SPEAKER_04 0:05

Welcome to the Future Ventures web uh podcast. Today's guest is Danislav Sirakov, general partner Launch Hub Ventures, one of the leading early stage venture funds, backing founders across Central and Eastern Europe. Since 2012, Launch Hub has invested in over 150 startups, helping many scale globally and raise a follow-on capital from top-tier venture capital firms. Stand sits at the intersection of capital, product, and emerging ecosystems, backing founders at pre-seed and seed with a sharp iron global ambition. Today we're diving into how overlooked regions produce world-class companies, how ventures evolving, and what founders consistently get wrong when raising capital. Stanislav, it's an absolute pleasure to have you on the podcast. You're a fellow Bulgarian like me, and uh I'm really looking forward to the conversation because I haven't been um I haven't been in Bulgaria uh in terms of a working situation for what ever since I left in '97. So I'm absolutely thrilled to have you on and talk about uh um what's happening in in central and southeastern Europe. Um but in order for us to contextualize the conversation, why don't you tell us uh kind of like what what's your origin journey? How did you come to venture?

SPEAKER_02 1:37

Yeah. Yeah, uh thanks, Max. I'm super excited to be in. Thanks for having me. And I'll be very happy if I could review a bit like what you've missed over the last 30 years in the return. Uh and uh yeah, on myself, um, I've actually always been uh more a math cs type of kid. I've uh I was working, you know, in Bulgaria we have computers, we were one of the kind of Soviet blog computer producers in the 80s, so I actually jumped on my first computer in '85. Actually, it was like the basic kind of uh programming. However, you know, I've I've um studied high school English language, then I went to university, studied computer science. And when I graduated around the early 2000s, I happened to actually like start my career in a different industry. I started my career in uh finance because at the time it was first it was like post.com, but also this region wasn't that exposed, so there weren't that many uh like programming opportunities. So I just like uh actually folder was easier, so I ended up working uh in a big insurance company in the risk management because I was also good with math and statistics, so I ended up working in a risk management, and um I actually were quite lucky because the company that I've been working, this was Alliance, the global insurance like German company. But at the time, actually in Bulgaria, they were managed. So what happened is they bought an insurance company in Bulgaria, and the guy who started the insurance company was still at the head, so it was actually the entrepreneur who started the company, sold it out successfully, and he was just leading the company. And I was very lucky because it was never managed as a corporate, it was managed as a kind of a very entrepreneurial, very startup member on any events that we have, our CEO was telling us you're entrepreneurs, you should like act as entrepreneurs, etc. So this was quite formative, and the other part like they have this culture that if you want to progress your career, and I was obviously quite ambition, you should go to sales. So, whatever you're in product, risk management, whatsoever, you need to go to sales. So after a few years in risk management, I was promoted on a certain sales position, and it was actually developing an entire new sales channel, entire new kind of sales because I worked in the company, and I felt very entrepreneurial. So after spending another two years there in 2007, I decided to leave and to start my own venture. So I was uh probably there was some startups in Bulgaria. I was definitely not the first wave, there were first wave in the late 90s, freedom of home, there were like some um uh second wave early 2000s, but I was relatively early in the startup type system in Bulgaria, and to be honest, in 2007 there was like zero venture capital. So I remember I started when I went on a startup conference, and there was literally one fund which was a VC fund, which was managed more like E. And the guy was speaking on the conference, and he was telling everybody, don't take too many risks, uh, you should like really be risk of us, which is completely contrary to what you expect from the right. So he was like, No, no, you should take very calculated risks, don't do this, etc. etc. And I was like, Wow, um, I raised some money, it was a small amount. I raised uh about$300 uh thousand dollars of of angel money. I have one angel from the US, actually. I have uh two other angels that were private equity guys, but they invested out of out of their own money. Yeah, and we started it was a fintech marketplace. So at the time it was more this kind of I didn't know neither term marketplace, neither term fintech, but in reality, this was what was the company. Yeah, and um I I wanted just to mix with fellow entrepreneurs, so I went to visit every of the local events, entrepreneurship events, etc. And then we hit it quite well actually. 2007 was still still booming years. Um, everyone was looking. So what we were building was uh if eventually a kind of a website where you as a company put your financials and the bank were kind of uh oceaning to give you a loan, so kind of a marketplace connecting uh people to lenders. Everybody wanted to give credits, everybody wanted to take credits. We kick started pretty well, and then 2008 happened, right?

SPEAKER_01 6:42

So I ended up uh still had some of the angel money, but we didn't know where.

