Ulrik Stig Hansen On Raising $50 Million To Build Data Tools And Infrastructure For Artificial Intelligence Development

In the world of AI, few founders have navigated the intersection of coding, corporate experience, and entrepreneurial vision as effectively as Ulrik Stig Hansen.

As the co-founder of Encord, Ulrik’s path offers a fascinating roadmap for founders looking to build and scale in the rapidly evolving world of artificial intelligence. Encord has attracted funding from top-tier investors like N47, Y Combinator, CRV, and Crane Venture Partners.

In this episode, you will learn:

• Early coding experience: Ulrik’s early passion for coding set the foundation for his entrepreneurial journey.
• AI’s potential: The rise of AI models, such as GPT-2, signaled a technological shift Ulrik didn’t want to miss.
• YC impact: Y Combinator helped avoid early mistakes and accelerated product-market fit.
• Fundraising lessons: Raising $50M across multiple rounds required vision, metrics, and perseverance.
• Product-market fit: True product-market fit became evident when the sales team closed deals autonomously.
• Scaling challenges: Scaling Encord involved hiring top-tier talent and navigating a lean, efficient growth strategy.
• Focus on problem-solving: Deep involvement in solving key problems while delegating less important tasks was key to Encord’s success.

 

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About Ulrik Stig Hansen:

Ulrik is the President & Co-Founder of Encord. Ulrik started his career in the Emerging Markets team at J.P. Morgan. Ulrik holds an M.S. in Computer Science from Imperial College London.

In his spare time, Ulrik enjoys writing ultra-low latency software applications in C++ and enjoys experimental sushi making.

Connect with Ulrik Stig Hansen:

• LinkedIn
• The Org
• Crunchbase
• Eventible

Read the Full Transcription of the Interview:

Alejandro Cremades: alrighty Hello, everyone, and welcome to The Deal Maker Show. Again, you know more building, scaling, financing, all of that good stuff that we like to hear you know with the founder that we have today joining us. He’s riding a rocket ship.

Alejandro Cremades: you know as we like them. And we’re going to be talking about early experience, for example, what it was for them to go through Y Combinator. Also, what was the experience of finding product market fit early on, as well as to how to think about scaling and the motions that you got to go through in order to make it work. But again, really, really inspiring conversation ah ahead of us. So without further ado, let’s welcome our guest Ulrich Stig Hansen. Welcome to the show.

Ulrik Stig Hansen: Thanks, Alejandro. Excited to be here.

Alejandro Cremades: So originally you were you were raised right outside of Copenhagen. So give us a walk through memory lane. How was life how was life growing up?

Ulrik Stig Hansen: Yeah, that’s right. So I grew up in a small town outside of Copenhagen, which admittedly was the most conducive environment for an aspiring AI founder. But there weren’t too many distractions around there. So I got into coding early on and probably spent the better part of five years just kind of coding, working on different projects, perfecting my skill set, um which, um you know, have been very important, I think, to my journey as a founder. of um given that I had that early kind of experience in building products and ah talking to users and all that good stuff.

Alejandro Cremades: So what do you think got you hooked into into coding so early on?

Ulrik Stig Hansen: Well, I think coding is you know it’s a very interesting discipline in that you can build things from your you know bedroom, which I don’t think you get in any other kind of like discipline. So um I really like the the problem solving aspects and the building aspects. And if you combine those two, I think you can like spend days you know just like pondering over a problem um and like just get stuff out that you can have people use within within like very short periods of time, which I don’t think is the case for any other um thing that you could do with your time.

Alejandro Cremades: So what was that the journey to get to JP Morgan?

Ulrik Stig Hansen: Yeah, so, um you know, I really like building stuff. um And I knew that I wanted to start a company one day. So I maybe thought that I had to get experience working in ah business and finance to to get there. So I moved to London early 20s to start my career there. um I think had a great time, learned a lot of things. But ultimately, um when you work in a big corporation, right, I think any corporation, you don’t really get hands on building stuff. um And I always wanted to get back to building. So I stuck around there for a few years, but ultimately decided to leave to to, to found on court eventually.

Alejandro Cremades: and And before that, you know you you were getting you know started on the AI, that excitement around AI, which you know obviously ended up getting you to Imperial, which is an incredible university where you did your your master’s in computer science. But what was so appealing to you about AI and and what was going on in the space?

Ulrik Stig Hansen: Yeah, that’s a great question. So um I think when I did my computer science master’s in Imperial, that was right around the time when the transformer model came out, the first YOLO model came out. um The GPT-2 model came out from OpenAI in like 2019, I think.

