How LeanSquare Invests in Music Tech Startups

Jakob

If you put your devices on Do Not Disturb, that would be much appreciated. The way that Riverside works is that it streams, downloads, and uploads at the same time, which means I will get the full quality at the end, which also means it sometimes lags a bit or it gets grainy. You don't need to worry about that. That's not shown at the end of the result. And also if you have background noise for any reason, we also use some noise suppression tools that works really well. So that will also be good.

Xavier

Yeah.

Xavier

Okay.

Jakob

The episodes we do are normally between 35 to 55 minutes. There's no wrong or right there. I think this episode will be less of a journey type episode, so the journey type episodes normally runs longer. So this is more like a niche expertise thing. So my estimate, it will run around 40 minutes of recording. Like that's probably where normally the sweets but for these type of conversations are. Just so you know, I have to have that. I also love if the talks are very conversational by a dialogue base. So try to be aware that if there's questions that can be, if there's answers that can be broken up into steps, that's preferred because then I can sort of tap into and lead the conversation. But again, if some answers become long, it's fine. It's just, that's how normally the best dynamic happens. Great. Do you have any questions? Perfect.

Xavier

Perfect. No, that's clear.

Jakob

Obviously, so this episode will be a partnership with Bailifornia, so I'll do a small introduction and the way that we will start the episode is I'll say hi and talk about what this episode is today and who my guest is, which will be you. And then I always ask the same question, is who are you and what do you do? So actually the guests always just introduce briefly themselves. We'll touch upon your entrance into the industry because it's quite interesting. That's also one of the questions in the list. Just to sort of understand where you come from, what your angle is into music. And then we'll cover the topics. We'll cover to well, I for me, I have a couple of cover at Lean Square and all of these things are obviously intertwined. Yeah. Great. Then I will start in a few seconds if you don't need any coffee or anything like that.

Xavier

Okay.

Xavier

No, that's good, I have water. Thank you.

Jakob

I will start in five seconds.

Jakob

Hey guys and welcome back to the Sound Connections podcast. Today we have a partnership episode with Wellifornia and we have none other than Saviour from LeanSquare on the podcast. Welcome Saviour.

Xavier

Welcome, thank you. How are you doing?

Jakob

Very good, thank you. I've been looking forward to this. And, Wellifornia is an amazing conference with focus on music technology. And, LeanSquare and yourself have been very involved in making that happen over the last nine years. I guess this will be the 10th year of Wellifornia. But, Savvia, before we get into that, we're talking about investment in music tech in Wellifornia and LeanSquare. For the people who don't know who you are, who are you and what do you do?

Xavier

So I'm David, I'm the CEO of Linesquare. Since now two years after I was the investment manager for Linesquare. So Linesquare is the investment firm based in Liège, part of the Notchak Group. We are an entertainment tech firm. And we have 11 years now and so I was there in the beginning of the creation of the phone, it's an evergreen phone so we don't have any closing date and I took the role of CEO since two years to manage the team and to manage the investment and the portfolio of Linesquare. I'm a father of two kids, I'm musician, I'm a sportive and yeah that's me.

Jakob

Amazing and we have talked with lot of investors on this podcast and there's always Confusion or conflicting statements about what does it mean to invest in music tech and what is the actual potential? Because it is like a quite undefunded space. There's not a lot of VCs there. There's not a lot of angels there. So it's a to a big degree very unknown space at least from an academia level which I tend to really like but also from like just accessible information. So I hope we can sort of dissect you guys mindset throughout the episode. Before we get into sort of how you got into LeanSquare and before we get into LeanSquare itself, it's really important just to talk about Wallifornia because we're partnering with this episode but there's also a reason why this is extra interesting beyond the partnership and that is Wallifornia is focusing on music technology. Can you walk me through what is Wallifornia and why is it important? What's actually gonna happen in the start of July this year?

Xavier

Okay, so this year it will be the nine edition. Next year it will be the 10th anniversary. So nine years ago we were in South by South West, three years after the creation of the firm. And we see a lot of, and so for to be also a detail, an important detail, the CEO of No Shack, so the mother company is also the co-founder of one of the biggest music festivals here in Belgium, Les Arnaud. And so we, at that time and still now, we had this, I mean, feeling for the music, love for the music, we are all musicians, et cetera. And so we decided to go to South by Southwest to see what is going on there. And when we came back here in Belgium, we decided to do the same in a small size, for sure, but to do the same. It means to organize an event with startup, with corporate, with partner, with VCs from all around the world in Belgium during two or three days. And it was the way to begin this music tech strategy.

