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EU Scale and the Structural Reform of European Seed Funding · Blockchain Germany – Web3 Startups, Crypto Innovation & Venture Capital by Startuprad.io™

• 0:00
  If you're a European founder scaling deep tech and stuck in
• 0:04
  the web of fragmented investment rules, here's your
• 0:08
  challenge: cross-border early-stage investments in Europe is
• 0:11
  painfully slow. Legal fees are high and standardized
• 0:15
  instruments are missing. Tomas
• 0:18
  Matsurik, co-founder and co-CEO of FundingBox and
• 0:22
  managing partner of FundingBox Deep Tech Fund, built and
• 0:25
  exited tech companies, now invests across Europe and
• 0:29
  leads the EU-funded DeepSafe project to create,
• 0:34
  to create what is called EU Scale, a pan-European
• 0:38
  convertible loan instrument. Today we'll uncover
• 0:42
  how to navigate European startup funding, fix the cross-border
• 0:46
  investment gridlock, and unlock deep tech capital flows
• 0:50
  that could reshape the continent's innovation scene.
• 0:59
  Welcome to startuprad.io.
• 1:02
  Your podcast and YouTube blog covering the German
• 1:06
  startup scene with news, interviews, and
• 1:10
  live events. Our
• 1:13
  guest today, Tomasz Mazuryk, brings a rare
• 1:16
  trifecta. He's a founder who built and sold
• 1:20
  NetSprint.pl, an investor deploying capital
• 1:23
  through Fundingbox Deep Tech Fund, and a builder designing the
• 1:27
  next layer of Europe's startup infrastructure.
• 1:31
  With a PhD in computer graphics from Wien,
• 1:34
  an MSc from IT— in IT from Warsaw
• 1:38
  Institute of Technology, Thomas has developed over
• 1:42
  1,500 startups' access, acceleration, and funding
• 1:45
  through FundingBox. Now, as technical coordinator
• 1:49
  of the DeepSafe project, he's steering the creation of EU-scale
• 1:53
  Europe's first standardized pan-European investment
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  instrument for early-stage funding. So if
• 2:00
  you're a founder, investor, or policymaker
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  wondering how do I raise or invest across Europe without
• 2:07
  drowning in legal fees and red tape, you come to the right
• 2:11
  place. Tomas, or Tomek, welcome to the
• 2:14
  show. Um, for everybody
• 2:18
  familiar with investment instruments, Would
• 2:21
  you say the EU Scale is like the
• 2:25
  European answer of Y Combinator SAFE?
• 2:29
  Hello everybody. Hi Joe, thanks for having me here.
• 2:34
  Um, well, that's our mission. That's the mission we have onboarded on, uh,
• 2:38
  to create the pan-European instrument facilitating
• 2:42
  faster and more seamless
• 2:45
  investments at the early stage. The
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  issue that is pretty important right now
• 2:53
  in Europe, because the deals in Europe are happening on average
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  3 to 5 times slower than in the US,
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  and I would assume that at the early stage the gap is even
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  bigger, especially at the early stage where the deals should be
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  happening really, really fast. I was just
• 3:12
  recently talking to one of the board
• 3:15
  members of the European Business Angel Association, and he
• 3:19
  told me about two valleys of death, one very early stage and
• 3:23
  one pretty late. And I think you, you're, you're more
• 3:26
  or less also talking about the experience many founders have of the
• 3:30
  first valley of death, but there'll be a different
• 3:33
  interview. Um, you've built companies,
• 3:37
  you've invested across Europe. Take us back to your founder roots.
• 3:42
  What drove you to start netsprint.pl, and
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  how did that experience shape your later mission to rebuild
• 3:49
  Europe's startup funding infrastructure? Well, we are
• 3:53
  digging into the really, really past stories.
• 3:57
  Uh, we founded Netsprint in the, uh, so-called pre-Google
• 4:01
  era. So Google was the local player
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  back then in on the US market, of course with the global ambitions.
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  Um, but we came on the mission, uh,
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  within my current back then company with my business
• 4:19
  partner. We've been running the software house. So we
• 4:22
  created something that we know it's called
• 4:26
  nowadays incubation program. Back then we
• 4:29
  simply have announced, come to us with ideas
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  and we are going, if we like the idea, we are going to fund it.
