Corporate Venturing Reimagined: Sebastien Picard from xcube on Ecosystem Models

Rahul: [00:00:00] 

Welcome back to Understanding VC. I'm your host Rahul. Understanding VC is a perpetual MBA on a single subject, Venture Capital. Today, I'll be chatting with Sebastian Picker, founder of Xcube, a Singapore based corporate venture studio founded in 2023 about their unique ecosystem approach to building ventures.

Also, one quick note. Are you looking to refresh your digital presence? Digital Prism, the Singapore based digital transformation expert sponsoring this episode, has a fantastic offer. First 10 listeners to contact them get 20 free consultation hours. Just mention Rahul sent you. And also learn more from the link in the show notes.

Now let's talk to Sebastian. 

 Hey Sebastian, thank you so much for joining me today. 

Sebastien: Hi Raul. Thank you very I'm very happy to be here. 

Rahul: So, xcube. Is a venture studio. But then my understanding is that, unlike typical other venture studios, you act as a ecosystem co founder rather than like a general co founder for startups.

Sebastien: when you look at the ecosystem,for innovation in a, in country, [00:01:00] you have different,ecosystem partners. traditionally we have incubators and accelerators. these structures support external,startup founders.

In the recent year, what we have seen is,emergence of a new type of ecosystem partner, which is,Startup Studio or Venture Studio. A Startup Studio is actually a bunch of entrepreneurs coming together and actually,doing, creating startup from within. So they don't collaborate with,at the outside,world.

Venture Studio is, uh, bit the same, but is they actually like helps corporation to,excubate. They,the idea that when they want to innovate the core business, they usually excavate the ideas,and give it to the Venture Studio to help them to,co found this day ideas.

so how do. How does Xcube differentiate with other Venture Studios? 

Compared to the other Venture Studios,we don't help a corporation to create one single startups. this is what most of our competitors or friends are doing. We help them actually to build ecosystem of [00:02:00] startups.

So we create what we call a corporate venture portfolio equities for them. 

Rahul: So I'd love to know two things. One, what is,the corporate venture portfolio equity model and also,what inspired you to,create this? 

Sebastien: Yeah. So, as I said, we create a ecosystem of those ecosystem is actually,what we call a It's a composed, it's a group of startups that we unite together to address major global challenges or, some market market opportunity, including this ecosystem.

We create what we call an ecosystem company, or as often it can be called an orchestrator whose role is about. to,create all the synergies and manage all the business flow, innovation flows between the different startups that compose that ecosystem in order to achieve strategic goal and financial goals.

the CVPE model,is actually designed,specifically to foster, uh, collaboration, collaboration. co innovation,and shared resources between the different [00:03:00] actors, but also to bring some kind of community support between them,in order to be more resilient and to face all the challenges that the startup is facing.

to answer your second question the CVPE model,can be traced in my,former startup that I,co created,when I was developing this startup, I realized that,we didn't have all the knowledge,to scale technology and the speed or the marketing power to achieve what we wanted to do.

We wanted to have like a breakthrough innovation, but,the reality of any breakthrough or disruptive innovation,they are all with the outcome of like multiple small, invisible innovation that happen in different sphere. And so if those multiple,invisible innovation are not here, the breakthrough innovation cannot happen.

And then this is what we,realized that, if we want to make our product successful and adopted by everyone, we needed to innovate here, we need to innovate here, we need to innovate here. all of these things coming together. if you want to address,global challenges or pioneer a new market when things doesn't [00:04:00] exist.

Well, you need to have multiple flows of innovation that comes together,and you need to be able to institutionalize them. And then now you have your breakthrough innovation. So.this perspective, actually, when we think about,innovation or systemic innovation, actually,it flattens the world.

it's a shift toward,what we call a flat ontology, where things are conceptualized, not in the traditional sense where you have the micro, the meso, and the micro,lens, but rather as flat. action nets,that are related and connected each other by relational flows.

the idea of the ecosystem is really like rethinking,the way we do systemic innovation by having all of these different,action net and link them together. instead of having this emerging,innovation comingcalming is been a little bit more strategic and try to be most hands-on to actually design all of this little innovation and pull them together.

[00:05:00] For that. you need multiple startups,because they are in different environment. they are different technology, different know-how, but you need to orchestrate them through an orchestrators that link them all together. 

Rahul: So, could you explain this, with an example, like, example that people can easily relate to or maybe one that you've already created?

