 Thank you for joining me on stage, Rebecca, Alice, and Rebecca. It's a pleasure and an honor to be here with you all three. We're here to talk about the shifting funding landscape, as the introduction said, and what's been driving this has been a recent run of record-breaking years in venture capital, and I thought it might be interesting to share some quick facts. 2018 is no exception to the record role. Here in Europe, we're on track to see some 23 billion going into startups this year that's up from 20 billion last year and four times the amount that went in in 2013. Impressive numbers. In the U.S., we've seen a fair bit as well, about 100 billion this year if we stay on pacing and that year isn't done yet. Along with more money going in, one of the other really interesting characteristics is that the size of rounds are getting larger, and here is an example from Europe. The size of the 50 million plus growth rounds going into companies is up seven times in the last four or five years, and with all of this abundance of capital, we've seen an amazing amount of innovation, and this panel here is here to discuss it, and we have everything from Entrepreneur First, which helps to create and promote entrepreneurship to funders of companies from the early stages all the way up to growth, and with that, we'll dive in. So I'm going to start and ask each of you to speak about how your firms have responded to the amount of innovation and ecosystem expansion over the last five years. Have you done anything differently or maybe not? Rebecca, do you want to start us off? So in terms of innovation and the expansion of the ecosystem, I think for us, we focus on series A and B, and what we have seen as I think you've seen over here is just this massive proliferation of seed and A stage firms, and people who are historically really great may or may not be kind of in the future, and so what we're always trying to do is replenish our relationships and sort of keep track of who those new seed and early stage investors are that we think are really doing a great job, and keep relationships with them so that we can come in and be partners potentially on the A or the B rounds a little bit later. Alice? So at Entrepreneur First, we take a slightly different model of investing, and we see ourselves as talent investors, and I suppose as you see the seed ecosystem expand and get more busy, we really think about what happens before seed, pre-seed capital, and so one of the things that we do is we invest in individuals before they have a team and before they have an idea, so really at the very earliest stage, you could really put money behind people, and I think in ecosystems, particularly outside of somewhere like Silicon Valley, so in Europe and in Asia, where maybe it's not as typical to think about finding a startup, and there are some structural barriers around finding a potential co-founder, around knowing what a good idea looks like, EF really is there to solve that problem, so really to try and bring more people into entrepreneurship, highly talented in particular technologists, and put money behind them at the very, very earliest stage. Adventures, our fund breaks into two pieces. The core of it is a early stage, series seed and series A firm, and then we have an opportunity fund that focuses a little bit later. I think in the last five years, what we've specifically done is make a conscious decision to not change the model, and to see the influx of all of this capital into the industry and the rise of these mega funds, and to look at how that plays with our portfolio and the impact it has, and say we want to stick to our knitting, and we want to stay focused on the stages we're focused on, but also not raise the size of the fund, and we really did that for two reasons. One, and probably the biggest is it's the stage and the style that the team around the table likes to do, that enjoys and thinks that early stage in these size checks is a meaningful part of the market that will last despite cycles and has fun with it. The second is we think there's actually an opportunity because as the mega funds come in, it becomes about what you don't do, right? You're such a big fund that you have to be in the majority of those winning companies to return the kind of capital we're talking about. When you have a smaller fund and you stick to that strategy, it can be about what you do do rather than what you don't do, and we made a very conscious decision that that's really where we want to play. Excellent. Are there some other innovations you've seen in the market that you look at and maybe benefit from, or maybe advise your entrepreneurs to look at last things like staying private longer because of the mega rounds, or maybe leveraging some of the scout funds in the system, or what else have we talked about before? You're saying how you have chosen to do some of the entrepreneurship encouragement. Are there other areas where you've had to advise your entrepreneurs to maybe not take larger rounds, things like that? So saying there's so many different innovations out there. Have you seen any of them work less well for your entrepreneurs? Maybe some of larger rounds have been offered to them and they've got it to not do it. But it's not really something new. It's when these huge funds often come with a lot of strings attached. And so what works less well for entrepreneurs is really going after incredibly high valuations with large, large dollars because oftentimes that comes with strings. And so what I always advise entrepreneurs to do is really think about the long-term play here and the long-term vision and what you want to accomplish and be very careful when you take a very high valuation to make sure that that's a clean term sheet. And the way you accomplish that is getting, of course, a couple of term sheets to basically perfect those terms. So that is one thing that has come in with a large amount of capitals. We're seeing a lot more structure come back on those rounds. I think, you know, I agree with that. I also think that we've seen this shift in a lot of categories of innovation from when network effects was a core differentiation, right? And that doesn't require huge balance sheets, generally, in early days, to when there's a category of companies where the prime differentiation and the defensibility is around the balance sheet. It's that they've outraised their competitors and so they have this runway that in theory their competitors don't have to execute on. That's a specific