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  And support it. So back then
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  I took the multiple roles, uh,
• 4:45
  of an angel investor, uh,
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  but in fact it was also the venture building
• 4:52
  role. And we have incubated and
• 4:56
  venture built the startup called NetSprint. Again,
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  back then we didn't know it's called startup. It was supposed to be
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  the company.
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  And we were on the mission of building the first
• 5:12
  search engine of the Polish internet. Back then, Google
• 5:15
  didn't cover Poland in an efficient way. The AltaVistas
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  and other search engines were really, really poor.
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  So we very quickly got the market traction.
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  We created the company Just
• 5:32
  weeks before the dot-com bubble
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  crisis. So after setting up the company, uh,
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  we had a couple of conversations with investors, uh,
• 5:45
  from outside of Poland. They were very excited,
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  but then the dot-com bubble crisis came and
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  all the dreams about getting any money has gone
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  bust. So
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  we went all the stages from the founding of
• 6:04
  the company with the really angel tickets coming from
• 6:08
  my pocket and of my partner's, business partner pocket.
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  And then we have been developing the company without any
• 6:16
  external funding because on the local market, uh,
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  there were no investors, no VCs back then.
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  All the foreign investors after the crisis, dot-com uh,
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  dot-com bubble crisis, have stepped back.
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  So for the 6 years we've been running the company and growing this
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  as in the bootstrap mode. So when I look, uh,
• 6:43
  back and try to compare this to the
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  nowadays, I must say that today founders are in the very
• 6:51
  luxury situation. They've got
• 6:55
  money available on different stages of the company
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  development. They've got co-works. They've got
• 7:02
  venture studios. They are just asked
• 7:06
  to come up with their ideas and develop them.
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  So, you know, after 6 years of— 6
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  difficult years, we have been able to make
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  an exit to the global player from the media
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  space. And then after
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  the exit, I got a little bit
• 7:29
  step back, time to reflect what to do in life. I did
• 7:33
  a bit of the consulting, but after
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  some time I decided, well, it's time to do something
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  next. So on the other side of the barricade, which
• 7:44
  is the FundingBox platform and FundingBox company,
• 7:48
  that I'm developing right now is the platform to support startups.
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  So we decided to, to, to support startups, uh,
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  through the acceleration programs. And after some
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  years seeing the great deal flow of startups coming from all over
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  Europe, uh, I also founded the
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  venture capital fund that is investing in the
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  best startups, from the local
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  ecosystem. You're getting a little bit
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  ahead of me here, Tomas. Um,
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  let us walk through all the questions, and I'm sure we'll touch on
• 8:27
  everything of that. Um, let's talk a little bit about the current
• 8:31
  status quo. Everyday founders in Europe face different
• 8:34
  legal and tax reality in each country.
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  How would you describe the current state of European startup funding,
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  especially for deep tech and cross-border deals?
• 8:47
  Well, the European startup scene is
• 8:50
  growing, but it cannot
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  boom because the investment landscape, uh,
• 8:58
  is still broken. You've mentioned in the introduction
• 9:02
  about the two valleys of death, and here we are
• 9:06
  covering the first one at the seed stage. Let
• 9:10
  me come with an analogy.
• 9:14
  Probably all the listeners of this podcast still
• 9:17
  remember different chargers
• 9:21
  for every phone they've been getting. I remember my
• 9:25
  every Nokia phone was coming with a different charger.
• 9:28
  And now if you've got a couple of phones
• 9:32
  in your family and then every phone has
• 9:36
  a different charger, it was a mess. You could not reuse your
• 9:40
  charger. Then the USB standard came, now the
• 9:44
  USB-C, and now
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  you've got— you can have the same charger, same cable for your
• 9:51
  laptop, for your phone,
• 9:55
  for your electric toothbrush, for the Oura
• 9:58
  Ring, and all the other
• 10:02
  devices. And I must say, it's a huge, huge relief.
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  So now,
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  how how to, to put this analogy into the startup ecosystem?
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  Well, in Europe, startups are trapped within
• 10:19
  27 different legal and tax systems. Uh,
• 10:25
  practically, uh, of course it's possible
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  to make the cross-border investments, but it's making them
• 10:32
  slow, expensive, involving too much
• 10:37
  legal activities. So
• 10:41
  it's making them expensive, and especially at the very
• 10:45
  early stage, the seed stage,
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  those costs are relatively too high
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  compared to the size of the ticket startups are getting.