Sebastien: so usually when you have this kind of ecosystem you want Um, to tackle a major, uh, market needs, market demands, or global challenges, like not like for a single product. when you look at today, the environment,you have big actors organizing into a business ecosystem,and the competition is actually not anymore about business model or product,what is my unfair advantage, but to be part of the, robust ecosystem.

So one of the things that we wanted to talk with Xcube is about financial inclusion. I have a past,in FinTech, so it's my thing. So I wanted to, you know, how we can address,financial inclusion challenges. [00:06:00] And when I was looking at what is it?

And I said, why, why we are not. Um, I realized that,the approach is always like, okay, try to have a one size fits all. But when we look at financial exclusion, actually it's a lot of multiple different problems,that,country are facing or even people are facing. So, yeah. 

So the way of you know, to address financial inclusion is to develop, multiple product market fit to today. When you go in Africa, you go in India, you go in Southeast Asia. While the product that we are offering actually are, that doesn't really like, fit the regionality of the problem.

to make that happen, you need to have some kind of modular system in order to,to create solution that fit. The specificity of the market. To do that, you need multiple startups [00:07:00] working together. So for instance, we use what we call a RealFi.

So RealFi is actually blending traditional banking practices with Web3 technology. to tackle financial inclusion and DeFi is actually great. it's a great thing because you kind of break down a lot of regulatory constraint. You can also break down a lot of cost for the, banks, big, they cannot actually,target those people because it's too expensive.

So the DeFi is enabled that because it's a cheaper,you can do peer to peer,transactions. So the cost of,offering,financial services to,people who are excluded is great. However, It's pretty much inaccessible for them. so what you need is like having this ecosystem,startups, you can do DeFi, but also you need to be able to have some kind of what I call Web3 literacy, teach them how to make that happen.

So we have like three startups working together around that point. We have a trading deck where actually you can do DeFi. We have [00:08:00] a trading platform as a community which helps, people to learn about,DeFi, how to trade crypto, what is a crypto, how to make that happen.

So you have, different products, such as copy trading. But then we put an AI company on the top of that to actually analyze your behaviors. So when you start to trade,probably risk adverse at the beginning, but then when you get your first loss, then you want to recover, and then this is where you become more gambler rather than a rational investor.

So this AI actually analyze your own behavior so you can learn how you behave when you trade, and then they can send you all it where actually you are not any more rational. So this kind of like a mechanism,improve, like with literacy, but then it's not yet enough. You need still have a connection with,the real world.

That's why we have what we call,wallet as a bank, which is basically your wallet. when you have all your financial,asset there, as if it is a bank. But they are on the Web3. Everything is hidden. They don't see the Web3, the people don't see the Web3,element. So they have a [00:09:00] traditional web app but all of the assets are here and they can use it as a bank and they can connect to all the different services that they need.

But to make that connection in order to be regulatory compliant, we need a KYC solution that to not only the onboarding, but also anti money laundering. But when we talk about financial inclusion, usually we are talking with people who can't have access to financial services.

They can't have access to anything because they are under documented. So we need to create, we created a solution which is a decentralized KYC solution that helps actually people who are under documented to build a financial identity over time in order to have access to More advanced,financial services and all of that are different companies working together on their own solution on their own market.

But when we combine them and we orchestrate them, then this is how we can develop solution for tackling financial inclusion challenges. 

Rahul: Yeah, so it's essentially like a [00:10:00] suite of maybe products and services coming together to solve like a common Big problem. 

Sebastien: yes,it's about that.

But instead of being product,independent product,they are a startup developing their self different features. You know, they are the best at doing a wallet. They are the best at doing KYC,KYT. And that actually is a wallet and the KYC, KYT address. Two different people.

Yeah. And the wallet is mostly for individuals or retailers, but the KYC solution is mostly for the banks or for financial institutions. So they are on different, targeting different group of people, but they need to come together in order to tackle financial inclusions. Yeah. 

Rahul: Okay. So this is. What,you talk about when you talk about,collapsing of industry boundaries and shifting,towards a sort of ecosystem,based competition?

Sebastien: Today, with the digitalization,and what I call the dataization, from the economy. You can see [00:11:00] that the creation of value is not anymore around one product, but it's spread around different type of industry.

If I take the example of,Roll Royce, for instance, they are building,engines for airplanes.

And they started to connect the engines with a lot of, different connectors to collect data. And having all of this data now enables them to offer, different services to the airplane industry so that they are not anymore like probably an engine companies, but they are more like, you know, the service as a platform when with all the data they collect the flight, they can help companies to improve, the maintenance of the flight, they can also reduce the cost, they can offer a lot of different solution and services through the data.

so that's where the collapse of the industry somehow just did disappear,because the data actually are transversal and it can enable the person who are owning those data to create other solution,other product and diversify the, portfolio of product.

