In this episode of the EUVC podcast, Andreas talks with Sandeep Bakshi, Head of European Investments at Prosus Ventures.

Andreas and Sandeep discuss the evolving dynamics of early-stage investing across Europe and beyond, sharing insights into how Prosus Ventures identifies opportunities in a global landscape. Sandeep offers his perspective on navigating the European VC scene, reflecting on the unique challenges and opportunities facing founders today. The conversation also covers the role of strategic capital in scaling startups, with a focus on the sectors and trends shaping the next decade.

At Prosus Ventures, Sandeep oversees a diverse portfolio targeting early-stage companies around the world. With notable investments such as Delivery Hero, iFood, OLX, Bilt Rewards, Corti, Superside, Avant Arte, and Oxford Ionics, Prosus Ventures continues to drive innovation by backing transformative startups across various sectors and geographies.

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✍️ Show notes

The evolution of the marketplace landscape & what role AI started to play in this?

* Over the past decade, digital marketplaces have evolved from simplistic online shopping platforms to highly sophisticated ecosystems. Initially, their success was driven by scale and convenience, but the shift towards AI integration has redefined user experiences and operational efficiencies.

* Operational efficiencies: AI allows marketplaces to automate processes like customer service, fraud detection, and content moderation. Generative AI helps streamline listing creation by auto-generating product descriptions and handling inquiries, reducing costs while improving accuracy. Example with iFood who has embedded AI throughout its operations the last few years:

* We’re seeing this with several of our food delivery investments. For iFood for example: For customers, AI provides personalized food recommendations and enhances customer support through chatbots, improving overall user experience. For drivers, AI optimizes delivery routes and schedules, allowing drivers to navigate efficiently and respond dynamically to demand.

* For the Overall Platform: AI-driven demand forecasting and fraud detection enhance operational efficiency and security. For marketing and ad: 30% reduction in customer reacquisition costs, by deploying 75% of its advertising budget using AI strategies.

* Success metrics: Prosus's iFood has hit a milestone of delivering more than 100 million orders in August. That is a more than 30% increase year-over-year. Cost to deliver have been reduced by 16%. All while customer satisfaction increased.

* AI in Search and Discovery: Traditional keyword-based searches have evolved into more sophisticated systems powered by AI. Semantic, image, and voice searches now make product discovery seamless, improving user engagement and retention. Example with OLX.

* Personalization: AI-based recommendation engines tailor product suggestions based on user behavior, preferences, and historical data. This enables marketplaces to create personalized shopping journeys, boosting user satisfaction and conversion rates.

How is Europe’s marketplace landscape evolving compared to other regions like India or US?

* We’re seeing European marketplaces prioritize sustainability and trust, while India focuses on growth and accessibility, and the U.S. on innovation and specialization. The EU is the world's largest exporter of manufactured goods and services, and is the biggest export market for around 80 countries.

* India is an interesting market and one we’ve been investing in for more than a decade. Its e-commerce landscape has expanded rapidly due to a variety of factors - mobile-first access to the internet helped the market leapfrog traditional pace of internet (broadband) penetration, and there has been a strong government push to promote digital payments and building supporting infrastructure including highways and logistics support networks.

* We’re seeing the blending of traditional commerce with digital solutions. Mobile-first platforms are critical here, as many consumers access the internet via smartphones, and companies are innovating to meet local needs, offering everything from hyperlocal delivery to vernacular language support. This model is democratizing access for small businesses, allowing them to reach new customers. For example, A huge proportion of shopping in India is done through mom-and-pop shops - 4.5mn mom and pop shops in the country.

* Another interesting trend is the rise of social commerce. Consumers are not just buying products; they’re engaging with brands and sellers via platforms like WhatsApp and Instagram. WhatsApp has one of the highest market shares in India, and the same for Instagram.

How exactly is AI reshaping shopping habits and enhancing user engagement in these digital platforms?

* AI has fundamentally transformed how users interact with digital marketplaces, enhancing personalization and streamlining the user experience. We’re again excited about agents.

* Agents - Conversational AI and Virtual Assistants**:** Chatbots and virtual assistants provide real-time support, helping users with product discovery and offering personalized recommendations. This is probably the area of fastest development in AI, agents can operate on both the buyer and seller side.

* Search Innovation: AI has advanced search functionality, allowing users to search via natural language, voice, or images. This capability makes the shopping process more intuitive and boosts engagement, especially in sectors like real estate, where visual search and interactive tours are becoming more common.

* Better recommendations: AI-powered systems analyze user behavior and preferences to deliver curated shopping experiences. This level of personalization not only improves user engagement but also leads to higher conversion rates.

Where do you see the most promising investment opportunities in Europe’s AI-driven marketplaces?

Operational efficiencies. For example, Photoroom supports European marketplaces by enabling sellers to enhance product images using AI. For instance, on food delivery platforms or shopping platforms like Zalando or Vinted, sellers can quickly remove backgrounds, create uniform product visuals, and batch-edit photos. This streamlined image editing improves the quality of product listings, making them more attractive to buyers, boosts sales and allows businesses to scale their operations efficiently. For food delivery, last mile delivery and logistics operations are seeing strong growth.

How do you see the future of AI-driven marketplaces in Europe? What should investors be on the lookout for?

* Localized AI Solutions: Europe’s fragmented regulatory landscape will require AI solutions tailored to specific legal and cultural contexts. Companies that can navigate this complexity while leveraging AI for personalization and compliance will have a competitive advantage.

* Immersive Shopping Experiences with Extended Reality: AI-powered extended reality devices are likely to create immersive shopping environments, particularly in sectors like real estate and automotive. Virtual tours and 3D product views could significantly enhance user interaction with digital marketplaces.

* Trust and Transparency: AI tools focused on fraud detection, price transparency, and secure transactions will be essential in maintaining consumer trust. As AI-driven fraud becomes more sophisticated, robust AI security measures will be crucial for success.

* Again, Autonomous Shopping Agents: AI-driven agents capable of performing shopping tasks autonomously—such as finding the best prices, making purchases, and handling negotiations—could disrupt traditional marketplace models, creating new, streamlined shopping experiences.

The Person Behind

* Always treat everyone you meet with respect.

* Every meeting is an opportunity to learn something, and you can learn something new from anyone.

3 biggest learnings in venture

* Everyone we talk to is human. Reiterating - treating everyone with grace and respect pays the biggest dividends.

* The team is the most important factor to business success.

* Even the rocket ship companies have their ups and downs, be even keeled during both pha...