SPEAKER_02 6:51

So we decided to stop the company, return some of the money to the angel investors, and with one of my angel investors who's an American guy, we decided to start a local incubator, and it was his idea, not mine. It was his idea, not mine. Uh, he was, you know, he was doing something similar in the past, and he said, I want to really kind of uh build this. There is no money, there is no mentorship, etc. Uh, and he's like making it um, like somebody on the ground. So it was an NGO thing, so it was literally probably the first incubator in Bulgaria. This is 2009. Uh, practically, it was an NGO thing, so it was non-profit. We were raising money for from some kind of international institutions like donors, like Motorola Foundation, etc., but also local tech companies uh to support entrepreneurship. And we were investing, like not investing, funding, um, three to ten companies per year. We were providing a mentors program, so it was practically the first steps in the incubation. And that's how I got involved even deeper into the startup ecosystem. Those early days, you remember, like the big thing was like the lean startup. We were organizing kind of events around the lean startup, this like 2010, 11, you know, how to start a company in a lean array, how to experiment, do the like quick loop, etc. etc. And at a certain point of time, we also tried to raise a fund, like a proper fund with my partner, but we were not very successful. Um, because I guess I didn't have a lot of experience at the time. I was running the thing, but it was just one and a half years. He was involved in many other things, he was uh just like supporting on the on the on the background. Uh so it was not successful, but at the time was actually it coincided with the time when Wandscop first fund was raised. And um this is actually when two of my partners, very interesting guys. One of them built the first internet company in Bulgaria in the late 80s, successful exit, in the late 90s, successful exit. Uh, the other one was consulting, he was an MA banker, consulting tech companies. They decided to launch cup, and I joined at a time when like the like some commitments were made, but the first closing wasn't happening, so just at the right time. So, this is my story pre-Wunch Cup. I'll pause here in uh like we're going into the Watch Cup story, if you wish.

SPEAKER_04 9:25

No, I I mean I mean I I I I love it uh out of curiosity because I went to an English language school as well. I went to Providence. Where did you go?

SPEAKER_02 9:34

In Sofia. I'm from Sofia.

SPEAKER_04 9:35

In Sofia, okay, okay. Yeah. I mean, for context for our listeners, like I don't know what vintage you are, but we seem to be similar age. Uh I I for the first 14 years I grew up under communism, right? So, like anything in English, any foreign language was highly, highly controlled by the government. It was impossible to get in schools like that. Um yeah.

SPEAKER_02 9:59

So it was really probably your city is the city of the first computer in Bulgaria, right? So it was like you're even more, yeah.

SPEAKER_04 10:09

And and and I don't know how many of our listeners and viewers know, but uh the inventor of the personal computer is is is a Bulgarian or quasi-Bulgarian, uh Jonathan Azov, right? We share the same last name, no relation. Um, but he was a Bulgarian that had emigrated to the United States and then uh he invented the personal computer. Um and and to your point, because we're part of the communist bloc, uh it was planned economy. So Bulgaria had the computer assembly. And I don't know if you remember, but uh in Province where I went to high school, um I think the plant still exists where they manufacture computers there.

SPEAKER_02 10:49

Do you know what's funny? I've never been to that. And I I should have, I should have. That's a big shout out. Thanks a lot. I'll definitely go there. I I yeah, I I I think it exists. I think it's a great place to visit. Yeah, because as you mentioned, during this kind of communism era, Bulgaria was actually mandated to produce the computers of the of the Eastern block, and we were actually copycatting the Apple II, and I think the product computer, which I was first uh proponent was uh an Apple II quone or something like that.

SPEAKER_04 11:25

Yeah, yeah, yeah. Fantastic. And and so that launched you into Launch Hub um kind of by uh serendipity. Um tell me kind of like what happened like afterwards. Like, I mean you came in pre-first close, so I'm assuming that you you led the first close uh in investment, and then what's the story afterwards?