So, another take on an example, [00:12:00] if you take Grab, Grab started as the Uber in Asia to use taxi, but now they started to move in different industry. You can pay with Grab. So they are entering, they are becoming a FinTech. then we can deliver food.

So you have those platforms that connecting the supply and demand plus the data, you know, actually create some kind of collapse of the industry and now it's more about being part of an ecosystem. We need to think about what is this ecosystem is doing. the competition is about having your own ecosystem but it's pretty expensive and it's very hard to manage.

sometimes it's better to be part of the winning ecosystem. It's great enough. 

Rahul: Yeah. 

Sebastien: Yeah. 

Rahul: This kind of approach, right? Like, what is the sort of,advantage for the three sort of stakeholders? One is a startup, the investors and also the corporations. 

Sebastien: Yeah. So because we do venture building and we build ecosystem,we realized that,when we talk about corporate venturing, which is one, you know, an [00:13:00] adventure studio is one of the elementlimit of corporate venturevendor, one of the mechanism of corporate venturing.

And you have multiple,you know, multiple,all those form of doing corporate venturing, depending on the stage of, where you want to enter and collaborate with the startups.when you look at,the corporate venturing program,there is no really, links between all the different initiatives that they have,to create some kind of synergistic framework and, really innovate beyond the core.

Hence, it ends up mostly as, an opportunity investment that we're here and there, some kind of a patchwork, and then there is no really like a strategy coming to link all of that and really create new growth platform. there's many reasons why that's happening, and one of the probably most critical challenges 

is how you balance strategic,objective and financial objectives. Strategic meaning more long term, you give the time for the startup to pivot and to grow and to build a business, where the financial objective are usually more like a short term. So, okay, I've invested, [00:14:00] what is my return on investment?

Okay. But the other challenge that we see that how you reintegrate,the startup within the entire mothership company, into the business. And here you have a lot of cultural misfit. You have a lot of like organizational resistance.

It make it very different. And very often than the startup is making like, even if the startup is making like a 10 million revenue annually, it's,a drop in the ocean of the mother company. So nobody really cares about it. So the way we were thinking is like, how has actually,we have shift our view and paradigm of corporate venturing.

Instead of saying like a, saying being a corporation activity, how it is actually a collaborative activity between the different stakeholders. We are talking about corporation collaborating with startups, but we are not taking the point of view of the startup, how they collaborate with a corporation. And then.

So basically,it requires a lot of finance coming into that. Even if it is a corporation that invests through a CVC program, it’s a different stakeholder, different objective. Basically you have like a three element and it's a very in simplification, but it's different.

You have three elements. You have the corporation that try to innovate behind [00:15:00] their core. You have the startups that try to have access to resources and a market and support from the corporation. And you have investors that want to finance,innovation, but also to get a return on investment.

So with the way we try to set up the CVPEA model is like how we can maximize the interest of every stakeholders. Yes. They are part of the ecosystem if the vested interest is actually maximized. So how we can maximize all of this vested interest and, but in the same time, having this kind of like a global vision, you know, how we do strategic alignment.

So the idea is having to create a distributed vision, you know, between the different person that actually maximize the vested interest of the stakeholder. That's the main challenge.for corporation, as I said, the objective, I make it simple, is how they can innovate,beyond their core and how you will define success is,if they succeed to launch a [00:16:00] new,growth platform, you know, that will be the KPIkey P.

1. for corporation. There is several, but the main KPIkey P. I. will be this one. for the startups. It's a little bit more difficult because they all joined corporate venturing or an ecosystem or CVPEA model,for different, reason. It can be access to resources, access to market,having some support,having some financing.

So more difficult to have some kind of KPI, but there also is a value of working all together because they become stronger together rather than alone. when you are an entrepreneur, your journey is very lonely and is great if you have peers that support you.

And because they may have faced the challenges that you have, and then they can bring you, some ideas,they can help you actually to face this difficult time. from execute point of view of a CVPEA model,what do you think? What I would consider as a key PIO,and a success of a CVPA model for when you come for the startup is that if you see a high rate of co innovation, so they can come together and they can create new product, [00:17:00] not the product that they have, but new product by combining the product features and capabilities in order to tackle new market that was actually inaccessible for them that's,Probably how I will assess the success of the CVPA model from the startup point of view.

