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The Hiro Capital boss says it's unlikely the VC will back another world model or LLM startup.
The boss of the VC firm that hit the headlines when it snapped up Yann LeCun and Nick Clegg says it invested around €50m in a co-leading investment in LeCun’s much-hyped world model startup AMI Labs, as part of the startup’s $1bn plus raise announced earlier this year.
Hiro Capital’s investment- co-led with Cathay Innovation, Greycroft, HV Capital and Jeff Bezos’ Bezos Expeditions-marks the first deployment out of Hiro Capital’s Hiro lll fund, a €500m-plus fund investing in spatial AI, robotics, games, space and defence, which Hiro is still out raising for.
New fund
On raising funds for the fund, Luke Alvarez, Hiro Capital co-founder and managing general partner, says: “We are in process. We have really good demand from institutional investors and sovereign wealth funds.”
However, Alvarez did not share any names of the investors in Hiro lll, citing client confidentiality.
The fund is investing at a multi-stage level, deploying cheques of between €5m and €50m, targeting the so-called scale-up capital gap in Europe.
Clegg, Meta’s former president of global affairs and former UK deputy prime minister, joined Hiro as a general partner, while LeCun, Meta’s former chief AI scientist, joined its advisory board.
Hiro’s strategy is to lead or co-lead an investment round but it’s “not religious about it”, Alvarez said.
Would Hiro, based in London and Luxembourg, invest in a Large Language Model company, like France’s Mistral, or another world model company like AMI Labs?
Alvarez said: “We have done one investment in world models. We probably won’t do more of those. We are really interested in applications of those world models, in things like autonomy and robotics. We certainly don’t think there is much opportunity to invest at this point in competitors to Anthropic and OpenAI for language and code foundation models.”
Appointment of LeCun
Hiro’s appointment of LeCun in December last year to its advisory board appears to be an act of foresight, given Hiro’s investment in AMI Labs just months later.
Alvarez said: “With our relationship with Yann, we did get an early heads up that he was leaving Meta and was going to set up this amazing thing. And we thought that is so perfect within our strategy, we absolutely would like an opportunity to invest in that and maybe lead it. And that is what happened.”
Hiro has a core investing team of around 10 investors, mostly based in London, with a couple in Europe, which is complemented by Hiro’s advisory board, which also includes former Australian prime minister Malcolm Turnbull and British astronaut Tim Peake.
The advisors are partly employed to help unearth the most promising companies of tomorrow in their specialist areas.
“We get amazing AI entrepreneurs who want to work with us because of Yann,” says Alvarez.
Appointment of Clegg
Hiro is Clegg’s main gig, says Alvarez, with the former deputy prime minister also sitting on the boards of UK AI startup Nscale and edtech firm Efekta.
Alvarez says: “It’s his relationship with Yann, who is an old friend of his, who brought Yann into our orbit and our advisory board. He has been great on intros, great on deal flows, lots of people reach out to him because of his time at Silicon Valley. In due course, he will sit on the board of Hiro Capital’s portfolio firms.”
Last year, Clegg caused a bit of an uproar when he said a multibillion-dollar tech agreement announced to coincide with Donald Trump’s state visit to the UK represented “sloppy seconds from Silicon Valley”.
Clegg said the deals, heralded with great fanfare by the UK government, were “mutton dressed as lamb” and would make the country ever more reliant on US tech.
Alvarez says: “I think Nick and the rest of our team are strong believers that Europe needs to build its own globally significant companies.”
Investing in founders
So what does Hiro look for in today’s founders?
He says: “Our fund is predicated on the thesis that we are in the early years of a platform shift in tech. These platform shifts come along every 15 or 20 years. The next big shift is where computing moves off the 2D screen in your pocket or on your desktop and into the world around us.
“And where AI moves off of language and into atoms and manufacturing and logistics and movement of people. So we want entrepreneurs who are swimming in the tools of the technology that makes that possible. And want to build really big generational ambitious things that make the world better.”
Why should founders choose Hiro?
Why should Hiro, founded in 2018, win, given the best startups have many suitors?
Alvarez points to the dearth of big funds, like Hiro, in Europe, compared to the US.
Allied to that, he says: “Part of the difference with Hiro is we are all founders and entrepreneurs. In a European venture, that kind of founder-led background to funds is quite unusual.”
Alvarez, who previously founded and was CEO of Inspired Entertainment, says he has four IPOs under his belt while his co-founder Ian Livingstone, an entrepreneur who helped bring to life Tomb Raider’s Lara Croft and the Warhammer fantasy games, has five unicorn exits to his name.
The third co-founder is LoveCrafts co-founder Cherry Freeman.
Hiro to date
Hiro, founded in 2018, started out backing development studios, esports and other gaming innovations across the UK and Europe.
It also has a focus on the metaverse and takes its name from the character Hiro Protagonist in Neil Stephenson’s 1992 novel Snow Crash, which came up with the name metaverse. Hiro lll is its third main fund to date.
Alvarez says: “Our first two funds are performing in the top quartile to top decile of venture funds of their equivalent vintages.”