Fueling SoundTech Success with SoundHub & SoundInvest

You shouldn't paint a picture perfect picture of your startup. We rather want to know what are you struggling with, how can we support you, what is it that you are looking for in an accelerator in this case. Is it the investment, is it something about your team, is it something about your product, is it are you lacking customers, where are you. An industry investor is actually the most important part. There's somebody who actually understands the space. Have not only supported it with sort of moral

support, we actually invested in. For us that's another add value for the in the program is that you actually get that part working as well. This is an investment episode with sound Hub Denmar and sound invest. They are leaders in the sound tech industry for acceleration and investment and it's really cool to see that there's so many common denominators between Music Tech

and soundtech for obvious reasons, but also how they differ. Hey guys and welcome back to the sound connections podcast. Today we have another investment series episode and we are speaking English today even though it's three people in the same uh podcast, but Mel and R welcome to the podcast. Thank you. Thank you very much. Thanks for having us. You guys are a part of the same uh that's called organizational

structure that's about uh improving the living conditions for sound tech. This is my own interpretation, but basically what we're going to talk about today is um obviously I normally work within Music Tech and sound tech is a big part of it. I am also a tone Meister by degree so I'm very passionate about Euros space in particular um, but so we're going to talk about investment acceleration business development in space um because it's really difficult to navigate um, but

before we go that um Mikel and can you each just introduce yourself a bit, what do you do and what's your job. Should I startop Jacob. Yeah you can do perfect. Yeah but my name is Ru, I'm the chief commercial officer here at the sound toop Denmark um I've um actually been a part of the management team when

we started in 2018 um my role is uh is together with the with the team here uh to nurture uh the sound industry, both the bigger ones and the smaller players um through the um sound Innovation environment and Technology environment we have here in St, the city of sound in Denmark. You

could say my role as a commercial officer is mainly on establishing the part parnerships, the link between the different players uh it can be startup to Startup, it can be startup to corporates um and also of course initiating different kind of programs and uh and development um programs that we have inh

housee. Amazing and mik your role is connected uh in that whole uh structure because tell me a bit more about that. Yeah my name is Michael and P and I'm the CEO of sound invest and sound invest is sort of the investment arm that we use to invest in the startups that participate in the soundtech accelerator in s so that's where we connected um I have a background in the Pro and

and consumer audio industry, more on the sort of product management side of things so that's where sort of I come from in this. And most people wouldn't necessarily know but demac has for uh many years been quite successful within the audio industry. Could you guys tell me a bit about that, what's been the history in Demar and why is it in Denmark that sound Hub is

located. I think there's you're completely right, there's been over many years a great sound industry in Denmark where Denmark has established a number of well-known Hi-Fi and lifestyle Brands and then on top of that we have quite a big hearing aid industry as well that counts for around yeah the majority or at least over 50% of all the hearing

aids that are sold in the world. So something about sound in Denmark and audio in Denmark that is well known um so that kind of you can say a stronghold for a country is for sure also what we tap into here at sound toop Denmark and that we want to nurture even further uh with the both uh Danish talents but also talents from abroad. Again uh you know my background

is originally as an Audi engineer and one of the things I'm very proud of as a Danish is also life sound like I think we have amazing sound engine, amazing venues, amazing festivals and I think there's a big pride in Danish people in the live industry also where I'm primarily from about sound quality and that whole experience. So it's really a big thing in Denmark um but which also means there's investment opportunities

so I guess Michael that's sort of also where you sit from, that's your angle. Yeah definitely I think the fact that we have had so many and do still have so many different companies in Denmark has also nurtured sort of it yeah the is set fairly High uh we used to working with things that really uh are good and I think that's where this the investment side is also interesting is because we have a pass

background to work with these kind of companies and therefore we also I believe are fairly good at spotting uh the right talent and the right ideas when we when we start looking at who should be applied for the program and potentially eventually be part of the Investments. And if may add to that Jacob I think what you also are pointing out is the live scene and I think particular

scene from Michaels and my side we have over the last years he seen that the pro audio and all the elements that surround the live audience part and the entertainment part has actually been you could say on an increasing Trend uh so you're completely right. It's simply because I come from the Hi-Fi and the bangos and background for many years so that's why my whole notion start

from that but you're completely right um about the entertainment part and performance that is booming. The really interesting discussion to be had so I think that's going to be very Central to our talk today is when you have these um Niche Industries and even though it's a strong in Demar you know on a cobal level it's quite Niche um when it comes to building successful

startups or getting Capital uh there generally speaking is a lack of knowhow and experience from business developers, investors and everything in sort of that role which also is one of the reasons why um it can be uh a less thriving Market within Innovation. A lot of the times we see this in music tech uh where access to knowledge and experience can

be very difficult which uh negatively affects the environment of which Founders operate in and what's really interesting is when we have a country like Denmark uh that has this previous success it also means we have people who would know how to navigate from a business development side and investment side to improve the area but I guess that must have been where soundhub

started from. Can you tell me a bit about that process, like when did you guys start and what was the reason for it. You could say basically there were multiple reasons what one of them was of course that we could see the stronghold in Denmark that we want to F further nurture. Another thing was that being located here in STW uh in the hometown of bang and olon then we found out ourself a little bit in The

