Antonio (00:00) I'm not willing to invest money in ventures that don't improve the world we live in. I would like to leave to my kids a better world. That's my concern. it's kind of, it's important that as investors, we share this sense of responsibility. Because if we don't do that, we end up with some, the world that is much worse. Of course, we make a lot of money, but then what? $600 million ⁓ dollar asset under management. if we combine all the funds that we have invested in dry powder. ⁓ As I said, we invest out of basically three pockets and we have a cross-fund investment strategy. ICEO Technologies (00:44) Antonio is the managing director Europe of Sony Innovation Fund, the venture capital arm of Sony. This fund has 430 million dollars of assets under management and constantly invest into promising early stage and growth stage startups. Antonio (00:57) check who is actually giving you the cash because those guys, especially if they sit in the board, they could actually kill your company. So it's very important to work with the right people. We have seen a lot of issues in companies, not because the idea was not good or because the business plan was not good, but because... Diego Calligaro (01:19) Antonio, so glad to have you here today with us. We spoke a few months ago back in Dubai and it was really a pleasure to get your insights back there. And I'm happy to have you here now so we can share it with everybody. Antonio (01:34) Yeah, thank you Diego for having me. It's a pleasure for me to be part of this. Diego Calligaro (01:37) Perfect. And so yeah, let's start straight away with talking about investments. So I would like to understand first from you regarding the process in Sony when you identify and make investment into startup. If you can share more about this. Antonio (01:55) Yeah, yes, basically, started actually formally a venture capital activities since 2016. Before that, we were actually making investments in the startups mainly off balance sheet and based on sponsorship from business units in Japan. Then from 2016, we actually formalized the process. We established a team. only with the focus on investing capital in start-ups. The first 100 million budget was off-balance sheet but with a process based on investment committee. So we have an investment committee and every month investment committee is presented with opportunities and they actually decide where. which opportunities to take forward for investment. And that was kind of the first hundred million budget that was allocated. It was only Sony money. Then from in 2019 and 2021 we raised external external budget, external money and we established a venture fund where Sony is an NLP and a GP, but also we raise money from external limited partners. also there we have an investment committee and actually that investment committee makes decisions on every opportunity, on every investment and we meet up every month basically with the investment committee. and make those decisions. Sony is a corporate venture capital fund, somehow our investments need to be relevant to Sony Group. That does not mean that we need to have a sponsorship before making an investment. So our main prime measure of KPI is actually return on investment, so MoIC and IR. But we also are very proud of having about 40 % of the companies in the portfolio to have some sort of collaboration with Sony Group. And also, we like to invest in areas that we understand. And we are all Sony employees for many, years. And Sony makes money at the intersection between media and technology. And that's where also we are investing most of the money in that intersection. So we have basically two key pillars. One is deep tech, and the other one is media. And we are making investments globally, so in the US, in Europe, in Africa, in India, and in Asia Pacific. Diego Calligaro (04:26) Okay, perfect. And then can you share maybe some numbers in terms of number of startups invested, asset under the management, potential exit? Antonio (04:36) Yeah, so we have about $600 million in assets under management if we combine all the funds that we have invested in and dry powder. as I said, we invest out of basically three pockets and we have a cross-fund investment strategy. We tend to get in, foot in the door, and companies using our early stage budgets allocated for early-stage companies. And then, why? Because we believe that the best, the only way really to learn and to understand about a company is actually to make a small investment, understand the board dynamics, understand the capabilities of the management. And then if the company... is a good one that we kind of we doubled down the growth funds. We put more capital. We tend to allocate about 10-15 million per project. And since 2016, we have got hundreds of companies in portfolio. of course, doubling down only some of it, portion of it. We have done about 10 exits so far. And yeah, I think... The focus areas that we are looking at, as I said, is media and deep tech. From the deep tech side, I think the key investment strategy is to be exposed to things like AI and big data, which is actually a tectonic shift of the today world. and anything that is related to that, including, for example, energy. We have closed recently an investment in a company in Sweden called Flower. Today, you have more more data centers that are planned to be built. Stargate project was