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  So that basically means in every of the
• 11:00
  27 EU member states you have to deal with different
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  laws regarding, uh, taxation as well as investment
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  funding. So that means it makes cross-border
• 11:12
  transaction pretty expensive and inefficient,
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  right? Exactly. And that's why we are on the mission
• 11:19
  on bringing the US SAFE type of
• 11:23
  instrument to Europe that is universal, that
• 11:27
  could be applied almost on the spot to
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  make the investment without too
• 11:34
  many work around it. I was wondering,
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  at some point you you realizing— realize that
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  copying just the US SAFE model just wouldn't work
• 11:45
  here. What was that moment of clarity, and what
• 11:49
  did you discover about why Europe isn't ready
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  for US-style SAFE? And a little disclaimer here, I know there are always
• 11:57
  details making this impossible. For example, in Germany, when you
• 12:00
  finally convert the safe, you still have to invest a little bit,
• 12:04
  which is not in the US legal tradition, and so on and so forth. So
• 12:07
  basically, they always needed to be adjusted, at least
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  in Germany. Yeah, well, and the
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  reality is, um, that there are some
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  adjustments needed, uh, in every
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  country, or almost every country across Europe. So
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  We started our DeepSafe project,
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  and after 9 months of
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  making an effort to fit the US-style
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  safe into the European reality,
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  well, literally I can say that we have hit the wall because we have
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  found out that this is not possible to make it in a simple way.
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  So We have confirmed, making
• 12:55
  the consultations with some selected investors,
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  that basically Europe is not
• 13:02
  yet ready for the simple adaptation of US SAFE.
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  The legal accounting tax realities and the no clear
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  vision how to treat it, whether it's a debt or an equity.
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  And on top of this, there are coming
• 13:20
  additional considerations, like for example,
• 13:24
  the so-called difficulty situation of the company.
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  If you take the capital into the company,
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  which you don't know how to classify, a debt or an
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  equity, most of the accountants and tax advisors will say, okay,
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  let's take it as a, as a debt. This
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  is sitting on your balance sheet. And
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  too much debt, uh, after
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  some time, like 3 years, is creating the so-called
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  difficulty situation of the company, which
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  doesn't allow the company to get any public help, any grant, any further
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  investments that are backed by the public money.
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  So there are many consequences of this status quo.
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  So just to recap before we move forward,
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  there is a lot of money in Europe, but
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  it comes with the limitations of the public money also.
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  I mean the grants, but also the funds that are backed
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  by public money. Because
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  of that, many investors that are backed by
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  public money are too risk-averse. So they
• 14:39
  are paying too much attention on the downside protection,
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  and they are not paying enough attention to the
• 14:47
  upside potential that is coming with the deal. And basically, you
• 14:51
  know, the American way of investing is, uh, looking
• 14:55
  at the upside of the upside potential of the company.
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  So, uh, that's why our ecosystem
• 15:03
  is simply not ready yet, uh,
• 15:07
  for the full deployment and the
• 15:11
  growing in the way that we would be
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  expecting to grow. That's, that's my take. So there
• 15:18
  are like two elements. One is the legal
• 15:21
  constraints, but also the readiness of
• 15:25
  the ecosystem. Um,
• 15:29
  we've been talking a lot about different, different
• 15:34
  costs, especially, um,
• 15:39
  when investing cross-border. Can you share a story
• 15:43
  of a promising cross-border deal that
• 15:47
  fell apart because of legal or tax barriers?
• 15:50
  What did it cost the founder, not just in money but also maybe
• 15:54
  in lost momentum?
• 15:58
  Well, I think you've touched a very good point. It's
• 16:02
  not about the money. It's mostly about losing
• 16:05
  the momentum. And
• 16:09
  well, I have seen in my life
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  hundreds of the negative examples.
• 16:16
  A couple of them we have witnessed
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  in our investment fund.
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  Once we have rolled out our fund,
• 16:29
  we have been using the full potential of the FundingBox
• 16:33
  Group to look into the European pipeline of
• 16:36
  projects. In the first 6 months of
• 16:41
  running the fund, we have found 3
• 16:44
  excellent startups from Western Europe.
• 16:50
  But it ended up that due to the limitations, due
• 16:53
  to the costs, the potential costs of the transaction,
• 16:58
  uh, the cross-border transaction, those deals didn't happen.