Xavier

Linesquare decided at that time to invest on the music tech. As an investor, we don't want to be only an investor, so as a banker, we want to be a creator of ecosystem. We strongly believe in the ecosystem. We think that the startup look at searching for money, but also for partnership. And so the best VC on the market, because I mean, there is a lot of VC, there is a lot of money on the market. So it's like, it's, I mean, we have competition as a VC, we have competition to find the best startup. And so we decided, as we already done with all our strategy in NoShack, to create an ecosystem to attract startup, VCs, corporate, partner, and to create the best ecosystem on music here in Belgium because we see that there is a lot of different events all around Europe. But here in Belgium, we were the first one to do this. And so I think we begin with a really, really small event. And now, our nine edition, we attract 10 startup during the Acceleration Program. So there is two days of Acceleration Program. After, we have two days of event. And the purpose of this event is one, to... to receive startup and to have a better deal flow of startup. So we try to, and after each edition, we invest maybe in one or two startup. It depends on the quality for sure, and all the startup in which we don't invest, we continue to discuss with them, we continue to help them, so it will be part of the ecosystem of Wallifonia. And during two days of events, we discuss with all

Xavier

the industry of the music all around the world here in Belgium. So it's a way to create an ecosystem and to create a move in the music tech to better understand this market, particular market of music and also to attract startup from all around the world and to create synergy here from there.

Jakob

Hmm.

Jakob

It makes sense. I'm looking forward to coming there and I'll be a part of some of the things happening there as well. But the reason why you've created Wellifornia, obviously if you want to break it down really basic, is to have good ways to find startups. And invest in them. But the ecosystem around them is key in order to not only find them, but also sustain them over time. And that's one of the things that I see in Europe happening a lot is these ecosystems coming up and running. What was the ecosystem like nine years ago? Like, was there a supportive ecosystem for music technology?

Xavier

In Yesh or all around the world? It was, mean, all around the world. When you see, there is a lot of different events or initiatives in the world. So you have South by Southwest, you have, also in, but you have a lot of different also events. South by Southwest is a big, is a really big event and maybe too big. You have also a lot of different initiatives in Europe, Slush.

Jakob

All around the

Xavier

There was the medium in France, but there were nothing here in Belgium. There was, there were. There was an ecosystem of music at that time, really. But we were really novice on it. I mean, it was the first time that we touched it. And so we decided to have a better connection with all these ecosystems because you have the ecosystem in Europe, you have the ecosystem in USA, you have the ecosystem in the north of Europe. And so we tried, that's why we also created MusicTech Europe. So it's a connection between all the initiative all around Europe. So you have Wallifonia, but you have music

Jakob

Yeah.

Xavier

you have Music Estonia, et cetera. So we try to connect all the initiative all around Europe because there is, what we see, it's quite fragmented. And so we try to create just one.

Jakob

All

Jakob

Mm.

Xavier

initiative by this music Europe. So there was an ecosystem, there was Fragmentik, there was no ecosystem here in Belgium and has a Belgian investor, we decided to create something from Belgium but... but open to all the other ecosystem. And that's why we discuss with all the people all around the world. That's why during the Wallifonia, we have more than 300 people during the event. And we still continue to create partnership. We still continue to discuss with them to be sure that we can exchange information, exchange startup, exchange, or just discuss about different topics.

Jakob

Yeah, I definitely had FOMO last year. I was really trying to come and I couldn't and I saw after on LinkedIn like, wow, there's a lot of great people there. Savia, before we go into sort of music tech investment quite deeply and your thoughts and experiences on it, you have a background that you said you're a musician, but as far as I understand, you also come from banking. But could you just tell us a bit about your journey into investing in music technology?

