yesterday and that relationship continues to be very close. And I think one thing that is undervalued from family offices as LPs as investors in venture capital funds, is that the individuals behind family offices, because of how successful they are, they've got access to a lot of information, they've got access to the brightest minds in the world. And whether that is to introduce you to potential customers for your startups, to introduce you to other potential LPs, to help you think through asset allocation and how you yourself are going to define how you raise your next fund or how you allocate to the startups that you're going to invest in. I think there is a lot of value in a professional and sophisticated family office actually helping you build your own thought process.

Yeah, I mean one. So again it's been very interesting over the last five, six years because you had a lot of family offices start allocating directly, right, like they were deploying directly. But the, this led to this problem because on the one hand family offices are not quite secretive, but they are, they do not advertise, let's put it that way. But on the other hand they want deal flow to come to them. Right. So they came up, you know, they had this inherent tension which was we have capital deploy, we want to deploy it, but actually we're not able to attract the best deals because if we, you know, if we want those deals we're going to have to advertise. And so, so a lot of the family officers, and I know quite a few struggled with that, with that strategy and therefore kind of reverted back to deploying as LPs or at least in part because that allowed them to diversify their strategy a little bit and meant that they weren't just reliant on, on their own deal flow coming through. Do you think? And it's very hard to generalize because obviously to your point family offices are very diverse and will change. But do you think that, you know, in the current market environment for venture and you and I have talked about, you know, some of the, some of the challenges that are out there, do you think family offices are becoming sort of more risk averse in terms of potentially deploying themselves? Are they, you know, are they allocating more as LPs, are they even moving away from venture maybe you know, going back up towards more sort of private equity style later stage, less risky asset classes or what's your kind of general feel?

Yeah, I think there are several points to touch on here. So first at the macroeconomic level you've got interest rates at a different level from where you had them 10 years ago and also from where you had them last year. And so the level of interest rates determines how risk averse people become depending on how much they can get for their risk free investments. And so when, when you are talking about returning kind of 20% IRRs in venture, that is extremely appealing. When you've got 0% interest rates, when you've got them at 5%, it's a little bit less appealing. And so the first thing to talk about is macroeconomically are people are family Offices allocating to venture or not. And I think they are allocating, it is clear that they are allocating less today than they were pre2022.

Now, do you think that's sticky? Do you think that's something that will persist or is it again just cyclical?

I think it is macro dependent. It will come back. Now the second point is on direct versus indirect investments. And one thing that people underestimate is direct investments take a lot of your time to manage and to run. And it's not only as a venture capitalist. I would like to think that myself and those that invest in early stage venture capital have some value to add to the companies by spending time with them and trying to help them. However, even if that is not the case, it's a very intensive exercise from a time perspective. And when you're running a family office and you've got five different asset classes and you've got 10 funds that you've invested in and you've got 20 startups that you've invested in, it's a very difficult portfolio to manage. And if you want to know where things stand, if you want to just try and help your companies, it becomes very challenging as a family office. So that is why I think a lot of family offices try, because they do have the access. Now it's another question whether they get the access to the right opportunities or not. But even if they get the right to the access to those right opportunities, then they need to manage them. So I think there's a lot of family offices and frankly also exited founders that start investing also as angel investors. And then before they know it, they've got 50 portfolio companies that are ringing them and saying, can you help me with this or can you sign here? And that is difficult to manage. And that's why I think when they experience that a lot of family offices start saying, look, I am not particularly good or maybe not better than average at allocating directly to startups and this creates a whole lot of work. So why would I do it directly? And I feel like there are constantly, there's a flow of family offices trying to go direct and then a couple of years later there's there's another flow of family offices just going in the opposite direction.

