European tech was established to show the world what's happening here. In its first year, the report declared that 2015 was a breakthrough year for European tech. Since then, the rate of growth has been phenomenal. 2018 was another record year for investment, a record year for exits, and a record year for the creation of billion-dollar companies in Europe. The state of European tech has become the fulcrum of a wider discussion around the role of tech in our lives. Mr. President, why are you so interested in speaking about the state of European tech? Look, because I think this is one of the best ways to completely transform and reshape our world. It's also a forum to discuss what needs to change. It's more likely that a black founder will contract skin cancer than to get venture capital funding in the UK. You know, it is that dial. There's one thing that worries me is the tech education. I think that I'd like the government to realize that tech is actually here to stay. For the policymakers, it's vital they understand what technology can do. And this revolution is going to change everything about the way that we work and live and interact with each other. Last year, the European tech ecosystem hit new heights. Welcome to the launch of the state of European tech 2021. We're set to cross the milestone of $100 billion invested in a single year. Ten times the level we were excited about when we launched our first report back in 2015. Then came 2022, where the story hasn't been one of growth. So what happened? And more importantly, what happens now? Welcome to the launch of the 2022 state of European tech, where we'll discuss the path ahead. Ladies and gentlemen, welcome to the eighth annual state of European tech report launch coming to you live from BAFTA here in London. My name is Bryce Keane. I'm a partner at Atomico and your host for this afternoon. I've had the privilege of leading the report's launch since the second edition back in 2016 when it was a deck on SlideShare.  I'd also like to welcome the thousands of you tuning in from around the world via the live stream. What started as a conversation in a sauna at the Slush conference in Tokyo about how to use data to help Europe tell its own story is now an essential resource for making better decisions and supporting our shared ecosystem. We're lucky to be joined today by leaders from across Europe who've flown in from Berlin, Stockholm and Edinburgh, among other places to share their experiences of a rather tumultuous year with you all. But before we get into that, I'd like to start by introducing you all to the two people without whom none of us would be here today. Ladies and gentlemen, please give a very warm welcome to the duo with all the data. State of European tech co-authors Tom Veymeyer and Sarah Gamore. And thank you, Bryce. Well, let me also add a warm welcome from the two of us and welcome to the State of European tech 2022. So you saw that video just now and I referred to a breakthrough moment for the European tech ecosystem back in 2015. And I was referring to just $10 billion of investment, our first few hundred billion dollars of ecosystem value, 35 unicorns ever, and getting to that point felt huge. And now we're counting ecosystem value in the trillions. We are counting unicorns in their hundreds. So I think being on this stage today really makes me realize how far we've come. So whether you're here with us at BAFTA or you're one of the thousands of people that have joined us live down the line, thank you so much for joining us. The State of European Tech is a resource for the entire ecosystem, but it also takes the whole ecosystem to work together to create this report. So thank you to the many collaborators who help us bring this to life. Our report partners, without whom today's event wouldn't have been possible, OREC, Lazard, Silicon Valley Bank UK and Slush, your support is invaluable. Our data and distribution partners whose insights make this the definitive resource for the European Tech community. And to the thousands and thousands of you who took the time to help us build the largest data set on sentiment about European Tech, thank you. Your insights were key to help us unlock the story behind the headline numbers. Now, this is our eighth State of European Tech. It is also the first year that the numbers haven't all been up until the right. This year, we knew we would tell a very different story. And to do that, we needed to understand how the shift has affected founders, investors and everyone working in tech across Europe, how they felt, how they've adapted and how they see the future. Now, I would love to walk you through all of the data that we gathered, but we also know that you want to get out of here before Christmas. So today, we're sharing just a small fraction of the more than 450 charts that you will find in the report. There's no escaping it's been a difficult year from soaring inflation and interest rate hikes, the energy crisis and of course the horrifying war in Ukraine. We're facing the most challenging macro environment since the global financial crisis. But it's also our opportunity to build shape and invest in the future. In fact, opportunities like this come around only once in a generation. So should we get into it? Yes. 2022 is a tale of two halves. We witnessed a record-breaking first half of the year we've investment levels still riding high after 2021. Over the summer, however, the ecosystem began to cool off as the caution that we've all observed and felt started to show in the data. In Q3, investment levels fell by 40%, continuing into Q4 and now 2022 is set to be down 18% year on year. But overall, when we look at total investment into European tech, things still look good. This will still stand at around $85 billion by the end of 2022. That is double the figure from just two years ago. Now, other measures offer further insight into the visible impact of changes to the macro environments. We've seen $400 billion of value raised from public and private European tech companies in the past 12 months. The total ecosystem value has fallen to $2.7 trillion from its $3.1 trillion peak in late 2021. But that still leaves $2 trillion of value created since just 2015. IPOs were actually non-existent this year. Europe saw just $2 billion flotations versus $25 in 2021. Of course, the same trend has been seen globally with a 30 times reduction year on year. M&A also slowed down, although if you look at the Q3 numbers, there's some signs of recovery. And this will clearly be the main path to exit until the public markets reopen. And layoffs abound. Founders are under pressure to grow sustainably and faced with the painful decision to reduce headcounts. Globally, more than 200,000 tech workers have been laid off this year already. And European tech companies represent 7% of this. And of course, all of this is having an impact on the challenge of raising money. Even at the best of times, this is never a simple process. Today, 82% of founders say it's harder to raise funding this year than a year ago. And it remains especially challenging for diverse founding teams. Capital is still overwhelmingly going to men only founding teams despite some signs of positive progress at the earlier stages. The data confirms what we've all witnessed. The market has shifted. And with it, expectations are reset. In 2021, capital was cheap and abundant. And today, as the cost of capital has increased, a growth at all cost mindsets is no longer viable. Not surprisingly, the volume of $100 million rounds is down compared to 2021, despite a record-breaking level in the first half of the year. It's now taking longer for founders to raise money. And often, the result is going back to existing investors for bridge rounds. Founders are speaking to more investors encountering deeper due diligence and having to accept tougher terms. And compared to last year's 105 new billion dollar firms, we're now back to pre-2021 levels with 31 unicorns born in 2022. But in fact, we're left net negative with at least 45 of the previously created unicorns dehorned this year. This is most obvious for listed companies with the instant feedback of the public markets bringing valuations down. But in the private markets, more forced front raises in a very different valuation environment means they're likely to see more down rounds next year. So it's a new reality and it means hard decisions for almost everyone, founders, investors and talent. But it's just half the story. We've actually emerged from the process of writing this report feeling more optimistic about the long-term European opportunity. And most of you watching today already agree. Almost 8 in 10 people who took our survey say they're more or just as optimistic about the future of European tech as last year. Because real success for the sector is less about the glamour of short-term valuations and capital market dynamics and much more about talent, innovation and long-term company building. The crucial pieces of this puzzle are firmly in place. Now the data we've shown you is a reaction to the macro landscape and that's still being shaped by geopolitical instability, the changes in monetary policies we talked about and the energy crisis. The importance of technology has not and will not change, nor has our reliance on tech or its ability to improve our lives. Yes, down cycles hit short-term consumer spending and certain types of investment, but they don't fundamentally change how technology is transforming the way we live and work. Digitization brings about gradual but permanent shifts in the way that people and businesses behave. And these ultimately are the types of massive long-term trillion-dollar trends that underpin the opportunity for entrepreneurship and technology. And it's not just about our innate desire for smarter tech. The broader environment reminds us of the transformational power of technology to solve meaningful problems. The energy crisis, the climate crisis are front of mind for all of us. The need for sustainable solutions to those is more urgent than ever. We have an opportunity and there's continued evidence that Europe is most ready to meet it. Investment levels in purpose-driven tech come very close to 2021's record-breaking amounts. Our proportion of investment in purpose-driven companies continues to be higher than the US and Asia, who are by sharply decreasing investment. And European tech benefits from a more experienced talent base than we might think. Almost four in ten founders aren't first-timers. That rises to six in ten for unicorn founders. And there's already some experience of down cycles baked in. Most companies have members of their founding and leadership teams that have operated through prior downturns. So they've learned how to do more with less, how to maintain perspective. And we will now build this knowledge into a whole new generation, who will emerge stronger as a result, embedding more grit and more resilience into the ecosystem. The European tech ecosystem, as we know it, is barely twenty years old. And in that time, we've matured at incredible rates. We benefit from a diverse set of experienced, long-term-oriented and committed investors. Saying goodbye to the tourists can be beneficial as founders draw from long-term, supportive capital. And dry powder is still plentiful. There are record levels of venture capital funds raised ready to be invested in Europe's most resilient companies. The pillars of our ecosystem are strong, but they are being tested. And looking forward, we have a generational opportunity to deliver inspired solutions to the problems that Europe and the whole world face. One of our most forward-looking indicators is early-stage funding. It gives us the clearest insights into the companies of tomorrow. And this is on par with the US. In fact, European startups account for 31% of all capital invested globally. This is quite remarkable. And the talent found in those startups is stronger than ever. Our talent flywheel tracks the rate at which talent is redeployed from one generation of companies to the next. You've all heard of the Skype and Spotify mafia. Well, now we're measuring the Ariane, Wise, and Karna alumni. It's clear that the flywheel is accelerating. Today, the 2010 Unicorn cohort has led to 30 times more founders than the one from just a decade ago. That means more founders and more experience of operating at scale. It's the greatest pipeline of talent that we've ever had. So we can't fully predict the journey ahead, but the data allows for strong conviction on some important points. The challenging macro environment will persist, but we must remember that volatility is just a temporary phenomenon. The European ecosystem is strong and will continue to deepen and strengthen its resolve. On every metric, even in a down year, we're far stronger than just a few years ago. And