Jeannette zu Fürstenberg is managing director at global VC firm General Catalyst and founder of La Famiglia VC — a Berlin-based early-stage investor which merged with General Catalyst last year, in a move which caught everyone in the European venture scene’s eye.
It came about, she told the Sifted Podcast in October, after years of coinvestments between the two firms — into fintechs like Stripe and Ramp, healthtech Maven Clinic, AI upstart Mistral and defence unicorn Helsing. She sits on the boards of the latter two companies, giving her a front seat at two of Europe’s most closely-watched companies.
“I think that led us to understand that we work very well together,” she said. “We had a shared understanding and mission that Europe, in its current shape and form, needs more scaled capital to truly close the productivity gap that we still have to the US, which is ever widening… and to truly create more ambitious and big outcomes in Europe.”
“Helsing and Mistral are great examples of that; it’s one thing to seed these businesses, but I was always a bit sad to then see them float away and not really have as much involvement and as much ability to support them in the ways I would like to. It’s great to now be in a position where you can put real capital and real platform muscle behind companies you believe in and help them shape up to become global category leaders.”
Since Zu Fürstenberg came on the podcast, General Catalyst has unveiled even more capital — closing a fresh $8bn, including $4.5bn for its core VC funds, $1.5bn to help create new startups and $2bn for doubling down on existing investments.
For hints on some of the more novel ways that money will be spent, listen to the full episode of the Sifted Podcast with Zu Fürstenberg — or read some lightly edited highlights below.
La Famiglia has a strong history of B2B investing and working with the ‘Mittelstand’ — the small and medium-sized businesses in Germany. How do you think AI is going to affect those industries? Are they wary of AI because it’s still early, or too new, or are they jumping on board?
If you think about the European Mittelstand specifically, these are very entrepreneurial cultures. These are entrepreneurs who are full-heartedly committed to the success of their companies. Something that we found out quite early in the journey of La Famiglia is that if you bring together entrepreneurs face to face, they typically do speak the same language, even if they’ve grown up in different generations.
We connect our portfolio very early on with key potential customers and people we believe could be ‘high signal’ in a given vertical. And what we’re observing is they’re just as eager to adopt and embrace AI as larger companies — but all of them still lack some of the engineering capabilities when it comes to truly adopting these models. If you think about the traditional work of a software engineer, then it is quite different to what ML and AI software engineering do. So there is still a large chunk of work to be done when it comes to really creating a better adoption mechanism for these companies to truly embrace AI to the fullest, and I feel like we’re still very early in the cycle.
If you really embrace the enterprise customer, and you optimise making models as performant as possible to truly fit their needs, whether you’re fine-tuning or post-training of any given industry vertical, that is a very promising path, especially for Europe.
One of the biggest dreams I have is to make sure that 10 years from now, three out of the 10 largest technology companies are European.
I think a large part of our role now comes down to, how do we make sure we create a real partnership model between these established industry champions and the AI ecosystem, and make sure they come together on a trusted basis and truly accelerate and meaningfully accelerate the trajectory of Europe. I do think that we have the potential to 3x our market cap as a consequence of AI.
That’s what I’m working towards. That’s what makes me get up in the morning. It’s really one of the biggest dreams I have: to make sure that 10 years from now, three out of the 10 largest technology companies are European.
You sit on the board of Helsing, the AI defence startup which raised €450m at a reported €5bn valuation this summer. Why is it such an exciting company?
The current defence ecosystem has never been challenged from an innovation standpoint. The West has literally taken vacation from history for many decades, and that is showing in the way that the systems have evolved; none of the existing systems are set up for scale, none of the existing systems are set up to actually communicate with one another. And so it’s very hard to build a cohesive deterrent stack purely based on existing systems infrastructure.
Helsing’s core mission is to protect our democracies, which I think is as high a goal and as high a virtue one can have when building a company, because it is anything but to be taken for granted that we live in a free society the way we do here and can live our values to the extent that we do. I think the interesting thing about the genesis of Helsing is that they had that insight before the Russian invasion into Ukraine. It was an insight that was very much fueled by the way global policy was shaping up and the aggression that Putin had already exerted over the years before that. There was an understanding that unless we really enable these existing legacy systems through software and AI, we wouldn’t be able to respond to a threat in an efficient way. If you think about the capacities of Russia, China or the US, they are far beyond anything that Europe can bring to the table. So how do you supercharge the existing landscape to a meaningful degree?
That is the mission and vision of Helsing. Now what they’re doing is creating an AI-based software platform that creates connectivity and visibility into different hardware assets, both from a sort of visibility standpoint, but also from an execution standpoint, which is something that is totally lacking in the existing systems landscape. I believe that this company is making one of the most meaningful contributions to the safeguarding of our western democracies, and is doing so in a way that is incredibly impressive from a technological standpoint. And if you think about the genesis of defence technology and what DARPA has done in the US, it really has been the underpinning of a large part of civil innovations that followed. I think we have a similar path with Helsing, where we are really shaping best in breed technology that can be used for civil applications down the line, and is really setting a precedent with regards to what excellence means in that sector.