Xavier

So I moved from banking to the investment side, not for music in the beginning, okay, because I moved in Noshack 11 years ago with the creation of Linesquare, and so Linesquare was not active on new music, and I was, I mean, more general investor for Noshack, but at that time, there was a turning point when I realized that the banking sector, it's really stable structure, but not really focus on innovation and creation. So a company who need money, go to when you, it's the same thing that when you want to buy a house. So you want to buy a house, you go to your bank, you ask for the money, you sign a document, you receive your money, and you do what you want to do in your house, and that's good. For the company and for my point of view, I wanted to go... more further on the relationship with the company and not only be an investor, but I wanted to be a partner. So the position on investment fund for me was the right thing to do to... to be focused on the innovation and the creation because on LeanSquare, for example, we are not only an investor, but we are, as I already mentioned, we are a partner and we take a seat on the board of director for the company. So it means that we take the decision with the company. It means that we take the responsibility with the founder. We help the founder to grow. We help the company to grow in the good of the company, in the good of the shareholder because we are a shareholder. And so we have an exit strategy. We want to make money for sure. Not the subsidiaries but we are there to help the company to grow. And so for the innovation and the creation as an investor and that's what I found in NoShack for sure there is a lot of different VC, a lot of different type of investor. Mean some investor create in ecosystem, some investor...

Xavier

don't create ecosystem. For sure, it's a real particularity of NoShack and LeanSquare to create all this partnership and all this ecosystem. And so I found a way to do it. So this innovation, where I found the innovation, first of all, is because I take seat on my... So everybody in the team takes seat in the company. So it means that we have a lot of work. So we prepare the investment, we finalize the investment, but also after we follow the investment, we are part of the company. And after we put innovation and things to our...

Jakob

Hmm.

Xavier

ecosystem or thanks to our events or thanks to our acceleration program. The Wallyphonia is clearly an innovation program. It's not just an event when you come, you discuss, you drink a beer, you go to a concert, to a live concert. It's really, there is a panel, et cetera, like all the events. But as a phone, the main, mean, create, Linesquare created Wallyphonia nine years ago. So we wanted to put innovation on the market to put some innovation on the startup and that's why with our size we try to put all the people together to be connected and to try to make partnerships, to try to make business together and to put some innovation on the market. So that's the two ways I was

Jakob

Hmm.

Xavier

really interested on it and after the banking, it's an old industry and so when we are on VC, when we are on a startup investment fund, you look at new technologies, innovation, etc. New business models, so that's really, it's funny. And the focus on music, we are all musicians, so if we try to find some... some smartness and funness in our job, I the music. I mean it's great to invest on music. I mean it's better to invest on music than to invest on IT, for example.

Jakob

Mm.

Jakob

Yeah, that makes sense. But obviously also Lean Square has been investing in the industries the last nine years and now you guys are going into focusing more exclusively in entertainment, but in entertainment there's more than music. We don't need to necessarily go very deep into that, but I know for a fact with speaking to a lot of my VC friends and connections that... even with a focus on music, oftentimes like a clear music technology case doesn't happen that often as an investment because of many, many things. But what are the things that you see people do the most wrong or like where are the misperceptions of potential for you as an investor in music technology? And the reason why I'm asking that question is you guys... Do a few bets, like you've had like, I think you said 49 over the last nine years, and if you ever that out, even though it's a big portfolio, it's not, you don't invest every single week, and it's not every single of those investments that are music. So you must see a lot of things you don't believe in, but generally speaking, what are the things that you have a hard time investing in? And I hope that it's okay, I asked that question.

Xavier

I mean, what do you mean? Mean, the topics, special topics on the music, what we are looking for or why or our feeling about the investment and the size of the market for the investment. What do you mean by your question? It's both of...

Jakob

Okay, maybe like, sorry if I made it over complicated. What do you invest in music? What do you look for in music? And then we can try to talk about the things you don't do afterwards and the reasoning behind that.

Xavier

Okay.

Xavier

Okay, so what we are looking for in the music, so in terms, there is two things. There is the market and the need of the market and our investment criteria. So the first thing what we are looking for on our investment criteria is the team. First of all is the team. If we have to look on clearly, mean investment criteria. The first thing is the team. We prefer to invest on a good team with a small project than in a big project for the market with the wrong team. Really it's our first criteria. Why? Because as I mentioned we are an investor but a partner and so we take a seat on the board and we want to be sure that the relationship with the founder is really good. And after we have a lot of different criteria, the business model, the traction, the revenues, the market, the size of the market, the growth, the exit strategy, etc. If we look deeply on, or maybe more specially on the market, what we are looking for, and that's why also why we have created Wallifonia. It's to understand the market. As an investor, you can choose to invest on every area you want. I mean, I have money on my phone, I could invest on, I don't know, mean, on real estate, for example.

Jakob

Hmm.

