Patricia Pastor (00:00) We analyze more than 4,000 companies every year. It's hard work. Diego Calligaro (00:06) How do you identify those red flags or those companies that are not worth investing? ICEO Technologies (00:12) Patricia Paster is a general partner who has managed over 150 million euros in venture capital funds. The last fund she raised is called Next Tier Ventures, a 50 million euros AI focused fund investing in early stage startups. Patricia is a strong advocate for diversity in tech, and she has been widely recognized as a leading voice in the venture capital ecosystem. Patricia Pastor (00:33) for the next 24 months that we are looking for is an agentic workforce for finance, procurement, actions, not just suggestions, okay? Vertical AI in regulated space, very important, helping the industrial AI native with the robust product tools. If you want to amplify your network, that is the most important thing in your life. Diego Calligaro (00:54) hi Patricia. Very glad to have you here today. How are you? Patricia Pastor (00:57) Thank you. Thank you so much for the invite. I'm very, very proud to be here with you and attending this super successful podcast. Diego Calligaro (01:05) Very glad to have you. so, Patricia, just want to start straight away from an important topic. I know that you've been managing over 150 million of funds. You've been raising lately 50 million AI funds as well. But I remember last time we spoke, you told me that... Nowadays everybody wants to invest in AI but at the beginning when you started there was really like a few individuals that wanted to invest. AI was really like a niche so if you can bring us back to that time when you were trying to rise that round that would be great. Patricia Pastor (01:38) Yes, it was funny because the last two funds that we have built in the past was of AI. We invested in AI since 2011. And when we decided to create the line of funds of NextYear and we start to launch the pre-marketing of the fund, OpenAI was not a in the market, was before the OpenAI. And each person, corporate, investor that I remind that we call and explain the fund, they told us, but you are talking about cybersecurity, you are talking about something that is very niche. AI is not technology, it's not an extent technology, it's very... specific technology and my partners and I, we will see what will happen in a few months. And the reason is because we had a portfolio of 50 companies in AI. founders, partners, boards. All the conversation was about the next evolution of AI. And it's why we decide to build next year. And six months ago, OpenAI started the market in February. I remember that in one month, we achieved a... 100 millions of users. What was crazy? Every, you know, social network media influencer was talking about AI. Borsos incorporates become crazy about what is that? I need to integrate AI. I need to have AI. I need to be in the wave of AI, you know? And they start to call us, please, can you explain another time? that you are building, what is next year, what is important not to introduce AI in the companies, what is the impact in AI in the world. And all the bits that we have six months ago, suddenly, you know, become essential and necessary in each conversation on the market. And it was funny and crazy, you know, at the same time. Quickly, in less than one year, we have allocated all the funds, we have started to invest, and well, as you can see now, AI is everywhere. And the proof is at the end of the year, the last year, the 24th, speech book, they make a report every year, more than 50 % of investment in the world was in AI. Diego Calligaro (04:30) Yeah, there's a lot of investment here and I guess from your side is very also difficult to spot like the right investment because as everybody is investing, there's hype, how do you identify those red flags or those companies that are not worth investing? Patricia Pastor (04:52) Well, it's true that here data is the key. Then it's easy to invest in second or third time founders because they have their own data of their last projects. And that is... is necessary. It's easy for them that for other team that is starting an integrated APIs, integrate data for external data. That is important. Other thing that is very important is the infrastructure. Infrastructure is the essential thing that when you invest, the cost of the startup is to build a good infrastructure. We see a lot of problems in startups, in byte coding, that the bad infrastructure can kill the company in the future. And it's why for us it's something very essential that we analyze very well. And we don't invest in founders with crazy valuations because Diego Calligaro (05:46) Thank Patricia Pastor (05:54) We have more than 20 years investing and we have seen a lot of ways that valuation, you are very crazy in markets. And for us, it's something that is a bubble. That is the real bubble. they think, founders think they have the new, you know, the... the new magic for a market and they think that the company they are starting is the next, you know, king of the market and maybe, but it's not our play. Diego Calligaro (06:28) Yeah. And I guess that from your side, of course, from an investor that is trying to invest in this technology is challenging in a way because there are many things at play. So from one side, there's a bit of FOMO and a fear of missing out of opportunities. From the other side, there are a lot of companies that are repositioning themselves as AI companies while maybe in reality... Patricia Pastor (06:54) I see a project for us... Always I tell founders when they make