Thus far, the opportunities to invest in these companies have been available for local VCs, angel investors and major accelerator programs like Hub:raum, Y Combinator or 500 Startups. If you are an angel investor or a lesser known VC fund in the United States, Europe, or Asia, how do you get in on the action?
Innovation Nest is a VC from Poland and has been quite successful in its investing game. Its portfolio includes UXPin, which recently closed a $5 million funding round, and Growbots, which can count 500 Startups as one of their first investors. One of their keys to success is their ability to connect Polish start-ups with people from Silicon Valley. They were one of the first investors and partners of 500 Startups, and this partnership is now starting to bear fruit.
We wanted to know how outsiders can get to invest in Polish start-ups or even get noticed on the Polish market? We talked to Chris Kobylecki, a professional who has been involved with the Innovation Nest for several years, to answer these and other questions you may have about investing in Polish start-ups.
Paul Chen: Please describe Innovation Nest’s mission.
Chris Kobylecki: Our mission is to fund great teams based in Europe and help them raise follow-on funding from top U.S.-based investors that can improve their chances of becoming great companies.
You have been quite successful recently – what, in your culture, has contributed to this success?
The strongest element of our culture is developing close relationships with our teams. We support and help them focus on growth by working very closely with them. Our day-to-day approach is based on four pillars:
1. Customer development and business model iteration – We make sure they talk to clients and identify the right customer segments for their products.
2. Strong focus on sales – We believe that revenue is the best metric for growth.
3. Sharing and mentoring – We have built a network of more than 50 mentors (peers, specialists) and actively make connections to people who are based placed to help our start-ups with specific issues.
4. Fundraising roadmap – We actively help start-ups with finding and presenting themselves to investors that provide the best fit.
I understand Innovation Nest has several international partners – who might some of them be and how are you cooperating with them?
Yes, that’s true. We try to develop partnerships that will help our portfolio companies to grow as well as we’re usually looking for partners with which we would have a mutual profit. To give you an example, we’re in cooperation with Amazon and Google when it comes to hosting platforms. That means that our portfolio companies can get access to Amazon Web Services or Google Cloud Platform for a limited time for free. This is a big help at the beginning so the companies will not have to worry about those problems from day 1.
How do you see the investing environment in Poland at the moment, in terms of seed or round A?
Poland itself has a very interesting environment. There are a lot of very different types of funds. There are funds that are supported by the EU, there are private equity funds, there are mixes of those. Poland has also received huge support from the EU. That allowed a lot of companies to start but it has also caused some problems for them due to very strict budgets.
In my personal opinion, there are good options to raise seed money in Poland. When it comes to raising series A, there aren’t that many projects that have raised series A here. There are for sure investors willing to invest in companies in that stage. The problem is how many companies a year are raising series A.
What do you feel domestic Polish investors are doing well?
I think that there are more investors now that are investing smart money. That means that they are not only giving money for the sake of a return but that they are helping companies to grow by supporting them with mentoring, strategic sessions, sometimes even working with them. I think that we can see that there is a growing number of companies that are global and somehow Polish investors helped with that.
What are some issues the investment environment needs to address to bring the community to the next level?
When it comes to the investment environment, I believe what is improving and what will be a big improvement are co-investments. In other markets, you can see projects that are funded by more than one fund happening all the time. In Poland so far, there have been only a few cases. It changes month by month but it is definitely something that we should work on.
Do you think Poland can use some foreign VC involvement in investment?
I think that Poland, as a country, is very attractive to foreign investors. It definitely can use some foreign involvement. There are already a number of Polish companies that have successfully raised money with foreign investors on board, especially when it comes to the post seed stage. Polish investors do not have that much experience with those deals. That’s why I think that the knowledge of more experienced investors is something that everyone could benefit from.
In the end, I wouldn’t say other investors are direct competition. I would say foreign investment is an added value to the ecosystem that will help to make it bigger.
What would, in your opinion, be the best way for a foreign investor, be it an angel investor or a VC, to enter the Polish market?
Entering the Polish market as with entering any market in my opinion, is similar in all cases. It would be good to start developing relationships with people – other VCs, other angels, journalists, start-ups and so on. Basically, when it comes to finding investment opportunities, there is a handful of ways to do it, but your network will always play a major role.
What would be a good first step?
It’s reasonable to find some local partners. This can be done by simply attending a few of the local events and making yourself visible to the community. For example, as Innovation Nest, we’re hosting 2-3 events a year called SaaS Meetup. We gather companies, mentors and investors. It’s a great way to meet a lot of people in one go. There are also a lot of other events worth visiting as well as cities in Poland.
Which people should they contact in the community?
Influencers! Get to know the people who are running coworking spaces, organizing meetups and events. Who is behind all of the activities? Try to meet the people behind the start-ups, like founders.
Paul Chen, the original author of this article, is a frequent collaborator of the Noname Agency.
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