with less froth and the consolidation that comes from a downturn, Europe has the opportunity to focus resources on technologies that solve meaningful problems and therefore have the greatest chance of success. If there's one thing we've learned in curating the state of European tech, it's that we tend to overstate the importance of the here and now. By its very nature, technology is forward-looking. Markets are cyclical. The ambition of our ecosystem isn't and should never be tied to the capital markets alone. We must think in decades, not quarters. Eight years ago, when we started this report, we sense what was possible. But if anything, we completely underestimated the transformation that was underway and the value that was being created in the process. So just imagine what's possible eight years from now. More change is inevitable. Re-invention and revitalization is not only possible, it's necessary. And it's times like these that put things in motion. The greatest companies persist. They keep pushing or they pivot when required. And they find ways through the challenges and become essential in our lives. And they endure, creating immense value in the process. We're here today, but we are building ultimately for tomorrow. And tomorrow needs our energy, our grit, creativity and courage today to create those new breakthroughs. Thank you. We have with us today many speakers who built through cycles and who have shaped the course of history. Whether that's through invention, innovation, investing in people with bold ideas, or championing the European tech ecosystem. I know we are all keen to hear from them. But as I said earlier, none of this would be possible without our partners. We have Chris Grew, partner at Teclo firm OREC with us today. He and OREC have been essential partners to the state of the European tech over the years, supporting us through both the growth of the report and the ecosystem. And we're delighted that Chris is able to join us to say a few words about our findings as well as to introduce our first guest speakers. But one last thing from us, promise, the QR code on the screen will take you straight to the report. And it's so much more than a PDF. It's a reading experience. We've organized the content thematically so that you can get straight to the data that you need. So go and explore the stateofeapintech.com and let us know what you found most surprising and interesting. Thanks again for joining us. And now over to Chris. Thanks, Tom. Thanks, Sarah. Hi, I'm Chris from OREC. We work with probably some of the most promising founders and funds who are transforming the technology landscape, the region, and the way that we all live and work in the world. The state of European tech is now in its eighth year. And in the six years that OREC has been partnering with Atomico, it's been exciting to witness the report evolve into a platform intended for a diverse group of stakeholders, all of whom are united by a common purpose in European tech's continued growth and success. We participate in this report because we believe in the value of benchmarking as it provides a clear baseline to measure the great progress that we've made year over year and it also highlights where we need further investment going forward. As a member of the European tech ecosystem, we also believe that we have an individual and collective responsibility to make this community stronger by addressing and tackling issues together, particularly challenges around diversity, equity, and inclusion, as well as sustainability and climate action. As we've heard from Tom and Sarah, we are in the toughest macroeconomic situation since the global financial crisis. And this year is on pace to fall just short of 2021's record-breaking levels. While fundraising has become more challenging, founders should keep these six things in mind as they look ahead to navigate the uncertain future. First, responsible growth will drive innovation. As an economic downturn creates turbulence across global markets, venture capital investors are becoming more cautious and selective. Growth for growth's sake is no longer enough and companies must also balance efficiency, sustainability, and profitability. Second, the pool of European investors is deeper than ever before. Would you believe that nearly 3,500 institutions participated in at least one investment in Europe in 2022? Despite some slowdown in investment activity, there's plenty of investors who continue to explore opportunities in European tech. Three, the market offers a wealth of untapped potential. The pandemic accelerated tech adoption, but potential is still beckons around the continent. A third of retail companies in Europe lack a website, and nearly 60% of businesses with at least 10 employees are not in the cloud. Fourth, tech continues to drive change. Tech spending has more than doubled during the last 20 years. It transforms how we live and work and promises to continue reshaping everything from energy and sustainability to defense, cybersecurity, AI safety, and more. Fifthly, venture capital will help fuel the net zero transition. The transition to net zero greenhouse gas emissions by 2050 will require an extra $3.5 trillion a year in spending, according to McKinsey. And a significant portion of that will come from the tech ecosystem. This innovation community is uniquely positioned to help balance Europe's need for energy with its leadership in combating climate change through purpose-driven investments and clean energy transition. Finally, government's going to play a critical role. Policy makers continue to look to tech to solve complex problems. Regulators have pivoted as innovation outpaces regulation. From the European Commission's digital decade targets for 2030 to the Digital Markets Act, regulators are trying to create an open and fair digital economy. They will need to balance privacy with innovation. Meanwhile, the public sector makes substantial commitments to venture capital. The state of European tech has become the most widely anticipated guide to venture capital and tech in Europe. The tech community faces complex challenges that require creative solutions and the report puts a spotlight on those challenges and presents a path forward. These are extremely exciting times for the European tech community and ORA could not be more proud to be part of it. Now it gives me great pleasure to introduce a couple of people that are making an important contribution to the ecosystem. So James Anderson has made his name and legendary returns from going against the grain. His early bets on the likes of Alibaba, Amazon, Tencent, Netflix, and Tesla, along with a patient investing philosophy, helped Scottish mortgage investment trust give a return of upwards of 2,000% between 2005 and last year's peak. Last year, he retired from that role and became the chairman of Shinovec. He's joined by another investment leader. We've been keen to welcome for a few years now. Representing a new generation of leading European seed investors, please give a round of applause for Judith Dada from La Familia and James Anderson from Shinovec. Very excited for this conversation. James, we just heard it and then came 2022. You've just heard the overview of the state of European tech and you've been around through previous cycles. So from your perspective, what are your current thoughts on the tech and growth ecosystem in Europe? Judith, you're so polite. What you really meant is I'm quite old. Yes, so I do have experience of this. Before directly addressing the Europe question, I think we all need to accept and realise that struggle is the normal form of existence for entrepreneurs and one shouldn't even think that it's just flawed businesses that go through that. You know, I remember very clearly listening to Jeff Bezos in 2004 or 2005 and saying, you know, this is incredibly frustrating. All our internal metrics are going in the right direction. Yet the only one that anybody has an intention to is the external metric of the share price. You know, Tesla was with literally weeks of going bankrupt. So, you know, if you're finding yourself struggle, that is normal and is part of the process. And the oddity is that we have these straight lines up and to the right to the charts illustrate. But, you know, I think the opportunity in Europe judged by its own metrics and by those exponential technologies that power change is way greater than at the last crisis in 2007 and 2009 because the raw material of those vast technological epoch-making changes is there and that many of them are much more suited to a European style of business than the rather show-offy platforms that we've had to obsess about in recent years. You know, to my mind one of the big problems in Europe has been that really we couldn't convince ourselves that these were necessarily great innovations in many cases. But the tech with purpose, the tech with solar and wind technologies, battery technologies behind them, the tech in healthcare with big data, genomics, the potential in, say, synthetic biology all seem to me things that fit with the aspirations and hopefully of your generation. And there are many more of these than used to be. And equally I think we have a definitional problem. You know, actually, and I find this interesting, you know, people very often ask me about the four companies that were measured. I think probably over my career the most satisfactory, compelling experience has been working for years and decades with the people at ASML. And most people wouldn't, and even in this room I suspect, wouldn't be able to name the critical people behind that company. Yet to my mind, its contribution is unparalleled by any company in America or Asia. Without it, Moore's Law and all these platform companies wouldn't exist. So I think we've got to be looking at the new inspirations but also proud of where it's been the first. And I think we undersell ourselves enormously and I get deeply frustrated when I'm in gatherings in America from that direction. I love that. And I think what you said about struggle and embracing the struggle, doing things not because they're easy, but because they're hard. I think that really, you know, rings very true. Building on the point of ASML and the great founding team behind that company you kind of have a very global perspective. So you're based in Scotland, you work for Swedish company, you've invested in the US and China. What in your view are the chief strengths of European founders? What makes for that very unique DNA? Well, I think and hopefully it does link back to our previous question. I think it is this willingness to see it as in the one hand a matter of deep science, what's going on. You know, one of my privileges at Shinovic is working with the people at Northfield both on the board directly. But the level of determination and ambition and time frame that people in Europe can grasp, you know, I think we underplay how important that notion of struggle, which you've just mentioned actually is. But that struggle is about time frame as well as the hardness of the problems. And I think one of the great virtues that we can have and absolutely SML epitomizes this is you can say, look, my mission for the next 40 years is to try and beat Moore's law. And you know, we can all make up analogous examples for the new technologies. That is way better, way more appealing, way more powerful, way more enduring itself in terms than much of what we see elsewhere in the world. So I think it's that willingness to not just embrace the struggle but embrace the time frame that is critically important in this. So it's almost saying that founders need to really kind of run the marathon and embrace the endurance that comes with building a company, which I think is a beautiful image, kind of switching over to the investor side. If you look at how private and public markets elsewhere have embraced growth and tech investments, why do you think we're not yet seeing the same level of that in Europe? Looking at, for example, Bailey Gifford and Chinovic being two of the very few kind of crossover investors that we have here. Oh, gosh, Judith, are you? And in a sense, I'm genuinely much more interested in what people like you of your generation see as you're able to do. Although I was semi-trained as a historian, I think looking back can be dangerous in this. But I think that we need to differentiate in our industry between those people who are involved in finance for the sake of finance and those people who see our task as being to help create great companies. And I think it's become so all-embracing to be consumed by the financialisation of it and its consequent metrics that we find it difficult to do that. And the fact that lots of people are made far too good at living out of providing and circulating secondary capital must be a huge part of this. So I think we have to... I'm