WEBVTT 1 00:00:00.320 --> 00:00:04.160 If you're a European founder scaling deep tech and stuck in 2 00:00:04.160 --> 00:00:07.760 the web of fragmented investment rules, here's your 3 00:00:08.480 --> 00:00:11.520 challenge: cross-border early-stage investments in Europe is 4 00:00:11.520 --> 00:00:15.120 painfully slow. Legal fees are high and standardized 5 00:00:15.120 --> 00:00:18.240 instruments are missing. Tomas 6 00:00:18.640 --> 00:00:22.280 Matsurik, co-founder and co-CEO of FundingBox and 7 00:00:22.280 --> 00:00:25.640 managing partner of FundingBox Deep Tech Fund, built and 8 00:00:25.640 --> 00:00:29.360 exited tech companies, now invests across Europe and 9 00:00:29.360 --> 00:00:32.900 leads the EU-funded DeepSafe project to create, 10 00:00:34.820 --> 00:00:38.180 to create what is called EU Scale, a pan-European 11 00:00:38.860 --> 00:00:42.660 convertible loan instrument. Today we'll uncover 12 00:00:42.740 --> 00:00:46.100 how to navigate European startup funding, fix the cross-border 13 00:00:46.379 --> 00:00:50.060 investment gridlock, and unlock deep tech capital flows 14 00:00:50.060 --> 00:00:53.140 that could reshape the continent's innovation scene. 15 00:00:59.140 --> 00:01:01.140 Welcome to startuprad.io. 16 00:01:02.960 --> 00:01:06.320 Your podcast and YouTube blog covering the German 17 00:01:06.320 --> 00:01:09.760 startup scene with news, interviews, and 18 00:01:10.080 --> 00:01:13.840 live events. Our 19 00:01:13.840 --> 00:01:16.960 guest today, Tomasz Mazuryk, brings a rare 20 00:01:16.960 --> 00:01:20.160 trifecta. He's a founder who built and sold 21 00:01:20.320 --> 00:01:23.760 NetSprint.pl, an investor deploying capital 22 00:01:23.840 --> 00:01:27.560 through Fundingbox Deep Tech Fund, and a builder designing the 23 00:01:27.560 --> 00:01:30.860 next layer of Europe's startup infrastructure. 24 00:01:31.260 --> 00:01:34.460 With a PhD in computer graphics from Wien, 25 00:01:34.860 --> 00:01:38.620 an MSc from IT— in IT from Warsaw 26 00:01:38.620 --> 00:01:42.060 Institute of Technology, Thomas has developed over 27 00:01:42.060 --> 00:01:45.740 1,500 startups' access, acceleration, and funding 28 00:01:45.740 --> 00:01:49.500 through FundingBox. Now, as technical coordinator 29 00:01:49.500 --> 00:01:53.020 of the DeepSafe project, he's steering the creation of EU-scale 30 00:01:53.740 --> 00:01:57.110 Europe's first standardized pan-European investment 31 00:01:57.190 --> 00:02:00.750 instrument for early-stage funding. So if 32 00:02:00.750 --> 00:02:03.030 you're a founder, investor, or policymaker 33 00:02:03.990 --> 00:02:07.590 wondering how do I raise or invest across Europe without 34 00:02:07.590 --> 00:02:11.270 drowning in legal fees and red tape, you come to the right 35 00:02:11.270 --> 00:02:14.910 place. Tomas, or Tomek, welcome to the 36 00:02:14.910 --> 00:02:18.110 show. Um, for everybody 37 00:02:18.110 --> 00:02:21.900 familiar with investment instruments, Would 38 00:02:21.900 --> 00:02:25.380 you say the EU Scale is like the 39 00:02:25.380 --> 00:02:28.740 European answer of Y Combinator SAFE? 40 00:02:29.460 --> 00:02:32.500 Hello everybody. Hi Joe, thanks for having me here. 41 00:02:34.260 --> 00:02:37.620 Um, well, that's our mission. That's the mission we have onboarded on, uh, 42 00:02:38.180 --> 00:02:41.700 to create the pan-European instrument facilitating 43 00:02:42.660 --> 00:02:45.140 faster and more seamless 44 00:02:45.700 --> 00:02:49.220 investments at the early stage. The 45 00:02:49.700 --> 00:02:53.420 issue that is pretty important right now 46 00:02:53.420 --> 00:02:57.060 in Europe, because the deals in Europe are happening on average 47 00:02:57.060 --> 00:03:00.740 3 to 5 times slower than in the US, 48 00:03:01.140 --> 00:03:04.420 and I would assume that at the early stage the gap is even 49 00:03:04.660 --> 00:03:08.340 bigger, especially at the early stage where the deals should be 50 00:03:08.340 --> 00:03:12.100 happening really, really fast. I was just 51 00:03:12.100 --> 00:03:15.710 recently talking to one of the board 52 00:03:15.710 --> 00:03:19.430 members of the European Business Angel Association, and he 53 00:03:19.430 --> 00:03:23.030 told me about two valleys of death, one very early stage and 54 00:03:23.030 --> 00:03:26.790 one pretty late. And I think you, you're, you're more 55 00:03:26.790 --> 00:03:30.390 or less also talking about the experience many founders have of the 56 00:03:30.390 --> 00:03:33.790 first valley of death, but there'll be a different 57 00:03:33.790 --> 00:03:37.630 interview. Um, you've built companies, 58 00:03:37.950 --> 00:03:41.790 you've invested across Europe. Take us back to your founder roots. 59 00:03:42.140 --> 00:03:45.860 What drove you to start netsprint.pl, and 60 00:03:45.860 --> 00:03:49.580 how did that experience shape your later mission to rebuild 61 00:03:49.580 --> 00:03:53.020 Europe's startup funding infrastructure? Well, we are 62 00:03:53.020 --> 00:03:56.140 digging into the really, really past stories. 63 00:03:57.899 --> 00:04:01.500 Uh, we founded Netsprint in the, uh, so-called pre-Google 64 00:04:01.500 --> 00:04:04.940 era. So Google was the local player 65 00:04:05.340 --> 00:04:09.020 back then in on the US market, of course with the global ambitions. 66 00:04:10.940 --> 00:04:14.220 Um, but we came on the mission, uh, 67 00:04:15.580 --> 00:04:18.940 within my current back then company with my business 68 00:04:19.020 --> 00:04:22.780 partner. We've been running the software house. So we 69 00:04:22.780 --> 00:04:26.500 created something that we know it's called 70 00:04:26.500 --> 00:04:29.940 nowadays incubation program. Back then we 71 00:04:29.940 --> 00:04:33.420 simply have announced, come to us with ideas 72 00:04:33.740 --> 00:04:36.780 and we are going, if we like the idea, we are going to fund it. 73 00:04:37.070 --> 00:04:40.590 And support it. So back then 74 00:04:41.790 --> 00:04:43.550 I took the multiple roles, uh, 75 00:04:45.390 --> 00:04:46.990 of an angel investor, uh, 76 00:04:49.070 --> 00:04:52.670 but in fact it was also the venture building 77 00:04:52.670 --> 00:04:56.030 role. And we have incubated and 78 00:04:56.430 --> 00:05:00.110 venture built the startup called NetSprint. Again, 79 00:05:00.590 --> 00:05:04.310 back then we didn't know it's called startup. It was supposed to be 80 00:05:04.310 --> 00:05:04.830 the company. 