E109 [AI-Translated] Nvidia Acquires Hugging Face | Mistral €3B | Anthropic Secondary | Bootstrapping vs. VC | xorlab

00:00:00: The original podcast was recorded in German.

00:00:03: This podcast was translated using Artificial Intelligence, Burnrate the Venture Insider Podcast with Max Meister and Guy Jafredi.

00:00:12: Hello!

00:00:12: And welcome to Burnrate – THE VC INSIDER PODCAST.

00:00:16: Here we are again.

00:00:17: We've reached episode one hundred nine... ...and were recording on Friday September fourth at eight thirty.

00:00:22: I speak here twice a week With my business partner at Koyo Capital, Guy Jofredi.

00:00:28: This podcast is sponsored by our partners Umnium and Upscaler.ch.

00:00:33: Yes, guys!

00:00:34: Welcome back.

00:00:35: What are today's topics?

00:00:52: And the last piece of news we're staying with the AI News is about secondaries in Anthropic and how you can currently get access to them.

00:01:00: Then, In The Listener question We discuss whether bootstrapping or VC financing Is the better solution?

00:01:15: Very good!

00:01:15: Yes, the news this time are primarily international.

00:01:19: There wasn't much going on in Switzerland this week?

00:01:21: Yes okay Jan Sommer participated somewhere again exactly but I think that's not so interesting for the podcast right now.

00:01:29: yes let's go international.

00:01:31: NVIDIA is buying hugging face officially confirmed last night.

00:01:36: thirteen billion That is if i'm interpreting the numbers correctly approximately eighty five times revenue.

00:01:43: A not-so bad multiple, I'd say.

00:01:45: Yes and with that Nvidia isn't buying just any AI startup but one of the most important platforms for open source and open weight models.

00:01:54: Officially hugging face is supposed to remain open and neutral.

00:01:58: That's what one says now.

00:01:59: And at the same time, NVIDIA will in future control a central distribution channel of the AI world and we'll probably earn on practically every additional compute cycle.

00:02:09: Yes guy is this for you primarily a strategic infrastructure deal or is NVIDia deliberately buying influence here?

00:02:17: And also hoping to shape which models and tools actually gain traction in the future?

00:02:23: well I'd say it's a bit of both.

00:02:25: hugging face has long been more than a repository.

00:02:28: It's a distribution Channel A community and yes, also in part an almost default place where developers discover new models.

00:02:36: And do a quick test with them.

00:02:37: the platform now has around eighteen million users I've taken this from online research and three million models are available to uses.

00:02:44: that's already enormous.

00:02:46: what can be tested there by now?

00:02:47: two hundred thousand corporate customers or registered on hugging face And accordingly, you can certainly say it's something like the central hub for open AI models.

00:02:56: For NVIDIA of course is extremely valuable.

00:02:58: they don't build their own models themselves but want to understand which models are currently running best and perhaps also for which tasks.

00:03:07: Accordingly its exciting them see where hugging face customers then being directed.

00:03:12: In end every model or use creates demand again And in that sense, they can perhaps also plan their hardware a bit accordingly or estimate the demand.

00:03:24: Which customer is now coming back and having to build a new cloud data center?

00:03:28: The really interesting point will be whether Hugging Face customers see this acquisition as neutral and continue to use Hugging face the same way... ...and don't think hey!

00:03:37: This all-in video isn't so exciting for them anymore.

00:03:40: Yes I think Jensen Huang has tried it before.

00:03:43: It's again exciting when we go back into history.

00:03:46: There are always examples like this where founders had offers from big tech companies.

00:03:52: A few accepted them, but many also turned them down.

00:03:55: there's for example Mason I think his name was.

00:03:58: who had done Groupon back then turn down a three hundred sixty million offer From Google and in the end he walked away with three million.

00:04:06: so they're.

00:04:06: He made The wrong decision at least financially as we know.