sorry if it sounds obsessive or if it sounds moralistic, but I think we need to get back to considering what the purpose of finance is. And it's to help create companies and create companies at scale that will help our societies and humanity move in the right direction. And that is not something which has been popular over the last 30 years. I think your generation is genuinely a much better place to make judgments on those sort of grounds and those are the imperatives that matter. Not finance for the sake of finance. I'd love to just double click on that briefly because there are so many investors in the room with us today, but also listening in. How can we do that? Do you have a couple of examples of how concretely we can go back to our respective institutions and really change the mindset if it doesn't just come from a generational shift, but we were to just say we can do better as an ecosystem. And here's a couple of things or ways in which we can think differently about this. Well, I mean, I would anchor on your thinking differently. It's always struck me as something that's very odd about the finance industry. It's that people believe in something called best practice or still worse what the CFA teaches you is best practice. When, in fact, by doing the same, you inevitably have mediocrity. You know, I come from a family in which just about everybody is doctors or nurses. And, you know, I can pretty much know that it was a good thing to do what the doctor told you because otherwise you'd die. If you do what the stock market tells you and it dictates to you, you are not going to do great things. So I think you need to be incredibly honest. I don't know what you feel about this with yourself. You know, what can I do that is going to be different from the average? And if my response is to just embody that financialization, I think you have a problem. Secondly, I think you should put it very directly to yourselves and your colleagues, and sorry if it's saying you personally because I certainly don't mean that, but since you're asking the question, I think we need to subject ourselves to the same discipline. What will give us most satisfaction over the course of time?  It had many, many years when it didn't seem to be succeeding and I got yet another letter from Hedge Fund saying this is really stupid, it's going bust tomorrow, etc. But at the end of it, for all the, how should we put it, the interest of the founder, I think to know that you have at the margin helped create a company that made the world a better place and has transferred the car industry from its previously my orchid state gives you more satisfaction. And, you know, I'll be blunt about it. That matters much more to me and I think gives most people ultimately more satisfaction than just, you know, getting a bonus or a lot of pay one year. You just mentioned Tesla as one of the examples in a company that you backed before one could say it was consensus that it was going to be an outlier success and the same goes for a couple of other really notable investments. So you just mentioned a couple of lessons learned but are there other lessons learned that are particularly memorable and relevant to the current moment in European tech? So, you know, I'm cautious of wanting to generalize my own experiences, you know, which may have been random bits of luck and bad luck and whatever. But I really would because I think it makes a lot of impact at this moment in time. I really would emphasize that I think you should judge yourselves and have relations with your investors that are about setting out your own metrics of what success looks like. And they shouldn't be capital markets once. You know, so often I've heard people say well the stock market doesn't understand but then launching into another recitation of quarterly earnings and quarterly share price of performance, etc. I think you endure through these periods of time much more if you can say look this was my philosophy and I think so many of the really greatest founders are absolutely clear about setting that out in advance. This is what we want to achieve over the next 20 years. This is how we will do this. You know, I need to go back to the SML one. It's saying our point is to try and outperform Moore's law. It's not beat the competition or it's all to produce the quarterly earnings of it. So I would absolutely plead for everybody to have their own metrics of how they will judge their own success. And I think that gives you both much more resonance with your investors and much more enduring power to build the companies in the way that you think it ought to be done. So a healthy dose of maybe ignorance one could call it but also focus on what actually matters when it comes to building the vision that founders have. Let me come to some data. So one of your former colleagues at Scottish Mortgage recently did some analysis that the trust invested in 749 companies over the past 20 years and that out of those only 69 companies which is only 9% drove the excess returns. Considering how successful you were in returning value to shareholders that demonstrates the importance of power law. And so how do you do that? You know, how do you spot these companies? What do you look for? Kind of, you know, looking forward into the next decade of what's ahead. Oh, Judith, I'm glad you kept this relatively much to the end so you won't be able to push on this too much for it. I mean, actually I think that's quite high number and I think your reference to power laws which in a sense people have always known matter in private markets absolutely as much applicable in public markets. One study has shown that since 1990 1% of companies have added all the value of T bonds in the two bills in the world. So I think that is the world that is in it. But the reason I'm cautious about saying this is because of what I'm going to say next. I actually think it is fairly obvious which companies have the ability to do this. I think you can differentiate between Jeff Bezos and the average founder. And I think that the single most key aspect beyond that long run determination that we've already talked about is that almost always these people have a different interpretation of how the industry, the industries that they are working in will change. And they have a hypothesis which they will develop in that whilst having serious doubt at the same time as to precise specifics and you mustn't get torn into those. One of the parts of what Bezos said that most intrigued me was back in the days when Hamilton was just going public that there was this weirdness about his business that everything he was using got better by 40 to 50% per annum and then he gave one of his characteristic laughs, gaffaws and said I don't know where that takes us but I know it is going to be exciting. And I think it is that willingness to attach yourselves to deep exponential change that really matters here without getting narrowed into the specifics. So you follow the right people and you follow the evidence that those people have a philosophy of how their industry works and therefore we are on the company. And I think if one is honest there are very few companies out there that really make it. So those figures which I haven't yet had a chance to discuss with my colleagues, I shall do so over the Christopher theory of it. I think the amazing thing is actually that there was many as that. I think personally that we probably therefore were beneficiaries of a bull market rather than these deeply impressive companies regardless of circumstance. I love what you said because at the earlier stages where we are investing we always say a good founder makes you see the world not in ABC but in terms of CBA and suddenly you can't unsee what that founder has seen and has told you. So I'm glad to see that also exist at the later stages. So coming to an end I would love to leave the audience with one or two predictions that you have for 2023 and maybe also you know something that you want to share with everybody with regard to what we need to do more of to see more optimism for the next couple of years that lie ahead. Honestly, and I think I've pretty much kept this over the last close to 40 years I don't believe one should predict for any one year and I actually think that you make investment much more difficult if you're going to do this. If somebody asked me which year Amazon or SML was going to do well and thrash the indices by parallel amounts I couldn't have told you. But if you're betting on exponential technologies which you have a high probability of way beyond the normal market probability levels of it being right you can afford to take your time and it will eventually happen. So let's not do years but I'm not trying to get out of the topic by that. I think that the amazing part to me again going back as an oldish person is that we possess the technologies to solve those problems that were eloquently brought up in the previous part of this gathering. We know what we need to do and it is the nonsense surrounding markets and finance etc as politics that gets in the way of this. So I believe that the opportunities for huge scale investment in renewable technologies with technologies that are working on your side are extraordinary and if I had a real wish for what I would like to see Europe doing more of, doing better I think from several decades of health care usually being the reverse of Moore's Law where you put twice as much in and get half as much out we're potentially moving to a world in which the combination of data and genomics means that we understand human biology way better than we have at any time in the past. My biggest frustration is why more of that is not happening in Europe and I would like to see a wholesale examination of that and the creation of a much better specialist health care venture capital and successor investing companies that can really scale what's going on in there and that would be my deepest hope and perhaps some of us can try and help with that. We'll definitely give our best thank you so much no nonsense lots of endurance, no predictions and focus on the long term vision thank you so much for sharing that with us and so next up we have another video message from a European founder that probably needs no introduction, John Collison the co-founder and president of Stripes It's been a hard year for tech there's no two ways about it inflation has stayed stubbornly high startup funding has slowed down significantly and we haven't seen the end of the energy crisis we're clearly in a different economic climate and many parts of the developed world appear to be headed for a recession whatever happens next year it's clear that founders have to adapt for leaner times what does this mean? it means getting serious about revenue efficiency and reducing non-essential spending revenue efficiency that means producing similar or greater revenue with fewer dollars or euros or pounds where you have inefficiency in how you're working today finding ways to fix that are you building things in house that clearly you should be outsourcing? quickly down your priorities and eliminate non-core projects and then on the non-essential spending it's just it's time we all get real startups have been offering Google-like perks for years in an attempt to attract top talent but is top talent really interested in joining a company for the perks or because it's a great business so let's get the great business part right first and then later you can think about what kind of coffee you're serving in the office being serious about revenue efficiency and getting spending under control that's never a bad thing it's just the fundamentals of good business now I don't want to sound all doom and gloom here in fact there's loads of reasons to be optimistic about European tech first of all European companies have adjusted quickly to the new reality and companies like Klarna Solonis, Alma, Dr. Lib, Alan many others they're growing fast despite a bleak economy secondly the fundamentals of European tech are really strong European's town pool is excellent there's almost 50% more software developers here in Europe than there are in the US and that number is growing faster and European policy makers are trying to help the second payment services directive, PST2 and the passporting regime that's what Stripe uses those have made it easier for fintechs to get started in Europe than anywhere else in the world and that's why we're such a fintech hub stock options taxation has improved quite a bit thanks to the push of the not optional movement France is a good example of a country where the treatment is now night and day compared to where it was 10 years ago and now there's plenty of experienced European tech founders to learn from when me and Patrick started Stripe 10 years ago there was no Irish tech giant to look up to whereas today there's