an approach to a VC to talk about their portfolio. That is very important, to choose your VC because I think it's a relation for the next 10 years. And it's important because you have to take a lot of decisions, good back decisions. You have to have a partner that... can help you in the good and bad moments. I don't know if you choose only a financial VC that now say that investing in AI is the best partner, no. Because the new wave is founders, they have discovered a new technology and they are strongly changes of the sector, of the market, and they need VCs that can help them to validate product growth customers, open new opportunities globally, and also provide him something that is very important, that is the good decisions. Then if you are not specialized and... All your life you have invested in SAS and not in AI. SAS is another league, It's not so fast. You have more time to examine it, to analyze, no? And AI is very fast. And you need to have a lot of knowledge and to take decisions, you know, and to have the security that you can help this company that you are investing. hand for me it's more important that you have 60 % of startups they only have six months of life because they start that something very special, new, hype. Everyone want invest and six months after you say, happened? Big tech has announced another new future and... the startup is dead. Then you need to have a good visibility and vision about which is the future, which is the new wave, where you can detect the limits and the vision to invest in the good companies. Diego Calligaro (09:07) And then if we look at the areas like within AI, which you see are the most promising one, where do you focus your attention? Patricia Pastor (09:18) We invest in early stage, okay? Then it's true that for us it's it's a promising, no? When you invest in a company, but it's true the categories or the most exciting for the next 24 months that we are looking for is that agentic workflows for finance, procurements. actions, not just suggestions. Vertical AI in regulated space, important, health, tech, industrial. AI native with the robust product tools, coding important to detect good and bad. Yes, on the basis for privacy, latency and synthetic data. think that are the most important things that we are focused on. Diego Calligaro (10:00) I see. And then as you mentioned, so everything is very fast, know, companies can go bust in a matter of six months. They get hyped and then go bankrupt. So everything needs to be fast. If you can walk us through your process, how long does it take from the moment that you identify a company to the moment that you decide to invest on them and they receive the money in the bank? And what is the process in terms of a number of companies that you analyze and how many they go through this process and you finally invest? Patricia Pastor (10:36) We analyze more than 4,000 companies every year. It's a hard work. It's true that, for example, if we are leading investors, we detect founders before they launch the product. Okay. They have the company constituted, okay. All the product market feed validated, but it's their first round. And one we tried to say is to build a strong board, diversify. We are very strong play in AI, but for example, they need another VC in another country. They can help them to scale, you know, in the next country or or another VC specialization, I don't know, in some sector or private equity, they help to follow the company in the next round, in the next step. And we try to make a strategy with a good board. After, for example, when we invest in Nilo Technologies, what was our first investment is... We have spent four months with the team, calculating very well the launch of the product, the state of the company. And after we have invested our ticket, they have applied to Anderson Horowitz, the speedrun accelerator in Silicon Valley. have been selected. They have spent three months there with the most important mentors in video games. And they have won the speedrun. the three with them, know, help them with good councils, not because there is a lot of, you know, mentors, a lot of people give you a lot of, I think, important information, but... how to filter this information and how to take good decisions with lot of smart people. And it's why that is the role of a VC, with the maturity of the GPs, with experience, to help them to take the best way. And for example, for us, it was a super journey with Nilo Technologies. Now, after Anderson Horovitz and other business angels and VC from from you say investing in company and we have the first one. Diego Calligaro (12:44) Yeah. And in terms of general tickets, how much usually you tend to invest? Patricia Pastor (12:51) We invest between 500,000 to 1 million at the first ticket and after we make follow one. And it's true that it's not the same if we are lead investor or we are co-leaders or we are followers. It depends. Diego Calligaro (13:10) And when it comes to the sources, so you mentioned 4,000 companies, screening. So how many, which channels are you using to find these? And also when it comes to network, I would like to understand because of course, network is very important. Here it's coming more from cold and warm introductions. How much that weighs in your decision to move on with the company. Patricia Pastor (13:32) It's crazy, now to make deal flow. I think it's the most complicated era to make deal flow at the moment. But we have a very strong board with successful entrepreneurs, with, for example, people from Big Tech, they are VP of product in IBM, Microsoft, Google, Amazon. very