Hello and welcome back to the Scaling Europe show. I'm S Johnson. Today I'm joined by David. David is the co-founder of Transition VC who's also very exciting news today. And before investing he was builder, operator, CEO of Unity. Unity is now doing over two billion of annual revenue. IPOed at $13 billion. So amazing experience building, operating, and now investing. But he's got some great news. So David, what is the news?
Yeah, thank you so much. So great to be here. You know, for the last 5 years or so, I've been working on building a venture franchise, Transition.vc. And yeah, we're just announcing our second fund has been raised and we started investing a few months ago, as is kind of typical venture land.
Amazing. And the fund is $150 million, which is the same size as fund one. Can you tell me a bit about who are you looking to invest in from this fund?
Yeah, thank you. It's a little bit larger than the first fund but it's similar size. So, and same team and well, let's see who are we trying to invest in. You know, we're looking for amazing founders who are incredibly ambitious and want to kind of rewrite the physical world. You know, I come from software. I've been in software since I was a kid. Unity was obviously mostly a software company although we kind of integrated with hardware like you know the graphics chips and the devices and gaming and so on. But what's happening now is that you know more and more technologies are coming out that can really kind of change the old industrial system and rewrite a lot of the old shitty noisy ugly polluting carcinogenic, you know, distasteful and finally also, you know, climate change causing technologies of the old system.
Yeah. Amazing. And it feels like that first fund was all about climate tech. You know, you raised it back in was it 2020, 2021 where it was climate tech was much more the thing. Now we've sort of moved into this world of AI and hardware, energy resilience. Was that a conscious transition? Do you have you made from climate tech or is it the old...
We're actually not moving very far. I think of course you know when we started investing let's say almost 5 years ago yeah there was a bunch of technologies that there was a lot of hope for that haven't delivered or were really hard to fund in like you know carbon removal and so on. We didn't actually invest a lot in these because we sort of feared suspected that those were not really you know this is not where the future of these technologies were. We decided you know we're looking at this you know there's climate change there's all the kind of other interconnected systems there's just resource limitations you know whether it's mining minerals or power you know we hadn't foreseen the explosion of AI but you know we foresaw or felt that there was going to be a lot of resource constraints so the framework we decided to kind of work inside of is the planetary boundaries framework which is developed by the Stockholm Resilience Centre which kind of quantifies quite scientifically and thoughtfully nine systems that we live inside of that we you know have to live with and not totally mess up. And that's really remains in front. The difference is of course yeah that like you know the world has moved on. There's a lot of AI to deal with a lot of data center you know challenges opportunities mining minerals have become more kind of clearly a resource constraint power incredibly important a lot of kind of ways of making you know waste products you know things that have to be recycled and so on. So in a way and then of course robotics is, you know, exciting like finally we can do a lot of things that were really hard before. So yeah, those are the themes we're looking at.
And how did that go down when you went out to LPs? You know, was that something that really interested and resonated with?
Yes. So, to be really honest, raising Fund one was a very miserable tough tough experience. You know a couple of years in if you had asked me and if I'd been honest which I hope I would have been I would have said I'm not sure this is happening and this is before kind of the new you know the newest era let's say this is just the Ukraine war has started people had a hard time thinking about anything but war but the you know the classic alliance was still kind of holding strong and there's a lot of things that were kind of still fine and it was really hard to raise. We invested I think well we built a great team really really excited we can talk about that later and finally we went out a bit over a year ago starting to raise and were quite successful I mean it was much less miserable we had quite an institutional investor base a mix of like really great institutions and the great founders of companies and yeah most came back so yeah I shouldn't say it was easy actually my brother who I run the firm with alongside two other partners did most of the heavy lifting to be fair. So maybe I shouldn't say it was easy. But it was much more downhill.
Yeah, that was great to hear. That was great to hear. It's really interesting because it feels like a lot of fund managers who either focus on climate tech have now sort of moved to branding it as resilience and hardware. Even though to your point the problems are still the same. In fact, the problems are more bigger now, right? In terms of data, state energy, resilience, security, the problems are bigger. And it's actually almost the way that we're solving them is very different. You know, to your point, they said about carbon removal. It's about taking big bets at energy, right? And it's about building hardware and data centers. One of the companies...
And by the way, we didn't stop believing these are like urgent problems. And I think that also resonates both with the LPs but also the founders.
Yeah. Yeah. Yeah, and it's the same with founders idea because you know a lot of the companies that we talk about today as being resilient or energy or sovereignty focused would have been called climate tech companies four or five years ago but it's just that branding has very has changed which I always think is interesting. I want to talk about Oyx. You know, Olix is one of the companies that you should invest from. Amazing company building photonix based computing chips. Really exciting company recently valued at a billion dollars. And now I know that you you knew James the founder from his previous company. What's he like to work with?
So I was so lucky to meet him. You know, in my sort of let's say between Unity and forming Transition, I sort of wandered the earth a bit. I invested in a bunch of different things as an angel. Just let myself be kind of driven by interest, passion, you know, meeting interesting people and so on. And yeah, I was so lucky. I came across him when he was, I think, 17. He had kind of come up with kind of the core idea that became his former current company, Comind. You know, I got to spend some time with him. Initially like a quiet it's very rude to call him a kid because he's definitely not a kid anymore but you know at that moment a very kind of quiet thoughtful kid I just invested because he was brilliant and it was interesting to see what he was up to but he's so unbelievably creative as a young man and you know it just combines the best of what founders can be right you know this thoughtfulness, confidence, openness, you know, listening and then, you know, striking and making his own decisions, of course. No, it's been a joy. Yeah, we got to invest in Olix early. I mean, early it's a very young company still and you know, it's just incredible that the talent is assembled around him. This kind of relentless organization that works unbelievably hard. You know going for maybe the biggest you know market category of all time.
Yeah, that's what I think is so interesting because he's still very involved in co-mind, but he's decided to tackle like you said like the biggest part of the stack, right? Like this is a huge area and it's not even about building something for Europe. This is just a huge... do you know why? Like why was this, you know, what piqued his interest? What piqued your interest? Were you interested in this area or was it just like whatever James does we're on board with?
Honestly, as an angel like I would just have invested in whatever he does, right? But you know we've spent a lot of time as a fund as a team on you know data centers compute you know everything from cooling to energy to kind of actual you know not the well we hadn't really focused on the chips because we didn't really think there was that much interesting to do at the a few years ago but you know that was started to happen. Yeah I mean you know I got a call you know he wanted to tell me what he's up to. We took a look and it was a very fast decision to make.
Yeah, I bet. I mean, yeah, I guess when you know an amazing founder, they're building in the biggest market in the world is probably gives you even greater conviction. He's a Thiel fellow, but when you look at some of the other founders in the companies that you've backed, you know, Thiel fellows, SpaceX engineers, people from ASML, highly technical. Is that a thesis that you have or is that just you know what kind of founders do you like to back? I guess.
Maybe it's a little stupid to say we know it when we see it but I think that's part of the truth. But no, we like I mean people that have like deep technical expertise, you know, relentless, you know, maybe they've seen some of the best the world has to offer in various ways and you know, they're unbelievably ambitious. Of course they're not you know I invested in a lot of things I invested a lot of game companies in the past and they're not those people there are people that are much more deep in tech like in technology and I sort of unafraid of you know attacking these kind of large physical problems that require building out like physical things figuring out you know chemical compositions layering there's a lot of you know sort of really cool things these people are attacking that you know I come from software software is easy in that perspective.