00:04:10: money doesn't make you happy But that Was still a bold Decision.

00:04:15: Another case is Zuckerberg, who had a billion offer from Yahoo.

00:04:19: turned it down after consulting with his first investor Peter Thiel.

00:04:23: Also a bold decision.

00:04:25: or Spiegel even Spiegl from Snap exactly.

00:04:29: he just released those ugly glasses for two thousand dollars.

00:04:33: these days no one.

00:04:35: I don't know who wears something like that.

00:05:00: And after he probably approached them a few times before, Jensen Huang.

00:05:04: He said okay now I'm making an offer they really can't refuse and indeed i mean when you offer that much that much then yes You probably just have to accept it even though one always said One wanted to remain independent.

00:05:19: That was always proudly proclaimed.

00:05:21: now they're selling completely.

00:05:23: Yes, is that not a signal?

00:05:24: That open source AI ultimately can barely be financed independently of big tech?

00:05:30: guy

00:05:31: yes I think you can say that and i think thats also the biggest story behind it.

00:05:35: i mean opensource sounds sexy Decentralized a bit, maybe even rebellious but training hosting and distributing AI is extremely capital intensive.

00:05:43: And that of course creates a paradox.

00:05:45: the models can be open while the infrastructure behind them becomes increasingly concentrated.

00:05:51: NVIDIA can even afford this openness of the models because a larger open model world naturally tends to produce more compute.

00:06:00: If Huggingface now remains open and developers can still choose which chips they use, so whether that's an AMD chip or Google Cloud with Google Chips.

00:06:10: Where exactly is the problem behind that Max?

00:06:12: What kind of issue could arise?

00:06:14: Yes in short term probably nowhere.

00:06:17: I also wouldn't say this deal automatically bad for Open Source.

00:06:20: My point more neutrality.

00:06:23: not just a question terms of use but incentives.

00:06:26: Nvidia owns the platform the data about what developers use, the distribution and at the same time dominant hardware behind it.

00:06:34: Even if they never actively disadvantage anyone power in this stack shifts once again clearly an Nvidia's direction And exactly for that reason The regulatory part will probably become almost more exciting than the purchase price.

00:06:48: That certainly something we need to observe and will observe how that develops.

00:06:53: Let us get into next piece of news.

00:06:55: Mistral is reportedly close according to the Financial Times.

00:07:01: Samsung is said be the lead investor.

00:07:03: Additionally, NVIDIA, ASML and new EU scale-up fund are on board!

00:07:09: The valuation is around USDKPT.

00:07:11: That's substantial.

00:07:12: What particularly notable comes together here?

00:07:16: It's an Asian tech company An American chip giant A European semiconductor champion And EU capital All betting on Europe.

00:07:23: great AI hope.

00:07:25: Yes guy Is this round for you a sign that Mistral can really become the European counterpart to open AI and Anthropic?

00:07:32: Or does it rather show how extremely much capital you now need?

00:07:36: just stay in the race at all.

00:07:37: I think, hmmm... You could already say thats very probably more than latter.

00:07:42: Three billion sounds huge but compared with sums that OpenAI & Anthropic are raising They raised one hundred twenty billion and sixty five billion respectively at the start of the year.

00:07:52: Mistral is still significantly smaller, add three billion and a twenty-one billion valuation.

00:07:58: What's interesting?

00:07:59: Is therefore less The absolute sum than the strategic composition Of the investors?

00:08:03: mistral is increasingly becoming A european industrial project with infrastructure And also political significance all At once.

00:08:11: yes samsung is said to be the largest investor.

00:08:14: NVIDIA and ASML are also part of it.

00:08:17: Why exactly the big hardware players investing so aggressively in model providers?

00:08:30: And if Mistral grows bigger, trains more models and also more companies deploy Mistral then of course the investors Nvidia & Samsung benefit relatively directly.

00:08:43: They make chips and ASML indirectly because they develop and assemble the machines for chip manufacturing.