kind of business and it requires the ability to always raise that kind of money ahead of the market. And so we've just tried to advise those entrepreneurs that that strategy seems to be working, but you have to be very conscious of where you are in a cycle with that. Because a lot of the money that's coming into those rounds often has been historically the kind of money that when the market turns is the quickest to leave. And that's a different dynamic than some founders today are really accustomed to. Yeah, well, it's been an extended bull run, which we'll talk about in a little bit if that changes. But I want to flip quickly back to the other side and what we're seeing entrepreneurs do differently when they're looking for new capital. Sort of where entrepreneur first plays or scout funds. And maybe Alice, you and I were talking backstage about some of the other innovations you're seeing. When do you want to speak about that a bit? Yeah, sure. So this idea of investing in individuals is really beginning to pick up speed and pick up traction. And I think it very it's very particular to ecosystems such as Europe where we need to put infrastructure and funding behind individuals are very, very early stage to even enable them to get into entrepreneurship. One of the innovations that we came up with was providing capital to individuals and using that to give us an option to invest in any company that they might create. So giving a living stipend, so 2000 euros a month for a couple of months to give them the opportunity to even come up with an idea and develop a team and get some form of traction. I mean, we invest insanely early. We invest in companies that are 14 weeks old. So one four weeks old. So very, very young. There's really not very much there. And that means that still at that stage, you're investing in the individuals, you're investing in the team rather than anything they might have produced. And we're beginning to see some really interesting things and innovations around how you invest in individuals, such as income sharing agreements where you're basically taking equity in an individual and getting some share of any income they might generate in their life. But I think it's one of those growth spaces that we are going to see continuing sort of experiment and innovate over the next couple of years. And I think it's particularly important for ecosystem such as Europe. So you're investing pre-entrepreneur almost before the pre-seed. Basically, there's not much there when we invest just a super talented, super talented individual. That's excellent. Speaking of things that are now possible, innovations, maybe there's other areas of investing that your firms are doing that you might not have done five years ago. And because people are able to try new things, you're looking at, are there any areas you could give examples of, of deals you've done that you might not have done five years ago because the frontier tech, the deep tech, some of these areas just really weren't being pushed into or if you haven't done them areas or trends you're watching and could consider doing. Yeah. I mean, I personally have always loved like frontier tech and deep tech. When I was a chemical engineer in my undergraduate and I worked at like a nuclear research reactor and it was a research reactor. So we had all of the cool, fun, you know, NASA O-rings and space crystals and all that. So I had a little bit of latitude the past few years and was actually, I've done one deal that I think maybe we wouldn't have done 10 years ago and that's Luminar and that's in the LiDAR space. And they actually are the gold standard for LiDAR and have, you know, deals with most of the car makers and the OEMs out there. But it is something that, you know, is technologies allowing to exist now and they are full stack as well as hardware. So it is one that probably wouldn't have historically fit what we did. I think for us, probably the most concrete example is the blockchain and the emergence of a decentralization thesis at USV and the need for something to kind of counteract the centralizing force of the web right now. That's probably the most concrete that we've invested behind so far. I think in terms of some of the frontier technologies, which you may or may not kind of count that in. I think crypto might count. Counts? Okay. That was so last decade. You know, but when you talk about some of the other ones, I think the way we look at that is the intersection of the technology quality with the market mindset. And so I think we're less likely to invest just when the technology is there and wait, instead we'll wait for that intersection when we think there's this curve in the market where that adoption looks like it might be beginning. Interesting. Well, I want to shift and talk a little bit about to the comment we made before about it's been a nine-year bull run. Things might change. And you started to talk about this already a bit when, if things do change, we get into a down part of the cycle. Where do you see as the most vulnerable points? You mentioned some of the endless growth capital might not be as prevalent. Are there other areas that you think might be the first areas to shift either in certain types of funding instruments or certain areas of technology as guidance to the entrepreneurs here and what they can think about? Yeah, I mean, we saw the inversion of the yield curve what, two days ago? So we're seeing that the Dow suffer, you know, a lot. And so I mean, I we've had this for nine years and I think this is the sort of the beginning of at least a slide in terms of what we're seeing. And so the question is, you know, the money is there and it kind of moves around into different markets. And so right now it's in venture when it has other options and to get a return, like where does it move out of? And so what happens historically is that those later stage funds that weren't traditionally in venture, you see those people kind of exit first, right? And maybe back in public markets or back in other areas. And then what you see is you see the earlier stage funds and having to continue to support these companies to Rebecca's point are accustomed to endless capital, right? And you see that happening. So even though everyone's like, oh, there's so much money in venture, it freezes really quickly. So I've seen two cycles now once at a startup that went public back in the early 2000s and then once as a venture investor in 08. And we actually raised our fund right after Lehman crashed, right? So