Ulrik Stig Hansen: um So the interesting thing was that these models that had been, I think, very much confined to like academic research were actually starting to deliver value in the real world for, I think, the first time. So AI, of course, have had a few false starts, and it didn’t quite live up to the hype of the past. um So that was incredibly exciting, I think, to see from the sidelines. If you kind of looked ahead, it was very clear that we were on the on the precipice of ah of a major technological platform shift. And I think I would like be very sad to miss that because I think anyone who’s grown up during the kind of early days of the internet um and have been in entrepreneurship or is excited about starting a company always felt that we missed out on the um the internet revolution. um So I just couldn’t miss out on the on the AI revolution.

Alejandro Cremades: So how do you end up meeting who ended up becoming your co-founder out in court?

Ulrik Stig Hansen: So I met Eric, my co-founder at an entrepreneur network in London. Eric had just left his job. He worked in high-frequency trading. He was working on big data systems, putting thousands of models into production to, of course, like do different things, to trade stock futures and ETFs. um But we saw the world in very much the same way in that the data part of the AI development stacks. AI, you need models, compute, and data to get working. um There was a huge opportunity just because the innovation of the past couple of years had not been what we had seen for models and compute. So we thought there was an incredibly exciting opportunity. That’s really why we started on-court.

Alejandro Cremades: So what ended up becoming anchored for the people that are listening to get it? What is the business model? How do you guys make money?

Ulrik Stig Hansen: Encore started off as focused on data annotation. So when we went out and started Encore at the beginning, we talked to probably like a thousand plus AI engineers, researchers, ML engineers, data scientists, and they all like basically said the same thing.

Ulrik Stig Hansen: which was that they were having a really hard time getting the best data annotated ah to use in their models. I think since then, like the problem has shifted somewhat from being a data quantity problem into being a data quality problem.

Ulrik Stig Hansen: so um you know Instead of getting like high quantities of data, people are now much more focused on getting the right data into their into their production AI systems. So we’ve really built Encore to solve that entire workflow from solving the data quantity to the data quality problem, breaking down the problems with three distinct pieces of data management creation, getting the right data annotation, so having humans provide feedback feedback to the model, and then model evaluation. So making sure that um you are pushing the right data into the model and taking all the data out of the model that might be poisoning the data set or hurting your your model performance.

Alejandro Cremades: So what was that the journey of going through a Y Combinator? Because there’s a lot of people that are probably listening thinking about you know the whole accelerator thing or incubator thing. So at what point do you guys realize, hey, you know like maybe it makes sense to go to San Francisco to join a Y Combinator to become part of that community? How was that thought process? And then also, what was the experience like of going through Y Combinator?

Ulrik Stig Hansen: We yeah went to YC in the winter of 21, which is just more than ah just over three years ago. It was a very odd time because it was doing the but the depths of the the COVID pandemic. So all of our YC experience was fully remote. and I’m sure the in-person experience is much better.

Ulrik Stig Hansen: I think for a first time founder, you probably can’t find a program or an accelerator um that helps you avoid as many mistakes as whited as YC does. So when you’re first getting started, you may like not think about fundraising the right way, you might not think about finding product market fit in the right way. And I think the YC network really helps you hone in on like the things that are important and prevent you from spending too much time on things that are less important to you know initially finding product market fit, getting your first customers, and beginning to um scale out some of your product engineering teams initially.

Alejandro Cremades: So then coming out of Y Combinator, what was what was that like? Because it was kind of like a rocket ship too, especially the way that things started to happen too on the on the financing front. So what was that like coming out of there?

Ulrik Stig Hansen: Y Combinator I think has probably one of the best um fundraising environments attached to it. So YC definitely helps you a lot with getting the initial capital in. ah I think you know the common misconception is like that’s by no means a given. um You really have to work hard i think to get the investors that you want um and to ah get that initial capital in. I think YC really helps with that, but they can like solve the problem for you, of course.

Ulrik Stig Hansen: Coming out of YC, we raised in a very hot funding environment in 21. So we raised ah a pre-c the series ah sorry pre seed and a Series A in 21, which really gave us like the the capital that we needed to build out um the initial product engineering team, ah build out a great product that we could sell repeatedly to our customers, and also afforded us the luxury of um You know, making a few mistakes, I think, on the sort of product, finding product market fit fit side and also ah the initial scaling of the of the team.

Alejandro Cremades: So then talk to us about what how that fundraising journey was. I mean, how much capital have you guys raised to date?

