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On investing in the recreation of the real world with Patric Hellermann, GP of Foundamental

A true deep dive on construction tech, proptech, Foundamentalțs investment strategy and the role of data infrastructure.

In this conversation, we explore the distinction between construction tech and prop tech, with a focus on the former. Construction tech is a project-based business that optimizes supply chains, while prop-tech is an operations-based business that focuses on real estate transactions and utilization.

The conversation delves into:

  • The different segments within construction tech, including architecture, engineering, construction, and supply chain technology.

  • The importance of outcome-based business models.

  • The role of AI and data infrastructure in the construction industry.

The conversation concludes with an analysis of the funding trajectory of construct tech and its potential for future growth.

Andreas and Patric examine the waves of technology in the construction industry and the importance of data connectivity and harmonization. They also touch on the challenges of pre-manufactured housing and the fallacies in VC fund strategies. Patric shares insights on their fund model, which is vertically dedicated, global, and focused on early-stage investments. They prioritize preempting follow-on rounds and emphasize the importance of staying involved and not delegating decision-making. Patric also offers advice to young people in the industry, including thinking from a DPI perspective and finding differentiation.

About the guest

Patric Hellermann, the Founding General Partner of Foundamental, an $84M EUR venture capital fund focusing on construction technology, with $100M EUR Fund III just launched.

About the firm

Foundamental is led by three GPs, 1 in the US, 1 in Europe, and 1 in Pacific Asia. They are investing in AEC-Tech: 3D-design, Construction, Renovation, Supply Chain & Logistics, and Blue-Collar Work, starting from day zero up to Series A.

Portoflio highlights count Infra.Market (Series A), Enter (pre-seed), Speckle (pre-seed), Rayon (pre-seed), Metalbook (pre-seed), SafeAI (seed), and Wizfreight (seed).

Key facts include a 94% follow-on rate among Fund-1 companies, the vast majority of which they invested at seed, top-decile returns in both funds, incl. top-decile DPI (Fund-2 actually top 3-5% currently), circa 10 portfolio companies have achieved net-profitability.

Key takeaways:

  • Construction tech and prop tech are distinct sectors, with construction tech focusing on project-based optimization and prop tech focusing on real estate operations.

  • Construction tech encompasses various segments, including architecture, engineering, construction, and supply chain technology.

  • Outcome-based business models, where the focus is on selling the outcome rather than the product or service, can be successful in the construction industry.

  • AI and data infrastructure play a crucial role in optimizing workflows and improving efficiency in construction tech.

  • The funding trajectory of construction tech shows significant growth potential, with the sector expected to reach 50 billion in funding within six to eight years. The construction industry is experiencing waves of technology, with data connectivity and harmonization being crucial for progress.

  • Pre-manufactured housing and improving construction processes are challenges that require innovative solutions.

  • VC fund strategies should be derived from the potential for generating DPI, rather than focusing on raising capital.

  • Staying involved and not delegating decision-making is important for VC success.

  • Differentiation and finding a unique value proposition are key in the industry.

  • Young people in the industry should prioritize DPI, care for their cap table, and focus on building strong relationships.

  • VCs should avoid relying too much on social signals and be cautious of scaling through hiring without maintaining quality.

Legendary companies by definition do not repeat. And yet, the human brain is conditioned to constantly see patterns to effectively come to decisions that allow us to survive among the atomic chaos around us.

A great early-stage investor is able to disconnect this pattern-repeating part of their brain in their quest for legendary, category-creating firms. Instead, they obsess with unearthing and understanding the details, the nuances and the quirks of hidden singularities that rule our world, and see opportunity within them earlier than others.