SPEAKER_02 11:48

Yeah, I I'll tell you. So uh like when we started Launch Cup, so my partner started uh raising in 2011. I joined 2012 at least. We've done the first closing of 2012, but at the time, actually, um there was again, there was like zero capital, not only Bulgaria, the entire region. And what we were trying to build and had some institutional backing was a kind of a again, accelerator, incubator program, something very similar to what YC in this region. And we uh knew that we couldn't do it only ourselves. We need some kind of institutional knowledge. So we partnered with three actually three funds. One is SeedCamp. I don't know whether you know, it's uh the what they call the YC of Europe, it's uh UK-based, it's now they've moved more into seed stage, but it's probably uh yeah, one of the best known uh seed funds in Europe. So we partner with them and we partner with two other US funds. One was the accelerator program of the Mozilla Foundation, so we were actually partnering them, and the other was called IO Ventures. So we decided that we need all this knowledge in order to build a proper program. So our first calls actually happened to be 10 million dollars, so small amount, but again, zero VC funding in the entire region. So not only Bulgaria, Romania, Greece, uh like Western Balkans, Serbia, Croatia, Slovenia, zero capital. So, in a way, we came in a region where there was not a lot of money, and at the time where entrepreneurship was started to get in all, so it was never at the state it is in the US, but it was just kick starting. There were more gatherings, more co-working spaces, more like uh meetups, um, like startup schools, etc. etc. And what we decided from day one was actually two things. We want to build a really like good program because some of our backers were doing it more for the ecosystem. They were like years later, they revealed we were never expecting a return from you, we were just wanting to do it for the ecosystem. But we always wanted to do a proper, kind of a very good quality program, and that's why we partnered all these kind of a great funds, and uh we were pushing on this, we copycat a lot of a lot of kind of the the other programs, and then uh the other thing we realized doing only Bulgaria, all these all these all those markets are like pretty small markets, so doing only Bulgaria doesn't make any sense. So we started traveling in the region like from Turkey, Greece, Romania, like Western Balkans, even like Austria. There was one or two funds in Austria, but not actually very active. Ukraine, yeah, yeah, it was yeah, it was holiday. This is 2012, 2013. So we started actually investing across the region. Initially, we were running a program, then this also evolved. We realized that it's very hard to build a world-class program if you don't have world-class mentors, right? And there were some early success stories, but there are like one or two or three companies per country that were doing good internationally. Yeah, so we don't have this much of a recycle capital, recycle knowledge, yeah, recycle kind of a talent that is happening. So it was very hard. And then what we decided to do is like let's pick the best like people in the region, and we try to bring them in the US, or we try to bring them in the UK, in London, have more knowledge. So we were doing those kind of uh weeks like a San Francisco week, a London week, a New York week, etc. And we were bringing some of our portfolio there and try to connect. And what we what happened, and um our love for diaspora actually is from that time, of course. Initially, we connected to the diaspora, and we found that there are a lot of like great people like yourself, very smart people, like very successful people in big tech companies from our region, and they were very open to give back. So I actually went two times in the Bay Area in our first year in 2012, early 2013, uh, a few times in London, um, and like trying to bring the portfolio companies, and we actually um started there. Uh then in 2016, we topped up the fund, so it was a bit of a weird structure again. It was like more amount in the same fund, so we practically invested from 2012 to 2018 out of the same vehicle. Okay, okay. Approximately 100 investments, uh checks like pre-seed checks at the time. This was like two, three hundred K checks, and we were trying to help them with the program, etc. And just the region by the time changed enormously. There were funds started emerging, there were more money, there were first success exits in each of the countries happening in this period. So there were companies that were sold, like for example, in Bulgaria, there is one company that was so sold for 300 million in 2014, there was one in Sweden for sold approximately about a billion in 2017. There were like more and more exits start happening, and more and more angel investors, Stanislav. What are the names? Let's give them a shout-out. Yeah, of course. So the Bulgarian company is called Teleric, and actually it was a growth, it was an investment by Summit Partners in Boston. It was a great story, not only because of the exit, but uh it was bought by a uh public company in the US, but because actually, out of the employees, there were probably 10-20 startups that uh that actually uh and yeah, and and and some of them raised actually hundreds of millions as a formal funding. We were uh we were investing three of those. So so there were a lot of one. And in in Slovenia, the company is called um uh the company is called it was the producer of this app, talking toma. I forgot the name of the company, but this app that every kid is playing around and you hit it and it returns like an Apple hundred app. It was a billion exit, right? So it was uh quite yeah, quite significant. So more and more money were coming, more and more entrepreneurs, and and we we've started seeing this kind of a series A funding. We started seeing first exits ourselves. So we have exited. Um, we were in a company which was a Bulgarian founder, moved to the Bay Area, done a fighting sport, like an app for fighting sports, and it like it was called Fight. It got acquired, it was quite like it was probably premier app at the time for fighting sports streaming content um in the US. Then uh another one in the co-working space, software management, also, etc. Quite quite significant ones. And in 2019, we said, okay, we've kind of a run like we've seen, we've invested in a lot of companies, we've seen the whole region. It's time for us to raise our first proper fund. And we started fundraising our like uh fund number two, which unfortunately we started in 2019, but then COVID came, and it was usually managing the story. Yeah, so yeah, first closing was 2021, unfortunately.

SPEAKER_04 19:55

Yeah, and how big was uh the second fund?

SPEAKER_02 20:00

75 million euro. Okay, so a bit more indoors, like um proper seed funds investing in this entire region. What we realized by the time is that it's not the first 100k, 200k, 300k. First, because the angel community actually evolved a lot, so there are now a lot more angels in the entire region, yeah. And you could easily raise up to 500k from angels or all around, so it's not the first money in, and there are more experienced people that were on like good positions that were starting companies, so they don't need this kind of a hundredk check, but what the region is like properly missing is a proper seed fund that could lead like half a million to three million rounds, you know, like help you too early for you to go and like fundraise in the US, right? You don't have the method, not enough momentum, and nobody knows you, right? Because if you are um if you are from Bulgaria, from Romania or from Greece, it doesn't matter, like you are not networked well there. So give this initial money to build initial traction and then go for the series A. So this is our thing, and what we also realized there is a lot of missing knowledge on series A. So we started called Series A Academy, where we were inviting successful startups that raise series A's or investors, like some of we have a lot of like we have funds like inside partners, like funds like uh CRV, index, etc. Like quite, quite quite good brands were actually coming and like sharing their experience, what's there in the boardroom, what are they looking as partners, etc. etc. So drank. We first done this for our portfolio internally, but then decided to do it for the home market. So we were inviting uh like inviting other founders as well. So this was um another kind of a mile. One we went through, and um this one is now actually like uh portfolio, it's not fully deployed, but in terms of uh new investments, it's not making uh any new investment since our last investment was December last year, and actually we are uh now just started our new fund where we we've made two commitments from it already uh since this year. Yeah.

SPEAKER_04 22:24

Okay.

SPEAKER_02 22:25

Yeah.

SPEAKER_04 22:25

So fund trees already raised or in the process of raising it?