literally hundreds of ambitious European tech companies to go to for advice now we shouldn't take any of this for granted and in fact we should be doing everything we can to help European startups move faster than what we could do we spent time with all our European customers and we recently ran a survey two out of three businesses tell us that they would grow much faster if the European market was more harmonized and you might wonder where is that? well harmonization could improve things in quite a few areas we're in a single European market and yet access to funding and talent is still hard if you're operating across multiple countries we train tens of thousands of software engineers every year in Europe but we don't have any until after university PST2 has existed since 2015 and yet a pan-European payment method in Europe is still just theory and Europe has incredibly ambitious carbon neutrality goals but there's no incentive to help private tech companies go to market quickly fixing these and more could have an enormous impact on the future of European tech but in times like this I worry they'll fall to the bottom of the pile on policy makers desks and it will be a huge mistake because we've still only explored a fraction of the internet's potential and Google and Amazon and Facebook and all these companies they emerge from the ashes of the dot-com bust I mean, Stripe itself was founded not long after the global financial crisis and there's no doubt many great European companies that will rise from this recession so instead of debating whether it's the end of tech school and Nira or anything like that why don't we all work harder to give the next generation founders a chance to win Thank you, thank you very much to Judith and James and thank you to John which was a wonderful setup for our next session so there is a famous quote that goes everybody has a plan until you get punched in the face for many founders 2022 has been a proverbial haymaker soaring inflation exacerbated by the war in Ukraine along with post-Brexit and COVID supply chain disruptions would be a challenging backdrop for any company for a UK startup that also happens to be a hardware manufacturer and a retailer in the suddenly rocky femtech space these fresh blows might just have been enough to drive it over the edge but Tanya Bola didn't let that happen she recognised that the new reality would mean tough choices and quick action please welcome the outspoken founder and CEO of LV Tanya Bola alongside Bloomberg markets co-anchor Tom McKenzie to the stage to share her experience as a founder living through the eye of the storm this year Ladies and gentlemen, thank you for those who don't know let's start with an explanation and for the very few members of this audience sitting here and watching as well an explanation about what LV does and who your customers are Thanks Tom, hi everyone yes I'm Tanya and I started LV and we're all about smarter technology for women, particularly women's health so we look at quite taboo or neglected issues where there's been a lack of innovation and we design products to meet women's needs so our main category we developed is breast pump so we've completely returned that category on its head, we launched the first silent wearable breast pump and we have a family of products around that and our first category is pelvic floor health which again is a very important and neglected issue for women in terms of scale we're about 100 million dollars revenue this year and our main market is the US and we're headquarters in Bristol and you were telling me that the US market makes up for about close to 90% of sales let's talk about the challenges then before we talk about the opportunities we've been hearing about the drop-off in funding 85 billion versus 100 billion we know about the challenges the macro challenges of course that have been outlined in the previous conversations how challenging has 2022 been for you and how have you had to adapt as a business and as a founder yeah I think just taking a step back as Bryce mentioned we're obviously consumer facing business we are still currently loss making, high growth and so anybody in our space in terms of a startup or so there's three parts to your system that have to all be working and there's obviously demand supply and then because you're still loss making the investor side and I think what we've seen really went back to 2021 so we are hard work, we're consumer electronics March 21 was the beginning of the rills of supply chain crisis obviously we'd faced a lot of freight issues due to Covid but particularly semiconductors and component shortages and that really just congested the whole supply chain which meant for example last year that whole supply side not only does it mean a lot of erosion on your margins but we literally had to go dark we couldn't meet demand and then as we saw that sort of impact along with other things how that led to obviously inflation and then the impact on consumer crisis so we've sort of been hit at all angles say overnight the investor sentiments you know just trying to literally have nothing to do with anything which is to do with discretionary spend or on the consumer side so sort of dealing with everything falling apart at the same time there's a lot to unpack there on the supply chain issues and passing on those passing on, were you able to pass on some of the costs to consumers and where are you in terms of addressing those supply chain issues now have you resolved them and what contingencies have you put in place? Yeah and I think if you read the news what we went through with LV Apple and all the big companies gone through a similar a similar pathway the difference is obviously if you start up you have much lower cash reserve so it's harder to manage so yeah what happened was obviously there were component shortages even if we've got the forecasting right our component manufacturers would just say sorry LV you know these really really big tech companies have jumped to the front of the queue and so then you sort of scramble around and try to switch out components so it's sort of a constant distraction and effort and then the panic sort of set in more with the retailers the retailers are all out of stock at the end of Q4 last year they start placing crazy orders so it's just the whole supply chain has been a mess I'd say for nearly 24 months now and on the capital raise you have successfully obviously raised at seed levels, you've raised from private equity as well you've publicly raised in 2021 a C round how has it been in terms of tapping that capital in 2020, you talked about the challenge and the pressure from investors talk to us about how you managed to raise and how much money you've got in the months ahead I raised the first institutional round about six years ago and I've been in this period where as we heard about from the report it's been very entrepreneur friendly I mean we're a binary proposition a lot of VC funds don't want to go near hardware and I get that because obviously an intense of cash cycle but those who are interested you know it's been to be honest we've become a bit arrogant in this process it's been quite quick it's been quite easy and so on and so I went into this year with that level of confidence and naivety and and I think really what's changed also I get it from the investors I know there's a lot of investors in them right when I started raising obviously I knew all about downside protection and dilution pref stack and all the rest of it but the last eight years you haven't seen that on term sheets so I completely understand from the investor point of view they want to be adding in more downside protection but for me and for any founders in the room who are going through this experience it is again it's kind of like a shock right to the system that you're having a very different set of conversations so yeah be honest we did an internal round it was quite tough and I think when I looked at the report this morning I saw there isn't a huge number of down valuations and I think obviously my guess is because of when there's a lot of internal rounds everyone around the table is not necessarily incentivized to do a down round but there is more downside protection and what I kind of learned as a founder is you just have to constantly be looking out you're playing a double role right your CEO you need to do what's best for the company but you also need to look out for your own shareholding and make sure you don't get too screwed sorry have you been screwed or did you manage to avoid being screwed it still was tough but look do you know what it's so annoying I'm still used to being the outlier so you hear all this stuff on the report I've heard the speakers and it's like oh my god I'm a cliche there's all the stuff you know the theory about so everybody always says your board is there when times are good they're all super supportive and then when the crisis hits and particularly when you're hardware and you've got a lot of liabilities it gets really it can get quite substantial quite quickly even if you're growing and doing well and so on and sorry we should ask the investors in the room but obviously investors in natural positions often to look after their own investment first right but that was a big lesson for me now I know exactly what I need to do in the next years and you talked about that overconfidence and that naivety and we've been through a decade of essentially negative interest rates and James and Judith were talking about this earlier the need for longevity in terms of the mindset of founders but and investors as well I just wonder how commonplace that naivety is amongst your generation of founders and whether we do in fact come out of this more resilient or in fact that naivety ends up costing resilient on fundraising or how to run a business which can become profitable both yeah I mean look when I started I remember my number two sort of ex McKinsey type the two would have a lot of academic conversations what's more important top-line revenue or profit and it's a profit a dirty word all these sort of academic conversations which obviously now a bit of a moot point but I you know I think there has we've heard in the report it was a very sudden shift in investor sentiment towards bringing profitability and asked like any other startup we're always 18 months away from becoming profitable but we had started that process and the process of reshaping your P and L and becoming profitable is a hard slog right and if you're the entrepreneur and you want to do the big fun exciting stuff there is even as we heard earlier there's a kind of process of growing up but to your point about resilience yes you know we are now one month away from becoming profitable and I'm so proud I mean it's really hard to get there but there's like a lightness to not be reliant you don't have to keep going to raise money so I do agree with the sentiment that we will be you know we are building stronger foundations this is forcing companies like LV to go through that process faster I do worry for earlier stage companies though right because companies like us we've got product market fit we're number one in our castries and our markets it's about expansion for companies that haven't found that product market fit they still need to be experimenting that bar for the series is gone up I think it's very tough for them and what were the hard decisions that you had to put in place to get to that one month time frame for profitability in terms of job cuts in terms of cutting the perks coffee I mean what did you have to do there's the serious element obviously around job cuts what did you have to do to cut the proverbial fact to get to that position you asked about price rise obviously like other companies in our space we had to pass on some of those costs to the end customer and then in terms of how you get your gross margins I mean we also had real margin attrition during Covid some of it is just for hardware it's a lot of this organisational transformation you know everybody always has high growth start ups it's this car driving at 100 miles an hour while you're changing all the parts most founders I know are not really changing the parts they're just driving at 100 miles an hour hoping they don't sort of the wheels don't completely come off and you know there is and even for my board even during Covid the message was engine of growth and it's always product marketing so again it you do have to go through a lot you need to reshape your company and it's not just your systems your processes you need probably different people in there as well and then to your point about cost cutting yeah we did have to go through whilst going through this fundraiser summer to cut the cost base and even hearing earlier now you need to start cutting non-core projects but that's very painful