very very close to the pipeline of that kind of startup programs of Big Tech. Also we are in touch with fellow of Diego Calligaro (13:59) there. Patricia Pastor (14:03) very smart universities in USA, in Europe, to can invest at the first ticket in the best first startups of that accelerator or universities. And also we have our network with other VCs that we are comfortable with them in the board and we share a lot of projects together. Also, we attend a lot of special events of startups, AI, VCs to positionate the fund, to scale the message that we are a specialized AI fund and they can choose us. We work also with big associations, foundations of women's disease, SARAS program, and also with institutionals and corporates. You have a lot of ways to found the good company. Diego Calligaro (15:05) And if you had to pick those three top traits of a founder to be foundable, let's say, what would you say? Patricia Pastor (15:15) At this moment, think data governance is very important, the model evaluation, the cost of surprise to scale, the bake evals, various scalable product. and also very, very, very good composition of the cap table. Because when we analyze a company and they share with us the data room, they share a lot of things. They share legal, finance, product. But the first one is the cap table. And when we see a cap table with a lot of problems, red flags, a lot of VC business angels, a percentage of each founder that is not very clear and equilibrate between Diego Calligaro (15:40) Mm. Patricia Pastor (16:03) them, we stop the analysis. And that's very important, not that the founders need to have very clear the percentage, the position in the company, the commitment. And also, it's crazy, but it's like that. When you start, you take a lot of tickets from Business Angel, but after you have 50, 20, 30 business angel that you need to syndicate, you need to take a professional form to attract business. Diego Calligaro (16:36) And looking at the cap table more specifically, what would be the ideal percentage for the founders, mean the executive leadership in that hand, of course based on the stage in which they are. Patricia Pastor (16:47) I don't know exactly the number, but for example, I say you, example, a cap table where the CTO have 10%. What? 10 % of the CTO has a strong position in the company, that is risk. In other hand, for example, the decisions need to be equilibrated. If one founder have a very strong position than another one's. But when I see your strong position is a very differential police position, I think it's a risk too, because if the other founders are very essential for the company, it's a risk that they can be alone in the future. then I think something that could take the best decisions together and equilibrate the life, the time life of the founders in the company. And also very careful with dilution because if in the first round you are very diluted, you have a problem for growth. Diego Calligaro (17:47) Yeah, of course. So there needs to be a balance internally based on the roles, responsibilities and impact in the company. But of course, avoiding investors or previous investors taking too much equity based on the each round essentially, otherwise that can block future rounds. ⁓ Patricia Pastor (18:05) So for example, for next year ventures is essential to take 10 % of the equity of the company. If that is possible, it's something that we continue to analyze. Now, if it's not possible, for example, we take a 7 % is due to we see that we can... make follow in the next round and we can improve our position in the company. But if you invest in a company and you have 1 % of it is not interesting for ABC. Diego Calligaro (18:39) Yeah, of course, of course. if we do a step back, you know, and looking more at your role in managing this found, most of all, interesting in the... your day-to-day work essentially. So I know that you need to manage the investment, looking for new funds, dedicating all time for the team. So how does a typical day work look like for you and what are your main priorities when managing these funds? Patricia Pastor (19:11) And don't forget fundraising. Well, general partners, we divide our time every day to attend LPs, to increase fundraising, to make a lot of decisions with the team about which company we need to follow or not. Diego Calligaro (19:13) Exactly. Patricia Pastor (19:30) In my case, for example, I don't talk not with VCs because it's my team that have the relations and it's more to attend the position of the firm, the strong decisions to attend the portfolio, to help very well the portfolio, to be very active on boards and in... follow meetings and help them to scale and growth and to form the next. lead round that can make our exit because we are not a fund of later stage that we prepare companies for IPO. We are not an accelerator when we invest in 100 companies in tickets that are very small. We are in the middle. are a 50 million fund that we invest in companies that are growing in series B. our participation is ending then. We need to do conversation with VCs that can follow the company and to give us our exit. Diego Calligaro (20:32) Yeah, yeah, Fund Rising is an important piece for you. So not only those 50 million, but keep rising for the fund. And of course, many people listening here, they never raised a VC fund before. And it would be great to understand the process here. You went through and you're keeping going through as well. Patricia Pastor (20:53) the process of fundraising. Diego Calligaro (20:55) But for a VC fund for rising a VC fund Patricia Pastor (20:59) Well, you