The Evolution of Venture Capital in the Next Decade: An interview with Francois Mazoudier

As the global economy continues to evolve, the landscape of venture capital stands at a crucial juncture, poised for significant transformation in the next 5-10 years. With rapid technological advancements, shifting geopolitical dynamics, and emerging market trends, the venture capital industry faces both challenges and promising opportunities. In this interview, we sat down with Francois Mazoudier, serial entrepreneur with 5 companies on record (1 IPO and 3 Exits), currently head of Fundraising Bootcamp, a program to raise funds with astonishing results and metrics. We will delve into the current state of the market, exploring key trends and insights that shape the future trajectory of venture capital. From intriguing market dramas to harnessing the potential of emerging sectors like artificial intelligence and biotechnology, we anticipate a dynamic journey ahead for investors and entrepreneurs alike.

How would you characterize the current state of the venture capital market and what trends do you find most intriguing or interesting?

In 2021, the market grew over 110%, constituting 620 billion dollars flowing into the market. The following year, we experienced the greatest firework disaster and the “hangover”. Out of the 600 billion, 400 billion got wiped out. All of this in one year, which is the biggest historical accumulation of wealth and destruction ever. So you have this massive year in 2021 where everybody thought it was easy to go IPO. Everybody could fundraise on the back of a PowerPoint - there was even a term change from the minimum viable product, MVP, to MVPP, the minimum viable PowerPoint, and that became a bit of a joke really. 

"So you have this massive year in 2021 where everybody thought it was easy to go IPO, then come 2022, we experienced the biggest hangover, everybody stopped fundraising and all evaluations halved or 90% crashed, like Klarna, and even some solid companies. "

Come 2022, we experienced the biggest hangover, everybody stopped fundraising and all evaluations halved or 90% crashed, like Klarna, and even some solid companies. 

Then, in 2023, given the slight difference between the US and European market, Europe didn't have as many of those creative evaluations so had less companies to slash by 80 - 90 %, which is what's happening now in the US. In Europe you have less of those so have more investment going to late stage, pre-IPO companies, because these companies were better and more fairly priced in the first place and have less fat to be cut. When it comes to early stage, you see the US is rebounding already (from??) the plateauing of both valuation, number of transactions and average transactions and what people don't expect, because the press does a great job at giving you doom and bloom and sensationalized titles, is that if you look at the global early stage you will see that both the median ground size and the median dilution has not actually deteriorated for founders, so there’s less transactions, investors are taking their time and really doing their due diligence before they invest. But once they've decided that a company is a good company they actually back you so you don't get screwed as a founder, which is not what you read in the press, but that's the hard data.

In your view, what sectors or industries hold the most promise for disruptive innovation and why?

At the risk of sounding boring - AI. It’s everywhere at the moment. I think you could replace anything dash coin with AI. All the coins were a massive contributor to the 2021 400 billion losses in just 12 months, however, the technology of crypto is amazing and now, finally, after the big crash, you see now both investment funds and amazing tech companies built on crypto, which I think will do superbly well.

"With A.I. it's like being in 1985 when the first personal computers  came in, it's like this explosion of services, devices and data sets which will make us healthier for longer, so it's super exciting"

AI right now is just climbing up that huge peak of expectations that will never be met as we're very good at believing in stuff short term and we always miss the long-term impact technologies have. So I think what we're seeing is AI is the flavor of the month, but a lot of people don't understand what AI actually does. There is a big difference between a language model and something that re-registers and re-orchestrates all the atoms in the universe - radically different uses, but also radically different technology. What we see at the bootcamp, which is fantastic news, is amazing technology companies in the Health Sciences, Biomedical, Medical Devices, all the way down to mental health platforms and selective/preventative instead of cure platforms - I'm a big fan of this. I think everybody agrees we're going to live longer and we want to live longer healthier, but we know that all governments are bust and therefore the national health services cannot provide that kind of prevention. In many countries, you can only be seen if you have a radically late stage diseases.

The private markets are taking preventive medicine and we see amazing things; I've seen one company has designed a bionic arm which is a fraction of the cost compared to its complexity and works extremely well. AI touches everything if you have a large enough data set and it will change how we calculate and prevent things. In medicine we’re definitely at the beginning. It's like being in 1985 when the first personal computers came in, it's like this explosion of services, devices and data sets which will make us healthier for longer, so it's super exciting.

_{Francois Mazoudier is the head of Fundraising Bootcamp, a program for startups  that has raised over 380M euros so far}

What major challenges in opportunities do you anticipate for the venture capital industry in the next 5-10 years?

The venture capital industry was filled with easy money in 2021, loads of small funds, loads of people who actually didn't have the passion, but the belief you could make quick money with VCs - stupidity. It's a long and slow industry before you can sell the businesses that you invested in. A lot of these businesses have been wiped out because they bought too high and they’re not able to sell with profits, so game over. It's an industry that has a long memory so if I have given you 1 or 10 million and you haven't returned my money, I'm certainly not going to give you a second shot, so a lot of that cleanup is happening right now.

"The big thing to remember is tons of new VCs have refreshed their funds; all the big names have actually increased the number of funds and the amount of capital per fund"

At the same time, you marry up the fact that you have these brand new technologies and entire markets coming out. You have AI hitting everywhere, such as in health and well-being, there’s a huge demand for anything that makes you live longer, better and healthier and everybody on the planet wants to buy. You also have loads of other stuff in automation, so I think we're ending the era of robotisation because programming them, making them safe, making them adapt to changes in an environment, is too expensive, but now we have these self-driving, self-learning robots based on AI, that means we are going to have a massive production of everything done automatically, which is not good for human low-end jobs but amazing for abundance.

The big thing to remember is tons of new VCs have refreshed their funds; all the big names have actually increased the number of funds and the amount of capital per fund. Think of your top 50 American/European funds, all of them have more cash. Obviously the press doesn't tell you this that there is tons of capital available and waiting for that bottom to crash, acting as you know the massive apex of mass hysteria we've seen the happening in blockchain mostly about coins then it's crashed now the real businesses are being invested in. I don't think we're going to lose the world to AI but you're going to have those who can master AI as part of their job and be ultra productive and those who don't have AI and they're going to be the slow-coaches.

The same happened before with Photoshop and how to build images. In fact, the same happened in every computer revolution and so now that the VCs have got tons of cash, they are waiting for the final correction. I think in Europe - where their valuations are very low - expectations are reasonable so you still have companies doing amazing things. Look at the European AI companies being invested in at a great rate, so it's a good time for VCs but a bad time for VCs that have invested in the hype and stupid years. It's like a stock market - don't buy too high and then, when everybody buys, sell instead of buying more. For founders what it means is follow the money for the young funds because they have 10 years to continue backing you if you do well.

Don't go for funds that are just about to die, for obvious reasons, I've explained the negative signal it creates. Finally, stick to the plan. Don't do a little bit of fundraising on the side, it's a massive process. Terms have become more difficult and the duration, the due diligence and the process has become super strict so don't expect a return to the quick cheques and quick investments.