81 00:05:08.050 --> 00:05:11.410 And we were on the mission of building the first 82 00:05:12.050 --> 00:05:15.770 search engine of the Polish internet. Back then, Google 83 00:05:15.770 --> 00:05:19.610 didn't cover Poland in an efficient way. The AltaVistas 84 00:05:19.610 --> 00:05:22.530 and other search engines were really, really poor. 85 00:05:23.650 --> 00:05:27.250 So we very quickly got the market traction. 86 00:05:28.690 --> 00:05:32.190 We created the company Just 87 00:05:32.590 --> 00:05:36.030 weeks before the dot-com bubble 88 00:05:36.030 --> 00:05:39.630 crisis. So after setting up the company, uh, 89 00:05:40.990 --> 00:05:43.870 we had a couple of conversations with investors, uh, 90 00:05:45.230 --> 00:05:48.750 from outside of Poland. They were very excited, 91 00:05:49.230 --> 00:05:52.950 but then the dot-com bubble crisis came and 92 00:05:52.950 --> 00:05:56.590 all the dreams about getting any money has gone 93 00:05:56.590 --> 00:05:59.480 bust. So 94 00:06:00.840 --> 00:06:04.560 we went all the stages from the founding of 95 00:06:04.560 --> 00:06:08.360 the company with the really angel tickets coming from 96 00:06:08.360 --> 00:06:12.120 my pocket and of my partner's, business partner pocket. 97 00:06:12.600 --> 00:06:16.280 And then we have been developing the company without any 98 00:06:16.600 --> 00:06:20.200 external funding because on the local market, uh, 99 00:06:23.170 --> 00:06:26.050 there were no investors, no VCs back then. 100 00:06:27.250 --> 00:06:30.608 All the foreign investors after the crisis, dot-com uh, 101 00:06:30.892 --> 00:06:34.130 dot-com bubble crisis, have stepped back. 102 00:06:34.930 --> 00:06:38.050 So for the 6 years we've been running the company and growing this 103 00:06:38.610 --> 00:06:42.290 as in the bootstrap mode. So when I look, uh, 104 00:06:43.570 --> 00:06:47.130 back and try to compare this to the 105 00:06:47.130 --> 00:06:50.930 nowadays, I must say that today founders are in the very 106 00:06:51.650 --> 00:06:54.610 luxury situation. They've got 107 00:06:55.570 --> 00:06:59.090 money available on different stages of the company 108 00:06:59.250 --> 00:07:02.530 development. They've got co-works. They've got 109 00:07:02.770 --> 00:07:06.610 venture studios. They are just asked 110 00:07:06.610 --> 00:07:09.010 to come up with their ideas and develop them. 111 00:07:10.370 --> 00:07:13.930 So, you know, after 6 years of— 6 112 00:07:13.930 --> 00:07:17.720 difficult years, we have been able to make 113 00:07:17.720 --> 00:07:21.480 an exit to the global player from the media 114 00:07:22.280 --> 00:07:26.080 space. And then after 115 00:07:26.080 --> 00:07:29.720 the exit, I got a little bit 116 00:07:29.720 --> 00:07:33.480 step back, time to reflect what to do in life. I did 117 00:07:33.480 --> 00:07:37.320 a bit of the consulting, but after 118 00:07:37.320 --> 00:07:41.080 some time I decided, well, it's time to do something 119 00:07:41.080 --> 00:07:44.880 next. So on the other side of the barricade, which 120 00:07:44.880 --> 00:07:48.440 is the FundingBox platform and FundingBox company, 121 00:07:48.980 --> 00:07:52.420 that I'm developing right now is the platform to support startups. 122 00:07:53.300 --> 00:07:56.740 So we decided to, to, to support startups, uh, 123 00:07:57.540 --> 00:08:01.260 through the acceleration programs. And after some 124 00:08:01.260 --> 00:08:05.099 years seeing the great deal flow of startups coming from all over 125 00:08:05.099 --> 00:08:08.900 Europe, uh, I also founded the 126 00:08:09.620 --> 00:08:12.900 venture capital fund that is investing in the 127 00:08:13.140 --> 00:08:16.300 best startups, from the local 128 00:08:16.300 --> 00:08:19.540 ecosystem. You're getting a little bit 129 00:08:20.020 --> 00:08:21.700 ahead of me here, Tomas. Um, 130 00:08:23.700 --> 00:08:27.420 let us walk through all the questions, and I'm sure we'll touch on 131 00:08:27.420 --> 00:08:31.260 everything of that. Um, let's talk a little bit about the current 132 00:08:31.260 --> 00:08:34.900 status quo. Everyday founders in Europe face different 133 00:08:34.980 --> 00:08:37.540 legal and tax reality in each country. 134 00:08:38.500 --> 00:08:42.180 How would you describe the current state of European startup funding, 135 00:08:42.180 --> 00:08:44.740 especially for deep tech and cross-border deals? 136 00:08:47.370 --> 00:08:50.970 Well, the European startup scene is 137 00:08:50.970 --> 00:08:54.650 growing, but it cannot 138 00:08:54.970 --> 00:08:57.930 boom because the investment landscape, uh, 139 00:08:58.890 --> 00:09:02.490 is still broken. You've mentioned in the introduction 140 00:09:02.490 --> 00:09:06.250 about the two valleys of death, and here we are 141 00:09:06.250 --> 00:09:10.010 covering the first one at the seed stage. Let 142 00:09:10.010 --> 00:09:13.740 me come with an analogy. 143 00:09:14.380 --> 00:09:17.780 Probably all the listeners of this podcast still 144 00:09:17.780 --> 00:09:21.340 remember different chargers 145 00:09:21.580 --> 00:09:25.100 for every phone they've been getting. I remember my 146 00:09:25.260 --> 00:09:28.540 every Nokia phone was coming with a different charger. 147 00:09:28.940 --> 00:09:32.620 And now if you've got a couple of phones 148 00:09:32.620 --> 00:09:36.420 in your family and then every phone has 149 00:09:36.420 --> 00:09:40.190 a different charger, it was a mess. You could not reuse your 150 00:09:40.190 --> 00:09:44.030 charger. Then the USB standard came, now the 151 00:09:44.030 --> 00:09:47.550 USB-C, and now 152 00:09:47.550 --> 00:09:51.390 you've got— you can have the same charger, same cable for your 153 00:09:51.390 --> 00:09:53.990 laptop, for your phone, 154 00:09:55.110 --> 00:09:58.670 for your electric toothbrush, for the Oura 155 00:09:58.670 --> 00:10:00.790 Ring, and all the other 156 00:10:02.790 --> 00:10:06.470 devices. And I must say, it's a huge, huge relief. 157 00:10:07.550 --> 00:10:09.150 So now, 158 00:10:11.470 --> 00:10:14.670 how how to, to put this analogy into the startup ecosystem? 159 00:10:15.310 --> 00:10:18.830 Well, in Europe, startups are trapped within 160 00:10:19.150 --> 00:10:22.670 27 different legal and tax systems. Uh, 161 00:10:25.070 --> 00:10:28.870 practically, uh, of course it's possible 162 00:10:28.870 --> 00:10:32.190 to make the cross-border investments, but it's making them 163 00:10:32.680 --> 00:10:36.440 slow, expensive, involving too much 164 00:10:37.880 --> 00:10:41.720 legal activities. So 165 00:10:41.720 --> 00:10:45.320 it's making them expensive, and especially at the very 166 00:10:45.720 --> 00:10:47.480 early stage, the seed stage, 167 00:10:49.880 --> 00:10:53.080 those costs are relatively too high 168 00:10:53.480 --> 00:10:56.680 compared to the size of the ticket startups are getting. 