SPEAKER_02 22:29

In the process of raising, we've done first closing. We are actually preparing the kind of uh we are raising for finals.

SPEAKER_04 22:36

So tell me like zoom out a little bit, tell me a little bit about more about the the region. Um we we closely at Future Ventures, we closely collaborate with Textiles. And if we look at where the the latest Tech Stars accelerators were opened, Istanbul and Sarajevo. And I'm like, okay, what's happening there?

SPEAKER_02 22:59

Um first I think like uh so accelerators, there is more need of knowledge everywhere, right? Yeah, I consider accelerators more kind of uh knowledge institutions. They need to, they need probably a good accelerator needs to do two things, right? Like, like like give you knowledge how to start a company and actually give you a proper network to do it. Yeah, and all those markets need a lot of this, so we see a lot of those open. Are they necessarily a good like investment opportunity? Depending on the case, of course, there are amazing ones like YC, but there are also what that are not making money. However, um, I've been in Cerato last year, and yeah, there is there is very good diaspora, there is tech talent, but there is not a lot of angels, not a lot of opportunities to fundraise, etc. etc. So a good accelerator could provide this network with angels and uh and um like startups. So however, I would say some of the markets, like like in Turkey, there are already I think two to 10 billion kind of a companies, right? Uh there are like uh diaspora, Turkish diaspora is great, and there is there is a lot of capital in Turkey. There are a lot of Turkish funds. Uh in in Greek, there are like Greek-only funds as well. In Romania, there are Romanian-only funds. So, what happened in the region is two things actually. On one hand, on the funding side, there were a lot of like the local governments at certain points looked and said, okay, we need to kick start this industry, so we are gonna put money in in kind of a country-specific local funds. So I'm a Romanian government, I want to build a fund for Romania. I'm a Greek government, I want to build a fund for Romania. I'm a Hungarian government, I want to do it for Hungary. That's one which creates capital, which, in my opinion, it's a bit restricted because it's single geography, but on the other end, it's good for the local ecosystem, right? Because there is more capital. So if you're a startup founder, you you have enough capital to raise. Comparable to the US, of course, but like like 10 times more than before. Um, on the other end, I guess, especially during COVID and after COVID, a lot of the local diaspora actually returned. So I remember I was looking at a Slovenian guy at Meta who was based in San Francisco. He started a company, I wanted to invest. Unfortunately, I couldn't like self-invested in the pre-seed or the seed round, or whatever. Okay. And then he came back, he exited his company, but he came back in Europe. He's now he's now in Lublana, in Slovenia, and he started his company, right? So so so practically a lot of bias people returned during COVID, and this bring brought even more knowledge, even more uh kind of a network. And now I would say those markets are much better networked and more uh and better capitalized. So this for me is I'm very excited about this because it just like reveals like when when the market is small, obviously the outcomes are small and and like limited. When the market is getting kind of developed, like the and for me as an investor, I want more and bigger outcomes, right? So of course, yeah, that's uh um that's exciting. And there were uh significant outcomes. So UiPath in Romania, right? It started. Uh we actually looked at it, it was very bad coincidentally. We didn't have funds at the time, but it produced a 10 billion kind of a public company. They at a certain point of time, even 50 billion, uh, when they IPO'd in kind of uh in New York, I think, but but then like uh because of the uh price kind of uh yeah, it's it's kind of uh went a bit down. Um 11 Labs, which is an amazing product, it's out of Czech Republic. So yeah, there are now more and more global companies started in this region, and I'm very excited about this.

SPEAKER_04 27:14

So um what country are you most excited about? I mean, it and I expect you to say Bulgaria in some ways, but like um and a lot of people kind of group like think about uh Central and Eastern Europe as more like all the way to Poland. But for me, Poland is Western Europe because because of where it's situated. Um but if you if you think about the the old traditional eastern bloc, kind of like what's the what is the country that's that's producing maybe the it has the highest concentration of talent, the highest concentration of startups, the highest concentration of mentors, capital available, kind of like what yeah. What is that three?

