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As a venture capital investor, Jean Bourcereau, managing partner at Ventech, has been around the block enough times not to panic when an economic cycle turns down. But he also knows that for a younger generation of European entrepreneurs, the current chill spreading across the investment landscape is the first slowdown they’ve experienced.

Bourcereau joined us recently on the SeriesE podcast to discuss how Ventech, one of Europe’s most influential early-stage investors, is adapting to these choppy waters and helping its portfolio companies navigate through as well.

“There is anxiety because many of these entrepreneurs and some of our fellow VCs have been raised in a 12-year incredible bull cycle where — I wouldn’t say money was easy. It’s never easy, right?” Bourcereau said. “But there was a lot of money, that’s for sure. So everybody’s been telling them, don’t worry about the spending, don’t worry about the equity, just grow as fast as you can. And all of a sudden, our role is to tell them, hey, who told you that? What we want is for you guys to fine-tune your unit economics because that’s what is important. So it’s a big shift.”

Ventech has been around for almost 25 years now and Bourcereau is one of the three historical partners. The firm launched in Paris, France just before the dot-com bubble. Since then, Ventech has expanded across Europe, with offices in Munich, Berlin, Helsinki, and soon in Stockholm. And there are another 15 people in its sister firm in Shanghai and Hong Kong.

“I’ve been there for 23 and a half years,” Bourcereau said. “So, it means that I’m totally useless at anything else than doing that now.”

Here are a few key highlights from our conversation:

  • On the long-term perspective of an early-stage investor:

“The truth of today is not the truth of tomorrow and was not that of yesterday. The volatility is as high as you can imagine, and so people’s moods are going back and forth. When you’re an early-stage investor, it doesn’t influence too much our pace of investment. But because anything that we invest in today will exit in five to seven years. So the current context is irrelevant.”

  • Other ripple effects:

Exits and refinancing are in the tank for now, as is strategic M&A.

  • The difference between now and previous downturns:

“One thing we learned is that every crisis is different. And that’s why it’s very difficult to predict when it’s coming. But what we tell our LPs when they ask us, is it like 2000? You guys have seen 2000. Is it like that? My answer is no. In 2000, people paid high prices for crappy companies Here, people paid super high prices for good businesses.”

  • Impact of the Silicon Valley Bank meltdown:

“It impacts us in the sense that it increases the systemic risk and the volatility and the anxiety everyone. Now, in the field, we are active on the continent. And on the continent, SVB was not strong at all. They did not have a banking license, for example, in France. So there’s nothing similar to the earthquake that was felt in California, and not even to the situation that could have been felt in the UK.”

  • On the big tech trends:

“The way we do things is that every partner at a given moment of time is focusing on two to three topics, right? And that typically lasts for anything between 18 and 36 months. And then you move on to other stuff, not because the topic is dead, but because the topic has moved from the early stage to a later stage and this is not our game anymore, right? So these days, for example, I mean, we still spend a lot of time on the transition to the cloud for corporations. It’s finally happening and it needs so many tools and analytics and stuff like that. We’re not in the infrastructure play, but all the software that goes around it is a big, big topic of interest to us.”

“The move to the cloud is not going to end. It’s been a trend for 15 years. The move to blockchain, in our view, is the only thing that clearly reminded me of 2000…So we’ll need to do blockchain, but just like any other business, there’s no magic in it. You know, building companies that we say are coming, going from zero to five billion in, in 12 months, people thought that was possible. It’s not, it’s not. So it’s about building real and building value fast, but when something that is actually doable.”

  • On expanding into Sweden:  

“It’s obviously a great place to do venture. So we’re opening physically in Stockholm, but we have been allocating a significant part of our resources for a long time, but we were managing that from Helsinki. So the Nordics is 20% to 25% of our business, and we opened that Nordics presence a bit more than six years ago now. The lesson for us is that compared to places like Paris or Berlin for example, the quantity is very different, and not only because of the number of people, but I would say the deal flow per capita is much lower than Germany or France, but the quality is fantastic. The average quality is mind-blowing.”

  • Predictions for the rest of 2023:

“When you’re doing early stage, we try not to think too much about the current context because the exit is not today. And so it’s about identifying opportunities and above all the best founding teams that can execute on markets and keep the discipline. For us, it’s all about discipline. Invest in a good enough number of companies, have a clear vision on the potential equity story, do not compromise on teams, do not compromise on the potential gross margins that you can find and after that navigate what’s going to be in front of you. But We don’t draw too many predictions. Again, as I was saying,

  • On the ChatGPT phenomenon:

“It’s just fantastic. It’s not gonna solve everything…The market will find a balance between the cost and the environmental footprint of generative AI. I believe my kids will give all their homework to ChatGPT. So, make it expensive so that they don’t do it.”

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