Add the episode on Apple or Spotify 🎧


  • 00:03 Meet Patrick Hellemann and Foundamental

  • 00:32 ConstructTech Explained

  • 03:40 PropTech vs. ConstructTech

  • 05:40 AECS: Architecture, Engineering, Construction, and Supply Chain

  • 06:58 Robotics in Construction

  • 08:51 Challenges and Opportunities in Construct Tech

  • 19:33 Data Infrastructure and AI in AECS

  • 33:07 Market Trends and Investment Insights

  • 41:06 Automating Data Connectivity

  • 42:59 The Second and Third Waves of Data Integration

  • 43:22 Consolidation in the Infrastructure Sector

  • 45:00 Challenges in Construction Robotics

  • 46:21 Onsite vs. Offsite Construction

  • 47:04 Automating Bricklaying

  • 48:36 VC Fallacies and Sector-Specific Insights

  • 01:13:05 Personal Productivity and Fund Strategy

✍️ Shownotes

Last week, Patric and the team published their letter to builders (and investors). In this episode, we dive deep on it and below, reproduce the letter in full. You’ll have a hard time finding a better introduction to investing in AEC & ConstructTech.

Chasing Vertical Singularities

As we type our letter, we are already on the hunt for the next vertical singularities. For the founders that became enthralled with such a singularity, and the appetite to build a legendary vertical firm. This is our letter to them.


We founded Foundamental in January 2019 with a thesis, a prior track record, and $60 million in commitments. Five years later Foundamental grows to more than $250 million. As of 2024, and our third fund, we are flush with the available financial air power to back and cover the most ambitious builders, starting at their day zero.

More than ever, our minds are locked on our search for those who build the next 100 legendary technology companies in the real world. They build from the ground up, we bring the air power.

Before Foundamental, its founders had collected a spectrum of experiences across technology, venture, and industrial operations. At our day zero, we looked to some like a random mash-up of our prior successes investing in Spotify (NASDAQ: SPOT), Uber (NASDAQ:UBER), Lyft (NASDAQ: LYFT), Zetwerk and a few more firms who have since become legendary, coupled with having been engineers and business builders across energy, chemicals, and automotive. We, however, felt like the obvious team to build the pre-eminent vertical technology investment firm for the real world due to our unique takes and putting in the work.

Today, the Foundamental team is composed of a dozen unique individuals who expanded our spectrum of experiences and perspectives. All of us coming together to form our unique and controversial takes on technology for the real world. Which is powered by our past lives.

As a result, Foundamental’s approach is not to invest in common wisdoms and herd heuristics in the real world. Herd heuristics are a force of nature that allows mankind to make sense of the world in highly repetitive situations. The issue with applying herd heuristics is that legendary companies do not repeat. Each has its own unique ingredients.

Our starting point, therefore, is to search for vertical singularities in our sectors, almost always invisible or hard to evaluate until they become obvious later for others who, unlike us, are not set up to spend 365 days a year in our markets.

When we find such vertical singularities, we spend the time on details to build a deep-rooted conviction in those opportunities that most overlook initially. Like the founders we back, we believe that building Foundamental into a legendary technology investment firm therefore requires focus and dedication.

Image communicating all verticals Foundamental focuses on

Thus, we make no investments outside of the real-world sectors we feel dedicated to. We look for individuals capitalizing on vertical singularities in 3D and design, construction and renovation, blue-collar workforce and robotics, supply chains and logistics. Opportunistically, we also take early bets in industrial manufacturing and aerospace due to its similarities to the spaces we have built deep competencies in.

We look for the best founders across the globe, and even in space. Our investment teams spread across North America, Asia-Pacific, and Europe, led by one General Partner each who was born and raised in the region. While our teams embed deeply in the local markets, we collaborate globally. We can act decisively because of our unified investment committee in which each team member participates every week. This is how we succeed in our global, cross-border knowledge transfer that the best founders find so valuable.

Our primary focus is leading their pre-seed, seed and Series-A rounds with $500K to $5M cheques. While we dedicate vertically, we look for singularities on a global scale. To date we have partnerships with founders in more than 22 countries who serve more than 75 geographies across the Americas, Asia-Pacific, Europe and even Africa.

What matters to us is that we matter to the builders we back. A few include Infra.Market, Enter, Snaptrude, Speckle, Metalbook, Tazapay and Auba. Thus, we are happy to be the only investor in the round or build a strong group of partners alongside us. We reserve more than 50% of the funds we manage for follow-ons, something else that makes our early-stage strategies unique. Which has led us to pre-empting large follow-on rounds across all stages in our portfolio and bringing more air power.