SPEAKER_02 27:53

But by a huge margin is Estonia, right? By huge margin is Estonia, and I don't know whether you've heard that it is like because of Skype, so they have Skype, they have transfer wise, which is wise. They have they have a lot of huge, and I think there was like I'd read a survey that's probably in Europe, in terms of concentration, startups, etc., they are like probably number one. Um now we we we we go all the way, so we also invest in voltage, we also invest in Poland. Of course, we are better network in like southern part of Eastern Europe, but we also go all the way in. Um and to be honest, for example, Poland nowadays it's it's uh it's going well, but a few years back I was looking, and comparable to the like GDP development and how the country developed it developed amazingly well, like the startup level was not like today. So it was on par with the other, it was on par with the other countries in uh in Europe, right? And yeah, obviously, Poland is the biggest country, um, uh and uh you would expect to have a bigger number of startups, but if you look at a bigger like outcomes, not necessarily there. Yeah, um, I would say two things here. First, I would say uh we also are in love with diaspora, so we've also invested in a lot of diaspora, and I think a lot of the regional funds are also doing this. And you could find so like one of the co-founders of Snowflake is a Polish guy, right? So through like the okay, yeah, so one of the co-founders of Snowflake is a Polish guy. Uh two of the co-founders of of Databricks are Romanians, so there are like a lot of those people, very well, obviously, like the city of OpenAI was an Albertan lady. So they're like a one of those kind of a great people, uh, which are in really amazing companies in the US from the region. And it turns out that if you for certain reasons, like for certain kind of uh uh like coincidence or whatever, have access to those people, it's it's it's a great opportunity because, for example, they are also angel investing in uh in their countries or in the in the entire region. So that's number one, and then number two is I would say that still the markets are smaller and it's very cyclical. So I'll give you something from our internal data. When UiPath went public, I think it was 21 or 22 at a 50 billion valuation. It was, I think, the biggest IPO in Europe since SAP, uh, a Romanian company. We've seen a water what happening in Romania. And we also invested in some of the early employees of UiPath. We'd see a lot of kind of a uh like the whole ecosystem was like bustling. You you could feel it because people know them, they were like more capital recycling and a lot of this. But then, because the country is not that big, it's big, but it's not that big, it somehow consumed the Taiwan and stopped. So, so like we see a lot of this kind of a microcycles happening in each of the countries, and we are actually today, for example, we see a wall in Croatia. There were a few success stories in Croatia. I don't know whether you've heard of Riemats, which is the fastest electric vehicle, a Croatian founder. It's like um it's a super expensive, and they bought Bugatti. Yeah, yeah, you know, I saw that because he's now the CEO of Bugatti. Exactly. So I I know Remats since 2012. I met him for the first time when he was building this car. I was like, an electric car in Croatia? Are you crazy? No, Bugaris are actually uh building Croatia. So I think in each of the country there are like those stories, and very, very much the startup ecosystem is following those stories. And when there is a success story in one country, there is like more and more flourishing, and there are more and more companies coming. So we are uh we are seeing those kind of a microcycles across the region.

SPEAKER_04 32:00

It's interesting that you mentioned this. Um uh as I mentioned, we we work closely with with TechStars, and TechStars has an actual title, a person. His name is Eric Mintisek, and he's a community architect. So with him, we've worked to kind of understand what makes for a driving startup community. And it's the things that you're mentioning, like it's kind of like the PayPal mafia. Like you, if you have founders, you have uh, if you have recycling of capital, if you have mentorship, if you have uh kind of these uh connections, because they're TechStar's most successful community is not something that you would typically expect. Is Boulder Colorado, followed by New York, followed by the other, and it's like it's it's to your point. Like companies got spawned off, they became successful, they exited. Um, now they have all these founders with money. They either start new companies, new capital, or take the capital, put it into other companies. And so it just becomes this recycling, this virtual circle that creates the momentum.

SPEAKER_02 33:00

Yeah, yeah, exactly, exactly. 100%. We also observe it here. Of course, probably uh different uh different um scale, but it's it's it's it's quite visible. So, what are you the most excited about at the moment? So uh most excited, you mean in terms of technology or in terms of like industries, companies, kind of like what this is a very open-ended question, but yeah, uh I'll tell you, I'll tell you what I'm most excited about. I'm I'm very excited for how we are automating our business. Okay.

SPEAKER_04 33:37

I wanted to ask you about this because I I read about it. You're trying to take a turn venture on its head and say how much AI can we apply into venture.

SPEAKER_02 33:46

Yeah, yeah, we we've done an internal hack on for our team. So we've done an internal hack ton, um, and we've produced like a lot of uh different tools, automations, etc. Just before our call, we had an internal call, what more we could automate, etc. etc. Yeah. So I see my productivity boosted like amazingly. And I'm gonna do research because we have an LP, an LP event in in a month time, and I'm now preparing a research for our portfolio as well. Because I hear anecdotally in every board, in every company, okay, like quote code or or codex, or it doesn't matter, has changed this kind of uh tremendously for us. Yeah, we're now doing faster, etc. But we want to actually really try to measure this for like uh so we are gonna do it. So, one of the things I'm very excited is about my personal productivity and the founder's productivity. Of course, uh, one of my colleagues, um, uh, we were just uh laughing uh today, he's kind of a self-coded, uh uh uh kind of a recording tool, uh kind of taker tool. And obviously, we are using ourselves, but he's kind of a himself. So we are so I was like, okay, like if I bring a startup to you, uh, this one of my partners, you'll probably go for a day, you'll try to kind of a vibe code it, and you'll kind of say, Oh, this idea doesn't like it's not credible because I've done it in a day. So there are like certain risks related to that, but um that's one thing. The other thing I um I'm quite excited. This is very uh specific for Bulgaria, I could say. Uh, they built an like a few years ago, they built an AI institute, which is only focusing for postdocs, so PhDs and above. It's a very renowned professor out of Etechai in Zurich, the probably the premier continental Europe university, and he's doing it in collaboration with MIT, Technion in Tel Aviv, uh Etecha and Cambridge, I think, in Europe. And he's actually it's it's it's only a PhD type of program, but he's bringing amazing. So in Sofia, like a year ago, there was like the newest board member of OpenAI, uh, who's a professor at Carlon Himellon, who is actually giving a lecture for the university. This, if you ask me for Bulgaria specifically, that's probably the best thing that happened like in the last 20 years, in my opinion, uh, for the country. But overall, I see this ambition and these success stories, and it makes me very excited. You know, I'm kind of uh um yeah, for the entire region and all those kind of uh companies that we mentioned, yeah, and all these kind of uh successful founders, even in the US companies that are from the region, that are giving back to the region, that are more engaged with the region. I'm super excited about it.

