Five takeaways from Japan’s AI Tech Leaders Summit

August 26, 2017

Some of the Asia’s leading experts in artificial intelligence mingled yesterday with a small group of corporate acquirers, startups, and investors at the first ever Japan AI Summit. Here are my five takeaways from the interactions:

5. The sovereign gap is widening

In advanced AI research, the U.S. still has the lead, but China has the momentum. Other developed nations need to accelerate or will never close the gap.

4. Data is “misunderestimated”

Perhaps the most controversial statement of the day, but the contention was that with techniques like simulation learning, massive data sets are no longer as critical. So size doesn’t matter so much after all…

3. Hardware is overrated

Robotics folks subscribe religiously to the necessity of hardware for data collection to feed AI systems; however, the consensus yesterday disputed this mindset. The prevalence of data already in existence focuses the question more on “how to use it” rather than “how to collect it.”

2. Analog is back, baby !

Ok, I’m getting ahead of myself, but I’ve been claiming for years that rumours of analog’s death had been greatly exaggerated. Well, it turns out that analog chips or mixed signal ICs will soon play an essential role in AI systems. CPU::Intel. GPU::Nvidia. Neuromorphic::X. If anyone can accurately tell me who X is, I’ll give you a medal.

1. Privacy arbitrage opportunities

The disparity in regulations on data privacy may create opportunities for “privacy arbitrage” across countries. For example, obtain access to medical records in China in order to train an AI system on a health care solution with applications globally.

Special congratulations to Dreamquark and Snips for making the trek over from France !

Yet another signal of how far France’s startup ecosystem has come

August 17, 2017

I recall how when I first moved permanently to Paris over 16 years ago, finding people in the office during the month of August was highly unusual. It seemed that after the long weekend of July 14th, one couldn’t count on scheduling a meeting again before September 1st.

This shutdown extended to the startup sector as well, which back in 2001 was still in its infancy. Even for several years, scheduling a meeting with entrepreneurs in late July and August proved difficult. And if anything, this was the segment of the working population that was most likely to be at their desks.

Inversely, for a diligent entrepreneur hoping to pitch to a French VC in the peak of summer: forget about it. Remember, most French VCs at the time were former commercial bankers investing tax rebate money of their retail clients.

How dramatically things have changed !

It was only back in 2014 when then Innovation Minister Fleur Pellerin suggested the French need to reformat their mental software to become less averse to failure. Now, Ms. Pellerin has moved on from the government into creating a venture fund, while leaving a lasting positive impact on the French government’s attitude toward the startup community.

Over the past few weeks, I detected yet another signal that Ms. Pellerin’s recommended mental software upgrade has taken effect. A privileged opportunity for European AI startups presented itself. Concretely, it is a small private summit that brings together leaders of industrial groups and AI entrepreneurs. But here’s the rub: this summit is taking place on August 25th in Tokyo — i.e. peak French holiday season in a faraway land from the perspective of French entrepreneurs.

Given these logistical hurdles, I figured that interest in such an opportunity would be limited, so I casually mentioned it in a blog post. Boy did I underestimate how much things have changed.

The high demand from French startups in the AI space for this opportunity caught me off guard. Maybe I shouldn’t have been surprised, because France possesses arguably some of the greatest engineering talent conducive to creating innovative companies in AI.

Given the small scale and specific subject matter at this initial event, many of the applicants were regrettably not eligible to attend this time. However, it is very likely that this will be a repeat occurrence sometime in 2018.

I would like to extend my sincere gratitude to all of the impressive, globally-minded entrepreneurs who have contacted me about this opportunity and will do my best to ensure that your candidacy is carefully considered for next year.

Things are looking encouraging for French innovation in AI, and in tech overall.


An inconvenient sequel about startup subsidies

August 6, 2017

inconvenient-sequel-about-startup-subsidiesLast week’s piece about my contention that government subsidies for startups tend to be anti-lean in nature generated two almost diametrically opposed reactions. So here are some final thoughts about Lean Startup and subsidies, and then I’ll put the topic to rest for now.

