WEBVTT - Giant Venture Capital Co-Founder Tommy Stadlen Talks Trump Influence 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.720 --> 0:00:09.360 Let's get back to the investment piece now, with a 0:00:09.360 --> 0:00:13.520 particular focus on venture capital and the shift around climate, 0:00:13.560 --> 0:00:16.120 but also defense spending as well. Venture capital investors bracing 0:00:16.160 --> 0:00:19.320 a course and facing a dramatic year. The Trump administration's 0:00:19.320 --> 0:00:21.640 focus on oil and gas production, rolling back as well 0:00:21.680 --> 0:00:24.439 some of those environmental regulations and trying to act or 0:00:24.440 --> 0:00:28.040 at least gut the Inflation Reduction Act has of course 0:00:28.040 --> 0:00:31.360 wide ranging implications for startups and fundraising. Very pleased to say, 0:00:31.440 --> 0:00:33.720 joining us now in the studio is Tommy Stadlin, the 0:00:33.840 --> 0:00:38.560 co founder of Giant Ventures, a big player within this space. Tommy, 0:00:38.640 --> 0:00:42.200 we have seen data that suggests that the flows into 0:00:42.320 --> 0:00:45.040 some of these renewable energy startups and the climate shift 0:00:45.360 --> 0:00:49.200 has started and will start to ebb in twenty twenty five. 0:00:49.520 --> 0:00:50.960 Talk to us about what you're seeing in terms of 0:00:50.960 --> 0:00:53.599 climate tech investing. Is there a chill wind now over 0:00:53.640 --> 0:00:54.040 the space? 0:00:54.200 --> 0:00:56.160 Well, let me say, first of all, climate change does 0:00:56.200 --> 0:00:58.280 not care who's in the White House, and I don't 0:00:58.280 --> 0:01:00.920 want to alarm your listeners before they've had their morning coffee, 0:01:00.960 --> 0:01:04.640 but we're facing potentially a billion climate refugees, mass disruption, 0:01:04.720 --> 0:01:07.240 to the global economy. So climate change is real, it's happening, 0:01:07.360 --> 0:01:09.280 and I think rational actors are going to take action 0:01:09.360 --> 0:01:11.960 against that. So what we're seeing is that the long 0:01:12.080 --> 0:01:14.360 term decarbonization trend is going to happen. And if we 0:01:14.400 --> 0:01:17.679 get anywhere close to decarbonizing the global economy by twenty fifty, 0:01:17.880 --> 0:01:19.600 that I think is going to be bigger than the Internet, 0:01:19.640 --> 0:01:21.640 both in terms of the losers, who are the incumbents 0:01:21.680 --> 0:01:24.200 who have exposure to hydrocarbons, but also the winners, right 0:01:24.200 --> 0:01:27.479 that people have exposures of these amazing new climate technology companies, 0:01:27.560 --> 0:01:29.080 and so in the long run that trend is going 0:01:29.120 --> 0:01:29.800 to continue. 0:01:30.000 --> 0:01:31.759 What we're seeing is, yes, a. 0:01:31.720 --> 0:01:34.640 Bit of a pause while people figure out what ex 0:01:34.680 --> 0:01:37.240 actually is going on when the Trump administration, particularly in 0:01:37.280 --> 0:01:40.440 the US, But actually we are seeing the underlying these 0:01:40.520 --> 0:01:43.520 strong technology companies in climate those who don't require a 0:01:43.560 --> 0:01:46.360 green premium, where they're not asking either governments to pay 0:01:46.400 --> 0:01:49.840 a green premium or corporate customers are certainly consumers that 0:01:49.960 --> 0:01:52.280 businesses which can stand on their own two feet. Those 0:01:52.280 --> 0:01:54.640 companies are continuing to get funding and actually we've just 0:01:54.640 --> 0:01:57.400 been involved in some of the most competitive climate technology 0:01:57.680 --> 0:02:00.720 venture rounds we've ever seen. So it's steam ahead for 0:02:00.760 --> 0:02:02.840 the strong commercial climate tech companies. 