Sweet Spot of audio and Hi-Fi and when bno actually moved to other premises here um in this town we actually decided to use the building for an inter International growth Hub uh for everyone that works with sound. So we simply took over you could say a both a co-working space for sure also uh one of the

world's best development hops with different labs and Facilities that uh that we have further developed over the years. So it means it's quite unique in the world that we have a hub where companies can come and actually get help on their development of products and solutions but also get the advice that is needed. So that was

some of the things that we you could say uh looked into and then it's also you would say fair to say that we also took a very International approach from the very beginning uh we very much would like to see that a lot more talents and entrepreneurs actually come by Denmark um and learn from the professionals here

um because that's also a win-win for Denmark in the long run uh that we get even more out there that understand how important sound uh and maybe sometimes also the lack of sound is important for the world. So this has been going on for as far as I remember like six seven years since you got re um established. What is your experiences you had so far, have you

what did you have a thesis about what you could would do, has that been improved, what's sort of been the journey there. The thesis had was originally and still is uh that we want to attract Talent so in the long run we would love to see that this big house here is filled up with uh everyone that works with sound uh we have 3,500 square m

here uh so we have sufficient space to acculate uh around 100 uh U full-time workers uh but having said that we have especially worked with startups uh because we also thought that in order to attract both investment but also the corporates then we need to start to look into what is it that the Innovation that

the startup area is contributing with uh how can that resonate with what the corporates are looking for. So I think over the years we have learned that the whole idea of working with startups is actually one of the things that really moves the way forward and also to look at I think many looks at sound as being quite a niche thing

where we actually see it quite broad, the sound in quite many different things. So what we try and cater for is not only the traditional Hi-Fi audio industry but it's actually across different vertical. So within uh health or robotics or the wind energy or whatever it might be that there's always a sound element into it and that is what

we see more and more uh that these kind of you would say Audio Solutions or Sound Solutions is an important part uh and that seems to increase. That's really interesting Michael could you describe to me because as an investor in this space uh it builts on um an assumption of historical value there's companies who have been

built and who has been valuable and there's been some owners at one point that's you know benefited from that. What is it that you use as your um justification of investing in this space, what's the upside, why is it attractive. I think some of the things that uh makes it attractive is that it's in many ways it's just a space like any other investment space but we do believe we

have sort of a special uh role to play in the sense that because we are industry specific uh we do have the knowledge both about the technical stuff but maybe even more importantly about the business side and how the market Works, how the market dynamics work, what's that kind of the business model that you operate on, all these kind of things is something that we have knowledge and experience

with and that gives an us an edge in when we work with the early stage startups that we actually can we can both spot them at the right point in time we believe and we also have the ability to help them in many ways and as is explaining as well with the facilities, the people that are sort of uh in the in connected to soundhub as well you can also help with the product

side. So when you usually look at startups what everybody's targeting is getting product Market fit right and we can help not only with the sort of Market fit side of thing which is usually where you help we can also help with the product fits so we can also uh sometimes uh speed up the process of getting the product done because we can at the right time or because we have the

knowledge or the people around us have the knowledge we can steer people in the right direction and thereby save valuable time and maybe even more importantly valuable cash in product development as well. The really interesting thing about your um organizational setup is DEC compination uh fisis development uh Partnerships um and cash. If you were

to take the um the uh Business Development uh structure all this kind of stuff out of the picture and just look it at it historically speaking um what has been sort of the value proposition for investors in this space, like what's been the actual value in the products, is it Hardware that can be sew in mass, is it padded in technology, is it software that could be scaled, like there might be many anud but historically

speaking where has been the most interesting part of investment in this space. I think it's been actually the hardware uh part. The startups we've seen we work with uh a better part of what 60 startups at this point in time so we have quite a lot of um sort of historical data on how well did it go and the ones we can see that has gone

sort of really far has been Hardware uh focused one way or the other which is quite interesting because most startups or at least most investors in startups have a tendency to shy away from Ware uh and the interesting thing here is actually that the best performing has actually been Hardware focused or at least having uh quite a significant Hardware component to the to the final solution. Would you contribute that to um

the istic case of Hardware or because of the support structure you've built up. Well I wouldn't say that we can take uh take credit for all the success the startup had so I would say that we had some help and we had some sort of piece of the uh of the success they had but definitely I think it's the combination more than anything

that actually is the is the sort of deciding factor the you both have the knowledge about how the market works and the Business Development works all the whole setup is and then you also understand the hardware and the challenges of doing Hardware uh you can't sort of I think it's difficult at least for me to sort of separate the things in that sense it is a combined package and some of

the things that one of the very strong feedback we always get from startups is that it's nice to talk some with some people who actually gets it uh there a lot of startups that have come through the accelerator over the years have been part of other accelerators before and they end up spending a about lot of times on just explaining why what they're doing makes sense and we started

we start talking about what is the difficult things and why do we need to start working right away because we actually understand the business there. I think that's really important um sound connections is partners with musicor Academy as a networking partner and I'm also a mentor in the program international program and that's also one of the things we talk about a lot as well it's just like there's so much help to be