We believe that almost all legendary firms, especially category-creators, go through their own adversities in the first five-odd years, and almost never looked obvious to an outsider. Board cycles are critical as a firm matures, but in the early days every decision every day matters. We therefore put in the work outside of Board cycles. With our deep understanding and unique convictions we pledge to put in the work on your behalf and make you our fans. Patric famously said on the record that his KPI is to reply to every founder Whatsapp in less than 60 minutes. Actually, we almost always respond instantly.


Many have referenced the real world’s market size and its lack of productivity growth. While true and important, our passion for investing in technology in the real world originates from a different place. We fell in love with universal first-principles patterns we discovered, and their timing for the real world.

We have always found that the Macro influences the Micro more than the other way around. What can be difficult about the Macro is that it is like a painting on the grandest canvas of the universe, and we are a tiny dot of color on it. Zooming out is hard. We put in a lot of work to see and monitor large-scale mega shifts and learn from their patterns.

Venture capitalists have poured more than $3.9 trillion of venture funding into the next generations of legendary firms since the dot-com crisis. A staggering 1’075% growth comparing the first twenty years of the 21st century to the two decades prior to dot-com. In the last decade, many venture-backed legendary firms were IPO’d too early for its private investors, having gone on almost unbelievable, sustained post-IPO share price rallies, for example Shopify (+2’742% since its IPO), MongoDB (+1’468%) or Crowdstrike (+400%).

But almost unanimously, and shockingly, these legendary tech firms were built in spaces where they are mainly being used by consumer-like users or IT managers. Venture investors struggled to identify real-world legendary tech firms. Our conviction is that is because venture capitalists are more successful in identifying outliers that will scale when they have a deep personal empathy for the exact user. And generic investors have been consumers or IT managers for many years themselves.

Venture capital and founders need many things today, but more generic venture capital is not one of them.

What generic investors do not have past empathy for are the building contractors, the industrialists, the manufacturers, the supply chain managers, the procurement experts, the painters, the electricians, the truck drivers, the 3D creators, the architects, the CNC engineers. The professionals whose trades are full of nuance and details that are un-google-able. And for whom behaviors and user-archetypes vary dramatically across geographies. Thus, generic investors lack a specialized approach that uncovers and incorporates local nuances.

So what happened in this explosive growth of venture success of the previous two decades was a universal pattern of supporting category-creating firms from sector to sector, but starting with those sectors in which the trained brain of the generic venture investor would be able to have a user empathy. The consumers and the IT managers.

And fortunately for us, this universal pattern had the real world at its tail-end.

When we founded Foundamental in January 2019, we compared the real-world sectors of AECS - architecture, engineering, construction and supply chains - to this universal pattern. We did this because project-based real industries have very different singularities than operations-based businesses. The AECS sectors are optimized around projects. And much to our excitement AECS had stood at approximately $4.5 billion of total venture funding over its history in 2018. While the pattern we discovered instructed us that AECS innovation would begin inflecting past the $5 billion mark.

Graph depicting sector growth over time

We felt confident that leaving our jobs and betting on our own Plan A - founding Foundamental - came at a moment just before an inevitable inflection, allowing us to build differentiation without being too early.

Now less than six years later AECS stands at above $30 billion of total venture funding and is following right in the tracks of the universal pattern we discovered. And we feel more confident than ever about our Plan A.

Graph depicting sector growth in comparison to VC funding

Just as capital and its empathy are the biggest Macro influence on which sectors undergo rapid change, so too is the new vertical infrastructure that a sector builds as a result. We think of vertical infrastructure as the combined data, workflows and tooling. As more of it gets re-built from the Macro, the vertical infrastructure connects to each other and thus creates a self-reinforcing cycle of more and more innovation from the Micro.

We had described this pattern in our founding thesis, calling it the Waves that AECS and the entire real world will undergo.

Graph depicting the Foundamental waves thesis

As we enter the next five years of Foundamental we realize that our sectors are still in their infant stages of technological transformation. New data pools were created at an ever-accelerating pace, but it is only now that we begin connecting them. We are beginning to see category leaders driving consolidation in a digital way, such as Infra.Market. Artificial Intelligence has been hailed by many, and yet only with the right data infrastructure we will reap the hugest of benefits of artificial intelligence over the next decade. Business leaders have accepted the reality of an ever-shrinking pool of highly-skilled workforce, and are embracing real world robotics.