Yeah, no, I think that's super interesting. And for sure I've seen that with angels that I know. You know, when you start to your.5,000 investments, it becomes hard to potentially manage unless you are a full time angel. Right. And I've certainly seen people that have made that Decision to go into, into being a full time angel versus, you know, dabbling almost, if I can put it that way. And then, and then the natural sort of conversation that happens in the head is do I raise a fund, do I just LP into someone else's fund or do I stop? And I've seen a lot of angels, you know, have stopped over the last few years for various reasons. Right. I think again, risk appetite comes back into it, macro circumstances come back into it. Interest rates come. Like if I can earn a risk free return of 4.3% by sticking, literally just by sticking my money in a wise account, like, you know, that that changes the, the nature of how you make decisions. But you opened up a point there which we didn't actually have on our kind of list to discuss, if I can put it that way. But you and I were talking about this earlier, so I think it's worth maybe delving a bit deeper. Right. And that's around diversification and concentration and maybe sort of framing that in a current state of versus future state of venture. Right. And you and I, I think, are both fairly agreed that at the moment there seems to be a shift from generalist to more specialist VC firms. I mean there's definitely, it is a harder market to be raising as a, as, as a vc, whether you are an emerging manager or indeed you're raising your third or fourth fund. Like I think, you know, what is becoming clear is that it is tough out there irrespective of, you know, of your performance and irrespective of your, you know, your pedigree. Unless you are really one of the, you know, sequoias or whoever it might be. So how do you, yeah, how do you think about that whole question around diversification, you know, being a generalist versus a specialist. And, and where do you see kind of all of this ending up over the Next sort of five, 10 years?

Yeah, so I hold this view where I don't think that diversifying across early stage venture capital funds makes a lot of sense. We were talking about this before. I think the average returns of early stage investing in VC are pretty poor as an asset class. And I think what you need to do is just find the type of funds and act as we do as venture capitalists. When we look at startups, what happens a lot is on the back of a successful fund one or fund two or fund three, then you start backing somebody. And the reality is that people are much more driven when they need to win and they need to win at the beginning. When Nobody knows them and nobody is actually willing to give them money. But I think diversifying is not the solution to investing in early stage venture capital. And so I would just, if I were an asset allocator into venture capital, I would just concentrate my bets on specific funds that do something that I believe in and I would prepare to back them over a good cycle, over three or four funds over a longer period of time.

So, so delving into that. So what you advocate or not advocating, but what your, what your premise is. So if I'm an lp, better for me to back five consumer funds than one consumer fund, one health tech fund, one edtech fund, one whatever. Is that, is that essentially what you say?

That is if you believe in consumer as a thesis.

Yeah.

But even within consumer, I would say just back that one fund that has a thesis on consumer you like that you can back that you maybe can help with and then consistently back that fund to win in that space. And that goes to the generalist versus specialist fund. Right. I believe that all funds that are started today need to be specialists. And why is that? Because the good incumbent large generalist funds that the large LPs back exist and they continue to perform well at the levels where they are investing. They are not meant to generate 10x returns out of their funds. It's a little bit of a different asset class and a different game that they are playing. But if we go back to emerging managers, I don't think you can say, hey, I'm going to be better than Accel and Sequoia at doing what they do. Because that is not going to happen.

Well, you don't have the reach. Right. And you don't have the brand and you don't have the market.

Exactly.

Traction.

Exactly. It's very difficult for you to compete. And what do you do? You should aim to collaborate with funds like those that normally actually come later into the investment than you do. But regardless of that, you should be the go to person for something that is very specific. When you think about Boost, what should you think about? You should think about excellent customer experience. I want to create a differentiation in my company and I want to win this sector by having an excellent customer experience. Okay, let me talk to the guys at Boost. Now, can I get money from a top tier established fund? Go do it. Of course you should do it.

You're not going to get the support necessarily.

Exactly. You're just going to get different things from different types of funds. So that's why I would say that early stage emerging managers should aim to stand out and be better than everybody else at doing something. One very specific thing, whether that is community, whether that is distribution, whether that is introducing the companies to U.S. investors, that whatever it may be, you should just find your niche and be better than anybody at doing it.