00:08:50: And that's why the entire value chain benefits in this setup, it would also be interesting to see how much of the financing was done through the provision of chips?

00:08:58: That isn't kind!

00:08:59: How much actual cash is effectively being invested in Mistral?

00:09:03: I mean NVIDIA is known for announcing relatively large investments but these are then earmarked so that the companies also buy their compute chips and equip their data centers with them.

00:09:13: So it's a bit of picks-and-shovels plus strategic hedging, I would summarize here Yes after just three years Mistral is already worth twenty one billion.

00:09:21: Is it still a normal venture valuation or is it more geopolitical pricing?

00:09:26: What do you think?

00:09:26: max

00:09:27: know It is still a venture valuation but already a bit political.

00:09:31: Of course too.

00:09:31: i mean purely financially.

00:09:33: mistral has to prove at some point From tech relevance, an extremely large business also emerges.

00:09:40: That's not the case yet today.

00:09:42: at The same time these investors are of course paying Not just for revenue but also for strategic optionality.

00:09:49: I Also said this in a recent interview with Swiss radio Europe wants its own foundation model champion.

00:09:55: Industrial companies want alternatives to the US and hardware manufacturers Want more AI demand.

00:10:02: Part of the valuation is therefore probably also the price for Mistral existing as an independent European player at all.

00:10:10: Yes, in the third piece we take a brief look at the private secondary market.

00:10:15: things are going there right now like never before.

00:10:18: it seems like Anthropic is currently clearly beating open AI those two players who are enormously active.

00:10:27: Anyone who wants to buy anthropic shares now needs, according the market participants at least twenty five to fifty million dollars.

00:10:36: Then you get in but even then it's difficult.

00:10:38: so more like a hundred would be optimal.

00:10:41: Anthropic is now being valued on this secondary market at approximately one point four trillion dollars.

00:10:47: no trillion dollars exactly.

00:10:49: It is valued at trillions of dollars Exactly.

00:10:52: and open AI shares You can partly get from five hundred thousand.

00:10:55: I actually had the opportunity this week to buy for five hundred thousand.

00:10:59: The exciting question is, Is Anthropic really better AI trade or simply hotter one right now?

00:11:05: That's a big question.

00:11:07: Yes guy!

00:11:08: Anthropic is apparently three four-five times more in demand than supply available on the secondary market.

00:11:14: Is that for you a genuine signal?

00:11:17: investors see Anthropic fundamentally stronger then open AI Or simply classic pre IPO FOMO?

00:11:24: Yes, I mean you have to say Anthropic has enormous momentum right now.

00:11:27: Claude is extremely strong.

00:11:29: Enterprise is growing enormously and yes the market sees a very clear path toward an IPO and price discovery.

00:11:37: of course it's extremely difficult but i've briefly noted down two more numbers here for comparison.

00:11:43: I mean, Anthropic generated a quarterly revenue in the second quarter of eleven point six billion.

00:11:48: That's an annualized run rate off just under forty five billion US dollars.

00:11:53: so that already enormous revenue.

00:11:54: they're clocking here by now and the eleven billion is doubling compared to first quarter.

00:11:59: it's an enormous growth.

00:12:01: you can also see with revenues at anthropec You could say valuation derived from relatively clearly.

00:12:09: very likely they're already at seventeen or so billion in revenue in quarter three, perhaps even already at twenty.

00:12:16: So you can see an extreme amount of momentum right now happening there.

00:12:19: and the last valuation that investors paid In May I think this year was still just under one trillion And accordingly That's now thirty forty percent more for strong growth and strong results showing here Which is certainly a deal that sounds extremely expensive Right Now when You Say Hey a startup that's only existed for a few years.

00:12:39: It is valued at one point, four trillion.

00:12:42: The IPO if you believe the voices from market are supposed to be set around two trillion.

