How Europe’s Visionaries Are Using AI to Disrupt Industrial Tech
- Jörn Menninger
- May 15, 2025
- 37 min read
Updated: 20 hours ago
How Europe’s top founders use AI to fix legacy industry pain points—fast. Learn what’s working now and what’s coming next.
What Is This About?
Europe's visionaries are using AI to disrupt industrial technology — from manufacturing and logistics to energy and construction. This episode profiles the founders deploying AI in sectors where deep domain expertise creates sustainable competitive advantages over pure-play tech companies.
Introduction
Across Europe, a new generation of visionary founders is using artificial intelligence to disrupt industries that have resisted technological change for decades. This feature profiles the entrepreneurs building AI companies that challenge established players in sectors from manufacturing and healthcare to logistics and financial services, revealing the strategies and technical approaches that are making European AI startups globally competitive.
Executive Summary
European AI founders are disrupting industries from manufacturing and healthcare to logistics and financial services using approaches that differ fundamentally from Silicon Valley's consumer-first AI strategy. The European competitive advantage lies in deep domain expertise combined with AI capabilities — producing solutions that solve specific industrial problems rather than general-purpose AI platforms. The feature profiles founders whose technical backgrounds include PhD-level research and industry operating experience. Their ventures represent a distinctly European model of AI entrepreneurship with different risk profiles and growth trajectories than US counterparts.
Key Takeaways
Atomic Answer
What Is This About?
Europe's visionaries are using AI to disrupt industrial technology — from manufacturing and logistics to energy and construction. This episode profiles the founders deploying AI in sectors where deep domain expertise creates sustainable competitive advantages over pure-play tech companies.
How Europe’s top founders use AI to fix legacy industry pain points—fast. Startuprad.io brings you independent coverage of the key developments shaping the startup and venture capital landscape across Germany, Austria, and Switzerland.
This founder interview is part of our ongoing coverage of Scaleup Founder Interviews from Germany, Austria, and Switzerland.
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
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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.”
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Relationship Map
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Frequently Asked Questions
What is this article about: How Europe’s Visionaries Are Using AI to Disrupt Industrial Tech?
How Europe’s top founders use AI to fix legacy industry pain points—fast. Learn what’s working now and what’s coming next.
What are the main takeaways from this discussion?
Europe's visionaries are using AI to disrupt industrial technology — from manufacturing and logistics to energy and construction. This episode profiles the founders deploying AI in sectors where deep domain expertise creates sustainable competitive advantages over pure-play tech companies.
How does this topic connect to the broader startup ecosystem?
Across Europe, a new generation of visionary founders is using artificial intelligence to disrupt industries that have resisted technological change for decades. This feature profiles the entrepreneurs building AI companies that challenge established players in sectors from manufacturing and healthcare to logistics and financial services, revealing the strategies and technical approaches that are making European AI startups globally competitive.
About the Host
Joern "Joe" Menninger is the host of the Startuprad.io podcast and covers founders, investors, and policy developments across the DACH startup ecosystem. Through more than 1,300 interviews and nearly a decade of reporting, he documents the evolution of the European startup landscape. Follow Joern on LinkedIn.
Support Startuprad.io
Startuprad.io features the visionaries using AI to transform European industry. Our expert interviews uncover the strategies and technologies driving the next wave of industrial innovation. Subscribe to our podcast on Apple Podcasts, Spotify, or YouTube for weekly deep dives into the AI and deep tech trends reshaping the DACH region.
Automated Transcript
Music:
Speaker1: Hello and welcome, everybody. This is Joe from StartupRate.io, 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?
Speaker0: Hi, great to be here.
Speaker1: Totally my pleasure. I usually give a little introduction about the guests that I do have here. And we may tell our audience up front, 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 hyper growth phase. I think you have one or two stories to tell from this time. You also have been a competitive athlete. I'm sure we'll also talk about that. Plus, you specialize in BASAS, 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 also got some names here of investments, not you personally did,
Speaker1: but visionaries, including Lovable, the Unicorn Personio, Miro, Pigment, Tacto, Apron, Choco, Pivot, and Central. And of course, we link down here in the show notes interview with Central. So that was already a lot. Take a deep breath. So let's talk a little bit about your journey and your vision. How did your time at Tear for everybody that that's one of the e-scooter companies, the hyper growth e-scooter companies during its hyper growth phase influence your approach as an investor?
