As location becomes irrelevant, Greek VCs eye local talent and spread their wings – TechCrunch
According to a recent report on Greeces startup ecosystem by management consultants Found.ation, venture capital and venture debt have continued to grow in the country, although its angel scene remains low-key.
Oddly enough, 2020 was a banner year, with the sale of InstaShop to Delivery Hero valuing the company at $360 million, making it the largest exit for a Greek-founded startup with operations in Greece.
The pandemic has meant Greek investors and startups realize that if they can work from anywhere and hire from anywhere, then Greece is not such a bad place to be. And the Greek VC market benefits as the diaspora returns from the mega cities of the West. The nations startup ecosystem is also attracting more outside investors, who see low capital costs, an educated workforce and the move to remote working/hiring.
Bessemer Venture Partners, Insight Venture Partners and FJ labs are all backing Greek startups, and Microsoft completed its first acquisition in the country.
Greek startups and investors are also extending collaboration with near neighbors in Cyprus, Romania, Albania and Bulgaria.
Investors in our survey said they were excited by sectors such as infrastructure, agtech, cybersecurity, proptech, efficient software, renewable tech and platforms aimed at helping the recovery of blue-collar jobs.
Were they seeing green shoots after the worst of the pandemic? Yes, but still small.
Investors are spreading their wings outside of Greece as location becomes irrelevant and work-from-anywhere the new standard although the local ecosystem is always a priority.
Heres who we spoke with:
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What trends are you most excited about investing in, generally?
Infrastructure, agtech, cybersecurity, efficient software.
Whats your latest, most exciting investment?
Hack The Box (the largest cybersecurity playground in the world).
Are there startups that you wish you would see in the industry but dont? What are some overlooked opportunities right now?
Infrastructure software is far from being optimized and resulting in huge bills. There is a lot to be done to leverage modern hardware architecture to make things cheaper and easier to operate.
What are you looking for in your next investment, in general?
Industry people fixing their industry.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Data management/analytics is oversaturated.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More than 80%, we operate in underserved market and enjoy preferential pricing.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Shipping is an obvious one but we dont think venture returns can be accomplished in this space.Our portfolio company Netdata is changing IT monitoring. Huge OSS community and $30 million raised so far from Marathon, Bain and Bessemer.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Get to know the people first and where they are coming from (culturally).
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes absolutely, big expensive cities will drain talent to their peripheries (not going very far TBH).
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel is the obvious answer.
We see a lot of opportunity in software rebuilding, consolidation. There is truly too much software duct taped together. Its expensive, difficult to run and creates silos.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
It hasnt changed anything really, we just want founders to be able to use exclusively online channels. Companies with a hardware component are more challenged but even they have to innovate on support, which becomes a net positive if/when achieved.Advise to startups: If you can find money sweep it.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Remote work could become a great equalizer or at least give more opportunities to people living far from the big hubs.
Any other thoughts you want to share with TechCrunch readers?
I think investing in local/geographical ecosystems is not so much about the law/economies of the ecosystem but rather the culture. Actually I was working on an article about that I wanted to share with TC 🙂
What trends are you most excited about investing in, generally?Future of work, enterprise software, edtech, AI.
Whats your latest, most exciting investment?
Intelligencia.ai supporting drug discovery with ML and Big Data.
Are there startups that you wish you would see in the industry but dont? What are some overlooked opportunities right now?
Edtech is a hugely untapped market, especially in vertical education and non-English-speaking content.
What are you looking for in your next investment, in general?
Given the stage we invest in (pre-seed and seed), we are always looking to find founders with a unique perspective, market insights and understanding.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Although we are an Athens-based fund, we are location-agnostic. Half of our portfolio companies are based overseas, with the majority being in the U.K., where there is a strong community of Greek expats and diaspora.
Which industries in your city and region seem well-positioned to thrive, or not, long term?
