LEARNINGS FROM PAUA VENTURES VISIT IN CLUJ-NAPOCA
Berlin startup ecosystem
Cluj-Napoca was the second city which Paua Ventures visited this year, after Lisbon. We had the pleasure to welcome them in our office and to talk about Berlin and Cluj-Napoca startup ecosystem.
It was a great conversation about the evolution of Berlin in the last 15 years and about its current status regarding the startup ecosystem. Big companies are currently playing an important role in pouring money into the ecosystem. Business Universities adjust their approach and now have the ability to educate and help young, talented people, to develop a strong business mindset.
NOW “ALMOST EVERY BIG COMPANY IN GERMANY NEEDS TO RETHINK THEIR BUSINESS MODEL AND TO FIND NEW WAYS OF MONETISATION”, CHRISTIAN BUCHENAU, PARTNER AT PAUA VENTURES, SAID.
Currently Berlin is putting great effort in building a bridge between German entrepreneurs and USA, for attracting foreign investors.
In Europe the competition between London and Berlin is high. In 2015 Berlin attracted more investments than London, for the first time. Berlin has now its first unicorns. It’s growing fast, the diversity is amazing and has more power and potential in attracting money, than never before.
Culture and mindset are highly important in developing a local startup ecosystem. In Germany, big corporations are getting more and more interested in buying startups. They already build their own accelerators and began to fund startup hubs. They are pouring good money into the ecosystem, which has definitely a positive impact.
“IN BERLIN IT’S A WAR OF TALENTS. EVERYBODY IS COMPETING”, MENTIONED CHRISTIAN BUCHENAU.
Berlin has now an amazing capacity of not only attracting talented people but also keeping them for a long time. Jumping from one startup to another is getting pretty normal, in Berlin.
Cluj-Napoca’s startup ecosystem
What really made Paua Ventures to add Cluj-Napoca on their Europe Roadshow list?The answer is simple. They’ve heard good stories about Romanian developers from Cluj, who currently work in Berlin startups.
Cluj-Napoca has definitely technical skills and talented developers. Even for the local market, the demand of developers is higher compared with what Universities and Tech Schools can provide.
REGARDING CLUJ-NAPOCA’S STARTUP ECOSYSTEM, CHRISTIAN BUCHENAU CONSIDERS THAT “ THE CLUJ MARKET IS STILL IMMATURE. LOTS OF TECH TALENTED PEOPLE WITH NO BUSINESS EXPERIENCE. THE MARKET NEEDS TO BE EDUCATED.”
If you were to compare it to Berlin, you can say that in Berlin you can find highly talented people with business mindsets. Here, startups are competing in hiring top talents. Cluj-Napoca is quite the opposite. The culture is very tech oriented but in order to grow faster, entrepreneurs need to get relevant business experience and their mindset needs to be educated.
“IF SUCCESSFUL ENTREPRENEURS, LIKE FOUNDERS OF LIVERAIL, WERE TO COME BACK, THEY COULD CONTRIBUTE GREATLY TO THE DEVELOPING OF THE LOCAL ECOSYSTEM”, ADDED BUCHENAU.
Reinvesting the money in the ecosystem could help in making a big jump. Knowledge sharing from entrepreneurs and business people, who built their know-how abroad, could help developing an entrepreneurial mindset.
Onyx Beacon and Pangea are just two examples of the companies they like. But, LiveRails exit has definitely impressed them.
On investment
Paua Ventures interest in Cluj-Napoca consists in finding startups with global potential and scalable products but also in understanding the local tech scene and from where the talent of tech people come from.
At the end of 2015, Paua Ventures secured its first institutional fund with a first closing at $45 million. Typically they write checks at Seed or Series A stage, investing amounts between $200.000 to $2 million — with the ability to follow up to a maximum of $6 million. Now they have more power to continue to double down on European market in areas such as SaaS, B2B-marketplaces, B2C mobile, mobile enterprise solutions as well as ecommerce 2.0.
They get nearly 1500 startup requests per year. Having more than 100 pitches per month, you have no alternative, but only to be selective. They already made 4 exits out of 10 investments.
“IN THE EARLY STAGE OF A STARTUP THERE ARE NO KPI’S. YOU INVEST IN THE TEAM, THAT’S WHY TRUSTING AND KNOWING THE PEOPLE YOUR STARTUP IS WORKING WITH, IS HIGHLY IMPORTANT.”
Paua Ventures is looking for extremely talented entrepreneurs and startups with a global mindset. Teams with high potential, opportunity driven and open minded, who have the ability to focus 110% on the product.
When investing they look at complementary teams, market size, market potential, economics, financial model, competition, what founders achieved before, the network they have, what kind of people they are hiring, sales approach and even how founders establish their salaries.
They allow their startups to run 18 months and are interested to see the ability to learn fast, to be agile, passionate and motivated to build a global business.It’s not always the case when startups win a round based on the innovation of their product, but rather on an outstanding execution and a committed team.
They believe that investors don’t need to be greedy and take too much share from the founders, because on the long run it will affect the team’s performance.