The real world is going through waves, and we are here to ride them alongside the builders of the next 100 legendary tech companies.


It is known that in order to reap outsized returns from early-stage venture investing, you have to be contrarian and right. Herd heuristics rarely unlock Alpha as legendary firms are unique. In building Foundamental, though, we discovered that herd heuristics are almost always applied to tech opportunities in the real world. Surprisingly, they are fundamentally inherent to the model of the generic venture investors when applied to the real world.

Let’s repeat the truth: The world does not need even one more generic venture capital firm. In spite of a healthy contraction in investment volume and pace from the unsustainable years peaking in 2021, founders have more capital accessible to them than ever. What our markets lack is an efficient allocation and distribution of capital to B2B technology markets and their category creators before they are undeniably obvious. The distribution mechanics of generic venture investors that worked in markets they had personal empathy for - consumers and IT managers - are fundamentally flawed once applied to markets with hidden details and nuance. Which is leading to substantial over-allocation on firms that in their early days ‘look like my past successes in consumer and IT’ and an under-allocation to the category creators and future 100 legendary firms in the real world that look and feel different in their first five-odd years.

This alters how venture capitalists need to operate to capture Alpha and create excess value for founders. Generic herd heuristics and generic empathy are obsolete in the real world.

And yet, over the past 17 years of our individual careers we have heard endless variations of the most popular narratives how generic tech investment firms justify doing or not doing deals in our sector:

Table communicating the VC firm fallacies

Did you notice what is remarkable here? None of these popular narratives add any nuanced insights or conviction to the builders.

What makes all of the above an uncomfortable truth is that the prevailing model is just that - generic venture capital with an inefficient and flawed allocation mechanism to B2B markets. Technology advancing into more and more nuanced markets - the largest of which is the real world - threatens the raison d’être of many generic venture investors.

Why is this a problem for investors? The next 100 legendary firms will get built in the markets that contain nuance and operate with a lot of detail. The venture investor community has three options to respond to this threat:

  1. Duck, pray, carry on. Might work for a few of the largest and longest-standing generic investment firms, and for those focusing on the latest stages when the numbers have become undeniable to recognize a legendary firm.

  2. Preach unconditional tech optimism. Just ignore any nuance, abstract the whole world to the most generic and hollow statements possible, hoping your evangelists do not open their eyes until after they accepted your money.

  3. Invest the time and work hard to earn nuanced vertical insight and differentiated convictions. Be a partner to founders in building truly first-of-a-kind legendary firms in nuanced markets, which look just different in their early years.

We have chosen path number three. It is the only way we have conviction in to build a legendary investment firm in the real world.


Such herd heuristics lead to one place only: Regularities. Regularities are those all-too-common beliefs in a category that appear visible even for non-experts. That makes a regularity the opposite of a vertical singularity. Surprisingly, a regularity is what too many investors chase. Regularities are thus at the heart of the inefficient capital deployment into B2B markets, specifically into the nuances of the real world.

Another unspoken truth is that many generic investment firms chase category-clones instead of category-creators. A method which forces them to identify a clone worth cloning by using flawed indicators. The amount of fundraising in a category, for example, is often used by generic investors to determine a top-down derived investment appetite for backing a clone in a heavily funded category.

The problem with such heuristic for almost all investor types, except those who can index an entire market, is that this method is not footed on fundamental substance and is thus much more likely to be a race to the bottom. It is footed merely on herd movements prior to observing how the business actually performs within its market. In the end, a battery of category-clones is funded each by dozens of investment firms of the internet-investing age.

Quick commerce. Scooters. Buy-now-pay-later. Enterprise carbon accounting. Solar installers. There is no shortage of over-funded categories with recombined clones, before the categories display the fundamental substance, cash flows and margins that justify cloning. They leave little justification for optimism about their true margin potential or cash flow. The justification for funding has become herd heuristics, not fundamentals.