On one end, a couple readers became defensive, questioning how I could even imply that France is not the best country in Europe to start a company by criticizing its subsidies. This reaction did not surprise me; indeed there is a small but vocal segment inside the French startup ecosystem who is convinced that France is the best place in Europe to start a company thanks to its generous programs of government subsidies.

Ironically, I too believe that France is a fantastic country in Europe for startups — and submit that it has become dramatically more appealing over the past decade — yet for different reasons. I would argue that the components that make France a fertile startup ecosystem are not its subsidy programs, but rather a whole host of other attributes, which I’ve discussed previously at length. Furthermore, I could cite a handful of co-investors with whom I have worked across Europe who could make a compelling case for Belgium, Germany, Holland, the Nordics, Spain, and the UK.

The other end of the spectrum of feedback to my contention that subsidies are anti-lean is probably best summarized by the following tweet from my partner Alex:

I agree with Alex’s line of thinking. Not only are subsidies anti- Lean Startup, but they can also create fatal conditions for entrepreneurs who readily accept government loan advances only to find themselves in dire straights 12 to 24 months later. I’ve actually witnessed this a lot. Entrepreneurs take as much up-front non-dilutive money as they can, develop a product which usually is fairly technology-intensive due to the constraints accompanying such subsidies, and then subsequently discover that there is no market for their product. At this point the startup finds itself in a quandary: it lacks product-market fit and faces a debt repayment schedule. Which VC in their right mind would invest in such a venture now ?

One of the most prolific forms of early-stage startup subsidy in France is something called the CIR, which stands for crédit d’impôt recherche. The CIR works essentially as a tax credit for R&D expenditures. Its intention of course is benign: to encourage companies to allocate time and resources toward innovative, research-intensive efforts. The consequence of the CIR in startups is that it makes it dramatically cheaper to hire personnel with engineering degrees. This phenomenon is not unique to France; Holland offers the WBSO, for example, and many European countries offer similar programs.

Beware the hidden costs of subsidies

For all of its benefits, however, the CIR is not devoid of costs, particularly hidden costs.

First, by reducing the effective cost of hiring engineers or personnel with advanced degrees, startup founders feel less constrained in such people, perhaps more than they actually need at the time. Or they pay them more, resulting in a subtle inflationary pressure across the sector. This is not a bad thing per se, but when you have a lot of engineers on hand you need to give them products to develop. Allocating a disproportionate level of resources toward product development at an early stage before the market need is validated is, by nature, anti-lean.

A second hidden cost involving the CIR pertains to future tax audit risk. Almost every growing company in France finds itself subject to a tax audit at some point. For the French tax authority, the CIR seems to be one of the top items on its audit checklist. The central thrust of assessment often investigates whether the claimed expenditures genuinely reflect actual research expenses. Remember, the CIR stands for crédit d’impôt recherche, in other words the ‘R’ in ‘R&D’.  It’s no secret that most startups in their R&D expenses tend to incline more toward development than research. So in the event of an audit, the startup must produce documentation from previous years clearly demonstrating that all expenses which were deducted under the tax credit do properly reflect research efforts. I’ve sat on boards of a number of companies who have successfully navigated such audits, but never without a cost: the time and distraction alone usually set back the company for months.

Perhaps the most pernicious hidden cost of the CIR  and similar subsidies is its opportunity cost. By spending 12 to 24 months developing a product which in the end the market will not pay for means that those 12 to 24 months were not allocated toward a value-generating activity.

In Chapter 4 of The Lean Startup, entitled “Experiment,” Eric Ries underscores the importance of answering four questions:

  1. Do consumers recognize that they have a problem you are trying to solve?
  2. If there was a solution, would they buy it?
  3. Would they buy it from us?
  4. Can we build a solution for that problem?

Government subsidies often encourage the startup to ignore questions 1-3 and jump straight to #4.

The allure of non-dilutive subsidies can be enticing when you’re a resourceful entrepreneur scrambling for whatever financing you can find. Be careful.


The Lean Startup, Anti-lean subsidies, and other ramblings

July 31, 2017

This year’s RudeVC summer reading list post generated an unexpected mini-debate in the comments section (LinkedIn version, can’t figure out how to link to it). The debate did not center on the 5 novels I recommended but rather focused on an afterthought recommendation I made at the end of the post for Eric Ries’ 2011 book, The Lean Startup.

