Inovo — We’re going to help create 10 unicorns and a few decacorns in Poland in the next 10 years. Here’s how and why…
We’ve just organized the last closing on fundraising for Inovo’s second fund. This is our current investment vehicle, that has already made 12 investments since it’s launch in September of 2018.
Christopher Janz wrote on his blog that “Raising a new fund as a VC is not that newsworthy per se” and I couldn’t agree more with that.
With this post I wanted to use this opportunity to introduce Inovo to the world, re-start my stalled blogging career and update the Polish investment ecosystem on our strategy and positioning.
Let’s start with the basics…
Here’s some information that will help you to get a better idea of where we’ve been as a company and the course we’ve chartered for the future.
1 We started by raising a €54m fund
Our first closing back in 2018 was at €12m, and our dream was to reach €25m (PLN100m) to invest in top founders from Poland and CEE. It was incredibly exciting and rewarding to be able to more than double this amount! I believe it was better for both founders and LPs that we were able to achieve that size.
2 Our investment strategy is influenced by these factors:
- Company stage — We are an early-stage fund, investing mainly in seed transactions. Our first tickets are between €0.5m-3m. Occasionally we invest earlier or later.
- Product stage — We are more attracted when you have a working product and customers who are able to give us feedback. It should be clear that the product provides significant value and is 10x better than current solutions.
- Geography — We invest in Central and Eastern Europe (which includes Poland, Ukraine, Belarus, Romania, Czechia, Slovakia, Bulgaria, Hungary, Slovenia, Croatia, Lithuania, Latvia, Estonia, Albania, Moldova, Montenegro, Serbia, Macedonia, Bosnia and Herzegovina, Kosovo).
- Home market focus — Our focus is Poland and we want to be the fund of choice for top founders here. We know all the founders, local operators and business angels and the whole tech community here and we can provide the most value here. This includes strong network, organizational know-how related to, among other things, US visas and relocation of founders there if necessary. For more information, please see the section “how we help” below.
- We are sector & business model agnostic. We love software, especially SaaS, and marketplaces, but if we see a great entrepreneur we are happy to jump in other businesses as well.
- We’re always on the lookout for “moonshots”, companies with massive potential for high returns before they are recognized as a success. We view them as companies that can get to $100m revenue in 5–7 years and become unicorns on their way to even more growth. Our data, including the number of pre-seed and seed rounds in Poland and graduation rates suggest that Poland will generate more than 15 such companies in the next 10 years, out of which we’ll help to create approx. 10.
3 A different investment landscape going forward
We have recently begun to position ourselves as a seed fund. Our first fund was in operation in 2014–2015 and at that time Series A seemed the best “stage” to invest in Poland and in the broader region. Three things changed since then:
- Rounds and valuations have become significantly larger. What we called “Series A” in 2014–2015 was around €2-€5m (round size). This is basically a Seed round today. Seed rounds have also become larger, and companies raising them have more traction.
- The quality of founders skyrocketed, and the quality of startups is also much better. I believe top Polish founders are of the same quality as their UK/German/US counterparts. This implies that we as a fund feel more comfortable investing early.
- The current “Series A” space (with rounds of €5-€20m) is very crowded in Europe, including Poland. With our willingness to support top founders, we strongly believe the best place for Inovo to invest is early-stage (including pre-seed, seed, pre-series A).
One thing has not changed at all — our search for ambitious founders with a VC mentality working in growing, dynamic markets. Our door is always open to them.
4 We’re on the hunt for companies that can grow to $100m+ revenue in 5–7 years
- Power law applies to most of the VCs, including ourselves. In our first fund, as of today, our largest stake is worth 40% more, than the sum of all stakes we have in all remaining companies. This enabled our results to be among the top quartile of global VC funds. This is the league we belong in and we have every intention of staying here.
- Such companies are usually created in either enormous markets or new niches that grow exponentially. It is difficult to achieve this scale with a startup in a mature market.
- Large markets make it possible for companies to achieve results much larger than the numbers above.
- We often say to founders that it is OK to fail. As with other tier 1VCs, we will not be disappointed if they lose our money, as long as they do their best to build a large company. We believe in a good ‘founder-market fit’.
- We love all founders, but we find that there are certain groups with a higher probability of success:
🚀 Second-time founders, or founders experienced in other early-stage tech companies;
🚀 Founders with “founder-market’ fit” who understand the pain points of their clients well and build a product that addresses them;
🚀 Founders obsessively focused on the customer and customer experience.
5 How we help
“Stay ambitious — we have your back” is our claim. Stefan Batory from Booksy once called Inovo “my personal Swiss knife, which I can use whenever I need to”. I love that. We often get the feedback that we are “the most helpful VC on board”.
In short, if Inovo is your investor you will have:
- A partner from our fund who will have enough time to support you whenever you need it; a supportive and knowledgeable board member can be a great asset.
- Access to our knowledge platform, which includes all resources you need to succeed at every stage in your growth, and connections to top Polish founders who have done it before.
- Assistance in fundraising (our companies have in captable a16z, Hoxton, Point Nine, Blossom, Greycroft, Rheingau Founders, Owl Ventures, Full in Partners, Evli Growth Partners, White Star Capital, PROfounders, Speedinvest, Karma Ventures, Cat Rock Capital, Sprints Capital, and many more funds).
- We have a full-time recruiter on-board who works with the companies in our portfolio.
Inovo is a partner in the full sense of the word, invested in your success in more than financial terms. Working with founders who share our hunger for success brings out the best in us as committed backers of the journey of an idea, from vision to IPO or successful exit.