169 00:10:57.160 --> 00:11:00.400 So that basically means in every of the 170 00:11:00.400 --> 00:11:04.200 27 EU member states you have to deal with different 171 00:11:04.740 --> 00:11:08.580 laws regarding, uh, taxation as well as investment 172 00:11:08.740 --> 00:11:12.140 funding. So that means it makes cross-border 173 00:11:12.500 --> 00:11:16.060 transaction pretty expensive and inefficient, 174 00:11:16.060 --> 00:11:19.460 right? Exactly. And that's why we are on the mission 175 00:11:19.940 --> 00:11:23.420 on bringing the US SAFE type of 176 00:11:23.420 --> 00:11:27.220 instrument to Europe that is universal, that 177 00:11:27.220 --> 00:11:31.000 could be applied almost on the spot to 178 00:11:31.000 --> 00:11:33.360 make the investment without too 179 00:11:34.560 --> 00:11:38.160 many work around it. I was wondering, 180 00:11:38.400 --> 00:11:41.680 at some point you you realizing— realize that 181 00:11:41.760 --> 00:11:45.600 copying just the US SAFE model just wouldn't work 182 00:11:45.600 --> 00:11:49.280 here. What was that moment of clarity, and what 183 00:11:49.280 --> 00:11:53.080 did you discover about why Europe isn't ready 184 00:11:53.080 --> 00:11:56.880 for US-style SAFE? And a little disclaimer here, I know there are always 185 00:11:57.340 --> 00:12:00.780 details making this impossible. For example, in Germany, when you 186 00:12:00.780 --> 00:12:04.620 finally convert the safe, you still have to invest a little bit, 187 00:12:04.620 --> 00:12:07.900 which is not in the US legal tradition, and so on and so forth. So 188 00:12:07.900 --> 00:12:11.700 basically, they always needed to be adjusted, at least 189 00:12:11.700 --> 00:12:15.140 in Germany. Yeah, well, and the 190 00:12:15.140 --> 00:12:18.260 reality is, um, that there are some 191 00:12:18.260 --> 00:12:21.740 adjustments needed, uh, in every 192 00:12:21.740 --> 00:12:25.500 country, or almost every country across Europe. So 193 00:12:26.080 --> 00:12:29.560 We started our DeepSafe project, 194 00:12:30.480 --> 00:12:32.880 and after 9 months of 195 00:12:34.400 --> 00:12:38.240 making an effort to fit the US-style 196 00:12:38.720 --> 00:12:41.680 safe into the European reality, 197 00:12:42.640 --> 00:12:46.440 well, literally I can say that we have hit the wall because we have 198 00:12:46.440 --> 00:12:50.160 found out that this is not possible to make it in a simple way. 199 00:12:51.280 --> 00:12:55.050 So We have confirmed, making 200 00:12:55.050 --> 00:12:58.850 the consultations with some selected investors, 201 00:12:59.250 --> 00:13:02.850 that basically Europe is not 202 00:13:02.850 --> 00:13:06.050 yet ready for the simple adaptation of US SAFE. 203 00:13:07.410 --> 00:13:11.010 The legal accounting tax realities and the no clear 204 00:13:11.010 --> 00:13:14.770 vision how to treat it, whether it's a debt or an equity. 205 00:13:17.410 --> 00:13:19.570 And on top of this, there are coming 206 00:13:20.630 --> 00:13:24.230 additional considerations, like for example, 207 00:13:24.550 --> 00:13:27.830 the so-called difficulty situation of the company. 208 00:13:28.790 --> 00:13:31.990 If you take the capital into the company, 209 00:13:32.950 --> 00:13:36.430 which you don't know how to classify, a debt or an 210 00:13:36.430 --> 00:13:40.230 equity, most of the accountants and tax advisors will say, okay, 211 00:13:40.230 --> 00:13:43.990 let's take it as a, as a debt. This 212 00:13:43.990 --> 00:13:47.740 is sitting on your balance sheet. And 213 00:13:48.540 --> 00:13:51.660 too much debt, uh, after 214 00:13:52.300 --> 00:13:55.460 some time, like 3 years, is creating the so-called 215 00:13:55.660 --> 00:13:58.540 difficulty situation of the company, which 216 00:14:00.060 --> 00:14:03.900 doesn't allow the company to get any public help, any grant, any further 217 00:14:04.140 --> 00:14:07.580 investments that are backed by the public money. 218 00:14:08.460 --> 00:14:11.950 So there are many consequences of this status quo. 219 00:14:12.740 --> 00:14:16.100 So just to recap before we move forward, 220 00:14:16.340 --> 00:14:19.620 there is a lot of money in Europe, but 221 00:14:20.020 --> 00:14:23.780 it comes with the limitations of the public money also. 222 00:14:23.940 --> 00:14:27.260 I mean the grants, but also the funds that are backed 223 00:14:27.540 --> 00:14:31.340 by public money. Because 224 00:14:31.340 --> 00:14:35.140 of that, many investors that are backed by 225 00:14:35.460 --> 00:14:39.300 public money are too risk-averse. So they 226 00:14:39.300 --> 00:14:41.980 are paying too much attention on the downside protection, 227 00:14:43.340 --> 00:14:47.020 and they are not paying enough attention to the 228 00:14:47.420 --> 00:14:51.220 upside potential that is coming with the deal. And basically, you 229 00:14:51.220 --> 00:14:55.020 know, the American way of investing is, uh, looking 230 00:14:55.020 --> 00:14:58.220 at the upside of the upside potential of the company. 231 00:14:59.180 --> 00:15:02.620 So, uh, that's why our ecosystem 232 00:15:03.260 --> 00:15:05.870 is simply not ready yet, uh, 233 00:15:07.150 --> 00:15:10.430 for the full deployment and the 234 00:15:11.070 --> 00:15:13.790 growing in the way that we would be 235 00:15:14.750 --> 00:15:18.510 expecting to grow. That's, that's my take. So there 236 00:15:18.510 --> 00:15:21.710 are like two elements. One is the legal 237 00:15:21.710 --> 00:15:25.470 constraints, but also the readiness of 238 00:15:25.470 --> 00:15:26.270 the ecosystem. Um, 239 00:15:29.470 --> 00:15:31.910 we've been talking a lot about different, different 240 00:15:34.550 --> 00:15:35.750 costs, especially, um, 241 00:15:39.590 --> 00:15:43.350 when investing cross-border. Can you share a story 242 00:15:43.590 --> 00:15:47.350 of a promising cross-border deal that 243 00:15:47.350 --> 00:15:50.550 fell apart because of legal or tax barriers? 244 00:15:50.950 --> 00:15:54.750 What did it cost the founder, not just in money but also maybe 245 00:15:54.750 --> 00:15:55.910 in lost momentum? 246 00:15:58.480 --> 00:16:02.080 Well, I think you've touched a very good point. It's 247 00:16:02.080 --> 00:16:05.840 not about the money. It's mostly about losing 248 00:16:05.840 --> 00:16:08.960 the momentum. And 249 00:16:09.760 --> 00:16:12.240 well, I have seen in my life 250 00:16:13.040 --> 00:16:15.440 hundreds of the negative examples. 