announced in the US, $500 billion allocated. And the amount of energy required is going to be substantial. And so one of the key issues is actually using renewables and making sure that renewable is used to power up those data centers. And the problem that you have when you use renewable is that you create an imbalance in the grid because renewable energy is stochastic, is not predetermined. So we invest in a company in Sweden to address this problem, which seems to be unrelated to AI exposure, but actually is very, very related. So those are the of focus areas that we are looking at. we tend to, as I said, allocate 10, 15 million per project, so from initial ticket up to the end of the, to the exit of the company. Diego Calligaro (07:00) Okay, and if we look at identifying the right targets for you to invest, what are those conditions like on top of the sector that you mentioned, but what are those conditions that you see like this is the right company to invest in? Antonio (07:16) I think for us it's very important to have, of course, business plan, sound business plan, the good numbers and so on. is always something that we look at. But for me, the most important element is the team and the people involved. We have seen a lot of issues in companies, not because the idea was not good or because the business plan was not good, but because actually there were some kind of bad dynamics within the team and between the team and the board. So for me, having a good group of people actually that have common sense and are reasonable is actually one of the keys to success, is the most important thing. I've seen companies failing because the CTO wanted to become the CEO, because there is a bad dynamics within the board. Sometimes because the board was too silent, there was no governance. Board members coming to the board meetings just to kind of take notes without actually really supporting and advising the founders. So we have seen all those things and we like for us and that's what also I tell many founders, yes, get the cash in order to kind of be able to execute your plans, but make sure that, you know, check who is actually giving you the cash because those guys, especially if they sit in the board, you know, they could actually kill your company So it's very important to work with the right people. And for me, people is really the essence of this job. It's an HR challenge at the venture capital. Diego Calligaro (08:42) Interesting. And if we look at as well when it comes to other objectives for you, of course, there's a lot of financial returns that as an objective for you as a fund. Last time we spoke as well, you were also highlighting the importance of value and the impact that your investments are doing as well in society. which was an interesting perspective as well from VC, which I would like to talk Can you share more about this? Antonio (09:07) You Yeah, so for me, I think we have a responsibility. the responsibility we have is actually to make sure that the world that we leave to the next generation is better than the world that we are living in. That's our prime responsibility. And I think sometimes we just forget about it. It's all about, you know, accumulating and make, you know, get most of the money and the... So that's why it's important for me when we invest. Of course, we cannot live without a profit. We cannot live without making a return and we must make a return. That's my prime concern. But I'm not willing to invest money in ventures that don't Improve the world we live in I would like to leave to my kids a better world. That's my my concern and it's kind of It's important that as investors we share this sense of responsibility. Because if we don't do that, we end up with some world that is much worse. Of course, we make a lot of money. But then what? So I think that's for me, it is one of the kind of key goals that I have in my mind every time I see a new opportunity. And Sony as a company share these double values. mean, it's a very ethical company. And so that's why I'm really fortunate I can actually work for a company like Sony that has just, you know, we have a total alignment in terms of values, yeah, and this sense of responsibility. So that's what I mentioned to you in Dubai, think, and then, you know, there are a lot of, there are too many investors today that are just forgetting about this in my view. Diego Calligaro (10:44) And maybe can you share some example of companies that you're very proud about of making investment that are really impacting society? Antonio (10:53) Yeah, as I mentioned, this company in Sweden, Flower is called Flower and Flower stands for flexible power. Their goal, you know, the reason why they came up with this software platform to balance the grid is because their ultimate goal is to be able to power up data centers and facilities only with green power. Yeah, no fossil fuel. Today, one of the biggest issue if you want to use green power, so you want to have a kind of net zero, net zero carbon footprint. One of the biggest issues is that the price volatility of this green power. Why there is this price volatility? Because you cannot really predict precisely when the wind is blowing and when the sun is shining. So what these guys have developed? They've developed a trading platform, a multi-market optimization platform that can actually leverage this volatility to make money. And