Firm of The Year Finalist: Xavier Lazarus of Elaia Partners on the rise of AI in venture capital and future trends

Jun 01, 2024

Celebrating a new finalist in the Firm of The Year category at this year’s European VC Awards, this episode dives deep with Xavier Lazarus, Partner at Elaia Partners.

We’re very excited to have this conversation with Xavier because, as you already know, Elaia has achieved many things in +20 years of activity. Elaia is a French venture capital firm focused on European digital and deep tech startups, from early stage to growth development.

Together with Xavier, we’re gonna tackle the following topics:

Generative AI & how it has been shaping venture capital
Future AI trends and what we should expect from this industry
The recent 200M round they have just participated in with H company
The rise of Paris as a venture ecosystem and innovation hub
… and some other exciting topics that we invite you to discover by yourself.

Watch it here or add it to your episodes on Apple or Spotify 🎧

Big shout out to our Firm of The Year Sponsor Haynes Boone.

Don’t take it from themselves, take it from one of their long-term clients, Joe Schorge:

"Having worked together for many years now, they fully understand the Isomer ethos and process, and we really appreciate the value that this long-term relationship brought to this mandate from start to finish. We look forward to continuing to work with Karma, Ronan, Will and the rest of team.”

Naturally, we’re incredibly excited about having the Haynes Boone team with us as sponsors of the Firm of The Year Awards - yet another testament to their support for the EUVC ecosystem. We strongly encourage you get in touch with Karma and the team for a great experience 🔥

Get in touch

Chapters:

00:44 Diving into Gen AI and H Company
01:48 Xavier's Transition from Boutique to Franchise
04:58 Exploring H Company's AI Innovations
12:03 AI's Impact on Various Sectors
15:17 Future of AI in Education and Beyond
32:14 The Rise of French Tech
32:26 The Impact of AI and International Investments
34:02 Challenges and Strategies in Fund Modeling
36:28 Portfolio Management and Risk Assessment
43:52 Elia's Growth and Expansion
44:50 Strategic Partnership with Lazard
54:30 Personal Insights from Xavier Lazarus
58:23 Reflections on VC and Entrepreneurship

✍️ Show notes

Celebrating Achievements: Xavier Lazarus on the European VC Podcast

Xavier Lazarus, a prominent figure in the European venture capital scene, is welcomed to the European VC Podcast.
Xavier is congratulated for being a finalist in the prestigious Firm of the Year category at the European VC Awards, highlighting his and his firm's achievements.
The podcast episode aims to delve into innovative technologies and their implications for venture capital, promising an insightful discussion.

GenAI Revolution: Investment in Action-Oriented AI

Xavier discusses the recent substantial investment of 220 million dollars in H, a groundbreaking startup in the GenAI sector.
H’s focus is on developing AI that not only generates content but also performs specific, reliable actions, addressing a critical need in the AI landscape.
This approach sets H apart from other AI firms that primarily focus on large language models like GPT, which excel in generating text but lack action-oriented capabilities.

From Guessing to Doing: The Evolution of AI in Business

Xavier emphasizes the necessity for accuracy in AI applications, particularly in business environments where precision is crucial.
He explains that while current AI models like chatbots and copilots are effective at guessing answers, many business tasks require exact actions to avoid costly errors.
An example provided is financial transactions, where even a small mistake, such as an incorrect digit in an IBAN, can lead to significant problems, illustrating the critical need for precision in action-oriented AI.

AI as the New Water: The Inescapable Integration of Technology

Xavier likens AI to water, suggesting that it will become a fundamental part of daily life and various industries, much like the internet and mobile technology have.
He predicts that AI will be integrated into countless applications, making it ubiquitous and essential for modern functioning.
The conversation touches on the incremental yet profound changes AI will bring, reshaping how we live and work in subtle but impactful ways.

