For those who listed the tendencies which have captured the eye of 20 Warsaw-focused traders who replied to our recent surveys, automation/AI, enterprise SaaS, cleantech, well being, distant work and the sharing economic system would high the listing. These VCs stated they’re looking for alternatives within the “digital twin” house, proptech and expanded blockchain tokenization inside industries.
Buyers in Central and Jap Europe are typically searching for 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 scenario since March hasn’t modified so much, however we went from excessive panic to excessive bullishness. Neither of those is nice and I’d suggest to stay to the long-term objectives and to not be pressured.”
Stated Pawel Lipkowski of RBL_VC, “Warsaw is at its pivotal level — assume Berlin within the ‘90s. It’s a spot to watch rigorously.”
Right here’s who we interviewed for part 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 traders:
- 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, typically?
Gradual shift of enterprises towards elevated use of automation and AI, that permits dramatic enchancment of effectivity, value discount and switch of enterprise sources from tedious, repeatable and mundane duties to extra thrilling, worth added alternatives.
What’s your newest, most fun funding?
One of the crucial thrilling alternatives is ICEYE. The corporate is a pacesetter and first mover in synthetic-aperture radar (SAR) expertise for microsatellites. It’s constructing and working its personal industrial 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 value issue), which is disrupting the multibillion greenback satellite tv for pc imagery market.
Are there startups that you simply want you’ll see within the trade however don’t? What are some missed alternatives proper now?
I’d like to see extra startups within the digital twin house; expertise that permits creation of an actual digital duplicate/copy of one thing in bodily house — a product, course of and even the entire ecosystem. This type of resolution allows experiments and [the implementation of] modifications that in any other case could possibly be extraordinarily pricey or dangerous – it might probably present immense worth added for purchasers.
What are you searching for in your subsequent funding, generally?
An organization with distinctive worth proposition to its clients, deep tech part that gives aggressive edge over different gamers out there and a founder with world imaginative and prescient and give attention to execution of that imaginative and prescient.
Which areas are both oversaturated or could be too onerous to compete in at this level for a brand new startup? What different sorts of merchandise/companies are you cautious or involved about?
No market/sector is just too saturated and has no room for innovation. Some markets appear to be tougher than others attributable to immense aggressive panorama (e.g., meals supply, language-learning apps) however nonetheless will be the topic of disruption attributable to a singular worth proposition of a brand new entrant.
How a lot are you targeted on investing in your native ecosystem versus different startup hubs (or in every single place) generally? Greater than 50%? Much less?
OTB is concentrated on alternatives with hyperlinks to Central Jap European expertise (with no bias towards any hub within the area), that means firms that leverage native engineering/entrepreneurial expertise with a view to construct world-class merchandise to compete globally (normally HQ outdoors CEE).
Which industries in your metropolis and area appear well-positioned to thrive, or not, long run? What are firms you might be 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 improvement. The area is well-positioned to construct up options that leverage deep, distinctive tech no matter vertical (particularly B2B). Traditionally, the area was particularly sturdy in AI/ML, voice/speech/NLP applied sciences, cybersecurity, information analytics, and so on.
How ought to traders 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 when it comes to engineering/IT expertise. Inherent threat aversion of entrepreneurs has pushed, for quite a lot of years, a extra “copycat”/native market strategy, whereas holding again extra bold, deep tech alternatives. In recent times we’re witnessing a paradigm shift with a brand new era of entrepreneurs tackling issues with distinctive, deep tech options, placing emphasis on world enlargement, neglecting shallow native markets. As such, the standard of offers has been steadily rising and at the moment displays fine quality on world scale, particularly on tech stage. CEE market demonstrates additionally a rising variety of startups (in complete), which is usually pushed by an abundance of early-stage capital and success tales within the area (e.g., DataRobot, Bolt, UiPath) which might be efficiently evangelizing entrepreneurship amongst corporates/engineers.
Do you anticipate to see a surge in additional founders coming from geographies outdoors main cities within the years to return, with startup hubs dropping folks because of the pandemic and lingering considerations, plus the attraction of distant work?
I consider 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 trade segments that you simply put money into look weaker or extra uncovered to potential shifts in shopper and enterprise habits due to COVID-19? What are the alternatives startups might be able to faucet into throughout these unprecedented occasions?
OTB invests generally in firms 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 typically in favor of technological options enabling enterprise shoppers to extend effectivity, reduce prices, convey optimization and exchange handbook labour with automation — and the overwhelming majority of OTB portfolio suits that description. As such, the vast majority 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’s your recommendation to startups in your portfolio proper now?
The COVID pandemic has not impacted our funding technique in any method. OTB nonetheless pursues distinctive tech alternatives that may present its clients with fast worth added. This type of strategy offers a comparatively excessive stage of resilience in opposition to financial downturns (clearly, gross sales cycles are extending however generally gross sales pipeline/prospects/retention stays intact). Liquidity in portfolio is all the time the primary concern in unsure, difficult occasions. Lean strategy must be reintroduced, firms have to protect money and hold optimizing — that’s the one option to get via the disaster.
Are you seeing “inexperienced shoots” concerning income development, retention or different momentum in your portfolio as they adapt to the pandemic?
A great instance in our portfolio is Segron, a supplier of an automatic testing platform for functions, databases and enterprise community infrastructure. Software program improvement, 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 method elsewhere). The COVID pandemic has stored engineers dwelling (with no potential for distant testing) whereas driving demand for digital companies (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 concerning their IT infrastructure within the difficult financial atmosphere.
What’s a second that has given you hope within the final month or so? This may 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.