Gotten from accelerated programs in general, but at one point, you know, um, the basic knowledge and the basic help, I'm not trying to make it less than it is, just is what it is, y, uh, and when you've covered those basics, the niche understanding of approach is so incredibly important, and spending maybe 2 hours with the right person might

Matter much more than 20 hours with a G jist, so I guess that's also how you approach your value towards start startups. Exactly, and I can only support what it is that you're saying, that what we hear from the startups that has both been in the house but also in particular participating in the program is that they meet people that understand what they're doing, they don't

Need to dumb down their solution, people get it, um, but also that they meet different mentors, coaches, and also some that generally want to help them, uh, so there's no catch there. They meet a community or collaborative network that is really interested in helping them, uh, and also that they meet

You can see different people, so again, it might be a startup that has some issues with patenting. Okay, if that's the sole thing, then let's help on that part, but there might be others that are struggling with the whole idea of whether or not they should be a startup at all, or whether or not they are going to be or continue to be a CEO in their own startup, so I think we also take them by the hand where it

matters the most um yeah and thereby you can say then they get uh faster in you could say in their uh development but they also unleash the potential they have a lot faster than others simply because they get help um from yeah professionals yeah I think there's an underlying point in this as well and I think uh there's

Something about Danes and the way we sort of communicate and the way we sort culturally work, and I think it actually fits very well with an accelerator in the sense that we have a very low sort of power distance, we are very direct, uh, and that actually helps quite a lot because we don't have that much time with the startups when it, we have five months, it's a three cam program, so

We spent 10 days in total physically with the startups, and then we have online sessions on top of that, but we don't have that much time, so we need to, we need to get working quite fast, and we need to get to the point quite fast, and we have a tendency to do that, and we have, we have been able so far to create, foster a, an environment and a tone of voice and the way work that actually, um,

Means that we really fast gets down to where things actually starts to hurt, so to speak. They don't have paint a nice picture because that's what you do when you're applying and all that, and they're really good at that, but when, as soon as you start working, it's super important F to get to, so where are the problems, because there are always problems. Yeah, and I think also what we have experienced now, we in the recruitment process for the upcoming

Program, but many of the startups that we talk to, uh, on an online meeting and getting to know us better, is that they are asking us whether or not we should, they should set the pit stick, and we said no, we shouldn't, because we need to learn who you are. You shouldn't paint a picture perfect picture of your startup. We rather want to know what is your str, what are you struggling with, how can we support you, uh, what is it

That you're looking for in an accelerator, um, in this case, is it the investment, is it something about your team, is it something about your product, is it, are you lacking customers, where are you, and we rather get to know of that, because as Michael is indicating, there's a high level of trust among us in the cohorts we have, and that is really benefit, everyone is benefiting

From that, uh, and people or participants, they really learn from it each other as well. Let's linger some time with the problems, um, and obviously in any startup there's a lot of problems, so let's talk primarily about investment capital, uh, because there's a reason why you have an investment arm as well. What is the problems with startups

In this space, how much capital do they need, are the investors out there? Michael, can you just walk me through the investment landscape for these startups, what are they struggling with? I think the biggest challenge for the startups is, uh, making sense, so to speak, uh, in a world where SAS cases and all kind of things are sort of, yeah, running with the sort of the better part of the

C, at least the attention, you could say, more than anything, so they're sort of struggling to get attention because they're easy to brush aside as being just another niche thing, I don't really get it, uh, kind of thing, uh, so that's one of the things that they struggle with. It's quite difficult to get the right people, uh, in, so to speak, so that's one thing that they're struggling with, and

The other is the fact that it's hardware, uh, a lot of the time there, it's connected to hardware, and that alone actually pushes quite a lot of star investors away, you could say, so those are some of the kind of things that they definitely are struggling with. They do get investors anyways, and we actually see quite a lot of the startups that we work with have, uh, investments and all find investments

Along the way. I think also one of the things we are bringing to the table in sou invest is also the fact that there's an institutional investor that has invested, and that definitely, we, that was a hypothesis we had when we started out, and we invested in six cases so far, and some of the cases are starting to get their new investment rounds in place, and it has definitely helped them having an institutional investor on

Board that gets it, the fact that an industry investor is actually the most important part, there's somebody who actually understands to space. Have not only supported it with it sort of moral support, we actually invested in it, and that's the big change for us, because in the past we more had the moral support, we been part of the accelerator, I could be talking about why it made sense, but the fact that we now

Also invested sort of raises the bar of the support that you're giving, and I think that's an, for us, that's another add value for the in the program, is that you actually get that, uh, part working as well. Validation capital is really important, and I will try to reserve it a bit more for later part of the conversation, because I really want to understand the problems more before we