to do because there are projects that you care about or maybe your moonshots or so on but there is that need to start reducing priorities I wonder to what extent you've benefited by being a purpose driven business and James of course making a very passionate case to look at the long term and to look at those businesses that genuinely have a purpose scene and Tom's presentation around your accounting for about 50% of funding for purpose driven have you seen that shift is that material you're smiling oh yeah it's been great my background I've never worked in the private sector before LV I've always worked in international development so I have a PhD in women's health I'd always worked towards social justice for women but when I started LV obviously I had to learn a new language and I'd always hide the purpose side because it's obviously just about to make the best returns for your investors but now yeah the language is very much shifted even as we've heard today even if I look at the Atomico website I was looking it's all about entrepreneurs and positive social change but also what I think is exciting as well as we've seen the report similarly when I started there was a lot of money at the series A stage it was less at B and C and now that as we've seen from the data has shifted but what I think is exciting and I've seen in the last four or five years is just a plethora of new investors focusing on ESG or impact and quite a wide range right because we have a few impact investors at LV we have BlackRock not Impact Investor but we took money from HealthTech fund within BlackRock but they have an ESG fund now a hundred million dollars there was quite a hands-off approach so as long as you hit the right criteria you can get money from that fund and it's like any other money but then at the other end of the spectrum we also talked to funds which have very hands on the impact side actually tying money to very clear targets and then actually we've, I don't know that many people know Bloom Equity they're a great new ESG growth fund in Europe they've come on board and they're actually quite pragmatic they're like yes we need to focus on the ESG but let's also look at that commercially and what's exciting now is that there is potentially a premium that's associated with being that purpose driven company that's on ESG and on purpose driven you're also an angel investor an active angel investor yourself so I just wonder what advice you would give to start-up founders now looking to raise say in the next 12 months or so I did obviously talk to a lot of founders and it's a mixed bag we still hear there's still a lot of dry power there's still a lot of money going in I would say I talked to a founder last week who has had four term sheets with phoma and excitement going on but then I asked about the downside protections because I know obviously what's going on with more participating prefs on the term sheets and he just said oh I don't know that's the lawyers looking at that so my main advice as I said before is the founders need to get on top of the detail they need to get on top of the detail on the legal side and the detail on the cash side and for some founders that might not seem exciting but that's absolutely critical I would say also if you're early stage I do think it's particularly that the VCs who are probably coming up with some of the more punitive terms or maybe I should say punitive more investor friendly terms but there is a lot of money I think on the angel side so I would encourage them and also what I'm seeing with some of some of my investments is potentially actually you know we will see more consolidation in the market there will either be companies that fold or actually be acquired so I'm seeing sort of more strategic partnerships at earlier stages at the moment on that point around acquisitions are you yourselves at LV potentially looking to expand your market share through acquisitions or is it all going to be organic? Yeah that's a good question I just asked the board when crisis hits there's always two ways to look at it is opportunity or do you look at it in a very pessimistic sort of apocalyptic way and I think especially in March with the Ukraine-Russia crisis there was a sense of we could go and raise and go on a huge acquisition spree but then the other side was much more risk averse let's just make sure we survive whatever's going to come our way yeah being open we have looked at some opportunities they haven't been the right ones but we'll see maybe there'll be more in 23 and in terms of your in terms of your geographical footprint so you're talking about close to 90% of sales from the US but you're and yet you're very much a European company why are you not getting the traction that maybe you would expect in the European market or am I misreading okay no we will win in Europe it's just I think like any company we've been delayed right our plans are still the same plans but because of this onslaught of particularly the supply chain it's diverted a lot of resources so we are still progressing in the right way but I would actually I think this is open we did also but for us actually US is number one market but China should be our second market and we went in before 2019 just before Covid and very sadly actually this summer we've had to say we've had to withdraw for now because it's sometimes again going to that bit about where's your non-core business and also I'll be honest I like we did a big fundraise last year and I hate it going with the cliche but we were I don't know we went for too many markets too quickly right so this process over the summer has allowed us again to rationalise that and do things okay interesting on the China market there's a lot of debate as to how much exposure one would want to have to the Chinese market but clearly as a consumer base difficult to avoid that market completely just looping back to the angel investor role and what the conversations you're having with new founders when it comes to that debate about whether to focus on profitability early stage or build out market share how important is that conversation where do you sit within the current environment on how dependent is it on the segment that they're targeting yeah I think it's a bit difficult to generalise I think it depends on the business I think the key thing is cash right to just keep very close eye on cash and for us that meant that we did choose to become profitable faster but yeah for any founders in the audience who haven't raised it it is quite brutal to be honest so my main advice would be try and avoid it unless you need to or do it with eyes wide open how do you see the next 12 to 24 months for your business specifically what are the priorities yep so the plan is still the same we're definitely planning not to fundraise again I think I still have PTSD after the summer sorry profitability it is actually as I said there's this amazing lightness that comes from being profitable and that's not easy for a business like ours and I'm worried obviously what's happening next year with inflation and so on on the impact on margins so it's just sort of hunk down a little bit and make sure that we are setting ourselves up for success and we have quite a few product launches towards the end of next year and there was some discussion already about talent the depth of talent that we have here in Europe as we see some of these companies having to lay off workers and teams is that an opportunity to add are you seeing a slack within the talent pool or does it remain very tight yep I mean well Elvie partly because we've got a lot of PR people want as we heard from the earliest people people want to work for mission ed companies they want to wake up in the morning and do something that's creating a product that's having a positive impact so we've generally found it very easy to recruit but at the same time we're a victim of our success quite often the target of poaching but for us unfortunately we did have to lay off a few people this summer so we're just trying to come through that now and rebuild okay and I know you want to be diversifying your portfolio products as well platform the platform for femtech and healthcare female healthcare what is the journey to that point looking like once we get through the turmoil that we're facing now across the macro environment yeah I mean look the opportunity is still there right and it's I think historians will look back and just think isn't it crazy in 2022 that there hasn't ever been a global tech brand for women so that's what I want to do that's what I want to prove how do we get there what we're just going to keep doing what we do best right and that's what you learn through this we reinvent categories we create products that women love and then they talk about that and that technology changes lives and then they tell their friends about it and that organic change is that's the magic of LV and that's what we keep doing okay Tanya thank you very much indeed fantastic insights and one month in profitability Tanya Bolo there of course the CEO and founder of LV and we have another special video that's coming up and Les Price is going to correct me as I look him in the eyes from an esteemed academic and scholar at Carlotta Perez on why we are now on the threshold of a new golden age hello everyone I'm Carlotta Perez it's a great pleasure to join you for the launch of the 2022 State of European Technology 20 years ago I published a book about technological revolutions and financial capital that explored the relationship between breakthrough innovations investment cycles and the role of the state in shaping the conditions for deploying the new technological potential what I found was that each technological revolution follows a regular pattern the first few decades are about installation it is a time of creative destruction as Schumpter called it it is a time when the new technologies replace the old it is a bumpy ride with bubbles and crashes as in 2000 and 2008 the technological experimentation leads to great wealth creation it leads to new giants but also to job and skills destruction capitalism and democracy are in danger in these times after this period of instability though governments normally have set up a win-win game between business and society those are the golden ages why tell you this now because that is the message of hope that history provides we are at the threshold of the golden age it has taken longer than usual to get here the installation period of the ICT revolution one way back in 1971 with Intel's microprocessor the impressive growth of the European technology ecosystem over the past 20 years suggests great synergy into the future currently there is a world of opportunities for innovations that cater to a smart green lifestyle sustainable in its services and fair in the distribution of the wealth they create I have suggested that there is a major opportunity for the creation of a European way of life that would replace the wasteful American way of life that shaped consumption during the post-war boom it could contribute to combating climate change and to the creation of a leadership space for Europe in the world economy this year may have been a tough one for tech stocks and valuations that has always happened before the better times it is obvious that the main source of prosperity is synergistic technological innovation innovation that goes in common directions quantity is not enough we need convergence finding a powerful consensus direction is indispensable for collective success in shaping a better future for all I trust that Europe will soon find a common way forward congratulations on the major achievements being reported today and thanks for inviting me to address you alright still with me? here we go on to the home stretch guys get excited when looking back over a tumultuous year there was one European tech company that captured more headlines than any other in 2022 yes I'm talking about that down round but full credit to this next founder he got in touch with us about returning to the state of European tech stage this year to share the story behind the story in the hope of helping other founders navigate the path ahead when it comes to fundraising joined on stage by another entrepreneur who's also been speaking a lot this year about down rounds please give a warm state of European tech welcome to Clana co-founder and CEO Sebastian Smyrtowski and atomic co-founder Nicholas Zenstrom thanks alright thanks Bryce thanks Sebastian let's get straight into it so Clana attracted a lot of attention this year but you also been focusing that the headlines are not capturing the whole story so what's the one thing that they've been missing wow a lot of things I don't know well maybe one thing that I think is interesting is right Clana was a profit making company up until 1819 started saw an opportunity