Coding and Education: AI’s First Major Footprints

Xavier foresees the first significant impact of AI in the fields of coding and software development, where AI will dramatically enhance productivity.
AI's ability to assist in coding tasks will allow developers to produce higher-quality software more efficiently, addressing the current talent shortage in the industry.
Education is another area poised for transformation, with AI providing personalized learning experiences and supporting educators by handling repetitive tasks, thereby allowing teachers to focus on pedagogy.

Navigating the AI Revolution: Policy and Regulation in Europe

Xavier discusses the importance of Europe embracing AI innovation while also implementing regulations to ensure ethical and secure deployment.
He stresses the need for a balanced approach that supports technological advancement without stifling growth, addressing concerns about privacy, security, and data sovereignty.
European policymakers are urged to foster an environment where innovation can thrive while maintaining oversight to protect societal interests.

Building a Tech Hub: The Rise of Paris in AI and Tech Innovation

Paris has become a significant hub for AI and tech innovation, driven by consistent government support, strategic policy changes, and a robust entrepreneurial ecosystem.
Over the past 12-15 years, initiatives like public funding for seed investments, tax incentives, and the creation of BPI France have nurtured the growth of startups.
The success of companies like Mistral and H highlights the effectiveness of these efforts, establishing Paris as a leading center for AI and tech innovation in Europe.

Big Bets in Venture Capital: The Strategy Behind Large Investment Rounds

Xavier explains the strategic rationale behind making large investments, such as the 220 million euro round for H, within Elaia’s portfolio.
Elaia employs a sophisticated proprietary fund modeling tool called Emmy, named after the mathematician Émile Borel, which uses Monte Carlo simulations to assess millions of potential scenarios for portfolio development and fund returns.
The Emmy tool helps Elaia make informed decisions by simulating various investment outcomes and understanding the impact on the overall portfolio.
The creation of mini portfolios within the larger fund allows Elaia to diversify investments and manage risks more effectively, ensuring a balanced approach to high-stakes ventures.

Strategic Expansion: Elaia’s Partnership with Lazard

The partnership with Lazard marks a significant step in scaling Elaia’s operations on a global level.
This collaboration provides Elaia with access to Lazard’s extensive capital resources and global distribution networks, enhancing its fundraising capabilities.
Despite the partnership, Elaia retains independence in its investment committee decisions, ensuring that its investment strategies remain aligned with its core principles and objectives.
Xavier describes the deliberations behind the partnership, emphasizing the importance of cultural compatibility and the strategic benefits of aligning with a global partner like Lazard, who has no competing private asset operations in Europe.

From Academia to Venture Capital: Xavier Lazarus’ Journey and Philosophy

Xavier shares his journey from an academic background in number theory and pure mathematics to becoming a venture capitalist.
His academic experience instilled a deep appreciation for tackling complex problems, patience, and a commitment to intellectual rigor.
In his venture capital career, Xavier focuses on deep tech investments, nurturing talent, and fostering innovation, reflecting his belief in the transformative power of science and technology.

Looking Ahead: Elaia’s Vision and Future in the VC Landscape

Xavier outlines Elaia’s future strategies, emphasizing the importance of performance and sustainable growth in the competitive venture capital landscape.
He discusses the firm’s approach to scaling while maintaining high investment standards, aiming to achieve balanced and consistent returns.
The conversation concludes with a vision for Elaia’s continued impact on the venture capital industry, driven by a commitment to innovation and excellence.

There’s nothing we like better than getting Europe’s best and brightest together with good food, drinks, and conversations that go truly deep.

Fund Modelling Workshop & Mixer | 5th of June | 🌍 Berlin, Germany | Join waitlist.

European VC Awards | 4th of June | 🌍 Berlin, Germany | Get tickets.

📅 Upcoming virtual events

From time to time, a podcast is just not enough. Check out our roundtables and live events below.

🏆 Firesides with the winners of the European VC Awards

Fireside with the Newcomer of the Year Winner | 13/6, 12-1:30 PM | Register here. Hundreds of new VC funds come to market every year. But only ONE will win Newcomer of The Year. This is your chance to meet the winner firsthand.

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