How Europe’s Visionaries Are Using AI to Disrupt Industrial Tech
- Jörn Menninger
- May 15
- 39 min read
Executive Summary - AI in Industrial Tech
In this episode of Startuprad.io, Marton Sarkadi Nagy, Partner at VC Fund Visionaries Club, joins us to break down how Europe’s unique industrial DNA is becoming the perfect proving ground for disruptive AI solutions. This article dives into why traditional SaaS is on the verge of transformation, how “radical accountability” shapes winning startup cultures, and what makes Europe poised to lead in applied AI.
If you're a startup founder, tech executive, or investor targeting legacy sectors — especially in the DACH region — this is your guide to understanding the next frontier in industrial tech innovation.
Table of Contents
🚀 Meet Our Sponsor
Managing finances as a freelancer or small business owner can be overwhelming – but it doesn’t have to be.
With Tide’s free business account, you get everything you need in one place: send invoices, track expenses, and handle taxes with smart tools built to save you time and stress. Plus, when you sign up with the code STARTUPRADIO, you’ll get €200 cashback after spending €500 as a sole trader, or €400 after €1,000 as a registered business.
Don’t miss out – sign up now at tide.co/Podcastsde – use code STARTUPRADIO
Why Visionaries Club Backs Industrial Tech Innovation
What makes Visionaries Club different from other VC firms?
Visionaries Club’s LP base includes 30+ unicorn founders and legacy industrialists — a rare blend of digital-first entrepreneurs and family-owned manufacturing giants. This allows the firm to foster real-world impact by investing in applied AI and B2B SaaS solutions that target legacy sectors like logistics, procurement, and manufacturing.
“The single biggest leverage we bring to founders is connecting them with the right people — whether customers, partners, or operators — across our network,” says Marton.
Their €600M+ AUM enables targeted early-stage investing in companies tackling Europe’s “oil economy” inefficiencies using AI, making them a key player in driving industrial tech innovation.
What Is Radical Accountability in Startups?
How do high-performing startups maintain a culture of ownership and speed?
Radical accountability means every team member owns their output. It's a mindset, not a metric — championed by Marton and inspired by Ray Dalio’s radical transparency.
🔍 Featured Snippet Optimized Answer:Radical accountability is a startup culture in which individuals take full ownership of their output. It emphasizes execution over ideas, enabling teams to scale faster and avoid chaos during hypergrowth.
This philosophy shaped Visionaries Club’s team and how they advise founders during crisis moments. It's especially critical in seed-stage companies building operational muscle.
How Will AI Transform Legacy Industries in Europe?
Why is SaaS 1.0 dead — and what comes next?
Marton sees the coming wave of AI as a disruptor to traditional SaaS. “Back-office work like procurement, quoting, or insurance processing is going to be fully automated,” he explains.
Unlike rigid ERP systems like SAP, AI-driven agents will:
Adapt workflows dynamically
Handle schema migration
Integrate with legacy systems
Manage entire processes autonomously
🧠 Think: Agentic AI meets enterprise complexity — the perfect storm for scalable innovation in industries ripe for digital overhaul.
Why Europe Will Lead in the AI Application Layer
What advantages does Europe have in applied AI?
🧠 Deep talent pool: Europe doesn’t have a talent problem — it has context.
🏗️ Legacy infrastructure: Old ERP systems present a massive upgrade opportunity.
🕹️ Lock-in reduction: AI enables faster data integration and migration from incumbents.
Europe’s opportunity lies in building AI-enabled challengers that combine contextual understanding of industry-specific workflows with technological flexibility. This gives European startups a unique advantage in the application layer of AI.
What Defines a Genre-Defining Founder?
How does Visionaries Club evaluate exceptional founders?
Their mental model includes:
⏱️ Timing/Urgency: Do they act fast and decisively?
💪 Grit/Power: Do they push through setbacks?
🎯 Accuracy: Can they prioritize and simplify problems?
A bonus metric? “If you feel like you’re wasting their time in a meeting — they’re probably elite,” Marton jokes.
They also look for:
Product obsession (personal or professional)
Field-specific insights (e.g., procurement, cybersecurity, construction)
These founders often come from non-traditional backgrounds but share one thing: extreme ownership and clarity of thought.
Painkiller vs. Vitamin: What Startups Should Build
Why do some obvious B2B tools fail to sell, despite ROI?
A “painkiller” solves a mission-critical problem. A “vitamin” is nice to have.
Examples:
✅ Stripe = painkiller (you don’t get paid without it)
✅ AI-based sales agent = painkiller (increases revenue, saves time)
❌ Generic process automation = vitamin (hard to justify upfront investment)
Founders should test whether their solution:
Increases revenue
Decreases costs
Is mission-critical to operate
Marton notes: “Even great tech doesn’t sell if the customer doesn’t prioritize the pain.”
🎥 Multimedia and Subscriptions
🎥 The Video PodcastWill go live on May 15h 2025. Available earlier for Startuprad.io channel members.
🎧 The Audio Podcast
You can subscribe to our podcasts here. Find our podcast on your favorite podcasting app or platform. Here are some of the links to subscribe.