Table communicating investor fads over time

We observe multiple reasons leading to these herd investment heuristics. At the top stands a lack of detailed understanding for deep and detailed markets - the largest of which can be found in the real world. It is much easier to back a category clone in consumer or for IT managers than it is to earn a nuanced appreciation of a $50 billion market niche in an industrial vertical. Secondly, the incentive systems of too many generic investments firms are broken. Rewarding a terracotta-army of employed investors with promotions after positive news on big rounds, rather than delaying gratification and expecting a deep understanding of the substance of a business. And finally, the hope that legendary companies can repeat. Worse of all, believing in a repeat-success before knowing whether the cloned company is actually on its way to become truly successful, or is just a fundraising mirage.

It is really hard to evaluate the real potential of what could be a legendary company in the real world - without investing real time to earn real knowledge.

Today, our investment community chooses to deploy staggering amounts of capital into regularities. Categories that these investors easily understand. Founders that shine with charisma.

Foundamental could deploy entire fund generations into a battery of clones for the real world. And we are not immune to the lure created by entire markets moving at the will of large capital deployments. But we learnt to try our best to unearth substance and earn our knowledge. Our convictions have evolved to be different.


When Foundamental started, Patric had written about our investment principles here. All of them are axiomatic. They remain valid in our world view. They define in our core how we look at opportunities. But just like we expect from the founder teams we partner with, we expect from ourselves that we absorb earned learnings into our craft in our pursuit to become legendary.

We validated more aspects of our convictions since our day-0 than there is space to share here. Many of them are like tools in our toolbox, usable at the right moment. Among all others there are four convictions we earned over the years of building Foundamental that have become so core, so underlying to us, that they shape who Foundamental is today. And they work especially because we focus on the real-world:

A graphic communicating a selection of Foundamental's earned convictions

Chasing vertical singularities

We think of a singularity as an abnormal, almost freakish, occurrence in nature. In Mathematics we call it ill-defined or of extreme behavior. A singularity is that rare point that is un-repeatable among regular circumstances. That makes a singularity the opposite of a regularity. Which makes them worth chasing.

We have found that singularities in the context of companies occur way more often vertically than horizontally. We have seen them occur way more often in the real-world specifically, due to all its nuances. It is those unique nuances, hidden deep under a million rocks in the real-world, that allow a vertical singularity to occur.

The generic VC model is not set up to unearth those vertical singularities from under those million rocks until they become obvious by the numbers.

That’s why we have dedicated our careers to chase vertical singularities in the early days of a business. It is a major source of excitement for us when we find one. And it is often a key component to our thesis of investing with massive conviction. We gain that extra conviction when the real-world has unique nuance that requires a first-of-a-kind or highly adapted model, of which AECS has various.

The global view we take is critical to discover vertical singularities. Our global breadth unlocks much earlier insight into the nuances required to understand where to find a vertical singularity, and what it will look like.

Earning nuanced knowledge

Another uncomfortable truth about investing in technology is that it is inherently un-scaleable. When we see a new $500 million early-stage fund get announced, our first question is ‘what is your plan to deploy $500 million in a 10x fund’? We are in an un-scaleable business because the amount of singularities we can deploy against and earn outsized returns is strictly limited by nature.

The only scaleable part of venture investing is knowledge. It’s the only thing we can recycle a million times and it gets better every time we use it. It is as close to a network effect as there is. Scaling knowledge fits perfectly to the nuances and singularities of the real-world, as the nuanced knowledge about the real-world is very tedious to acquire and very valuable.

That’s why we look up-stream of the herd heuristics. We consider it our job to put under the microscope what is overlooked by many. Often they do not overlook first of a kind models because they are first of a kind - but because the generics are in no position to judge the model‘s fit against the singularities of the real-world. Already unusable herd heuristics then often get further reduced to social signals, which do not work particularly well in B2B’s earliest opportunities.

We have learnt to work upstream of the herd heuristics of generic venture investors. They do not matter to us. Our mindset is to pick - not win - our partnerships with founders.

One manifestation of this is that we can rarely excite ourselves for hot narratives that generic investors push but where we see no path to sustainable value creation for shareholders. Negative gross margins? We do not get it, and probably never will.