0:02:03.040 --> 0:02:04.200 Those who require. 0:02:03.880 --> 0:02:07.640 More capital to scale up and get cost competitive with hydrocarbons, 0:02:07.760 --> 0:02:09.000 they are struggling at the moment. 0:02:09.440 --> 0:02:12.440 Yeah, I mean, Bloomberg figures show the kind of dramatic 0:02:12.480 --> 0:02:15.960 decline from twenty twenty four into twenty twenty five of 0:02:16.000 --> 0:02:18.400 climate tech investing. Do you really think that europe can 0:02:18.480 --> 0:02:22.320 hold out though against what is a sea change in 0:02:22.360 --> 0:02:25.919 the White House? Or does it change the pitches from 0:02:26.000 --> 0:02:28.399 companies in order to get that funding. 0:02:28.800 --> 0:02:31.440 We're definitely seeing companies change their pitch, and actually some 0:02:31.520 --> 0:02:33.639 of it is just a branding thing. So the words 0:02:33.639 --> 0:02:36.240 climate tech are not particularly popular in the US right now, 0:02:36.360 --> 0:02:39.760 we're seeing climate tech be rebranded as American dynamism. So 0:02:39.880 --> 0:02:43.840 trends like nuclear anything which is energy for renewable, for 0:02:43.919 --> 0:02:47.800 data centers in AI, more energy efficient AI chips, anything 0:02:47.840 --> 0:02:50.280 which fits with this kind of muscular nationalism we're seeing 0:02:50.320 --> 0:02:52.280 not just in the US but around the world is 0:02:52.320 --> 0:02:55.320 doing very well. So look out for kind of European dynamism, 0:02:55.440 --> 0:02:59.120 British dynamism, American dynamism. These companies haven't changed, but they 0:02:59.160 --> 0:03:01.520 have rebranded their pitch. To make it work more, particularly 0:03:01.560 --> 0:03:03.880 in the US. Okay, it's really interesting around the rebranding. 0:03:03.919 --> 0:03:05.640 Isn't it to kind of cut through at least avoid 0:03:05.680 --> 0:03:07.799 some of the scrutiny that may come from the Trump 0:03:07.840 --> 0:03:12.640 and administration who's courses? There's something of an animus around this sector. 0:03:13.560 --> 0:03:17.040 The defense space has been prominent. You're seeing massive spending 0:03:17.040 --> 0:03:19.799 from the German government adjusting their fiscal rules in dramatic fashion. 0:03:19.800 --> 0:03:21.320 You're seeing it from other nations as well to a 0:03:21.400 --> 0:03:24.919 lesser extent. What are you seeing in terms of how 0:03:24.919 --> 0:03:27.440 significant do you think that will be in terms of 0:03:27.840 --> 0:03:31.240 funding into the defense space and the startups in Europe? 0:03:31.240 --> 0:03:33.560 How are you leaning into that and is that pulling 0:03:33.560 --> 0:03:35.920 funding away from some of these climate stories. Well, if 0:03:35.960 --> 0:03:37.440 you just look at the numbers, we've seen about a 0:03:37.440 --> 0:03:42.120 fivefold increase in venture investments into defense tech. So that's 0:03:42.120 --> 0:03:44.560 still only about ten percent of European VC which goes 0:03:44.600 --> 0:03:47.960 into defense tech and surrounding technologies, but it's a massive increase. 