🔗 Connect with Startuprad.io
📬 Work with us: partnerships@startuprad.io
📰 Subscribe: https://linktr.ee/startupradio
📣 Give us feedback: https://forms.gle/SrcGUpycu26fvMFE9
👤 Follow our founder: Jörn Menninger on LinkedIn
👨💼 About the Author
Jörn “Joe” Menninger is the founder and host of Startuprad.io — one of Europe’s top startup podcasts that scored as a global Top 20 Podcast in Entrepreneurship. He’s been featured in Forbes, Tech.eu, Geektime, and more for his insights into startups, venture capital, and innovation. With over 15 years of experience in management consulting, digital strategy, and startup scouting, Joe works at the intersection of tech, entrepreneurship, and business transformation—helping founders, investors, and corporates turn bold ideas into real-world impact.Follow his work on LinkedIn
📣 Call to Action
Leave a review, share this post, and let us know your thoughts in the comments!Subscribe to Startuprad.io and be the first to catch the next wave of startup intelligence.
© All rights reserved — Startuprad.io™
🧠Automated Transcript
Narrator Dorsey Jackson [00:00:05]:
Welcome to startuprad.io, your podcast and YouTube blog covering the German startup scene with news, interviews, and live events.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:00:20]:
Hello, and welcome, everybody. This is Joe from startuprate.ao, your startup podcast and YouTube blog from Germany, Austria, and Switzerland. And today, I do have Martin here with me. Hey. How are you doing?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:00:31]:
Hi. Great to be here.
Jörn Menninger [00:00:33]:
Totally my pleasure. I usually give a little introduction, about the guests that I do have here. And we may tell our audience upfront, you are not per se an entrepreneur, but you're working on the investment side. You are with Visionaries VCs. You're based in Berlin. And you have been the former growth lead at TIER during a hypergrowth phase. I think you have one or two stories to tell from this time. You also have been a competitive athlete.
Jörn Menninger [00:01:09]:
I'm I'm sure we'll also talk about that. Plus you specialize in BA SaaS, AI cybersecurity and deep tech where you're exactly at the right place here at Startuprate.io. You have a strong belief in operational experience and radical accountability in VC. We'll talk about that, I think. And you lead investments that solve real world industrial problems via applied AI. I I also, I also gotta got some names here of investments, not you personally did, but visionaries, including Lovable, the unicorn Personio, Myro, Pigment, Tecto, Apron, Choco, Pivot, and Central. And, of course, we link down here in the, in the show notes, the interview with Central. That was already a lot.
Jörn Menninger [00:02:06]:
Take a deep breath. So let's talk a little bit about your journey and your vision. How did your time at TIR, for everybody that that's one of the e scooter companies, the hypergrowth e scooter companies during its hypergrowth phase influence your approach as an investor?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:02:26]:
Yeah. That's a great question, Jern. Just for background, I was with TIER pretty much from its pre seed stage until through series b, which meant that within a very short period of time, within one year, we went from zero to 400 people, reached a hundred million annual revenues, and similar number on the funding side, which I always refer to as a little bit of a positively chaotic scaling journey because there was a lot of positive elements and there was also a lot of chaos. And one thing that was definitely very, very clear, in that short period of but very intense time is that the people you work with really, really define of what you can achieve. And exceptional talent will find a way to own the outcome and really build something that will move the needle in some context. And this is one really interesting conversation we always have with founders that are building very early stage teams, especially investing in precede and seed, is that who you should hire and how do you know that person actually performs well. Did you hire the right person for the right role? Yes or not? And if somebody's underperforming, is it because they are not, doing the right responsibilities or not in charge of the right responsibilities? Or whether whether, ultimately, it's just not a fit for the company. And one key learning that really, really shapes the way that we are trying to work together with founders is this perspective of how we look at talent and, ultimately, how you can hire the type of people who you can use as Swiss Army knives in very different situations.
Jörn Menninger [00:04:08]:
Mhmm. And just to be clear, the the those people, Swiss army knives, they don't necessarily need to come from just a handful of really big Berlin based startups or a handful from consult of consultancies. Right?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:04:22]:
Absolutely not. These type of people can come from pretty much any types of backgrounds. Very often, in the majority of the cases, they have at least some level of unconventionality in their life story, which doesn't mean that, you know, they went to some I believe tools. But very often, they might end up coding in their parents' basement at the age of 12 and just cannot stop reading books about building things. And and I think that's something that just comes up again and again, with these people.
Jörn Menninger [00:04:59]:
I assume you had quite a lot of fun at here, but what motivated you to to to be to become really from an operator turned into an VC. The did did you think at the beginning it was more relaxed job? And and how did you end up at Visionaries Club?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:05:21]:
Yeah. It was not a very conscious decision at all. When I was with Tia, I had a friend who was running Entrepreneur First's, batch in Berlin, and we went into a couple of conversations. And, we were talking about when I personally thrive the most. And I also realized in that conversation, which I didn't know about myself, is that I thrive the most the more I look outside of my regular day to day environment, so to say. And I think there are different types of people here. I definitely fall into the camp of really thriving on in environments where I get new impulses, not just from a topic perspective, but also individual's perspective. And then that friend of mine told me, hey.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:06:12]:
I actually do have have two friends who are actually founders, former founders, and they are launching a fund. And it sounds like that since they are building this venture fund from scratch and you get to spend your entire day speaking to people who are thinking how the future should look like in a different way, changed by technology, sounds like a very good intersection of your operator DNA, building something, actually, as in a venture fund. So being kind of like an entrepreneur in BC and also being able to have this very outward looking, way of working. And, I pretty much just took that introduction, not expecting too much. And I think a lot of things resonated with me. And the things that came together, the different DNAs of Visionaries Club, made me very excited. And that's where I have been in the last six years.