From the investors,though here the investor is clearly like a return on investment. Yes, if they want to finance innovation, they want to have impact, but it's clearly a return on investment. so the model is trying to accelerate,to accelerate,and de risk innovation for early stage to come in them together, to be more resilient, to be more creating some diversification.

So that's one of the advantage. The CVPE model is kind of a new class of asset in the portfolio of investors. It sits between,VCs and direct investment into the startups. So what is the advantage of investing as a Investor or as a LPwas an in the VC that you benefit the diversification model.

So basically,you hope the power will work that 80% of our revenue will be generated by 20% of the startups. to be honest, this model has kind of a little bit breakdown. It doesn't [00:18:00] work anymore, but,there is some great advantage. Basically if one startup failed, the other one can compensate.

However, the inconvenience of that is that you're going to have like a 10% within the company. So you have a lot of 10% everywhere. So you need still a lot of good exit in order to make a significant return on investment. On the opposite side, you have the direct investment into the startup.

Usually you can get more equities. And you are a little bit more hands-on, you have more transparency of what's going on. You can control, you can bring more support, you can help the startups to grow. using your network. The inconvenience of investing directly into the startup is that, ifis a startup fail, you lose everything..

 Well, the idea of the CVPEA model is to take the advantage of these two models and try to mitigate the risk of each of them. So actually investor is going to invest in an ecosystem company. So an ecosystem company,or the orchestrators is not.

It's not a portfolio company. Why is so? Is because it's not just holding the asset, but it's also to be hands on and more,[00:19:00] strategy oriented and, you know, try to tackle, build actually co innovation and co product that you're going to actually,sell on the market. So it's really the company that actually sells the ecosystem.

So you invest, you are hands on into it, you are more equity,into that company. But now the money that you invest is going to be,used to venture build,some certain of the startups. So when you venture build, basically you own it all. 100 percent or let's say you give a bit of part of the co founders, but you can have between 50 and 70 percent you want to startups.

So when you do an exit at that level, The return on investment is pretty significant because you have a lot of stake. We do, you can also do corporate partnerships. So basically you're going to create some kind of joint venture with an external corporation that have a great technology.

but,doesn't want to diversify the technology in new market and you see value into it, so you just collaborate with them, take the technology so you accelerate and you de risk your innovation because the technology is already there. And then you have is,you know, [00:20:00] investment in external startups.

So here is like more like a, the traditional CVC model. where you invest in certain startup who usually need some funds, and then you get 10 percent of equities. But what you do is product integration. So when you do product integration, they can enrich your ecosystem.

So that's, you create for an investor some diversification, but not only is diversification compared to the VC, it's between different type of startups. And then they all are actually linked into the same, strategy, which can create some surplus of valuation at the ecosystem level because your ecosystem company is actually targeting some market and generating revenue and access to market that will be inaccessible to every type of the startups.

So you create this kind of like, you know, like complex diversification, which is great for an investors. Also, you have like, if one of the startup is actually failing. While we can buy back the asset, so, okay. Yeah. if one of The startup is failing, but we buy back the asset. So we can [00:21:00] still make,you know, still the ecosystem is working.

It is like, you know, we use the technologies that they have. We use a product and is actually owned now by the ecosystem company. So you have this kind of like resiliency of your portfolio, ifwhich one of the startup is failing while the otherrder are here to compensate. But we can also buy by the asset.

And then the last point is like, if you, suppose your ecosystem,company is failing, it may happen. What we do is just now we turn it into a portfolio company, holding the asset of the startup, which is underneath, and you can have one of them become a unicorn and get still a significant return on investment.

A couple of 

Rahul: things. So when it comes to Xcube,working, on creation of an ecosystem, right? so what is the sort of,relationship with, a corporate, like, do you charge 

Sebastien: So yeah, different models may happen. so this is what I said. We are a little bit also like a startup studio is sometime when you know that defined it's something that we created.[00:22:00] 

And then we seek corporate partnerships. So here is more like a model like a venture client. So we, you know, we collaborate with a certain of the startups. They can use our product. They can test our product,for free, you know, for them is for us is good. We are market and we have access to a client and we get data, but for them is also to see if they like it, if he works, if they can and ends the value proposition.

So it's kind of like a That kind of relationship that we are working, but all the ecosystem is actually,oriented to collaborate with,it's more like a B2B2C model. So we collaborate with corporation for the client. We don't really target the retailers.