Sort of go into it and sort of what the benefits are from that, but I can assume one of the problems is also the lack of investors in general in the space, you know, I can't imagine that this is, you know, where people dive head first into investment space. Is this like primarily like corporate investors, like, you know, companies that succeeded before they invest traditionally in the space, so what's sort of the persona that people

Meet? That's very diverse, uh, also steming from the fact that we have what, five different nationalities in the startups that we, they come from five different countries, so it's very different, uh, the startups we have, uh, we have one startup for instance from London where they are industry people actually investing in that one, so that's more of

An industry case. What we also see is that it's, uh, geographically it's something, it's the local heroes, you could say, it's the local investors, so it's much more about the vicinity, it's more about the local connection, you could say, uh, so that's one thing. Some of them it, we see a few it investors, all of them what I'm talking about now is all business angels,

It's very tional investors. I've seen a few, uh, deep tech investors, uh, in our previous cotes, um, but it's still difficult for them to sort of understand the tech when you're doing tech sales to corporates, the whole, the whole way that business works, you would say, so it is, it is very diverse, and it's usually angels, and it's angels that have some sort of either

It's geography, it's because it's the local startups, they want to support something that's local, or they have some sort of interest, they play music, they have, there's something in their, in their personal life that does that, there are some sort of, there's a bit of conor in it as well, that's what we see. And I think it's also important to say, just to add to what you're saying

Here, there, that there are very few investors out there that solely would invest in sound, because they maybe the as saying they don't get it, or they at least not too, uh, knowledgeable about the area, so a lot of time we also spent, uh, dialogues with the startups around what bigger agendas are they tapping into, because sometimes you get so focused on your own solution

That you forget that you are actually within health, or you are tapping into the sustainability agenda, and that's maybe the talk you need to have with the investors, well knowing it's maybe not the talk you have directly with your customers as such, so I think also that there's some learning there for the startups to get that message over the

Counter, you would say. There's one thing that I can see, uh, just reasoning, uh, the information I have now, that can be a problem, is you have said that a lot of the success or at least the indication of success comes from the hardware. You've also said that the prime investors in the space are angels, like, that doesn't necessarily fit too well. Again, this is, it rarely becomes

A VC case, and you know, anyways, hardware is not necessarily always a wec case, but like the heavy money to take something from a prototype to a commercialization in hardware is, well, it's a lot of money, so how do people solve this, do they solve it? They do solve it, but it takes time, and I think that's the other thing that's different from traditional

DC cases, is that, uh, the time it takes to do semi-organic growth, let's put it like that, uh, is just something that takes time, and it's slow, slower in the beginning than a lot of investors would usually, uh, expect. That's not the same as you can't actually achieve, it's definitely possible, we have one company

That have on the better side of 70 million euros in turnover, and 80% of that cap table is still on the founders, uh, W slide, so, and it's a hardware product, it can be done, uh, but about being clever and actually expecting and, uh, accepting that the early stages, the first years will take time, and it

Will take more time than say a SAS case or something. Oh, sorry, no, it's just to say that's also, you ask about what is that we have learned over the years, I think also what we have learned is that there are quite many startups that focus too much on a single part of their product for too long instead of reaching out to experts, a lot easier, a lot earlier, sorry. So what we have

Seen is that more and more startups actually er reach out, uh, for the competence we have here, so they actually begin to use sound of Denmark as their competence center or as their development partner, and that's a little bit of a new thing, uh, where formerly we were maybe more matchmaking place, uh, where now they actually come and say, can you help us

With that, because we are a group of founders or we are a little team, but we don't really know anything about electronics, for example, can you help us with that part, so I think that's also has been a change in the market that maybe the startup has been, yeah, they are, they faster reach out to for help than they maybe did some years back. I'm sure what the, and I, and I have

An idea of it now, when you talk what the, what the, uh, typical, um, narrative would be towards investors on like what type of case this is, according for example to my research in music tech, which I do a lot, I argue that generally speaking, um, the most attractive way of positioning music technology companies, especially from a software perspective, is that

Valuations are generally speaking lower, uh, and exits are also lower, but the road to getting there is quite fast. There's a lot of ecosystems consolidating, which means I believe the generally speaking the most optimal investment narrative to have when it comes to returns is, um, multiples, uh, so

Low valuation, low exits, but at a faster, uh, environment than other SAS products, like there's a lot of SAS products out there, tech products that needs to go to certain stage of revenue, uh, to be attractive for acquisition. Web music tech often times a strategic, uh, acquisitions as a part of a bigger ecosystem plan, that's at least what my research, uh, points towards, but with soundtech and again I'm just trying to

Make these general statements, um, especially when it comes to the hardware, um, perspective, the investor narrative would that be, this is a question I'll trying formulated, that this is a, um, long-term investment speaking that has a higher chance of margins for dividend payouts of owners and then a larger exit of point when it starts becoming a

Legacy company, like what is the usual case, what is the usual narrative you sent generally speaking for investors? That's a very tough question to do a generalization on, um, and I need to sort of look at the stratus we haven't invested in, but status we've been working with in the past, right, so I think they fall