• 17:02
  So on the business level, we,
• 17:05
  we have been aligned, we have put the term sheets,
• 17:10
  but then in the framework of the implementation
• 17:15
  the deal simply didn't happen. From the
• 17:21
  FundingBox acceleration platform, I can
• 17:25
  give one example of the startup, an Italian startup, Cognivix,
• 17:30
  that after 2 years of going
• 17:34
  back and forth with, with the lawyers, they finally
• 17:37
  set up the office in the US.
• 17:42
  And got the investment. But
• 17:46
  so this is the so-called Delaware flip. But you know,
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  it was the time, it was the momentum, and it was really, really
• 17:54
  the complex operation. But well, speaking about the positive
• 17:58
  examples, probably
• 18:02
  you, all the listeners have heard about the recent
• 18:06
  unicorn coming from Poland, 11Labs. Polish
• 18:10
  founders, uh, after 3 years
• 18:14
  of running the company, they have hit the valuation of $6.6
• 18:18
  billion. But here
• 18:22
  is the twist: after analyzing the
• 18:25
  landscape, they decided to set up the company in the US and
• 18:29
  start fundraising into the US company from
• 18:33
  day one. So It is the positive example of
• 18:37
  the company coming from or born in the CE,
• 18:41
  but the negative for the, from the EU ecosystem perspective is that
• 18:44
  they decided to go directly to the US. So those are the
• 18:49
  barriers, those are the limitations that we are working on to
• 18:54
  eliminate them. And that's our mission.
• 18:58
  I was wondering, instead of forcing a
• 19:01
  safe you pivoted towards
• 19:05
  a pan-European convertible loan as the foundation for
• 19:09
  EU scale. Why was this the
• 19:12
  smartest starting point for Europe, and what lessons did
• 19:16
  you learn from the initial missteps?
• 19:21
  Yeah, well, as I said before, US
• 19:25
  SAFE adoption failed, the simple one.
• 19:30
  So we have pivoted and decided
• 19:33
  to concentrate on something that market
• 19:39
  already knows and is familiar. So
• 19:43
  all investors in Europe, all startups in Europe are
• 19:46
  familiar with the convertible loans.
• 19:51
  Uh, still the convertible loans can be very
• 19:55
  complex. So we decided to
• 19:59
  onboard on a mission of creating the EU simple
• 20:02
  convertible loan agreement. We call it EU Scale,
• 20:08
  and we believe that this approach gives the
• 20:12
  chance to gain the traction and trust among
• 20:15
  the startups and investors and is going to, to
• 20:21
  help to facilitate the speed of the deals happening
• 20:25
  across Europe. So it is very
• 20:28
  simple, 2.5 pages. Uh.
• 20:33
  No interest on the loan, no cash repayment,
• 20:37
  no specific guarantees for the investors, just
• 20:41
  the promise of the future
• 20:45
  most favorite nation of the shares
• 20:49
  at the future conversion, which is the standard
• 20:53
  when, when getting shares in future.
• 20:57
  And well, we stayed true to our goals. So we
• 21:00
  wanted the standardized and simple agreement.
• 21:05
  We are using the convertible note as the true starting point.
• 21:09
  And just to remind
• 21:15
  That's how the US SAFE originally was
• 21:18
  born. It was the American adoption of the
• 21:22
  convertible notes that were very popular on the market.
• 21:27
  So in, in the framework
• 21:30
  of our project, we plan to encourage some investors to start
• 21:34
  using our template and
• 21:38
  adopt it. And then hopefully the others are going to
• 21:42
  follow and we believe in the snowball effect on the market.
• 21:46
  So after a few positive examples, after a few examples
• 21:50
  that the deals can happen fast, we believe that it can
• 21:53
  become the new normal.
• 21:57
  So as I said at the very beginning,
• 22:01
  the US deals are happening 3 to 2 times faster than
• 22:05
  European. So we are on the mission with this approach, with this template
• 22:09
  that everybody's on the, on the
• 22:13
  startup and investors seem familiar with to make this
• 22:16
  gap smaller or even liquidate it.
• 22:21
  In the founders world, you'll also tell some inside story about
• 22:25
  stories about that. But let us go into building trust.
• 22:28
  As you said, one adapts and then more people will adapt.
• 22:32
  Um, you've said before European investors are distrustful of
• 22:36
  automation. How did that insight shape your approach,
• 22:39
  especially regarding AI funding platforms
• 22:43
  versus one-on-one, the, the typical human trust
• 22:47
  building? Well, our original plan
• 22:50
  within the DeepSafe project envisioned using
• 22:55
  our proprietary FundingBox-owned matchmaking AI
• 22:59
  platform, OnePass Bridge, to match investors and
• 23:02
  startups automatically.