That is one of the models that we have is mostly like. how we stretch a little bit the startup studio model to enter into the venture studio model and collaborate with corporation. We can have, some corporation that come with an ideas of an ecosystem, which you just don't know how to build it.

So here we act as more like a co founders,so we get some,some equity into the ecosystem, but then we have like a venture fees, venture building fees. So they pay us to build. [00:23:00] ecosystem companies to pay up the different startups that they want to venture build, prepare some fees for scooting startups.

then we have some fees to also to build all the entire strategy of the ecosystem. 

Rahul: And,for startups, right? you mentioned,50 to 70 percent equity is owned, 

Sebastien: Yeah, that is for the startup that the ecosystem is going to build. so basically when, the ecosystem, how an ecosystem comes to life,that's probably the way we can think.

so first we ideate. we need to come with ideas. and it goes by understanding very well the environment where we are How the innovation is actually happening between the multiple,interaction with the different spheres. So we start to ideate and then we have some kind of a conceptualization what will be,what will be the ecosystem.

Then we move to the next phase, which is what we call the problematization. And so what is a problem that we want to tackle? Yes, an innovation with like talking about financial inclusion. I'm not going to, tackle all the problems and then solve all the problems. So what part of [00:24:00] financial inclusion I want to tackle or what part of global warming I want to tackle.

So here is the problematization and then here we focus on the customer that we want to serve. And from there, from the type of customer that we want to serve, we define what will be the different startups that we need.and so we have this framework. I didn't invite it, but I, you know, invented it, but it's kind of like something that I draw from the book,Strategic Supremacy from Davani, which has been wrote in 2001.

And here's like, let's, all the startup will go into have a different role within the ecosystem. There is like what we call the core startups and core Complimenters or complimentary startups in the core startups, they are the one that you want to control. They need to because they become the infrastructure of the ecosystem.

So you want to venture build them so they can have different role. They can be the driving startups. If you don't have that, you don't have business. Or they can be enablers, enabler startups. Those are the really critical, it's what we call the minimal,[00:25:00] ecosystem, valuable ecosystem.

They need to be there. If you don't have them, you don't have an ecosystem. And then you need to have. a certain control over them in order to be sure that they create the infrastructure for the other startup to come and to plug in. So here is like those one, usually you have between 50 and 70 percent of,ownership.

30 percent at least need to go for the co founding team. And if you do it with a co founding team, The partnership with,with an external,corporation because they have the technology and they are interested to participate to the ecosystem. This is where you usually have like a 50 50,split. But for the complementary startups, they exist inside, they exist out there.

And they are,so here usually you have like a minority stuck into them. But the idea is not, enabling product integration. So you just want to secure the product integration,and having some arrangement that if it fail, buy the asset in order to still make the ecosystem possible.

Rahul: Okay. So for the core [00:26:00] startups, you mentioned 50 to 70%, right? is that enough incentive for a founder? 

Sebastien: yes. so this is,here like two different things. It's like, either it's like a startup,startup studio model. So we have the idea. So we come, we ideate and everything.

So we need to find what we call co founders,come into it. actually when you go to probably NUS and SMU, you have a lot of entrepreneurship courses, they're all great entrepreneurs, but it's different things being an entrepreneur and being a founder.

Founder is finding the ideas and finding an ideas is not that are going to work is everything but easy, but you have still great entrepreneurs, people who can take the idea and make their own and actually grow the business. That's the type of people we are working, we are looking for. So they become us.

co founders rather than, you know, and we because we want them to be part of the startup. So we give them significant equity, but I mean, sometimes we also have a salary coming there. You know, if you take a real founder that started alone, he doesn't have any salary. So [00:27:00] it's a huge risk.

But now you have, you are graduated, you have some experience, you want to be having this entrepreneurial life. but you don't want to, I mean, it's very hard to take that risk and say, oh, I'm not going to get paid for like two, three years. then you can join our program, you get a significant stake into the company,up to 30%,and then you still have also a salary.

So it's a pretty attractive. And then also you get all the support of the ecosystem. When you start from scratch, you have the support of nobody. And it's pretty scary. And this is what we call the dark side of entrepreneurship. I talk a lot about that. It's like, you know, people are dreaming about entrepreneurship, they see it as a hero, but there is a dark side of entrepreneurship.

So how we can mitigate that dark side, I think being part of like, you know, a startup that we are venturing,in our ecosystem, it's a good way. 

Rahul: it's not like a whole team. It's more like one or two people. Who can support [00:28:00] the internal sort of initiative that you're trying to bring in from outside?

