The Tio Tech Vision — with Founders Dominik Richter and Roman Kirsch

Hey everyone and thanks for joining us. The purpose of today's recording is to share a little bit about who Tio Tech is, introduce you to a few of the founders behind it, and dive deeper into the vision behind it all. So to jump in, today we're speaking with Tio Tech CEO Roman Kirsch and Tio Tech's Chairman Dominik Richter. Now given their deep roots in the EU tech ecosystem, you likely already know who they are, but just in case you don't, let's begin with some quick introductions. Dominik, let's start with you.

Perfect. Roman, you? Yes, I'm also super happy and excited to be here with you, Brett, today. And so my background is also as a serial entrepreneur. I started my first company at the age of 23, Kazakanda, which we eventually sold after approximately a year to a US company, and then continued to build and scale and co-found businesses in the e-commerce space and in consumer internet space, with you know some more successful exits, also some challenging times, but it was a great entrepreneurial run. So we sold two more companies to publicly listed businesses. And in addition, I also began after my first exit to really partner with other entrepreneurs by investing into 20 plus businesses directly, investing into several venture capital funds. And you know, I see Tio Tech also as a natural transition from, you know, not only partnering with entrepreneurs in the first stage early on, but also in a late stage and helping them transition from a private company to a public company.

Perfect. Now today was a big milestone for Tio Tech and trading has officially begun on the Nasdaq. But most importantly, this means for the first time you're actually able to share information with the public that we previously couldn't. So let's begin right away with our questions. What exactly is Tio Tech? So let's start with the basics.

We have 300 million US dollars back listed at Nasdaq. And what we look for is to partner with a leading EU tech company with great founders and bring this company public in the US. And at Tio Tech, it's, you know, we're looking for high quality companies, we're looking for companies that have fast growth, we're looking for companies that are public market ready, you know, in the range of a billion to three billion. And you know, we're looking for companies where we feel that we can, you know, give a lot of value add and, you know, multiply the shareholder value over the next few years.

And who else is involved besides Tio Tech?

Yeah, so besides Dominik and myself, there's another seven people, so a total of nine individuals. And they all come from three different camps basically that I think all equally important to, you know, have a successful SPAC and a successful company afterwards. So it's number one: founders and operators, so people who've really founded great businesses, who have operated them. And you know, besides Dominik, myself, we have, for instance, Victor, who is the co-founder of Klarna, 30 billion plus valued fintech out of Sweden. Then number two is we have people who have plenty of M&A experience and we've done plenty of transactions. So as an example, Spiro, who's our CFO, he's been doing over 30 M&A transactions for Delivery Hero, which is a European-based food delivery business. And then a third camp is the individuals who have a really great track record of private and public markets investing and who can really identify the segments, the sentiment of the market, and really go for the industries that are about to really kick start and kick off. And there we have, for instance, Jan Becker, a dear friend of ours, who's been an entrepreneur before and started his own hedge fund approximately two years ago, which went from 20 million to over a billion dollars under management and has been among the best performing hedge funds focused on tech over the past two years. So all in all, I think we have a complete set of founders, M&A operators, successful public market investors, which is a great team to really be successful.

Perfect. And we'll switch to you here. You know, you guys are both European, living in Europe. Why the US? Why'd you guys decide to launch this back in the US?

And another question for you, Dom. SPACs are quickly becoming talked about as this alternative to the traditional IPO. You've been through the process yourself with HelloFresh. What would you say is wrong with that traditional IPO process?

Perfect. Roman, switching back to you here. What makes the US a better environment for startups currently than in Europe?