Jörn Menninger [00:07:08]:
You often speak about radical accountability. What does this mean when you work with founders? For example, let's let's think, I'm one of your investments and currently it's not going well. What what would you expect in terms of radical accountability?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:07:29]:
Radical accountability is a pretty broad term, I would say. And definitely don't only use it in the relationship of VC to founder, but also the other way around. And this is something that we also, most importantly, encourage founders that we back use within their own environment, so to say. Radical accountability is a little bit of a tolerant term, I would say, from radical transparency from Ray Dalio, switching the word out, transparency into accountability. But it's very simply put, radical accountability means that especially in environments where there's a lot of change and just as I told you at tier, there is a lot of chaos. The one thing that you can only go back to and always can go back to is owning output. And that's really what radical accountability means because everybody has ideas. Everybody has comments about how things should be done.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:08:31]:
But the what really differentiates the top 0.01% of startups from the rest is that this sense of radical accountability, it's pretty much soaked into the culture of how people think and get stuff done. And this is something that pretty much everybody is accountable both on a positive and rather consequential negative side when things are either executed very properly or not executed properly.
Jörn Menninger [00:08:58]:
We're now going a little bit into market insights and your investment thesis. And we may tell, tell our audience because I do believe most of our audience are founders and they somehow have an idea they had heard Visioners Club before. But we should tell them that you're around the data that I found around 600,000,000 assets under management. Your last fund was, I do believe, in 2022, '4 hundred million?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:09:28]:
That's correct.
Jörn Menninger [00:09:29]:
Yes. And so you you're one of the bigger VCs and therefore, it is of interest to me. But some of the things that first stood out is that you guys have a very unique base with limited partners. For everybody who's not familiar with the term, it's basically the institutions, the people who give you the money to invest them as VC, legacy industrialists, and modern digital in entrepreneurs. How does that shape your portfolio strategy? Because it it it sounds like you have two magnetic poles and they always pull you in different directions.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:10:11]:
Yes. Happy to give you a little bit of background because I do think that this will help, also scope the conversation a little bit. And just want to tell you and the listeners a little bit about the origin of Visionaries Club. So we have been around for some six years, and one very important theme that we have all across the investment team is that everybody is a former operator or founder, pretty much really everybody in the investment team. And this is something that we really wanted to incorporate into the very DNA of how we set up the fund ultimately. And back then when we set up the first fund generation, one very important decision we made was, as you said, that we only raise capital from entrepreneurs that we know well. And if you look at who these entrepreneurs are, as you mentioned, it's two very different group of individuals, but it's always the private people behind these, companies. But on the one hand, we have a collection of some 30 unicorn founders.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:11:07]:
If you look at, at, for example, Andre from Miro or Daniel from UiPath from Eastern Europe, Erika from Supercell or Miki from both from The Nordics. If you look at fintech, for example, Peter from Adrian, Guillaume from checkout.com, but also a lot of, DACH entrepreneurs such as GetYourGuide, FlixBus, HelloFresh, Autohaines, who built these very successful hyperscaling tech companies. And as you mentioned on the completely other side, we have this collection of family business entrepreneurs who are little bit less conventional entrepreneurs because they didn't start these companies themselves. Right? They inherited these multi decade old family businesses from the what we call oil economy, or industrial economy that have been operating pretty much offline for a couple of decades, very often in manufacturing, logistics, distribution, wholesale. And what's really interesting about them and about Europe specifically is that 80% of the European economy is owned by family businesses. So when we were thinking about bringing this entrepreneurial DNA into how we build the fund, we felt that if we look into the next decade and we look at the intersection of what we have to work with in the European economy, and one technology can bring an unlock, this is really the intersection that we are looking into. This very digital first entrepreneurs and this very nondigital entrepreneurs who are incredibly important of how we think about the economy. So this is how we really bring this group of people together.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:12:26]:
And over over the last couple of years, we scaled this one to some 600,000,000. And, ultimately, if I really want to sum it up in one sentence, the single biggest leverage that we bring into the relationship we have with our founders at the back is that we bring in these people and really connect the founders that we back with the right people at the right time across all this network. This can be about potential customer introductions. This can be about integration partners hiring go to market. But based on our experience, instead of coming in with a high level VC advice, just take a step back and really execute on those introductions that are strategically important. Mhmm.
Jörn Menninger [00:13:05]:
Mhmm. I also do have a theory. Maybe, maybe you also have opinion on that, because I I'm now doing startup interviews with the project in Germany that I did before since, let's say, thirteen years. And over time, I've seen a lot of entrepreneurs maturing, getting bigger businesses, and so on and so forth. And when they're running the company for long enough, there is barely a difference between those people and the more traditional entrepreneurs, how they view their life, how they view their company and their outlook on the company. Would you agree to that?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:13:42]:
I would say it's really interesting, especially if you contrast industrial entrepreneurs with really, really large corporates. One thing that we made very a very conscious decision on taking on these industrial entrepreneurs and how I would say they think about actually, digital entrepreneurs is that since they own a very significant portion of the company and they are also in a very active strategic role, they can take decisions much faster, and they can take risk with a much higher level. Again, this is not a guarantee that they will suddenly all adopt highest, you know, the most advanced software and end to end agentic AI automation tomorrow, But at least you can get an answer from them very, very fast whether this is the right timing for them to speak to a certain software company or not.
