#502 How Data Is Reshaping Venture Capital: AlphaSemantic’s Vision with Cyril Shtabtsovsky

[00:00:00] 

Mehmet: Hello and welcome back to a episode of the CTO Show with Mehmet today. I'm very pleased joining me, someone I've met in one of, you know, the cohort I was part of. Uh, I want to welcome today Cyril [00:01:00] Shtabtsovsky. Cyril is the founder of AlphaSemantic, and Cyril really did great, great, great, you know, research. In the Datadriven VC world, I'm very pleased to have you with me today, Cyril.

So I always tell my guests the best one who can introduce someone is themselves. So without further ado, sil, tell me a little more about yourselves for the audience, of course, what you've been up to, and then we can start the discussion from there. 

Cyril: Sure, ed. Thanks for having me. So yeah, you are absolutely right.

I've been to the VC cohorts, uh, but then I actually pivoted into service that's called Alpha Semantic now. So we provide them services to VCs, making them data, data driven, uh, sourcing pipeline, using big data. Uh, machine learning models, but before that, I'm still am, I'm a venture capitalist by living as well, so deploying money, uh, doing some deals and so that, that's [00:02:00] probably the best way to describe myself.

I wear two hat, uh, first a vc, and second one is, uh, founder of a product for VCs as well. 

Mehmet: That's great. And you know, I'm excited about this discussion today, Cheryl. The way, you know what I like to do with all my guests, especially if you are a founder also as well. So of course you have the VC hat, but I love to uncover why you felt there is a need for what you currently do with, um, uh, alpha semantic.

Like what are, like the missings in the market that you felt no one is covering up. So I love to hear these stories. 

Cyril: Absolutely. Yeah. So it was a very natural way to break into this stuff. Uh, so as I told you, I've been doing a vc, um. I, uh, ate or a nice scientific paper where we, uh, took data for the startups and predicted their [00:03:00] success.

Uh, it's open. You can go and read it. Uh, probably can put a link in the description later. So we build this algorithm to find chance, uh, back test startup successes and try to raise my fund. But then I immediately realized that. There are a lot of funds who cannot do that. So we can kind of just share the infrastructure and just provide this as a service to these VCs.

Uh, a few VCs immediately ask us how we can use that, uh, for their own fund and that that's why we pivoted into vc. And then I immediately understood that there is only about three, four, about 5% of VCs who do some. Advanced stuff with data or other VCs do that the old way, like meeting founders in demo days, at demo days in coffee and, and all that.

But they still really want to do this advanced data driven stuff. And that's, I guess, why we, why we're doing this. 

Mehmet: Cy just, you know, I [00:04:00] am not playing the devil advocate here, but doesn't this contradict with the whole concept of a venture capitalist? So a vc, you know, they historically, they have bet on, I don't know.

Hundreds and thousands of startups knowing that only few of them will succeed. So now you're, is it like removing this equation completely or is it like, just to justify, you know, the bets that they do on the 

Mehmet Gonullu: Jockey

Mehmet: Instead of, of the. Uh, of the horse.

So what, what is, what is, you know, the, the, the theory behind what, what you are offering, 

Cyril: right? Yeah. Uh, this is my favorite topic actually, so thanks for asking. So. The thing is that almost all top tier funds, like top 10 VCs that you can name, Anderson Ho, [00:05:00] Sequoia, new Enterprise Association, they all use this new data driven stuff and platforms.

They build it insights or either buy out of the market. They either use it or not. They still use some. Uh, strong brand that they, uh, gained over decades and, uh, insider information, but they still use the data-driven and, um, um, machine learning models to identify and probably bet on startups as well. So it's kinda a state of the art in five to 10 years, I'd say, uh, I'd say it'll, it'll still be, uh, an insider information.

Game, uh, where, you know, there is a founder who's cool and he can take your money and you'll be the first. But there is still, um, a big room for improvement, such as, uh, uh, finding startups, uh, uh, immersion out of stealth, uh, tracking their numbers, uh, on website traffic. App downloads and, and all that. So there is still a, a long [00:06:00] way to go there and we, we just fill in this gap, uh, somehow.

But you are absolutely right. There will be still be an insider information traits and, uh, the VC will be, uh, just like before, uh, but with some data-driven stuff inside. 

Mehmet: Cool. Does that mean it'll work after certain stage the startup is at because. A pre-seed startup would not have any metrics. To your point, probably they are still in stealth mode.

So are we talking here about targeting, you know, maybe startups who are ready for Series A? Can we do it for even seed rounds? Like what is the sweet spot here? 

Cyril: Right. So, uh, yeah, you are absolutely technical and you're absolutely right. The sweet spot. Uh, there are some trade off between some information and some upside left for, for like venture revelations.