Into at least two categories, let's divide it into that. So there's the industry exit, there's the fairly fast, say few years industry exit, where it's a technology, uh, really difficult to get it sold, really difficult to get it, uh, into a lot of products, takes a lot of time, but then an exit opportunity arises,

And that, uh, means that the investors on board actually gets a really good deal, because they have some sort of unique thing that one in, one in the industry actually wants, and they just would outright buy them basically, so that's one, that one narrative is that's what you'll see, and then it's a three, four year, uh, time frame that you're looking at, so fairly fast. The other is

More building a brand, uh, products that are actually consumer facing, and where it's more like a standard consumer cas, could say it's more about building a brand, building the business that way, that's kind of the two scenarios where it's more like a, and then it's more like a nor normal sort of consumer facing product type, uh, never mind that it's an audio product, it's, that's not the important side of it, I think, I think

I do think it's an important point to underline again, that you're not selling on the fact that you're a soundtech company, you're selling on whatever solution that you're doing, and you need definitely to frame yourself in categories in investors usually look at, software platforms, hardware products, whatever, consumer, B2B, whatever, you need to, you need to understand the frameworks that investors are usually looking at

And you need to figure out what part of that framework, where do you fit? And yes, there's some sort of sound in it, but it's that's not the important part. Yeah, so there's really about the, well, first of all, the industry markets fit from one side, and then there's the product market fit from another side. Um, what do you see, um, really when

companies reach out to you, what's the sort of the, um, mixture, the percentage between those two? Again, I know we're doing generalizations, but let's just stick to it for understanding where people in that is it mostly consumer facing or is it B2B industry? What do you see? I think that's really a mix, um, so it's not because we favor one or the other. I

think what we mostly see, if we coming back to the phe, they are within that the whole, um, market validation part is something where many startups tend to think about it when they, oh, when we get clos closer to launch, then we need to talk about it, where we try and force them in our program that they already in the initial process of looking into the problem and the solution they're

bringing to Market also need to get that validated uh so there's also a validation of the problem order the solution and not just a you could say a traditional commercial Market validation when you're getting closer to launch and I think that's has really been a wakeup call for many of the startups in our program how valuable that information is because it will be a yeah big

problem if you bring a product to market where you haven't really tested anything, uh, on beforehand and spent a lot of time and money. Uh, so what we see is that hands-on approach and where startups actually are really being forced out to talk to potential customers or collaboration partners for that matter. Uh, that's really where it creates

that, uh, wow feeling and aha for those startups saying, okay, now I actually better understand my own business then before I joined the program. But how, what kind of persona are the founders? And you know, I have my own idea, you know, it would probably people like me, I studied, you know, electrical engineering and I out because it was not creative enough and I did like a to my degree which is also

nerding its own right. So I can imagine most founders in this space come from a technical background and I again I'm just assuming and you can confirm more it, which means that the, um, the charismatic hustler which is often times associated to a more Americanized version of founders which are still relevant in all territories might be something that Jing speaking is lacking.

Is that true or like? I wouldn't say so. Yes, there we do have some very nerdy, uh, founders of course we do, but we also have the other side of things, we also have the more commercial thinking outgoing, uh, type of personas as well. Uh, so it's not, it's not, uh, again, it's really difficult to box them in and put them into one box, it's very diverse in many ways. Of course it's

also part of our screening process as well. It is really hard to get if it's really nerdy out of university kind of thingy and there's nobody on the team who has any sense of business, it's a tough sell for to us basically because we know that this is going to be complicated in the long run. Not to say that we don't, we wouldn't

invest, but it's just it's a definitely a flag for consideration, let's put it like that. Uh, I think if I try to say there some kind of, you say common picture, I would say for all the startups we have work with that had really succeeded is that all of them individually have some kind of domain knowledge, whether or not it's from a technical perspective or they

know something about sustainability and design or they maybe are familiar with the live scene, uh, internationally, I don't know, but they have some kind of, you can say ingredient, uh, themselves that has actually tricked them into becoming an entrepreneur and starting the company. But what they have been then also good at is establishing at le at least a little

team around them and as Michael is also indicating, we are catching them at the time where they do have a small team because that's a criteria for some accelerator that they do have a team, otherwise they'll not get on board. But of course we can help them prior to that in sound Hof, but, uh, accelerator wise, um, they need to have a team. So it's not just nerds, I think. No, also touching on

something else and that is the, they all have either personal experience or some other insights into why this product, uh, or this problem needs solving and why this product or this solution will actually benefit from it. So they all have experience in the field that they're in and they all have some sort of background that does either from

industry or from education or from whatever part of their life, but they do all have insights into why is this a problem and is it worth solving. And that's more what we basically also are looking for is that they need to have some sort of intrinsic knowledge about this field and this particular problem that they're tackling. Yeah, what is it investors are looking for? Like what kind of, again,