0:03:48.200 --> 0:03:51.000 And in order to achieve that, we've had some investors 0:03:51.000 --> 0:03:53.800 in private managers have to remove their vice clauses. So 0:03:53.800 --> 0:03:56.400 we had a situation where LPs would say you can't 0:03:56.400 --> 0:03:59.720 invest in porn, gambling or defense right, and we've now 0:03:59.720 --> 0:04:03.160 come long way defenses escape that vice clause. And actually 0:04:03.240 --> 0:04:06.280 even for firms like Mine Giant Menus where we're backing 0:04:06.280 --> 0:04:08.400 companies that really matter, we're looking to create impact in 0:04:08.400 --> 0:04:11.520 the world as well as financial returns. People are saying, well, actually, 0:04:11.600 --> 0:04:14.240 isn't defense tech even more important than things like climate 0:04:14.280 --> 0:04:16.120 and health Because we don't have a strong democracy here 0:04:16.120 --> 0:04:17.760 in Europe, nothing else really matters. 0:04:17.880 --> 0:04:19.320 So it's in a complete. 0:04:19.000 --> 0:04:23.120 Turnaround from investors, from venture firms and also from entrepreneurs. 0:04:23.120 --> 0:04:26.240 We're seeing really strong entrepreneurial talent choosing to build their 0:04:26.279 --> 0:04:28.960 next company in defense, which here in Europe is just 0:04:29.000 --> 0:04:30.599 completely unthinkable five years ago. 0:04:30.880 --> 0:04:35.000 But is that money really now Because the money flowing, 0:04:35.040 --> 0:04:37.440 for example, from the massive German package, it's not expected 0:04:37.480 --> 0:04:39.880 to hit until twenty twenty six the UK defense space. 0:04:39.960 --> 0:04:44.280 Also the increase in spending, you know it's months years 0:04:44.279 --> 0:04:47.000 probably away from having a real impact. But you say 0:04:47.000 --> 0:04:49.240 that the investing is happening already at your level. 0:04:49.520 --> 0:04:51.680 I think the most interesing action actually is happening with 0:04:51.880 --> 0:04:54.080 C stage investments, which have started to do well already. 0:04:54.080 --> 0:04:56.680 So a company like Helsing for example, a really exciting 0:04:56.680 --> 0:04:59.719 defense tech technology company here in Europe that was started 0:04:59.760 --> 0:05:01.840 some years ago before all of this happened, but the 0:05:01.880 --> 0:05:03.599 interest now is very, very large. 0:05:03.720 --> 0:05:04.839 So I think what we'll see. 0:05:04.760 --> 0:05:07.320 Is companies who've been tinkering at the edges before this 0:05:07.520 --> 0:05:09.960 was an attractive area to invest in will now start 0:05:09.960 --> 0:05:12.120 to get the scale up capital they really need. The 0:05:12.160 --> 0:05:16.720 big question is will the incumbents in Europe, particularly the militaries, 0:05:16.960 --> 0:05:18.720 are they going to have the capacity to work with 0:05:18.720 --> 0:05:21.120 these defense tech startups in whether they have had no 0:05:21.240 --> 0:05:24.240 practice of doing for so many decades, unlike the US 0:05:24.279 --> 0:05:26.880 Department of Defense, which is so well versed at teaming 0:05:26.960 --> 0:05:29.920 up with defense startups from a very early stage. 0:05:30.400 --> 0:05:35.000 How do you, Tommy, how do you inject rationality into 0:05:35.240 --> 0:05:39.040 these new, very hot themes. There's a temptation presumably to 0:05:39.800 --> 0:05:42.000 pile in when a set I mean it's red hot 0:05:42.080 --> 0:05:44.320 right now, and there's a bunch of startups and we've 0:05:44.320 --> 0:05:45.520 spoken to a lot of them. A lot of them 0:05:45.560 --> 0:05:48.240 are not going to survive, and a lot and a 0:05:48.240 --> 0:05:50.520 few will do very well. How do you ensure that 0:05:50.560 --> 0:05:53.039 you have the metrics in place and the structure in 0:05:53.040 --> 0:05:54.960 place to ensure that you're putting the funding to play 0:05:55.279 --> 0:05:57.800 in the companies that really get to matter and thrive 0:05:57.839 --> 0:05:58.599 in the defense space. 