Sebastien: Well, it's an entire team. Okay. It's an entire team, but you build it like you need. I will say usually what we have is,we work with this kind of like entrepreneurs. I will recall that someone which can lead the business was a capacity to grow the business. Usually you have some product,development.

skill and knowledge or some kind of business knowledge. But usually we go more for someone which is more like a product development oriented because we pioneer the market at the level of the ecosystem. And then we bring some, solution architects.

I know those two guys are the most important to be part of the company. After that, the team is joining, there is some ESOP to make them participate to the life of the startup, but they are not considered as co founders. So we are looking for like, yeah, as you write, one or two person to be co founder company with us.

And then after we hire the rest of the team.

Rahul: so.

[00:29:00] okay.

so how do you, okay,we didn't talk about the investor side of things. so the investors mostly invest in X cube directly, or No, they invest in the ecosystem company. Okay. 

Sebastien: So directly the company. So X cube is,creating the ecosystem company with the corporation. We created,dependent, split dependent negotiation of with a corporation, but.

Every investment is a, you know, every ecosystem company is a significant investment. so for a corporation, especially for mid sized organization. they may have a great technology, they may have a great market, but they may not have all the financial,resources needed to set up such an ecosystem.

this is where you collaborate with LPs, some,or investors. Investor come in there. So the way we do is we create some syndication around those investors to invest within the company. Then we take a major stake because the investor a [00:30:00] significant amount of money.

Usually what we expect is like having between two and three,fundraising before we can exit. Where we target is an exit usually between six and seven years. for the first investors. There is different mechanism having the LPs.

it can be a fund. It can be an SPV. There are different type of mechanism. But entities will invest into the ecosystem company. Then the ecosystem company is having his own activity, which is creating, orchestrating the ecosystem, but now is actually using that money either to create startups or to invest into doing traditional corporate venturing, investing in multiple startups.

So that's, That, the advantage of that model is that the ecosystem company is creating some kind of a buffer between investors and some usually more like short term oriented objectives and founders at the level of the startups who are more like long term oriented. And [00:31:00] then we, the ecosystem company is actually creating that buffers and try to maximize the interest of everyone.

Rahul: So I'm also curious to know, like, how do you,align interest and sort of, increase collaboration between all the startups in an ecosystem? And also one other thing,I read about this, psychology sort of a team that you have at xcube? 

Sebastien: Yeah. so it's two different questions.

I'm going to explain,both of them. strategic alignment is the most difficult,things to, to get, but is a main KPI of the orchestrator. I need to be able to,align all the different interests of the different actors. that's why we like, we need to understand and the perspective of each others and what are the different activities that we make them align 

the idea is to be a translator.how I'm going to translate,the investor's concern to the startups and vice versa. And with the corporation is [00:32:00] like, considering if they are interested in different spheres, they have their own,bias and own paradigms, a way of seeing things.

So how you translate,the ecosystem and the benefit. that the ecosystem can create for them in their own words. And that's the role of the ecosystem. when you make a corporation and a manager from a corporation talk with the founders. They don't talk the same language.

They do speak English or, you know, whatever the language, but they actually don't talk to each other. They don't understand each other. So this is where the ecosystem is playing its role. It's like it's bilingual. You can talk corporation and you can talk startups. 

And that's the idea of the ecosystem. How be able to talk to everyone and by talking and bringing them with reasonable people, then it's kind of this is where you get a consensus where to go. for one of the significant, where we foster collaboration or co innovation, while the secret is like, don't give it, to the founders or the startups [00:33:00] because you want them to actually focus on their core product and actually increase, you know, like, and create some traction and growth on their market.

This is where you want them to focus. You don't want them to be distracted by something else. the ecosystem is actually companies taking the responsibility of the co-innovation. Co innovation. So we all the team come together, try to identify what are the possible synergies and in co innovation opportunities between the different product, because they also know the market.

And then this is where the ecosystem solution architects start to set how This co innovation, is feasible or not feasible? when it is feasible, we prioritize which one we're going to start, or different co innovation opportunities.

We validated that with the different stakeholders. And then from there, we implement,the co innovation. So we execute the co innovation programs at the level of the ecosystem. So the founders are not distracted by anything, but they are, they have a, they haveare located a small[00:34:00] portion of their resources and time to the co innovation, but most of it is taken by the ecosystem.

So we leave the burden of the co innovation and the synergy creation between startups to put them at the level of the ecosystem.