So the [00:07:00] sweet spot, you're absolutely right is serious bm. That's what we covered in the scientific paper that I published. We predicted. Uh, exits and back tested this strategy for Series B startups. Mm-hmm. So this is the sweet spot, but it still works for Series A seed and even pre seed beds because again, you can somehow get the signal based on founder's background, their previous experience, their education, um, LinkedIn and other social networks.

Give you a lot of signals that you can track and, uh, somehow back test the strategy as well. But again, you're absolutely right. Sweet spot is somehow later in, at the series B or even beyond that. 

Mehmet: Cool. One thing I love to do it on, on, on the podcast also as well is going through the journey, right? So let's say Cheryl.

Um, I decided to go and choose to use your product. Right? What [00:08:00] are like some of the prerequisites that me as a VC I have to have before starting using it? And what is the, I would say how the, the, the onboarding looks like. 

Cyril: Right. So first of all, I'm not selling the product. Probably it is not for everyone.

Uh, but if you, if you're looking for some outside, uh, deal flow sources such as outbound sourcing or something, maybe you rely only on inbounds or your network, it's totally fine. But in case you want some more due flow, that's, that's probably for you. So there are like three core pillars in the product.

First, we built our own semantic search. For example, if you're looking for some specific industries such as, I don't know, um, AI, first startups and FinTech or something, we can, using our own semantic storage, relying on databases. Search for all startups. Semantic, semantically close to, to the startups you described.

[00:09:00] That's the first thing. The second thing, we scrap all the information we get, gather all the information about the startups such as their, uh, social network signals, employee signals. Uh, probably some internal databases with revenue or some, some other sort sort of stuff. And then we just map them using our own algorithm to run these companies.

And third core pillar of the product is that you get this list of top startups first. They fit your thesis, they within the industry you're looking for. Second, they're good. We score them using our algorithm. And so we can just click a button and our AI agent will go and, uh, send them. Uh, generate you a draft of the letter that you can send to founder and ask if they're looking for, for funding.

So that's, that's the three core things. If you want to try that, just let us know your thesis and we can, we're happy to, to try that with you. 

Mehmet: Great. So for deal flow, that's, you know, the dream of every vc because usually [00:10:00] if we are talking about like an established VC with, uh, track record, so you have either some, um, you know, venture scouts out there searching for these startups, or you would, uh, be relying on your own, uh, ways of attracting, as you mentioned, like attending events, um, you know, demo days and and, and so on.

Now, the question here, sir. Let's say if this startup is really super cool, right? And it's like on the rise, and because you pointed that usually we're talking about the sweet spot of a series B. Now how much. Of the pie. Me as a vc, investing in Series B, I would be able to take knowing that usually the, the follow up would come from whoever backed them, maybe in Series A.

So this will be the bigger backer. So I'm just trying to, to do this conversation to. Let also the audience understand the dynamics of, you know, [00:11:00] how the rounds and, you know, the investors who would be involved in each rounds change sometimes from, from stage to stage. 

Cyril: So you are absolutely right. So, uh, there is a saying that VC has three jobs, right?

So first. Um, find, pick and win. So find is about like finding these opportunities that you can back second, uh, picking out of all these opportunities that you source, you need to allocate properly, right? So, uh, out of, for example. Thousands of opportunities you source, you probably need to pick about 3% or something.

And finally, the last job of the VC is to win. So, for example, get there first. Convince the founder that you have the best value of money, uh, that you put in. And so that, that's how the VC works, right? So our product only helps with the first two, right? So we can. First of all, map all these opportunities that's available for you.

[00:12:00] Second, to pick those opportunities out of all these, uh, list of good opportunities. But winning is all about the brands, about how we talk to the founder and all that. We obviously do not replace the vc, the gp, it's all, but obviously it also helps with that a little bit as well because, uh, if you come first, if you see there is the signal.

Earlier than others probably have a higher chance to getting into the, into the, uh, company for Series B, you're absolutely right. There is a majority is taken by Prorata or some top tier funds 'cause Series B. There are not many of them 

Mehmet: right now. One point also, sir, like, um, there's a saying that sometimes you, especially VCs, you know, they, they talk about it, is you go by your gut feeling sometimes, like, I know like this contradicts, you know, the data driven approach, but from your, you know, experience as a [00:13:00] VC yourself also, plus, based on the paper.

Like, would this gut feeling actually somehow in the future proves that it's not a gut feeling? It was like some data that maybe unconsciously you as a vc, you've, you've spotted on, maybe it's maybe the background of the founder, which is again, I believe you can quantify this, right? So even. You know, if they are on a pre-seed or seed stage, still there are like these signals, we as a human, like to be emotional and call it like gut feeling.

But I'm sure like you can relate to something with the data later. Like correct me if I'm wrong. What or what's your opinion on that? 

Cyril: Well that, that's a good question actually. Uh, because again, at the earliest, well, for series B it's easy, there's almost no gut feeling, right? Right. So you just see the numbers, you see how it grows.