Xavier

But I don't have any connection with the real estate. I don't know the market of the real estate. And so when we decided to go to the music tech, we had all these investment criteria. We know our job, we knew our job, we knew how to make an investment, we knew how to make a duty agents to make, to put good governance on the company because a music tech company or a real estate company or a food tech company has the same need in terms of investment, terms of business, in terms of governance. So we knew our job. But the Wallifonia also is really helpful for us to understand the need of the market. And so when we receive a startup and when we receive, I mean, we receive a lot of pitch of startup, what we have seen in the past is that there is a disconnection between the pitch and what the startup wanted to do and the need of the market.

Jakob

Mm-hmm.

Jakob

Mm.

Jakob

Hmm.

Xavier

There is a real lake of, and there is, mean, because of disconnection, the startup we didn't discuss with the corporate or with the market, and inversely. And they didn't understand the market. So it was always the same proposition, always the same business model, always the same product, and they didn't answer the need of the market. So the Wallifonia is also, for us, as you mentioned, a way to attract some new start-up. But for sure to understand really the need of the market at that time. So here in July, will discuss with the market all the year, but we will discuss with the market. And it's a way during two or three or four days for the startup to discuss with the corporate and to see if their proposition, if the product, if the technology fit with their need.

Jakob

Mm-hmm.

Xavier

That's why it's an acceleration program, that's why it's an innovation program. And so we have some focus for, if we have to go on the focus, we have some focus on... on the music, which is quite connected with the sports tech, because we discuss music here because it's Raleigh-Fonia, but Linesquare is an entertainment tech fund, so we invest on music tech, sports tech, e-sport, and gaming. And what we see when we decided to go to the music, after we opened the way for the sports tech, because there was a lot of... connection between the two markets, music tech and sports tech in terms of technology, in terms of need. And so we look at a startup who answers some questions about the rights, about the health performance, about the fun engagement, the smart venues, the management, the production, creative studio, etc. So that's the area that we looking for the music tech, sports tech, e-sports and gaming.

Jakob

Hmm and do you prefer or is it positive if a company touches multiple of those verticals or like their you know music in eSports kind of company is that positive?

Xavier

It depends, mean, solution that you, mean, for example, a ticketing solution could fit with the music and could fit with the sport. So, but for sure, in the beginning, so we are, our investment thesis, to be clear, we invest on late seed pre-series A.

Jakob

Mm.

Xavier

means that so in terms of investment you have the pre-seed, you don't have any product, you have a first seed, second seed, you try to have your product market fit, but we invest on late seed pre-series A. It means that we have already a product on the market, we have revenues, we have customers, et cetera. And so what we are looking for is startup who have already a first connection with the market. So you cannot, you cannot, fill all the industries. So you have to choose a first step, a second step, a third step. And so if the first step is the music, it's OK. But what we are looking for also when we are doing our duty agents, it's the way to grow the company, it's the way to grow the market, and what is all the connection that we can find to increase the potential of the market. So if we have a solution of ticketing,

Jakob

Okay.

Xavier

in music tech, we will try to see if there is possible to open other markets like the sports tech for example.

Jakob

No, it makes a whole lot of sense. So basically the reason why I want to cover what you don't invest in is also to sort of like understand the reasoning behind that's not part of the criteria and I hope that we can expand that just a tiny bit. When you say a good team, what is not a good team in your opinion? If you can try to generalize that as much as possible, like what competency do they not have?

Xavier

That's a tough question because it's, no, but it's really tough question because it's an individual relation. mean, sometimes it fits, sometimes it doesn't fit. so, I mean, with the experience, we know what kind of relationship we will have with the company after the investment. We know that. We know really well the organization of the board.

Jakob

Thank

Xavier

We know really well all the difficulties we can find on the market when we try to develop your product and the decision sometimes to pivot. And so when we discuss with the founder, we see if the founder can listen, can learn, they are open to advise, and if they have the capacity. to pivot or to take the hard decision if they have to do it. After it's an experience, so sometimes we do well, sometimes we do mistakes, but with the experience we know if there will be a fit between Lin Square and the mentality of Lin Square and our thesis and our politics of investment and the company.

Jakob

Mm.

