Start-Up: Interview with Bartłomiej Gola of SpeedUp Group
This time we’ve got something for the start-up community. If you decide to create your business it might be useful to know your potential investors’ point of view. Better listen criticism and correct mistakes now than close the project before it develops properly.
I have talked to Bartłomiej Gola, the Managing Partner of SpeedUp Group, an entrepreneur and innovator, about the future of start-ups, why great engineers fail, the difference between local and international business and how to find an investor for your start-up.
Ula Lachowicz: How does SpeedUp Group help startups?
Bartlomiej Gola: SpeedUp Group is an early stage investor, so we invest at a Seed and Start-up stage (sometimes late Start-up). First of all, we offer a capital but we try hard to offer smart capital. We have broad know-how in the market site of product, in marketing, sales and business strategy. We support start-ups in decisions which feature should be developed. On the other hand SpeedUp Group is almost 20 companies now, so with our alumni (those who we invested, not those we have sold) we build common knowledge base. And we implement tools to run this exchange of knowledge.
UL: SpeedUp Group is looking for start-ups as well as investors…
BG: First of all, we are a venture capital fund. At the beginning we started to invest private partners’ money, then we raised funds from European Union, which we also invest. At the moment we’re opening a new fund, where external investors can give us money to mange and we invest them in start-ups.
UL: What kind of startups are you looking for? Are there any branches or countries of origin that interest you the most? Or any specific projects?
BG: For now we invest in projects from Poland, but we’d like to expand our activities onto projects from the rest of central and eastern Europe. We divide projects into two groups and our portfolio includes projects from both. In the first group there are projects that we called “value”. Thanks to our investment round and relatively simple business model, they can gain profitability and be sold. For example they can be a simple web project, based on advertising model, where there is no complicated technology or high risk in creating this technology. In the second group there are “growth” projects, of which we want to be first stage investor. They are mainly projects that are more difficult and international, and our role is to run them to the second investment round with funds, which invest in our later stage. When it comes to industries, it is a broad ICT, but we try not to limit ourselves.
UL: When would you like companies from central and eastern Europe to join your portfolio?
BG: We’re talking with them right now. But in a year’s or year and a half’s time there won’t be more than a few percent, about 2-3 investments.
UL: Do you see any difference in approach to business in Poland and in the US?
BG: It is easier for me to look at Europe and the US. And I think we’re less ambitious in Europe. What for us is a ceiling, for them is a floor. I always say, when you come to an American fund they ask you: are you the next billion dollar company? European funds ask you: Are you the next 100 million dollar company? In Poland think if you are the next 10 million dollar company. Ambitions of our founders and investors are too small. We think in terms of restrictions, problems. And I still insist that we don’t have a big success story from Poland.
UL: Don’t you think that we have good engineers and programmers and they can create something really cool, but they don’t know how to sell it?
BG: I agree we have really good engineers. For example, some time ago there was the world championship in programming in Warsaw and Polish teams were always high ranked. And we came in second (they say it’s a defeat, but I think second place is fantastic). However, I listened to an interview with a professor who supervised them. He was proud that his students got job offers from corporations. Among Polish engineers there is a lack of spirit of enterprise. They focus too much on a narrow part of their code. Of course I generalize now, but I think for most of them working in a corporation and coding is a dream. Whereas the best students of Stanford, MIT or famous European universities of technology, first and foremost, think how to do their own business and later where to go to work. And that’s the main difference.
UL: Sometimes it happens that engineers create a product, they are so delighted and spend endless time on improving it. But when the product is ready they have no idea how to sell and promote it.
BG: That’s right. Polish engineers are excellent but don’t know too much about business. They are narrowly profiled.
UL: Which countries are most active in founding startups? Let’s take into consideration last year.
BG: Of course Silicon Valley is still start-ups’ home. Most of innovations are there. But I would also pay attention to Europe and what a big step the pre-Baltic countries took, especially Estonia. Actually every month a new international start-up financed by foreign companies is founded there. Berlin is becoming a European hub, which competes with London. Every week there is a start-up event or something interesting happens – new investment funds are founded, funds from different sites of Europe move to Berlin, new companies are formed.
UL: What are the present trends in startups market? Games? Mobile projects?