Jörn Menninger [00:14:32]:
I see. We're not talking TVC, and I would be interested maybe except for AI, what sectors are you most bullish on right now, especially in early state investing?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:14:48]:
Yes. This is a really good question. I would say that given, our very DNA and kind of history, over the last couple of years, we built a relatively lean team. So in total, we are six people in the investment team. And that means that for us, specifically, it doesn't make sense to split up the team by sector. Right? So even though we have certain interest areas, for example, I personally look into a lot of topics on the, let's say, more technical side when it comes to data, infrastructure, architecture, AI, cybersecurity. These are all areas to love to look into. We are incredibly focused on founders, and pretty much picture them within the bigger realm of what we find exciting.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:15:33]:
Right? So if you, look at the way that we work usually and work together with founders, we spend, I would say, 80 to 90% of our time on the ground in ecosystems because Europe is incredibly fragmented, and you have absolutely no idea which ecosystem will produce the next really exceptional entrepreneur. You You pretty much have to be there. Really try to find these founders, sit down with them, and really understand, why the timing of what they want to build fits into the broader market. And this can be in very different industries. For example, I personally have been looking into and working with a lot of founders in procurement, but also back teams in cybersecurity. It can be about, you know, engineering. It can be about pretty much pure data. It can be about really, really, we are I would say we are very sector agnostic from that perspective.
Jörn Menninger [00:16:25]:
Mhmm. Mhmm. And which ones are the most interesting right now?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:16:34]:
Sectors?
Jörn Menninger [00:16:35]:
Yep. You you can also see speak from personal perspective because I do understand from from, such a broad company, it's always, difficult to speak, like, about this or that. But your personal experience in your area of responsibility is totally fine.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:16:54]:
It's it's it's a really interesting question because we are now at a very interesting shift between cloud software one point o versus the next type of, let's say, software. You can still call it software. And I know you didn't necessarily want to get an AI answer, but I would say one very clear shift that we are seeing at the moment is that traditional software as a service will very likely cease to exist in its current form, in a very short period of time. And almost these models around services and software is is emerging. Because if you look at especially, for example, the industrial economy, one very interesting theme that we have been looking into and and maybe one thing to pinpoint very concretely is how we are thinking about the automation of back office work. Right? And this traditionally, for example, in software has been very much tied to sectors. So for example, you had to think about a very specific procurement software as a service that had, I don't know, an underlying database, some type of a user interface, maybe integration with legacy systems, and then you try to pretty much take these companies and then target these companies and roll them out. Now what we are seeing is that if you look at some of the back office work, let it be, let's say, insurance, procurement, sales, quoting, construction, You have these massive back offices where people are just sitting in front of their computer and have been doing the same repetitive tasks they have been trained to do for pretty much ten, twenty years.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:18:32]:
And in my view, this is gonna be exactly the absolute first type of use case where full level of automation will be achieved within a very, very short period of time. So we absolutely don't see any scenario where these tasks won't be % automated within a couple of years of time. And this is especially relevant because this is exactly the type of talent also in our economy that is retiring fast, and there is no supply of it. Because you have to be somewhat educated in order to execute on this task, but it's actually not something that needs incredibly sophisticated, you know, qualification that cannot be, yeah, taught in in certain areas.
Jörn Menninger [00:19:11]:
Why do you believe Europe is positioned to lead in the application layer of AI globally?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:19:19]:
The reason for that is that Europe is a very special Europe is in a very special position. If you look at the talent in Europe, it's very clear speaking to entrepreneurs from a global scale, speaking to investors from a global level that Europe has absolutely zero talent problem. This is something that is sometimes a massive misconception. Europe has incredible engineers, incredible entrepreneurs. It's a very fragmented ecosystem, but from a very fundamental perspective, I think this is just one thing that is, I think, very important to get right. When it comes to the application layer of AI, and especially if you look at the European economy and getting back to, for example, how many of these industrial companies, well, for what it's worth, you know, non industrial companies necessarily, have been working with traditional software like SAP, and others. You know, some of these existing software stacks have been around for thirty years. Right? And there is an absolute clear reason for that.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:20:23]:
And the clear reason for that is that their lock in is so incredibly high that challengers over the course of the last couple of decades absolutely failed to remove them because they are so ingrained and so customized to the local environment that it was just pretty much impossible to, create a strong enough incentive for these customers to put effort into removing them and adopt a new solution. Now the opportunity for Europe right now where pretty much this ingrainedness is the highest, I would say, is that with the shift in technology when it comes to mapping, let's say, integration endpoints, when it comes to, using new technologies, around AI to facilitate data migration, data schema mapping, mapping out workflows, and pretty much automatically automating these workflows is something that was not unlocked before. And, from an application layer perspective, this is what we have context on. And I think the keyword here is contextuality. And this is something that Europe has. The technology is there. We can use it pretty much, from a foundation model perspective, which, you know, we don't have to be a winner in. And, ultimately, this is exactly where the opportunity is because you can match this level of context reality and generate new generation of challengers that can ultimately remove this absolute, high lock in of incumbents that have been dominating the industry for many, many years.
Jörn Menninger [00:21:52]:
Mhmm. How as personally, I've been working in more SAP projects than I would, like to admit here. I I can totally see that. But when I now think about the logic that we used there back in the days, and the teams you've been talking about doing their administrative stuff, which would be quite a picture book example of being replaced by AI agents. I get to think that you would not only need to reenvision the software, but you'll also need to reenvision at least in part the companies because there'll be a lot more of automation, especially in administrative duties.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:22:44]:
Yes. A %. And I do not think that this is going to be, zero to one shift. Right? If you look at, for example, a very clear example of, the migration push of SAP on prem to SAP HANA that, you know, SAP is pushing massively. Some of these companies actually spend a very, very significant amount of euros and very significant amount of time, meaning years, to go from the concept of understanding what the existing on prem setup looks like from the perspective of what standard SaaS API code, what's customer SaaS API code, how, for example, the business logics look like. All of these things hire a bunch of consultants, kind of try to map out exactly how this should look like in the cloud. It doesn't just work in a way that you buy a virtual machine and you just push it there within a week, but you actually have to go through this entire process. And then pretty much you've tried to move the application.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:23:46]:
Now from my perspective, technologies that can, on the one hand, speed up this type of, of, process as well as think about how these workflows can be fully automated from, let's say, agent perspective will need to emerge in parallel because you cannot just throw an agent pretty much at an on prem SAP instance. Right? It's it's I think it's very, very clear. So you will need very different approaches. And, ultimately, what will unlock the most value will have the most grip on the market as we have seen also in the past. There is no absolute clear cut answer what type of what type of approaches will win. But, ultimately, I think it needs to be a game of parallel approaches, to be honest. Mhmm.