Yeah, so maybe big picture, we are strong believers in European tech. You know, if you look at it, the US and Europe have approximately the same number of consumers, they have the same number of, you know, engineering talent, GDP is roughly the same. But the US has 10x when it comes to the market cap of tech companies. And some of that is of course a time lag because Silicon Valley had a kickstart. But if you look into the next few years and to the next decade, the next two decades, we believe that a lot of the value creation for tech companies will come from, you know, a lot of different geographies including Europe. One of the big reasons why European tech companies haven't really, you know, created so much value so far was: a) really challenges in accessing late stage financing, b) the mindset of, you know, selling out too early, of rather going for the straight sale, rather, you know, selling to a corporate, which is, you know, partially driven by the mentality of founders but also by the lack of role models and also by a lot of times boards pushing for that early exit, and c) also difficulties in going public in their respective local, a lot of times quite small capital markets. And we feel that with Tio Tech we can, you know, give a really good solution to a lot of the founders who have the ambition to build global category leaders, who have the ambition to kind of build companies that are bigger than this billion dollar trade sale. And that's, I think, what we try to solve for, and that's also one of our ambitions to help those aspiring entrepreneurs to unlock a lot of value and really, you know, get the best out of the companies. So that's kind of our thesis and one of the main motivations why we're doing this. If you look actually at, you know, the US environment and the US stock markets, I think what you tend to see is US investors are way more comfortable with short and mid-term investments into growth at the cost of profitability because they understand that in order to build, you know, great technology, in order to kind of be a dominant player in your respective domain, you have to invest into growth, and sometimes this comes at the expense of profitability. And obviously companies like Amazon and others are a great example for how they can work. And that mindset is just way, way more common in the US. That's why technology stocks have better multiples on average in the US. You're talking about, you know, at 25 to 30 discounts in terms of multiples, like, like so that means you have easier access to capital, you can raise more money, and it's totally fine to invest into growth and be able to communicate your long-term strategy and your long-term vision and not go from quarter to quarter and talk about, you know, immediate profitability. So those are the things that really are the biggest drivers for us when talking to founders and when convincing founders that yes, this is a lot of times the better listing venue to go public. And what you've seen over the past, you know, years is that a lot of tech stocks that are listed in the US have actually no business whatsoever in the US. You know, you look at Mercado Libre, which is the Latin American business, you look at Sea Limited, which is a Southeast Asian business, you look at Jumia, which is an African e-commerce business, and those have been, you know, the best performing stocks or among the best performing stocks in the US. So, also US investors get businesses that don't necessarily operate in the US quite well, and I'm more than happy to kind of tap into that additional growth potential in other geographies.

And we've talked a lot about the benefits here of going public in the US, the benefits of SPACs. But to go back a little bit, what about the benefits of just going public in general? Dom, if you want to maybe take this one. You know, why should founders consider going public in the first place?

You know, every day I wake up and it seems there's a new SPAC launching and there's just more and more that are coming out. So what makes you guys think that founders are going to want to go with you over some of those other SPACs?

That's a really good question, Brett. So maybe first big picture, I think when you look at the stock markets at the moment, there's 40% less public companies than there were 20 years ago. So we feel that, you know, the whole SPAC boom is something positive because it helps to bring a lot of private companies back into the public sphere and make them accessible to all types of different investors. So that said, I think we are still at very early stages in Europe. So for four unicorns in the US, you'd have one unicorn in Europe. But for 300 SPACs in the US, you have basically just three that are focused on Europe. So you know, the relationship is 100 to one. And obviously we would welcome plenty of more SPACs or good quality targets in Europe, but we're also happy that being one of the first, we can actually select the best targets. Why are we different or what is our key differentiator? I think we're a founder-led SPAC. So we have, you know, nine individuals who've all been there in the past decade plus of building businesses, of talking to founders, of investing into founders. I think this is the key differentiator. And there's plenty of data that operator or founder-led investment vehicles, for instance, SPACs but also SPACs, outperform those that are done purely by financial advisors. And why is that? I think it's because it has a lot to do with pre-investment and value creation from us from partnership and post-investment value creation. So I'm going to talk about the pre-investment value creation. Dominik can maybe talk about what we'll do after the business combination. So pre-investment, I think where it really makes a difference is at two different stages. Number one is when we talk about the diligence part. So I think we've been in the ecosystem for quite some time, and I think it comes more natural for us to really understand the main drivers of the business, to really make the diligence. And I think that's where a lot of the investors trust us. The second thing is, you know, the long-term view that we have. So we're not there to kind of invest for a year or two. We are there to be key supporters, shareholders of the business. And that's also how we select the investors into our SPAC that was listed today. So what we actually care about is that the people who buy into us, who buy or kind of invest into us, that they have sticky money, have a long-term view, and really want to support this company from going from a billion or two to 10, 20, 30 over a longer period of time. I think this is where not all SPACs are created equally, and a lot of them are actually focused on the short-term gain or short-term flipping, which is, you know, definitely something that I as a founder would not want to do if it would be my company. So I would definitely ask that question to SPACs: what's your investment horizon, what kind of investors are you bringing to the table? Because there's a lot of differences there.

Well, I think that's all we're gonna have time to cover for today. Thank you both for your time. Thank you to everyone who's listened. And if you want to find out more about Tio Tech, you can visit www.tiotexspack.com. Look forward to seeing what happens in the next six to 12 months. Thanks guys.