00:12:47: Accordingly it could still be an exciting investment put in just before the IPO.

00:12:54: with open AI I certainly wouldn't write off of company.

00:12:57: they're also clocking under seven billion in quarterly revenue.

00:13:00: by now growth has stagnated in comparison to Anthropic, but overall I mean we both use the models.

00:13:07: You have to say now that OpenAI has improved again strongly in recent months and you can use ChatGPT much better again!

00:13:14: Yes i think the price at Anthropic is right now being driven up very strongly by artificial scarcity.

00:13:20: one has to say The company controls very carefully who gets onto the cap table And also large blocks are only changing hands in limited supply.

00:13:29: The founder recently said one should be careful with SPVs from Anthropic because they aren't officially approved.

00:13:36: That's really an important point, I mean offers come up again and again to invest in some SPV or other that supposedly has anthropic exposure... ...and those are not officially approved!

00:13:47: That means you have no idea how.

00:13:49: the came-to-hold shares.. ..or artificial participation instruments right?

00:13:54: You don't actually know that necessarily.

00:13:55: it is not published.

00:13:57: so I think if you were to ask, maybe then yes.

00:14:00: But actually it's not the case that these are official instruments that are coming onto the market.

00:14:05: or may be someone found an employee who said they're selling theirs although the company would know that too.

00:14:11: so for me That is a very big question mark one has to attach here.

00:14:15: For me therefore The most exciting story even before this companies listed at all.

00:14:21: we already have extremely emotional AI public-market trade happening here just in the private market and it's very, very opaque.

00:14:30: And long story short I personally would be enormously cautious about still investing now so shortly before the IPO in Anthropik.

00:14:39: you said they might come to market at two trillion will then have a pop in the first weeks maybe as we saw very nicely with SpaceX to two point five but then it'll probably crash.

00:14:50: perhaps later offers an interesting entry opportunity but the valuations are already extreme.

00:14:57: With OpenAI, which is pursuing a different strategy and it's more diversified.

00:15:02: It's very hard to assess.

00:15:03: I'm also rather skeptical there right now especially when i look at the CEO And how he behaves?

00:15:09: Also what they're doing content-wise overall.

00:15:11: So currently let say More on the substitutes bench watching but of course enormously interesting Right that clear.

00:15:18: so it isn't remains exciting.

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00:16:35: Today's listener question comes from Sylvan from Sursee and revolves around a topic that is becoming quite relevant for many founders right now – bootstrapping vs VC.

00:16:45: The classic start-up playbook of recent years was often relatively clear.

00:16:49: You have a good idea, A cool team you raise as much capital early and then grow very quickly.

00:16:56: Especially with software companies, this was also logical for a long time because you already needed relatively a lot of money.

00:17:02: For the first product version You had to hire developers?

00:17:05: You have to build infrastructure Of course First bring in sales people and so on And so forth and with AI This equation is changing quite substantially.

00:17:13: There are few exciting articles recently The New York Times about A guy who's doing a billion In revenue by himself.

00:17:20: I then looked into it a bit.

00:17:21: It's not as simple As described in the article But it is the case that today very small teams can build, test and in some cases even scale products.

00:17:30: That a few years ago would have needed significantly more people and capital.

00:17:35: That actually is the case.

00:17:36: Nobody disputes that either, at the same time we still see very large seed rounds and also ever larger funds right?

00:17:43: And from that actually arises a very interesting fundamental question if founding becomes cheaper and small teams become more productive which is undeniably the case does one even need venture capital that early anymore?

00:17:55: or is bootstrapping becoming real alternative to VC for many companies?

00:18:00: And yes, perhaps then VC is something you bring in later when capital actually brings a strategic advantage.

00:18:07: Guy if you were founding a software company today would you try to bootstrap as long possible?

00:18:12: or are there still good reasons for taking on VC early?

00:18:16: I mean they're always good reason to take on VC Capital.