in the US we went for it which is difficult it's interesting to go from Europe to US we invested we increased our investments a lot and started investing a lot I think even that's actually one of the most confusing things is that media seems to have a hard time trading between losses and investments but we started investing a lot and as a consequence of that we're showing a loss on EMT level we came to a point where we were investing 100 million dollars or we were loss making and investing much but that meant loss making of 100 million dollars a month hearing that number it sounds like a tremendously large number and it is right 100 million dollars is a lot but it's always easy to look at it with the benefit of hindsight if you consider the fact that Clana was given a valuation by its investors of 45 to 50 billion dollars last year that meant that at that investment rate and loss rate we were diluting our shareholders 2% per year so obviously our shareholders were saying 2% per year if you're trying to go after this tremendous industry called the credit card industry and the banking and try to catch what is actually genuinely a trillion dollar opportunity it's not crazy now obviously as then investor sentiment shifts and suddenly people don't want you to lean into the future but they want you to show profitability at that point of time 100 million dollars a month is a lot so you need to unfortunately as a consequence of that we had to shift back focus right so I think that's probably one of the things and then you look at it and say how could this be right but actually it makes sense it makes sense in that environment it doesn't make sense in this environment that's right and interestingly the same investors who last year told you grow really fast invest will give you more money all of a sudden change the mind very much so but you managed to raise 800 million or something and the market set the price and there was a big down round so the headline and of course this is like a lot of companies are doing down rounds this year and next year we are going to see even more so how I think about down rounds is also it gives you funding so you can grow and I think this is like the theme that I think about is like it enables you to continue to grow but how did you manage to go from that mindset of just investing in growth to turning this around to think about more sustainable growth and also actually getting to profitability and how did you do that and can you give us an update where are you in that path I think in that case obviously I do have a little bit of a benefit I've been doing this for 17 years 18 this year I'm not a rookie hopefully anymore and I did take clonor through the financial crisis of 07 and 8 even though obviously the company was smaller at that point of time so to me I remember clearly when COVID hit for a few weeks everyone thought that the world was ending at that point of time a lot of investors called me and said you have to cut your spending now you have to adjust to new and I said you know what let's wait a few weeks see a little bit how this plays out and it turned out at that point of time it wasn't the right thing this time around in our case in our financial plan we had an idea of race money it was planned to race money this year and in Jan and February we were in our case really preparing ourselves to tell a different story because there is a misconception that clonor is all about binopilator and that's actually not true how for transactions are debatable we do tons of other features and services and so forth so part of this was that we wanted to change and tell investors that we were doing a lot of other things and then as we went into the market it was a very tough environment suddenly because we were basically trying to race money and then every week we may have got some commitments for some money and some valuation and then PayPal dropped 20% in the stock market and then we got new commitments and next week PayPal was down 20% again so it became impossible at this point of time I actually said let's pause this whole thing and rather face the reality that investor sentiment has shifted and we will have to basically throw out the old business plan create a new business plan that's all about getting back to profitability we call it get to net internally to have a little bit of a fun name at least around it and so basically in our case we had been profitable in 18 and 19 we make about a billion dollars of gross profit in the European market so we have a sound underlying profitable model and so we set a path which we said okay when is it realistic? well probably after summer next year for about 12 months to get back to positive numbers and then unfortunately obviously we had to conclude that it wouldn't allow us to invest as much which then unfortunately meant changing the size of the organization which is obviously the most painful harmful thing but also then focusing on things so we started executing on that in May, June and then once the liberal man announced it we went back into the markets because we felt that now we could also show investors that we were actually taking this seriously and doing what was necessary and then we were able to raise that money after that but we had to obviously see now again our devaluation drop in Klan is not that different than PayPal's and other fintechs on the stock market so it's within the vicinity and as long as selling as much is about 12% dilution or something yeah exactly and I think again now I obviously did everything I could to participate in this round it's a lot of money for me but I did my best I'm a big believer in the long term opportunities so given the experience that you have from this financing also you've done obviously raised a lot of money throughout the years and what advice can you give to founders who are going out watching this or probably have to raise next year in this difficult environment well I think that the I actually I was if you look at Sweden where I'm based there was a couple of other companies that took action even earlier than us and I think to some degree the companies like us that took actions fairly early also got maybe more negative sentiment in media that's what companies do to that now it's more like everyone's doing it so you get away we're doing it in a different way but the point being is that I still appreciate that I think I would be worried if you don't take actions I think the most important thing is to realize there's a different world you have to adopt to it and then be willing to take the tough decisions that you have to take I get less concerned about companies that are willing to take those decisions than I am about the ones who are not so I think that's the most important thing and I think if you do take those decisions then I think investors will look at that as well and say not everything is perfect maybe you still need more funding then I would also mention one thing that's a little bit opaque which is obviously that Klana did not have the option to do liquidation preference special type of stock deals because we're a bank so we can only do common stock right now it's a little bit opaque what's actually happening in the private market because there's a lot of liquidation preferences pref shares this and that going on so I think also founders should be aware that even though you see some companies out there racing at same valuation or equal or slightly higher don't be fooled by what you're seeing actually the terms are quite tough so I think that's also creating a little bit of sometimes maybe as an entrepreneur you don't really want to see reality and then you allow yourself to be fooled by those so if you had the option which you didn't but if you had the option to the round you did down round versus something at higher valuation with 2x, 3x liquidation preference do you know what you would that's hard it's very difficult because to some degree I would say yes I would have liked to do it part of me says that but on the other hand I just feel that like Clona has been strict with common shares even before we became a bank for 17 years and I've just heard so many horror stories of having different shareholders with different incentives coming in at different places so everything else equal I still feel like I'm quite happy that we've been consistent about it so I'm a little bit torn about that I hear you I think there's long term alignment among all the shareholders when everyone is the same class is probably better for the long term that's my view at least and as you mentioned you've been doing this for 17 years and I remember when you and I spoke when you've done it like you were coming up to 10 years and you said you know I've done it for 10 years and I think I can do it for 10 more years and then I know what I think last year or this I don't know within the last year I don't know before after the whole crash but when you said like you're going to do it so much longer but so the question here is like how do you continue to find motivation for yourself and also how do you continue to motivate your team when they see that like everyone is motivated by of course long term stock price but first and foremost like for myself I mean I, two things right I do genuinely believe that Klaner is challenging this massive banking credit card industry that has been making too high profits on consumers I think it's definitely a market that needs disruption and competition and yes we are also offering credit a healthier form of credit than the ones that exist in the market so I genuinely believe that we're doing a good thing but we're not just doing it because we're nice we're doing it because we want to make money as well but I think it's both right so that is obviously in itself interesting I'm also extremely fascinated so half of my brain power is thinking about what does those products look like, what does the future of retail banking fintech looks like and what could that product look like and the other half which I find extremely fascinating is how do you it's one thing to run an organization of 50 people it's another one having 6000 how do you actually move mountains how do people come together and actually get things done in an astounding way how do you organize yourselves how do you work together, what kind of culture is that for me so these two fascinations they keep me busy I think about nothing else I've been thinking about these things for 17-18 years I think about them when I go to sleep or when I wake up and that in itself to me is just like that's my passion, I love it and so I would be so bored sitting under a palm tree in Thailand or whatever so this to me and I feel extremely fortunate in life to experience this and together with my team try what if we do like this and how people react and can we do this better I just think it's extremely fascinating so that drives me, that's enough for me and then I have some beautiful kids that I can hang out with do some fun stuff now and then do some horseback riding with them so I think now I do genuinely believe what kind of people do I need and who should I what kind of people should I try to to attract the Khlana if we want to move mountains and I think all of us will have a mix of drivers how much money we make what title we have what our friends thinks about us and what we're doing how much we actually get done there's tons of things that drives us I find that the people that are the best are the ones that genuinely their primary driver of all of these is they want to get things done they want to see and explore how we actually make things happen I do believe that to some degree the benefit I have the proportion of such people at Khlana back in 2010 and 2015 was very small the proportion of such people at Khlana today is much higher and that is also what helped us in this situation because it wasn't about what does my friends think about me or my title or this and that but because it was genuinely driven by people who are trying to understand how to make things happen I think they weather this storm better so I think that helps doesn't make it all go away obviously people were unhappy and depressed about seeing they thought they had all this money and now it's something else and this and that but it makes it slightly easier and on that getting things done and I'm sure you've been doing a lot of work to motivate everyone to get to net profitability has that been something that has been rallying the troops we have for sure but I would actually say the team has done that to a large degree I'm quite impressed by how all of our all of the people in the organization picked it up and really like we have this internal channel at Slack called Winning and I created it a few years ago and encourage everyone to publish good stuff there and so during summer some after we doing this somebody in the