Two years ago, we launched Underline Ventures. It was a very exciting moment for us—we were prepared to put all our energy and experience into helping early-stage founders build the companies they strived to build.
One year ago, we’ve done a quick recap. This year, it’s a short review of our work and learnings.
What we’ve been busy with: we have finalized the raising of our first fund at $20 million, completed 13 investments, and built a team of 10 (5 full-time + 1 part-time + 4 on-demand) professionals to support our portfolio companies.
This 2-year experience has also helped us shape further our principles and modus operandi.
Geeks will always win
Eastern Europe is best known for having good engineers but limited entrepreneurial talent. This is due mostly to the historical fact that entrepreneurship was illegal in Eastern Europe for 50 years.
A generation ago, the rule of thumb was that great companies are built by business people who hire good engineers. So it happens that today great business people can commercialize technology, but they cannot understand deeply its transformative long-term power.
In the past years, we have worked with numerous tech-first founders who use technology to explore business opportunities and help them frame the best paths forward, rather than select the founders who have already matched the opportunity with technology-to-be-built.
I have also been intrigued seeing that most European VCs are looking for the same founder profiles as our US counterparts: high energy, visionary, and never in doubt. Eastern European founders have an engineering background and tend to be more analytical, and thoughtful, but all action.
There is value in the differences. We just have to lean into them.
You are not a lottery ticket
There are many schools of thought when it comes to investing in startups.
At opposite ends, you’ll find the indexers vs. the deterministic. The indexers want to index the market or build a portfolio of a certain quality, large enough so that one of their investments turns out to be an outlier that returns the entire portfolio many times over.
As an ex-founder, I find this to be a misalignment with what founders need. I do not think that founders should be a lottery ticket or a number on somebody’s bingo card.
As a founder, even if you start something without having a deterministic vision of the future, you want to move from directionally unknown to directionally correct as fast as possible. And the best investors help you to do just that – find the right direction as early as possible.
We have concluded very fast that we prefer a deterministic approach to our investments, which needs to be doubled by deep vertical knowledge, good technology understanding, and the capacity to operate as a thoughtful intellectual partner to your founders.
3x capital – financial, human, know-how
Yes, founders reach out to venture funds for capital, but capital in itself is not enough.
We strive to support our founders with both human capital and know-how in multiple ways: from helping them to connect with experts from our immediate or broader network, running expert-led Q&A sessions, hosting private events with potential investors and experts, or hands-on running with them their recruiting processes.
These things matter a lot – founders are usually swamped with work, and providing them hands-on support (not opinions) that is under their control has an immediate impact.
The founder’s path
I mentioned in the beginning that entrepreneurship was illegal in Eastern Europe for 50 years, deeply impacting our local business culture.
In the case of Romania, those 50 years have been followed by another 15 of what I’d call short-term capitalism – a version of capitalism where laws, rules, and currencies changed dramatically each month, sometimes each week, to such an extent that business planning was almost irrelevant.
After 65 years of cultural destruction which ended only 20 years ago, it is hard to ask the founders to have the same level of entrepreneurial knowledge as a founder from San Francisco, New York, or London. Lack of direct access to founding experience (through family, or from other companies) is significant – but Eastern European founders are hungry, and determined and start ambitious startups nevertheless.
The Eastern European founder needs to grow along with the startup he/she is building. The same founder that is running a 10-person team cannot be the same when he/she is managing a 100-people team, with millions in revenue. And, in successful technology startups, this personal development process needs to take place in a highly compressed time frame.
This is another area where we spend extra time – helping our founders evolve, learn, and build their frameworks for future progress.
We’re just two years in, and the best is yet to come.
Per aspera ad astra.