Key insights from Moonfire Pulse 2023

Last month, we gathered together tech experts, entrepreneurs, and investors in London for Moonfire Pulse 2023, our signature event exploring the technologies and founders shaping tomorrow.

The panels and firesides covered the European opportunity for founders and LPs, Silicon Valley Bank UK’s future as HSBC Innovation Banking UK, why now is the time to build in fintech, and the importance of data for startups. And AI was never far away from the discussion, from ushering in a new era of software to disrupting gaming and its potential impact on healthcare.

Here are our key takeaways from the day.

Buried giants: The European opportunity for founders

The main difference between Europe and the US? ‘There’s a higher degree of taste in Europe,’ said Soleio, designer, investor, and early employee at Facebook. ‘Taste affords you the ability to shortcut bad decisions. […] It’s being able to get something to market faster by virtue of knowing when it sings.’

But ‘The double edged sword of taste is this propensity to not ship. If there’s one thing I hope all of you take away from this conversation, it’s that shipping is all that matters. […] People hide behind taste to excuse slipping the launch date or not getting things out the door. It’s a matter of finding a good balance.’

Europe has another edge. ‘In Silicon Valley we tend to build software for startups,’ said Soleio. ‘It’s a little bit incestuous.’ In contrast, European founders have proximity to huge markets, and ‘That proximity can provide a unique edge to not just understanding your end customer, but being able to identify opportunities that might be in the blind spot of entrepreneurs in other parts of the world.’

In addition, remote work has reduced the magnetic pull of Silicon Valley on talent. ‘The quality of a city, where you wake up, is a key factor in your ability to do great work, to be able to thrive […] It’s going to be a way in which cities like London can be hyper-competitive with environments like San Francisco, where there isn’t quite the same degree of infrastructure, safety or, at the very least, quality of culture. This is something European founders need to lean in to.’

For once, being a museum plays into Europe’s favour. There are more buried giants on whose shoulders we can stand.

Ready player one: Gaming and the AI, Web3 convergence

‘We don’t talk in millions in the gaming industry. We only use Bs.’

Board director and investor Megan Quinn reminded everyone why gaming’s worth talking about. A $200bn industry value, $200bn invested in gaming over the last two or three years, and the largest transaction of 2022 being a $69bn deal between Microsoft and Activision. Not to mention that gamers aged between 13-17 spend 40% more time gaming than any other form of media, including social, music, and TV.

But how will this opportunity be monetised? Alexis Bonte, Group COO of Stillfront Group, sees free-to-play as key to gaming’s growth, particularly given the global mobile device market size. Gunnar Holmsteinn, CEO and Co-founder of Quest Portal, was more sceptical, suggesting that gamers have a pretty high tolerance for upfront payments – but also encouraged continued experimentation with different payment models.

When talk turned to the power of AI in games, Nihal Tharoor, Founder and CEO of Scriptic, envisioned the technology’s importance for an accessible creator economy. Suddenly creators have powerful tools in their hands, allowing them to develop and distribute their own narrative – and other – games.

Web3 has yet to gain traction and, as Alexis noted, gamers don’t want the speculation of crypto and complication of Web3 in their gaming experience. But if the infrastructure can be built in such a way that it enables ownership and trade in a seamless way, Web3 could become an integral part of gaming. ‘I think that part will grow and will be meaningful, and will allow for new business models,’ said Alexis.

It’s still unclear what new gaming and storytelling experiences AR/VR will enable. As Gunnar noted, it will be interesting to see how it plays out with Meta’s Quest betting on home use and Apple’s Vision Pro betting on companies. Also ‘It depends on how you define gaming,’ said Akshat. ‘I think spatial computing and Vision Pro will make non-gaming sectors more gamified, whether it be healthcare, education, etc.’

However it plays out, remember ‘Ready Player One was a warning, not a roadmap,’ said Megan.

World of pure hallucination: LLMs & transformers, a new era for software

‘If we had GPT-4 ten or fifteen years ago, would we have built all the software we built today?’ asked Namit Chadha, Founder and CEO of Shape. ‘The answer is no. I think we need to rethink all of this from the ground up.’

So it’s not enough to just build or apply a model. ‘I don’t think a foundational model is a moat,’ said Steve Crossan, Founder of Dayhoff Labs. ‘The product and platform you build with it is the only moat, and you can do that on the basis of much smaller, cheaper models.’ Mike echoed the sentiment: ‘So much perceived competence comes from the competence of the model itself, but an extraordinary amount of untapped perceived competence will continue to come from exposing access to unique proprietary data and allowing those models to take interesting actions.’

What about the problem of trust and hallucination? ‘Trust in AI is actually much more a user interface exercise than it is a “oh, we’re just going to tweak these transformer models until they don’t hallucinate”, because the point they don’t hallucinate they’re also not powerful any more,’ said Christian Lanng, Chairman at Beyond Work. ‘Anyone who thinks we’re going to get to hallucination-free models is hallucinating.’