• 23:06
  Uh, obviously We did not believe that the deals
• 23:10
  are going to happen automatically, uh,
• 23:14
  but the goal was to do the matchmaking
• 23:18
  and allow startups and investors sign the
• 23:21
  deals on the platform, uh,
• 23:26
  using the standardized template. Uh,
• 23:29
  the platform recently won the Alastria Blockchain Award for
• 23:33
  the best Web3 project. So from the product
• 23:37
  perspective, um, it's
• 23:41
  ready to be deployed. But what we have found out,
• 23:45
  that there is no product-market fit, uh,
• 23:49
  because the investors, especially investors, are not ready,
• 23:53
  uh, to use it for the
• 23:57
  purpose of closing the deals.
• 24:00
  So The reality is that the EU investors are
• 24:04
  not ready for the so-called blind hype-based seed
• 24:07
  investments. They are also distrustful of
• 24:11
  the new legal approaches, uh,
• 24:15
  and the so-called black box automation. So now we are pivoting this
• 24:18
  to one-to-one model, uh, meaning
• 24:23
  in the framework of the project, we are test
• 24:27
  driving matchmaking the investors
• 24:30
  also through the platform, but then taking this
• 24:34
  on the one-to-one basis to close the deals using
• 24:38
  the EU scale template. So we want to have
• 24:42
  the real-life proof that the deals, the signing of the
• 24:45
  investment agreement, can happen really, really
• 24:49
  fast. And this is the first step that we are
• 24:54
  right now, uh, testing.
• 24:59
  I see that, that sounds pretty promising. You've been talking
• 25:02
  about DeepSafe before. Can you walk us through the
• 25:06
  structure of the DeepSafe project? Who's involved?
• 25:10
  How decisions are made? And how founders, lawyers,
• 25:13
  and even VCs are contributing to the EU
• 25:17
  scale design? Yep, absolutely.
• 25:21
  So the DeepSafe is the EU-funded initiative. Uh,
• 25:26
  it's consortium of experts doing the work. We are rather
• 25:30
  a small consortium of 7 partners led by FundingBox
• 25:33
  accelerator company based in Poland.
• 25:38
  In the consortium, we've got the Danish accelerator
• 25:41
  called Accelerace, seed fund from
• 25:45
  Latvia Overkill, South Moravian
• 25:49
  Innovation Center,
• 25:52
  BW.CON, Baden-Württemberg Connected
• 25:56
  from Germany, and Techosystem
• 26:01
  in Ukraine. And on top
• 26:05
  of this, we've got a sister company from Spain, FundingBox
• 26:09
  Communities. So that's the consortium. That
• 26:12
  is helping us to get immersed
• 26:16
  into the different ecosystems, different legal ecosystems in different
• 26:20
  countries, to make the adaptations
• 26:24
  as fitting to the legal
• 26:28
  realities of different countries, different ecosystems.
• 26:33
  While the European
• 26:36
  Simple Convertible Agreement for Loan to Equity
• 26:40
  EU Scale is the product. It's a contract template,
• 26:44
  uh, supported by the
• 26:48
  guidelines. And right now we are looking for
• 26:51
  the organizations willing to join us
• 26:55
  and help us build it together.
• 26:59
  We want to listen to the voice of the ecosystem because
• 27:02
  we are building this product for the
• 27:06
  ecosystem. So if you are the lawyer, tax advisor,
• 27:09
  VC representative, angel investor,
• 27:13
  or experienced founder, we are opening a call for
• 27:16
  expressions of interest to recruit for our working
• 27:20
  groups. So you can visit our website eu-scale.eu
• 27:23
  to register, and, uh,
• 27:27
  we are definitely going to
• 27:31
  to involve everybody that is willing to contribute to this
• 27:34
  common goal that we've got in Europe.
• 27:40
  Um, we are focused on Founders here on Startuprade.io,
• 27:44
  so let us dive in a little bit into the Founders Playbook.
• 27:48
  For founders listening today, admittedly we're recording this
• 27:52
  shortly before Christmas, but it will be aired only in February
• 27:55
  because we, we currently do have quite a backlog a
• 27:58
  backlog in content. So for founders listening today,
• 28:02
  say, when racing across Germany, Poland, and
• 28:06
  Czechia, what 3 practical
• 28:09
  steps should they take right now to prepare
• 28:13
  for cross-border round? Well,
• 28:17
  nowadays I think that the best approach is
• 28:21
  get the local lead investor
• 28:25
  and close with him a preliminary deal that he's
• 28:29
  going to lead the round.
