If you listed the tendencies which have captured the eye of 20 Warsaw-focused buyers who replied to our current surveys, automation/AI, enterprise SaaS, cleantech, well being, distant work and the sharing financial system would prime the listing. These VCs stated they’re looking for alternatives within the “digital twin” area, proptech and expanded blockchain tokenization inside industries.
Investors in Central and Eastern Europe are usually in search of the identical issues as VCs based mostly elsewhere: startups which have a singular worth proposition, capital effectivity, motivated groups, post-revenue and a well-defined market area of interest.
Out of the cohort we interviewed, a number of instructed us that COVID-19 had not but considerably reworked how they do enterprise. As Michał Papuga, a associate at Flashpoint VC put it, “the state of affairs since March hasn’t modified quite a bit, however we went from excessive panic to excessive bullishness. Neither of those is sweet and I’d suggest to stay to the long-term targets and to not be pressured.”
Said Pawel Lipkowski of RBL_VC, “Warsaw is at its pivotal level — assume Berlin within the ‘90s. It’s a spot to watch fastidiously.”
Here’s who we interviewed for half one:
- Bryony Cooper, managing associate, Arkley Brinc VC
- Anna Wnuk-Błażejczyk, investor relations supervisor, Experior.vc
- Rafał Roszak, funding director, YouNick Mint
- Michal Mroczkowski, associate, Market One Capital
- Marcus Erken, associate, Sunfish Partners
- Borys Musielak, associate, SMOK Ventures
- Mathias Åsberg, associate, Nextgrid
- Kuba Dudek, SpeedUp Venture Capital Group
- Marcin Laczynski, associate, Next Road Ventures
- Michał Rokosz, associate, Inovo Venture Partners
For the conclusion, we spoke to the next buyers:
- Karol Szubstarski, associate, OTB Ventures
- Michał Papuga, associate, Flashpoint VC
- Michal Bachmacz, associate, Aper Ventures
- Pawel Lipkowski, associate, RBL_VC
- Tomasz Golinski, associate, CofounderZone
- Szymon Janiak, associate, Czysta3.vc
- Bogy Skowronski, associate, Mitefcee.org
- Boris Kocot, associate, AIP Seed
- Bartosz Lipnicki, associate, Alfabeat
- Radek Czyrko, associate, THC Pathfinder VC
Karol Szubstarski, associate, OTB Ventures
What tendencies are you most enthusiastic about investing in, usually?
Gradual shift of enterprises towards elevated use of automation and AI, that permits dramatic enchancment of effectivity, price discount and switch of enterprise sources from tedious, repeatable and mundane duties to extra thrilling, worth added alternatives.
What’s your newest, most enjoyable funding?
One of probably the most thrilling alternatives is ICEYE. The firm is a frontrunner and first mover in synthetic-aperture radar (SAR) know-how for microsatellites. It is constructing and working its personal business constellation of SAR microsatellites able to offering satellite tv for pc imagery whatever the cloud cowl, climate situations and time of the day and evening (comparable decision to conventional SAR satellites with 100x decrease price issue), which is disrupting the multibillion greenback satellite tv for pc imagery market.
Are there startups that you just want you’ll see within the business however don’t? What are some missed alternatives proper now?
I’d like to see extra startups within the digital twin area; know-how that permits creation of an actual digital duplicate/copy of one thing in bodily area — a product, course of and even the entire ecosystem. This form of resolution allows experiments and [the implementation of] adjustments that in any other case might be extraordinarily pricey or dangerous – it may present immense worth added for purchasers.
What are you in search of in your subsequent funding, basically?
An organization with distinctive worth proposition to its clients, deep tech part that gives aggressive edge over different gamers available in the market and a founder with international imaginative and prescient and concentrate on execution of that imaginative and prescient.
Which areas are both oversaturated or could be too exhausting to compete in at this level for a brand new startup? What different sorts of merchandise/providers are you cautious or involved about?
No market/sector is simply too saturated and has no room for innovation. Some markets appear to be more difficult than others as a consequence of immense aggressive panorama (e.g., meals supply, language-learning apps) however nonetheless will be the topic of disruption as a consequence of a singular worth proposition of a brand new entrant.
How a lot are you centered on investing in your native ecosystem versus different startup hubs (or in all places) basically? More than 50%? Less?