Given the size of the local market, which is relatively small, I believe by reality our country is better positioned for B2B and enterprise software ventures. The most recent exit of RPA startup Softomotive to Microsoft (May 2020) validates just that. Two companies Im excited about are Intelligencia.ai, which helps big pharma companies predict and accelerate clinical development of new drugs, and Netdata. Netdata is an open-source system for monitoring applications, servers, containers and devices in real-time.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Greece has recently started to get more traction and headlines in international publications, Softomotives exit as mentioned were good news for the local ecosystem, together with a few up rounds for Athens-based startups such as TileDB, Plum and others.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Absolutely, as location becomes irrelevant and work-from-anywhere the new standard we expect more founders to emerge from less profound places. Brain-regain will also be a significant driver, as more and more people will go back to their home countries.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel tech is profoundly negatively affected by the pandemic and while its really early to tell when and how travel will reemerge, I see little opportunities there for the next 12 to 18 months.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
For our post-revenue investments, cash flow and its impact on runaway is the biggest challenge. Our pre-market, pre-revenue startups are less affected. Fundraising for the next round is a major concern and challenge for all. We strongly recommend continued monitoring and cost-cutting where and if needed. For their fundraising strategies, we recommend raising more money, effectively extending their runway to 18-24 months. In cases where their ideal fundraising scenario is no longer a viable option, we suggest smaller rounds emergency financing driver primarily by existing investors that will support the companies until the market is less volatile.
Are you seeing green shoots regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
We are seeing interesting areas for growth as some of our companies decided to partially pivot their core product offering or market segment focus. A great example is MyJobNow a local blue-collar marketplace startup. Their initial product was targeting blue-collar workers using classifieds. Just before the COVID pandemic, the company introduced a second product, staffing on-demand service for delivery and last-mile transportation. The product faced significant and accelerated adoption by retail clients and e-commerce ventures as the need for last-mile delivery was significantly and positively affected by the lockdown.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Most founders showed a mix of good reflexes, empathy and business clarity during the first months of the pandemic.
Any other thoughts you want to share with TechCrunch readers?
A key parameter that will greatly affect the next phase of the local scene is for new first-time founders to be able to attract initial angel and pre-seed investment, as access to 50,000-200,000 tickets is still problematic and limited. We need to enhance the investment numbers on this stage in order to enlarge the footprint of the ecosystem and create a strong bottom-up startup funnel.
What trends are you most excited about investing in, generally?
I most like to invest in radically better solutions to very basic problems, such as preventing disease, or food provision, or increasing productivity in small firms. This is the social context of the fourth industrial revolution, and where some of the great success stories of the next 10 years will be.
Whats your latest, most exciting investment?
Its a tough choice, but I pick 2bull MeDiTherapy. They have developed a unique blood test for prognosis and diagnosis of aortic aneurysm. These is a very common silent killer, that could only be diagnosed up to now by cumbersome and expensive imaging techniques. Once the test gets the required CE mark, we hope it will be widely adopted as a screening method across Europe and the U.S.
Are there startups that you wish you would see in the industry but dont? What are some overlooked opportunities right now?
In agritech, I havent seen much that would help small farms in rough terrain to increase productivity, secure quality or exploit unique niche varieties. This is potentially a big opportunity in many emerging economies as well as in the Mediterranean.
What are you looking for in your next investment, in general?
Ideally, a tool that can solve a fundamental production bottleneck across several industries, and that is based on years of research and has strong IP. An example from our portfolio is Navenio, which has location solution for people and equipment in large indoor spaces, that is infrastructure-free and requires no physical mapping. This has applications in hospitals, shopping malls, logistics centers, railroad stations, etc.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
We see too many applications for e-commerce and service marketplaces. Most are copycats, but even if there is a new concept somewhere, network effects and economies of scale are prohibitive for almost all new teams.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
By our mandate, we invest only in companies that have a substantial presence in Greece. This usually means an R&D center and/or product development team. Within Greece we have no specific preference for Athens, our home base, but most of the good deals we see are there.