One of the things for startups, in terms of your second question about psychology support that we bring. xcube is one of the as a, differentiation factor we have compared to the other studios is we have a corporate psychologist.

if you, I'm going to ask you a question, it's like, okay, you are, you're an investor, you're a business angel and you invest in early stage startups. I'm going to ask you, what is your, the most critical asset in which you are investing? People. The people. Yeah. Yeah. That's the people. Because technology is not there.

the market is not there. They need to pivot and everything. So I'm going to ask you, what do you do to protect your asset? And I hear it's like, yeah, what can I do? I don't know. and there is some kind of,you know, like, you say, oh, I'm going to bring coach,you know, like a coaching and all of these things, but there's some kind of like, here, like a paradox.

You are an investor, you kind of push your founders to [00:35:00] achieve, what he promised to do or to enter in the market. But at the same time,you want to protect him, you protect him. So there is a kind of a contradiction between,when I heard that some VCs are saying, Oh, we bring, coaching and support to the founders.

On one hand,you bring, you come down on the other end, you push pressure on that. It's a little bit schizophrenic. The idea is what we can do for them. And so we were discussing how we can avoid them, you know, to get into the dark side.

One of the common thing, if they can burn out and well, your investment is gone. And then suddenly they decide to do, you know, like they have family issues or anything then the mindset is over there. So again, your asset is done. So what we do is that we help them, we help,with our corporate psychologist, we help them to understand what is actually to be an entrepreneur.

there is a, nice and beautiful, the light side, but there is also the dark side. And so we help them to build coping mechanism, to avoid to enter in the dark side of dark [00:36:00] entrepreneurships. For that, we help them to build what we call the psychological capital,which is based on resilience,self regulation and optimism.

So how to manage that together and having a stock in which you can tap in over time, to face the challenges of,an entrepreneurial life. And how actually you also refill that stock over time. you know, entrepreneur need to have a balanced life. And so do you work on this during the week and you don't work on the weekend?

Well, the reality is not like that. You know, sometimes you really need to work 24 hours, seven days a week. And then did you work like crazy? Because this is a time of doing it. And this is where you start to tap into your psychological capital. But then after you need to figure out, okay, now I'm reaching the point of no return.

And so here, what are my tactics? In order to, feel that kept in the capital. And then this is where our corporate psychologist is helping our founders to define this, moment where they [00:37:00] need to recover. And then they can always come to her, to speak about their issue, what's happening, 

It can be issue, can be whatever, you know, like you just need to have this safe space when you can talk with a professional. And everything on that is saying in that space, stay in that space and the person helps you to become stronger. 

Rahul: Yeah. So, internally, how do Xcube measure,the success and also the impact of,the model, CVPECBP model?

Sebastien: Yeah,the success of,it depends, it's difficult to define a success. It's always difficult. What means success is,you know, long term,discussion between,academics, Again, the success will depend of the point of view, the point of view we are taking.

So if we talk about corporation again, it's probably the success of the CVPE model is that I have a new growth platform. I have developed and launched a new growth platform. It's not like, Corporate venturing to have access to one little technology or one [00:38:00] product, and when you integrate them, it's a drop in the ocean.

So now you have with the ecosystem, you have a major growth platform, that goes beyond or extend your core business. 

Rahul: what becomes successful corporation. So it would be like, if you can create a major growth vertical. 

Sebastien: This is exactly that. you create a new business unit, that you have a business unit. So either you plug and play, you keep it as it is, or then over time you can reintegrate it into your core business. But it's self sustaining. And that's a key thing of the ecosystem is self sustaining. And so you can integrate, you can keep it at that.

Or if you decide, you know what, this is not what we want to do, but you can resell it. you can IPO the ecosystem and you have a return on investment of what you are doing. But the ecosystem is self sustaining. So the startup are protected and they can still strive on their own market.

So that's the advantage of the ecosystem. for the investors, [00:39:00] as I said, it's,the return on investment,in a short time. So as I said, how we work is between an exit between six and eight years,which is a little bit better than VCs.

why is possible is because we collaborate with the corporation from the beginning. So when you reach a valuation of the ecosystem around 100 million to between 100 and 200 million, it's actually the sweet spot for a corporation to buy the ecosystem.

After it becomes too expensive, under that usually you don't have enough, traction or revenue. So the sweet spot for, you know, for a corporation to buy,to do M& A is. usually around between 150 and 200 million,USD. we believe we can reach between six and eight years,through the ecosystem dynamics and synergies.