had raised, you know, all but two million of it before then. So it was a fabulous time to be investing. No joke. It actually was a really good time for new investments. So but and back then there was tons of money too, right? So that argument doesn't really hold because what happens is that money gets spent supporting those current companies and not really on new. And so you're kind of hurt ironically at two ends. You're hurt at the later stage end because that money has sort of left the arena. And then you're hurt on the early stage end because those investors that would have traditionally done that a round are now supporting those companies later than potentially they would have had to. And so it's a little bit of a barbell issue. It typically is what you have seen historically. Yeah, I mean, I think I agree with all of that. And I also think fundamentally what the market has valued might shift. You know, profitability largely has become a word for meaning not growing fast enough. And generally perspective on that adjusts when the funding market change. The role of fundamental unit economics. Really this role of growth at all costs and what it means to value growth. I think I don't think it goes away. I think startups in any ecosystem in any time frame are about high growth and kind of beating curves. But what that means and at what expense I think, you know, evolves largely because a changing market can reveal the gap between what late stage funding in a bull market values versus what M&A values. And it may be that they value quite different things and that kind of gets obfuscated during a bull market and clarified during a bear market. Yeah. And Alice, I have to ask, how are you feeling about the potential changes that Brexit may or may not? We don't know where it's going to go. But how are you thinking about that? I mean, Brexit from a personal perspective is very sad. But I think it's been a really interesting time for British and European VC more generally. We've never seen so much money within European VC and not only that, the quality of the cash that's coming in and the quality of the new VCs that are coming through, particularly in London, Paris and Berlin. And means that I think Europe as a whole feels pretty robust at the moment. I think Britain and London in particular will whether the storm that Brexit throws at it. If you look at all of the numbers around British VC at the moment, everything is still looking pretty good. The amount of capital that's going into startups, the number of startups that are being created. And most importantly, the number of individuals that are still emigrating to the UK and choosing that as the place to start their company or start their career in tech hasn't changed post Brexit. So we're still very bullish on the UK. We've just also opened offices in Berlin and Paris. And I think we are beginning to see that sort of coming together of the European VC ecosystem so that you're not just you can't now just be a London VC or just a Parisian VC. You really do need to be looking at the whole of Europe together. Excellent. And picking up on the, we're talking about immigration and other forms of regulation. Can we speak for a moment about your experience with regulation and the tech world and maybe it's been positive. Maybe there's times where regulation has enabled more innovation or investment at least or other times where possibly it's been a little bit more of a decelerator for business. So I personally, I'm actually an attorney also and I love the regulated spaces because when you look at some of the biggest companies that have been created in the last decade, when you look at whether it's Airbnb or Uber or Skype or PayPal or Lending Club which we were in, they were, they're all in, well in hindsight we say they were in the gray area but they were, none of them were in the gray area. They were pretty much in the red area and work their way to gray and then work their way to the good side of it, right? And so I think the thing that perhaps with a couple of exceptions, probably Uber the most, the biggest exception that makes the difference is how the regulators are approached. So do you work respectfully with the regulators? Do you get ahead of the issue or are you combative? And I would say the majority of the combative companies that have taken the combative stance are not in that list that I just mentioned but maybe you're in those same spaces, right? So I actually really like companies that take that regulation on because it's a lot and it creates opportunity and usually it's because regulation is behind what a trend is. Regulation was created in a time when that need or that ability didn't exist and so the regulation didn't really account for it. And so you have, because of that regulations naturally lag and so if it's really cutting edge and edge tech and it's a new trend, it's almost natural that it's going to hit a regulatory issue. And then the question I have is well how do you deal with it? You know are you combative or do you deal with the regulators proactively? And my preference and my data set is that it's better to be proactive on that front and bring the regulators kind of along with you so that you're the poster child for the good not the bad. Yeah, I mean I think, you know, a different angle to the same question. I think if you look at the last somewhere between 2015 and 20 years of innovation, it's been a lot about building out the fundamental networks on the web. And those have created unprecedented scale and access and tools to kind of bring people together and the question now is what can they be leveraged for and what kind of access do they provide? And when you look at those opportunities and something we're really focused on at USV, a lot of that goes to the meaty regulated old school, kind of ugly, hard to crack industries, financial services, healthcare, education. But we've now built the rails. And so when you think about kind of this era of second order change, even though there's some difficulties to those categories and you have to approach them and the regulators in the right way, they may be the biggest buckets of opportunity. And we may be really timely in approaching them. So they're categories that we're really excited about. Alice in the entrepreneur first classes, have you seen certain areas like this come up where people are going with the regulation or potentially innovating around the edges? So this was an interesting example in London that's worked incredibly well is the