SPEAKER_04 36:47

I mean, and rightfully so. I mean, I remember uh I I'm a CPA by background, so I'm more I've always been on the finance side rather than the on the development side. But I remember I took my first coding class in 1989 in Sofia, and my my instructor was was uh a lady of I don't remember her name, but at that time she was focused on AI and machine learning. Uh that was back then. I mean, that's many, many years ago. And I mean I remember uh coming out of Bulgaria, I was really, really proud because we had one of the highest literacy laid, highest levels of education. So there was a lot of focus on uh secondary, post-secondary education. Um technology in IT was a key area of focus. And so I obviously I want to see my country, my uh country of origin be successful in this space. Um and and and it deserves to be.

SPEAKER_02 37:45

Yeah, absolutely, absolutely, and I think that's uh that's a definitely a very exciting story. It is for Bulgaria, but it's also for Romania, it's also for Poland. I think the whole region was um like historically very good at math. So my son is now at university studying math NCS, and he says some of his kind of a best classmates are from Romania or from Ukraine or from Russia or from Poland, etc. So those university is he attending? He's in in Europe, he's in Polytechnique in France, so he's not in the US. Um, so he's in Europe. Uh, but like one of his kind of a top like performers are from uh some of the countries in the innovation. On the other hand, I think still like the political side is something that we could always complain about, right?

SPEAKER_04 38:44

I I heard that I I I don't follow Bulgarian politics though, but I heard that the last the election that just happened that somebody came in and said no more elections, because I think there's been four elections in four years or something like that.

SPEAKER_02 38:56

It was a nightmare. It was a nightmare. But uh what I think um like there, like if you look at those countries, there you could see like two different worlds. Like people are traveling all around, they're recruiting, they're making headquarters in New York or in the Bay or in Europe, some countries, etc. They're recruiting globally and they're building global products. But then what is for me still to come is how this success and wealth and creation could kind of universally um uh spread across the more like circles, social circles. And it's a problem everywhere, it's a problem in the US as well and everywhere. But I guess here, because like this is a more recent trend, probably it's still a bit delayed. So I want to see more of this because sometimes when I speak with some friends from childhood, etc., that are not in this kind of a tech bubble, I think they have like zero understanding what's happening, right? And I'm I'm I'm trying to educate, but at the same time, I think you could educate by experience.

SPEAKER_04 40:08

So yeah, and and and uh tell me a little bit more. What do you mean in terms of the advancement of AI and the adoption of AI, or um what are you referred in in when you were when you were narrating the story around like when you talk to your childhood friends, they have no idea. I just want to contextualize it.

SPEAKER_02 40:27

No, so there are two. First to start, I think, okay, for tech jobs and programming jobs is one thing. But let's say if you are uh like a biz dev person, if you are uh a CS person, a marketing person, you don't see that many opportunities in tech right now. And obviously, if you go in tech, you would have an access to uh worldwide audience, so you're not doing testing just for Bulgaria or Romania or so. You could do marketing for the like for the entire world, and you develop as a profession, like that that's number one. And the second thing is because I have friends and even my wife, she's in a more traditional industry as pharma. I see how are we today adopting all the kind of AI tools and with what speed, and I see some of the other like more traditional companies, how are they like adopting them? There they are adopting them. It's not that they aren't, yeah, but I feel the productivity level is not advancing to this extent. So that's number two, and then obviously number three is like the more of the socioeconomical kind of a wife of the country, how this actually helps, how people are thinking, okay, I'm not an engineer, but maybe my son could become, and that would kind of my family be better and better. Still, this is not a top-of-mind career, let's say, in my view.

SPEAKER_04 41:54

That's a shame. Um, what are the different governments uh uh in the region doing to uh um to promote this? Because I mean, obviously, at one point there was the regional advantage and and it the low cost, but with with AI, a lot of that margin or gap has has shrunk uh because the things that you were outsourcing to low-cost centers now you can do with AI. Um, so what what are the economic development agency or regional governments uh doing to promote like what it's AI literacy or AI adoption or upskilling, reskilling?