why they are making money, they guarantee a flat price, flat renewable price to retailers. Retailers could be IKEA, Sony and others. So that's a great example of a company that is actually making money while providing a great service and supporting actually companies that they would like to power up their facilities only with renewable power. So that's where actually return on investment and impacts kind of meet. it's an intersection. That's what really makes us happy when we see these type of stories where you can actually make a profit, but also make some good out of it. Diego Calligaro (12:35) Yeah. And maybe on the other side without of course sharing names, could you maybe share an example of a great potential investment which you didn't invest in because it wasn't in line with your values, because it wasn't in line with the impact that you're aiming. Antonio (12:51) we have a lot of investments that we passed because we did not believe... We did not believe that the founders could deliver on their promises. But also it's really, important that we can work with the team and the team shares our values. when we don't see that, we just don't invest. So of course we have some examples of past investments that we didn't go through simply because we didn't feel there was enough honesty in the people we were discussing with. So those values like integrity, honesty, those are the key values that we look in these teams, in those people. And if we don't see them, we just, I don't even bring this to the investment committee. So even if it's a brilliant idea or potentially could actually revolutionize our PNL, I think we want to see Diego Calligaro (13:33) Yeah, Antonio (13:45) this type of values in people. Diego Calligaro (13:47) Okay, I see. so yeah, you essentially, you don't even go through the analysis of it in the first place. So you got it at the beginning clear. And so maybe we can discuss looking at the investment as well regarding this year, you're investing several sectors, you but what are you think like the, the areas of specific technologies like, you know, you are most excited about in which you think you're gonna focus more. Antonio (14:14) Yeah, so here, for example, in Italy, we are closing an investment now, also that is coupled with some public funding coming from the government, hopefully. I mean, it's not sure yet, the grant, the private money, you we almost wired the money. So we are in the process of closing. And this is company. that is going to manufacture in Italy. And it's about data centers. And again, it's about energy. It's about data communication. So today, especially with AI, you have a lot of data that you need to move from one rack to another rack within the same data center. And this moving data. it's very energy inefficient today because if you want to transmit data using the copper, you have a lot of power dissipation. So the idea is actually to use optical fibers and modulate light at very high speed and move data from within the same data centers and between data centers using optical fiber. And to do that, we are closing an investment in a company that is doing developed this new optical modulator using a new material called graphene and the graphene was actually invented in Europe. So one thing that I always try to do when I you know, we try to invest in companies is to look at, what is the territorial strength? What is it that we can bring as Italy, as France, as Europe, that US doesn't have? And one conclusion was, well, we have, we got an overpriced in Europe in 2012 to discover this new material, this 2D material, it is called graphene, that has extraordinary properties, like superconductivity at target temperature, for example. And what can we do with that? And we have enough talents that understand this type of material. So what can we do? What is the application? What is the potential market that we can turn? And the idea is actually to, again, to focus on this optical engine to move data at very high speed at a very low power. for data centers, which is again, it's about making a profit, but also doing some good because we can actually provide employment and also address the issue of the big issue that is the data mobility inside data centers. Diego Calligaro (16:36) Okay, clear. if we look at Europe in general, there are many new areas as well to invest in, given the global problems that are arising as well. What do you think are the key areas or needs in which you would like to focus more in terms of investment? or also new developments and technologies emerging. Antonio (17:00) Yeah, so if I look at Europe, think one area for sure is Silicon Photonics and Photonics. which is basically what this company is looking at, but by leveraging some new materials, 2D materials, that's one area of big interest to us. Another area is actually, again, The basic theme is the same, energy efficiency. For me, the energy problem is really key for the future. The other issue is a new type of computing. So today, you know, the processor that we have in our laptops is still use the same architecture, the old human architecture. But if you look at the brain is operating in a completely, as a completely different architecture. And our brain, if I compare our brain, what our brain can do compared to any processor that today is used in our laptops. Our brain is perhaps 100 times faster in doing certain