Base10 Partners closes $850M fund focused on AI automation for the real economy

Reeves to make a very convincing um to make a very convincing Keanu Reeves saves the day video that I think went viral and confused a lot of people but was a lot of fun and they did a whole bunch of uh back uh like behind the scenes content. Anyway, we have our next guest AA from Base 10 who's the managing partner. How are you doing? Welcome to the show.

Good guys. Thank you for having me.

Thank you so much.

Let's get right to it. How much did you raise and John? Give me the hardest gong hit of your life. Amp it up a little bit.

850 million.

Boom.

Clean.

Congratulations.

Great to have you on the show.

$2.6 billion in assets. Um, but it is your first time on the show. So, why don't we go back in time a little bit and, uh, give us some of your background and how you got into investing, how you scaled up this fund.

Yeah. So um the accent is Spanish. The name is Nigerian.

Um early childhood in Nigeria, then southern Spain.

Um and like you guys, I was a founder. So I I went to college in Madrid. I started my first company when I was in college in Madrid. Uh which was not very popular occupation in Spain at the time.

I thought you were saying that the company wasn't very popular. Like you got into some hot water. uh maybe you're

the company the the being a founder was not very popular um the company became very popular so we we were 20 we became the equivalent of Facebook in Spain um and to to give you a sense we started in ' 05 uh we sold to Telefonica in 2010

uh and when we sold we were about 60% of daily internet traffic in Spain

wa so that was that was quite early

what what was it called sorry that I'm not already

20

20

so like 20 because it was for 20 years old but the Hispanic phonetic pronunciation tu e n ti

I remember I remember now it's all coming back it's all coming back because I I have some very good family friends in Spain I've spent a decent amount of time there uh including a summer in Madrid

at one point uh and yeah I I remember it uh very very cool product

so talk about the strategy 85 $50 million. That's a lot of capital for seed series A, series B. Jeff Bezos raised a$12 billion series B today. Uh, and there's this odd uh K-shaped dynamic in venture where the letters don't really mean anything anymore because you can raise a$2 million, $10 million series B, $10 billion series B. Um, where are you seeing opportunity? What is the early medium stage market? what are you looking for in the companies that you fund?

Yeah, so we we we uh say that we invest in automation for the real economy and and to give you a sense when we launched the fund in 2018

we actually said hey we're going to invest in applied AI for the real economy

and the feedback from the LPS was like hey applied AI is not a thing.

Yeah. Um, so it's sounds niche.

Uh, so like why don't you like do something real? Yeah.

Uh, so we call it automation and we're like okay well we just think that people are going to use a lot more AI in like logistics and restaurants and transportation.

Um, so it's it's no longer niche.

Yeah.

And now as you were saying we have this crazy dynamic where like you know we we we sold 20 for 100 million and that was a big deal.

Yeah. Now that is like there's some YC companies that raise that right after we see

not just raise at a hund00 million valuation but just raise 100 million.

Raise 100 million. Exactly. So it's a it's a completely new world. Um which is fun like that that that's fantastic. And what I tell the founders we invest in today is like man I'm so happy I don't have to compete with you

because you guys are so good

and there is so much happening. Uh so I would say applied AI to the real economy which these days means a lot.

How are you thinking about uh services as a as software that whole trend? It does feel like there's an opportunity to not train a foundation model, not build a robot, be very capital light, go apply the tools that are already well beyond what's actually implemented in the real world, close the capability overhang, make a bunch of money in the process. Maybe you build some software, maybe you get some some customers on long contracts and the business works profitable. That sounds great. At the same time, you sort of veer into like are you just a consulting firm? How are you talking to founders? What are you seeing? What models are working?

Yeah. Uh great question. So there are a lot of labels like you know um AI enabled services, AI first applications. Well, I like to spend a lot of time talking to clients,

like, you know, calling the the logistic companies, the transportation companies, and they don't really care

what the label is. They just want it done, right? It's like, hey, at the end of the day, I need to move this package from here to here.

Yeah.

I need to like get this cash from this client. What can you offer me that works?