Uh, you can probably predict something about the market, not like at the pre-seed stage where you have just the [00:14:00] idea and some problem market that still doesn't exist. So for Prese, I'd say, yeah, gut feeling is probably the number one. Tool for a GP to find, to find and uh, back startups. But again, uh, if you just try and replicate that with, uh, some models probably can work somehow.

For example, there is a nice fund probably I should introduce you to, to the guys called Truck vc, uh, US guys, uh, the founder of the funds, uh, as well with uh, uh, his partners codes. Uh, F Fred Mbo, they train their algorithm. So they, there, there was a data driven VC fund. They use algorithms to find and pick startups.

They do, don't do any work at all, uh, as a gp. So they train the algorithm based on. Let's say gut feelings of top tier VCs. So they gather this group of, uh, different VCs, successful VCs, and they just try to get their feeling [00:15:00] what startup is good, what, what is not. And that's how they build this model they're using right now.

So, um, it can be also working the same way. Uh, so we can use gut feeling to build a model and probably vice versa as well. 

Mehmet: Cool. Now if we want to. Like, uh, talk statistics, Cheryl, like success rate, let's call it about the exits. And just for, of course, you and me, we know a lot of people they know, but if someone just, you know, turned now and wondering what these guys are talking about, so when we say startup exit success means either they went to an IPO or they were acquired or merged with another company.

Now when we look at data-driven. More into details like we, we bring our magnifier and start to look into details. How much percent does I would say, add [00:16:00] to a VC who maybe are using just the traditional ways, like I'm trying to hear, compare the before and after state. 

Cyril: Right. So we, we we're trying to compare the heat rate or exit rate for a traditional VC and data-driven vc.

Right, right, 

Mehmet: right. 

Cyril: So, yeah, it's, it's a complicated, I think it differs from case to case. For example, if we compare that with, uh, so let, let's take our paper for example. Again, I hope we'll put Sure. The link in the description. Of course. We'll, but, uh, there, yeah, there is the number. So. The heat rate, so the, the right, um, choices.

This model, um, uh, did, it was 86%. Um. Right choices. So out of, for example, 100 startups that you choose, uh, the model either says it'll be successful startup, meaning it will go public or will be acquired for a big amount of money, or it'll [00:17:00] be an unsuccessful startup that you don't shoot. Uh, don't need to be.

So the success rate here was 86%. But we also did another thing. So we big tested this model using real numbers. So we run these models. Uh, simulated the real portfolio of a venture capital fund, like, uh, some virtual venture capital fund from, uh, 216 to, uh, 2000, uh, 22. I guess I need to look at the numbers again, but there is the, the paper that you can look at and we back tested this model, so we simulated peak and startups and putting them in the portfolio based on the, on this model.

And, uh, then we looked. What are the numbers? So we, we took startups at series B and then saw, uh, looked what, what went with them. And, um, uh, overall performance of, of such fund was 14 times relations portfolio, meaning DPI, so there was some mm-hmm. TV P or mining [00:18:00] as well. So for the same touch here, it was about top, top 5% of the funds, if I'm not mistaken.

Sorry for that. But there is the number, so 86%. Um, success rate. Um, and again, 14 times revelation of the whole portfolio. So it means it's the top car venture capital fund for sure. 

Mehmet: Cool. Now the thing here that also comes to mind, and by the way, we are seeing. You know, the utilization of data, ai, machine learning in every domain, and, you know, VC is, is no different right now.

The thing is, how do you think if, let's say majority of the VC funds are utilizing your tool or any set of tools, right? That gives them this superpower of predicting rightly. How they could be because people, they think that startups run after VCs, [00:19:00] but it's not always the case. Sometime the VC will be going after the startup if they are really up to something.

So yeah. What is the MO for the VC here? Right. Of course there are like the older ones, like let's say in the US se the Sequoias and Battery and you know, BEMER and all the big names that we know, uh, Anderson Hos, founders funds, like we can keep going on. So these are like established names and, and right.

So, but maybe for newer VCs, how they would be able to differentiate themselves and actually, you know, attract, you know, startup founders to to, to accept them to be their backers, 

Cyril: right. So yeah, again, we're talking about these three jobs that VC has. So I think it's all about the brand and some unique access, unique insights.

For example, there is like. Uh, whole list of VCs that do some really unique stuff. For example, there is a, um, a nice gentleman in Stanford. He's a [00:20:00] professor for Stan, uh, for venture capital fund, uh, funds there, venture capital and private equity called I, and he, for example, backs, he is, uh, students, right? So, uh, he has this high quality pipeline of young.

People who want to do some entrepreneurship or venture capital, they come to his classes and he finds the best, the, the most brilliant, uh, people there and just, uh, invest in them, in their funds, in their startups. So that, that's a very unique stuff. I, I, I'm not sure if there is some model that can do the same, right?