251 00:16:16.960 --> 00:16:19.920 A couple of them we have witnessed 252 00:16:20.640 --> 00:16:22.240 in our investment fund. 253 00:16:26.070 --> 00:16:28.310 Once we have rolled out our fund, 254 00:16:29.670 --> 00:16:33.310 we have been using the full potential of the FundingBox 255 00:16:33.310 --> 00:16:36.950 Group to look into the European pipeline of 256 00:16:36.950 --> 00:16:40.790 projects. In the first 6 months of 257 00:16:41.190 --> 00:16:43.350 running the fund, we have found 3 258 00:16:44.630 --> 00:16:48.470 excellent startups from Western Europe. 259 00:16:50.270 --> 00:16:53.990 But it ended up that due to the limitations, due 260 00:16:53.990 --> 00:16:57.070 to the costs, the potential costs of the transaction, 261 00:16:58.750 --> 00:17:01.870 uh, the cross-border transaction, those deals didn't happen. 262 00:17:02.430 --> 00:17:04.190 So on the business level, we, 263 00:17:05.950 --> 00:17:09.790 we have been aligned, we have put the term sheets, 264 00:17:10.510 --> 00:17:14.110 but then in the framework of the implementation 265 00:17:15.180 --> 00:17:19.020 the deal simply didn't happen. From the 266 00:17:21.740 --> 00:17:25.460 FundingBox acceleration platform, I can 267 00:17:25.460 --> 00:17:29.260 give one example of the startup, an Italian startup, Cognivix, 268 00:17:30.460 --> 00:17:34.100 that after 2 years of going 269 00:17:34.100 --> 00:17:37.660 back and forth with, with the lawyers, they finally 270 00:17:37.900 --> 00:17:40.700 set up the office in the US. 271 00:17:42.820 --> 00:17:46.020 And got the investment. But 272 00:17:46.900 --> 00:17:50.660 so this is the so-called Delaware flip. But you know, 273 00:17:51.300 --> 00:17:54.980 it was the time, it was the momentum, and it was really, really 274 00:17:54.980 --> 00:17:58.620 the complex operation. But well, speaking about the positive 275 00:17:58.620 --> 00:18:01.220 examples, probably 276 00:18:02.980 --> 00:18:05.700 you, all the listeners have heard about the recent 277 00:18:06.740 --> 00:18:09.140 unicorn coming from Poland, 11Labs. Polish 278 00:18:10.820 --> 00:18:14.500 founders, uh, after 3 years 279 00:18:14.660 --> 00:18:18.500 of running the company, they have hit the valuation of $6.6 280 00:18:18.980 --> 00:18:22.700 billion. But here 281 00:18:22.700 --> 00:18:25.699 is the twist: after analyzing the 282 00:18:25.940 --> 00:18:29.620 landscape, they decided to set up the company in the US and 283 00:18:29.620 --> 00:18:33.380 start fundraising into the US company from 284 00:18:33.580 --> 00:18:37.090 day one. So It is the positive example of 285 00:18:37.090 --> 00:18:40.090 the company coming from or born in the CE, 286 00:18:41.050 --> 00:18:44.850 but the negative for the, from the EU ecosystem perspective is that 287 00:18:44.850 --> 00:18:48.410 they decided to go directly to the US. So those are the 288 00:18:49.290 --> 00:18:52.570 barriers, those are the limitations that we are working on to 289 00:18:54.250 --> 00:18:56.170 eliminate them. And that's our mission. 290 00:18:58.090 --> 00:19:01.810 I was wondering, instead of forcing a 291 00:19:01.810 --> 00:19:05.380 safe you pivoted towards 292 00:19:05.380 --> 00:19:09.140 a pan-European convertible loan as the foundation for 293 00:19:09.140 --> 00:19:12.500 EU scale. Why was this the 294 00:19:12.500 --> 00:19:16.060 smartest starting point for Europe, and what lessons did 295 00:19:16.060 --> 00:19:19.700 you learn from the initial missteps? 296 00:19:21.380 --> 00:19:25.060 Yeah, well, as I said before, US 297 00:19:25.060 --> 00:19:28.580 SAFE adoption failed, the simple one. 298 00:19:30.240 --> 00:19:33.680 So we have pivoted and decided 299 00:19:33.920 --> 00:19:37.520 to concentrate on something that market 300 00:19:39.040 --> 00:19:42.560 already knows and is familiar. So 301 00:19:43.200 --> 00:19:46.480 all investors in Europe, all startups in Europe are 302 00:19:46.480 --> 00:19:49.040 familiar with the convertible loans. 303 00:19:51.760 --> 00:19:54.800 Uh, still the convertible loans can be very 304 00:19:55.350 --> 00:19:59.110 complex. So we decided to 305 00:19:59.590 --> 00:20:02.870 onboard on a mission of creating the EU simple 306 00:20:02.870 --> 00:20:05.830 convertible loan agreement. We call it EU Scale, 307 00:20:08.550 --> 00:20:12.070 and we believe that this approach gives the 308 00:20:12.070 --> 00:20:15.830 chance to gain the traction and trust among 309 00:20:15.830 --> 00:20:18.950 the startups and investors and is going to, to 310 00:20:21.440 --> 00:20:25.200 help to facilitate the speed of the deals happening 311 00:20:25.200 --> 00:20:28.720 across Europe. So it is very 312 00:20:28.800 --> 00:20:30.440 simple, 2.5 pages. Uh. 313 00:20:33.360 --> 00:20:36.480 No interest on the loan, no cash repayment, 314 00:20:37.280 --> 00:20:41.040 no specific guarantees for the investors, just 315 00:20:41.040 --> 00:20:44.480 the promise of the future 316 00:20:45.040 --> 00:20:47.680 most favorite nation of the shares 317 00:20:49.070 --> 00:20:52.270 at the future conversion, which is the standard 318 00:20:53.390 --> 00:20:55.950 when, when getting shares in future. 319 00:20:57.230 --> 00:21:00.870 And well, we stayed true to our goals. So we 320 00:21:00.870 --> 00:21:03.150 wanted the standardized and simple agreement. 321 00:21:05.230 --> 00:21:08.750 We are using the convertible note as the true starting point. 322 00:21:09.550 --> 00:21:12.350 And just to remind 323 00:21:15.350 --> 00:21:18.910 That's how the US SAFE originally was 324 00:21:18.910 --> 00:21:22.510 born. It was the American adoption of the 325 00:21:22.510 --> 00:21:25.910 convertible notes that were very popular on the market. 326 00:21:27.110 --> 00:21:30.870 So in, in the framework 327 00:21:30.870 --> 00:21:34.550 of our project, we plan to encourage some investors to start 328 00:21:34.870 --> 00:21:38.630 using our template and 329 00:21:38.630 --> 00:21:42.320 adopt it. And then hopefully the others are going to 330 00:21:42.320 --> 00:21:45.920 follow and we believe in the snowball effect on the market. 331 00:21:46.320 --> 00:21:50.120 So after a few positive examples, after a few examples 332 00:21:50.120 --> 00:21:53.920 that the deals can happen fast, we believe that it can 333 00:21:53.920 --> 00:21:57.120 become the new normal. 334 00:21:57.440 --> 00:22:01.120 So as I said at the very beginning, 335 00:22:01.120 --> 00:22:04.640 the US deals are happening 3 to 2 times faster than 336 00:22:05.600 --> 00:22:09.440 European. So we are on the mission with this approach, with this template 337 00:22:09.440 --> 00:22:13.130 that everybody's on the, on the 338 00:22:13.130 --> 00:22:16.730 startup and investors seem familiar with to make this 339 00:22:16.730 --> 00:22:19.970 gap smaller or even liquidate it. 340 00:22:21.010 --> 00:22:24.610 In the founders world, you'll also tell some inside story about 341 00:22:25.250 --> 00:22:28.930 stories about that. But let us go into building trust. 