things and yet is only consuming 20 watts. So having a new type of computing that is mimicking the way the brain operates and works is actually another big area for us. And we recently closed an investment in a German company called Gimesys that is actually doing exactly that. It's a company that is mimicking the way the brain operates to process it. And it's kind of cutting edge in the analog computing. So those are the two technical. Then I mentioned this clean energy or softer platform to reduce the volatility of renewable price volatility. That's the other one. Also, in entertainment, are looking at some kind of new type of solutions. Also, leveraging some software based on AI, driven by AI, to kind of reduce the cost of content production. So a lot of the stuff that's in the past was kind of done. and manually to boost efficiency, process efficiency in content development. So we're at this infrastructure technologies that help us to reduce the cost of production of content. That's also another area that we are looking at. For example, debugging a video game after you develop. Today, instead of using several people and several hours actually trying to play games and finding a bug and then debug it. adding some automatism there that's kind of automatically, there is an agent that is playing, AI agent playing, and then you can actually identify the bugs and fix it automatically. So this type of stuff we are looking at on the entertainment side as well. Diego Calligaro (19:34) Bless you. talking about this, you know, there's a lot of debate as well emerging now, given a huge amount of investment in artificial intelligence from US, China as well. And some people say as well, Europe is behind in terms of investment or is regulating too much. Like, what is your take about this? Antonio (19:57) Okay, so for me, artificial intelligence can be an unbelievable thing, unbelievable technology that can deliver a lot of good, but also can be extremely harmful. And that's why my honest opinion is that I think it's really important to avoid too many open-source activities around AI because my biggest concern is that this technology is very powerful technology because in the hands of bad actors and if that happens this again is gonna create it's not gonna make the world a better place. So this open source approach although I'm pro open source in general but For this specific technology, would really be cautious. And you can still share and disseminate results with other people by sharing information through APIs, through API calls, but not putting the full model open source that can be accessed by everyone at any time with no control at all. And so, you know, I would be very cautious on that. And I would really, you know, look at things, you know, too much regulation is bad for innovation. But if you are too deregulated, you have a lot of risks, you expose yourself to a of risks. And I think AI can be a risky technology. It's not just like technologies we have seen in the past, you don't have actually any limits to this. Technically, you could offload any task to a digital agent, especially today with the new type of AI that is reasoning. It's becoming really with age AI in the future. I think it's really important to have an approach that is kind of, okay, give enough freedom to innovate, but also make sure that there is enough regulation there, enough boundaries to avoid that this technology goes in the hands of bad people. Diego Calligaro (21:56) Yeah, clear. So yeah, so it looks like you're in favor to the approach of the European Union to at least regulate the technology that can have a huge impact around the world. It can also be extremely negative as well. Antonio (22:11) Yeah. I'm in favor, but I think on the other side, think European Union is regulating too much and is too slow. I think we should look at, US is the other extreme. We are both on the extreme. So Europe is one extreme, US is the other extreme. think a middle ground, I think is required. Yeah, so I think that's the issue. Diego Calligaro (22:33) Yeah, indeed. Because some will say that also it can be difficult to regulate something that still you don't see the impact or the negative consequence that may have. At the same time, the level of transformation can be so quick that you need to anticipate that rather than cure potential problems. Interesting. So thanks for sharing this, And then I would like as well to touch on moving towards startups as well, some remarks from your side to your piece of advice, let's say, for startups that want to raise investments. And with you, with Sony, what would you suggest them? Antonio (23:13) Yeah, think, well, it's important to, of course, to look at markets or develop technologies and ideas that have big impact. Meaning that being able to address very, very big markets, it's important to protect those ideas. either by not sharing them or through filing. And so we are looking for big disruptions, I think. And then the third thing is that it's important to have common sense, so to be people with ambition and big ambitions, which is, again, something that in Europe, I mean, in Europe really We put ceilings to everything, but if you go to the US, founders in the US, have no ceilings. Ambition is, there is no ceiling to the sky. So ambitions is super, super important. But I think together with ambition, it's very important to have a great