have first of all, a first step of marketing when you announce the fund you explain the phone in several... in several spheres, geographic sectors, and you try to position the fund. And after, when you have the approval of the regulator, in case, because it's based in Spain, we invest in global, but the VC is registered in Spain, and you have the approval of the regulator, you can start to distribute the LP agreements. It's true that, for example, in our case, our LPs are very curious about AI. They could be corporates, they could be family office, they could be specialized people that are very, you know, working deeply in this technology and they want to... more about not only in what we invest but what we see and what we analyze and reporting them about a lot of different that we have. And the interest is very diversified. For example, corporates are investing in our fund because they want also to co-invest after in strategic companies. are interested for them. And for example, they want to know specifically in this sector and their sector, what is starting now in the world and the competition where Where is the play now and what is new for them that and there we make a reporting of this sector in concrete and all the year that what we see and family office because they want to diversify and they have also you need to know if you invest in next year and other technological funds in Spain, you have no taxes when you distribute the capital and that is very interesting for example for LPs from Spain but also out of Spain because is the only product that you don't pay taxes for the moment when you win money. And that is, I think, very attractive... attractive space for LPs. after, our case, because I know other cases, but in our case, we have a very strong relation with our LPs. And we are constantly in touch with them. We help them in any doubt, any case. We make work with our board. that they have doubts about the new vision of AI, the impact of adoption, we help them with our portfolio, our board of our providers. Diego Calligaro (23:43) Perfect. So, Patricia, thanks a for sharing this point and we'd like to move now to a different topic as well, which I know you are very fond on, which is women and investment. I know you are as well leading a large organization about women investment. So if you can share more about why you are joining as well this movement because of course women in investment there's a very small percentage of women and if you can share us why it's 2%. Why is this? Patricia Pastor (24:14) 2%. 2%. This is incredible. Yes. Exactly, I don't know, but it's true that from Winvest, the ambassador of Winvest is the organization that we are more than 300 GPs of VCs from Europe, Latam and USA. And we share our personal situation and a lot of meetings that we have. And the conclusion is that it's true that it's a world of men. But for me, is a problem of culture. Because women decide their house. They start the school of their kids. She decides about their holidays. A lot of things, but she needs to decide about their money. You know, and when you are in front of woman and for example, to explain the the phone, she she told me, OK, let me I share that with my husband, with my father, with my brother. And and I ask her, are you are in a company with them and you need to decide because you are partners? And she don't know. No, no, no, no. It's my money. It's my company. And I asked her, why? You need a validation, you need an assurances. And it's at this moment that she, you know, she, she reflect that, wait, why I can't take my own decision about that if I like, I understand, I position it, you know, I'm, a lot of things that she can take the decision by herself. But it's complicated and also for the moment in our Occidental culture, women have a position without courage. It's about courage because they have fear not to lose the risk. timing is true that take a lot of time to work, to travel, to make strong decisions, complicated decisions. But in my case, I have a lot of good people, my partners, associations like we invest, I can expose my problems, I can share, I can from GPs that... Diego Calligaro (26:09) Thanks. Patricia Pastor (26:29) and they have more experience than me and they have, for a lot of problems than me, barriers and you have at this moment a lot of ways that. For example, 20 years ago, I understand that the situation was different, but now the ecosystem is developed and you have a lot of events, meetings, associations, foundations, people who a lot of with a lot of entrepreneurs, know that you can associate them, you can look for your best partners. And we are in a very good moment to be. we see entrepreneur hour and it's true For example, if you tell me, Patricia, can you back to work in the real economy? I say no, because I spent the last 20 years working in innovation. Innovation, technology, ecosystem, entrepreneurship. Then when I see the real economy, how they work, know, times, processes, cultures. can't, you know, it's impossible for me to adapt at this, at these ways then. I encourage a lot of women, strong women with a lot of, background in technology, in investment, and A conclusion that we have arrived is if we want to have more women, we need more women to invest in women. Because when I, for example, when I access to a meeting with my partners and I start to explain my plan and in front of me I have only men when they listen to me after they ask my partner. And I said, why? But I think that they feel comfortable to continue the conversation man to man. It's not something general. It's a specific case. we