00:18:19: those are mainly when you need Capital to build the product at all.

00:18:23: because If a Software is now extremely deep tech and the road to revenue is extremely long, then it certainly makes sense.

00:18:30: And yes of course when you get into the growth phase every VC dollar advances the company further.

00:18:36: but today if I were founding a software company now not too deep tech Then i would try to get by without institutional capital significantly longer.

00:18:48: Not because VC is fundamentally bad But as you mentioned a bit.

00:18:52: The starting position has changed quite substantially.

00:18:56: Previously, you needed relatively quickly a team.

00:19:00: A relatively large team just to even finish building and testing the product.

00:19:04: And today You can do that with a small number of people and you Can already get very far and win customers?

00:19:11: If you know a concrete customer problem and The customers are willing to pay for the solution then I want To first try to grow through That.

00:19:20: the customer is ultimately the best financing.

00:19:23: much better than some programs.

00:19:26: accelerator programs where you lose a lot of time or discussions with investors are the eternal pitching at innovation contests.

00:19:34: The money from your customers.

00:19:36: that's what ultimately makes the company big and VC make sense as I've said really only when the capital brings it genuine strategic advantage, Maybe speed to market is also decisive that you can go broad relatively quickly, and not just launch in one market.

00:19:55: And then grow organically as you primarily do with bootstrapping or has mentioned when high upfront investments are necessary?

00:20:02: Or when the market is developing very fast and customers actually need a solution quickly than You have to hire sales team quickly so you can cover it.

00:20:13: but raising money Just because It's part of The classic startup playbook That doesn't really make much sense to me.

00:20:20: I said it, but we're seeing very large seed rounds right now and also ever larger early stage funds pre-seed funds that are coming back.

00:20:28: Isn't that a contradiction?

00:20:30: So if product development is becoming cheaper What do you even still need so much capital for?

00:20:35: yes the capital is being deployed differently.

00:20:37: i mean briefly on The Large Seed Rounds And looking at the Swiss Ecosystem.

00:20:43: A lot Is Being Invested Now Especially in Deep Tech where we don't simply have a quick path to market.

00:20:49: And I mean, if you need less money for the actual building then The Money just gets allocated differently.

00:20:55: before the software team was built up and today maybe instead You quickly build out a sales and marketing team.

00:21:02: Maybe faster money goes into internationalization and also into growth.

00:21:08: For that venture capital can of course be very sensible.

00:21:11: The danger when you invest a lot of capital early however is bad feedback gets covered So quasi premature scaling.

00:21:18: You acquire customers too expensively, your teams grow extremely fast and with that you actually manage for a long time to show that you're growing well even though the unit economics behind it aren't really working yet With bootstrapping one has to say.

00:21:32: such premature scaling is relatively hard because you have very direct feedback.

00:21:38: Customers have to be willing to pay enough for your product, so you iterate at the start and optimise it until you're really in the right moment.

00:21:49: That's also when you should raise capital.

00:21:53: It is much harder on the initial phase but forces founders to maintain economic discipline.

00:22:03: Do you think founders are sometimes raising money too early today?

00:22:08: I'm not really a fan of bootstrapping by default, as is well known.

00:22:12: Yes sure!

00:22:13: As you say if it makes sense then one should also Bootstrap.

00:22:16: so i think the decisive question is what could a startup NOT do in the next two years?

00:22:21: If it didn't raise venture capital

00:22:22: right?!

00:22:23: Yesterday we had an exciting upscaler workshop with a food start-up And this question also came up there.

00:22:28: So he wants to do a financing round, so we then discussed intensively what exactly he does with the money?

00:22:34: What's the game plan?

00:22:35: that for me actually is the decisive question.

00:22:37: right and I very often see start-ups then diversify with capital they raise don't invest in core business of course become critical but makes no sense at all!

00:22:54: doesn't go into sunk cost, but finances growth.

