Deep dive with Lead Investor- Madis Müür
A Funderbeam exclusive interview with Madis Müür, a former poker player turned investor. Started investing in 2005 and in start-ups from 2015. Has been a lead investor on Funderbeam since 2017 for BiKeep, Ampler, Upsteam plus many more!
As an early stage investor, what questions do you always ask when looking at a business and its management team?
Teams are of the utmost importance in early stage, together with timing. So the teams background, industry knowledge, their networking, what they have learned recently, their understanding of client pain points, growth hacking skills, whether they have growth mindset etc. It’s getting very competitive in European tech scene as well, more and more tech hubs are emerging, more industry experience, more smart money etc and it takes an exceptional team to pull it off more than ever before so getting the team right is very important.
One interesting question is what have you done the last year that you’re the proudest of? Also Jason Calacanis’ question: Why now? What trends or technology breakthroughs are supporting the business idea that is should grow big now?
What is the biggest lesson you have learned in investing in early-stage companies?
Too many to mention. Two most important ones are: look who their other investors are, if it’s industry smart money and experienced investors then that is a good sign, if mostly small ticket FFF type of money then not so good. Also look at their clients and ask their experience, how well it is solving their pain-points, would they pay for it again in 6 months, would they refer it to friends or colleagues or others in the industry.
Are you sector agnostic when it comes to making investments as long as they meet your criteria?
In the Valley and in maybe a few other bigger hubs you can be sector specific but otherwise just too little good deal-flow comes your way to choose from, you wouldn’t be able to build your portfolio. It’s always possible to connect founders to industry shapers and good founders network with them and other great founders anyway. It’s not possible to build a portfolio in early stage investing where you try to understand every part of the business as well as the founder does. If the founder doesn’t know a lot more than you do then it probably isn’t a wise choice to invest.
What is the tipping point to you when you decide in favour of investing?
Team, timing and traction. If there’s 10 unaffiliated customers already happy with the product, there’s solid ~10% month on month growth in numbers, they know their growth channels then that is already something.
Can you tell us about some of your favourite companies in your portfolio?
All of them are, even if for lessons learned. Sometimes lose, always win. Maybe e-bike producer Ampler as one of my earliest startup investments 5 years ago that is also the biggest success story for me. A good example that a great team with great focus on product, sales channels and right markets can achieve awesome results despite limited funding. We have a lot less funding here than in the Western markets so we just have to work smarter and that disadvantage has proven Estonian advantage actually. Founders are really focused on solving real problems and solving them well for a lot of customers with reasonable costs and margins, otherwise you don’t get funding here. You just don’t. Think about how Bolt has raised over 50 times less than Uber to become the leader in Europe and Africa ride hailing. Estonian startups are much more efficient!
What areas do you think will present the most opportunity for early-stage investors over the next 18–24 months?
Climate change and companies addressing that problem will be the biggest business oportunity after the internet like Skeleton founder Taavi Madiberk said. Currently also health tech, education tech and companies solving problems for working, consuming and entertaining remotely (Zoom, Amazon, Netflix) have also enjoyed good progress and will likely continue to grow at accelerated speed for a few more years.
Where are you seeing the most exciting early stage opportunities? What are the ‘ones to watch’/ most currently underrated?
As I’ve invested my portfolio already I haven’t been looking for new opportunities actively. The mentioned climate change and greener transportation modes for sure as Tesla stock price can confirm. Also there’s lot more second generation founders here now that have worked in startups, brought results and are now setting up their own startups, the overall quality has risen significantly also. Some very early ones that have been on my table are DriveX and Vok and my biggest bets from last 6–8 months are Promoty and Grim. Promoty has a great team working with ex-Transferwise developers and industry insiders and something awesome is coming out of that one. Grim is doing a great job of turning values, sustainability and doing good and into unfair competitive advantage, over half their growth is coming from their clients.
What are your fears as an investor?
As they said in Wolf of Wall street: that I didn’t invest more? Joking aside, lot of industries are facing difficult times, lot of SMEs will be out of business for good, financing landscape has frozen a bit. Startups have to be more lean, cost efficient now, growth hacking and better tested and measured actions are required. Can’t spray bullets with machine gun any more, it’s sniper time! Every shot has to bring in a scalp, a client, an improvement. But as argued before, Estonian startups are used to that anyway, they adapt very fast and many have turned into new growth after initial contraction.
A book to read or a blog or podcast to follow…
Hoffman Blitzscaling and his “Masters of Scale” podcast, Sean Ellis “Hacking growth” and G. Weinberg: “Traction” are all great books on startups.
How did you discover Funderbeam?
Several years ago I was learning about how to better build my own company and did that with startup materials. As I had invested before I naturally wanted to try out how it’s to invest into startup, learned about that also, had invested on another platform before and Funderbeam was the next logical step.
What is Funderbeam to you?
Funderbeam is the future of investing! Five biggest tech companies in US are bigger than the market caps of Eurozone stock markets combined! Growth is in technology, in startups. And they were all or mostly grown with venture capital. Now this asset class is becoming available for wider range of investors, which is very positive. Very little growth left on stock market for investors at these valuations for the foreseeable future but there’s plenty of opportunities in early stage tech.
Questions from Kaidi Ruusalepp, Funderbeam CEO and Founder:
1) If you could be a founder/CEO of any company in the world, what would this be and why?
I would definitely still be an investor! As New York angel David Rose said, the role of angel investor is that of a grandparent. You see the companies grow, the pain and the happy days but somebody else changes the diapers and somebody else spends the sleepless nights. I like it that way! I would probably get something done at early stages of a startup but would be horrible in later stages anyway. Very different worlds.
2) Would you like to win the Nobel prize, Oscar or Olympic gold medal? Why?
Looking at Estonian data it is much more likely to build a Unicorn than to win any of those! So far 0 Oscars, 0 Nobel Prizes, 1–2 gold medals per decade. Out of about 500 startups that had been founded in Estonia by 5 years ago four have become unicorns, not bad data! A unicorn has much more wider economic and beneficial social effect than any of those plus lot of potential for further growth. Sports and entertainment are very top heavy in terms of earnings and most people don’t make much or stay at hobby levels. If to choose from those 3 then probably Nobel prize but I probably don’t have the determination to stay super focused on a single topic for several decades and to become truly the best at it, to be able to expand our understanding of it. There are quicker ways to do lot of good for the society and solid money in the process like investing into startups!
3) If there’s 1 question in the world where the universe provides you the correct answer, then what would this question be?
Next Eurojacktpot numbers? I’ve got plenty of answers by now and more will come on the way. I’m more concerned about applying them better than getting new ones at this point. Knowledge without application is useless.
We’ll be continuing our Lead Investor Insights series soon with a mystery question from Madis to our next guest. Stay tuned with social channels to hear more soon!
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