SPEAKER_02 42:34

Um maybe I I I'm not like up to the final feet, but what I've seen, first it's very much developed on the like like who's who's in charge. So, for example, in these, because like because their prime minister, Max Stanford guy, like very well educated, been like at the forefront, they're now doing a lot in the respect of so it's very dependent on like who's in charge and what like their personal knowledge, understanding of these things. So I don't think I don't think the countries are at par and they change also, like like with politics, everything is like within certain mandates. Um I see a lot of people, especially in education. So, for example, I have some kind of more uh like observation on education. There are trying an amazing lady in Bulgaria, she was like a deputy, uh deputy education minister, she she used to live in the US, Bulgarian grown up and lived in the US, was working at Google, so she was trying to adopt AI in education, but again, these are very related to the like individual personal like experience of like different kind of a governance. I don't think it's still universal to say, okay, it's an amazing. rather like trying to think about education. That's probably for me that's my personal thing to be honest. We we also as a fund when we because we do a lot of contributions to different causes and we as a fund decided to uh contribute to education that's our uh cause and that's why i would like to hear more from the like fundamental approach to it yeah um what would you like to see um to to drive unlock um in in the region in terms of venture or proliferation of uh of uh startups at the advancement of scale ups kind of like what what would you like to see probably the quick answer would be uh more like beyond coding more different skills that you need to build a company more more go to market more product more kind of a so because it's not just coding right coding is a very fundamental part but you need other other skills in order to this is still missing and to be honest most of the companies we invest or other funds invest they go and they actually try to acquire this in in in in like more sophisticated markets like in the US if you look if you look like probably a very big chunk of our portfolio would be engineering in Eastern Europe go to market in the US that would be probably like a very good representation of what's our portfolio today.

SPEAKER_04 45:29

So there are some skills uh in terms of a walk I would say yeah it's it's I think there is like this like like like uh why we wear like the more you create the more appetite the more opportunities etc etc and again I think we are early links into it so I think like there is more like to come of this yeah but every kind of a successful company actually unlocks more and more uh this is one thing but I think founders in their ambition at least what I see in terms of how I how are they like easy to travel etc there are uh probably also the other thing is the support industries so industry is related to legal accounting yeah uh uh like uh even kind of um uh advisory services etc there aren't that many specialized ones and there are of course a lot of the such services but not very specialized for fast growing tech companies yeah yeah yeah so the the scale and and and by the way this seems to be universal like I mean uh I'm I'm based out of Calgary here in in western part of Canada and we see that the biggest gap that that that exists at the moment is in the scale of phase companies with three to fifty million dollars in revenue that are looking to grow uh exponentially uh that looking to grow fast and so the things that existed at this kind of the startup phase uh those those are fantastic because you kind of need to fill the pipeline but the startup is fundamentally very different from a scale of the things that worked at a startup phase don't work at the at a scalar phase and and so I mean this is the primary reason why we decided to focus on on scaling up uh companies because we the risk is lower because they already have product market fit and they need help in and primarily the help is strategy growth and capital um like 100% are typically technical founders right so they they know how to write code yeah yeah yeah absolutely absolutely and you know what I believe it's it's it's good magic I think some I've seen some engineers grow into a like amazing CEOs not all there are some that cannot or they don't want to they're still so much in love with engineering they then don't want to let go in order to become CEOs but I've seen some become the ones that become and are successful they're very good because they're analytical data driven etc the ones that don't want to let go probably one of the things I see they just don't they don't want to be honest and say okay I don't want to let go my kind of an engineering job to become a CEO and maybe they should like they should recruit themselves uh a leader who's yeah like maybe but they should be probably more like uh honest within themselves and actually try to to to to do you you know what I think that every every founder should do is what you did. If you have ambitions to be a leader of a startup scale up you have to do a Steam team sales you have to understand what it what it what it takes to sell um because because that's the best way to uh and understand what what your customers are looking for what they need and how to provide it to them um because I mean in the beginning you start with founder at sales it's you have to be good if you want to achieve commercial success.

SPEAKER_02 49:05

100% 100% yeah have a few companies unfortunately where they say okay we are at 200 300k very early on and we want to get our uh sales leaders and oh man you know you need to it's your vision it's your story you're not selling a product like you are a Microsoft or whatsoever you you have to see your story and your vision and it's like no better than yourself don't don't get account execs or whatsoever it's too early.

SPEAKER_04 49:33

Okay. Um because good if you're the founder you you to your point you can sell the vision you can talk about what's on the program road map it you can talk about where you go and you can ingest the feedback bring it back to the developer.

SPEAKER_02 49:46

Yeah I completely agree with you what what what other mistakes are founders commonly making that you would like to see this like changed I think one thing and and obviously this is um you know in a way it's it's like our companies so we have a very good ratio by the way we number one metric we follow is like C to series A so because actually this means that what we invested like of course long term is X and PPI but like short term. And we have about 40% of our portfolio that raised like series A uh from C. And um once they raise a big round let's say a 15 20 million series A they go and kind of uh try to overspend. And I I've seen in and it's it's a bit of a controversial because you have new money you're growing like these are companies that are growing like let's say a company at 5 million grow from 1 million to 5 million in a year right it's a very it's a very fast growing company and they go they raise a series A and say okay because I'm growing because I kind of all have all these gaps I'm going and overscaling and unfortunately I've seen a few times that like you're like over scaling just by recruitment without building the proper foundations and I didn't have some fights with especially US funds which are very aggressive and they say go like I'll get a post etc I think like in some cases it could work amazingly well I'm not saying there's a universal truth but there are some cases where I've seen this a few times more than once more than two that they're actually trying to buy into the growth and like they're not ready to do this right and uh and then actually you have more money you're a very good teach but the growth start kind of uh not not not progressing that kind of a with with the with this kind of exponential state because you actually are uh sometimes like I have this syndrome that after series eight there is like sometimes a lot of like swallow for a while until you hit the next kind of a the next etc so that's one thing and and of course it it's it's a it's a very case specific that that I've seen as a as a mistake. I've seen like we had a few cases where founders wanted to sell and I believe they've sold out too early. And we invested and a year later they sold the company uh to uh to a public company in the US uh and it was a good exit for us obviously but I think this company could achieve so much more yeah you know uh on the other end they were like a bit scared from competition a bit scared from this kind of uh hyperscaling companies etc etc so they wanted to sell out so sometimes I see this as well so selling for um one thing that's always very hard and I don't have a I don't have like even in 15 years now in venture I don't believe I I have an answer is like recruiting sales leader in the US every company I I told you like very fundamentally engineering eastern europe go to market us and every company go and and kind of try to get sales leader and I cannot remember where it was a company which hit the right salesperson at once like from the first time.