Some entrepreneurs drew attention to — in some cases even singled out — VCs in France who are allegedly ignorant of The Lean Startup concept. Unnecessary gratuitous finger-pointing aside, I do agree that every investor in tech startups, be it VC or angel, should at minimum possess a passing familiarity with the concept.

My hypothesis for the reason that the Lean Startup methodology is not so deeply integrated into the French investing culture can be encapsulated in one word: subsidies. France’s startup ecosystem boasts a long tradition of funding via government subsidies. Unparalleled by almost every other advanced economy, a whole industry of advisers and “subsidy-raisers” working on a commission basis exists in France.

The intentions behind government subsidies are sincere and well-meaning: promote innovation, try to replicate Silicon Valley in France (which I submit is fallacious thinking but that’s another topic), render modest risk-taking more less daunting, etc.

The problem, however, with government subsidies, at least in France, is that in my opinion they are anti-lean. The Lean Startup methodology is about experimentation. It’s about going to market with an MVP — i.e. before you have a product — the very endeavor which informs the definition of the ultimate product to be developed. Subsidies, on the other hand, are generally only granted to extensive technology development efforts.

Incidentally, for a helpful recent explanation on what an MVP (minimum viable product) is and is not, check out this piece from Nacho Bassino.

Here’s a link to the French translation of Eric Ries’ The Lean Startup. I encourage every investor unfamiliar with it to put it on their August to do list.


Respect to Hakuho

July 26, 2017

Some readers noticed how I omitted writing about sumo over the last two tournaments and wondered if I had something against (consecutive victor) Hakuho.

Not at all ! On the contrary, I admire Hakuho, the yokozuna who won the sumo championship in May and then again this week. I admit, Harumafuji is my preferred sumo wrestler of the four current yokozuna. I’ve been a fan of Harumafuji back from the days when his ring name was Ama, and I’ll never forget his first championship in Tokyo in September 2009.

However, I must confess I’ve been rooting for Hakuho as of late. Now that he has surpassed both Kaio and (my all-time favorite wrestler, the late/great) Chiyonofuji, it is hard to dispute that Hakuho represents one of the greatest rikishi that sumo has ever seen.

Much respect, Hakuho !


Summer reading list 2017

July 21, 2017

Time for the RudeVC summer reading list again. Here are my picks for the summer of ’17.


The Gene: An Intimate History, by Siddhartha Mukherjee. Mukherjee has a talent for crafting an engaging, page-turning narrative out of complex scientific topics. His first book, The Emperor of All Maladies: A Biography of Cancer, won the Pulitzer Prize in 2011. In some ways, The Gene serves as the prequel, recounting the stories of the ancestors of modern hereditary biology like Gregor Mendel, and leading up to the contemporary day of genome mapping and gene editing technologies. The haunting question is: should humans ever go beyond reading our own genomes to actually writing them?




Shibumi by Trevanian. This book was recommended to me by my lawyer, of all people, and I always heed his advice. Shibumi is a spy novel in the classical sense, though it is written like a beautiful piece of literature in the methodical way of Rousseau. The word shibumi in Japanese is so rich in context that it elicited a wide variety of reactions from native speakers whom I queried. If you have any affinity for the Japanese design aesthetic, for France’s Basque country, for the strategic game of Go, or simply for spy thrillers in the most refined sense, you’ll love this book.





The Three Body Problem, by Liu Cixin. I’ve only read books 1 and 2 of this captivating trilogy translated from one of China’s most prolific science fiction writers, and I’m chomping at the bit for the delivery of book 3. There’s a strange contradiction revealed by the naïveté and kindness demonstrated by humanity when faced with the universe: On Earth, humankind can step onto another continent, and without a thought, destroy the kindred civilizations found there through warfare and disease. But when humans gaze up at the stars, they turn sentimental and believe that if extraterrestrial intelligence exists, it must be from civilizations bound by universal, noble, moral constraints, as if cherishing and loving different forms of life are parts of a self-evident universal code of conduct. Mind-blowing !



Finally, for any VCs who are still not familiar with the lean startup concept, Eric Ries should be on top of your beach blanket this summer.