Which industries in your city and region seem well-positioned to thrive, or not, long term?
Greece has strong research teams in biomedical science, and a large number of doctors with international experience and networks. I expect that health tech and medtech will be a big growth sector. Another area is HR tech: Workable (a leading applicant tracking system), Epignosis (learning technology for corporate users) and Bryq (a new bias-free candidate assessment platform) have all started in Athens. The first two already have nine-digit valuations, while Bryq is just taking off.
How should investors in other cities think about the overall investment climate and opportunities in your city?
The greatest advantage of Athens and some other Greek cities is the number of highly skilled Greeks in their thirties, who are working in technology or research in the rest of Europe and are looking to return home. Tech employers can easily attract such talent if they offer an exciting and/or well-paid job. These experienced people can train many of the excellent engineering and science grads that come out of local universities. Almost every company in our portfolio has done this. Investment climate is also rapidly improving under the current government, especially for knowledge industries, via various tax incentives, but also by encouraging the research community to open up to business.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes, I expect that, and we are already seeing this in Greece, as one of the places of origin of such founders, but also as a destination for talent that is leaving expensive and crowded cities.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel and hospitality will be hurt. Big Pi has not invested in the sector (by chance, not by design) but some very good Greek teams were in there, and inevitably some will have to move to other things. Great opportunities arise in remote provision of sophisticated services (health, entertainment, education and also equipment maintenance and repair).
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
There have been delays in enterprise sales, and in the supply chain for hardware products. We have set aside capital to support longer runways, but beyond that we dont anticipate much damage. Our advice to founders is to focus all resources on achieving targets that will enable them to raise the next equity round.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The Greek government designed and implemented in record time a logistics system for COVID vaccines, and, most impressively, a very user-friendly appointment platform for the vaccinations that is working seamlessly. For a state that until recently was very slow and inefficient, this was a great leap ahead and bodes well for future digital public services.
Who are key startup people you see creating success locally?
All six VC teams that were funded by Equifund in 2018 have done a very good job (Marathon, Venture Friends, Uni.Fund, Metavallon, Velocity and Big Pi) and have given a big boost to the ecosystem. Founders from Greek diaspora have been instrumental (e.g., Stavros Papadopoulos of TileDB, Vergetis and Skaltsas of Intelligencia, Masouras of Saphetor).
What trends are you most excited about investing in, generally?
Proptech, fintech and marketplace models, interested in both B2C and B2B startups.
Whats your latest, most exciting investment?Influ2 (Person Based Marketing startup B2B SaaS).
Are there startups that you wish you would see in the industry but dont? What are some overlooked opportunities right now?
Some investors shy away from capital intensive models e.g., that need a lot of debt fundraising and many prefer B2B SaaS startups. We like B2C a lot, we like operational plays i.e., not pure tech necessarily, plus we are comfortable with models that require a lot of debt raising in parallel to equity.
What are you looking for in your next investment, in general?
Founders with global aspirations that execute well a scalable model. The team and the market size are the two most important factors, and then a number of other factors: competition, timing/market trend, short- and long-term defensibility/USP, etc.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Many markets/areas are oversaturated or would be too hard to compete this however can vary on geography as well e.g., we have seen some great opportunities in LatAm for example that are copy cats of other models.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
The local ecosystem is always a priority. Also apart from local startups we are looking for Greek founders across the globe e.g., recently invested in a U.S.-based Greek founder. However given the size of our fund and opportunities out there we do not restrict our investments only in the local ecosystem. So far more than 50% has been in the local ecosystem (company or founder) however because we are an international (European mostly) VC more and more of our investments are from outside of the local ecosystem.
Which industries in your city and region seem well-positioned to thrive, or not, long term?
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As location becomes irrelevant, Greek VCs eye local talent and spread their wings - TechCrunch