you have a screening process of having a healthy team, but I can also assume that there's some sort of, uh, persona, uh, that investors this space that has this industry knowledge is looking for. Is that, is that like it's a repeating pattern you seen what attractive for them? No, I don't think so actually. I think I think that's, uh, that's very

different, uh, from investor to investor as well. Uh, I think investors are also very diverse in many ways. They, we do have of course our stereotypes, but I do not believe that they're actually that, uh, real so to speak. So it is, it is quite diverse and the founder teams we have are quite diverse actually. Uh, and the same goes for the

investors. Yeah, are there any con common denominators you, I think you touched upon it very, um, briefly, like investors that have some sort of touch point with the product of the industry, is that like, is that the only common denominator you see or is there others? I think for all investors I think the team matters, uh, the growth potential, the scalability, that's common for all. I think what

we have started out with some years back is actually starting a little bit a crusade because we meet too many investors that say I don't invest in sound because I don't understand it. And then I often say, but you don't understand robotics or windmills either, but you still can, uh, invest in that in that part. So I think there something about that investors, um, they need to see whether or not there's a business

potential, a, and the way we look at it is that if they are just a little bit in doubt of whether or not that there is a potential or that the solu solution is right, then use us, uh, as their sounding board. Uh, let us try and, you can say, validate whether or not this is a good stuff or whether you should derive from, um, from investing in

it. So I think a number of the things that we or the offers we have towards startups on the market validation is actually also something that the investors could benefit from if they wanted to reach out, um, and get that knowledge. We hav't seen, yes, but it would be love, we would love to do it. I can imag, but one of the things that I see a lot, um, because a lot of the companies we

work with have a, um, even, uh, the first F first line of contact with artist or second line of contact with artist, which means that often times startups has an assumption that, well, music, uh, is, um, it has a sentiment to it, there's an emotional aspect of understanding music, having a relationship with it. One of the things that I a lot is actually you might mistakenly believe that's your

strength. I believe that's actually your weakness because there is a sentiment associated to it, they, U, automatically either have negative association to it, which you know is negative inherently, or positive, but it means they also have a formed opinion, which means they also disqualify themselves for, um, due diligence for example, because if it's positive, they would also know that they don't know

anything other than that they appreciate it. So there's no, in my opinion, there's no real good angle from coming from sentiment into music investment like that. It doesn't really exist unless you just spot on with one particular investor and how they feel. Generally speaking, I believe really trying to steer away as much as possible you can from that sentiment is the better solution generally speaking. Is that also

what you see? Definitely. I think that was also what I was trying to cut at previously is that you need to fit the brackets where the investors are usually looking. So the types of startups that or the way that you sort of divide startups into different types, you need to figure out what those types are. The fact that there's audio involved or sounding involved is something that is on a solution or a problem based kind

of thing, but it's not in itself something that qualifies you, uh, in any way for any investor, including investors who have an audio background. Yeah, especially in investors with an audio background, they're almost even more reluctant to invest, uh, because the fact that it's audio, they just know that can be difficult as well. And the thing that you know the most about is probably the where you can see the most problems as well. So

sometimes, uh, often it's not industry investors that are the best investors with a background in industry, which was the original assumption, which has proven, uh, not to be correct at least in a broader sense. But I do agree in the in the sentiment and the that side of it is actually not something to promote at all, it's actually you need to prove that there's a good business here,

that there's a growth market and all the all the standard things. It's the same things that you'll be doing for any other startup so to speak. So I do think that we have a tendency and had a tendency in the past to overemphasize those kind of things which are more emotional, which at the end of the day doesn't come down to what we do when we have an invest in side of things. But there's something about the

you could say the commitment and what strives you and that's of course also an emotion as such, but that we have seen across, now we have been working with the startups from nearly 20 countries, uh, so very different cultures we work with and there's some kind of pattern, uh, where we begin to see that there are some countries or cultures where you really you

you really aim for it, that's a make a break for you, where other culture cultures are a little bit more reluctant and say, yeah, it's a little bit of a lifestyle kind of thing for me now and if it I don't make it then fine, I just wanted to try it out. Um, so there's a nerve to it I think that also the investors look for. Do you, do you have fire in your eyes? Do you really believe

in it? Can you sell the product, uh, or sell yourself? Um, I think there's something there we also look for when we select for the program and of course also Michael does. Yeah, and that goes more with the territory of the international side that one of the things that we experienced there is that without bashing da startups, there is a tendency there that there are some of those startups that I'm driven more like

a this is what I do now, we'll see where I make it, whereas a lot of startups we work with internationally are like this is what I want to do and I'm passionate about this in a way that this is the most important thing for me ever. And that's something that the investors can and appreciate at least. So it's an interesting side to it as well. Yeah, and there is about there I would though say that there's something about

audio, uh, and sound tech where a lot of people are more passionate about it maybe than sort of the average, you could say there us, they have some sort of emotional thing, emotional attachment to the fact that for you and I think that shines through in the way they present themselves at company of the product is that they're very passionate about, uh, in a way that not is not necessarily