342 00:22:28.930 --> 00:22:31.970 As you said, one adapts and then more people will adapt. 343 00:22:32.690 --> 00:22:36.290 Um, you've said before European investors are distrustful of 344 00:22:36.290 --> 00:22:39.730 automation. How did that insight shape your approach, 345 00:22:39.970 --> 00:22:43.070 especially regarding AI funding platforms 346 00:22:43.390 --> 00:22:47.230 versus one-on-one, the, the typical human trust 347 00:22:47.230 --> 00:22:50.990 building? Well, our original plan 348 00:22:50.990 --> 00:22:54.670 within the DeepSafe project envisioned using 349 00:22:55.390 --> 00:22:59.230 our proprietary FundingBox-owned matchmaking AI 350 00:22:59.230 --> 00:23:02.430 platform, OnePass Bridge, to match investors and 351 00:23:02.510 --> 00:23:04.670 startups automatically. 352 00:23:06.830 --> 00:23:10.590 Uh, obviously We did not believe that the deals 353 00:23:10.590 --> 00:23:12.350 are going to happen automatically, uh, 354 00:23:14.430 --> 00:23:17.870 but the goal was to do the matchmaking 355 00:23:18.110 --> 00:23:21.950 and allow startups and investors sign the 356 00:23:21.950 --> 00:23:24.350 deals on the platform, uh, 357 00:23:26.030 --> 00:23:29.870 using the standardized template. Uh, 358 00:23:29.870 --> 00:23:33.670 the platform recently won the Alastria Blockchain Award for 359 00:23:33.670 --> 00:23:37.450 the best Web3 project. So from the product 360 00:23:37.530 --> 00:23:41.050 perspective, um, it's 361 00:23:41.130 --> 00:23:44.890 ready to be deployed. But what we have found out, 362 00:23:45.290 --> 00:23:48.890 that there is no product-market fit, uh, 363 00:23:49.530 --> 00:23:53.250 because the investors, especially investors, are not ready, 364 00:23:53.250 --> 00:23:57.010 uh, to use it for the 365 00:23:57.010 --> 00:23:59.050 purpose of closing the deals. 366 00:24:00.650 --> 00:24:04.380 So The reality is that the EU investors are 367 00:24:04.380 --> 00:24:07.340 not ready for the so-called blind hype-based seed 368 00:24:07.700 --> 00:24:11.420 investments. They are also distrustful of 369 00:24:11.420 --> 00:24:13.620 the new legal approaches, uh, 370 00:24:15.220 --> 00:24:18.940 and the so-called black box automation. So now we are pivoting this 371 00:24:18.940 --> 00:24:22.420 to one-to-one model, uh, meaning 372 00:24:23.700 --> 00:24:27.060 in the framework of the project, we are test 373 00:24:27.060 --> 00:24:29.620 driving matchmaking the investors 374 00:24:30.580 --> 00:24:34.020 also through the platform, but then taking this 375 00:24:34.260 --> 00:24:38.100 on the one-to-one basis to close the deals using 376 00:24:38.580 --> 00:24:42.340 the EU scale template. So we want to have 377 00:24:42.340 --> 00:24:45.220 the real-life proof that the deals, the signing of the 378 00:24:45.940 --> 00:24:49.460 investment agreement, can happen really, really 379 00:24:49.940 --> 00:24:52.340 fast. And this is the first step that we are 380 00:24:54.010 --> 00:24:55.930 right now, uh, testing. 381 00:24:59.210 --> 00:25:02.930 I see that, that sounds pretty promising. You've been talking 382 00:25:02.930 --> 00:25:06.690 about DeepSafe before. Can you walk us through the 383 00:25:06.690 --> 00:25:10.090 structure of the DeepSafe project? Who's involved? 384 00:25:10.330 --> 00:25:13.970 How decisions are made? And how founders, lawyers, 385 00:25:13.970 --> 00:25:17.690 and even VCs are contributing to the EU 386 00:25:17.770 --> 00:25:21.460 scale design? Yep, absolutely. 387 00:25:21.860 --> 00:25:24.740 So the DeepSafe is the EU-funded initiative. Uh, 388 00:25:26.580 --> 00:25:30.300 it's consortium of experts doing the work. We are rather 389 00:25:30.300 --> 00:25:33.620 a small consortium of 7 partners led by FundingBox 390 00:25:33.860 --> 00:25:37.460 accelerator company based in Poland. 391 00:25:38.260 --> 00:25:41.900 In the consortium, we've got the Danish accelerator 392 00:25:41.900 --> 00:25:45.220 called Accelerace, seed fund from 393 00:25:45.710 --> 00:25:49.470 Latvia Overkill, South Moravian 394 00:25:49.470 --> 00:25:50.670 Innovation Center, 395 00:25:52.510 --> 00:25:55.390 BW.CON, Baden-Württemberg Connected 396 00:25:56.990 --> 00:26:00.790 from Germany, and Techosystem 397 00:26:01.469 --> 00:26:05.190 in Ukraine. And on top 398 00:26:05.190 --> 00:26:08.790 of this, we've got a sister company from Spain, FundingBox 399 00:26:09.150 --> 00:26:12.720 Communities. So that's the consortium. That 400 00:26:12.720 --> 00:26:16.400 is helping us to get immersed 401 00:26:16.400 --> 00:26:20.240 into the different ecosystems, different legal ecosystems in different 402 00:26:20.320 --> 00:26:23.840 countries, to make the adaptations 403 00:26:24.640 --> 00:26:28.000 as fitting to the legal 404 00:26:28.320 --> 00:26:31.920 realities of different countries, different ecosystems. 405 00:26:33.440 --> 00:26:35.760 While the European 406 00:26:36.800 --> 00:26:39.840 Simple Convertible Agreement for Loan to Equity 407 00:26:40.760 --> 00:26:44.440 EU Scale is the product. It's a contract template, 408 00:26:44.440 --> 00:26:47.560 uh, supported by the 409 00:26:48.040 --> 00:26:51.880 guidelines. And right now we are looking for 410 00:26:51.880 --> 00:26:54.920 the organizations willing to join us 411 00:26:55.480 --> 00:26:58.120 and help us build it together. 412 00:26:59.080 --> 00:27:02.440 We want to listen to the voice of the ecosystem because 413 00:27:02.760 --> 00:27:06.230 we are building this product for the 414 00:27:06.230 --> 00:27:09.870 ecosystem. So if you are the lawyer, tax advisor, 415 00:27:09.870 --> 00:27:12.670 VC representative, angel investor, 416 00:27:13.470 --> 00:27:16.830 or experienced founder, we are opening a call for 417 00:27:16.830 --> 00:27:20.270 expressions of interest to recruit for our working 418 00:27:20.270 --> 00:27:23.310 groups. So you can visit our website eu-scale.eu 419 00:27:23.630 --> 00:27:25.470 to register, and, uh, 420 00:27:27.550 --> 00:27:29.150 we are definitely going to 421 00:27:31.400 --> 00:27:34.600 to involve everybody that is willing to contribute to this 422 00:27:34.840 --> 00:27:36.600 common goal that we've got in Europe. 423 00:27:40.040 --> 00:27:43.640 Um, we are focused on Founders here on Startuprade.io, 424 00:27:44.200 --> 00:27:47.880 so let us dive in a little bit into the Founders Playbook. 