Xavier

It doesn't mean it doesn't mean that if we don't invest on the company because of the team because we don't believe in the team It's quite it's quite rare. I mean It's quite rare because but if it doesn't mean if we don't invest it doesn't mean that the company will not find Investment in other VC. Okay. It's like it's like a wedding I mean doesn't mean you know, it's a relationship you try you try to find someone else so And we always try to give advice to the company. So if we decided to stop a duty agents, not to go, not to begin a duty agents for all the reason we can find, we always try to connect to good, to... to give an advice to the company, to give the right reason why we will not invest in the company, but also to stay connected with them, because it doesn't mean that if we don't invest on an A time that we will not invest on a B time. And we try to connect them with other investor who maybe the relationship will be better, or maybe the, I don't know, I will take an example, if they are,

Jakob

Hmm.

Jakob

Mm.

Xavier

not on our timing of investments, so late seed, pre-series A, but they were still on seed, we will say, okay, it's not the timing for us. We connect you with a seed investor, but we will still have a connection with you because when you will be on the late seed on pre-series A stage, maybe you will be interested for us. But it's a tough question. mean... A good team is a team with experience, where you can listen, you can learn. I mean, it's quite hard to define what is a good team. It's a question of relationship.

Jakob

Hmm. I think what was interesting in your answer is, the first thing you brought up was mentality. and that's also sort of what we find when we as Amplitude are working with, with founders, which we do a lot is the mentality is also what we've started to look for the most. And especially if we work with a of like very early stuff. And for us, like mentality almost comes before team because the way that we work is that the team can be formed in the process. But if that lone founder maybe has the right mentality, so many things can be unlocked because of it. And on the flip side, if the mentality is difficult, know, most positive movements can be just really, really difficult. Because being a founder is not only a lifestyle, it's also like a sickness no it's a it is so difficult to be a founder that there's this personality traits that just needs to be there

Xavier

It's not a value judgment like we say in French. I mean, we will never do that because maybe being founder and we see a lot of young founder. I the most part of what we see on the market and what we see on our pitch, it's young founder. And so I was always impressed by their... They're willing to create enterprise, to create startup, to create value, et cetera. I mean, as an investor, we invest money on the company to exit after seven years with revenues for us for sure, but our role in L'Innsquare really well. We are an investor, we create ecosystem, but also we want to companies. We want to be part of this creation of companies.

Jakob

Mm.

Xavier

We want to help our territory to have a better economy. That's why we invest on companies. And so I'm always impressed to see, I mean, 20 years old founders to go to the market. But for sure, as a late seed or pre-series investor, we see so many companies that we have to be focused on the best one, I mean, what we think to be the best one for us.

Jakob

Mm.

Jakob

Mm.

Xavier

But I mean, yeah, it's unbelievable to see, and it's not a value judgment to see, you are not able to be a founders. For sure you are able to be a founders, but at that time now for us, it would not be possible. But it's not a value judgment. mean, we try to create a relationship and sometimes it fits, sometimes it doesn't fit.

Jakob

How many decks do you receive versus how much do you invest in?

Xavier

maybe 300 decks per year, between two, I mean, in average, maybe 250 per year. And we try to spend, so we create also to help the company, to help the founders. We have created what we call the one hour challenge. So we have a guy in our team, which is called Ben Pica, we will be on Wallifonia Music Tech.

Jakob

you receive.

Xavier

And we offer one hour of our time to the companies. If we think that they fit with the investment, I mean, if they are really pre-seed, we will not spend maybe one hour with them, but sometimes we do it because we want to open our door for everybody. That's our role too for the ecosystem, for our position, and for the economy from the edge. So we open the door for everybody. So we give one hour of our time to each company. They pitch, and it's a way also to increase our deal flow, for sure, and to have a first inside of the company after one hour of meeting. Sorry.

Xavier

And after this one hour, we discuss during the team meeting if we want to go deep on the due diligence or not. And if it's not, they receive a positive feedback. You are not ready for us. advise you to connect with some investor, to connect with some partner, to connect with some corporate, we accept all this startup in our ecosystem and we help them to grow, but not with an investment. Because maybe one time, they will be ready for us to be invested by Lean Square. That's a way to organize our ecosystem too. So we create the one and watcher and so it's, yeah.

Jakob

Hmm.

Jakob

Mm.

Xavier

on average 250, 300 per year. And we are doing, so we are an evergreen phone, so we are doing five, six, between five and 10s per year, which why.

Jakob

Hmm.