Because the model cannot be a professor for, at Stanford Venture Capital and fund these, uh, these, these founders that come to him. So, mm. I'm not sure if there is a, a, a really simple answer to that. So again, the brand is all about that. For new funds, probably I'd recommend finding something very unique that they can do.

For example, I'm very [00:21:00] excited about Deep Tech right now because, uh, honestly, software companies, anyone can do that right now. You, you just, uh, go to lovable other white PO tools and do that even without CTO for the first time. Right? Like gaining some direction. So I think. Software will commoditize, but deep tech will not.

So if you have some unique relationships with technology transfer offices or some unique scientific group, there probably can be the very unique VC in this specific niche. For example, whether it be quantum computing, optics, uh, ai, again, maybe you have some brilliant pipeline of, uh, AI talents out there.

We see how meta and other guys buying this. Talents just like, uh, uh, soccer players, uh, out there. So I think again, it's all about the brand and some unique things that you can bring. But for the majority of funds, obviously, you either use these data-driven stuff to just [00:22:00] keep up with the competition or you just know.

Mehmet: E. Exactly. And to your point, just as a, um, you know, my own 2 cents on what you just mentioned regarding, you know, deep tech, I, I, you know, extremely agree with you. I would say, um, I think even I was telling people, and even I wrote something, uh, on LinkedIn a couple of months ago where I said. Funny enough, you know, when, uh, you know, we started to talk about, which just came from a vc, uh, software is eating the world now, I think.

AI chips mainly are eating the world. And I said, like, it looks like, and, and you know, like people, they don't understand. Sometimes we have cycles, um, in, in, in our, uh, human history where things go back to square one and, you know, things kick off and then you go back and other things kicks off. But yeah, like, because, you know, the, [00:23:00] the LLMs are.

Uh, I would say commoditized. Now, uh, vibe coding is commoditized. Now, yesterday, you know, just for the sake of transparency, we are recording on 15th of July. Probably you're watching at, towards the end of July or beginning of August. So, uh, you know, I was surprised even I come from a technical background, but how easy it is to do an MVP today, you know, with software, if you're talking about a SaaS.

It's, it's like maybe maximum one hour of work and you have a full fledged MVP if you bring someone more technical, like someone who still remember how to code, not me. So probably you, you, you would, you would end up like much, much faster. But to your point, a hundred percent. I agree on this Cy. Now back to absolute.

Yeah. So back to the VC and data driven. Um, let me ask you quickly, the back testing was on US companies or was it like global? 

Cyril: It's global, but about 80% were US companies. Okay. 

Mehmet: Yeah. The reason I'm [00:24:00] asking you this, Sarah, like, because let's say I'm, I'm based in Dubai, so let's talk about, about the MENA region.

So if I want to get these signals, does the volume affect, you know, the outcome, uh, of data driven? System that can, you know, bring me these startups, these signals, or doesn't matter. Like it's because like, okay, we can, what, what applies in the US we can say it applies in Europe. I know you're based in Europe.

It can be applied in mena, it can be applied in apac, in Australia, whatever. So, um, how much the, the size of the data or like the number of startups, because the good news is we are building momentum in the MENA region, but still we are very, very, very far away. But how this will affect a VC like myself sitting in the MENA region.

Cyril: Right. So that's, that's great question. Actually. The number one problem for any data-driven VC or tool for [00:25:00] VCs is the quality of data, right? And the data itself, right? Right. There is only a few million startups out there, like globally, and success rate is, is really small. So we have really a little, uh, examples to train your model on and all that.

So for a niche. Uh, not really niche. It's an emergent place, really. Um, a lot of success cases, like Kareem for example, went public and all that. Uh, there are a lot of success cases, but probably not really enough to, to build a robust, reliable, solid. Model. Uh, and probably for such regions such as Mina or something else, it's probably better way to just network with the founders, hang out there and see if something is emerging.

But probably you can, um, again, the devil is in the detail, right? So if we train the model and see some signal, that's it. But I haven't tried that unfortunately, cannot say the right answer. But again, data is the big problem in we see here. And, uh, the smaller the region, the harder it is to build a reliable model [00:26:00] for that.

Mehmet: Absolutely, and this makes sense. Um, because yeah, we need, the more we have data, so maybe, I don't know, like probably in 10, hopefully less number of years, like I'm talking about at least the MENA region, we, we will have like more exits. Of course. We have good ones that, uh, that happen. We are seeing some momentum also as well.

Um, I'm pretty much, you know, believing in the cross bridging across geographies, whereas. You know, because we, we always, uh, think that it's a m and a or IPO, uh, but you know, I'm starting to, to to also believe, I mean. An IPO locally or an MA by foreign entity. I'm hoping to see like, you know, both directions.