And for the startup, the success is, I define it personally,because as I said, every startup have different,perspective and reason to join the network. But I define it as,the rate of co innovation. The higher the rate of co innovation, and the most successful is,the [00:40:00] CVPEA model because it showed that they are part and collaborate all together and created some synergies and,they are not just here as free riders.

Rahul: So, how do you see this model,evolving in the future? that's a great question. , 

Sebastien: we are launching a CVPE,LinkedIn group to invite,people interested to discuss how we can improve that model,how we can make it,better over time.

So that's an open question. How I see it evolving personally, it's AI. you can use,gen and predictive AI to,create your ecosystem. the dream I have about Xcube is everyone coming on Xcube.co,

co, and then I want to create my ecosystem and enter my different parameters and then A lot of thing is done automatically and we're going to tap into different data in order to offer some,some solution. We can school different companies, asset,assess and do the diligence of different startup to be part of the ecosystem.

I do believe that AI can help for that. the Web3 [00:41:00] can actually also helps to,create some kind of decentralized orchestration. Today, the orchestration is really centralized around the company, but with Web3 technologies, we can create a decentralized orchestration,which will help to have an ecosystem,which is global.

today our ecosystem are very localized. you know, it's a very southeast Asia,but with this kind of like, technology. I hope we can, you know, have like a CVPE that are global and, you know, making a good corporate startup in Japan, working with a startups in Peru for instance.

so we are not yet there,but this is something definitely,look at,start to integrate. And I think what will be the, what will be the technology and the model and how it could work. my wish in terms of impact,I wish that we can make,corporate venturing great again.it used to be like,some hype and there is a lot of disappointment with,you know, among corporation with, corporate venturing and CVC model.

if the CVPE model [00:42:00] could be the next wave of corporate venturing, I will be very,very HappyOkay, 

Rahul: Why the disappointment with the traditional CVC model? 

Sebastien: I think there was some kind of overselling on what it is, also it's a new activity,rather new activity,for co corporation.

1. It was everybody was excited, you know, having some dream about the startups are going to collaborate with startups. We're going to have innovation. We're going to create a, you know, innovation culture within our companies. So they have all of this hype around that. The reality is always nuanced, right?

it's, nothing is easy. And,so we're like, okay, we're going to collaborate with startups straight, and then we're going to create our own corporate startups. But we forget about the inertia and organizational resistance that exists in the traditional business. And we don't really take that into account when we sell,corporate venturing, when we, You know, actually within that, where you have all the HR people trying to have like a, you know, oh, you are an entrepreneur and entrepreneur, you want to do the startup, [00:43:00] let's do it.

And so there's this kind of more internal marketing, you know, selling the dreams. Well, but again, entrepreneurship is. It's tough, but corporate entrepreneurship is probably even tougher because you have to deal with all the, you know, politics and organizational dynamics and everything. And then from the top management is like, Oh, okay, I have this new startup, but it's one doing one or 2 million,you know, revenue.

Rahul: nothing. 

Sebastien: It's nothing. It's like, so you have this kind of disappointment around corporate venturing that emerge over time. We got better,and we see that, for instance,EDB is launching his,new,corporate venturing launch pad,program, the new one 3.

1. So They know that it's still important and they push for that. but one of the major,major,you know, concern,of,of EDB is how we can,educate and it helps company to develop that capabilities and get better. and we are now at the three edition of that program [00:44:00] and we are still not yet there.

So it's a long way to go. 

Rahul: So, what is then the next step,for Xcube? 

Sebastien: So for xcube, xcube is a rather young company, we have like a,the company is one year old. So our main objective was to build a studio,and come up with a project. Pillar project,for the CVPE model,and see how we work.

So this is where Defy emerging and we put things together. We are very satisfied, we have very good feedback from the product. So now it's the time to make,for us to make,you know, the CVPE model more,known and to create brandawareness around that. So, as I said, we are just created a CVPE,LinkedIn group where people can come and join and learn about CVPE or share experiences,criticism.

We are welcomingcriticism to improve,but To make that model always,aware and probably creating the new wave of corporate venturing,we are going to [00:45:00] launch our,soon our,white paper where we have a description of how all of this,model is working and what are the advantage for the corporation, advantage for,investors of startups, or advantage for an ecosystem.

You know, when we talk about, I was talking about EDB and, you know, they are promoting this corporate venturing, activities among investors. Start,startups and,corporation in Singapore,how actually that model can enhance the Singapore ecosystem,for an open innovation.

Rahul: Yeah. this was great to imagine,Sebastian, thank you so much for taking the time to do this again. Thank you, Raul. It was a pleasure to be here with you.