425 00:27:48.040 --> 00:27:51.880 For founders listening today, admittedly we're recording this 426 00:27:52.040 --> 00:27:55.680 shortly before Christmas, but it will be aired only in February 427 00:27:55.680 --> 00:27:58.950 because we, we currently do have quite a backlog a 428 00:27:58.950 --> 00:28:02.350 backlog in content. So for founders listening today, 429 00:28:02.670 --> 00:28:05.710 say, when racing across Germany, Poland, and 430 00:28:06.670 --> 00:28:09.630 Czechia, what 3 practical 431 00:28:09.870 --> 00:28:13.630 steps should they take right now to prepare 432 00:28:13.790 --> 00:28:17.390 for cross-border round? Well, 433 00:28:17.390 --> 00:28:20.110 nowadays I think that the best approach is 434 00:28:21.310 --> 00:28:22.990 get the local lead investor 435 00:28:25.640 --> 00:28:29.360 and close with him a preliminary deal that he's 436 00:28:29.360 --> 00:28:30.680 going to lead the round. 437 00:28:33.320 --> 00:28:37.000 Then search for the international investors who like 438 00:28:37.000 --> 00:28:40.800 the idea. Well, searching for investor is still the 439 00:28:40.800 --> 00:28:44.600 job that you have to do as the founder. And then once 440 00:28:44.600 --> 00:28:48.320 you convince them, ask them to join the round. Why 441 00:28:48.320 --> 00:28:51.820 the local lead investor? To build the trust 442 00:28:53.180 --> 00:28:56.620 of the foreign investors that all the legal 443 00:28:56.620 --> 00:29:00.140 elements and the 444 00:29:00.140 --> 00:29:03.780 basic due diligence has been done properly under 445 00:29:03.780 --> 00:29:06.620 the local legislation. So 446 00:29:07.420 --> 00:29:11.060 that's the approach for now. For the future, once the EUSK 447 00:29:11.060 --> 00:29:14.620 will become the standard, it should be much easier because then you could 448 00:29:14.620 --> 00:29:17.030 be raising money independently 449 00:29:18.870 --> 00:29:21.990 for— from different investors and signing, uh, 450 00:29:23.910 --> 00:29:27.190 like the American companies are doing, signing SAFEs, 451 00:29:28.230 --> 00:29:31.910 each of them independently and up to some limit, 452 00:29:33.270 --> 00:29:36.710 and then with the promise of converting them at the next 453 00:29:37.110 --> 00:29:40.750 equity round. But we are still not 454 00:29:40.750 --> 00:29:43.860 there as the ecosystem. And 455 00:29:44.580 --> 00:29:48.340 I was wondering for our audience if you ever paid a lawyer to 456 00:29:48.420 --> 00:29:52.020 translate a SAFE or convertible notes between EU 457 00:29:52.260 --> 00:29:56.100 jurisdictions. Drop a comment where you're based and let 458 00:29:56.100 --> 00:29:59.740 us know how common this is. We need to talk about 459 00:29:59.740 --> 00:30:03.380 the policy context here, the so-called 28th regime and EU-INC. 460 00:30:04.180 --> 00:30:07.900 Yes, the European Union has currently only 27 members, and 461 00:30:07.900 --> 00:30:09.830 the 28th regime is 462 00:30:11.820 --> 00:30:15.260 part of growing political momentum in Brussels, um, 463 00:30:16.540 --> 00:30:20.300 a potentially new pan-European company structure that could— 464 00:30:20.940 --> 00:30:24.140 would let startups incorporate once and operate 465 00:30:24.220 --> 00:30:28.060 everywhere. But since this might take years to become real, 466 00:30:28.380 --> 00:30:32.220 how do you see EU Scale positioning itself as the 467 00:30:32.220 --> 00:30:35.820 bridge between solution founders and investors 468 00:30:35.820 --> 00:30:39.310 can use today? How has 469 00:30:39.870 --> 00:30:43.510 the shifting political climate influenced 470 00:30:43.510 --> 00:30:46.830 you? Well, the 471 00:30:46.830 --> 00:30:49.310 response coming from the 472 00:30:50.270 --> 00:30:53.069 European Union, European Commission, 473 00:30:54.190 --> 00:30:57.910 towards the initiative of creating the 28th 474 00:30:57.910 --> 00:31:01.590 regime is very positive. EU-INC initiative 475 00:31:01.590 --> 00:31:05.320 is working on it. They have even developed the EUFAST. 476 00:31:07.960 --> 00:31:11.360 This is the advanced 477 00:31:11.360 --> 00:31:15.040 subscription template that 478 00:31:15.040 --> 00:31:18.760 is basically the US SAFE adoption in 479 00:31:18.760 --> 00:31:21.640 Europe. We believe 480 00:31:23.000 --> 00:31:25.000 it has still 481 00:31:26.600 --> 00:31:30.210 the flaws, that we 482 00:31:30.210 --> 00:31:34.050 have faced when trying to adopt American 483 00:31:34.210 --> 00:31:37.730 SAFE in the current European ecosystem. 484 00:31:38.610 --> 00:31:42.290 So that's why we believe that the intermediary step, 485 00:31:43.970 --> 00:31:47.650 like the SCaLE, Simple Convertible Loan Agreement, is 486 00:31:47.650 --> 00:31:50.370 needed. Commission recently 487 00:31:51.250 --> 00:31:54.970 announced that the 28th regime is going to be 488 00:31:54.970 --> 00:31:58.810 the binding regulation. That's good. It's likely to be 489 00:31:58.810 --> 00:32:02.410 adopted in '27 but taken into force 490 00:32:02.970 --> 00:32:06.490 late '27 or even '28. Uh, 491 00:32:09.610 --> 00:32:13.290 just to remind the listeners, GDPR was also the 492 00:32:13.290 --> 00:32:17.010 regulation, and there were many, many issues with the 493 00:32:17.010 --> 00:32:20.650 implementation, and there is usually the transition 494 00:32:20.650 --> 00:32:24.280 period allowing companies to get 495 00:32:24.280 --> 00:32:27.920 time to prepare. There are different interpretations of 496 00:32:27.920 --> 00:32:30.800 laws, different understanding what data protection was. 497 00:32:31.840 --> 00:32:35.680 GDPR was supposed to be universal but became 498 00:32:35.680 --> 00:32:38.879 very complex, and practically for the it, SMEs, uh, 499 00:32:41.360 --> 00:32:45.200 it hit the small companies with the disproportionately high costs. 500 00:32:46.080 --> 00:32:49.410 GDPR concept was born 15 years ago. And 501 00:32:51.090 --> 00:32:54.850 very recently it got fully implemented. So, uh, 502 00:32:55.730 --> 00:32:59.410 that's why we believe that on the way of 503 00:33:00.130 --> 00:33:02.610 implementing the 28th regime, 504 00:33:03.890 --> 00:33:07.650 there will be some hurdles. Regarding 28th 505 00:33:07.650 --> 00:33:11.170 regime, there are more questions than 506 00:33:11.170 --> 00:33:14.770 answers. These questions are tax residency, social 507 00:33:14.770 --> 00:33:18.490 securities, labor laws. It still might 508 00:33:18.490 --> 00:33:20.850 not be applicable for all companies, 509 00:33:23.490 --> 00:33:26.930 especially those that were established under different 510 00:33:27.330 --> 00:33:31.050 local laws. And that's why we 511 00:33:31.050 --> 00:33:33.810 believe that we need that bridge solution 512 00:33:34.850 --> 00:33:38.650 now. The EU scale, we believe, is something 513 00:33:38.650 --> 00:33:42.430 that is going to be the intermediary step, but we 514 00:33:42.430 --> 00:33:45.750 need it really now and fast in the European 515 00:33:45.750 --> 00:33:46.470 ecosystem. 