Ulrik Stig Hansen: We have raised $50 million. dollars We just closed a $30 million dollars Series B a couple of months ago with NYX47, with participation from Y Combinator, CRB, our seed and Series A investor, and and and also a bunch of other ah great investors that we’ve been very excited to get on board. I think the common mistake that people make is that they take um fundraising likely and they kind of like take it for granted that they’ll be able to raise money, especially being an AI company. And I could just tell the the audience that that is definitely not the case. It is extremely difficult. The Series B market is still, I think, reeling from a bit of an overhang from the boom years. So I think the most recent round was definitely the most ah difficult one ah to raise. ah

Ulrik Stig Hansen: But you know I think we we managed to get it done. We managed to get some great investors on board. And we have now a lot of capital for the next phase of ah the anchor journey, which we’re excited, incredibly excited about.

Alejandro Cremades: And we’ll talk about that in just a little bit, but it was very impressive the fact that you guys were able to do the pre-seed seed and series A in such a short amount of time. Why why was that the case?

Ulrik Stig Hansen: Yeah, that’s right. so Back at then in 2021, this was like pre-chat TBT days, right? So AI was still sort of like something that people were like peripherally interested in, but it wasn’t the main thing that people were going after. um I think back then, like crypto and blockchain, I think was very much like the thing that was like hot amongst investors. um But I think we had an insanely compelling pitch, even at the time where, um you know, you could kind of see that The AI boom was like right on the way or ready to take off. We’d already gotten our first like initial set of customers. We worked with some of the world’s leading ah AI teams, both at big enterprise models like AI Scaleups. um We already had some of those customers early on, given the insane customer focus that we’ve had. so we really build the product to

Ulrik Stig Hansen: to support those kinds of use cases. And I think we were quite lucky to find and ve you know a set of investors who really believed in that vision and decided to back us pretty early on when the team was like pretty still pretty ah pretty small.

Alejandro Cremades: Because what was the timeline you know between Pre-Seed Seed and Series A? What are we talking about here?

Ulrik Stig Hansen: Yeah, so I think pre-seed we raised in like February. That was like the the Y Combinator check. The seed round we closed in May and the Series A we announced in early October.

Ulrik Stig Hansen: So it was a very, very short timeline. I think that year was pretty crazy. like We ultimately spent most of our time, or not most of our time, but a lot of our time, ah conferring with our legal counsel and and whatnot to get the the rounds done. But um ultimately, you know it gave us the firepower that we needed to ah get to initial scale and raise the Series B this year.

Alejandro Cremades: Yeah, because typically people think more like 18 to 24 months between financing cycles. What was your guys’ thought process behind, hey, you know what, let’s let’s go at it again with another financing.

Ulrik Stig Hansen: for this year you mean or for back then?

Alejandro Cremades: No, for the pre-seed seed and Series A all within such a short period of time.

Ulrik Stig Hansen: Yeah, that’s a good question. So, um you know, we were very lucky to get some amazing customers and amazing logos on board pretty early on. And we kind of like knew already at the time, like what we wanted to build. So for us, it was really a function of like, how quickly could we move on accelerating our product roadmap to um get to build those pieces of the product that we wanted to. um And ultimately, like more cash gives you the flexibility to like hire more people and move faster. um And that’s ultimately like what we ended up doing.

Alejandro Cremades: And how different was it that year, you know, doing early stage stuff, you know, versus the Series B, which is more like growth stage stuff. I mean, it’s quite a ah transformation going from early stage to growth stage. So what was, how different did you find the process of going to the Series B?

Ulrik Stig Hansen: Extremely different. Early stage is all about like vision. I think it’s very little metrics driven. Of course, like you have to have some customers and like some use cases to kind of back it up when you go out and pitch um to make sure that like investors can even believe the vision that you’re selling. I think series B, early growth stage is when things start to get more metrics driven.

Ulrik Stig Hansen: So you start to look more at um different like types of stats metrics like CAG payback periods, ah account executive ramp times on like efficiency metrics, gross margins, and these sorts of things that um will matter even more for later stage rounds where Let’s say that early stage is 90% vision, 10% metrics. I think series B is probably somewhere like 60, 40, or 50, 50 vision and metrics. And when you move to like series C and beyond, the pendulum kind of switches in the opposite direction where it’s 20 to 30% vision and 70% metrics.

Alejandro Cremades: So then it sounds like you guys found product market fit very quickly. What was that moment where you were like, I think that we’re into something here.

Ulrik Stig Hansen: Finding product market fit is always like an interesting thing, right? Because I don’t think there was like a singular moment when um we experienced like, oh, now things are growing extremely rapidly. I think it’s a series of events that just end up happening and then all of a sudden you realize, oh, I’m the founder and i and I’m no longer involved in every single deal anymore.