always the case when I see other startups pitch which are in more sort of whatever is that they do, but it's maybe not something that is so emotional you could. So where do you guys place yourself in a investor portfolio mindset, uh, you know, let's take angels or just for the ease of it like a super angel or family office standpoint, um,

when you when it comes to your startups in general, what's the value proposition you bring to the table there? Like how does this differentiate from the other startups? Why is this is attractive in that connection? I think it comes down to the financial side of things at the end of the day. Is this, do we have a chance to make a return on the foot? I mean again, you sort of strip away all the, uh, the emotional side of it and the

argumentation is basically because we're an industry investor and we have the setup around the accelerator program with the competences and the facilities and all these things, we have a better chance or our startup or investment cases have a better chance of making it basically. Uh, 80% of the startups we worked with over the years are still alive, which is way better than the average. Uh, so we have some merit to

that claim as well. Uh, and I do think that's the that's the cell that we have is that because we have that ability to spot the startups right and understand them and select them correctly and help them afterwards, we actually end up with startups that have a better chance to survive and make it basically and therefore also to make a return on the fund. I think that's

really interesting, I want to explore that more. 80%, that's an incredible number. Um, is that so would that be because people have better expectations going into like let's say less delusional, uh, idea of growth, they're more patient, they don't over speed up things? Like why I need to understand this, why do you guys believe, and of course your participation matters, but in

generally speaking, why is this the survival rate so high? I think it has a lot to do with our selection process. Uh, we are so lucky that H every year we get around, I would say close to 500 emails from people that want to, you could say learn more about the product and the program we have, H,

and out of these we have around 50 that apply. So it means if we are only looking for between five to nine startups in a cohort every year, we, uh, we are fortunate to select those that we believe in the most. Uh, and a part of that, you could say believe, and now we've talked about the business aspects and the team, but it's also whether or not we think we

are a good fit for them. So we are also quite honest about that, they should fit into what we can help them best with, and also whether or not they are coachable. And you can always laugh about a little bit about that, aren't we all coachable in some way or another, but there needs to be some kind of good, uh, chemistry, uh, between us as well. So I think we capture

those that that we really believe in and and maybe that's also what we can see in the survival rate of these uh that they are also good they are good uh that's the thing and then we give them a helping hand through the program there must also be a opposite of the F fast unicorn mentality like because that's sort of what you see in you know especially in the you know Americanized version of Founders

Journeys it's just like just go for it raise capital and fail fast and move on that kind of stuff and shoot for the stars and then die really hard if you don't like that's you know that's mentality that's that is um the success of that is incredible and the graveyard is everywhere is it be

Is it because you guys lie on the other part of the Spectre also or like what explanation. I do think to some degree yes this is not uh we're not on a unicorn hunt here uh that would be foolish to do if you look at how many sound tech companies that are out there that have actually made it so far as to become a unicorn it's there are far and a few between and those they are that in

All businesses by the way but so I do think that's one part of it is that we want only to have cases that have potential to grow and become big companies that's definitely what we're going for we are not going for companies and we're not expecting companies to go on that really fast unicor growth Journey a few of them

Might uh but the majority won't so just from that I think there's there is it's a different uh trajectory that they're on uh anyways um the and the other thing actually ties a bit back to what we talked about before About the Passion side of things and I do think there is some stamina in these Founders as well which might be different from

Others because they're very passionate about the business that doing they're very passionate and they that might actually give them sometimes the extra uh or the energy to go the extra mile which might be the thing that they need in order to make it. Yeah I think it's really interesting and I think that also what might position Founders in displace to Pivot

More over a longer time or because you know if I'm sometimes perplexed I speak to a lot of Founders also outside of Music Tech and I hear Founders who are on like long difficult Journeys where they saw an opportunity in something they might know a bit about but then they jumped into it then they be became experts over time and for me I just I don't understand why you would have that stamina because you know sure

The success can be attractive but as any experienced father would know like that's not enough like the journey is way too difficult way too risky to have that as the primary goal um and that's where I'm very perplexed about how that at skill happens but again I think just to support your claim that's might also be what's happening here and what also

Speaks to the longevity of it is because yes there's a business goal there's absolutely needs to be that on behalf of investors and themselves and their families my wife in my case but there's also just you know I would do this for free do you I mean like you know if that's not healthy I'm not saying people should do it I'm just I would and I know quite a few Founders

That have the same way I mean uh so and I think that it's important not to make it into something where it becomes all Rosy and stuff but I do think there is some passion about the field that they're in and the problem they're solving uh so that might actually be the reason why they stay on and I do think that stamina has there's some real good

Things in that uh in the sense that actually sometimes mean means that you have a bigger chance of actually making it because the timing side of things is really difficult to control uh you can't really control the timing whereas but if you're good at staying and still figuring out where is the path you heighten your chances of success in my h so if I can again I like simp

Simplifying things because that's sort of how it work as a human being and I know that boxes are not boxes they're just made up but um if you were to simplify an investor parallel storytelling is if you let's say you would have a traditional investor that you know where one side is day trading and another one is like ETF funds I can imagine that if you make that comparison investors in the space would probably be