Helsing was the youngest company — faster than [US defence startup] Andruil — to ever win a program of record in Europe, which is unheard of for a startup, which just shows you that they have really captured the tailwind in a very interesting way. It’s probably the first time in 70 years in Germany that we will see a redistribution of market share in this industry.
If you look at all the startups you’ve worked with, what attracts great talent? What are the ingredients necessary to become absolute magnets for great people?
Big ambition is certainly a huge driver, and I think we need more big, ambitious companies; it’s not enough for us to look for the next sales optimisation company. What are the really big problems we need to tackle in Europe? There are many of them. How do we actually get behind them at meaningful scale and with a meaningful risk profile? You need to lean into risk in order to truly embrace the market potential to its fullest, and lean into domains that may not be as consensus-driven. When Helsing was started, defence was not the hot sector that everybody wanted to go after. Then, a little less than a year later, Ukraine was invaded. I think the best founders can anticipate the future in ways others can’t. So I think this ambition and early vision is definitely one ingredient.
When Helsing was started, defence was not the hot sector that everybody wanted to go after
I think the second thing is that smart people want to work on the hardest problems, and these are really hard problems to solve that require best in breed product thinking and technological capabilities to truly master them. If you have really strong talent DNA, then this is magnetic to more talent to join you. That’s the talent flywheel that has activated so many other companies in the past.
What needs to happen to enable more companies to have the success that Helsing has had so far, and to convince governments to work with them?
I don’t think I’ve figured that out yet — and it will vary from country to country. Selling in Germany, for example, has the challenge that you first need to get the approval of the military, and once you have the approval of the military, then you have to climb down the ladder, and you have to move up the ladder of parliamentary approval. So that is, just from the procurement process perspective, a really tenacious path, and it requires somebody like Gundbert [Scherf, cofounder and co-CEO at Helsing, and former special advisor to the German Federal Ministry of Defence] who really understands the inner workings and inner dynamics to create a meaningful push and pull to land these contracts. You need to be in very close contact with decision makers to understand where the puck is headed, and align from a product perspective. I think that is more of an art than it is a skill anybody can just pick up — and so we need more Gundberts to really make these companies successful.
You also need a really unique value proposition that meaningfully complements the existing infrastructure stack. I think there are a couple of domains that will emerge going forward; one of our theses is that AI in combination with mass-produced hardware will be a very meaningful part of the defence stack. If you think about the hardware manufacturing capabilities that are needed to execute on that vision, that’s an interesting domain that doesn’t seem obvious, but it’s a really important one. You can also, like Helsing with Saab and Airbus, really lean into partnerships with incumbents. We have incredible incumbents in Europe that understand their domains really well.
Where are the big opportunities you see in the energy transition or climate resilience in Europe?
Scaling innovation in that industry is quite tricky, because it doesn’t come down to just scaling software. Software is probably less than 5-10% of what is needed to truly activate a meaningful energy transition. If you think about really innovative solutions, like carbon capture or hydrogen, they really only become profitable at scale. So you need to have a very long and enduring perspective as an investor to underwrite these businesses.
What we’re thinking through as a firm currently is, how do we meaningfully get involved in the whole project activation part? How do we help companies enable a go-to-market pathway and help them get through the permitting and the implementation process to get to a meaningful scale, and what is the right capital framework to activate these businesses? I don’t think it’s pure venture dollars that will do the job. A lot of it will come down to infrastructure-related financing options. That’s where we are spending a ton of time currently as a firm — to truly bridge that gap and come up with creative solutions to drive that. If companies have found product market fit and are getting to scale, it’s very expensive to fund that from equity, so if we can give them alternative solutions, then these companies, in turn, will be enabled to have more free cash flow that they can use for other growth paths that they deem fit. We are thinking through different new capital solutions that are better suited to climate. Stay tuned for that.
The second domain that is really interesting, as we think about industrial businesses, especially in Germany, is energy transformation. Industry suffered from the immediate surge in energy prices after the war, and so many companies are thinking through independence when it comes to their energy needs. How can we become partners to industrial businesses? What is the optimal energy stack from a product standpoint? What renewable energy access points can they build themselves? What are potential options for node generators that would give them some degree of independence from the grid?
Another domain that we’re thinking through, from an industrial standpoint, is what does the AI workflow look like for these companies? How will robotics, and especially the cobot [collaborative robot] era, affect their labor shortage and make them a lot more productive and give them more output and more efficiency at scale, which is really what’s needed for European industry to sustain vis-a-vis China.
And then lastly, how do we help them re-architect their supply chains? Because a lot of supply chains as they currently stand are just not sustainable anymore. You don’t want to have too much dependency on China. You don’t want to have too much dependency on different logistical risk factors. So how do we really think about that going forward? These are really big and important problems, and great companies will be built in these domains.
Listen to the full episode of the Sifted Podcast with Jeannette zu Fürstenberg here.
Read the orginal article: https://sifted.eu/articles/jeannette-zu-furstenberg-interview-podcast/