Like something from Europe or like us probably coming here making an IPO or vice versa, or m and a, right? So, so let's see. Let's see how, how things goes. But [00:27:00] in general, sir, and you. You've been investing for a long time. How are you seeing the, the VC landscape in general? Um, at least in 2025, I would say.

Cyril: Right. So yeah, we obviously had this spike in 2020 with, uh, M 2021, probably with cheap money, low interest rates, a lot of money pouring into, uh, startups and venture funds as well, a lot of capital. So I think it was the peak about, um. And if I'm not mistaken, about two three to relearn in dry powder was allocated.

Obviously not every, everything deployed. So we see this cycle again, like, uh, coming back with, uh, hyped, inflated valuations for EA startups. Really this, a lot of money pouring into this stuff. So, uh, again, there is like top tier funds that make. Most of the returns in the venture industry and the rest of the, [00:28:00] um, and the rest of the venture capital industry.

But again, in the, in the coming year, in the last years, like say, uh, three to five years, there've been some emergence space for, again, data-driven VCs. There is a nice report like industry report for data-driven VC landscape, uh, led by. Uh, a gentleman, a venture capitalist from Germany called Andrea. He's called data driven vc.

There you can see a top list of top, uh, venture capital funds using data and models to source and identify startups. So I'd say that that's the recent trend. Uh, I'm not sure how sustainable it'll be. Maybe these funds will remain at the same level. Maybe they will go to be the top tier funds, but honestly, I think the Silicon Valley funds will dominate like Squa and recent Corbit, all these top tier funds will still dominate because these decades of.

Uh, brand building of track record building, uh, is a [00:29:00] really strong mode, just like we we described before. So, uh, I think it'll be all the same in 10, 20, probably, uh, 50 years. There will be top tier funds, probably the same names as now, and all other VCs, maybe some innovators as well. 

Mehmet: Right. So we, we are seeing, you know, to your point, sil about just what you mentioned at the end, um, we are seeing these pushes both from investors and startup founders about like making at least Europe, you know, uh, better established on the VC map.

Uh, I saw a lot initiatives. I saw a lot of, uh, kind of, I would not call it hype, but real, you know, people really, they're trying to, to change things, but. Still, you know, and people are talk, keep talking, talking, talking. But it looks to me that we go back to square one actually square zero even, and we say, okay, it's the [00:30:00] valley, it's, it's the US start VCs and actually startups that they're gonna be dominating.

Are you seeing any real change, any real work being done to change this? I know like in Europe especially, the biggest, um, you know, I would say barrier is, are the regulations, are you foreseeing anything changing in the near future, maybe. 

Cyril: Well, yeah, especially for Europe because I'm based here and you very close obviously.

So there was a recent movement in some trying to make the new Renaissance for Europe. Uh, there was a nice project that I support, um, that. Uh, the European VCs want to make this, um, domicile for all European startups, so they don't need to, um, incorporate in Germany then separately in France or all, all their, there is like a movement to make this combined European, um, legal entity [00:31:00] setup.

So it'll be super easy for them to incorporate, pay Texas and also be. Uh, funded by VCs from, from all around the world. So I think Europe is moving somewhere. Not sure about other, um, regions 'cause I'm less, less involved in Asia, for example, or as well min region. But again, I think us still has this. Uh, US is, especially Silicon Valley, still, still has this superpower of being the do dominance place for new innovations.

And it still has this, uh, spiral of attraction, the most founders, the most VCs capital. So I, I I think it will still be the, the, the same, uh, case for the next decade or something, but obviously, uh, yeah, other regions make great competition here. 

Mehmet: Absolutely. Uh, I know like, um, uh, in Europe, um, trying to remember the name.

Yeah. So, so, uh, Harry Stabbings [00:32:00] with 20 cc. Yeah, he was trying to do something he, he called for, for some stuff. Le let, let's see, you know, establishing a, a pan European kind of, um, you know, fund. Um, let's see how this works in me region, you know, um, I would say. We are still in the baby phases. Right. So, although like VC is not something new, I think, you know, there will be VCs investing in startups for I think more than 15 years now, probably.

Um, we started to see exits, but I think we still need more. Like there's a plenty of rooms. Uh, but the biggest thing with VCs usually, I mean in, in regions, it's not the VCs, it's not the founders. Uh, when it comes to innovation, in my opinion, this is my new theory, it's about finding early adopters, especially for new kind of technologies, right?

So, so you need, like, let's say you and me, Israel, we are a co-founders and even we found a VC to back us. [00:33:00] Uh, but if we don't have the doors open, which is a VC usually should help also in that. But if we don't have these early adopters, and I'm talking about the B2B, this is where my area of expertise is.

B2C. It's a different monster, different game. But anyway, so, so I, I think this is what built also the, you know, the reputation of, uh, uh, any ecosystem. Like, yeah, innovation is important, money is important, founders are important, but we need also the, the, the adopters, the early adopters, the first believers in, in any new technologies.