BG: Games have been popular for a while. But to be honest I don’t like trends. I think that projects go in groups, quite often similar projects occur at the same time. Today’s buzzword is cloud, data processing in cloud, data backup in cloud. Everything happens in cloud, but I don’t think you need to care about this too much. We all know there is a mobile revolution, but we still don’t know how big it will be. I personally believe in e-commerce. Nowadays it is just a few percents of total sales, however growth potential is huge.
UL: Is it easier for start-ups to find an investor if they go with the stream? E.g. If there is a trend for mobile or e-commerce, is it better to create that kind of projects?
BG: For sure. People invest more when they heard that someone already has made money on this. But one of start-ups’ role is to find investor, who doesn’t follow the herd.
UL: Do you know any interesting startup from financial and payments branch? In your opinion is it an innovative sector?
BG: Now a lot of innovation is going on around the world. There is for example Square in the US. Of course it is now a giant company that revolutionizes the market. Recently I’ve read that almost the same number of shops cooperate with Square as with Visa. Everything connected with NFC, mobile payments, mobile e-wallets is interesting. There are more and more solutions related to identification of credit cards by mobile phones or combining credit cards with loyalty programs. I have an impression that every week a new financial start-up is created. And I think it is a branch where many things are going to change soon.
Maybe there is not too much news in Poland (maybe Yetipay) and I regret that, because I’d like to invest in some cool financial solution.
UL: Let’s imagine you have a start-up. You have a great idea, you know how to do it and you’re searching for an investor. What is the best way to find it? Attending Start-up Weekends or going to groups of venture capital funds such as SpeedUp or searching for investor on your own?
BG: You know, there isn’t one good method. What is for sure important: they need to hear about you, you need to show yourself and you need to talk with them. I don’t agree with a theory that attending start-up events is bad idea because you are either running a business, or you’re attending start-up events. These two things are not mutually exclusive. Certainly investors, even though they claim to be rational, are more likely to invest in projects they know. This is how we are. You have to remember that at the beginning you are your product and you have to evangelize the market. If you don’t have the energy to make the entire market talk about you, don’t count that the business world and funds will notice you. You have to dare, go and show yourself. Every meeting, even the failed one, with a smart person that gives you feedback, puts you ahead.
UL: What is the best strategy for startups: do local business (no matter if it is Polish or German market) or think about global product?
BG: Once again there isn’t one good answer. Of course it is easier to do local business, because you know the people and the market. Plus, there is a language barrier abroad, even we speak the language well, it is not our mother tongue. There are cultural differences too. But on the other hand, nowadays it is more difficult to do local business as borders don’t protect us against foreign competition any more. If you have a content business or business related to local database – do local business. If you don’t have this kind of barriers – go global otherwise global companies will come to you.
UL: When you think about founding a global business you should find an investor abroad. Is it more difficult than finding a local one?
BG: Of course it is. And what’s more if the country, the person or the start-up center doesn’t have a strong start-up brand it could be more difficult. German investor prefers investing in German projects, because the risk is lower. So this problem concerns investors too.
UL: Bartek, what are the SpeedUp Group’s plans for the near future? What startups are in your agenda?
BG: Every year we’re in contact with 300 startups. Each year we raise the bar, both for us and for start-ups. It means that now it’s difficult to get money from SpeedUp. You have to remember that SpeedUp is a startup too. We started in 2008 and we don’t say we know everything about this business, but each year we are smarter so we expect the same from our start-up founders -to be more determined, motivated and to have the strength to overcome difficulties.
UL: And when startup comes to SpeedUp with an idea, what kind of financial support can they expect?
BG: If it is a start-up seed stage we invest up to €250 000/300 000. But the average value of our investment at this stage is €125 000. But we’re currently opening the later stage fund and we’ll try invest around €700 000/800 000 per project.
UL: Thank you for the interview.
BG: Thank you.
Bartłomiej Gola is the Managing Partner of SpeedUp Group, an entrepreneur and innovator. Co-creator of over a dozen technological startups. He studied at the Poznan University of Economics. After graduation he worked within the marketing field where he worked through all career levels up to the Managing Partner in the BTL Group (shareholder and co-creator) and TEQUILA Poland. He was the creator and Managing Director of the first Polish advertisement holding company INDIGITY SA. He is also an author of many publications in the field of marketing and business strategies. For many years he has been the Director of the Stowarzyszenie Marketingu Bezpośredniego (Polish Direct Marketing Association).