Speaker0: Yeah, that's a great question, Jörn. And just for background, I was with Tear pretty much from its pre-seed stage until Series B, which meant that within a very short period of time, within one year, we went from zero to 400 people, reached 100 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 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
Speaker0: that are building very early stage teams, especially investing in pre-seed 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 is underperforming, is it because they are not doing the right responsibilities or not in charge of the right responsibilities or 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.
Speaker1: And just to be clear, 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 of consultancies, right?
Speaker0: 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 they went to some Ivy League schools, 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 I think that's something that just comes up again and again. Uh with these people um.
Speaker1: You 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 a vc um did you think at the beginning it was more relaxed job and how did you end up at visionaries club
Speaker0: Yeah it was not a very conscious decision at all when i was with tier i had a friend who was running entrepreneur first 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 thrived 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 in the environments where I get new impulses, not just from a topic perspective, but also individuals' perspective. And then this friend of mine told me, hey, I actually 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
Speaker0: 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 VC 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.
Speaker1: Um you often speak about radical accountability what does this mean when you work with founders for example let's let's think um i'm one of your investments and currently it's not going well what what would you expect in terms of radical accountability um
Speaker0: 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 stolen 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 is a lot of change and just as I told you earlier, 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. But what really differentiates the top 0.01% of startups from the rest is that
Speaker0: this sense of radical accountability is 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.
Speaker1: We're now going a little bit into market insights and your investment thesis. And we may tell our audience because I do believe most of our audience are founders and they somehow have an idea they had heard Visionish Club before but we should tell them that you're around the data that I found around 600 million years assets under management. Your last fund was, I believe in 2022, 400 million.
Speaker0: That's correct. Yes.
Speaker1: And so you're one of the bigger VCs and therefore, um 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 entrepreneurs. How does that shape your portfolio strategy? Because It sounds like you have two magnetic poles and they always pull you in different directions.
Speaker0: Yes. I'm happy to give you a little bit of background because I do think that this will help also scope the conversation a little bit. I 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
Speaker0: behind these companies. But on the one hand, we have a collection of some 30 Unicorn founders. If you look at, for example, Andre from Miro or Daniel from UiPath from Eastern Europe, Ilka 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 Get Your Guide, Flixbus, HelloFresh, AutoEyes. Who build 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 a 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 old 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,
Speaker0: 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 what technology can bring and unlock, this is really the intersection that we are looking into. This is very digital first entrepreneurs and this is very non-digital entrepreneurs who are incredibly important of how we think about the economy. So this is how we really bring this group of people together. And over the last couple of years, we scaled this one to some 600 million. 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 that we back is that we,
Speaker0: 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, we just take a step back and really execute on those introductions that are strategically important.
Speaker1: I also do have a theory, maybe you also have an opinion on that. I'm now doing startup interviews with the project in Germany that I did before since, let's say, 13 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 the company and their outlook on the company. Would you agree to that?
Speaker0: I would say it's really interesting, especially if you contrast industrial entrepreneurs with really, really large corporates. One thing that we made 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 i.
Speaker1: See um we're not talking tvc and i would be interested maybe except for ai Hi, what sectors are you most bullish on right now, especially in early stage investing?
Speaker0: 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, 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
Speaker0: Europe is incredibly fragmented and you have absolutely no idea which ecosystem will produce the next really exceptional entrepreneur. 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. Security, it can be about engineering, it can be about pretty much pure data, it can be about really, I would say we are very sector agnostic from that perspective.
Speaker1: And which ones are the most interesting right now? Sectors yeah you can also speak from personal perspective because i do understand from from uh such 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 um it's it's
Speaker0: It's a really interesting question because we are now at a very interesting shift between cloud software 1.0 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 emerging. Because if you look at, especially, for example, the industrial economy. One very interesting theme that we have been looking into, 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
Speaker0: 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 10, 20 years. And in my view, this is going to 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 100% automated
Speaker0: 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 taught in certain areas.
Speaker1: Why do you believe Europe is positioned to lead in the application layer of AI globally?
Speaker0: The reason for that is that 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 30 years, right?
Speaker0: And there is an absolute clear reason for that. 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 ultimately automating these workflows is something that was not unlocked before. And from an application layer perspective, this is what we have context on.