00:22:57: And if it's really the case that thanks to venture capital one grows faster and there are competitors in the market who also growing strongly then its'in a vital interest of all investors.

00:23:06: this company raises capitol In order grow faster because is about whether can even exist on the market build a moat.

00:23:14: so I think thats an important discussion right?

00:23:17: Or put differently If the company grows anyway grows without venture capital, if it can record growth rates of fifty percent plus every year without taking on outside capital.

00:23:28: Yes be my guest then by all means but that to be completely honest I see very, very rarely right now.

00:23:36: Ernst and Young recently presented the finalists again.

00:23:39: The entrepreneur of the year And i looked at these companies and there are indeed one or two companies that have never taken venture capital That are completely bootstrapped that have financed themselves from cash flow.

00:23:50: But hey if that works Hey!That's sensational Congrats.

00:23:53: then you did something brutally Right?

00:23:55: Then You picked a market that Works that way.

00:23:58: There I Have to say chapeau because If you then still hold One hundred percent At the exit well what more do want.

00:24:03: Those are for me, those are the absolute kings right?

00:24:06: But that's simply rare if you're in a physical AI environment Right now You mentioned it where A lot of hardware is required Where you have to build infrastructure Have to build a sales team have To internationalize forget It with bootstrapping.

00:24:19: I Simply don't believe That i haven't seen.

00:24:26: Maybe you have to look again in five years.

00:24:28: Maybe a company sometime has perfect access to something, hey great but I don't believe it!

00:24:33: That's why as i said bootstrapping yes if works?

00:24:36: But would make the analysis very precisely there and then form judgement.

00:24:41: are you satisfied guy with

00:24:42: answer?".

00:24:43: Yes find that extremely good.

00:24:45: we answered nicely well rounded way.

00:24:47: question is more whether sylvan here is satisfied.

00:24:52: We're in any case looking forward to a brief piece of feedback from you.

00:24:56: And if you want to go deeper into the topic, write us another email Sylvan.

00:25:00: You'd have to tell us what you are doing and then we can Of course better say answer more precisely What do think but now received A fundamental Answer From Us.

00:25:09: Now it's perhaps about The next step where you reveal What exactly your startup does.

00:25:15: But let's first move on To the transaction of the week Guy.

00:25:18: Yes absolutely.

00:25:19: this Week we Have ExorLab On the program.

00:25:22: That's an exciting Swiss security case from Zurich.

00:25:26: They just closed their Series A plus of five million euros, the round was led by Spicehouse Partners and other investors were Graphaholding, Equity Pitchers Ventures and ZKB Startup Finance so all existing investors.

00:25:41: ExorLab is building a European email security platform for companies with high-security and compliance requirements.

00:25:48: That's important in the broader context because email is one of the most important entry points for cyber attacks.

00:25:55: At the same time, phishing and business-email compromise attacks are becoming significantly more convincing.

00:26:01: through GenAI I also by the way received just yesterday again once more a very well crafted phishing attack from an acquaintance of mine who had written me a bit of business context with a file attached And I thought, oh is that really from you Thomas?

00:26:22: But i wasn't sure.

00:26:47: they simply look like normal communication sometimes internally payment instruction a business partner's request or yes simply small internal message with the photo attached.

00:26:58: And that's exactly where the bottleneck is right now.

00:27:01: Classic filters recognize known threats very well, but modern attacks are often contextual and ExorLab therefore analyzes not just individual emails But also the normal communication behavior of a company.

00:27:15: who normally writes to whom?

00:27:17: which domains unknown Which language attachments links or payments requests fit?

00:27:22: The pattern and what is suddenly conspicuous.

00:27:25: If that of course works, then XORLAB won't simply be another email filter but a context-based security layer for corporate communications.

00:27:33: Yes Max how would you classify the case?

00:27:36: Well I find the case exciting because yes... The case also fits very well with the investment thesis of Coyote Capital.