sense of responsibility. We like to see that combination. Yeah, and then people with common sense that if, you know, after a while they see that things are not really going in the right direction, are capable of pivoting and have a plan B and execute a plan B. I mean, for me, that type of flexibility, you know, and ability to adapt, it is a really key point when we look at things. Yeah, because... Usually Plan A doesn't go ahead. So you need to really be able to pivot and change very rapidly. This is an attitude that we like to see in founders. Diego Calligaro (24:41) And if you could share as well, your suggestion, piece of advice, or let's say something that you wish for, for venture capitalists in general, investors in general as well. Antonio (24:53) I would love to see investors that are more, they have more sense of responsibility towards, know, beyond the financial returns. I would like to see investors that are more active in the boards of private companies that can really, you know, take this role in the board as a more humbleness. You are in the board, are serving the board. Serving means that you are at the service of the founder, not vice versa. So I would like to see this type of attitude more in boards where we actually go there and help the founder solving his problems or her problems. I would like to see less dysfunctional boards and more constructive thinking and positive thinking inside the boards and that's what I would like to see. And also, I one big issue that we have in Europe is that it is a lack of early stage capital, early growth capital. So companies have to raise serious B, serious C. It's very difficult to find capital in Europe. So they need to go in the US and try to risk money. mean, the past they were going to China and US. Now China is out of question. So it's basically US. So that's one of the issues that also we have in Europe. yeah, that's what I would like to say. And more founders that are willing to bet on. Europe and the local territorial strengths because that's the problem here. have great and solid, we have solid science here in Europe, all of great universities, great PhDs, but then we don't have a lot of people that can connect technology to markets and I think that connection is super important. To get those people you need to actually go to US. Diego Calligaro (26:40) Thanks a lot for sharing, Antonio. now let's look back at your career. You've been so many years in venture capital, investment, and Sony. What would you have done differently? Antonio (26:54) Yeah, that's a great question. To be honest... Yeah. Probably I should have moved to US probably 15 years ago or something because let's face it let's be realistic I mean that's where the market is so that's where the market is but on the other hand I know Europe I know the quality of life here it's at least for me I mean that's I don't think I would be able to live in the US. But if I look at my professional life, think if perhaps 15 years ago, 20 years ago, moving to the US, I think it would be different. Every time I go there, it's so interesting and so enlightening and you have so many crazy ideas and people with... You know, again, as I said, there's no boundaries, there's no ceiling, which is super important to have this type of kind of very bold type of ideas. to be a founder and a great entrepreneur, you need to be a bit crazy. You see all the big guys in the US, know, clearly they are not a bit crazy, which is important, for a start-upper. And so that's probably one of the regrets I have professionally. But as I said, I think for me, Europe is the best place to live. think quality of life in Europe, I don't think it's matchable with the, it's unmatchable. But professionally, think US, especially in venture capital, in venture capital, US is an edge. Diego Calligaro (28:15) Okay. And one last remark, Antonio, as we're approaching the end of the interview. looking at the accelerating rate of change that you are experiencing in the world, given the new technologies impacting the world and things that are changing very fast, can you share as well what you think, what excites you most? about the digital future, but also what are your main concerns as a person about the digital future. Antonio (28:41) As I mentioned before, I'm so excited about using AI to boost efficiencies and improve the everyday life. So leveraging artificial intelligence and neural networks to, for example, to get new drugs to cure cancer or to get, you know, to kind of in general to be more efficient, to improve efficiencies of companies and solve problems that today we have or even simple search or... having a greater kind of support in the business. On the other hand, think the big concern here is that AI can be utilized in the wrong way. so I'm kind of... very optimistic about the digital future and about AI, but on the other hand, I'm very cautious and I'm really concerned if this technology goes in the wrong hands. And that's why I'm very cautious for those companies that actually made a decision to just open source everything. I think it's wrong decision, it's the wrong direction in my view. Diego Calligaro (29:48) thanks a lot for speaking with us today. Definitely, I'm sure there going to be other occasions to speak again and discuss further topics. And meanwhile, I wish you a great day. Thank you. Antonio (30:00) Thank you Diego. Thank you so much.