financial conduct authority, which is the main finance regulator, has created a kind of sandbox system that allows very early fintech companies to both speak directly with somebody at the regulator and then also have their regulation fast track to some extent. And we've found that's been a really, really useful kind of innovation within the system. And I think it's been part of what's allowed so many fintech companies to come out of London. I suppose thinking more widely about sort of regulation and government response to entrepreneurship, for us the big thing is still around immigration. So if you look at any of our offices, whether it's London or Berlin or Paris, the majority of people that we're working with are immigrants to that city. Often they might have come through an educational institution, a university in that city. But I think the free flow of talent, particularly around Europe, is still one of the things that makes Europe really, really great. Excellent. So when we're talking about entrepreneurs and we're thinking if we put ourselves in the entrepreneurial shoes, do you think it should matter to them who they take money from? I mean, the world might change, but right now there seems to be a fair bit of it in different forms and different structures. What's the guidance that you give folks? And I realize this is an open question, so please take it to how it's useful. Yeah, look, I think there are entrepreneurs in a situation of we simply need money, right? And that's the majority of entrepreneurs starting businesses is ridiculously hard. Having choices about where capital comes from is a luxury often. And so sometimes you're in survival mode and then you do what you're going to do. However, when there are choices or when there could be choices, when you could be thinking about a situation in a different way, yeah, I think it's super important, especially going into a time of less predictability, because likely businesses will need more money, likely macro economic functions affect the course of your business, either because they affect your consumers behavior, or they affect what that cost of future capital is going to be for you, all kinds of different things. And having a partner who's more likely to be a long term partner and advocate and understand those cycles versus a partner who's more likely to redirect their capital elsewhere as a market shifts can really be the make or break thing in those times. Yeah, I completely agree with Rebecca and I'll just add to that. The other thing too is in addition to the capital piece of it, make sure that I actually think when you do have choices, it's really important to make sure you and your investor are just philosophically aligned, right? Because it's sort of like you walk into a casino and they're the five dollar tables and they're the thousand dollar tables and the high roller lounge, right? And some investors are like, go big or go home, growth at any cost. We don't care about unit economics, just go, go, go. And the challenge sometimes, but those investors, is when the market does shift or the company does have a hiccup, they've advised you to do those things and then they shift and as soon as those goals aren't met and look at something else, right? There are other investors that are more focused on, I would say, unit economics from the beginning, network effects from the beginning. How do we shore up those fundamentals of the business to where we get it, kind of the model, right? And then we pour cash in to grow at that direction, right? And I would say those are two very different philosophies and investors and entrepreneurs tend to be in one camp or the other most of the time. And so I would make sure that you line up with what the philosophy is of the investor to make sure you're on the same page because there are two different ways to do things. They've both been successful and it saves a lot of frustration if you make sure that you're lined up with what that growth strategy is. And there are many other examples of philosophical difference, that's just one. But I think it's really worthwhile to make sure that philosophically you guys are in the same, you're at the same table. I think one question you can ask around that, that it's almost surprising more entrepreneurs don't ask is how does your fund handle reserves for my company? Yes. Most entrepreneurs don't ask that, but it's a really important question particularly in these kind of cycles. So that's one thing that maybe we'll see a rise I think raise about. And to your point on cycle, it's how do your firm handle reserves in the last cycle, right? Not your firm has been around for three years and how have you handled it for the last three years, right? Because that's somewhat irrelevant. It's how did you handle it back in 09, 2010, right? How did you react to that situation? Because what has happened in the last three to five years I don't think is indicative of what we're going to go into in the next three to five years. And how people react in more stressful times is often very different than how people react when everything is up and to the right. So I totally agree. I think one of the sort of impacts of where we are in the cycle is that I think it has meant that there has been, particularly from European VCs, I don't know what it's like in the US, encouragement to spend and not necessarily a huge amount of discipline around how companies spend. And I think if I was an entrepreneur right now and fundraising, I would be thinking very carefully about how I spend that capital and thinking very carefully particularly that early stage of getting to product market fit before I start spending on big ticket items, whether it's the big hires, whether it's pumping money into marketing. But I think because we have had such a sort of positive market for the last couple of years, that kind of level of discipline doesn't seem to be prevalent at the moment. We have about 10 seconds left. Any last pieces of advice? Because this has been wonderful. Anything, anything else? Thank you for having us. Thank you for adding on your point, like people who made it through this last cycle were often the people that had the cash to get through it. Yeah. And so it depends where you believe, but just on your point, like being smart about where you spend that capital before you really pour in money and like spend it to grow. I'm knowing that you have the model right first. I would, I think that's key. Fantastic. Well, thank you very much. Thank you. Thank you.