Ulrik Stig Hansen: So now when we when I see deals close, and I think this is actually the moment where I thought, okay, we have product market fit, was when our sales team started closing deals that I had no idea like ah what those companies were doing.

Ulrik Stig Hansen: um And I think that’s quite a special moment for a founder. It’s kind of like so you know having code that almost writes itself when you see that happening because it means that

Alejandro Cremades: you

Ulrik Stig Hansen: you could build some repeatability into your um sales motion and that the next challenge for you probably is going to be figuring out like how do we scale that up. um

Alejandro Cremades: So then when you’re thinking more about the growth stage where you guys are at now, you know how do you go about ah have you guys found you know that that that comfortable situation or maybe not comfortable?

Alejandro Cremades: Really the the the path to follow you know that was more on the scale side and and what were going what was like going through those motions to make it work.

Ulrik Stig Hansen: People, I don’t think, like talk enough about um scaling a company. um They talk a lot about 5D product market fit. and I think scaling a company is like probably equally difficult, if not more difficult, than finding product market fit.

Ulrik Stig Hansen: This is probably a function of the air gets thinner the longer you get in the journey. So ah for like some of them, even later stage wise, the companies know that the founders there, um you know, they don’t have many peers that can actually like ask questions from. um So that becomes like being the the biggest challenge. I think for us, you know,

Ulrik Stig Hansen: The challenge now is really finding enough qualified people on the go-to-market side that can sell a technical product to a technical buyer in what is still a pretty early market. And I think that’s been one of the main challenges for us is that’s just finding enough um high-quality salespeople that can help us um run the sales function and like run the deals like pretty much autonomously.

Alejandro Cremades: So then, so then also for you guys now, you know, you’ve, you’ve also, we’re talking about scale. So I want to talk about scaling people because in the last year you guys have grown according to LinkedIn by about 36% the employee count. And in the last two years, by about 112%. So how do you think about to scaling when it comes to people, when it comes to culture so that it doesn’t break?

Ulrik Stig Hansen: It’s an incredibly difficult thing to get right. um I think so. We have very much focused on um scaling the team or our headcount in a and profitable way. So not throwing like every sense out of the the window and like just hiring people for the sake of hiring people. We very much like attempted to hire the best possible people and then like you know, getting really the best talent on the board, instead of like hiring 10 people, we might have like three and then we’ll pay them a bit more, we’ll get them more equity in the business. um So we have like a highly concentrated set of highly qualified and talented people that can help accelerate the growth of the company because ultimately,

Ulrik Stig Hansen: ah More people means like more operational overhang means, um you know, you ultimately end up moving slower. um So we very much like taking that sort of like lean approach to growth, which I think has served us well, especially in a funding environment that has been ah somewhat challenged over the past couple of years.

Alejandro Cremades: And then also, how has it been to the dealing with the ah board, the corporate structure, making sure that people are aligned? How do you think now about board dynamics? you know what What can you share with the people listening as well? um

Ulrik Stig Hansen: We had a pretty small board for a long period of time. So CRB, our Series A, and Seed Investor um have been on the board and we’ve had a fantastic board member um from CRB that have been i think instrumental to getting to the company to to where it is today. um I think for the Series B, we’ve gotten um and another investor board, which of course meant up also getting another person on the board, um which I think is great. It adds a lot of credibility to the company that you have a real board assembled. And it also just helps with offering fresh perspectives on the various different types of problems that the business faces and like key decisions we have to make. um And I think for us, like we have really been focused on getting the right people

Ulrik Stig Hansen: on the board, ultimately by giving a board seat away to an investor, it’s kind of like a marriage you can’t get a divorce from. So you have to make sure that that you you get it right and that you can um you can work with these people for like many years going forward.

Alejandro Cremades: And then when it comes to a problems, I mean, you were talking about problems earlier. Also, what what have you learned about problem solving? you know and And really rallying the team around, you know whatever is in front of you guys.

Ulrik Stig Hansen: I think this is probably one of the main things that I’ve learned as a leader that um to solve problems in the business, um you have to get insanely involved in the details of whatever problem that you’re trying to solve and then all the problems that may not be important or like may ah seem like they’re important but not important, you should just delegate. um so That has really been ah the main learning for me. And ah we’re still very much as founders involved in problem solving across the business. I’m still ah doing daily standups with our sales team, our customer success team, with our solutions team ah to make sure that like we are focusing on the right things. Because I think if you scale, that really becomes the the hardest part of of building a company. ah Because you lose that focus, you lose that alignment, and people start to like solve problems or attempt to solve problems that are not there.

Alejandro Cremades: So we’re talking about people earlier. I want to i want to just double click on that. you know When it comes to people, you know they’re already all all of them, they’re all betting on a vision, right? Whether it’s investors, customers, employees.

