LAUNCHub: SEE boasts tal­ent-rich startup ecosys­tem

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LAUNCHub is a 9.0 mil­lion euro seed fund, based in Bul­garia, in­vest­ing in the most promis­ing star­tups in South­east Europe (SEE). Since 2012, LAUNCHub has in­vested over 3.5 mil­lion euro in 47 port­fo­lio com­pa­nies. Over 140 founders have joined the big fam­ily and in less than two years have man­aged to at­tract a fur­ther 3.5 mil­lion euro-plus of fol­low-on fund­ing. As of Septem­ber 2014, LAUNCHub’s port­fo­lio in­cludes com­pa­nies from nine coun­tries in SEE – Bul­garia, Ro­ma­nia, Slove­nia, Croa­tia, Mace­do­nia, Greece, Ukraine, Aus­tria and Switzer­land. LAUNCHub's in­vest­ment fo­cus and team ex­per­tise fall within the dig­i­tal tech­nol­ogy sec­tor and in­vest­ments are mainly made in de­vel­op­ment tools, ed­u­ca­tion tech­nol­ogy, health tech­nol­ogy, en­ter­tain­ment, cloud in­fra­struc­ture and en­ter­prise soft­ware. The team is now plac­ing a spe­cial in­vest­ment fo­cus on Bit­coin projects and look­ing for the best of teams. LAUNCHub has signed a term sheet with Slove­nian-based team Cashila - a Bit­coin pay­ment pro­cess­ing ser­vice, ad­dress­ing the is­sue that peo­ple can ac­tu­ally start us­ing Bit­coin trans­ac­tions in ev­ery­day life. The so­lu­tion comes as a web wid­get for fa­cil­i­tat­ing on­line pay­ments, both for Bit­coin users on the one side and B2C busi­nesses on the other (i.e. re­tail­ers, on­line stores). This is to be the first Bit­coin in­vest­ment for LAUNCHub, mark­ing the be­gin­ning of an am­bi­tious strat­egy for step­ping in firmly on the Bit­coin land­scape. LAUNCHub is launch­ing in Septem­ber 2014 a new ded­i­cated call for Bit­coin ap­pli­ca­tions for seed fund­ing.

Bul­garia

Two LAUNCHub com­pa­nies - Flipps and Stor­pool - have closed Se­ries A Rounds since the be­gin­ning of 2014. Flipps re­ceived $2.4 mil­lion with Tim Draper and Early Bird par­tic­i­pat­ing, while Stor­pool was backed en­tirely by a Bul­gar­ian in­vestor.

In gen­eral, Bul­garia and the lo­cal startup ecosys­tem are said to stand out by ven­ture cap­i­tal rep­re­sen­ta­tives in com­par­i­son to other coun­tries in Cen­tral and Eastern Europe like the Czech Repub­lic and Hun­gary. Things are mov­ing and achieve­ments do seem to be quite promis­ing for the coun­try en­joy­ing an abun­dance of tech tal­ent.

Over the past eigh­teen months, the gen­eral per­cep­tion on the Bul­gar­ian startup ecosys­tem seems to have changed quite sig­nif­i­cantly for the bet­ter. There are now over 100 startup com­pa­nies com­pris­ing the port­fo­lios of the two early-stage in­vest­ment funds LAUNCHub (seed up to 200,000 euro) and Eleven (ac­cel­er­a­tion and seed) - 47 star­tups are with LAUNCHub and Eleven has 60 plus ( as of June 2014).

Both funds op­er­ate un­der the En­trepreneur­ship Ac­cel­er­a­tion and Seed fi­nan­cial in­stru­ment of the JEREMIE ini­tia­tive of the Euro­pean In­vest­ment Fund and the Euro­pean Com­mis­sion.

Ru­men Iliev, part­ner at LAUNCHub:

“We fo­cus on se­ri­ous teams and in­trin­si­cally mo­ti­vated founders. We avoid teams that are mak­ing a startup just be­cause it is cool or trendy. We cher­ish peo­ple who have the skills to de­velop an in­no­va­tive so­lu­tion to a big prob­lem and speak busi­ness, not buzz­words. The size of the op­por­tu­nity and the cur­rent trac­tions are taken in con­sid­er­a­tion as well. Star­tups dif­fer from nor­mal busi­ness by solv­ing a big prob­lem in in­no­va­tive and scal­able man­ner. So it is nor­mal for a ven­ture cap­i­tal fund to look at busi­nesses that have the po­ten­tial to grow fast and be­come big. Busi­ness that can gen­er­ate 1.0-3.0 mil­lion euro in five years are not star­tups and for us the math does not work since the val­u­a­tion for the ticket of 200,000 euro can go up to those numbers quite fast, es­pe­cially if we have trenched the amount

and we are do­ing a fol­low on.”

