When I’m asked to pitch our Vitosha fund to founders, one of the key things I always like mentioning is that we aim to raise the bar in investment professionalism, by offering as diverse as possible expertise from our investment team.
This has been pretty much our ambition from the start: be a team not only of people that have the required skills and are fun to hang out with, but also with backgrounds that cover as wide as possible an array of geographical and stage aspects in the venture industry.
And I’m proud to say that with our team of 10 people, we are lucky to have assembled an array of venture credentials that not only cover over 200 deals with over EUR 190m in transactions, but that we also have firsthand experience in entering and scaling in markets that are core to our business: here at home in Bulgaria, in key European markets like Germany, UK, and Nordics, and fundamentally also in Silicon Valley and the US market as a whole.
Now that our portfolio has reached the critical mass of 25 deals, we decided to launch what we hope becomes a regular series of “town hall” events, where we invite all of our portfolio founders to meet each other and share ideas, current challenges, and experiences with solving business issues, and to be able to share some of our own venture stories, that may be relevant to more than just one of our portfolio companies.
And so at yesterday’s inaugural Vitosha Town Hall, our partner Erik Anderson hosted a session in which he relayed his experience as an investor in European startups that successfully made an entry into North America, both with their products, as well as with fundraising from local VCs.
Before we launched Vitosha, Erik built up a formidable track record working with companies that grow across the Atlantic. Starting from his work with Techstars in London and onto a director role with the first early-stage tech startup accelerator in Central and Eastern Europe, Startup Wise Guys, positioned him as a key player in the bridge between the US and Europe.
His work with Techstars in London parlayed into a director role with the leading early-stage tech startup accelerator in Central and Eastern Europe Startup Wiseguys. Currently back in California after 4 years in Europe, he is a key player in the bridge between the US and Europe. Current roles include being the US partner in a EU-based VC fund (Tera.vc) and active with other programs such as Entrepreneurship-in-Residence Europe (EIR Europe).
According to Erik’s experience, the most important thing is to focus on communication and context. It’s a fact of life that there are vast cultural differences in the way Europeans and Americans communicate. This is not only a language barrier, between native English speakers and predominantly second-language users of English, but also in the way we present our achievements and build our relationships. Here is a brief overview of the main points Erik touched upon in his talk:
A core problem with fundraising and closing big customers is that at the outset, you’re in a Catch-22 (or chicken-and-egg) situation: without impressive traction you don’t get funding, and without funding you don’t have resources to close deals. One creative way to solve this is to be skilful at getting signaling, by obtaining advisors and supporters of your product and company that have a big reach and influence in the industry. These could be influencers for promoting consumer products, or investors with solid reputations as advisors that help with fundraising. Reputable names lend a sense of credibility that is hard to overestimate, especially at an early stage when neither traction nor a big checkbook are present.
Unlocking large transactions (anything above, say EUR 500k), takes having built a relationship with the people you’re transacting with. Such relationships take years to build, but as a startup founder in a new market, your runway is anything between 6 and 18 months. And so founders have to be very conscious and proactive in building these relationships. Actively build approaches to people, communicate carefully and precisely, be mindful of time zone differences, and generally, even in the age of Covid-19, show up in person when you can.
One thing many early-stage startup founders have in common, especially first-time ones, irrespective of geography, is the tendency to do everything by themselves. Staying hungry, staying foolish, being frugal, and eating our own dogfood. However, in environments where you have to move fast and go big from the outset, like the North American market, the game is rather to find the best professionals to do the work quickly and efficiently, and to correspondingly raise money to pay them. A core metric for many US funds is understanding the ability of a founder team to wisely spend the money they’re raising in a 1-2 year timeframe. This means knowing when, where, and how to hire the best tech teams, marketing agencies, and any other resources that are needed.
At the end of the day, soft skills like the ones Erik talked about in our Town Hall this week are deeply experiential, which means you can only really learn them by starting to practice them. A big part of the funding we provide at Vitosha, especially with the smaller tickets, is exactly for that: experimenting with different approaches, validating experiments in product, traction, and growth, and empirically validating a strategy that works. And that’s an individual journey for every founder, no two startup stories are ever the same.
I can’t wait to hear what the next Vitosha expert will share at the next Town Hall!