Jörn Menninger [00:24:36]:
And what you've been talking about is on premise, basically, more or less very simplified. You had a very big, data center. You're running SAP there just for your company, and now it's moved on HANA into the cloud. Very, very much simplified, and that was already a big project. But, the more I think about using AI agents in such tool, I always get the idea that the most successful companies or the most successful software in the future may not be the fastest AI agent, but I do get the one who makes it the easiest to administrate those agents, control them, give them duty, and keep them in check. Because if you do, what I have in mind are those huge, excel sheets where you track stuff and then at one point you don't realize that this agent is doing a, this agent is doing p, and they're basically just giving each other work. So there is a new way, how you need to think about a company getting back to the idea of, rethinking the company. But we've been a little bit intertwined already into AI.
Jörn Menninger [00:25:52]:
So I was wondering, we're talking to VC, what is your framework to identify AI startups with, like, a real differentiation and they don't necessarily have just buzz?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:26:05]:
Yes. That's that's a really good question. So I'm especially speaking from the perspective of a pre seed seed investor, which is a little bit of a cheat card sometimes because you can always give the answer that the founder has to be exceptional, which in itself, on the one hand, can be a really good answer. On the other hand, I completely agree that if you look at many of the verticals you see right now in agentic AI, you do see an absolute red ocean of parallel approaches, let's say, when it comes to the number of AI legal tech companies or the number of companies that are trying to build your AI SDR and so many of these different different approaches. From our perspective, the two things we we precede ultimately and and, you know, early stage investing, in a really simple simply put way is a really truly excellent founder building in an incredibly exciting market. And the incredibly exciting market is pretty much a given in many cases when you are looking at the opportunity of the technology and what you can see in many of these use cases. Now, ultimately, the ex exceptionality of the founder is something that we pay, exceptional like, really, really big attention to, because that's where, you can identify somebody who will be able to navigate the, let's say, the level of uncertainty that you will need to navigate in this space. And if you look at just the simple acceleration of last two to three years when it comes to what capabilities, for example, AI can do, this is one, you know, topic we have been discussing with the founder is that, for example, if you look at, some, of the of the, let's say, features that that, I don't know, some of these foundation models could do, for example, writing a poem or something like this that are absolutely not spectacular today almost to anyone who has been natively using these AI tools.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:28:00]:
Back then, the amount of file fact that you got from them was, you know, a hundred times higher than than what you get from now. Right? So from our perspective and from from a human perspective, human experience perspective, what we see is that we get used to the power of the technology incredibly fast, and we just forget how much progress has been made in the last two to three years. And I think personally that we completely underestimate how much this technology will develop in the coming years. And because of that, there is a very high level of uncertainty that a certain founder needs to navigate. So, ultimately, as a precede or seed investor, trying to identify if you have a level of tech defensibility as a startup that just developed an MVP is is is is not not a very valid question. Right? So for us, the focus really, really shifts very much to the exceptionality of the founder, which in itself can lie into, for example, unique insights to a certain industry. Because as discussed already, for example, in Europe, when you still have the challenge of, for example, needing to sell to some customers, in person or do field sales, for example, let's say in construction tech or industrial tech, a founder that is able to understand on the one hand the capabilities of AI, but also understands the particularities of the industry is the combination that makes them exceptional. Right? And this is something that that we always try to look at from a perspective point of view.