Slove­nia and Croa­tia

The Slove­nian and Croa­t­ian ecosys­tems are also well-ac­knowl­edged to stand out in terms of tech tal­ent and growth po­ten­tial.

Cur­rently, LAUNCHub has three in­vestees in Slove­nia – Me­di­ately, Enol­yse and Cashila. Slove­nia is one of the coun­tries from which it usu­ally re­ceives quite a num­ber of ap­pli­ca­tions and that from quite well-pre­pared early-stage tech com­pa­nies. The com­pany is cur­rently con­sid­er­ing ap­pli­ca­tions from other Slove­nian com­pa­nies.

Todor Breshkov,

LAUNCHub man­ag­ing part­ner:

“The Slove­nian star­tups are amongst the most pre­pared that usu­ally come and ap­ply with LAUNCHub. We have very good im­pres­sions in gen­eral and con­sider the Slove­nian ecosys­tem to be well-de­vel­oped. There are the lo­cal play­ers - Hekovnik, RSG, the Startup Ini­tia­tive, Ze­manta, the Tech­no­log­i­cal Park - all of which at­test to a very good level of the ecosys­tem, as the peo­ple in­volved are rein­vest­ing time and at­ten­tion to the younger play­ers.

Our ex­pe­ri­ence so far shows that it is very easy and pleas­ant to work with both startup com­pa­nies, as well as with men­tors and part­ners from Slove­nia we col­lab­o­rate with at our events. LAUNCHub even has two Slove­nian In­vest­ment Committee mem­bers. Apart from ac­cess to early-stage cap­i­tal, Sofia of­fers the Slove­nian com­pa­nies ac­cess to a wider startup com­mu­nity and op­por­tu­ni­ties for fol­low-on in­vest­ments. Slove­nian star­tups on the other hand also find Sofia at­trac­tive be­cause they get to min­gle here with like-minded peo­ple. As some­one said re­cently – in or­der to go west, Slove­nian star­tups need to go west first.”

Ru­men Iliev, part­ner at LAUNCHub:

“We have been or­gan­is­ing Long Week­end se­lec­tion events since 2012, with the pur­pose of spend­ing time with the teams prior to mak­ing our in­vest­ment de­ci­sion. It is a fair process, since the in­vited teams have the op­por­tu­nity to meet with us and yet de­cide for them­selves if LAUNCHub can be a valu­able part­ner. We think that meet­ing a team for just a pitch at the of­fice is quite an ar­ro­gant way of mak­ing de­ci­sions so we crafted this event and so far it has work well for us and the teams.

In July 2014 we or­gan­ised our first se­lec­tion Long week­end event in Za­greb. Za­greb has lots of ad­van­tages and is prob­a­bly the best place to start at, since it has all the el­e­ments of a vi­brant and grow­ing startup ecosys­tem. We have three in­vestees in

Croa­tia - Cinexio, GreenPie, and Hab­bits.”

Some of the chal­lenges fac­ing the SEE ecosys­tem in­clude match­ing the ex­ist­ing en­gi­neer tal­ent with good busi­ness skills on the one hand, and speed of execution on the other. The over­all im­pres­sion is that pitch­ing skills are im­prov­ing and in­vest­ment in­ter­est is seen to be grow­ing quite in­ten­sively, as Sofia forms the hub of a flour­ish­ing ecosys­tem.

Stanislav Si­rakov, part­ner at LAUNCHub:

“We are try­ing to help in many other ways than rais­ing money. We do not come simply as an in­vestor, but more as a team member and an en­gaged part­ner. We sit down with the founders and dis­cuss all the im­por­tant is­sues, some­times ques­tion­ing their strat­egy. Our whole net­work, con­sist­ing of tech ven­dors, suc­cess­ful entrepreneurs and in­vestors is opened to all the founders. Some­times we gather to­gether ex­perts in in­ter­est­ing ar­eas like prod­uct and UX, busi­ness de­vel­op­ment or marketing, which are pro­vid­ing the com­pa­nies with ad­vice. We have just started to or­ga­nize vis­its to big­ger hubs like Lon­don where the founders do share ex­pe­ri­ence with founders there. And of course we are a trusted ad­viser when it comes to rais­ing fol­low-on money. All this could speed the de­vel­op­ment of the com­pa­nies, but ba­si­cally most of the time great founders are win­ning their way in and we are there just to fa­cil­i­tate the process.”

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