516 00:33:49.990 --> 00:33:53.670 Guys, right after the break, we'll uncover the strategy 517 00:33:53.670 --> 00:33:56.710 that changed how FundingBox scales cross-border 518 00:33:57.030 --> 00:34:00.790 investments and how EU Scale could speed up 519 00:34:01.030 --> 00:34:02.790 your next round by months. 520 00:34:08.480 --> 00:34:12.240 Guys, welcome back from the ad break. How, Tomasz, how 521 00:34:12.240 --> 00:34:15.880 do you balance national differences, say Poland versus 522 00:34:15.880 --> 00:34:19.560 France, while designing one instrument that 523 00:34:19.560 --> 00:34:23.080 fits everyone? It has to fit 27 524 00:34:23.080 --> 00:34:26.880 legal regimes. Where do you draw the line 525 00:34:26.880 --> 00:34:29.440 between flexibility and standardization? 526 00:34:31.689 --> 00:34:35.449 Well, convertible loans are widely used across 527 00:34:35.449 --> 00:34:39.209 Europe with relatively small differences 528 00:34:39.209 --> 00:34:42.249 between countries, but 529 00:34:42.969 --> 00:34:46.809 unfortunately, quite often they become bulky and too complex. 530 00:34:47.929 --> 00:34:51.769 So the primary challenge that we've got is to make it— make 531 00:34:51.769 --> 00:34:55.049 them simple enough to make them universal 532 00:34:57.140 --> 00:35:00.980 But on the other hand, we are working on creating a 533 00:35:00.980 --> 00:35:04.820 playbook set of rules on this, 534 00:35:04.820 --> 00:35:08.220 how to align existing accounting practices, tax, legal 535 00:35:08.220 --> 00:35:10.020 implications in different 536 00:35:11.780 --> 00:35:14.820 legal setups. So 537 00:35:15.940 --> 00:35:19.340 to address this, we'll develop the white paper that will 538 00:35:19.340 --> 00:35:22.900 highlight the required adjustments and interpretations 539 00:35:23.060 --> 00:35:26.870 and educational materials So it's like a playbook for 540 00:35:26.870 --> 00:35:30.350 this, how to use this EU scale depending on the 541 00:35:30.350 --> 00:35:34.070 setup. Investor coming from this country investing in the startup in 542 00:35:34.070 --> 00:35:34.750 the other country. 543 00:35:38.350 --> 00:35:41.790 Let's look a little bit into the future, Tomas. 544 00:35:42.110 --> 00:35:45.550 If the EU scale becomes the norm, 545 00:35:46.190 --> 00:35:49.710 what we currently hope for, what will Europe's early-stage 546 00:35:50.070 --> 00:35:52.990 funding landscape look like somewhere around 547 00:35:52.990 --> 00:35:56.360 2028? Will we finally see a true pan-European 548 00:35:56.360 --> 00:36:00.080 seed, pre-seed market? We hope 549 00:36:00.080 --> 00:36:03.920 so. That's our goal and that's our mission. You, you 550 00:36:03.920 --> 00:36:05.560 guys are also working 551 00:36:07.400 --> 00:36:10.960 with DeepSafe. When is your next intake of 552 00:36:10.960 --> 00:36:14.440 DeepSafe for startups and investors, and can you 553 00:36:14.440 --> 00:36:17.240 explain the benefits for both? 554 00:36:19.480 --> 00:36:23.250 Well, we expect to to launch the next cohort for 555 00:36:23.250 --> 00:36:26.742 about 20 startups in, in late February 556 00:36:26.878 --> 00:36:30.050 '26, with the deadline for applications 557 00:36:30.370 --> 00:36:33.890 being in April. April. In So 558 00:36:35.090 --> 00:36:38.850 after onboarding those 20 startups, we are going to 559 00:36:39.730 --> 00:36:43.490 support them with the Venture Readiness Program starting from 560 00:36:43.490 --> 00:36:45.890 May. We offer them the mentoring 561 00:36:48.140 --> 00:36:51.620 But also we are going to include the fundraising and 562 00:36:51.620 --> 00:36:54.940 actionable advices on how to use the EU Scale 563 00:36:54.940 --> 00:36:58.620 instrument. Moreover, we are going to offer 564 00:36:58.620 --> 00:37:02.300 also the warm introduction to investors 565 00:37:03.020 --> 00:37:06.820 that are in our ecosystem. And we 566 00:37:06.820 --> 00:37:09.900 are looking for the high potential early stage startups 567 00:37:10.620 --> 00:37:12.620 active in the deep tech domain., 568 00:37:15.030 --> 00:37:18.310 established in the EU member states or Ukraine, uh, 569 00:37:21.590 --> 00:37:24.950 and we are looking for startups that are interested 570 00:37:25.270 --> 00:37:27.830 in piloting the EU Scale convertible, uh, 571 00:37:29.110 --> 00:37:32.830 deals. And obviously the expression of 572 00:37:32.830 --> 00:37:36.630 interest will be launched at the eu-scale.eu, so we are 573 00:37:36.630 --> 00:37:39.920 inviting all the startups to 574 00:37:40.560 --> 00:37:44.240 mark this website and look for 575 00:37:44.400 --> 00:37:47.040 announcement of the open call in February. 576 00:37:51.680 --> 00:37:54.160 Um, your predictions for 2030— 577 00:37:55.360 --> 00:37:59.160 what is your boldest prediction for Europe's deep 578 00:37:59.160 --> 00:38:02.480 tech ecosystem by 2030 in talent, 579 00:38:02.560 --> 00:38:04.160 capitals, and exits? 580 00:38:07.130 --> 00:38:10.410 Well, we believe that, um, the 581 00:38:12.490 --> 00:38:15.370 gap between EU and 582 00:38:16.250 --> 00:38:19.930 US and China will be minimized. Our goal 583 00:38:19.930 --> 00:38:23.570 is to reverse the trend, and we 584 00:38:23.570 --> 00:38:27.370 believe that reversing the trend, meaning that the gap is not 585 00:38:27.370 --> 00:38:30.090 growing and getting smaller, is going to be a success. 586 00:38:31.280 --> 00:38:34.720 I would also be interested in your contrarian take. 587 00:38:35.120 --> 00:38:38.800 Many say Europe can't compete with the US. Um, 588 00:38:39.600 --> 00:38:43.240 I actually just read the, uh, State of 589 00:38:43.240 --> 00:38:46.400 European Tech from Atomikor. They say something different. 590 00:38:47.520 --> 00:38:50.760 Um, but, um, you've argued that Europe's 591 00:38:50.760 --> 00:38:54.000 fragmentation might be actually its secret 592 00:38:54.000 --> 00:38:57.610 weapon. How so? Well, 593 00:38:59.210 --> 00:39:02.730 nowadays we definitely 594 00:39:02.730 --> 00:39:06.010 cannot compete in the volume and speed of investments. 