Jörn Menninger [00:29:32]:
Mhmm. Mhmm. I see. We'll be back after short ad break and then talk about how you do your investments, how, for example, you evaluate a founder, and so on and so forth. Hey, guys. Thank you for being back with us after the short ad break. I'm still talking to Martin, partner at Visionaries VC, and we are talking right now about how they evaluate the founders. What traits do you think define a genre defining founder in your eyes?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:30:13]:
Yes. This has been an exercise we have been constantly thinking about and rechallenging, ourselves on, especially if you look at the really exceptional founders in Europe and how serendipitously they came out of absolutely unexpected hubs, times, and setups, we definitely don't think that you have a very strong ability to put together check checklist and just tick boxes and give an average score. And if somebody hits that average score about a certain level, then you invest. If not, then not. So from us for us, exceptionality can come in very different forms. And we have certain trades that we usually look into, that can feed into certain exceptionalities in founders in very different ways. To give you an example, one, one trade that we are also looking to, looking into is, is a combination of a founder having, pretty much, very much like, for example, if you would look into, let's say, soccer, to give about to to to come up with a very concrete example. What what makes a good player shoot, for example, a ball, in in a good way? Right? It's a combination of timing.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:31:33]:
It's a combination of power and accuracy. And these are the three characteristics and the combination that really, really exceptional founders do have. When it comes to timing, we also interchangeably use it together with urgency or kind of like proneness to action, is the ability for the founder to very clearly articulate when to do what and how to prioritize what. It can be about hiring. It can be about execution. It can be about when they start building a certain product in a certain market. Power is pure grit. It's about how hard you work and pretty much how much you commit to the company.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:32:11]:
And accuracy is ultimately the ability to, to identify the most important problems and and really shortlist those, on a daily basis. And this is something that we always, try to evaluate, you know, on a on a on a recurring basis with together with founders. This is one very important aspect, obviously, that just comes up again and again, in certain founders. And I want to highlight this sense of urgency that with some of the most successful founders, when as an investor, you are in a meeting with them, you almost feel uncomfortable about wasting their time. And this is something that, you know, I definitely felt at tier with Lawrence, who is just a fantastic founder as well, is that, their sense of urgency when it comes to coming to action and their sense to not waste time in instances where they absolutely don't need to is very, very high. And this is something that you can, I think, really sense, as an investor? To give you an other example, product and personal obsession is something that you definitely can identify relatively accurately. And it comes out in very different formats, in very different founder journeys. Because if you have a fresh university team coming out of uni, maybe a couple of months of internship experience who have been constantly thinking about a certain problem, and, you know, they were absolutely sleepless about it and now try to attack it, which was the case in some of our investments like Taxo.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:33:46]:
For the listeners, it's a Munich based, procurement software company for, from some of the small and medium sized businesses, in the European economy. They have been obsessing over and over about how incredibly broken procurement is. It's really was their DNA. If you look at the seasoned industrial oh, sorry. A seasoned, entrepreneur for a seasoned operator or entrepreneur who have been in the industry for more than ten years, it's gonna be a very different type of personal or productive session. If, for example, somebody decides after six years of being one of the most successful, let's say, companies, or scale ups, for example, companies like Klarna or Contour or Smile, to give you just some examples from from our portfolio, to start from zero and start with a bank sheet of paper to start building something new. They often felt something from a market timing perspective and in once in a lifetime perspective, from an an obsession perspective that they just have to make that step. And this is something that clearly comes out when you have a very open and transparent personal conversation with them.
Jörn Menninger [00:34:59]:
I was wondering, can you give examples of painkiller versus vitamin startups and why that distinction matters?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:35:09]:
Yes. It's, it's something that we, we really like using in the context of b two b software, and that's the reason why I would personally be an absolutely horrible consumer investor because for me, comprehending painkillers as vitamin in the contact in that context is just very, very difficult. In b two b software, it's, from at least a theoretical perspective, it's it's something relatively simple to identify. From a conceptual perspective, a painkiller is something that can help your customer either increase your revenues or decrease cost or will be absolutely mission critical for you to operate. If you look at, for example, some of the agentic AI companies that try to automate, your sales team, that's a very clear, you know, impact on you being able to, for example, serve more customers or open your founder up more. So really try to, for example, drive your supply. If you look at, for example, some of the agent decay companies that are trying to automate your back office end to end, you pretty much can replace very concretely head counts in your back office at fraction of the cost. So that's really doing that.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:36:27]:
If you look at companies like Stripe, for example, that's a very clear example of a company that is just mission critical for you to operate because otherwise you don't get paid. Right? So this is this is pretty much how we how we try to think about it. One very interesting thing when we are thinking about pay killer versus vitamin is that in reality, things work sometimes in a different way. If you look at the very concrete example of process automation, and I'm talking a little bit pre AI era, there have been a huge wave of some of these RPA companies that were trying to pretty much automate anything that Zapier and UiPath couldn't, but yet they were not successful. Why is that? It's very obvious from a conceptual point of view that if you automate something, then you also save money. Yes. That is absolutely true. But if your customers don't want to automate those things and they are not in the business of automating things, it becomes often very difficult for them to convince that they need to give the extra upfront investment for those cost savings.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:37:34]:
And that's where we always try to match the conceptual understanding of what is a painkiller with reality of what actually is a painkiller.
Jörn Menninger [00:37:46]:
Mhmm. We've been talking in the introduction that you do have a background in competitive sports. How does this influence your judgment in high stakes investment decisions?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:37:59]:
Competitive sports is a really interesting environment, and there are a lot of parallels when you're thinking about company building. Because in competitive sports, in many cases, you have to prepare for one single event that might happen once a year, once every two years, or in the case of the Olympics, once every four years. And you have to show up every day, sometimes every day, twice, training up to 14 times a week, give your absolute best, and think about how you can be your better self every single day, for that one single event. And sometimes you have an injury that comes in that should takes you back, let's say, four to five months in your preparation, and you cannot do anything with it. But there are a lot of crisis situations. And if you look at the most successful people in sports and competitive sports, they are able to deal with setbacks incredibly well. Keeping their cool in those type those events is something that is that is really exceptional. And if you look at some of the top athletes, that's just something that comes out again and again.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:39:13]:
When it comes to investing and, you know, having an honest conversation with a founder, this type of pressure test also, I would say, can be very much applied. And if you're having an honest conversation about the most the highest heated crisis situations that they ever had in their life and listen to how they dealt with it, is something that really shows how they deal with the situations. Because these situations happen, and as a founder, you just have to solve them. And this is something that that, that we always have a bit have as a bit of an exercise. And what some of our best founders absolutely managed to do incredibly well is to assess the situation, understand what you can do about it, what you can't do about it, and and act like that.
Jörn Menninger [00:40:04]:
Mhmm. Let's talk a little bit about applied AI and SaaS adoption. You said AI will be the biggest driver of SaaS adoption, particularly in industrial sectors. Can you a little bit expand on that? Because you also said the classical SaaS. How does this fit together here?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:40:30]:
You mean the classical SaaS will will resist the existing in the form that it it has been existing?