One thing I want to ask you back to, to the startups, um, you know, funding. From valuation perspective, sir, what are we seeing? Um, I'm not sure if, if in, I'm sure you have touched on it in, in the paper, but Yeah. Okay. So we spotted good number. We back tested the, but when it comes to, uh, and also maybe after the paper, like what you're seeing currently, [00:34:00] the what are like now.

The standard valuations, uh, and returns for a startup in the series A, series B, mainly because I believe the seed stage usually is standard. So I see safe notes with either five, seven, maximum 12 million. But you know, after that we, we talk the real, you know, serious, serious, uh, business. Um, I have a theory, and correct me if I'm wrong.

Because the US is so crowded, so the valuations are a little bit, you know, struggling. I see the opportunity in other regions, probably Europe, mena, uh, I'm not sure about apac. I can, but I see in MENA region, you know, this opportunity where we will talk about like, yeah, the valuation is less, but this is where you actually, you can do your access rate, anything, any signals you, you, you spotting or you spotted before.

Cyril: Right. So that, that will be a very insightful talk. I [00:35:00] think. So obviously there is some arbitrage opportunity for, especially non-US funds. 'cause you know, founders here locally, whether it be Minar or Europe, that can raise at some European or. Mean ish valuations such as five to 10 million, uh, cap for seed or pre-seed, or even seed, and then they can move to the us right?

So it, it always been the same. But right now we can see it very clear that, for example, a YC startup, YC is a different story, but all US startups, they raise at least 10 to 15. Um, million, um, cap at pre seed, seed sometimes again, pre seed idea stage. In Europe, you can find a very decent founder already with direction, sometimes profitable, doing some very unique and innovating stuff at.

Much lower valuations here so we can invest and just use the arbitrage, move these [00:36:00] founders to the US and, uh, gain this, uh, uh, have these gains in valuations like immediately. So obviously for, it depends on the. Allocations for the late of the stage. For example, serious A series B. And beyond that, uh, there is less dispersion in these valuations.

So like European companies valued more like the US companies, for example. Look at Revolut, it's global business, but still's in Europe, like meaning in the uk, but it's valued at almost at the same. Uh, multiple as new bank in Brazil, uh, working in many region or other US based FinTech, uh, companies. So it's, it's, I guess it's already a serious east stage or something.

So the, the later the stage, the less dispersion in the relations. But again, I urge any VC listening to this use this arbitrage about like, brilliant founders here in Europe or mineral region or Asia. 'cause they, they, they still very [00:37:00] talented and can do. Uh, I can build stuff, um, in the US as well. 

Mehmet: Cool. Um, and of course it's, it's, uh, an opportunity for, in my opinion, for other, uh, investors as well.

You know, like, um, if, if, if they are running maybe a, uh, fund of fund or, uh, you know, so, because you need the local expertise here, but you know, that's, that's, uh, always insightful Yeah. To, to, uh, to get, you know, these, uh, numbers and. The arbitrage this, I'm a big believer on the arbitrage because as you mentioned, I've done a lot of research recently and yeah, this is the opportunity.

And the good thing is, you know, uh, I come from, you know, of course technical background, but I work in sales for some of the scale apps and always I. You know, we're saying, for example, we have a big region and then you have, you know, what we call the balancing. So let's say we are committing that, we're gonna do, let's say in a quarter, I'm just making up the numbers, 5 million a RR, [00:38:00] right?

So, and we expect, like country A would do, let's say two, country B would do two, and country C would do. I'm just simplifying it. And what happens, like in a magical way, is that Yeah, country A doesn't bring the two, it brings one, but you see like country B because they had like a moment, right? So, so they actually, they cover on that and the other country they do just as what they, uh, what they forecasted.

And I think this is applies even, you know, in, in, um. You know, in, in this contest we, we are talking about, because if you're having this arbitrage, so of course you have the big upside and at the same time, if you are like doing this in two geographies, like you're kind, something bad happened here, like that can cover it up.

So I'm, you know, food for thoughts as I say. Uh, but you're absolutely right, sir. You mentioned about, um, you know, deep tech other than deep tech, what. [00:39:00] Else, you know, you are having like, I would say, big bets or big, uh, um, you know, um, expectation from it from industry perspective in the tech of course. 

Cyril: Right.

So obviously a hot thing right now is defense and like some, um, some related to that game. It's all about deep tech because software, I guess we already have all defense software that we need, for example, Palantir does something for that. Um, so again, it's all about deep tech. It can be different kind of deep tech, healthcare, biotech, biotech is big stuff.

'cause again, I, I mentioned before of the record that I've been running this morning, so. You can just see the numbers, how. Uh, how people start thinking about their health, about their wellbeing, and you can see how numbers grow in at the races. For example, more and more people each year run marathons and all that.