0:05:59.160 --> 0:06:01.600 Well, venture in general is so trendering, right, and so 0:06:01.680 --> 0:06:04.000 everyone was a few years ago thought that blockchain was 0:06:04.040 --> 0:06:04.719 the next big wave. 0:06:04.800 --> 0:06:06.560 They thought AR and VR was going to be the 0:06:06.600 --> 0:06:08.039 next wave. Neither we rereadly were. 0:06:08.279 --> 0:06:11.160 Now it's ai, Now it's defense tech. What I think 0:06:11.360 --> 0:06:14.479 fundamentally is that there are two big mega trends. There's AI, 0:06:14.600 --> 0:06:17.200 which is going to fundamentally change the economy and particularly 0:06:17.240 --> 0:06:19.880 the venture world. There's climate, which is a much slower 0:06:19.920 --> 0:06:22.839 bum which is happening over a fifty year period of decarbonization. 0:06:23.839 --> 0:06:25.719 And you've got to pick which are the mega trends 0:06:25.720 --> 0:06:27.440 on which are not, and then just make sure you're 0:06:27.480 --> 0:06:31.080 backing brilliant founders because ultimately, the best venture investing happens 0:06:31.160 --> 0:06:33.360 regardless of what the trend, the sector, the company is 0:06:33.480 --> 0:06:35.159 by backing extraordinary entrepreneurs. 0:06:36.000 --> 0:06:40.120 I've heard the argument also though, that Europe can simply rebrand, 0:06:40.200 --> 0:06:42.720 as you mentioned, can can sort of change the label 0:06:42.760 --> 0:06:44.840 and still get the funding and still do the work 0:06:44.839 --> 0:06:48.400 in diversity, acuity inclusion, for example. You hear that quite frequently. 0:06:48.520 --> 0:06:50.680 Do you really think that the Trump administration is going 0:06:50.720 --> 0:06:53.440 to fall for that. They have a lot of kind 0:06:53.480 --> 0:06:56.640 of business leaders that the drive is going to be 0:06:56.839 --> 0:06:59.880 very pointed, isn't it? Is that really feasible for you 0:07:00.279 --> 0:07:03.240 to do that without there then being a clash. 0:07:03.520 --> 0:07:05.080 I think on one of the topics you've just mentioned, 0:07:05.120 --> 0:07:07.799 I completely agree with you. So diversity exctly an inclusion. 0:07:08.120 --> 0:07:11.520 There is zero appetite for those type of startups and 0:07:11.600 --> 0:07:14.040 even those corporate programs Europe in the US. That's been 0:07:14.080 --> 0:07:18.280 astonishing to witness the sort of overnight reversal of companies 0:07:18.280 --> 0:07:21.040 saying on their website, global companies saying this is a 0:07:21.080 --> 0:07:24.000 core value diversity inclusion, and overnight suddenly it's not so 0:07:24.080 --> 0:07:26.240 much of a core value it's removed. The difference there, 0:07:26.280 --> 0:07:28.640 I think is unlike some of these diversity startups or 0:07:28.680 --> 0:07:32.040 diversity policies where the ROI is harder to prove. In 0:07:32.080 --> 0:07:34.560 climate tech, this is not a cost center anymore. We're 0:07:34.560 --> 0:07:36.680 not talking about the year two thousand here where these 0:07:36.680 --> 0:07:39.720 companies were lost making. These are seriously impressive companies that 0:07:39.760 --> 0:07:42.760 are powering things like AI and are fundamentally cheaper than 0:07:42.760 --> 0:07:44.960 the hydrocardon alternatives and. 0:07:44.840 --> 0:07:46.880 Even in the US, people who want to. 0:07:46.880 --> 0:07:49.920 Make money, which includes the entire Republican Party, are going 0:07:49.960 --> 0:07:51.760 to get behind those trends, and so I think that 0:07:51.800 --> 0:07:54.080 is a fundamental difference to the clean tech one point 0:07:54.160 --> 0:07:54.840 o boom and bust. 0:07:55.080 --> 0:07:58.360 I've also got one other question around the defense and 0:07:58.440 --> 0:08:02.120 defense