Jörn Menninger [00:40:37]:
Yes. In the form right now. And where will it go? What will be, like, the next iteration, the next form of classical SaaS?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:40:47]:
This is a really interesting topic, and and I think everybody is, to some extent, still very speculative about it. But, what we have seen already in the last couple of months or, you know, one or two years is that the ultimate application interface that, that people in these environments are using, to execute on certain workflows is completely changing. If you, for example, look at very traditional, software as a service, as as mentioned, you might have some back end database, some features that, people, you know, input data in. Maybe, the software application is processing this data and then you have an output. That's something that given the capabilities of what's changing right now, in in my view, will really, really change, just from the perspective that if you look at how traditionally workflow has been executed, in especially in the case of knowledge work, 80% of knowledge base is just finding some processing and summarizing information and maybe passing out, passing it onto onto the next person. This is something that can be done incredibly well using AI. And some of not not only it's possible right now to remove some of the intermediary steps, but you can also completely rethink how the whole workflow is executed. Because if you look at this whole concept from a data perspective and data processing perspective, an agent or AI does not necessarily have to process the data the exact same way as a human being would, right, ultimately.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:42:34]:
And this is something where I do think that AI as an application layer will completely change the way that that industrial companies work. Just let's take a very, I would say, concrete look at procurement. Ultimately, if you are head of procurement at some of these industrial companies, your number one job as procurement leaders usually say is to keep your job because procurement is a bit of a loser game. Right? You ultimately make sure that everything is procured on time at the best price and it arrives. If it does that, then great. You are doing a great job. If it doesn't, then then it's not. So ultimately, if you look at how procurement leaders have been using software, for example, in the past, is that, they had to enter, for example, their system or ERP system to look up inventory, talk to product, talk to product engineering, sales.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:43:29]:
What do you need to procure? Ultimately, go up to your supplier, open some type of supplier database, look at some catalogs, submit some purchase orders. And it was all a little bit of a chaotic workflow from the perspective of what you needed to do. But if you look at ultimately what, for example, some of the AI capabilities can unlock when it comes to understanding need budget analysis and what you ultimately need to execute on at a given point in time and what you need to optimize for is something that is very different from how you would work as an individual human and how you would process this information and pass it on if that makes sense.
Jörn Menninger [00:44:11]:
Mhmm. Mhmm.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:44:15]:
That
Jörn Menninger [00:44:15]:
definitely makes sense. But it it it it it takes a while until it sinks in what this really means and how it actually applies to different industries. I don't claim I'm through with this thinking by getting closer and closer. You are also connecting AI startups with a piece to solve real problems. And how does a successful case for such a corporation look like?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:44:46]:
Yes. So this is something that we talked about then. And, you know, when we built the fund or started building the fund, we wanted to make sure that we have this unique ingredient, of having the connection to these limited partners of industrial family businesses who represent a very significant portion of the economy. Because very often, if you look at b two b software, you know, AI or call it pretty much any type of technology, at the moment in Europe, if you want to be at the multibillion dollar outcome as an entrepreneur, it's very difficult to ignore this group of family business entrepreneurs and industrials in the long term, if you are selling to European companies. So our our idea was that, you know, when when we build the fund is that we can connect these entrepreneurs that we back with these industrials. And, you know, as mentioned, the most important thing that we bring in as Visionaries Club is that whenever we invest with founders, and this often already starts before investment, it can be, you know, sometimes in the stage of ideation, is that we sit down together and figure out who from our industrial network is actually most helpful to talk to, from the perspective of the product that, that the founder is building and ultimately get them in front of the most important stakeholder, let it be a champion or an actual user of the product as soon as possible, and really shorten this response time that they get from these industrial companies. And this is something we do think has a very fundamental unlock. And in many cases, some of these industrial companies might get back, hey.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:46:32]:
This is incredibly relevant. Now we are in the middle of this massive, I don't know, ERP migration, so let's talk in six months. Sometimes they say, this is exactly what we have been looking for for a long time. Let's set up a paid DOC next week. And sometimes it's, no. We will, you know, build this internally, and this is not relevant. But getting this response time versus trying to call inbound some of these industrial businesses that are not on not even on LinkedIn is something that is very contrasting. And in an ideal scenario, whenever we can connect these industrial businesses with the founders that we are working with, we can really shorten this cycle.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:47:11]:
And in the most exceptional case cases, founders can pretty much champion these companies as well as if they were, let's say, technology companies. And this is where the magic of three d exceptional founders lie. So, you know, we don't guarantee any, any paid contracts. This is not the business we are in. But this kind of door opening function is what we've
Jörn Menninger [00:47:33]:
Past success is no indication for future performance. The usual disclaimer in financial services. Yes. Let us go a little bit, shortly into Europe's venture capital landscape if you still have a little bit time. Yes. What are the biggest challenges European founders face today, and how can they overcome them?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:47:58]:
The biggest challenge European founders face today is ultimately what everybody says, which is fragmentation of the European ecosystem. And why we think fragmentation is the biggest challenge at the moment, is because various different ecosystems, are in very different maturity stages. If you look at London, if you look at Paris, if you look at some of these ecosystems, they, have a history of producing some really exceptional, you know, venture outcomes. And some of these venture outcomes started producing some really exceptional operators who might end up, you know, starting new companies. And, for example, if you have a proximity of a university, you might even have the chance to bring some of these entrepreneurs or operators into some of these hubs that can really enable entrepreneurs not only to just pull the trigger and start something new and take risk, but also to be able to hire exceptional talent and start, you know, selling to the local ecosystem. Now this is not the case for all ecosystems. If you look at, some of, you know, other cities, the ecosystem are in very different stages. But ultimately, if you look at, for example, the example of Miro, Andre started it from a small town in Russia called Perm that many people didn't even hear about.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:49:20]:
And, through this big filter, he managed to, you know, build it into, successful enough outcome that now is a globally leading company. But, if you put, yourselves into the shoes of something like that, the amount of challenges that you need to go through and the amount of, you know, pushback that you will get that will set you back in terms of timeline and how fast you can market your product is exponentially higher. And the more remote the ecosystem is, the more difficult it is ultimately. And this is something that is already changing, but, ultimately, this is the very reason why we set up Visionaries Club in the way that we did. That if we back, for example, a young entrepreneur out of Munich who, you know, Munich is already a pretty advanced ecosystem. But if they want to connect to a wide range of entrepreneurs who either, you know, successfully navigated a certain landscape in a certain industry, traditionally, it has been incredibly difficult for them to get a meaningful connection with these people. But, by our our our approach, we we really try to, work on that and facilitate that.