A lot closer to the ETF fund style like yeah we know it's risky money but we also know that you know most likely from a risk perspective we will do okay is that sort of the general mindset people come in with at least from the general Partners in the fund that's the mindset they come in that's definitely what they have attracted them to invest in the fund is that they can see that this is

something that has potential and they know it will take time so that the 10 10 life the 10y year lifespan of of the fund makes sense it's it is what is needed to to make this happen I sometimes wonder a bit with the standard sort of unicorn hunt fund uh that why do you have a 10year lifespan on the font if if if you expect everything to happen within the first couple of years or

Three years or whatever uh I think there's there some built-in dilemas in some of those things we expect it to use the full lifespan of the fund uh to make a return and that is also the promise we made to our investors. Yeah true that's pretty interesting I think that's also like a really important takeaway from this conversation

Is in most startups there's very few Tech startups that could be bootstrapped like for real like at least to come to a level where it would be attractive when it comes to how much it cost being a Founder uh some do it and I applaud it and you know jealous but you know most not uh and startups needs to be aware of this before they go into the

Journey of growing the company and because most likely startups will be needing capital and there just needs to be an awareness that is what you're building does it have investor Market fit and if not could that be a reason for actually pivoting and it doesn't mean that the thing you're building doesn't have value and it's not going to be successful it's just like that's an

Extra element you need to consider when you go into this journey like if you're position yourself of being extra difficult to get Capital historically speaking that also means you have less of a chance of succeeding that's at least you know my presumptions and I think that's one of the things that people miss a lot because I think when people talk about Investors is more like well how do we how do we get to the next stage but it's

Also like well do you even have a case that is positioned for Success because if you don't have at least a hypothetical investor Market fit before you go into this you read it doing yourself at diservice in my opinion is that something you can resonate with. Yes I would say U also because we as a part of the program we challenge their business assumptions so we have

Seen even though we haven't calculated how many that has pivoted throughout the program or afterwards but we do see some that actually changeed completely path uh based on the knowledge they have gained by reaching out to the market or wherever it might be that they want to you could say team up with uh so I think there's something about that where you start at one then and find out

That maybe you need to go in a completely different Direction with what you believe in um yeah maybe this also ties a line over in what we want to achieve as well is that I also have a vision for the a situation where we have worked with so many startups and therefore so many different investors

That have decided to invest in this space and that will over time also turn into an interesting pool of potential investors for new stups that we work with and also investors that have sort of come to understand sort of the business terms that you're in when you work with the startups that we work with and I'm really looking forward to that as well and the other ankle to that is that it's International investors which mean that we have a broader appeal you

Could say it's very different difficult for most stats to actually get broad enough in their Outreach to investors it usually becomes very local in the beginning very difficult in the beginning potentially a bit a bit better uh internationally later on but very few startups are actually live long enough to be subjected to an international investor community and I do think that's an inherent problem for

Wers there might be an investor out there that is a fit but how do you make that contact uh and that's one of the things that I believe we will be able over time to help with and I think see that many of the startups sorry that we have helped over the years we continue actually to work with them after the program so it means it is they become a part of a

Community or an ecosystem that they always can rely upon so these alumni are you can say both important for us but we also important for them in that sense uh that we can be there and support them also when they grow um and what you can say what it has proven also is that they are so happy for what they have experienced through

Us that they also willingly would like to expose it to others so when financial times last year reached out um and tried to rank the leading uh hops of Europe we were among uh those and were actually ranked as the best in the co-working and lab area so there's something about you could say that Community feeling um that

I think we both from an investor point of you but also for the startups H we should continue to nurture I think as a as a closing note to the conversation which has been great and thank you so much for being here with your time is I really love the notion of there might be someone out there and how do you get there um and I

Think sometimes that's one of the biggest um biggest things for stars to consider in this space Also music tech I know they're quite similar is that everyone knows there's no straight line sure but sometimes in these industries there might be more circles than you might expect just because you kind of waiting not waiting but

You're working towards the right luck the right connection the right thing because this there's far between the right people but they're out there so often times you just need to go the Journey of becoming attractive or position having that intro more so than other Industries where because there's more investors like on a statistical

Level it's if you if you speak loud enough and you have something with actual value the chances of being heard might be higher than here and I think that's really worth cons like really thinking about like just because it takes a long time and sometimes it's not you know on purpose that it takes a long time doesn't necessarily mean that you don't have a great startup it just means the lucky

Moment will probably happen if you work hard enough and long enough and it might take longer than other people might expect from par Industries yep but they're out there um and I think that's sort of what I admire by well of both soundhub and S invest is that you guys are willing to um being the lower

Barrier of Entry of making those connections happen um because I believe that's one of the most important things to on a long-term perspective making this an attractive place to be a founder and at the end of the day that's what I'm obsessed about not so much about the companies but the founders because this is people who create Innovation and if they succeed with one startup chances

Are that do something pretty great again afterwards so it's a repeating thing um but Michael and Lee this has been um really great thank you for your time and we'll talk soon thank you thank you