Speaker0: And I think the key word 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 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 contextuality and generate a new generation of challenges that can ultimately remove this absolute high locking of incumbents that have been dominating the industry for many, many years.
Speaker1: As personally, I've been working in more SAP projects than I would like to admit here. 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 re-envision the software, but you'll also need to re-envision at least in part the companies because there'll be a lot more of automation, especially in administrative duties.
Speaker0: Yes, 100%. And I do not think that this is going to be a 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 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's standard SRP code, what's customer SRP 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
Speaker0: And then pretty much you try to move the application. Now, from my perspective, technologies that can, on the one hand, speed up this type of process, as well as think about how these workflows can be fully automated from, let's say, an agentic perspective, will need to emerge in parallel. Because you cannot just throw an agent pretty much at an on-prem SAP instance, right? 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 approaches will win. But ultimately, I think it needs to be, game of parallel approaches, to be honest.
Speaker1: 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 a 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.
Speaker1: 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. So I was wondering, we're talking to your VC, what is your framework to identify AI startups with like a real differentiation and they don't necessarily have just buzz?
Speaker0: Yes, 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 approaches. From our perspective, the two things we... Pre-seed, ultimately, and early-stage investing, in a really simple, simply put way, is a really, truly excellent founder building in an incredibly exciting market.
Speaker0: 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 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 the last two to three years when it comes to what capabilities, for example, AI can do, this is one topic we have been discussing with the founder, is that, for example, if you look at some of the, let's say. Features 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
Speaker0: today, almost to anyone who has been natively using these AI tools, back then the amount of wow effect that you got from them was 100 times higher than what you get from now. So from our perspective, 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 pre-seed or seed investor trying to identify if you have a level of tech defensibility as a startup that just developed an MVP is not a very valid question right so for us the focus
Speaker0: 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 um 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 we always try to look at from a perspective point of view.
Speaker1: I see. We'll be back after a 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?
Speaker0: Yes, this has been an exercise we have been constantly thinking about and re-challenging 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 a 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, for us, exceptionality can come in very different forms, and we have certain traits that we usually look into that can feed into certain exceptionalities in founders in very different ways. To give you an example, one trade that we are also looking into is a combination of a founder having pretty much very much like, for example, if you would look into, let's say, soccer, to come up with a very concrete example.
Speaker0: What makes a good player shoot, for example, a ball in a good way? right? It's a combination of timing, 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, 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 can commit to the company. And accuracy is ultimately the ability to identify the most important problems and really shortlist those on a daily basis. And this is something that we always try to evaluate on a recurring basis together with founders.
Speaker0: 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 another 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.
Speaker0: 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 Tacto for the listeners. It's a Munich-based procurement software company 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 originally was their DNA. If you look at a seasoned entrepreneur, a seasoned operator entrepreneur who have been in the industry for more than 10 years, it's going to be a very different type of personal or product obsession. 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 Konto or Swile,
Speaker0: to give you just some examples from our portfolio, to... Start from zero and start with a blank sheet of paper to start building something new. They often felt something from a market timing perspective and in a once in a lifetime perspective from 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.
Speaker1: I was wondering can you give examples of painkiller versus vitamin startups and why that distinction matters
Speaker0: Yes um it's uh it's something that we uh we really like using in the context of b2b software and that's the reason why i would personally be an absolutely horrible consumer investor, because for me, comprehending painkiller versus vitamin in that context is just very, very difficult. In B2B software, it's from at least a theoretical perspective, you know, 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 costs, 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 funnel up more. So really try to, for example, drive your supply. If you look at,
Speaker0: for example, some of the agency AI companies that are trying to automate your back office end-to-end, you pretty much can replace very concretely headcounts in your back office at a fraction of the cost. So that's really doing that. 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. So this is pretty much how we try to think about it. One very interesting thing when we are thinking about peculer 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.
Speaker0: 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. 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.
Speaker1: 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?
Speaker0: 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 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.
Speaker0: Keeping their cool in those events is something that is really exceptional. And if you look at some of the top athletes, there's just something that comes out again and again. When it comes to investing and 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, it's 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 we always 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,
Speaker0: what you can't do about it, and act like that.
Speaker1: 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?
Speaker0: So you mean the classical SaaS will cease to exist in the form that it has been existing?