organization was like why are we sending so many text messages have we really ever optimized the amount of text messages we send and then started getting nerdy about it and realized there was something wrong in how we were doing it and it saved 40 million dollars a year and then they publish it on Winning and you're like wow look at this the company just changed their focus they realized okay now this is the focus they started going after it they find these amazing opportunities and obviously you can say oh we were stupid we didn't see that earlier, fine but that's just the reality of life you're very focused on growth or you're very focused on optimization I think it's difficult to do both at the same time you can do a little bit of both but it's hard amazing it's fascinating you can do that with such a big organization but you've also been, I know that you've gone through waves and changes and you've been learning as a leader as well along the way from trial and error I had the fortune to take my top 30 managers to Derbyshire and visit the Toyota factory a few weeks ago and it was just so inspiring to see how the culture of that organization how they basically have created this fantastic culture where every factory workers every day works with Kaizen and thinks about small improvements it's super impressive one thing I've always been impressed is that you have this really long-term ambition with your business and I know it's been growing when you've been which is great but this year and this kind of big reset and everything has it changed your long-term ambition in any way and the outlook for the company financial services a few years ago we sat down in a room and we were kind of because we actually pivoted slightly the company a few years ago when we realized that Stripe and Adion was beating beating the shit out of us so we had to change because we couldn't compete with them and so we moved in this consumer direction that we're now and that point of time we formulated this idea that eventually in the future you wake up one morning and your financial advisor I've analyzed your mortgages tonight and I realized I could save you five pounds by changing from bank A to bank B and the only thing you need to do is say yes and that's going to happen I know it's just like self-driving cars I don't know if it's going to happen 5 years from now 10 years from now or 20 but it's going to happen and when you realize that the whole banking today banks think about themselves as a balance sheet and what they tell investors is we're going to maximize interest rate spread which basically means they want to give you as much money as possible in your deposits in savings interest and they want to charge you as much as possible on credit which isn't really aligned with customers' best interest so I think when computers get to that point and you're seeing things like chat.ai whatever and you're seeing like whoa it's getting there now you realize that bank will have to change from doing that interest rate maximization to actually how do I help my customers save time, save money that's the best word about finances that's going to happen so the only thing that I need to do if I have a 10-20 year perspective I just need to race to try to make Klara one of those best financial advisors in the world that will actually help people do that and then that doesn't change because there's a current macroeconomic shift or anything but it obviously changes how much we can invest into that future how fast, how we get there and so forth is affected you know financial advice of computers that save you time and money is as real as it was a year ago yeah, 100% and James Anderson he talked about this earlier on stage about with exponential growth and disruptive technologies is that it's hard to predict when but if you have patience these things will happen so I guess you continue what you do and things will happen and that's fascinating to your point image recognition doesn't work, doesn't work exactly who is Leon and Bianche my kids and can separate them and then you go to like AI chats and you're like doesn't work, doesn't work, doesn't work and then you open chat, open AI a week ago and you're like yes works that's what's so scary and cool about these technologies at the same time no, it's amazing, great and so Tom and Sarah on stage here today presented the report and what's the take is looking at highlights on the numbers is that the European take is more resilient than we maybe would have thought it was do you think given what's happening this year in tech in general in Europe that the fundamentals for Europe to deliver these like big mega companies 100 billion dollar plus companies can really change the world are the conditions changed from before I think in my opinion my impression has been that Europe is fairly well positioned and I think it has to do with um I just feel that when I went to Silicon Valley in 07 first time or 8 or whatever there was this start up vibe there was this like scrappiness this like focus and then as anything that becomes too rich and famous and successful that got lost somewhere on when you were visiting more recently you didn't see that hunger, that interest you know the same kind of drive and ironically more and more commonly you would meet a founder in Silicon Valley but the whole engineering team was in Ukraine and so I just feel that like when I look at companies like Bolt competing with Uber like the dedication to the business of optimizing that that car comes on time like the focus on the business that just in my opinion has been slightly healthier in Europe than on the west coast and I think that is something that we're going to see in the success of European companies well, Europe is the underdog and maybe that will keep us more that's a great place to be I love it Sebastian thank you and hopefully Klarna will be that one of those big defining companies that you have to stick around and wait for it so thank you for being with us and before we leave the stage I just want to present the next session so or we have a video message so one of the themes of the years report is taking Ukraine and the importance for technology for Ukraine's economy so up next is a message from the Minister of Digital Transformation Mikhailov Federal, thank you Greetings from Kiev Over nine months of our brave fight for freedom biggest war since World War II already 4700 cruise missiles targeted Ukrainian cities energy infrastructure and civil people this war is completely different from anything else before it's the most technologically advanced war in human history Ukraine uses tech to stay resilient and efficiently fight back first aid to arm in the world sardines, artificial intelligence tools army of drones and naval drones fleet we do believe that tech will also help us create a safer and brighter future in times of full scale Russian invasion IT business is the only industry able to develop, create jobs and boost Ukrainian economy with taxes paid and investments flows we even say that Ukrainian IT entrepreneurs are defenders of our economic front line one of the goals of the Ministry of Digital Transformation is to make Ukraine the biggest city hub in Eastern Europe and double the share of IT in the GDP of our country in a few years what's our vision to use unique world time experience in security and military sectors and turn it to our main export and expertise our country today is the best test ground not only for the newest defense technologies but also for energy, telecom, fintech, AI and robot solutions in order to become an IT hub state must create a solid and favorable environment for companies and startups to develop for those of you who want to support the growth of our tech sector we ask you and your leaders to join the digital blockade of Russia to follow the example of global big tech companies such as Apple, Google, Microsoft, Amazon Visa, MasterCard and PayPal which have suspended its operation in Russia and focus on working with Ukraine another big opportunity is to test your service or product in Ukraine you will get quite a unique opportunity to develop and scale it nationwide I would like to thank everyone who is investing now in Ukraine companies or considering doing it you are on the light side and this will be our joint victory join and make your input in Ukraine's recovery already today Slava Ukraine Thank you to the Deputy Prime Minister of Ukraine there for those powerful words so we are now on to the final session so we've had Sebastian touch on AI we've had James Anderson talk about digital law so good setup for this final session so one of the wonderful things about set of European tech as a platform is sometimes we like to surface stories about very, very amazing Europeans that you might not know so we're going to go bold, we're going to go big and then we're all going to go home Federico Faggin is one of the most influential inventors alive today in 1971 a few short years after travelling from his native Italy to California for what was supposed to be the Intel 4004 his life but our lives would never be the same the computer on the chip has been likened to the big bang of the digital age Bill Gates called the microprocessor a miracle and his late Microsoft co-founder Paul Allen wrote that Faggin's inventions specifically the much more powerful 8080 introduced in 1974 inspired them to create Microsoft if those first microprocessors were Faggin's only inventions his place in history would be secure but he would also go on to create the world's first touch screen and touch pad at Synaptics, you know, casual and who better to lead this conversation this last conversation of the night than a fellow Intel chip engineer and computer scientist who's gone on to become the COO of the world's leading AI company for our final discussion of the night it is my honour and privilege to welcome to the stage one of the greatest European tech pioneers of our time Federico Faggin and DeepMind's COO please give it up this is awesome, I'm so excited to be here thank you Federico for joining us and thank you Atomico for having us there's so much we could be talking about today so let's get on with it and see how much we can fit in the next 20 minutes you know one of the items highlighted in the report is the contraction of industry when you think about on the heels of the pandemic where we everyone started relying so much more on technology and compute has never been in higher demand than now microprocessors if you zoom into the computers the internet, the computers inside the microprocessor we all as business leaders are so reliant on the work that you helped develop and I know that's especially true in my field and artificial intelligence and how much we rely deep mind on the potential and the power of compute so before we go there and talk about it let's go back in time Federico grew up in northern Italy so let's go back to northern Italy and your childhood passion for planes could you tell us Federico how did that lead to your career journey well I was 11 and I love airplanes I mean how can they fly I couldn't tell and then one day I was in a field playing with the kids and I see a man charging up something and then this model plane flew and I was stunned I mean how can I didn't know that a toy could fly I thought only the big planes could fly so it was a revelation for me to realize that you can actually make a toy that flies and that was you know it was an instant love and a passion I bought myself a book I didn't have enough money to buy much more than a book and I learned how to do that and by 12 I had my first model plane that flew and basically I realized much later that by 12 I had understood the process of invention because I couldn't buy the kits you know where you you're assembled something that is already made for you but I had to first of all imagine the plane and so instead of studying Latin I would draw my model planes that I was going to build then you had to figure out buy the material make the parts assemble them and then enjoy the results so for me you know by the time I was 13 I knew how to create products and that has been a guiding star for me I still build and fly radio control now in model planes that's wonderful I was going to ask you about that actually you know it's and that element of building is interesting because I was as I was preparing for today I learned that you helped build an experimental computer in 1960-61 and it's really where you had to work with transistors and that also wanting to understand how did transistors work and how could you understand that that took you back to go back to school to learn about physics or solid state physics yes that's right and you also described it as your childhood was full of the industrial revolution and agriculture revolution and this building and this wanting to understand how things work