• 28:33
  Then search for the international investors who like
• 28:37
  the idea. Well, searching for investor is still the
• 28:40
  job that you have to do as the founder. And then once
• 28:44
  you convince them, ask them to join the round. Why
• 28:48
  the local lead investor? To build the trust
• 28:53
  of the foreign investors that all the legal
• 28:56
  elements and the
• 29:00
  basic due diligence has been done properly under
• 29:03
  the local legislation. So
• 29:07
  that's the approach for now. For the future, once the EUSK
• 29:11
  will become the standard, it should be much easier because then you could
• 29:14
  be raising money independently
• 29:18
  for— from different investors and signing, uh,
• 29:23
  like the American companies are doing, signing SAFEs,
• 29:28
  each of them independently and up to some limit,
• 29:33
  and then with the promise of converting them at the next
• 29:37
  equity round. But we are still not
• 29:40
  there as the ecosystem. And
• 29:44
  I was wondering for our audience if you ever paid a lawyer to
• 29:48
  translate a SAFE or convertible notes between EU
• 29:52
  jurisdictions. Drop a comment where you're based and let
• 29:56
  us know how common this is. We need to talk about
• 29:59
  the policy context here, the so-called 28th regime and EU-INC.
• 30:04
  Yes, the European Union has currently only 27 members, and
• 30:07
  the 28th regime is
• 30:11
  part of growing political momentum in Brussels, um,
• 30:16
  a potentially new pan-European company structure that could—
• 30:20
  would let startups incorporate once and operate
• 30:24
  everywhere. But since this might take years to become real,
• 30:28
  how do you see EU Scale positioning itself as the
• 30:32
  bridge between solution founders and investors
• 30:35
  can use today? How has
• 30:39
  the shifting political climate influenced
• 30:43
  you? Well, the
• 30:46
  response coming from the
• 30:50
  European Union, European Commission,
• 30:54
  towards the initiative of creating the 28th
• 30:57
  regime is very positive. EU-INC initiative
• 31:01
  is working on it. They have even developed the EUFAST.
• 31:07
  This is the advanced
• 31:11
  subscription template that
• 31:15
  is basically the US SAFE adoption in
• 31:18
  Europe. We believe
• 31:23
  it has still
• 31:26
  the flaws, that we
• 31:30
  have faced when trying to adopt American
• 31:34
  SAFE in the current European ecosystem.
• 31:38
  So that's why we believe that the intermediary step,
• 31:43
  like the SCaLE, Simple Convertible Loan Agreement, is
• 31:47
  needed. Commission recently
• 31:51
  announced that the 28th regime is going to be
• 31:54
  the binding regulation. That's good. It's likely to be
• 31:58
  adopted in '27 but taken into force
• 32:02
  late '27 or even '28. Uh,
• 32:09
  just to remind the listeners, GDPR was also the
• 32:13
  regulation, and there were many, many issues with the
• 32:17
  implementation, and there is usually the transition
• 32:20
  period allowing companies to get
• 32:24
  time to prepare. There are different interpretations of
• 32:27
  laws, different understanding what data protection was.
• 32:31
  GDPR was supposed to be universal but became
• 32:35
  very complex, and practically for the it, SMEs, uh,
• 32:41
  it hit the small companies with the disproportionately high costs.
• 32:46
  GDPR concept was born 15 years ago. And
• 32:51
  very recently it got fully implemented. So, uh,
• 32:55
  that's why we believe that on the way of
• 33:00
  implementing the 28th regime,
• 33:03
  there will be some hurdles. Regarding 28th
• 33:07
  regime, there are more questions than
• 33:11
  answers. These questions are tax residency, social
• 33:14
  securities, labor laws. It still might
• 33:18
  not be applicable for all companies,
• 33:23
  especially those that were established under different
• 33:27
  local laws. And that's why we
• 33:31
  believe that we need that bridge solution
• 33:34
  now. The EU scale, we believe, is something
• 33:38
  that is going to be the intermediary step, but we
• 33:42
  need it really now and fast in the European
• 33:45
  ecosystem.