Another one, and almost the opposite, is when a space or model receives a lot of early love from customers but generic venture investors pass on the firms in that part of the real-world. It can be very worthwhile to put those opportunities under the microscope. There might just be a singularity hidden here that requires unique nuanced knowledge to identify that one firm that is building something generational.

Distilling and directing truths

Did you ever notice how venture often times is practiced like a clique of friends in high school? He said, she said. Back-channelling. To a degree, that might be normal, given how every venture is a partnership that over time evolves to include more and more partners and requires people to court each other. Yet disturbingly, many of these clique-y habits happen outside the formed partnership of a company. It is this speaking outside the walls of the company we have grown to hate and refuse to contribute to.

We have learnt to treat every founder relationship we form as a treasured one-to-one partnership first. We avoid participating in back-channelling with other investors unless the founders instruct us to. We form our own viewpoints, strive to distill them to precise observations, and aspire to speak them directly to our founders. With veracity.

If a founder does not like hearing the truth, we are not for each other. The excellent ones, often those on their second or third or fourth company, they love our veracity. We distill and direct veracity where it belongs - in our one-to-one relationship.

Directing the truths also means to not wait for Board cycles. Start-ups and scale-ups alike take multiple decisions that matter every day. Decisions do not wait for the next Board meeting. We have learnt to reply within the hour with truth and knowledge.

We have made this our core because our best-performing relationships have a strong correlation with how much we treat each others’ goals with respect and make them a priority. We seek special relationships where we hold each other as treasured partners. To get there requires to direct the truth towards one another, especially if it is uncomfortable.

As a result, we refuse to foster back-channelling unless asked of us. We refuse to send five chocolate emojis your way to make you feel superficially gratified or manipulate you emotionally, leaving your business in no better place.

Our job is to distill and direct truths to you. Great founders flourish in it.

Embracing dis-comfort

Being uncomfortable as a tech investor is not something that many people are composed to handle. It is their habit to crave great news. You see this when you hear your investors reach out to you more often during 6 weeks of fundraising than during the previous 52 weeks. They will ask you if this brand-name investor likes you or what that well-known investor had to say.

Such behaviors are result of an inability to handle dis-comfort. It’s funny and sad, given how much dis-comfort and adversity a founder has to handle and what is asked of them.

Unfortunately, we have seen this inability to handle dis-comfort and uncomfortable truths creep deeper into the organizational set-ups of venture firms, where truths go to die and do not get elevated to the most experienced investors who could actually help. We see more and more founding partners of generic investment firms seek to scale their un-scaleable business by delegating more of their jobs while not sharing their equity pool in lockstep. What this creates among such venture brands is a system where junior investors are ‘partners-in-name-only’, incentivized and rewarded for broadcasting great outcomes and holding back bad news as long as possible. Because they get rewarded by promotions, not truly the value of the firm’s equity. And its founding partners hear of the uncomfortable truth last because that is the system they created.

Which in turn leads such VC firms to then become either actionist or distant the moment they hear of a bad news. Instead of being in front of it and helping fix it. This creates the worst possible situation for a founder, where their partners should be helping by handling the dis-comfort instead of adding more load on the founders’ shoulders. Unfortunately, the latter has become the go-to of many too large venture firms due to the set-up fallacies they walked themselves into.

We have made it our core conviction to stay small, flat, share equity, and make portfolio work the job of the most experienced people on our team, not the least experienced. We make it a point to absorb pressure for you, not release pressure onto you. If we feel uncomfortable about a company’s situation, it is by design, not by your fault. We can handle it. You build. We absorb.

In return, we ask of our business partners that they are comfortable being vulnerable with us. We see vulnerability and truth-speaking as a sign of maturity that unlocks exceptional decision-making. Over our past, we figured out that too many generic venture firms get this wrong all the time because they look for narratives to sell internally within their flawed incentive systems, rather than the answers and truths that unlock great decision making. We try our best to speak truths that help your business right now, and absorb the truths that don’t.