I think. I mean it's really interesting because what you're essentially talking about is almost consolidation, right? Because, well, it's actually, it's a combination of consolidation, fragmentation, right? Because those generalist funds could then split into multi sector funds, right. With specialisms and, and of course you have funds like that, like Speed Invest, for example, right. Which, which invests across three or four different verticals and have specific sector teams for those. But for emerging managers, where it's typically not large teams, right, you're talking one, maybe two GPS for the most part. And probably that's it. Maybe an analyst or something along those lines. And actually therefore, like, even from a bandwidth perspective, it probably makes more sense in each down because otherwise every single deal that you look at, you're going to have to figure out okay, what does this mean from a technology perspective, from a market perspective, from a consumer perspective, from a business perspective, whatever it is like you have to relearn that whole industry almost from first principles to be able to make a decision. Whereas if you, you know, exactly, if you niche down on what you, you know, what you are both good at, but also can and can add significant value to that portfolio company with, then a, you will start creating a name for yourself that, that is to your point, right? If Boost is known for customer experience, that is what Boost will become known for, right? If that's all you back, if that's how you back, then very quickly that word spreads because we all know that the venture ecosystem is very, very small and closed net. Whereas if you're a generalist fund, I guess it becomes that much harder to create that almost that marketing alpha where you become known for doing one thing exceptionally well. But to my earlier point, that feels to me like you'll see some consolidation. Then you also see some fragmentation, right, with some of those funds splitting up into a very specific sector specific funds as well. I, I like, I, I find it fascinating because I think we're going through a, I think we're going through a significant shift in kind of the venture ecosystem. You and I were talking about fund returns, DPI being not great. We talked about, you know, Carter had, you know, recently released that companies, you know, recent vintage companies are, are not raising series A rounds or not moving from C to series A as Quickly as they used to. And all of this has an impact. Right? Because if companies aren't raising as much, that either means that funds aren't deploying as much. All those companies aren't looking to raise as much.

Right.

And if funds aren't deploying, what does that mean? They still got to allocate the capital within a time frame. So they've got to be either allocating more into fewer deals or taking a different strategy. I don't think it's washed out yet. I think we're going to see a lot of those changes coming through over the coming years. But I wanted to shift, you know, again, it's one of my favorite topics on this, on this podcast, which is Europe and like where we have advantages because we've gone through the whole cycle of Europe sucks. And you know, the US can just, you know, it's just better and we regulate too much and all this sort of stuff. But you've invested extensively across like Europe, Latam, North America. So what are the unique opportunities or even challenges, I guess, that you see for European tech ecosystems compared to, let's say, North America or elsewhere?

So I guess first, historically you've had the issue of underfunding and regulation. I think one thing that needs to change from the top is that as we touched on briefly earlier, most of the funding that goes into US Venture capital comes from private sources, and that does not happen in Europe. Every single fund that I speak to is just trying to get funding from publicly backed institutions. And that is hard.

And by that you mean things like the British Business Bank, European investment.

Correct.

Et cetera.

Yeah, exactly. And so with that, it's very difficult to build durable businesses and to raise significant amounts of capital to be able to compete with what's happening in the US and then there is regulation. Europe is a continent that regulates much more than other continents do, and that creates friction and that slows down innovation and progress. And that is what it is. Now, I think there are several opportunities here. The first opportunity is macroeconomically. You've got big blocks, big economic blocks around the world that are kind of fighting each other. And Europe is a little bit out of that picture. Europe is at the moment.

Yeah, we're a sideshow to US or China or whatever.

Exactly. And so you can take that opportunity to focus on creating a better framework for innovation and progress and focus less on the macroeconomics of what's happening with tariffs and what's happening with kind of trade deals and trade fights across different blocs. Now Europe, in turn needs to invest in defense. And we know that. But you can use a lot of your focus now to try and foster innovation more than you have in the past. Now, beyond that, you've got, by the nature of the continent, you've got a lot of things that are happening in Europe that have happened in Europe historically that are not happening elsewhere. For instance, you've got a union with 27 countries where you've got different languages, different cultures, but it's much more, there's a sense of belonging. It's much more difficult to penetrate from overseas than it is from within the continent. So it's much easier for a French company to start serving, you know, Italian and Spanish customers than it is for an American company to do that and just come to France and say, okay, I'll kind of sell you my services.

And people forget that Europe is the biggest trading block on the planet.