SPEAKER_04 53:17

Yeah there's like one two three I have a great friend and a founder who's a repeat founder now so I I was wanting to invest in both his company and he's an LP in the fund because he he made successful yeah he said you just need the money and you just need to admit that you're gonna make mistakes with your first sales leader in the US and you just need to plan for the okay I'll do it for second order is the case I don't know or is it something that but I've seen a few mistakes there as well right with uh can I just double click on uh you said engineering in Eastern Europe uh go to market in the US why are companies preferring to go to hit the US market rather than European market I mean similar size market about 350 400 million um what do you ask over Europe? It's not always the case but it's very case specific I would say so for example this company that I said to you it's called SPOX it was acquired by Zscaler they were always 100% of their customers were in the US uh they were doing AI security and they were speaking with the top US banks and the top uh European bank with the top us telcos the top EU telcos like much even that they were a company from Europe or they had some goal to market in the US but they are company from Europe they like have 100% of their revenue in the US and they have some kind of a fortune a fortune uh 2000 companies and they were just seeing like US enterprises are more uh prone to buy startup solution which I think it's a universal truth on the contrary we have another very successful company called which is selling software for electrical EV charging stations yeah yeah and they're now penetrating the US but they started uh in Europe and they are probably the best in Europe right now uh they are for sure the best in Europe right now so in some markets in this particular market like Nordics and Germany and the UK were a bit ahead to the US but in most of the cases it's just the US market is more developed and the other is US enterprises are in my personal experience much more open to take startup risks and to to to to uh be able to bet on solutions from from from startups that makes sense have you seen any kind of structural changes or shifts in terms of how well on one hand from the founder perspective on the capital stack strategy in terms of what capital they access it and on the investment side kind of like where investors are putting their money uh you mean for our portfolio for our region yeah uh there are still so cities a I would say it's split between europe and in and and the US okay uh it's probably it's probably a bit more in Europe but it's probably close to 50 50 or 6040 or okay uh in Europe obviously the the market is London with the like most sophistication of and there are one of the big like sequel has a UK office uh uh like um there are one of uh one of the big funds that have uh Bessemer has a UK office yeah sometimes our portal actually get access to the big US funds through their European offices um and typically they sit in London like I think a16cole yeah yeah yeah they're in London yeah so uh that that I would say uh and what was the other part of the question sorry I kind of I was just gonna like uh founders kind of if if if they're thinking about capital in a different way like is it all equity are they tapping more into mezzanine debt kind of like how how do they think about the capital stack strategy so so the time when we invest usually the next one is series eight when it's equity then post series eight we had some companies uh especially before that had a lot of kind of a venture depth so we had quite a few companies usually it doesn't come straight after us it comes one hour after uh one after that because some of the and we have with we are in touch with a lot of um uh venture capital providers so we very often speak with them they want to see more equity in before they put a venture venture uh yeah of course venture debt and usually because venture debt is like 10-15 million they want to see at least 10 15 million of often raised so uh I've seen companies and now recently actually I've also seen some companies raising debt not medically I'm just I'm just saying pure debt of course these are specific companies so like I have a few that are very profitable so haven't raised a lot of money but are very profitable.

SPEAKER_02 58:08

And I've seen actually banks even in the region were uh were more receptive yeah we're more receptive nowadays yeah interesting they're all like they're hyperliquid so they want to yeah they want to they want to give you lows amazing I know we'll be coming to uh to time uh stanislav any any parting thoughts um and and where should people find you where should people follow you so i'm i'm not so much on X i'm LinkedIn uh and uh the fund we are also LinkedIn and workshop ventures is like our our website um parking thoughts i think like more and more the startup and and the whole tech industry is getting distributed COVID was a big unveil of this obviously because people realized that could work from everywhere they could fund companies I remember when I started going in the US it was everybody was like okay I'll invest in your companies if they are US only now it's not the case anymore because everybody seen that you could build big businesses out of everywhere and from that from that perspective I'm very excited also because our industry the tech industry the VC industry like works in a way that you shouldn't concentrate in specific hubs in specific schools in specific universities it should be like it should be a democratizing industry because technology is democratizing democratizing right so it shouldn't be kind of a like just so from that perspective I think it's it's it's great times and that's something that I'm very excited and our region as part of the whole world it's a it's an amazing place to be amazing well thank you so much it's been a super fun conversation for me a special conversation because I'm talking to a fellow fellow Bulgarian so that's amazing thank you so much. Thanks Max cheers bye bye