Happy reading !

[previous RudeVC reading list editions: 2013, 2014, 2015, 2016]

AI Startups: You’ll want to read this

July 14, 2017

As this recent opinion piece in the New York Times from Lee Kai-Fu suggests, perhaps the greatest threat of Artificial Intelligence is the devolution into a world AI have- and have-not countries. China, Japan, and the U.S. have taken note, and are dedicating research efforts to the domain. If any European nation possesses the same focused sense of urgency on AI, I am not aware of it.

An effort in Asia is underway to assemble some of the brightest minds working on artificial intelligence, be it from research, corporates, or startups.

Dubbed AI Tech Leaders, this effort will take the form of periodic Summits, starting with the first in Tokyo on August 25th.

At the Tech Leaders Summit, a privileged selection of innovative startups working on artificial intelligence will have an opportunity to mingle with world-renowned AI researchers and corporate innovation departments looking for partners or acquisitions. Corporates include: Denso, IBM, Lite-On, Mitsubishi, Mitsui, Persol, Razer, Samsung, Tencent, and Tepco among others.

A maximum of five European startups (with no more than two from any given country) are welcome at the inaugural event. The registration fee is waived for all selected startup finalists.

This is a unique opportunity for startups interested in developing relationships with potential future acquirers in Asia.

To apply

To apply, send the following information by email to

  • name of your company (in the subject field)
  • a 2-3 sentence description of your ambition
  • how your startup uses AI in fulfilling this ambition
  • stage of your startup (concept / prototype / product / revenue)
  • total amount invested, if any
  • location of headquarters and contact information

Applicants who missed the cut for August will be wait-listed for a future AI Summit.

Incumbent banks: startups are coming for you

July 7, 2017

In my previous post I wrote about the sparsity of financial services and products from incumbent banks for small businesses that act globally. This chasm has grown as the increasing proliferation of globally-minded startups face a retail banking sector that is stagnating for reasons of inflexible business models, obsolete systems, and corporate inertia.

Fortunately for SMEs, a handful of disruptive fintech startups have recently started honing in on this very problem. Given that fintech is one of our fund’s core investment areas, and I write occasionally on this blog about the various European or Japanese startups in fintech, I thought it might be interesting to recount my first-hand experiences as a customer of some of these fintech disruptors.

Of the wide array of fintech startups and alternative money transfer providers, I have direct experience with the following: CurrencyFair, Revolut, TransferWise, and OFX. The first three are pure technology players, whereas OFX, formerly called UK Forex or US Forex, is an Australian-based online international money transfer service.


I’ll start with CurrencyFair, which technically should be excluded from this list because CurrencyFair does not offer business accounts to U.S. legal entities. This is regrettable because CurrencyFair is unique in offering a currency conversion feature which I really appreciate: specifically, the ability to create an open exchange order with your own bid or ask price, even one that is out of the money. I enjoy using CurrencyFair as a consumer and look forward to the day they open up business accounts for U.S. entities.


UK-based Revolut has also just announced a business account, yet similarly does not yet accept U.S. entities. However, I understand that they will do so around the end of this year. Revolut conveniently offers a multi currency debit card, which is very handy when traveling abroad for use at ATMs or point-of-sale locations. Revolut charges a monthly fee ranging from £25.00 – £1,000 for its business account services.


The service I used most frequently over the past two years for international money transfers was OFX. OFX is technically not a fintech startup but a service that offers foreign currency exchange rates which are more transparent and competitive than those of incumbent banks. Unfortunately, OFX’s rules are difficult to navigate, and each transaction typically requires human intervention. Surprisingly, after 20 approved transactions, another OFX employee informed me that her colleague had violated the company’s compliance by approving my transactions based on a spuriously shifting definition of the term “third party transfer.” I no longer feel comfortable using OFX and cannot endorse their service at this time.


Which brings me to my final candidate: TransferWise. Only a few short months ago, TransferWise launched its Borderless Account product for small businesses. It’s still early days, so I will try to control my enthusiasm, but my initial experience with the Borderless Account is nothing short of euphoria! U.S. legal entities are eligible, and the product supports foreign currency transfers to over 60 countries. TransferWise offers its Borderless Account to businesses for free, and generates revenue in the form of a transparent fee upon currency exchange or money transfer. The company did not ask me to sing their praises; I’m merely a delighted customer acting on my own initiative. [For what it’s worth, here is my TransferWise referral link. I understand that using this link would grant you a free transfer up to £500.]