• 33:49
  Guys, right after the break, we'll uncover the strategy
• 33:53
  that changed how FundingBox scales cross-border
• 33:57
  investments and how EU Scale could speed up
• 34:01
  your next round by months.
• 34:08
  Guys, welcome back from the ad break. How, Tomasz, how
• 34:12
  do you balance national differences, say Poland versus
• 34:15
  France, while designing one instrument that
• 34:19
  fits everyone? It has to fit 27
• 34:23
  legal regimes. Where do you draw the line
• 34:26
  between flexibility and standardization?
• 34:31
  Well, convertible loans are widely used across
• 34:35
  Europe with relatively small differences
• 34:39
  between countries, but
• 34:42
  unfortunately, quite often they become bulky and too complex.
• 34:47
  So the primary challenge that we've got is to make it— make
• 34:51
  them simple enough to make them universal
• 34:57
  But on the other hand, we are working on creating a
• 35:00
  playbook set of rules on this,
• 35:04
  how to align existing accounting practices, tax, legal
• 35:08
  implications in different
• 35:11
  legal setups. So
• 35:15
  to address this, we'll develop the white paper that will
• 35:19
  highlight the required adjustments and interpretations
• 35:23
  and educational materials So it's like a playbook for
• 35:26
  this, how to use this EU scale depending on the
• 35:30
  setup. Investor coming from this country investing in the startup in
• 35:34
  the other country.
• 35:38
  Let's look a little bit into the future, Tomas.
• 35:42
  If the EU scale becomes the norm,
• 35:46
  what we currently hope for, what will Europe's early-stage
• 35:50
  funding landscape look like somewhere around
• 35:52
  2028? Will we finally see a true pan-European
• 35:56
  seed, pre-seed market? We hope
• 36:00
  so. That's our goal and that's our mission. You, you
• 36:03
  guys are also working
• 36:07
  with DeepSafe. When is your next intake of
• 36:10
  DeepSafe for startups and investors, and can you
• 36:14
  explain the benefits for both?
• 36:19
  Well, we expect to to launch the next cohort for
• 36:23
  about 20 startups in, in late February
• 36:26
  '26, with the deadline for applications
• 36:30
  being in April. April. In So
• 36:35
  after onboarding those 20 startups, we are going to
• 36:39
  support them with the Venture Readiness Program starting from
• 36:43
  May. We offer them the mentoring
• 36:48
  But also we are going to include the fundraising and
• 36:51
  actionable advices on how to use the EU Scale
• 36:54
  instrument. Moreover, we are going to offer
• 36:58
  also the warm introduction to investors
• 37:03
  that are in our ecosystem. And we
• 37:06
  are looking for the high potential early stage startups
• 37:10
  active in the deep tech domain.,
• 37:15
  established in the EU member states or Ukraine, uh,
• 37:21
  and we are looking for startups that are interested
• 37:25
  in piloting the EU Scale convertible, uh,
• 37:29
  deals. And obviously the expression of
• 37:32
  interest will be launched at the eu-scale.eu, so we are
• 37:36
  inviting all the startups to
• 37:40
  mark this website and look for
• 37:44
  announcement of the open call in February.
• 37:51
  Um, your predictions for 2030—
• 37:55
  what is your boldest prediction for Europe's deep
• 37:59
  tech ecosystem by 2030 in talent,
• 38:02
  capitals, and exits?
• 38:07
  Well, we believe that, um, the
• 38:12
  gap between EU and
• 38:16
  US and China will be minimized. Our goal
• 38:19
  is to reverse the trend, and we
• 38:23
  believe that reversing the trend, meaning that the gap is not
• 38:27
  growing and getting smaller, is going to be a success.
• 38:31
  I would also be interested in your contrarian take.
• 38:35
  Many say Europe can't compete with the US. Um,
• 38:39
  I actually just read the, uh, State of
• 38:43
  European Tech from Atomikor. They say something different.
• 38:47
  Um, but, um, you've argued that Europe's
• 38:50
  fragmentation might be actually its secret
• 38:54
  weapon. How so? Well,
• 38:59
  nowadays we definitely
• 39:02
  cannot compete in the volume and speed of investments.