tech space. I mean, there is huge anticipation in 0:08:02.160 --> 0:08:04.600 the UK about what money is going to flow from 0:08:04.640 --> 0:08:08.280 Britain's additional defense spending capabilities, and there are high hopes 0:08:08.320 --> 0:08:12.040 in the SMEs that that money from the MOD will flow. 0:08:12.560 --> 0:08:16.080 But there's been disappointment for years, if not decades, in 0:08:16.160 --> 0:08:21.120 this space. The MOD underspends and then perhaps will you know, 0:08:21.400 --> 0:08:24.360 make a huge order from one of them primes and 0:08:24.400 --> 0:08:27.760 the SMEs are kind of left to wither. Do you 0:08:27.840 --> 0:08:29.600 really think that things are going to be different this 0:08:29.680 --> 0:08:30.360 time around? 0:08:31.000 --> 0:08:31.600 No, I don't. 0:08:31.680 --> 0:08:34.120 I think the MOD has proven time and time again 0:08:34.160 --> 0:08:37.319 it is not capable of effectively working with startup technology, 0:08:37.559 --> 0:08:39.400 and I think what we'll see is the best UK 0:08:39.559 --> 0:08:42.240 defense technology companies will have to go to the US 0:08:42.280 --> 0:08:44.360 and partner up with the US, which is counter to 0:08:44.440 --> 0:08:46.680 everything that we're seeing in the geopolitical trends. In terms 0:08:46.720 --> 0:08:49.160 of European resilience. But I think that's just the reality 0:08:49.200 --> 0:08:51.760 because the US government is so far ahead on their 0:08:51.800 --> 0:08:54.000 ability to team up with startups. So we have to 0:08:54.000 --> 0:08:55.599 fix that. But my hopes are not high for the 0:08:55.720 --> 0:08:57.480 mod's ability to do that. They just don't have the 0:08:57.480 --> 0:08:58.360 people in place to do it. 0:08:58.440 --> 0:09:01.120 That's a damning It's a damag statement, isn't it about 0:09:01.120 --> 0:09:03.320 the ability for the MOD to adjust to this moment 0:09:03.679 --> 0:09:07.480 on the climate story? Is there a scenario where with 0:09:07.600 --> 0:09:10.560 the US ripping up the Inflation Reduction Act and going 0:09:10.600 --> 0:09:13.480 full bore on oil and gas, that Europe can position 0:09:13.559 --> 0:09:17.040 itself to lead and win on climate technologies. 0:09:17.440 --> 0:09:19.600 I think it's a massive opportunity for Europe to lead 0:09:19.640 --> 0:09:21.719 and win. And one of the really exciting things we're 0:09:21.720 --> 0:09:26.360 seeing is corporate, large corporate industrial players in Europe are 0:09:26.360 --> 0:09:28.360 waking up and saying, okay, we can now partner with 0:09:28.400 --> 0:09:32.000 climate technology startups and lead this decarbonization in a very 0:09:32.000 --> 0:09:34.360 profitable way. And so a giant many of our investors 0:09:34.440 --> 0:09:37.640 RLPs are the big European industrials who see this opportunity, 0:09:37.800 --> 0:09:39.040 and so I think Europe has. 0:09:38.920 --> 0:09:40.760 To sort of make use of the timing with. 0:09:40.760 --> 0:09:44.080 The Trump administrations reversal on climate change and make use 0:09:44.120 --> 0:09:47.680 of our strengths here, which basically is the big industrial giants, 0:09:47.679 --> 0:09:49.920 people like BMW, who now have an opportunity to really 0:09:49.960 --> 0:09:53.199 step up and lead and stop the you know, for 0:09:53.280 --> 0:09:56.720 fatal reversal that they're facing with people like Tesla stealing 0:09:56.720 --> 0:09:57.360 their lunch. 