Why a16z is keeping a close AI on Estonian founders
We recently caught up with Gabriel Vasquez, Investment Partner at a16z, who spearheads their global AI investment strategy. He shared why the global VC titan keeps coming back to Estonia.
How do investors see the new Nordics for a place to invest?
We've been investing in Estonia for a while - Skype and TransferWise (now Wise). On a per capita basis is an amazing country that generates amazing entrepreneurs, and for us our mandate is to invest in the best in the world, and if that continues to come up out of Estonia, we will continue to invest in Estonia.
I spent time there last year, and hopefully we'll spend more time this year there. We haven't seen yet a big wave of AI startups, as we've seen in Stockholm, for example, but I'm sure that will be coming. I actually met a couple great entrepreneurs from Estonia in Silicon Valley, and then we looked at a couple opportunities that are based out of Estonia, so we're looking at it from both angles.
We haven't done an investment yet, but the quality, it's really, really high, so we're tracking them very closely, and I wouldn't be surprised if we will participate in any of these great opportunities in the future.
Is there anything particularly special about any of the Estonian founders that you've met, anything that stands out about them?
I think they're very tough founders - they know it's going to be a hard journey, and they're going to embrace it.
I think all of them are highly educated. They grew up in a digital country, right? I think Estonia has embraced that, even at the government level. The other thing that we really like is that they have a global mentality, they understand that Estonia itself is a small market, and therefore they have to go abroad quickly and win quickly - this ability to embrace the fight, we really like that.
Okay, but what about the security situation? Is there anything that would concern you when you're investing in a company which is based in Estonia?
Not really. Obviously, there are geopolitical events that happen but for us - we just want to back the best entrepreneurs wherever they are. You can look at the case of Israel, and they continue to be amazing companies, despite all the geopolitical concerns happening in the country. I think the best entrepreneurs will figure it out.
I want to talk to you about Bolt, what do you think of Bolt as a company? And where you think it's going?
I think it amazing what he's [Markus Villig] been able to build. I don't think that anybody would ever have thought that they would have a chance against those titans of like Uber and Lyft, and all the capital they raised. I think that he embraces that philosophy - which is we are just going to make it more efficient and better, and we're going to come from a different angle that nobody else is, and we're gonna compete, and I like that a lot. And now with AI - I'm very excited how they're gonna leverage that.
You can tell by the energy that Markus has that he will continue to build this company into an amazing opportunity. For us, it's sad that we're not partners with them - my wish is for the next Markus that comes along in Estonia, that we can invest. Because we're investors in Skype, and TransferWise, Bolt is the only one that we missed, right? So I want to make sure that doesn't happen in the future.
Are there any other companies of the same calibre that you have your eye on, or you think are doing really well in Estonia at the moment?
There's one called Veriff, I think that they've done a phenomenal job, and continue to grow. I wouldn't say it's a top opportunity for us, because right now we're super focused on AI, so that is kind of the main investment mandate that we have. I just have a lot of respect for the founder. When I met him, and he told me the story of how he turned it around, it's incredible.
There's a couple of companies that we're tracking - they haven't made it to the stage where they are in the same category as Bolt and Wise - but there's a lot of promise.
You're super focused on AI. What does that mean, really? If people aren't themselves developing an AI startup or something, that there's just no point in them knocking on your door?
I think there are two main segments to this - you can build a business model that just leverages AI to make the operations more efficient, Bolt is a great example of that, right? Would you say it's an AI company, probably not, but like they're leveraging AI to make operations more efficient, to attract more margin.
The other side is more obvious, which is like applying AI to a problem. Can I apply AI to customer support, to legal, to healthcare, and how can I make them more efficient, and basically go after the labour opportunity and budget.
And then there's probably the third way, which is companies that benefit from AI - Veriff as an example, there's gonna be a huge boom of payments expansion and verification, and fraud - the second order effect of the huge boom of AI, that we're also very interested in. I wouldn't say if you're not building AI, don't come to us - you have to be in what we call the token path, if you're in the flow of AI, that's something that we want to be investing in.
The reason I’m talking to you today is that you met Triin Hertmann on a Mesh collective trip in the North of Norway recently. How have you benefited or gained from going on these Mesh trips?
We've invested in five companies out of Sweden and that has been possible because of the time that we spend with this community and getting to know them, so I think Mesh has been incredibly helpful on that front - it gives a lot more visibility of opportunities that we wouldn't otherwise if we didn't spend the time in the Nordics.
Just looking ahead, I know that you said that you're having conversations with people in Estonia, are you able to tell me any more on that?
We can’t unfortunately disclose that - but yeah, certainly super excited about it, and you know, Estonia has been so great for us - I want to invest in the best, and I think Estonia will continue to produce that.
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