So I think [00:40:00] healthcare biotech is a really big thing right now. You can just simply see the momentum here and it's, again, it's all about deep tech. Software cannot heal. Uh, your brain, your heart, uh, cure cancer and all that. So it's all about deep tech, but different kind of deep techs and also big bet on space tech.

I think it's, uh, it's a very important industry as well. Elon Musk is doing a great job once we have the Starship and all these low cost launchers that he. Promised, I think we we're going to see some very good stuff out there because again, uh, when we order something, when we even pay with the card, it also requires some space tech technologies.

For example, your card that you pay in your, um, uh. Uh, cheap uses this satellite GPS connection to double check if you haven't paid somewhere else at the planet. So I think space Tech, um, it's also about deep tech, but AI is obviously about software, but it can [00:41:00] be combined with hardware again, with some deep tech.

For example, robotics, we can see, uh. Robot robotics is very hot topic right now. Tesla, for example, is doing some robotic stuff and, uh, all other companies you can mention. So I think these are the hot topics right now, and if I, you are a VC or even LP deploying some money in the new technology space, I'd have these bets in in my portfolio.

Mehmet: Absolutely. Like, uh, again, uh, just today, 15 July, like, you know, actually I prepared that yesterday. And for the transparency, I use AI a lot for my deep researchers nowadays. But the good thing, it, it brings the right thing, it doesn't make it up, right? So deep research, it shows you even the link so you can go and check.

So I, I, I manually go and at least check the source. I don't read the full thing, but yeah, like, okay. It's a legitimate source. So to your point, you know. Uh, and let me just, you know, uh, I'll, I'll just to not give wrong numbers. [00:42:00] So the finding just in deep tech, right? Uh, and with robotics, so the numbers doesn't lie, right?

So the global robotics, uh, market projection by 20, uh, 23. It's gonna reach $178 billion, almost 179. Right? And the Calgary is 16% year over year. Right? Um, the deep tech, it's also like going very, very big. So we are talking about really, really like high. Technology where robotics is embedded with ai and it goes to all the sectors that you just mentioned because Space Tech would need this.

Um, you know, defense tech, by the way, it would need this, uh, biotech at Health Tech. I started to see, you know, even I was lucky enough to meet some founders in Deep Tech, which are doing something you never thought that. It is impossible, right? Like battery [00:43:00] technology, heating technology, all these things and people, they underrate, I think this sector, but for me it's not only about the returns, it's also about the impact, right?

And you know, like these are really cool technologies that are coming up, which is, and this is where I gonna. Relate to almost, you know, the, the last question that I had today, s uh, if we have angels, why we need VCs. 

Cyril: Right? Right. So, um, well, I think we, we should have both, right? Because angels sometimes cannot pay companies at later stages.

And also, also sometimes just. Easy for them to give money for, um, for fees to, to manage them and invest in startups. 'cause angels obviously don't have this like helicopter review at the industry. They just meet occasionally founders, they believe with them. And there [00:44:00] is a lot of more different in incentive rather than just, uh.

Um, uh, simple returns that VC is looking for, right? So they want just to support their, uh, friends, their strangers, they meet, uh, and, and all that. So, uh, yes, it's a good question. I think at early stages we can live without VCs, but it's not the case for latest stages and probably sometimes overall. Uh, and by the way, there is also another, if we come back to, to the main topic of the discussion is data-driven vc.

There is a nice group of people who build this first AI angel, uh, investor who just finds the founder Wow. Talks to the founder, like online, and then wires the money. So, uh, I can introduce you to guys. It's called, uh, no Cap. It's supported by White Combinator and like group of people around that. So similar to Bordy, 

Mehmet: I believe, like similar to the concept of Bordy, but.

Yeah. Yeah, I think I saw it somewhere. Yeah. Yeah, yeah. Yeah. It's, it's super cool. Yeah. So the reason I asked you, Sarah, [00:45:00] this question, because again, I'm trying to, so the folks who listen in the us, they, I'm, I'm sure you a hundred percent. Got it. So for the folks in other regions, especially in my region, uh, I'm seeing this, yeah, you go to Angels, but the thing is you are asking your angels large amount of money and.

Just for you to know the correct me sir. If I'm wrong. I don't have statistics from Europe. I have it from us. Funny enough. So when you talk about angel investments, so I would say it's in the range of 10 to 20 5K, maybe rarely, 50, very rarely, a hundred k and above. As an angel from one single engine, I'm seeing Mena, MENA region, uh, founders going to to angels and asking like.

A hundred fifty, two hundred fifty, uh, for seed round guys, don't do it. Um, I know you have issues with the VC space. I know like we need to do a lot more work in, in that space, but understand that angel round. [00:46:00] Of course, you know, you should, by the way, you should not be raising more than correct me, Sarah.

Like how much is an angel round in your opinion? Like, let's try to make it global, or let's talk about maybe Europe. Like what's an an, an average angel round in Europe? 