Chasing vertical singularities can be so worthwhile not because they are easy to find, but because they are tough to find. We learnt over the years to start our search with mega-shifts that are unlikely to reverse. From there, we pursue buy-readiness signals. We do not mind deep and narrow niches. We thrive in them. A deep vertical niche often holds the key to teaching us about a vertical singularity early.

Vertical singularities are un-repeatable by their very nature. It is not their quantity what makes chasing them so valuable. It is their amplitude. A vertical singularity in a deep yet differentiated enough market can be the root of the next legendary company in the real world.

That is why Foundamental is searching vertical singularities. It is why we invest our time in nuanced understanding. We strive not to be held off by popular narratives, but rather be inspired when a category, model or founder is incongruent with beliefs held commonly outside the AECS markets.

The best way we found to codify our search for vertical singularities is in our “hidden in spite of obvious” framework.

Foundamenetal's Hidden in Spite of Obvious Framework

The top-right is the sweet spot: "Hidden in spite of obvious". Vertical singularities hidden to generic outsiders yet painfully evident to industry insiders. This is fertile ground for category creation. Without the threat of a battery of clones nipping at your heels from day one.

Contrast that with the bottom-left quadrant. We label it "obvious in spite of hidden." Or a mirage. These are narratives that captivate the generic tech investor and cloning founder. Yet elicit blank stares from target customers and domain experts. This trap ensnares those attempting to force-fit a playbook from another sector into AECS. Without truly grasping the unique customer needs and industry nuances at play. Avoid this quadrant like the plague. The tricky bit is, you need hard-earned vertical insight to evade this fate.

The other two quadrants can have their place, but are directionally suboptimal. Being hidden to everyone often means shouldering immense market risk on contrarian assumptions about seismic structural changes - eg. regulation before it's anywhere near certain. It can pay off big if right, but it's a bet close to spinning the roulette wheel. On the flip side, being obvious to everyone typically means either betting on a proven category leader (great for growth funds, but comes with a hefty price tag). Or, if done early, it’s just a soldier in the army of ‘me too’ category-clones.

Our raison d’être is to be the first partners for founders who are hidden and illogical to everyone else, but obvious to us. It's where we together can jump on an emerging opportunity ahead of the pack. Raise a moat around it, and scale into a breakout category-leader before we become obvious.

But pinpointing these singularities demands a keen eye for the non-obvious and hidden. It demands of founders and investors a discipline to differentiate strong vs. poor signals. And which to lean on early.

Strong vs Poor Signals for Early Stage AEC-TECH

It's those signals, hidden in plain sight yet glaringly obvious to anyone with a nuanced understanding and avoiding the herd heuristics, that hold the keys to the next legendary firm in the real world.

But all of this also means: It is lonely to found - and to partner with - a company going upstream against herd heuristics. It is much more instantly gratifying and status-advancing in the short-term to pick categories that are currently in hot demand by investors. We have learnt that B2B category-creators almost always feel too early in their first years. And that is not a bug, it is a feature of creating something potentially legendary in the real world. As a result, these companies remain under-appreciated by generic investors for a long time until they become obvious by the numbers, at which point they require no vertical-specific insight anymore. But not in the early years.

Early customers are the one group to whom a vertical category-creator will not feel too early. Their actions serve as a second important indicator for a vertical singularity to us. Not what the customers say, but what they do with a narrative-defying start-up. When early-adopting customers in a narrow niche make purchase decisions with high velocity, we pay attention to the vertical singularities that might be at play here. Directing our attention to early-adopting customer has allowed us to appreciate signals of buy-ready markets in well-defined initial niches.

Another important indicator where we look for vertical singularities is what we call irreversible mega-shifts. These are large movements in a market’s supply or demand that are so fundamental, almost axiomatic, that they are exceptionally unlikely to reverse again over the next ten-plus years.