And this latest wave of AI will also bring about a sea change to productivity in science. ‘I keep saying to scientists, “what would you do if you could do 1000 times as many experiments as you can do now?”,’ said Steve. The state of the art in science is a long way behind enterprise software, but AI has the potential to create a more intuitive way for scientists to collaborate and interact with their data.

Locally won: Why is it time to build in Fintech?

‘We still very much view fintech as a market that’s locally won,’ said Nick Brito, Managing Director of DST. ‘It’s such a vast market that you actually don’t need to expand globally necessarily to build a big business.’

But if you do choose to expand, it’s not simply copy and paste. You can’t just assume that because it works in one market it will just as easily work in the next. ‘You really need to nail local product market fit,’ said Lasse Kalkar, Founder and CEO of Liveflow.

And there’s a lot of low-hanging out there for fintech startups. ‘There’s still a huge amount of opportunity for unbundling products and services, because the big banks […] aren’t very good at delivering modern product experiences,’ said Seth Phillips, Founder and CEO of Bound. It’s about making ‘really f——— easy to do what used to be really f——— hard.’

The AI will see you now: Can AI transform healthcare?

Perhaps the biggest fear of AI in healthcare is trust and security. But Javier Suarez, CEO and Co-founder of Oliva, argued that AI could be both more empathetic and, with the right controls, more secure than a human. ‘AI can ask much better questions and much faster for you to get to either a preventative stage or a healing stage much faster, because it adapts from session to session on way more inputs than a human can take.’

But new solutions can’t be shoved down practitioners’ throats. ‘You need to bring them all the way upstream and let them be part of making that process, bringing their knowledge and expertise to the table,’ said Thomas Vande Casteele, Co-founder and CEO of Awell.

Thomas also introduced the concept of “careops” – the application of continuous integration and continuous delivery (CI/CD) principles from devops to healthcare. This approach encourages small but frequent improvements, potentially accelerating the pace of innovation and delivery in healthcare.

Use it or lose it: Data, the lifeblood of startups?

For the last few years, companies have been treating data as the ‘new oil’, storing it even if they didn’t know what value was going to come from it, said Hamzah Chaudhary, Co-founder and CEO of Lightdash. ‘And now people are asking the question, just because you can store it, should you?’

Startups should focus on collecting data around the key value- and revenue-generating areas of their business, because ‘you’re going to spend a lot of time optimising that part of your pipeline,’ said Hamzah.

César Migueláñez, Co-founder and CEO of Latitude, shared the sentiment. ‘We’ve talked to many companies who have spent months building their data stack […] and then they don’t even know why they’re building them.’ Startups need to start working with data as soon as possible – that’s when you discover what value you can derive from it.

And AI should make extracting that value much less cumbersome. ‘You can actually start asking questions of relatively unstructured data as opposed to having it super clean,’ said Hamzah. ‘The hard part, though, is trusting the answer to the question, which is more of a human problem than it is a technology one. […] If you get an answer to a data question as an end stakeholder who doesn’t know SQL and all that stuff, you’re probably still going to go back to your data team and be like, “before I put this in the board deck, can someone double check it for me?”’

A culture of ambition: The European opportunity for LPs

‘The biggest change that I see from [15 years ago] to today is the culture of ambition that exists in Europe,’ said Graham Pingree, Partner of Cendana Capital. ‘People want to build big, global companies. […] Today, it feels like the level of ambition is on par with what we see in Silicon Valley and New York.’

And that confidence is spreading across Europe, pushing up the calibre and vision of European talent. ‘The technical talent is here, the vision for solving bigger, world problems is maybe a little bit clearer here than it is in the US,’ said Carson Monson, Partner at UNTITLED. ‘As you have technical talent that stays here […] that facilitates more GPs being here, being plugged into those ecosystems, and capitalising those founders. And that in turn attracts more institutional LP capital.’

While the market has corrected, and inflation and the war in Ukraine has cooled investor interest in Europe, it’s providing a chance for LPs to digest the many new relationships they made in 2020-21, and investors have been able to pick up opportunities at lower prices with more reasonable valuations.

And now AI has changed everything, said Thomas Kristensen, Partner at LGT Capital Partners. Entrepreneurs should try things out – that’s their job. But investors need to be a bit more cautious and think “what is it that we’re really investing in to?”

That said, there was agreement that Europe is still an overlooked market, presenting a big opportunity for early-stage funds. With the recent announcement of the Sequoia split, the panel thought there were likely to be further spin outs in future, as talented people in VC firms look to carve out a niche for themselves.

And how would they do it? ‘VCs that […] leverage data and technology in new ways […] or GPs that are able to create some sort of non-replicable community inherently will have some sort of advantage that allows them to continue to generate alpha,’ said Carson. ‘We live in a global world, and you need to be a bit more progressive in your approach in order to continue to stay on the forefront of where innovation is going.’