Correct, yeah. Now the other thing that you've got is you've got an immense amount of talent in Europe and it is very diverse talent. All of us love to talk about how diverse teams outperform those that are not. And there are studies about this. And all of us, I actually do believe that to be the case. Now Europe is a very diverse continent and you're getting immigration from everywhere in the world. Depends.

Recording this a day after, like a particularly annoying announcement from.

So, yeah, I guess immigration is another topic, but you are getting a diverse pool of talent that you don't have anywhere else.

And I would say. Sorry to interrupt Europe, I'm like, the US always holds itself out to be this bastion of open doors and welcoming of migrants, or certainly has been for a long time. And the diversity within. But I would actually argue that the uk, the UK and Europe more generally actually are far more open or have been far more open historically to populations of massively diverse ethnic and social backgrounds. Right. We have literally, and again, I don't know the numbers, but I'd be really interested actually to look at this. Right. But, but we have migrants from Southeast Asia, South Asia, Africa, Australia, you know, Latam, and even the U.S. right. Mexico, Canada as well.

Right.

Because you have certainly the Commonwealth countries and then beyond, and I think the U.S. you tend to see kind of like pockets of migration of like specific individuals, nationalities, countries. Whereas I think Europe, maybe it's a very London centric view as well. I wouldn't be surprised if someone calls me out on it. But it does feel like we actually attract talent from everywhere.

It is, to me, that is the case and that is a Tremendous advantage that we are not paying enough attention to. And then there is the thing with universities, research institutions, where you've got some of the best in the world in Europe. And that also breeds talent internally. And Europe has a quality of life where a lot of people are proud to be European and proud to live in Europe. And a lot of the people that are saying, well, you know, I'm migrating, I'm moving to the US because there's more opportunity there, they are aware of what they're leaving behind and they are doing it in spite of the fact that they know that their quality of life and a lot of the things that they enjoy doing are here. So if you manage to incentivize those people not to leave because the talent is here and it's educated here and you've got now different tax incentives in different countries for digital nomads across the continent, in different places in Europe. So if you manage to incentivize people to actually stay and build here and you give them the tools, I believe that talent wise, Europe is a magnet for a lot of these talent and it's progressing, right?

Andreas Klingen, his sort of E Accelerate Europe kind of activities. I mean, they're making progress. Like we may well see a Europe Inc. At some point soon. You know, Alex McDonald who's been on the podcast, and of course Harry Stebbings, you know, Harry launched Europe First. There's a new sort of syndicate that I've just seen, I think announced in TechCrunch. So there is momentum behind this idea that Europe, Europe has a lot going for it. And I would absolutely agree with that. I think Europe does have a huge amount going for it and I think if we can. To your earlier point, right, it's underfunding and regulation that are actually to the massive issues. You can fix the capital gap and if you can at least have sandboxes and or regulation, which is slightly less cumbersome, then you would see a lot of things flourish. And that's not to say that actually I'm like in some instances in Europe, regulation is not a negative thing. And in fact, you know, you could argue that actually in the longer term it's benefited consumers in Europe as opposed to in other countries. But I think from a, you know, from a tech venture kind of startup perspective, I think if so I always say.

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Wherever you get your podcasts, follow each other. If there's capital, you'll get talent. If there's time, you get capital. What seems to have happened in Europe is we've got the talent, but the capital doesn't seem to have stuck.

Right.

And I think that's partly because, you know, to your earlier point, family office, like, we have a lot of kind of private wealth stuck in traditional asset classes, like lots of real estate, you know, and obviously listed equities. But if we could. If we could. I mean, but there is a huge amount of that wealth, right? So if we can unlock some of that, I think we'd see a huge amount. I don't meet any founders that say to me, we're moving to the US because from first principles, we always knew we were going to do that. And that's actually where our market is. It's more a case of we have to move to the US because if we want to raise our Series C for argument's sake, or if we want to get to an exit via an iPad or even a strategic acquisition, it's just more likely to happen to the US So it's not a case of like, well, this is, you know, this was our plan along all along. It's more a case of, well, by default, I'm going to have to do that because that's the only way I can.