595 00:39:07.690 --> 00:39:10.890 Not today and probably not in the 596 00:39:11.930 --> 00:39:15.570 short future. But, and here 597 00:39:15.570 --> 00:39:19.290 are a couple of buts, we 598 00:39:19.290 --> 00:39:22.970 believe that the united defragmentation under the EU umbrella 599 00:39:23.390 --> 00:39:24.830 The fragmentation of the market, um, 600 00:39:28.750 --> 00:39:32.270 is giving a huge opportunity because 601 00:39:32.590 --> 00:39:35.310 Europe has the largest public grant 602 00:39:35.710 --> 00:39:39.070 ecosystem in the world. That is including 603 00:39:39.230 --> 00:39:42.630 grants on the different levels, including the 604 00:39:42.630 --> 00:39:46.350 cascade funding grants where we as FundingBox, for example, 605 00:39:46.590 --> 00:39:50.310 are one of the European leaders of distributing the cascade funding 606 00:39:50.310 --> 00:39:54.030 grants. Just to remind the audience, we have distributed and supported, 607 00:39:54.030 --> 00:39:57.230 uh, more than 1,500 608 00:39:57.310 --> 00:40:00.190 startups in the last couple of years. 609 00:40:01.230 --> 00:40:04.990 On top of this, well, Europe has the, uh, complex but 610 00:40:04.990 --> 00:40:08.670 more stable and predictable political and regulatory environment. 611 00:40:09.790 --> 00:40:13.470 Still lower costs of accessing talent, for example, from CEE 612 00:40:13.630 --> 00:40:17.160 or Ukraine, and Just to mention, 613 00:40:17.480 --> 00:40:20.520 numerous technology and competence centers, uh, 614 00:40:22.120 --> 00:40:25.800 that hold untapped advantages. 615 00:40:28.680 --> 00:40:31.800 Once fully unlocked, they could 616 00:40:31.800 --> 00:40:34.680 significantly strengthen the deep tech ecosystem. 617 00:40:36.440 --> 00:40:39.920 So Europe may not be the most competitive now, but 618 00:40:39.920 --> 00:40:43.740 it's likely the most steady market. We believe that all those elements 619 00:40:45.100 --> 00:40:48.860 are the counterarguments that Europe 620 00:40:48.860 --> 00:40:52.540 will not be able to compete with the US and China. And 621 00:40:52.540 --> 00:40:55.420 we believe that the defragmentation is the key 622 00:40:56.460 --> 00:40:58.140 to unlock all those opportunities. 623 00:41:02.220 --> 00:41:05.500 Um, for our audience, if you're a founder or investor in Europe, 624 00:41:06.060 --> 00:41:09.380 we would be interested give us a comment of your country 625 00:41:09.460 --> 00:41:13.300 pair, the two markets you're trying to bridge with funding, 626 00:41:13.620 --> 00:41:17.300 say Germany, Poland. We'll highlight some of your cases in future 627 00:41:17.300 --> 00:41:20.860 episodes. Tomas, you have 628 00:41:20.860 --> 00:41:24.660 any advice for founders? Because looking back to your 629 00:41:25.140 --> 00:41:28.660 first startup days and your early investor experience, 630 00:41:28.900 --> 00:41:32.580 what two things would you do differently today? 631 00:41:32.900 --> 00:41:36.690 And what should founders focus on when raising 632 00:41:36.690 --> 00:41:37.530 cross-border? Well. 633 00:41:41.130 --> 00:41:44.330 Back then there was literally no VC 634 00:41:44.330 --> 00:41:47.850 ecosystem in Poland, so we had to bootstrap. 635 00:41:48.890 --> 00:41:50.570 Due to the lack of capital, 636 00:41:52.490 --> 00:41:56.250 we got stuck in Poland. We simply didn't have the capacity to go beyond. 637 00:41:57.930 --> 00:42:01.290 So nowadays I would raise 638 00:42:01.370 --> 00:42:04.940 funds from, from abroad and start 639 00:42:04.940 --> 00:42:07.860 scaling from day one with the global mindset. 640 00:42:08.980 --> 00:42:12.740 Today, the mindset should be global and 641 00:42:12.900 --> 00:42:16.740 not local, not even regional, from day one. And 642 00:42:17.140 --> 00:42:20.780 only those companies have the chance to be a 643 00:42:20.780 --> 00:42:22.180 true success, uh, 644 00:42:24.740 --> 00:42:28.020 the founders that are born with the global 645 00:42:28.100 --> 00:42:30.770 mindset and go with this 646 00:42:31.810 --> 00:42:35.410 setup, uh, of conquering the world. 647 00:42:35.490 --> 00:42:39.330 That's the only way forward in my view nowadays. 648 00:42:42.050 --> 00:42:45.610 Let's talk about a hidden gem as the last 649 00:42:45.610 --> 00:42:49.010 question. What's one little-known legal or tax 650 00:42:49.250 --> 00:42:53.090 tip every European founder should know before 651 00:42:53.250 --> 00:42:54.850 signing the next term sheet? 652 00:42:57.740 --> 00:43:01.340 Well, I guess there are many, many tips and tricks. 653 00:43:02.940 --> 00:43:06.740 I believe that founders should 654 00:43:06.740 --> 00:43:09.900 be really careful when 655 00:43:11.579 --> 00:43:13.580 making— signing their first investment agreement. 656 00:43:15.740 --> 00:43:19.420 I would say, first of all, conduct the 657 00:43:19.420 --> 00:43:21.420 due diligence of your future investor. 658 00:43:24.050 --> 00:43:27.850 Investment agreement, especially at the very early stage, is the 659 00:43:27.850 --> 00:43:31.410 long-term contract. So be sure 660 00:43:31.810 --> 00:43:35.650 with whom you are onboarding 661 00:43:35.730 --> 00:43:39.490 on your mission. More 662 00:43:39.490 --> 00:43:43.250 practical things: do not make any guarantees on your personal 663 00:43:43.250 --> 00:43:46.850 property. Still, such elements are 664 00:43:46.850 --> 00:43:49.890 happening from time to time. And 665 00:43:50.450 --> 00:43:54.050 this can potentially lead to a lot of 666 00:43:54.050 --> 00:43:57.730 tensions and a lot of unnecessary pressure on 667 00:43:57.730 --> 00:44:00.850 the founder. Early-stage deals, 668 00:44:01.330 --> 00:44:05.050 it's known to everybody that are very risky 669 00:44:05.050 --> 00:44:08.730 and then can often fail. So you as the founder 670 00:44:08.730 --> 00:44:11.970 shouldn't be putting more pressure on yourself than needed. 671 00:44:12.690 --> 00:44:16.380 And The last thing, quite obvious, 672 00:44:16.940 --> 00:44:20.780 but unfortunately still too often 673 00:44:20.860 --> 00:44:24.380 overlooked: do not give away a large 674 00:44:24.540 --> 00:44:28.180 portion of your equity for the seed investment. We have seen 675 00:44:28.180 --> 00:44:31.660 so many broken cap tables that companies became uninvestable, 676 00:44:32.380 --> 00:44:33.580 and it's a big pity. Tomasz. 677 00:44:39.180 --> 00:44:42.870 Awesome closing words. Thank you very much. It was a pleasure having you as a 678 00:44:42.870 --> 00:44:46.270 guest. Thank you, Joe. It was also a pleasure 679 00:44:46.910 --> 00:44:48.990 having me with you. 680 00:44:55.470 --> 00:44:58.990 That's all, folks. Find more news, streams, 681 00:44:59.150 --> 00:45:00.310 events, and interviews at 682 00:45:00.310 --> 00:45:04.590 www.startuprad.io. 683 00:45:05.070 --> 00:45:07.240 Remember, share Carry is carry.