are 50 % women, 50 % of men in the world taking decisions to live in this world. For companies, for VCs, it must be the same. Diego Calligaro (28:33) Yeah, indeed. And what would you think is your message for women that want to enter the investment world? Patricia Pastor (28:40) They need to be more courageous to take risks, not have fear. And we are a lot of women that can help other women to take decisions. And it's good to share with your family, your husband, your father. in my opinion, The conservative way that we have in Europe about investor, family office, is a problem to evolutionate and to be, because if we want to evolutionate the innovation, you need to invest in startup. And to invest in startup, you need professionals, offices to have money to invest in startups. Because for me, the most mistake is when someone, say, no, I'm business angel and invest in free startup. But it was a disaster and I don't want to invest more in startups. And I say, when you have a problem to call an advocate, When you want to invest, call professional people. Don't spend your money if you don't know the processes, you don't know the sector, no? Only because you have feeling or you like the product or the company of the funders, Because we are 24-7 procuring that our portfolio will be successful and is a job, no? And it's a work of all the team, no? And all the VC. And we procure our piece. We'll have successful to invest in all in other of our funds. And when we see if you are a business and just with a background professional, that is perfect. But I say more when you found someone, you invest in. It was a disaster. I don't want to come to the ecosystem. No, no, please. I prefer to invest in real estate. Diego Calligaro (30:14) Yes. Patricia Pastor (30:34) You can't realize that you have made a mistake. And it's why we, it's a very, you know, work to position this message that please trust your money with professional, you know, and be comfortable with professional. And if you invest, invest with professionals. Diego Calligaro (30:53) Patrizia, thanks a lot for sharing. Last few questions here for closing. So, a general advice for founders in general that want to raise a fund from you. Patricia Pastor (31:07) founders, want to raise a farm. It's a very long journey with a lot of resilience and it's a life with a lot of problems because when you are in fundraising, after you need to invest, after you need to be successful, after you need to start another fund you know, and it's a cycle. constantly when you are always, always, always, always, you know, stressed working and also you have the influence of the markets, technology, competitors. Well, it's not a very, you know, relaxed life. I can see that they need to be very, very combined. Diego Calligaro (31:46) Yeah, indeed. And then looking at your career, so yeah, you're having a successful career. If you look back, is there anything that you would have done differently? Patricia Pastor (31:57) Yes, so many, we always say, if you don't do that kind of mistake, are... Now you never can arrive where you are today, no. Because it's this experience, helped you to be the person that you are today, no. But the decision of partners is very important. For me, it was in the past something that... a problem with my companies. You need to be at the same time with the same values, with the same needs, with the same aspirations, you know, and that's, you need to know all that at the beginning. And it's complicated, the decision of partners. After, for me also, the... the city where now it's not so important but in the past it's very important to be in the best moment in the best place with the best people. That is, you can say that it's something about luck. But it's true that if you want to amplify your network, that is the most important thing in your life to work your network. You need, you know, to go out to travel, to live in other cities and to have world, to have mindset of world. That's very important. After, when you are off, in my case, you come back home and travel only for determinate events or meetings. But I spent 30 years of my life traveling, living in other cities, meeting a lot of people, not only in my sector, everywhere. And today I'm very proud to have my network. because it's the key to growth in any product that you want to build. Diego Calligaro (33:42) And the last question here, if we look at the accelerating pace of change that is happening also due to new technologies, what is the biggest worry about the digital future for you and also what is the exciting you most about the future? Patricia Pastor (34:01) Well, I invest in AI, but I don't like some things that I see in AI. I'm very worried about if we can control the technology and... not only the technology, but the use of technology. I see that we live in a moment very crucial and very important that can make that the world could be another world that we know in the past. Because we are seeing very strong decisions in politics, very strong... make our decisions, I think AI and gene AI is something that can change the way that we are living now. And I'm very worried about that. And I prefer to be inside, know, and to see inside the market what are the next movements and the next steps and to anticipate and can anticipate about our lives. and decisions in our lives. Diego Calligaro (34:59) Yeah. Patricia, thanks a lot for your time. It's been really great speaking with you. Definitely, we're going to have another chance in the future to speak again. Thank you. Patricia Pastor (35:09) Thank you Diego, bye bye. Diego Calligaro (35:11) Bye.