00:27:43: Yes XORLAB addresses a very concrete and real problem and cybersecurity often sounds very abstract, but I mean email security.

00:27:52: you understand immediately.

00:27:54: A single click on a well-crafted phishing e-mail—you said it!

00:27:58: You experienced it — can be enough to compromise credentials payment processes or entire systems And XORLAB addresses exactly where conventional systems reach their limits.

00:28:09: If an E-mail looks technically clean But doesn't fit contextually Or in terms of the relationship context The platform should recognize that.

00:28:17: That's the claim, and it is particularly relevant for companies where bad decisions can become expensive of course at banks insurance company critical infrastructure health care telco but also public institutions.

00:28:31: yes you've looked up a bit.

00:28:33: what did you find out about customers max?

00:28:35: Yes apparently they already have very demanding enterprise customer in deployment on the website.

00:28:41: the company names among others Julius Bayer Swisscom, Von Tobel, CERN or also Climeworks.

00:28:49: Co-op the university hospital.

00:28:52: yes particularly strong is also the claim that six of the ten largest swiss banks are said to use ExorLab for email security.

00:29:00: That's of course very important for the case.

00:29:03: Cybersecurity products don't sell easily into heavily regulated organizations, but when banks and large Swiss companies of course productively deploy a solution that is a very strong trust signal in sales.

00:29:17: It shows that ExorLab not only has good story But also meets enterprise requirements And that makes a case strong.

00:29:24: Let us go deeper here right away.

00:29:26: What does ExorLabs specifically do Max?

00:29:29: Yes, we won't go too detailed now but I think as i've understood it at its core ExorLab protects incoming emails from modern attacks such as phishing spear phishing business email compromise qr code phishing malware or compromised business partners.

00:29:46: Importantly of course is not just about blocking more emails.

00:29:49: It's also about relieving security teams and reducing false alarms.

00:29:54: That's, of course also a productivity goal for companies and efficiency goals.

00:29:58: For companies which I find an exciting topic now.

00:30:01: if too much is blocked that disrupts the business.

00:30:03: If to little is blocked risks arise.

00:30:06: ExorLab Is Now Trying To Get This Balance Right Better Through Context Based Analysis.

00:30:11: So through The Question Of Whether A Message Fits The Normal Communication Pattern Or Not?

00:30:16: That'S Roughly The Mechanism Guy.

00:30:18: Let'S get To The Round.

00:30:19: Five million euros is not huge compared to some AI rounds right now, but for a Swiss cybersecurity scale-up it's a relevant growth financing one can say.

00:30:28: What have you found out?

00:30:29: Yes let's do a brief recap.

00:30:31: ExorLab was already founded in twenty fifteen as an ETH spin off.

00:30:36: In twenty eighteen they raised the pre seed round of zero point nine million with ZKB Hassler Foundation and business angels as investors.

00:30:43: The valuation at that time was just under six and half million post money In twenty-twenty, Spice House then came in as lead investor for the first time and a one point two million pre series A round at evaluation of twelve and half million post money.

00:30:57: The Series A was taken in twenty-Twenty One with an additional six point one million Swiss francs.

00:31:02: This time equity pitchers were in the lead together With existing investors who invested again At a Post Money valuation Of just under twenty three million.

00:31:11: Now in August the Series A plus five million Was announced with Spice house.

00:31:15: The other investors were also all existing investors, and the valuation was set at thirty-two million post money.

00:31:23: For me it's a signal.

00:31:24: XORLAB has built an enterprise product over multiple years validated with demanding customers And now they're raising capital to accelerate expansion in Europe.

00:31:33: What is game plan?

00:31:35: what does one do with the capital?

00:31:37: Yes!

00:31:37: The funds are supposed flow primarily into two things European Expansion and further development of platform.

00:31:44: Geographically, the focus is initially on DAG and Benelux.

00:31:47: And the Nordics.