There may well exist other innovative financial services, for startups by startups, which have not yet come onto my radar. I welcome hearing about anything I’ve missed and will gladly try them.


Global startups hamstrung by local banks

June 30, 2017

In countries with developed financial systems, small and medium sized businesses have long been at a disadvantage for banking services relative to large firms and even relative to consumers.

In this piece and the one that follows I’ll review some of the basic business banking services on offer which I’ve experienced firsthand as both an investor and startup owner. But first, how did we get here?

How did we get here ?

The IT revolution facilitated incremental innovations for large companies, and these extended to include the modernization of their financial systems across borders.

Small businesses, however, did not reap the benefits of a globalized financial system. The problem became particularly acute once the internet revolution fostered the creation on a massive scale of startups who, despite their modest initial size, began targeting global markets early on.

This disparity was probably not more pronounced in developed countries than in the U.S. For this reason, I’m restricting my assessment to banks and financial services firms which will accept U.S. SMEs as clients. Not to let European or Japanese banks off the hook — I once wasted 3 months with a French bank to open a local account for my Belgian startup — but at least European and Japanese banks acknowledge that more than one currency exists in the world.

Of the incumbent banks with whom I’ve been working with most recently I will only pick on three of them: Bank of America, Chase Bank, Citibank. Although I would have a lot of positive things to say about incumbents like Lloyds TSB (UK), BNP (France), and Prestia (Japan), they are excluded from this assessment because they will not open business accounts for U.S. entities.

Business banking evaluation criteria

My evaluation criteria prioritize what I view to be the most important attributes for an SME which conducts business globally, specifically:

  • ability to handle multiple currencies
  • online interface for all essential banking services
  • ease of access from multiple countries and time zones
  • currency exchange functionality
  • transparency in fees

I have yet to find a U.S. retail bank that offers a multi-currency functionality to small businesses. Certainly the three largest of whom I am a customer do not do this. All incoming wire transfers in foreign currency are automatically converted into USD at a spot rate net of some opaque and price-gouging spread. Furthermore, the security and access requirements for these banks are so archaic and provincial that they should be forbidden from using the word global in any of their marketing materials.

Chase Bank is the worst offender. Almost any banking activity performed online from an IP address outside the U.S. seems to trigger a freezing of the account. The account can only be unlocked by visiting a physical branch with a photo ID. For a person working internationally, this is so ridiculously inconvenient that it’s laughable. When exactly such an incident forced me to incur a $500 penalty due to a missed deadline, I dramatically curtailed most of my business banking with Chase.

Bank of America is a bit better. They’ve never frozen me out of my account, and their telephone customer service always seems to be first-rate. The disadvantage of B of A’s online system is that their two step verification process requires a U.S. mobile number to which to send the SMS verification code. International mobile numbers will not work, and even U.S. cell phones will not reliably receive the SMS verification when abroad. The only way around this is to use a security token, a privilege for which Bank of America will make you pay $20. It’s a shame because of the three major U.S. Incumbent banks, I think B of A’s  customer service and online web interface is the best.

As a result, Citibank has become my first choice of incumbent financial institution for U.S. business banking. Citibank requires the same security token system like Bank of America but in contrast do not make you pay for it. I’ve been lucky enough to come to know the manager of a certain branch, who responds to my inquiries over email and has proven incredibly helpful. The only knock on Citibank, well two knocks actually is that: i) like their peers, they cannot handle multiple currencies (every incoming wire is automatically converted into USD upon arrival); ii) Citibank’s clunky online banking interface reminds me of the mainframe days of the 1980s.

Is it any surprise that most people, “would rather see their dentist than their banker?” (Goldman Sachs’ Harit Talwar at CB Insights’ Future of Fintech event).

The real killer app for fintech disruptors ?

The good news for globally-minded SMEs is that radical improvements are underway, and it’s thanks to the fintech revolution.

