In this episode of Nothing Ventured, host Aarish Shah welcomes Joe Knowles, a partner at Smedvig Capital. Joe shares insights from his diverse background as an Airbus engineer, investment banker, and startup founder. He discusses Smedvik's unique approach to venture capital, emphasizing patient capital and a focus on integrity and founder trust rather than chasing hype cycles. The conversation explores the reality of the power law in venture capital, highlighting that while there are thousands of VC-backed companies in Europe, a small number account for a significant portion of exit value. Joe also addresses the advantages of being a single LP fund, the importance of execution in the commoditized tech landscape, and the need for improved physical infrastructure in Europe to support ambitious growth. Tune in for valuable perspectives on navigating the venture capital landscape and the future of value creation.

Timestamps:
00:00:00 - Introduction to Joe Knowles and Smedvig Capital.
00:00:42 - The Reality of the Power Law in Venture Capital
00:01:24 - The Golden Age for Value Creation and Commoditisation of Code
00:01:50 - Aarish Shah's Background and Podcast Introduction
00:02:33 - Joe Knowles' Background and Recommendations
00:03:11 - The Power Law Myth and Its Impact on Venture Returns
00:05:44 - The Symbiotic Relationship Between Outliers and Middle-Tier Companies
00:07:23 - The Importance of Good Outcomes for the Ecosystem and Economy
00:08:56 - Venture-Backed Companies in Europe: Key Statistics
00:10:25 - The Overlap Between Power Law Strategies and Middle-Tier Strategies
00:11:18 - Can VCs Pursue Both Power Law and Middle-Tier Strategies?
00:13:24 - The Impact of AI and Software Costs on Venture Capital
00:17:06 - The Reckoning in AI and Its Impact on Venture Capital
00:19:58 - The Shift in Venture Capital Strategies Due to AI and Market Dynamics
00:21:50 - The Role of Single LP Funds and Family Offices in Venture Capital
00:23:37 - The History and Structure of Smedvig Ventures
00:25:18 - Dependence on a Single LP and Fund Size Discipline
00:27:09 - The Branding and Messaging Challenge of Single LP Funds
00:28:41 - The Trend of Family Offices Entering Venture Capital
00:31:09 - The Flexibility of Single LP Funds in Exits and Returns
00:33:02 - The Importance of IRR and Flexibility in Single LP Funds
00:35:12 - Understanding Venture Capital from a Founder's Perspective
00:37:19 - The Opacity and Decision-Making in Venture Capital
00:38:07 - The Commoditisation of Code and Its Impact on Venture Capital
00:41:01 - The Importance of Speed and Non-Code Moats in Venture Capital
00:45:09 - The Role of Domain Expertise and Market Niches in Venture Capital
00:47:05 - The Augmentation of Coders and the Contextual Nature of Expertise

FindJoe Knowles online at:

LinkedIn: https://www.linkedin.com/in/joe-knowles-196a896b/
Twitter: https://x.com/joeknowlesuk / https://x.com/smedvigventures
Smedvig Capital: https://smedvig.vc/

This episode is sponsored by EmergeOne, fractional CFOs for venture backed tech startups from Seed to Series B.
Get in touch at https://emergeone.co.uk/contact-us/ or join the CFO team at https://emergeone.co.uk/join-the-cfo-team/

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