Yeah, I mean, Deliveroo was the first ever angel investment that I made in my career. And it just, you know, news broke last week that they just got an offer to be acquired by DoorDash for a 3.9 at $9 billion. DoorDash is an $80 billion business. And so. And recently, this week, they announced that they are acquiring another business. Right. And so that is the difference. That is why that trickles down. And you get your $5 million preceded $25 million in valuation in the US because you know that your potential exit is 80 billion. And Deliveroo is a pretty iconic company in Europe, in the UK, but it hasn't. And it's, it's 5% of the market cap that DoorDash has in the US and so that difference is what creates. There's more capital to be invested. There's more. There's the willingness to risk that capital because it is understood that capital can be lost when you invest in venture capital, that is the concept. And at the same time, there is the opportunity for the bigger exit. And so that's why everything is bigger. Now the way to fix this is from the top. You need to start kind of feeding more capital with that willingness to risk it from both private and public sources. But then again, there's much more that needs to happen from the private side in order to make that pie bigger that goes into backing companies. And in turn, those companies can raise more capital, risk more of that capital and create larger outcomes. Because then again, we're talking about a very similar population in the US and in Europe. It's not like the US has a lot more consumers than Europe does. It's not like they have purchase power that is significantly different from what you get in a lot of the countries in Europe. So the difference is in kind of putting more money to work in order to generate larger outcomes.

Yeah, it's a structural problem. And, and again, to your point, like that exit will happen in the U.S. essentially, it'll be interesting to understand how many of those deliverer employees that will benefit from that exit or recycle that capital in Europe versus somewhere else. Right. I think that's the other message. So I want to move on to kind of the final main topic because you talked about this in the Quick Fire as well. You've emphasized kind of backing entrepreneurs who create your user experiences that positively impact people's lives. So what is meaningful impact? Again, can you share like maybe a standout story?

Yeah, so we are not an impact fund. And so we don't have specific KPIs and metrics that say, look, you need to improve these number of lives in order to be an adequate investment for Boost's thesis. What we do have, however, is, I guess like everybody else, a moral compass of what we believe is tech for good and what isn't. And I actually do believe that a lot of the technological advancement that happens is not necessarily for good. And so what we're trying to do with that moral compass is, is back companies that we believe generate outcomes that are net positives for society. Now if you think about, we're talking at the beginning about a couple of the companies in our portfolio. If you think about making your relationship with your phone healthier, that I consider a net positive outcome for society. If you can improve the lives of people that are starting to experience mild cognitive disorders, impairment or decline, then that is a net positive for society. As you know, I used to invest a lot in gaming and Jury is Out. You know, I'm not going to get into that conversation, but there are a lot of people that think that gaming is a net positive as kind of entertainment and others that think that it creates addiction and it is a net negative. And both points of view are potentially valid. But then you get things like real money gaming and that moves kind of much closer towards addiction. And I don't think it necessarily serves the purpose of entertainment like social gaming does. And so to me that is not.

There's a massive difference between say Minecraft and some sort of bet.

And so to me what happens is you're talking about net positive for society and not net positive. And some people may disagree with me and they may say, well actually you talked about this and I think you think it's negative and I don't. Or you think it's positive and I don't. But my moral compass tells me, well, it needs to generate something that is a net positive for society. And I am a sucker for problems that generate those positive outcomes. And it can be as easy as government regulation. We were talking about how regulation in Europe is so massive and red tape and bureaucracy is terrible. So how do we use software to improve that? Now big sectors of the economy like sustainability, we didn't talk about this, but Europe has public buy in for everything that has to do with sustainability. And actually a lot of the private funding that is going into Europe is going into sustainable ventures. And so you think about sustainability as a net positive. It is a big problem. So where are those founders building to create more sustainable solutions in Europe that are software related? Because that is what we do, right? That is how we approach impact as a net positive in our mind. Not every company needs to be solving the most pressing healthcare challenges of this generation, but every company needs to have that impact that is positive on society.

Yeah, I mean, you know, I have had pure impact investors on it. It's always the question is, the question always in my mind is at what point does a founder start sacrificing societal outcomes for financial outcomes?

Right.