6 Who we are
We’re very proud of the team we have assembled. You can find my profile here. My partners Michał Rokosz and Maciej Małysz complete the leadership of Inovo.
Damian Zaplata and Ariel Finkelstein are our very engaged venture partners and advisors. Pawel Stajgis, Krzysztof Przybylak and Kacper Zambrzycki support us in the deal team. Oliwia Dusinska is our communication pro, Malgorzata Sternik is our head of finance, Michal Scipio del Campo covers investor relations, Mateusz Buchta is our legal counsel and Dominika Domachowska handles recruitment for portfolio companies.
7 The “Why” of Inovo
I am a big fan of Simon Sinek, who promotes the value of asking yourself “Why am I doing this?”.
My personal “Why” is very strongly about supporting entrepreneurs from Poland and the region. I am fascinated by people who take a non-standard direction in life (and founders are exactly this kind of people). I have a deep admiration for people who are willing to create something meaningful or huge, and are prepared to make the necessary sacrifices. I love standing by such people and saying “I am here for you”. This is what drives me.
On the other hand, starting when I was a kid, I was angry that Poland didn’t have large global brands, like Coca-Cola, Nike, Adidas, etc. I dreamed I would one day create one. After my studies, I, like most of my colleagues, went to work for international corporations. In most cases, this is associated with reaching a ceiling, since it is almost impossible to be a marketer/CXO in Poland for a global corporation, and manage global markets. You usually cover Poland and the region and are in the 3rd or 4th league of global managers in that company (unless you decided to relocate).
Prior to Inovo I worked at various financial institutions. But only when I started angel investing did I realise how amazing the potential is in (i) early Polish entrepreneurs / start-ups and (ii) technology companies. I also have a slight entrepreneurial advantage, which showed me how difficult it is to run a business.
I realized that as a VC I can:
- Support amazing people in their entrepreneurial journey.
- Support amazing projects, which have global potential, to become very large.
I am now fully convinced that I can support 5–10 projects like this every year and be a part of 100 such projects in the next 10 years.
Inovo plans to fundamentally change the Polish investment ecosystem. We take part in the most ambitious projects. We create global companies, leaders in their markets, headquartered in Poland. We want to make these founders & employees rich and then contribute further to the ecosystem. This is really important to me personally, and to my team. We estimate that our first fund helped to create over 30 new millionaires.
And by the way, on the way to funding the next Polish unicorns, I am sure we will make money for both our LPs and ourselves. But we are infinite players — as long as we are able to be part of the ecosystem and support founders, I will be happy.
(Not sure what an “infinite player” is? Watch this and you’ll never forget.)
8 Poland and the region
Poland and the region already have all the necessary pieces:
- Tech talent — the number of developers in Poland is around 300–400k, and in the whole of Central Europe is around 1.2 million.
- We have examples to follow (in Poland CD Project, Allegro, InPost worth €10–20bn, and Booksy/DocPlanner/Brainly on the way to being unicorns, UI Path in Romania, Grammarly in Ukraine, LogMeIn in Hungary, and many more).
- The Polish people are very entrepreneurial. We have seen entrepreneurship everywhere — every company in Poland was created in the last 31 years. In 1990 there were no private companies, and everything that exists today started then. People started shops, then wholesalers and huge retail chains. People started smaller companies, which grew large. This created a very entrepreneurial spirit, which is somehow associated with a very strong ambition to create great companies. It’s an ambition, to quote Ray Dalio, to “create meaningful work and meaningful relations”.
- Money is spent much more effectively here than in Silicon Valley or in the Western markets.
As a result the VC market has grown 14x in the last 2 years in Poland, and you can see large US funds doing investments here.
9 Our ambition
Our ambition is to be the best early-stage fund that a founder in Poland or the region can have.
We want to be the go-to partner for CEE founders and provide more value and support as an early-stage partner than global funds.
What we do not want is to be seen as the “best fund in Poland”. We want to be in direct competition with tier 1 US funds and being viewed as somehow limited in our reach will not help us achieve this.
Essentially, we want to be a better option than tier 1 US funds, in particular for Polish and CEE founders.
If we ever stop providing value to founders in the region, I think it will mean we have lost our way and drifted away from our core mission. But there’s no sign of that and we work hard to make sure there never will be.
10 Let’s work together
If you are a founder in Poland committed to chasing a large market or creating a great product that can achieve huge success on the global market, we want to talk to you.
If we find that we share a common vision, we can work together and do great things.
If we discover that we’re not a perfect fit, we can still point you in the right direction and everyone comes away more experienced and informed than before.
We’re also interested in meeting international business angels, VC/LPs interested in the Polish market and anyone with experience in supporting and building early-stage tech companies. Inovo co-invests with supportive partners that can maximize the success of the brands in our portfolio.
We’re proud of what we’ve accomplished, excited about what we’re doing now and more confident than ever that the future of Polish tech is just starting to reach its great potential.
We invite you to join us on this journey to success.
Inovo Venture Partners is a first-choice VC for ambitious founders from Poland and the CEE region. We back early-stage, post-traction startups with up to €3M of initial investment, and help them build global brands while driving growth of the local startup ecosystem. We take great pride in being close to top founders who think big. We’re investors in: Booksy, Restaumatic, Sotrender, Infermedica, Spacelift, Tidio, AI Clearing, Zowie, Jutro Medical, Intiaro, Packhelp, Preply, Eyerim, Allset, SunRoof. Our second fund reached a total of €54M.
For more information visit: inovo.vc