Ulrik Stig Hansen: Mm hmm.

Alejandro Cremades: So if you were to go to sleep tonight and you wake up in a world where the vision of Encore is fully realized, what does that world look like?

Ulrik Stig Hansen: That’s a great question, and also a tough question. I think in that scenario, um you inevitably start to focus on like what’s next. um So you know our initial vision was to automate the data annotation process for comp computer vision. I think we managed to kind of achieve that within the first 12 to 18 months, or at least to make meaningful progress on that, where like that ceased to be the main thing that we’re focused on. And then we kind of like moved on to the next thing.

Ulrik Stig Hansen: um so i think in a startup, right, if you’re doing well, if you’re doing stuff, and if you’re like growing in some dimension, there will always like be new problems to solve. And you will always like, re, let’s say like, um you reevaluate your vision, and you focus on like, what’s next, ah when certain things are, are achieved. And I think this is a very interesting thing, actually, because I think, ultimately, like with big companies, right, that are not led by the founders anymore, that’s something that they sometimes lose sight of, right, where they stick to the initial vision, but they kind of forget all the stuff that’s around.

Ulrik Stig Hansen: um or like they failed to update their assumptions about the world, like move on from what the but business was all about initially.

Alejandro Cremades: I love that. you know There’s actually a great book called Good to Great, Jim Collins, you know and he really talks about the how how businesses that have the founders living, you know they lose the essence and and how they decline you know over over the course of time. So that’s that’s great that that you mentioned that. I guess we’re talking about the future here. I want to talk about the past, but doing so with a lens of reflection.

Alejandro Cremades: Let’s say I was to put you into a time machine, and I bring you back in time, back to London, you know back to maybe like five years ago when you were thinking about doing something of your own, you know which obviously ended up becoming encored.

Ulrik Stig Hansen: Thanks.

Alejandro Cremades: But let’s say you had the opportunity of having a chat with your younger self, and you have that younger Ulrich right there in front of you, and you’re able to give that younger Ulrich one piece of advice before launching a business.

Alejandro Cremades: What would that be and why given what you know now?

Ulrik Stig Hansen: People always tell you to be patient and you know wait for the right opportunity to come before like making the the jump. um And I think what I probably would have told myself is like don’t be patient.

Ulrik Stig Hansen: The earlier you start, the younger you are when you do it, the more shots you’ll have in gold, the more shots you’ll have at finding something that actually works. um So yeah, I would probably have started earlier if if I could have.

Alejandro Cremades: and I think that as we’re talking about learning here, how have you thought about really scaling yourself too you know to be able to scale at the same pace with the company so that the company doesn’t outpace you? How have you thought about that too, the resources, the advisors, the people that you’re surrounding yourself by as well in order to learn?

Ulrik Stig Hansen: That’s an incredible difficult thing because, you know, you see your employees sometimes they kind of like stop to scale once you hit certain milestones. They might be good at the zero to one phase. They might be good at the one to five phase. As a founder, you don’t really have that luxury. You kind of like have to continue to scale. um Otherwise, you’re going to probably get fired by the board, which of course is not ah the outcome that you want. I think the things you can do as a founder are um meeting the right people, um being in the social circles where you can discuss ah the various different types of problems and challenges you have in the business pretty openly. I think YC honesty is great for that because it gives you that peer network of people that you can um

Ulrik Stig Hansen: you can like talk to and you can learn from. Of course, like not everybody has that luxury, so they have to find it elsewhere. um But that’s, you know, something that I think has been instrumental to at least, um ah you know, my own personal growth, but also I think the company’s growth is that and we have that network, we have the investors that we can ask for help from, um you know, we have all of our, um you know,

Ulrik Stig Hansen: advisors and all these things that um we shouldn’t you should just shouldn’t be ah afraid to ask for help, right? I think that’s really what it comes down to. So ah you need to be able to be vulnerable and ask the tough questions, ah even if you don’t like hearing the ah the answer.

Alejandro Cremades: I love it. So Ulrich, for the people that are listening that would love to reach out and say hi, what is the best way for them to do so?

Ulrik Stig Hansen: So you can either go on our website um on uncored.com, that’s E-N-C-O-R-D dot.com, or just pay me directly on my email, which is ulrich, U-L-R-I-K, at uncored.com. And I’ll make sure to get back to you.

Alejandro Cremades: Amazing. Well, hey, thank you so much, Ulrich. It has been an honor to have you with us. Thank you.

Ulrik Stig Hansen: Thank you for having me. Thanks, Alejandro.

*****

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