Jakob

Yeah, amazing, really interesting and it really showcases also how difficult it is to get investments for VCs. I think, you I hope that people get more and more educated what it means to get investors nowadays. But again, music, technology and...

Xavier

Sorry.

Jakob

Music tech financing has been definitely an underexposed environment and I think there's many fallacies in music tech that people don't know of and as you would know as an investor, traditionally speaking, it can also be... more difficult to raise large amounts of sums for music technology just because there's maybe generally speaking less of faith in music technology or due diligence or market size. There's many things to do. So you guys also need to be very sensible with your investments. Out of those five to 10 investments, how often do you see like a direct music tech investment? Yeah.

Xavier

In this numbers, it depends the year, maybe... I mean, we have strong activities on gaming for... I mean, no, no. And again, no, no. Music, sports and gaming, so it's quite huge for us. So maybe it's quite... I mean, there is... It's quite stable. I mean, a third in music, two or three per year. Two or three in gaming.

Jakob

Hmm.

Xavier

102 in sports, it depends on the year, but it's an average. But the problem of the music tech, you mentioned the difficulty to raise funds in the music tech area, it's because it's an unknown market. It's a quite close market of music tech. mean, it's better to, and what we see on the market also, there is not so much specialized VC on music tech.

Jakob

Mm.

Xavier

If they invest on music tech, it's because of your opportunity. But I know some investment, some investor on creative and cultural industries in US or I know one in US in music tech, plus 8 equity. But there is not so few.

Jakob

Hmm.

Xavier

investment on music tech. It's a closed market. It's a hard market to understand. All the connection, all the... between the corporate, the artist, etc. It's a tough market. That's why also, Wallifonia help us, as I mentioned to you, it's a way also for us to better understand the market and to better understand the need of the market, the need of the artist, the need of the corporate, the need of the industries, and to connect all the technology available on the market to see if they can work together to answer all the need. But it's a tough market. After there is a lot of, I mean, there is a lot of good project on entertainment tech, there is a lot of...

Jakob

Hmm.

Xavier

exit potential in music tech and more globally on the cultural and creative industries because entertainment is a part of this cultural and creative industries and there is a... I mean we never think about it but in Belgium I think it's the second market in terms of employment. So that's big.

Jakob

Mm.

Xavier

the cultural and creative industries is really big.

Jakob

I didn't know that, I didn't know that. How often do you see yourself as a validation capital towards other investors? How often do you see yourself as a validation capital? You guys know music and you have a music focus, so when they want to raise, let's say, raise five million and you guys come in with, let's say, one, how often do you position yourself as a validation capital and help the other investors understand what this case is?

Xavier

Sorry.

Xavier

As a lead investor, mentioned?

Jakob

Yet know as a validation capital, so supplementing investor of a bigger round. Do you do that a lot where you sort of help other investors understand the potential of this startup you just committed to?

Xavier

Again, as I mentioned, there is a lot of, it depends of the potential of the company, but yes, sometimes, it's a, the round on, so on Musiq Tech, we are focused on Europe, and so we know the different investor, private, public investor. For sure. and what we see on Belgium for example, but also for France, for sure, if Lin Square is on the round, if Lin Square has already validated the round, it's a key for the other investor to go on the round. If it's your question, why? Because, and that's why we decided this year to be focused only on entertainment, because we are already seen on the market as an entertainment tech, as a music tech also fund. And so where we are on the round, it's easier for the other investor to validate the round.

Jakob

Mm.

Xavier

As us, I mean, if I see on the market or if I see on the startup, if I have a little bit doubt on the growth of the product or on the need of the market for this technology, but if I see a partner or a corporate or another investor investing in it, I can discuss with him, I can chair my duty agents and to see, okay, there is a potential. It's easier to do a duty agents where you have already invested that you are doing on the realm.

Jakob

And those investors who that you typically co-invest with or like you see traditionally speak co-invest in music tech, do they also know music or do they usually come from sort of other industries?

Xavier

No, they're new music. They are not specialized only on music, but they know music by opportunity in the past. So for sure they're new music. if they don't know the music, they know the technology that the company using. And so it's an application of the technology in the market. And so if they have a doubt on the market, the role of Linesquare is to explain and to share the duty to see, this particular technology that you are knowing is really good for the need of the market in the music tech. And so we share the duty agents and we are doing the deal together.

Jakob

Thank you.