Jörn Menninger [00:50:28]:
Mhmm. How should European VCs adapt to stay global competitive? Because I've I've seen in the past a few analyzers that, at least from the perspective of the LPs, the European VCs have outperformed over time their American counterparts. So they did have a competitive advantage. How can they keep pushing it in their increasingly fractured world right now?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:50:58]:
Venture capital traditionally has been and always will be driven by power law. So there will be a lot of winners, and it's very difficult to give, I would say, a collective formula of how European venture capital funds, all of them, can stay more competitive. And when you say, you know, European venture capital funds, it's almost feels like that, you know, you would need to move the whole curve in a certain way, which which is somewhat tied to to, to macro environment. But what I can say is that, in order for your for some of the European venture capital funds that can be successful, is completely to be on the ground. Because if you look at the amount of time it takes for a certain ecosystem to absolutely ignite can be very, very short. And if you are trying to run this, from behind your desktop, I think it's it's a very, very difficult job. And I think you see this story very interestingly playing out right now, in the case of Stockholm, where a couple of companies, including Lovable, just absolutely demonstrated how you can get onto the path of building a globally leading company in a very short period of time. And taking that encouragement, many, many other really exceptional talent in the ecosystem had the courage to start new companies.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:52:22]:
And pretty much within the matter of six months, it became from a really interesting ecosystem into one one of the leading ecosystems, I would say, in Europe. And if you're a venture investor, you just have to be there and see that for yourself. Speak to the founders because they will grow. They will build very successful in companies very fast. And if you're an early stage investor and you're not there, you you will miss it out.
Jörn Menninger [00:52:47]:
A very last high level question. What needs to change in how early stage capital supports technical founders in Europe? Because we do have a lot of very good universities, very good technical universities, lots of STEM talent, but I do see a lot of them struggling, to get out not only but also in terms of biotech and so on and so forth to really get the support they need. Admittedly, technical university, UNIG and Odenema TUM are getting very good at this, but they need more to change. Do you do you have a few ideas what needs to change in order to support them better, get them more opportunity to found a company right out of university?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:53:36]:
Yes. Absolutely. The most important challenge is bringing back exceptional execution and commercial talents and connecting them with early stem talent as soon as possible. If you take the example of Hungary and Eastern Europe where I'm from ultimately, and this is a conversation I just had with the founder, Hungarian YC founder that just got into YC. I'm now 29. He's, I think, also, towards towards that age. Up until we, you know, finished our, maybe, second degree or masters or started working in the first position, we didn't have a clue about what venture capital is or, you know, what entrepreneurship truly is. We heard about the concept of starting a company, but the concept of what it means to take risk and take pulling the trigger to build something massive was absolutely missing.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:54:31]:
And this is something, for example, you absolutely see in many business universities already happening in the West. In DeHa, you know, you have successful ecommerce funders going back and saying, you can start this company, you can start this company. And then you have students sitting there and have a conversation after, you know, the lecture about, hey, actually, we should start doing this. We are in a time of of our life where pretty much we can take the most risk that we can. And this mindset is something that is very, very difficult to bring back very early. But the more early you can bring it, soon as possible, pretty much, start of university, ideally, the earlier you start a spark for these type of conversations and encouragement also across students. So I would say for all those different ecosystems that you have in STEM, you know, all across Europe, you as you mentioned, you have TUM, you have ETH, you have Oxbridge, you have so many of these universities. The ability to connect students with those entrepreneurs that really, really made that is something that, that is, in my perspective, is really missing.
Jörn Menninger [00:55:36]:
I see. Martin, thank you very much. It was a pleasure having you as a guest. Hope to have you back. And for everybody who'd like to learn more, we link, of course, we link their profile, the website of Visionaries Club. What's the best way to pitch?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:55:51]:
Just, pretty much send an email, martin@visionariesclub.vc.
Jörn Menninger [00:55:56]:
I I do have a game that's going on since I interviewed a few years ago, Alex von Frankenberg from High-tech. And I was I was I was wondering, if you get an email that only says the headline, yo, we should talk. Would you reply?
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:56:15]:
The headline, I would say we don't. I personally don't care that much about. What's in the message is, is is a little bit more important.
Jörn Menninger [00:56:25]:
Okay. Great. Thank you very much.
Marton Sarkadi Nagy | Partner at VC Visionaries Club [00:56:28]:
A pleasure. Thank you so much for having me.
Joe [00:56:34]:
That's all, folks. Folks. Find more news, streams, events, and interviews at www.startuprad.io. Remember, sharing is caring.
Comentarios