Yeah. that I can trust and that is fast and that is not terribly expensive.

Uh so we try to like avoid a little bit of the labels and then like go to what does a client want and need at the end. Uh and I think there are going to be many business models that are successful.

Uh is changing very fast.

Yeah.

Uh out for my own curiosity what how is Spain thinking about AI? Do they have a sovereign AI strategy? I don't know how closely you follow it. It must be at least

we we we we could be here all day. Um look, we we are a little bit more techn technology forward than when we started 20.

Uh but not quite San Francisco yet. Um, I will say that I get a lot of text messages uh from my friends back in my hometown who are, you know, running restaurants and hotels being like, "Hey, have you heard of this thing called Clock?" Um, and and that that fills me with joy. Um, as a country, honestly, we still need to get um our strategy together. Um, and although the culture is changing and actually one one thing that makes me very proud is that in the last year we have founded four different Spanish teams here in San Francisco

that have moved to San Francisco to start companies and they are crushing it.

Um, back home um, we still talk a little bit more about the World Cup than about AI. So we need to like change that.

Yeah.

Well, that's I guess fair for this next month.

Talk to us. But then after that,

yeah. Uh, talk to us about coffee. How does that fit into a portfolio? I mean, is there a linkage? Is it just a good business by itself? Is it just a passion of yours? What's the coffee thesis?

Yeah. Um, so, so look, we we are a research first fan and we're always like, hey, what is what is going to happen to the construction market or the logistics market with robots? And as you guys know, all that's well and good. And then really early stage investor is all about the people.

Yeah.

Um so when we met the blank street coffee guys um they were like look coffee is big. We're like okay we can agree on that. Yeah.

You know that that we don't need a lot of research with that.

But honestly it's one of the best pitches I I have ever like heard in my life. They were just like, "Look, we're both like sons of immigrants and like immigrants ourselves and like did you know that 80% of coffee carts in New York are like um roll over by immigrants and it's a a great path to like building wealth for the family and staying in the country and like that's what we want to power and we're like okay and and the automation and they were like well the coffee cart is going to be great and like completely automated and we're like okay we don't exactly know what that means right But these guys are awesome.

So we should be the we should uh write the best tech. Um and that turned out to go great.

Yeah, it's funny because there are there are examples of similar stories and then and then it not going that great. So yeah, it's it's it's it's so difficult to fix the uh to to square all of that when you see opportunity, but ultimately you uh you you find uh like the alignment and then everything works out. Um what do you do do you think in deployment pacing? Do you think in like two-year deployment, 10-year horizon? Like is that changing in the modern era with so much uncertainty? I mean, we talked to Matthew Prince from Cloudflare about like uh and and we talked to a number of people about uh it's hard to plan two years, three years in advance if you're a public company CEO. Uh also hard to plan ahead if you're a venture capitalist, but uh that's sort of what you're paid to do. Yeah. Uh I know. Um look, we we have stayed remarkably consistent on that. Like all our funds have been like 2 and 1/2 years to 3 years deployed.

Um and we are going to do the same thing with this set of funds.

Um it is more tempting than ever

to deploy very fast like and I'm an optimist. So we are we're currently in the

this is why cominator week,

right? So I want to back like 50% of founders that I make or more. Yeah.

And my team is like I stop like we can't we can't do that and you're like you're right. You're right. It's just ah there's so much to build and this these founders are so good. uh but we have built systems internally uh to make sure that we have that discipline because to your point um although it's very tempting and a lot of things are growing very fast um there is so much change that we want to get a little bit of feedback loop a little bit of data

of hey okay we are three and a half years into AI or whatn not

what happens in year five

y

um and we want exposure to that as well

fantastic well thank you so much for coming on the show. Appreciate your time. Congratulations on the fund raise.

Let's do it again soon.

Talk to you soon. Have a good one.

Goodbye.

Cheers.

Uh our next guest is already in the waiting room. We'll bring in

60% of internet traffic

on a on a company built in college.

Insane.

Crazy.

Insane. But yeah, that's such a such a high such an impactful company. So good.