EUVC #228 Sam Endacott, firstminute

What was the rationale behind firstminute's participation in the >100M seed round in Mistral? And how does Sam think about AI, Europe's role and position going forward and much more!

Oct 09, 2023

Today we have Sam Endacott with us. Sam is a Partner at firstminute, a $400m seed-stage venture fund based in London & Berlin to back founders across Europe (and opportunistically in the US and Rest of World). The fund has invested across all sectors and is a generalist VC but has typically focused on SaaS, DeepTech, Developer Tools and FinTech. firstminute is backed by over 130 unicorn founders in addition to current and former CEOs of Global Corporates.

firstminute are investing out of Fund III with a total $100m AUM and an established portfolio of over 130 companies. Notable investments include A.Team, Storyblok, Robocorp, Engflow, Wayve, Klang, Clockwork Labs, Ramp, Element and Generation Home.

The portfolio has raised follow-on financing rounds from Sequoia, Andreessen Horowitz, Atomico, Index, Benchmark, Coatue, Softbank, Tiger, General Catalyst, Northzone, Mubadala Capital, NFX, Balderton, D1, Felicis, Bain Capital and Tencent. At firstminute, Sam focuses on SaaS, Developer Tools, AI / ML and FinTech and has led investments into a number of the fund’s high performing companies such as Storyblok (raised $58m) and a number of recent deals in the AI / ML space which are not yet announced!

Jump to the parts that matter to you 👀

00:00:00 - Introduction to firstminute & Sam Endacott
00:03:44 - From Goldman to VC
00:05:03 - The Influence of History and Politics and dreams of being a diplomat
00:06:16 - Investing Globally
00:07:37 - Take a stance round: The role of luck
00:09:33 - Deep dive on AI & investing across the stack
00:10:57 - Capturing Value in Underserved Verticals
00:12:50 - Consumer internet and the need for a platform shift
00:14:30 - Building Natively for AI
00:17:02 - Mistral and the >100 Million Euro Seed Round
00:18:31 - Europe's Need for an Alternative to OpenAI
00:19:55 - Building with Mistral's Open Source Approach
00:21:25 - The Challenges of Regulation.
00:22:54 - The Importance of Open Source Software in AI
00:24:12 - AI Adoption Across Generations
00:25:53 - Reflections on The Next Generation's Use of Technology
00:28:51 - Challenges in implementing generative AI in the B2B space
00:30:23 - Selling to SMEs vs Enterprise
00:31:56 - The Potential of the No Code and Low Code Spaces
00:33:13 - The Value of SMEs and Big Enterprise
00:34:42 - Impact on People's Livelihoods
00:36:09 - Shout Outs and Learnings
00:37:32 - Ethical and responsible behavior
00:39:08 - The Fundraising Success Equation

Sam’s Journey into Venture

Sam's venture journey is a testament to the unpredictable paths life can offer. After enrolling at the London School of Economics with aspirations of entering the foreign office as a diplomat, Sam's trajectory took a turn. Like many students in London, he was drawn to the allure of investment banking and joined Goldman Sachs, conveniently located just a stone's throw away from his university.

During his tenure at Goldman from 2016 to 2018, Sam was part of the investment banking team focusing on financial institutions. This period was particularly riveting as it coincided with the rise of digital banks like Revolut, Monzo, and N26. As he covered UK banks, he foresaw the impending shift in the banking landscape. This realization was further solidified when several of his colleagues transitioned to these emerging digital banks.

This exposure to the tech realm was transformative for Sam. Upon leaving Goldman, he was presented with two enticing opportunities: joining WeWork or aligning with Brent Hoberman's new fund, First Minute. Brent, known for founding and taking lastminute.com public in the early 2000s, offered an unparalleled chance to learn from a seasoned entrepreneur. Brent's vision for First Minute was to create a venture fund he would have sought investment from during his early days at lastminute.com. Starting with the backing of 30 unicorn founders, the fund has since grown to include 130, marking Sam's intriguing entry into the world of venture.

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Sam taking a stance on Daniel Keiper-Knoor’s statement: “If one needs luck to be successful, they are doing something wrong.”

I disagree with that because I think everyone needs a little bit of luck and I completely understand the intention behind the statement. But I think everyone needs a little bit of luck, but you just need to put the right processes, around what you do every day so that when you need that luck it finds you rather than you sort of relying on it, if that makes sense.
so I think luck is important, but, you still got to have that sort of very disciplined daily grind as an entrepreneur and as an investor, if you want to succeed.