Speaker1: Yes, in the form right now. And where will it go? What will be the next iteration, the next form of classical SaaS?
Speaker0: This is a really interesting topic. 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 one or two years is that the ultimate application interface 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 mentioned, you might have some backend database, some features that people 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 my view, will really, really change just from the perspective that if you look at how traditionally workflow has been executed, especially in the case of knowledge work, 80% of knowledge work is just finding, some processing and summarizing information and maybe passing it on to the next person.
Speaker0: This is something that can be done incredibly well using AI. And 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 agent, does not necessarily have to process the data the exact same way as a human being would, right? Ultimately. And this is something where I do think that AI as an application layer will completely change the way 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
Speaker0: that everything is procured on time at the best price and it arrives um if it does that then great you're doing a great job if it doesn't then then it's not so ultimately um if you look at how procurement leaders have been using software for example in the past is that um They had to enter, for example, their system or ERP system to look up inventory, talk to product, talk to product, engineering, sales. 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
Speaker0: 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.
Speaker1: Thank you. Definitely makes sense, but 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 LPs to solve real problems. And how does a successful case for such a corporation look like?
Speaker0: Yes. So this is something that we talked about. 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 B2B software, you know, AI, or call it pretty much any type of technology at the moment in Europe, if you want to build a multi-billion 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 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
Speaker0: 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 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 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
Speaker0: 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 it inbound some of these industrial businesses that are not on not even on linkedin is something that is very contrasting. 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. In the most exceptional cases, founders can pretty much champion these companies as well as if they were, let's say, technology companies. This is where the magic of 3D exceptional founders lie. We don't guarantee any paid contracts. This is not the business we are in, But this kind of door opening function is what we've.
Speaker1: 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?
Speaker0: 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,
Speaker0: 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, Andrei started it from a small town in Russia called Perm that many people didn't even hear about. And through this big filter he managed to build it into a successful enough outcome that now is a globally leading company but if you put, yourself into the shoes of something like that, the amount of challenges that you need to go through and the, amount of 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
Speaker0: 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 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 via our approach, we really try to work on that and facilitate that.
Speaker1: How should European VCs adapt to stay global competitive? Because 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?
Speaker0: 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 almost feels like that, you know, you would need to move the whole curve in a certain way, which is somewhat tied to maker environment. But what I can say is that... In order 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, it can be very, very short. And if you are trying to run this from behind your desktop, I think it's a very, very difficult job.
Speaker0: And I think you see this story very interestingly playing out right now in the case of Stockholm, where a couple of companies, including Glovable, 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. And pretty much within the matter of six months it became from a really interesting ecosystem into 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 companies very fast and if you're an early stage investor and you're not there you you will miss a thousand a.
Speaker1: 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 uh to get out not only but also in terms of biotech and so on and so forth to really get the support they need And admittedly, Technical University Unique and Unternehmertum are getting very good at this, but they need more to change. Do you have a few ideas what needs to change in order to support them better, get them more opportunity to find a company right out of university?
Speaker0: 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 a Hungarian VC founder that just got into VC. I'm now 29. He's, I think, also towards that age. Up until we finished our maybe second degree or master's or started working in the first position, we didn't have a clue about what venture capital is or what entrepreneurship truly is. We heard about the concept of starting a company, but the concept of what it means to take risk and pulling the trigger to build something massive was absolutely missing. And this is something, for example, You absolutely see in many business universities already happening in the West, in Deha, you have successful e-commerce founders
Speaker0: going back and saying, you can start this company, you can start this company. And then you have students sitting there and having a conversation after the lecture about, hey, actually, we should start doing this. We are in a time of our life where pretty much we can take the most risks 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, as 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, 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,
Speaker0: really made it there is something that is, in my perspective, is really missing.
Speaker1: 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 your LinkedIn profile the website of Visionaries Club what's the best way to pitch
Speaker0: Just pretty much send an email martin at visionariesclub.vc.
Speaker1: I do have a game that's going on since I interviewed a few years ago Alex from Frankenberg from Hitech Grunafor and I was wondering if you get an email that only says the headline yo we should talk would you reply
Speaker0: The headline i would say we don't i personally don't care that much about uh what's in the message is um is is a little bit more important.
Speaker1: Okay great thank you very much
Speaker0: Pleasure thank you so much for having me.
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