0:09:58.240 --> 0:10:01.959 Our decisions being stored called by the Chomp administration. I mean, 0:10:02.240 --> 0:10:04.920 we're all hesitating until tomorrow and we get the sort 0:10:04.920 --> 0:10:09.199 of tariff news. Is the startup and VC space also 0:10:09.320 --> 0:10:12.080 pausing because you know, you're full of energy and ideas, 0:10:12.280 --> 0:10:14.800 and yet it does feel like there's so much uncertainty 0:10:14.840 --> 0:10:16.920 now that a lot of the big businesses that we've 0:10:16.920 --> 0:10:20.439 report on are pausing major decisions. 0:10:21.240 --> 0:10:22.839 I can only really speak for my world, which is 0:10:22.840 --> 0:10:25.600 a venture and a giant. We have invested more into 0:10:25.600 --> 0:10:27.679 climate technology in the first quarter of this year that 0:10:27.760 --> 0:10:30.160 we've ever invested before. Some of the rounds we've just 0:10:30.240 --> 0:10:32.400 led to sort of Series B rounds in Silicon Valley 0:10:32.400 --> 0:10:35.199 have been more competitive than any venture round I've experienced 0:10:35.240 --> 0:10:37.320 in my career to date. So for the best assets, 0:10:37.360 --> 0:10:40.199 the best climate technology companies which show a clear return 0:10:40.240 --> 0:10:43.360 on investment because they're making money today, there has been 0:10:43.400 --> 0:10:45.920 never been more appetite than I've ever seen in my career. 0:10:46.080 --> 0:10:49.400 Tommy, briefly on talent, because you talked about your theory, 0:10:49.480 --> 0:10:51.199 or at least your forecast that actually a lot of 0:10:51.240 --> 0:10:52.840 the defense tech companies are going to have to go 0:10:52.880 --> 0:10:55.040 to the US either to raise or to list in 0:10:55.080 --> 0:10:57.880 some form, or to get those contracts from the Pentagon. 0:10:58.440 --> 0:11:01.199 What are you saying on talent? Has the Trump administration 0:11:01.320 --> 0:11:04.720 adjusted the flow of talent? I mean, up until the 0:11:04.800 --> 0:11:08.040 end of last year, multiple founders and I would speak 0:11:08.040 --> 0:11:10.520 to would talk about the allure of the US, whether 0:11:10.559 --> 0:11:12.560 it's to raise funding, whether it's to list, whether it's 0:11:12.600 --> 0:11:15.280 to find talent, whether it's to build headquarters, whether it's 0:11:15.280 --> 0:11:18.400 to lean into the US market. Is any of that allures, 0:11:18.400 --> 0:11:19.880 any of that shine coming off. 0:11:20.200 --> 0:11:21.800 I think we are seeing a talent flow out of 0:11:21.800 --> 0:11:25.520 the US for sure, and that ranges from global superstars 0:11:25.559 --> 0:11:28.400 like Reid Hoffman, who we had with us at Giant 0:11:28.400 --> 0:11:30.280 the other day, who spending more and more time here 0:11:30.280 --> 0:11:33.120 in Europe, all the way down to young technical talent 0:11:33.440 --> 0:11:36.320 moving from the US to places like Canada or to Europe. 0:11:36.440 --> 0:11:37.760 And so yeah, there is a bit of a Trump 0:11:37.800 --> 0:11:38.679 brain drain going on. 0:11:38.800 --> 0:11:40.560 From those who frankly don't want to live in an 0:11:40.559 --> 0:11:44.160 administration which has those values. So that's another really exciting 0:11:44.200 --> 0:11:47.040 comportunity for Europe to stand up and gain in the 0:11:47.080 --> 0:11:47.920 innovation economy. 0:11:48.520 --> 0:11:50.079 Okay, I think we'll leave it there. Tommy, thank you 0:11:50.160 --> 0:11:52.080 so much for being with us in the radio studio, 0:11:52.120 --> 0:11:53.400 giving us lots to think about. 0:11:53.400 --> 0:11:53.640 Stay. 0:11:53.679 --> 0:11:57.360 Tommy Stadlin is the co founder of Giant Ventures and 0:11:57.400 --> 0:12:00.760 that picture for venture capital and what money is being 0:12:00.800 --> 0:12:03.280 invested now in Europe given the Trump administration.