Deep Dive on The AI Revolution:

In the rapidly evolving world of technology, few sectors have garnered as much attention and investment as Artificial Intelligence (AI) and its subset, Generative AI. Sam, a prominent figure from firstminute, offers a unique perspective on this transformative technology, its potential, and the challenges it presents.

1. The AI Landscape: A Brief Overview

Sam, traditionally focused on FinTech, enterprise SaaS, and emerging markets, acknowledges the undeniable influence of DevTools, AI, and GenAI. He notes, "So the space has got incredibly busy over the last 12 to 18 months... it's also incredibly important to have exposure in that space." Sam's insights highlight the rapid growth and the necessity for investors to diversify their portfolios in this dynamic sector.

2. The Promise of AI: Reversing the Productivity Decline

One of the most compelling arguments for the potential of AI is its ability to reverse the declining productivity trend observed in the Western world over the past few decades. Sam passionately states, "With AI and generative AI more broadly... it's probably a chance for that trend to reverse itself." This reversal could benefit knowledge workers, developers, enterprises, and even small businesses.

3. The Challenges: Competing with Cloud Incumbents

However, the path to AI dominance isn't without its challenges. Sam points out the difficulty startups face when competing against established cloud incumbents. He emphasizes, "A lot of the spaces they're going after are dominated by big cloud incumbents... it's very difficult to compete with their level of distribution."

4. The Strategy: Targeting Less Digitally Transformed Industries

Sam's strategy revolves around targeting industries that haven't fully embraced digital transformation. He elaborates, "Where are the areas, where are the verticals... where there aren't cloud incumbents, maybe those workflows are still dominated by pen and paper or spreadsheets." By focusing on these sectors, AI products can act as a catalyst, transitioning industries from legacy systems to cloud-based products.

5. The Consumer Internet Renaissance

Interestingly, Sam also sees potential in the consumer internet space, which has taken a backseat to B2B software in recent years. He envisions a resurgence, stating, "Jones had our AI... feels like a potential platform shift where you can build new consumer internet applications."

6. The Capital Efficiency Debate

A significant point of contention in the AI space is the capital efficiency of startups. Sam acknowledges the potential for startups to scale rapidly, but also highlights the challenges. He states, "The expenses and cost of goods sold associated with becoming an AI native company... can be lower." However, he also warns of the societal implications, emphasizing the need for reskilling and education.

7. The Future: Regulation and Open Source

Sam believes that the future of AI in Europe hinges on two critical factors: regulation and the open-source movement. He asserts, "Europe needs an alternative to open AI... it's very important that Europe has a potential major winner in the artificial intelligence space." Furthermore, he champions the open-source approach, which he believes aligns with European values and offers flexibility in commercial business development.

In conclusion, our conversation with Sam's gave pretty comprehensive overview of the AI landscape, highlighting both its potential and the challenges it presents. As the technology continues to evolve, it's clear that its impact will be profound, reshaping industries and the way we work. Watch it in full below 👀

Sam’s shout-out to Kamil at Notion 💌

I'd like to give a shoutout to Camille, a partner at Notion VC based in London. I've known him throughout my entire tenure in VC, which is close to six years. He's an exceptional investor, and every entrepreneur I've encountered holds him in high regard. Camille is not only empathetic but also technically skilled. He's a builder and has experience as an operator. Moreover, he's incredibly generous, always willing to share his network and dedicate time to brainstorming. That's my shoutout to him.

Sam’s Three Biggest Learnings

First: I think one is just like always act ethically and responsibly. You must always act in a super transparent way. Always be honest and transparent. I've always found this really important.
Secondly: work with people you like. You spend more time with your colleagues than with your family. So I think that's really important.
Third: Always try to learn and grow more. And that's why venture is such a fun job because it's literally like being at university every day. You know, it’s like being in three to four lectures from people who know spaces and topics and domains better than you do.

🔫 The Quickfire Round 🔫

Question 1: What advice would you give your 10 year younger self?

Learn how to code in machine learning engineering.

Question 2: What are your top tips for emerging VCs that are fundraising?

Last year, I was in New York with the head of investor relations at one of the largest multi stage VC funds in the US who was giving us some advice on the fundraise for our third fund. And he said something that was very interesting and stuck with me. He said: fundraising success is an equation with the following inputs: track record, USP, and simplicity of story.
And he said, if you can focus on getting the right balance between those three inputs, that will determine the success of your fundraise.

Question 3: What's the most counterintuitive thing you've learned since you've been in venture?

The one thing I've learned is that venture is all about the power law. So usually only a few of your investments drive the majority of your returns, but you end up spending probably the least amount of time with the companies which drive your returns. That's always been counterintuitive to and something that I've struggled with when thinking about using my time most effectively.