And I think the argument is always made back is no, if you have strong societal outcomes, you probably can have strong financial outcomes. Like they can go hand in hand. They don't necessarily need to detract from each other. I mean, like I've always been someone that, you know, has an impact mindset. Right. It's why I gravitated to sort of educational technology, but also got very disappointed with EdTech because it wasn't having the impact that I would have hoped it would have had and I guess as I've matured and as I've gained more understanding of the ecosystem in general, there are lots of businesses that fall within that kind of impact category without needing to be to your point for impact. Right? Like they just by nature of what they're doing will have a positive impact on the world. But you could argue that, you know, Deliveroo is a good example, right? Like was it a net positive for society? I'd argue it was, right. It created a huge amount of jobs for people that maybe would otherwise not have been able to enter the formal economy. You know, it allowed us to spend more time on the things that are important, spend more time in the family, at home or with friends, etc. Etc. You know, it created a social environment that was, was easier and also more accessible for people who are disadvantaged or don't have the ability to go out for a meal in a, in a three star, four or five star restaurant or whatever. So I think you know, impact is where you look for it, right? And I think you can, you know, as long as, as long as you are clear on what that moral compass looks like and what impact means for you, then, then, then that's great. I mean I think, you know, you can always argue for example that you know, potentially, you know, if you invest in the next only fans, maybe that isn't going to be a net positive. A net positive, right. Like it's positive for potentially some people but not necessarily net positive. And I think, you know, there's a reason why for example, as a family, my family will not invest in alcohol, tobacco, etc. Because it's, it goes against their kind of thesis and their philosophy.

Right.

And that's where their moral compass, I think it's wonderful because you know, ultimately I think when I first got into the venture ecosystem, my, my hope and my desire was venture would build those outcomes that essentially helped humanity move forward. I then became slightly disappointed when we started doing 15 minute grocery delivery which, you know, but you know, there was a lot of stuff that didn't need to be built was getting built it feels like of late. And you know, I think the resurgence or the upsurge of climate tech, defense tech, security tech, defense tech, whatever you want to call it, and then health tech, medtech, biotech, edtech, et cetera, all of these sort of areas are seeing a bit of a renaissance and I think that can only be a good thing.

I think Aris actually as part of building our thesis at Boost, impact is an important consideration and the reason I say that is, to me, every single customer experience that is improved is a net positive impact. And so if we go back to the example with Deliveroo, beyond what you can say about, again, the positives and negatives that you mentioned, I think what it created was a much easier, better way to order food and to have food delivered. I remember when I invested in Deliveroo, I was coming from investment banking. And in investment banking, you used to go to just it and have just your interface where you had 25 different restaurants. You picked one and you waited for 45 minutes because they didn't have their own riders. It was the restaurants that provided the riders. They waited until they had five or six orders that they could stack up and then they went all through the city just delivering those orders. Now, the improvement of that user experience, of that customer experience is very significant. And to me, that is net positive impact. Obviously, there are other considerations about how you treat your workers, your staff, minimum salaries, the rest of it. Now, in terms of customer experience, every single company that advances customer experience significantly is generating a net positive impact.

Yeah, I think that's, I think that's a really interesting way of looking at it. I have a couple of final questions just as we wrap up. So you may have already answered this. What is one thing that you have a contrarian, a conviction about from any area of your life that could be work, politics, socially or at home?

There are a few. I think you need to be slightly contrarian to be a venture capital investor. So there is one that's coming to mind which is I think suffering breeds innovation. And so one thing I fear, or I'm concerned about is that my children are being raised in an environment that is much more privileged than mine, and that they get access to a lot of things without suffering. And all of us, this is a very counterintuitive way of thinking because naturally we are wired to protect our family.

We don't want them to suffer.

And so. And all of us say, like, yeah, I'm gonna make them uncomfortable. And it's just like, go pay for your ice cream. Right? Like that is the way I'm making you uncomfortable. But actually experiencing real hardship in life creates hunger, creates drive. And particularly and definitely, if I extrapolate that to the world of work for me, which is working with entrepreneurs, the entrepreneurs that go through hardship, that go through difficult moments in life and experience really kind of life changing things when they are younger are the ones that build the true resilience, which is the buzzword that all of us use when when we say that we want to back resilient founders. But how do you build resilience? And you, you build it through these types of experiences. Right. So I am concerned that I am not giving my children enough hardship in life.