OTB is concentrated on alternatives with hyperlinks to Central Eastern European expertise (with no bias towards any hub within the area), that means corporations that leverage native engineering/entrepreneurial expertise as a way to construct world-class merchandise to compete globally (normally HQ exterior CEE).
Which industries in your metropolis and area appear well-positioned to thrive, or not, long run? What are corporations you’re enthusiastic about (your portfolio or not), which founders?
CEE area is acknowledged for its sizable and extremely expert expertise pool within the fields of engineering and software program growth. The area is well-positioned to construct up options that leverage deep, distinctive tech no matter vertical (particularly B2B). Historically, the area was particularly sturdy in AI/ML, voice/speech/NLP applied sciences, cybersecurity, information analytics, and so on.
How ought to buyers in different cities take into consideration the general funding local weather and alternatives in your metropolis?
CEE (together with Poland and Warsaw) has all the time been acknowledged as an exceptionally sturdy area by way of engineering/IT expertise. Inherent danger aversion of entrepreneurs has pushed, for numerous years, a extra “copycat”/native market strategy, whereas holding again extra bold, deep tech alternatives. In current years we’re witnessing a paradigm shift with a brand new era of entrepreneurs tackling issues with distinctive, deep tech options, placing emphasis on international growth, neglecting shallow native markets. As such, the standard of offers has been steadily rising and at the moment displays high-quality on international scale, particularly on tech stage. CEE market demonstrates additionally a rising variety of startups (in whole), which is generally pushed by an abundance of early-stage capital and success tales within the area (e.g., DataRobot, Bolt, UiPath) which can be efficiently evangelizing entrepreneurship amongst corporates/engineers.
Do you count on to see a surge in additional founders coming from geographies exterior main cities within the years to return, with startup hubs dropping individuals as a result of pandemic and lingering issues, plus the attraction of distant work?
I imagine that native hubs will maintain their dominant place within the ecosystem. The distant/digital workforce will develop in numbers however proximity to capital, human sources and markets nonetheless will stay the prevalent power in shaping native startup communities.
Which business segments that you just put money into look weaker or extra uncovered to potential shifts in shopper and enterprise conduct due to COVID-19? What are the alternatives startups could possibly faucet into throughout these unprecedented instances?
OTB invests basically in corporations with clearly outlined technological benefit, making quantifiable and near-term distinction to their clients (normally within the B2B sector), which is a value-add whatever the market cycle. The financial downturn works usually in favor of technological options enabling enterprise purchasers to extend effectivity, minimize prices, convey optimization and exchange handbook labour with automation — and the overwhelming majority of OTB portfolio suits that description. As such, nearly all of the OTB portfolio has not been closely impacted by the COVID pandemic.
How has COVID-19 impacted your funding technique? What are the most important worries of the founders in your portfolio? What is your recommendation to startups in your portfolio proper now?
The COVID pandemic has not impacted our funding technique in any manner. OTB nonetheless pursues distinctive tech alternatives that may present its clients with speedy worth added. This form of strategy offers a comparatively excessive stage of resilience in opposition to financial downturns (clearly, gross sales cycles are extending however basically gross sales pipeline/prospects/retention stays intact). Liquidity in portfolio is all the time the primary concern in unsure, difficult instances. Lean strategy must be reintroduced, corporations have to protect money and preserve optimizing — that’s the one method to get by way of the disaster.
Are you seeing “inexperienced shoots” relating to income progress, retention or different momentum in your portfolio as they adapt to the pandemic?
A superb instance in our portfolio is Segron, a supplier of an automatic testing platform for functions, databases and enterprise community infrastructure. Software growth, deployment and upkeep in enterprise IT ecosystem requires steady and rigorous testing protocols and as so many handbook heavy lifting with extremely expert engineering expertise being concerned (which can be utilized in a extra productive manner elsewhere). The COVID pandemic has saved engineers residence (with no potential for distant testing) whereas driving demand for digital providers (and as such demand for a dependable IT ecosystem). The Segron automated framework allows full automation of enterprise testing resulting in elevated effectivity, slicing working prices and giving enterprise clients peace of thoughts and a very good evening’s sleep relating to their IT infrastructure within the difficult financial surroundings.
What is a second that has given you hope within the final month or so? This will be skilled, private or a mixture of the 2.
I stay impressed by the unshakeable dedication of a number of founders and their groups to beat all of the challenges of the unfavorable financial ecosystem.