Jakob

How often do you see VCs that invest in something that they don't know too much about but still within their investment scope? For example, if an investor didn't deeply understand the technology or didn't deeply understand music but still is willing to go on the team and the revenue interaction, does that happen?

Xavier

Yeah, but not on late seed and pre-series. I mean, it's quite rare. If it has to happen, it's maybe on pre-seed and first seed. mean, it's sometimes... That's why it's really important for the startup to discuss with the investor. I mean, we are searching for the good founder, but the founder has to search the good investor.

Jakob

Hmm.

Xavier

I mean, it's the same relationship. We try to find the best team to conduct the company, but the founder has to find the best VC to understand what they are doing and to be sure that they are ready to put more money on the company to continue to help and to have the growth of the company. So, for example, a pre-seed investor.

Jakob

Hmm.

Xavier

A pre-seed company has to find a pre-seed investor who knows and who understands what they are doing. What we see sometimes with the pre-seed and the seed is that we have a lot of business angels who have money and want to put money on the company. That's really good, really good for the company and really good for the business angel. That's why the business angel ecosystem is really good.

Jakob

Hmm.

Xavier

For the music market, it's quite hard to find a business angel specialized in music. And so you receive money, it helps you to continue to develop or to put the product on the market, but it doesn't maybe helps you or the funder to find the right partner, to find the right key to the market, et cetera. That's why it's really important to find, at the time it's really important to find a VC, not only specialized in music, but who understand the technology understand all the way, the stage for a startup. mean working on a company or investing on a startup is two different jobs and so that's why it's really important to discuss with all an investor before signing any document or any shareholder agreement because it's a relationship.

Jakob

Mm-hmm. Makes a whole lot of sense. And I think one of the things that I hope over the next few years is that I'm trying to contribute to myself. Like a lot of these things that you say, this wisdom combined with a lot of other things that gets written down, gets public, and because there's so much lack of clarity on like how to go about these things. And I learned new things about investment. every single day, especially music technology. And I've spent two years really trying to understand it. And most founders don't have the luxury of doing that. They need to be able to get high level of understanding of how does music technology financing work. And it's great that you guys are participating and sharing that knowledge as well.

Xavier

Thank

Jakob

So, so I'm looking really much forward to meeting you at well, the fournia. I've been following lean square for a couple of years and, now a lot of my colleagues and friends, have partnered with you in investments and it's really amazing to see the contribution to the industry. I personally believe there's a heck of a lot of potential music tech, but you need to be very intentional about how you spend your time, what kind of companies have potential. and. companies like yourself are bringing forth that knowledge and hopefully that can also have ripple effects to other investors so they slowly get experience with music and can partake in both early rounds but also later rounds. And that's sort of what I'm hoping is gonna happen in the next five to 10 years.

Xavier

I hope so. For sure, mean, there is more VC in our stage of development and late seed and series A. There is more VC on IT or health tech or med tech than in music tech. then, also I fix music tech, but there is sports tech, there is gaming, so there is, for example, there is more investor on gaming than on music tech. Gaming is, I mean, is...

Jakob

Mm.

Xavier

It's a better open market than the music because there is a lot of investors on the market of gaming. So we don't have any difficulties to find other investors around for the gaming. It's sometimes more difficult on the music. It doesn't mean that you are not able to find the right investor at the right time. But for sure the Walifornia, the purpose of the Walifornia is also to educate also the investor in this music market. I mean we invite a lot of different investors from the music market but also from the industrial, the cultural and creative industry globally.

Jakob

Hmm.

Xavier

to present the potential of the music because if we are more, if there is a more investor on the market and if we know them, we will be able to do better round for the company, bigger round for the company and continue to help the company to grow because I strongly believe as you mentioned right just now that there is a lot of potential of exit in this market because it's an old market and there is a lot of need in terms of technology, terms of innovation in this market. So there is a huge potential for the music market.

Jakob

Amazing. Xavier, thank you for sharing your knowledge and your experience and people who can catch you at Wallyfornia. As I said, like last year I had so much FOMO and I never really get FOMO, but like the people that were posting about Wallyfornia, the people that were like, what they wrote about Wallyfornia, like, I should have been there. So guys, I will be there as well.

Xavier

Yeah, I would be there.

Jakob

And we'll have a few different episodes in partnership with a four-new leading up to it. So I hope to see you there. It's definitely be worth your money and time and we'll talk soon.

Xavier

Yeah, talk soon. Thank you. Bye bye.