Cyril: Well, uh, I, I don't have numbers at hand, but I, I best practice, I think it's like a few hundred thousand, uh, right as an engine round. So there is like a bunch of s putting this money.

Probably there are some distribution, some big super angel, but yeah, you absolutely right. The majority of tickets that come from Angels, uh, again differ from a few UK to, I'd say. A few dozen case. Right. So it's, it's, it's max like at, at average. 

Mehmet: Yeah. Because I've seen, you know, uh, um, just for the sake also of transparency, uh, I don't, you know, invest currently in, in European startups, but I try to see if I can help by any ways.

And, you know, I see this difference [00:47:00] between, you know, the. The asks, which is very reasonable. So, you know, I talk to founders from Europe, uh, in all regions, by the way, uk, um, centered Europe, Germany, Poland, and uh, in, in, uh, the Baltics also as well, and as well as from the emerging Europe, I would say like, uh, the, uh, the Baltics and other regions.

So the numbers are very, very, very normal. And you know, like there. The check size is very, so, so I'm seeing Mina, uh, founders doing this mistake. I can't blame you, don't get me wrong, but I think we need to, to to, to have the angels. Why if we get the angels in the right check size, and if you go to the route, which every single successful ecosystem have done it before, then you go to your vc.

And of course, hopefully we'll have more VCs investing in seed round. So you don't have to, to get your angels write these checks because remember, angels, yes, there are people who trust you [00:48:00] and usually they might be able to move things. But VCs and thank you sir, for mentioning about the three things you do, right?

And when you said like, yeah, so, so they, they fundraise themself, they deploy, they search, you know, they scout for startups and they have to make it successful. Right and making successful, this is what a real VC does. So they should help you founders with your go-to market strategy, they should be able to even help you in hiring.

They should be able to help you in, you know, the, the, the operation stuff. Of course, not the day-to-day operation, but at least you know, the overall the strategy, getting you connections, establishing partnership. If you're VC or you're. You know, um, investor are not offering anything and just opening the phones, asking you about your update.

Okay. No comment. Right? Yeah. So, but anyway, um, this was good. Really steril to your point. All the links, um, of course, you [00:49:00] know, will be in the show notes, the paper, the link to, to the, to the tool also as well. Anything you want to leave us with before we end today's episode, Sarah? 

Cyril: Right. Yeah. Um, yeah, probably just, it's a good morning, right?

It's a good summer. Wishing all the best, uh, to all our listeners. And yeah, please remember, we live in good times, new technologies, uh, like a lot of opportunities, so a lot of founders and VCs listening to you. So yeah, I guess we, we'll have a lot of good stuff, good technologies and startups coming and yeah, let's, let's just enjoy the moment.

Mehmet: Absolutely. I love this, uh, optimism. I'm optimistic also myself. Um, you know my word here and I don't usually do it much, but because you mentioned the yes, we are in summertime, little bit hot here in Dubai, but everything is gonna be okay. Everything is gonna be good. And just believe the process, guys, and I'm talking here to, to, to founders more than [00:50:00] VCs, honestly.

Uh, I know I feel your pain, but. Hold steady. I think things gonna change very, very soon on a very large scale. And, you know, again, uh, for people who are coming from outside to this region, also hold steady. I know what you're feeling, but things would change and vice versa also as well. So I really enjoyed this conversation with you today.

Uh, it was a very good, uh, kind of, uh, you know, not only discussion, it was like, uh, thought provoking for me at least. Some of the numbers, the facts, you know, the talk about, you know, the. New trend of technologies about software, not like before, like with ai it's the, the dynamics are changing and back to, to deep tech, which is also I'm a big believer in.

So thank you for shedding the slide. And everyone go check the paper, check what Serial is doing, you, I will leave also you serial, your LinkedIn profile. So as well if someone want to, to get in touch. And this is usually how I end my episode. This is for the audience. Guys, if you just discovered this podcast by [00:51:00] luck, thank you for passing by.

I hope you enjoyed it. If you did, so give me a small favor, subscribe, share it with your friends and colleagues. We are trying to do an impact. We're trying like to spread knowledge. Get connections and see if I can with the small effort, small thing from my side if I can help and if you're one of the people who keep coming again and again, thank you for doing so.

I really appreciate your support. I appreciate your feedback. I appreciate what you're doing for the show. This year, starting around February till today, we are in July. At the time of recording, the podcast is doing fantastically well. We are on a very high trajectory, growth in the audience size. We are getting the top 200 charts across multiple countries.

The last I checked was eight countries at the same time. Let's try to break the record and make them like nine or 10 before the end of the summer. Thank you very much. This cannot happen without you, the audience, and of course, the guests. Yourself included, sir. So thank you very much for being part of this journey, and as I say, [00:52:00] stay tuned for a new episode very soon.

Thank you. Bye-bye. 

Cyril: You.