00:31:49: that makes sense because exactly there many companies have similar requirements high compliance standards strong regulation critical infrastructure and a growing sensitivity toward digital sovereignty.

00:32:02: On the product side The Focus is on further improving detection an automating security teams more strongly so Better triage of suspicious emails more integration into Microsoft three sixty five and being able to build in more on premises environments.

00:32:21: And what does lead investor SpiceHouse have to say about that?

00:32:24: Yes, I was able to briefly exchange with Daniel Andres general partner at Spice House yesterday evening.

00:32:30: So they're of course extremely bullish on the company and shared some information with me.

00:32:35: The excitement that i'd like to share here is why their so bullish.

00:32:39: They first invested in twenty-twenty.

00:32:42: since then only one customer has churned.

00:32:45: That's already a good sign for software companies when there are relevant enterprise customers who are extremely loyal.

00:32:52: And currently, they've been seeing good growth also internationally since the start of the year and not just in the Dach region.

00:33:00: Accordingly, they have backed the company once more as lead investor.

00:33:04: so let's slowly come to a close.

00:33:06: how would you assess the outlook for ExorLab Max?

00:33:09: Yes!

00:33:09: The outlook is certainly exciting.

00:33:12: ExorLab is moving an area with an extreme amount of competition.

00:33:16: one has to say The company has a strong starting position in Switzerland, a clear European positioning and customers in very demanding segments.

00:33:27: If the company can transfer this trust base to Germany, Benelux & Scandinavia – A relevant European cybersecurity player could emerge from it!

00:33:37: The competition is certainly tough.

00:33:39: I mean Microsoft is constantly improving its own security and global providers like Proofpoint, MIMECAST etc.

00:33:48: but also cloud security platforms all address the same market.

00:33:53: XORLab therefore has to show that combination of behavioral AI high detection quality, European hosting also matters and flexible deployment architectures is important in order to prevail against large international providers.

00:34:09: We have a limited partner with us right?

00:34:12: who has made a successful exit in the security space?

00:34:16: And he says clearly look if you're able to acquire many customers If You Have A Product That Works then the exit is relatively assured.

00:34:27: So, you get consolidated in right?

00:34:30: And it's a question of price what gets paid?

00:34:33: and now this case that probably VCs have completely different expectations regarding Exit Price than for example founders.

00:34:44: that can well be.

00:34:45: And then it of course comes down to who decides in the end at what price, The company is sold?

00:34:51: In case I mentioned there was no VC money and the founders decided to sell a very good multiple but always whether this multiple is sufficient for VCs For the Swiss ecosystem, yes.

00:35:09: Certainly The deal was also I think not

00:35:12: bad.

00:35:12: Yes i'd say that too.

00:35:13: No!The deal is certainly exciting.

00:35:15: That's why we included it.

00:35:17: on burn rate ExorLab shows a slightly different pattern from what We otherwise have On the program Compared to the forty million round at Adaptive Where quite young startups raise extremely large amounts.

00:35:32: Well exorlab Was founded in twenty fifteen.

00:35:34: They've built technology Customer trust and enterprise maturity over years, and now they're raising capital to scale internationally.

00:35:43: And that is one has to say a rather patient cybersecurity build compared to a fast hype case right now.

00:35:50: it actually also fits well into Switzerland's current strengths ETH origin deep technology and then demanding regulated customers.

00:35:58: an operation that requires trust and precision but years of reliability.

00:36:05: And it also shows that venture backed companies don't all rocket to unicorn status within a few years, But many cases simply also need time to mature including before a company sale.

00:36:16: That can then hopefully take place positively

00:36:20: Exactly.

00:36:20: That was it for Burn Rate, the VC Insider podcast!

00:36:24: Yes if you want to support our podcast subscribe to The Newsletter and share within your network.

00:36:29: Thank You very much for listening.

00:36:31: We wish a lovely Saturday A lovely warm weekend.

00:36:34: Take care And Bye.