I mean, I. So I fully agree with you at something. It's very interesting, you know, when I look at it through the lens of my own kids. One of my, one of my daughters grew up, you know, for the first five years of her life, very much sort of both of them grew up in a loving environment.

Hear that? That's me in Tokyo learning to make sushi from a master. How did I get here? I invested wisely. Now the only thing I want worry about is using too much wasabi. Get where you're going with spy, the world's most traded etf. Getting there starts here with State Street Investment Management.

Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit state street.comim for prospectus containing this and other information. Read it carefully. SPY is subject to risks similar to those of stocks. All ETFs are subject to risk, including possible loss of principal. Alps Distributors Inc. Distributor 1 grew up in London. She was very close to her grandparents and extended family, so she had a lot of that support around her. My second child, you know, grew up essentially in Papua New guinea and then in Australia. And in Australia for a while, bringing my wife, looking after girls. And you can see the difference in resilience. I mean, I wouldn't say that they, you know, I don't think they suffered hardship. I would certainly not, not, not, not say that my wife might. Well, but, but I fully agree. In fact, we've had one of our guests, Manish Karani came on, he's building Uretta, but one of his core principles by his vc. And then he was backing Hail founders, what he called Hail. So hardship, hardship, adversity, illness and loss. Right. So founders that have gone through those experiences somehow, you know, often tended to.

Be.

The sort of founders that were bringing the best returns. And he's built Ireta around that whole kind of system. But I agree, I mean, in the West, I think in general, our kids are typically growing up without really understanding like hardship for them is, my teacher told me, whereas hardship, hardship for you or I may have been, well, we had to shift cities or we had to do something different. Yeah, I completely buy into that. And finally, so we can maybe get to know the real you. Although I think I probably do have a fairly good picture of that. What is something that moves you Emotionally.

Human relationships in general. I try and apply that personally at home and be present when I am with them. I try and apply that at work as well. I, I am proud that I would say that I know the founders in my portfolio better than the average PC. I am pretty sure I saw that.

I mean, I did a bit of work obviously with Boost or a bit of a presentation of your portfolio. It was very clear like that community was quite strong.

Yes. And that's something that makes me really proud. I also enjoy underdog stories. So thankfully I've had a few companies that did very well, but the ones that kind of stick with me are the ones where you can see that the company is about to die constantly and the hardship that the entrepreneur is going through and you desperately try to help them and eventually after 10 times that you thought the company was going to disappear and be liquidated, they just come up with something and it works. And maybe it's not the largest ever exit or outcome for anybody, but it is just when the odds are stacked against them, then something happens. And that's something that I enjoy very much. Trying to get my hands dirty to try and help those entrepreneurs. That makes me tick a lot. And I think that goes back to personal human relationships. I also enjoy and this is an initiative that we're trying to, to build that boost. I enjoy understanding people's motivations for real. Not asking like, hey, you know, what are your hobbies, but trying to understand, trying to understand in depth psychologically why are you wired the way that you are? And all those human relationships are a key part of my personal and my professional life.

Amazing. Well, look, I've always been an absolute blast having you here in the studio. Wonderful conversation for our audience. Where can they find you online? Are you on LinkedIn, Twitter or X rather, where can they find you on the Internet?

Yeah, mostly on LinkedIn. That's, that's where I, that's where I hang out socially when, when it comes to work. So yeah, just ping me if you want to speak to me and thank you for having me.

I really appreciate, appreciate it. Thank you so much.

Thank you.

Hear that? That's me in Tokyo learning to make sushi from a master. How did I get here? I invested wisely. Now the only thing I worry about is using too much wasabi. Get where you're going with Spy, the world's most traded etf. Getting there starts here with State Street Investment Management.

Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit state street.comim for prospectus containing this and other investment information. Read it carefully. SPY is subject to risks similar to those of stocks. All ETFs are subject to risk, including possible loss of principal. Alps Distributors, Inc. Distributor.