In the next piece I’ll review some of the fintech startups, of whom I’m also a customer, who are aiming to disrupt the aforementioned incumbents.


FB Messenger Instant Games Infographic

June 23, 2017

As I’ve said before, I believe that Facebook Messenger’s Instant Games platform has the potential to disrupt the App Store distribution model of mobile games, at least pertaining to casual games.

Playing a snackable, casual game inside a messenger chat feed is far more seamless, in my opinion, then going to the App Store, hunting for a title, downloading, installing, etc. Moreover, I suspect that the inherent social context of the platform should naturally foster casual games which are more interactive among friends.

Today, Facebook Messenger counts over 50 games from 30 game publishers. The game publishers who are currently on the Instant Games platform are the lucky ones. For now, this remains an exclusive club because Facebook has closed the gates to the party. Below is an infographic of the current games on the platform (note that some of these games may not be yet be available in all countries). Special thanks to my intern for helping me compile this matrix.

As investors in one of the publishers on this platform (CoolGames), we are monitoring closely the adoption and engagement metrics of the various games. For example, although it is still early days, we are already seeing viral adoption metrics which are orders of magnitude higher than conventional metrics prior to launch on Instant Games.

[click for full infographic]

5 hacks for jobseekers to catch a VC’s attention

June 16, 2017

Apparently my recent post, “So you want a job in Venture Capital?” proved popular (bumped me up a hosting bandwidth pricing tier, but hey it’s for a good cause).

Some people suggested that since I downplayed the value of drafting a sample investment memo, I should offer some constructive and concrete actions that ambitious jobseekers could consider in order to be noticed by a VC.

Point taken. So while I cannot speak for other VCs, here are five things which would catch my attention:

  1. Offer to write a “quick-look.” Rather than a draft investment memo, which is highly specific to the internal machinations of each VC firm, a one-pager quick-look analysis on a deal is far more versatile and efficient. For an example of a venture capital quick-look document, feel free to search the web or contact me.
  2. Offer to compile our portfolio companies’ historic budget and actual financials into a concise, easy-to-read Excel spreadsheet. As much as we try to standardize our internal reporting, every portfolio company is unique and possesses its unique format of shareholder reporting. Maintaining an accurate and updated synthesis document is an ongoing need at our fund. (Note: this is a bold one because if I enter into an NDA with you to share data, you’re taking a first step to a more formal working relationship).
  3. Offer to provide a market assessment of competitors of one of my portfolio companies. This is another example of an effort which is performed in detail at the time of the initial investment yet not always refreshed as the years go by and the market evolves. Portfolio company CEOs usually prioritize other activities with their limited bandwidth (and I often discourage them from obsessing too much over what their competitors are doing).
  4. Offer to do some groundwork research or other assistance for my blog. A student once offered to redesign some of the images on my blog posts and sent me a couple eye-catching samples. Three weeks later I hired him as an intern. I seem to be regularly facing some minor, nagging WordPress issue which needs attention, so this is an easy one.
  5. Offer to create a concise overview pitch deck encapsulating the core message of my portfolio companies onto one slide each. (Another sneaky hack because by building your knowledge of our portfolio, you start to make yourself indispensable).

These are just five ideas off the top of my head. The fallback option which practically never fails is to simply contact the VC and ask openly, “How can I save you time?”


Portfolio job openings

June 9, 2017

Many of our portfolio companies are seeking talented, adaptable individuals with a hunger to join a startup adventure. (For my views on why I believe everyone should consider working in a startup, read: Free your career).

Here are a few open positions among our current investments:


  • Ad sales manager (Japan)
  • Experienced Game Developer (Holland)
  • Front-End Developer (Holland)
  • Internships also available in graphic arts, social media, content management, game quality assurance, social media (Holland)

Lead Media Group

  • Business developer for Southeast Asia
  • Sales representative (India)
  • Sales representative (Canada)

At other portfolio companies (France):

  • VP Operations
  • VP Marketing
  • Data scientist
  • System administrator
  • Media salesperson
  • WordPress developer

And of course, internship opportunities abound, particularly in France, Holland, and Japan.

Any interested candidates are welcome to contact me directly by email.

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