• 39:07
  Not today and probably not in the
• 39:11
  short future. But, and here
• 39:15
  are a couple of buts, we
• 39:19
  believe that the united defragmentation under the EU umbrella
• 39:23
  The fragmentation of the market, um,
• 39:28
  is giving a huge opportunity because
• 39:32
  Europe has the largest public grant
• 39:35
  ecosystem in the world. That is including
• 39:39
  grants on the different levels, including the
• 39:42
  cascade funding grants where we as FundingBox, for example,
• 39:46
  are one of the European leaders of distributing the cascade funding
• 39:50
  grants. Just to remind the audience, we have distributed and supported,
• 39:54
  uh, more than 1,500
• 39:57
  startups in the last couple of years.
• 40:01
  On top of this, well, Europe has the, uh, complex but
• 40:04
  more stable and predictable political and regulatory environment.
• 40:09
  Still lower costs of accessing talent, for example, from CEE
• 40:13
  or Ukraine, and Just to mention,
• 40:17
  numerous technology and competence centers, uh,
• 40:22
  that hold untapped advantages.
• 40:28
  Once fully unlocked, they could
• 40:31
  significantly strengthen the deep tech ecosystem.
• 40:36
  So Europe may not be the most competitive now, but
• 40:39
  it's likely the most steady market. We believe that all those elements
• 40:45
  are the counterarguments that Europe
• 40:48
  will not be able to compete with the US and China. And
• 40:52
  we believe that the defragmentation is the key
• 40:56
  to unlock all those opportunities.
• 41:02
  Um, for our audience, if you're a founder or investor in Europe,
• 41:06
  we would be interested give us a comment of your country
• 41:09
  pair, the two markets you're trying to bridge with funding,
• 41:13
  say Germany, Poland. We'll highlight some of your cases in future
• 41:17
  episodes. Tomas, you have
• 41:20
  any advice for founders? Because looking back to your
• 41:25
  first startup days and your early investor experience,
• 41:28
  what two things would you do differently today?
• 41:32
  And what should founders focus on when raising
• 41:36
  cross-border? Well.
• 41:41
  Back then there was literally no VC
• 41:44
  ecosystem in Poland, so we had to bootstrap.
• 41:48
  Due to the lack of capital,
• 41:52
  we got stuck in Poland. We simply didn't have the capacity to go beyond.
• 41:57
  So nowadays I would raise
• 42:01
  funds from, from abroad and start
• 42:04
  scaling from day one with the global mindset.
• 42:08
  Today, the mindset should be global and
• 42:12
  not local, not even regional, from day one. And
• 42:17
  only those companies have the chance to be a
• 42:20
  true success, uh,
• 42:24
  the founders that are born with the global
• 42:28
  mindset and go with this
• 42:31
  setup, uh, of conquering the world.
• 42:35
  That's the only way forward in my view nowadays.
• 42:42
  Let's talk about a hidden gem as the last
• 42:45
  question. What's one little-known legal or tax
• 42:49
  tip every European founder should know before
• 42:53
  signing the next term sheet?
• 42:57
  Well, I guess there are many, many tips and tricks.
• 43:02
  I believe that founders should
• 43:06
  be really careful when
• 43:11
  making— signing their first investment agreement.
• 43:15
  I would say, first of all, conduct the
• 43:19
  due diligence of your future investor.
• 43:24
  Investment agreement, especially at the very early stage, is the
• 43:27
  long-term contract. So be sure
• 43:31
  with whom you are onboarding
• 43:35
  on your mission. More
• 43:39
  practical things: do not make any guarantees on your personal
• 43:43
  property. Still, such elements are
• 43:46
  happening from time to time. And
• 43:50
  this can potentially lead to a lot of
• 43:54
  tensions and a lot of unnecessary pressure on
• 43:57
  the founder. Early-stage deals,
• 44:01
  it's known to everybody that are very risky
• 44:05
  and then can often fail. So you as the founder
• 44:08
  shouldn't be putting more pressure on yourself than needed.
• 44:12
  And The last thing, quite obvious,
• 44:16
  but unfortunately still too often
• 44:20
  overlooked: do not give away a large
• 44:24
  portion of your equity for the seed investment. We have seen
• 44:28
  so many broken cap tables that companies became uninvestable,
• 44:32
  and it's a big pity. Tomasz.
• 44:39
  Awesome closing words. Thank you very much. It was a pleasure having you as a
• 44:42
  guest. Thank you, Joe. It was also a pleasure
• 44:46
  having me with you.
• 44:55
  That's all, folks. Find more news, streams,
• 44:59
  events, and interviews at
• 45:00
  www.startuprad.io.
• 45:05
  Remember, share Carry is carry.