Examples of irreversible mega-shifts that influenced Foundamental in the past

For example, one such irreversible mega-shift is the shortage of skilled real labor in developed economies and the abundance of not-skilled-enough workforce in emerging economies. A commonly-held macro interest among generic investors is that moving more and more blue-collar tasks into controlled environments, i.e. factories, allows to maximize automation, and thus is supposed to decrease the economic penalties from not-enough-skilled workforce. However, we view this differently and more nuanced in an AECS market context. AECS contains a large amount of work that physically is more efficient to do on-site. 1 billion buildings will always be in 1 billion sites. A large chunk of those buildings has to be fitted to its site under hyper-local constraints, such as infill or topology. Axiomatically, AECS will not become a copy of an automotive factory. Such are the nuances of our sectors an early investor needs to dedicate time to, in order to realize that this mega-shift will not only drive factory-level automation in the real world. It unlocks category-creating companies in on-site robotics, in vertical workflow standardization and in cross-border labor mobility. And those category-creators are first seen in the real world.

From all this, we have come to appreciate one big signal: The buy-readiness of a vertical niche. We pay attention when we discover that buy-readiness. We get truly excited when we see the potential for a highly differentiated technology applied to that vertical, buy-ready niche in the early days.

Anatomy of generational vertical B2B ventures table


Regularities, herd heuristics and long-held generic beliefs do not inspire us. They can move us in the right directions though. By forcing us to eliminate wrong convictions that just do not apply to a legendary opportunity in our B2B verticals.

Our first five years were about realizing just that. Abandoning the lemming-like mantras of the generic venture investment scene. And finding vertical singularities and uncovering the axioms that power them. Earning the empathy for buyers and workflows outside of the obvious, that a generic fund manager who learnt to rely on their empathy for a consumer or an IT manager does not have the will, skill or access to build for themselves. This makes for an exciting opportunity for those venture investors that dedicate to a deep market with an almost unreal number of nuances. The real world, with AECS at its core, is that vertical market for us.

Where does Foundamental go from here? Our pursuit is to build a legendary, vertical investment firm. It is anti-thetical, some may say it’s diametrical to the common beliefs held by generic venture investors. It is a crazy way to build a technology investment firm. But we have strong conviction in our path. Our next five years will be defined by that pursuit.

As we type this, we are already on the hunt for the next vertical singularities. For the founders that have become enthralled with such a singularity, and the appetite to build a legendary vertical firm. The founders who are told ‘you are too early’ or ‘show me your cohorts’. Those who have come to the same conclusion as us: That the world does not need another generic venture investor. That the early days of a generational vertical tech company is best built alongside a partner who gets excited by the vertical quirks, adds nuanced convictions, is not shy of sharing a distilled truth with them, and absorbs and embraces the dis-comfort of the B2B company journey.

Against all herd heuristics, a few courageous company builders feel the same way we do. They come to the same convictions as us.

We are on a mission to find you. Make you our fan.

And become the best partner you have ever had.

World map

📅 Upcoming virtual events

From time to time, a podcast is just not enough. Check out our roundtables and live events below.

🏆 Firesides with the winners of the European VC Awards

Fireside with the Newcomer of the Year Winner | 13/6, 12-1:30 PM | Register here. Hundreds of new VC funds come to market every year. But only ONE will win Newcomer of The Year. This is your chance to meet the winner firsthand.

Fireside chat with the Winner of the Hall of Fame | 25/6, 12-1 PM | Register here.
Hear firsthand from a true giant upon whose shoulders the European tech ecosystem stands tall.

🗓️ The VC Conferences You Can’t Miss

There are some events that just have to be on the calendar. Here’s our list, hit us up if you’re going, we’d love to meet!

Nordic LP Forum & TechBBQ | 📆 11 - 12 September | 🌍 Copenhagen, Denmark

How to Web | | 📆 2-3 October | 🌍 Bucharest, Romania

WVC:E Summit 2024 | | 📆 7-8 October | 🌍 Paris, France

North Star & GITEX Global | 📆 14 - 18 Oct | 🌍 Dubai, UAE

Invest in Bravery | 📆 22th of October | 🌍 Kyiv, Ukraine

0100 Conference Mediterranean | 📆 28 - 30 October | Milano, Italy

GITEX Europe 2025 | 📆 23 - 25 May 2025 | 🌍 Berlin, Germany

Trying to get in front of European VCs and LPs? The 2024 EUVC Media Kit is out - check it out here, and let’s talk. 💌

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