really helped lead to the digital revolution industrial information revolution so now let's fast forward to that part of your life you were sent over as mentioned in the introduction from Europe to the United States for a six month rotation it's been a little bit longer yeah it took I'm still on my sixth month time works differently there that was 1968 I was working for SGS Fertial Fertial is the company that developed the planner process which was the first real process that made possible to make integrated circuits for the first time you could make many transistors on the same surface of a slice of silicon single crystal silicon so then you could easily connect them together and you had the integrated circuit so that was 1960 1961 the first integrated circuit was sold in 1962 and I joined Fertial at that time the MOS technology which is what now almost everything is built with that technology was a kind of a Cinderella it was just up and coming and I saw the potential of changing the process the manufacturing process in a radical way using polysilicon for the gate electron instead of using aluminum and I had a number of benefits and I developed at that time the silicon gate technology which was a new way to make integrated circuits which then became the only way to make integrated circuits at that time 95% of all I see used by polar technology which is a different way to make transistors it's really amazing that you were able to develop this new technology of the silicon gate and then you actually had a chance to apply it in a highly complex situation and that actually with Intel so for those who don't know one of the company that birthed a lot of what we now know is silicon valley so then you went into Intel and we have figured out that our Intel connection I was two decades after you and 50,000 employees later working on the Pentium processor but you had the first processor so maybe you can tell us how did you move from working on that gate technology then into Intel and how did you a boy from northern Italy be the person, the inventor of the first microprocessor well it was actually because I did all the pieces I developed the basic technology that made it possible the silicon gate technology when I was 18 and 19 I built a computer and designed 60% of the computer and I had four technicians working for me at Olivetti in Italy then I went to university study physics so now I understood how to make transistors because I wanted to understand how they are made and then I developed the best technology for making that then I wanted to make the most difficult circuit with that technology Intel took that technology from a fair child as they were funded on the technology that I developed and Intel had the project for me they had a project sitting there which was an architecture of making a computer on a chip but nobody knew how to do it so I had all the pieces to be able to do it and it was in 11 months I did it and you have seen the picture before there was that integrated circuit that you saw it was my chip and on the upper right corner there was my initials FF signed like an artist because it was a piece of art which actually we were talking about this earlier you brought a multi-disciplinary approach you had done all of these different parts where and how do you think your European background helped to influence that? Well I think it's this more holistic way in Italy especially we are not as specialized as we are in the US and so people and also we learn more the basics and then we can figure it out by having more solid foundation of math and physics and so on so when I graduated from University of Padua I could do anything I mean I just throw me anything I'll do it because I could find my way through the various technologies that were needed and just do it Well and it's interesting because at Intel you launched many microprocessors Yes all the first fours and you not only introduced these help design and launched the technology but you also pushed business plans Do you want to mention something like that? Basically the 8080 which was the first type performance microprocessor which it was six times more faster than the first 8-bit it took me nine months to convince my management to let me do it not only did I think about it, architected I wanted to do it but it took me nine months for them to actually say okay do it so I did it and then I decided that was enough because we are going to lose the leadership in the market if we keep on losing time because we don't believe in the direction of the microprocessors Intel by the way was started to make memories and they thought the microprocessors were a good way to sell memories but they had not seen the potential of microprocessors and so I pushed management to actually go out with chips that were initially custom designs exclusive for one for a Japanese customer and one for an American customer So again your multi-disciplinary approach and the business opportunity and also the vision that that was the future clearly software has to replace hardware it was too hard to make big systems a new system for a new problem where you can do software much faster it can also change, adapt and so on and so forth so for me it was that way but that was a major risk for me because I was a techie I was not a my father was a professor of philosophy and history and so I did not I did not live in a household where people understood business so for me making this step and becoming an entrepreneur was kind of hard So maybe we can make that you did go from being an entrepreneur inside of Intel and thank you very much because my career would not have been possible if it wasn't for you to being an entrepreneur you left Intel and went to found a company and you started to compete you took compete with Intel at a lower price point and you did pretty well at a better product too of course you did and in fact it's still being manufactured today the Z80 if there are gray hairs probably some people here have used the Z80 how many people know about the Z80 how many people played on a Pac-Man machine on a on a spectrum X-X okay few anyway the Z80 was a very very successful product introduced in 1976 and it's still in high volume production today so it's amazing you know mostly it's a part of the system of the chip but it's still so we're talking about the challenges of year to year and here is an entrepreneur who after a few days later his product is still in mass production how was it being a founder and in fact it wasn't they mentioned in the beginning it wasn't the only company you founded you went on to synaptics I found three companies so how was it being a founder and maybe you can talk a little bit about shifting from that entrepreneur to an entrepreneur it was intoxicating it was hard and I got the most growth, personal growth out of that because you know when you develop a product or you are a technologist you solve problems which are solvable because you can logically get to the solution but when you have to decide whether you make a product or not you have to use your intuition because you don't know what the market is going to be three, four, five years from now so how do you make that decision so you have to you have to change gear and I realize that I always had intuition in fact inventors invent because they are intuitive they invent because they they can see they can see something completely and then you got to do it you got to build it but you had to have division first if you don't have division first what are you going to do no so learning to trust my intuition and learning to trust my gut those were absolutely the most important steps that I made and they led me to now study consciousness which is a completely different beast and I love it I really love it you seem to have always challenged yourself to learn more along the way so I want to maybe you can tell us a little bit as a being founder I also was reading an interview with you and where you mentioned it also was the challenge of being a founder so what was harder the people or the technology well by far the people by far the people in learning how to build a solid culture in a company I really succeeded in my third company to really create a strong culture a culture that allows people to get the basics of what it means to continue to innovate not just the first product or maybe the second but continuously innovate renew yourself rethink what you're doing and the third company which is Synaptics is a very successful company the other two were successful but not nearly as much as my third one because I understood how to build a culture and I understood that because I had to build in a way build my capacity to understand over the years and Synaptics maybe you could can you was mentioned in the beginning that it was about touchscreens and did you know that that technology did it no touch pads first and did you have any idea how the microprocessor how the Z80 your work at Intel the Z8 and Xilog how touch pads would influence the world today well yeah but not to the extent that they did I think you know for example the touch pad for example you know we had we the first idea was there was a problem what is the problem the track ball if you use the early laptops you know to point on the screen you use a little ball that you would move with your fingers the fingers always have little grease so after a little while the ball is greased up and it slips through the little wheels that they had to make to rotate so you move the ball and the and the cursor zip through and so you have to open it up clean it with alcohol and go back to work and that's really a mess so I challenged our best engineers to come up with a solid state solution so I started meeting with them once a week sometimes even twice a week to brainstorm how to build a solution to this problem and within two months we had invented the touch pad and the touch screen you know just how to do it the whole thing and then of course was doing it which took another year and a half but the basic conception was done at that time the touch screen clearly was a solution looking for a problem and then about 2000, 2001 I wanted to have a sample of a touch screen and go to different companies, telephone companies cell phone companies showing the touch screen so if you use the touch screen you can have more flexibility you can avoid having a keyboard and the whole thing is screen they were laughing at us Nokia, Motorola RIM they were so proud of their keyboards I mean our keyboards are so good what do you want to replace it with this thing yes and then we ended up at Apple we showed the thing they say yeah we like it but we want the exclusivity so I'd say no right and Apple did their own in 2007 the iPhone came out and when it came out I said that's it we got we are second source of the rest of the world and so the company at that time was about 300 million dollars sales a year and then within five years we were at 700 million so because we were supplying touch screen to everybody else that's awesome and I think it also shows your kind of courage to say no when you needed to say no we would have been killed so I only have time for unfortunately one more one last question so maybe I'll pick off the last story that you told us which is you've done so much everyone here owes you so much for what you have enabled in our companies and our lives I wonder if you could go back from your information revolution pioneering work that you've done back to that child childhood time you teleport back to northern Italy to your 12 year old self what would you say Atta boy wonderful I think there's no way better to end that Atta boy thank you for your courage for your pioneering work for willing to take risks for embracing the failure and the learning along the way for role modeling leadership is a bout of continuous learning in yourself investing in yourself your teams your culture and for making so much of today's world possible you have brought the future closer to all of us Atta boy thank you what a positive note to end on and thank you also to Federico for flying all the way from Silicon Valley six days after his 80th birthday to share his story with all of you can we get one more round of applause so thank you all for giving us your time this afternoon thank you you've made the first dedicated in person State of European Tech launch a truly memorable occasion and thank you to the tireless efforts of the very small teams you'd be surprised how small at Atomico, at DPDK at Militant Partners who have worked behind the scenes for the past quarter slash half a year to bring this report to life for those of you who want to go deeper into the data as we said earlier please visit the website at atomico.com or just snap there it is and remember as Peter Drucker said the best way to predict the future is to create it so see you all in the future thank you