Sometimes things just click. The moment I met Yuliia I knew she’s an exceptional founder who figured out a niche in a huge data observability market. I wanted to be part of her story.
I met Yuliia courtesy to Google Form Startups where she pitched her startup in front of investors in Warsaw 🇵🇱 in March 2023.
We immediately clicked.
I experienced the problem they are solving—i.e. breaking data streams — first-hand while at Samba TV, so it was not hard for me to understand the value Masthead provides.
Yuliia is an ex product manager, like myself, so we spoke the same language, which also made it easier to get to the point quicker.
She walked me through the live demo of a product at the conference. Normally things like those end up super awkward. This time, however, it was not. I think it was mostly because of the passion she has for the product, and how she can talk about it both on a generic “VC level” and on very technical “CTO level”. Once she realized I can get deep into the technology, it got super interesting.
Data Observability — The X Factor
Data Observability has become an essential component of modern data stacks to tackle growing numbers of erroneous data. This means a dynamically growing demand for such solutions. Harvard Business Review data shows that $3.1T annual losses are generated due to erroneous data in the US alone.
The main differentiator which makes Masthead’s solution unique and valuable for their clients, is that unlike traditional data observability solutions, Masthead does not compromise on clients’ data privacy and security. Their platform observes data pipelines and table health in real time via logs without accessing clients’ data directly (i.e. does not require a database connection). Thanks to this technique, the company’s software is also easier to integrate than competitors that require database connections.
The fundraising timeline
Founders often ask about our process and how fast we can move, so in full transparency, here’s how the process looked like in case of Masthead.
The fundraising was initially slow, like for every first-time founding team, but it quickly picked up once SMOK and Monochrome committed about the same time. With focal and DEPO and a few angels already being part of the deal, within days, the round changed from under- to oversubscribed with a new investors unfortunately not being able to me it.
That’s how the actual timeline looked from my perspective as a VC:
January 20th. Yuliia sends a cold email with the deck which we ignore.
January 25th. Yuliia pings us over email. We reply back that Canada is outside of our scope and that we’re passing because we’re like total idiots 🙂
March 27th. Michael Ciffra from DEPO Ventures introes me to Yuliia who’s planning to be in Warsaw.
March 30th. First met with Yuliia in Warsaw, and quickly figured out they are actually well within our geo-scope with a CEE-based backoffice team and Ukrainian founders.
April 1st-14th. Internal due diligence — chatting with multiple founders and engineers of data-heavy startups like Sumologic, Data Dog and Snowflake to confirm the product market fit.
April 18th. Yuliia chats with Dan Bragiel, our SF-based venture partner. As a US fund investing in CEE we always want to have both our US partner and our CEE partner involved in each investment we make.
April 20th. SMOK commits to invest. Negotiating terms.
April 25th. KYC and formal DD finished.
May 4th SAFE signed.
May 9th. Money wired.
The fundraising process confirmed my belief in Yuliia and her founding team. Being able to navigate the fund raise, keeping in constant loop with all the parties, accommodating for some specific requests of each VC and staying genuine and confident at all times are all traits of exceptional founders and those will be required later on when the company raises a seed / series A and further rounds, hopefully taking the data observability market by storm!
Are you a Central / Eastern European founder working on a startup?
At SMOK Ventures we invest in top pre-seed founders in the CEE region and diaspora.
We love software engineering tools, AI, computer games and founders who understand their industry well and disrupt it via software.
We can invest in either EU or Delaware-based entity as long as there is a CEE connection and a global mindset of the founding team.
We’re thrilled to announce Sasha Yatsenko joining SMOK Ventures. Sasha takes over the principal position to help us invest in top early stage startups in Ukraine and the Baltic states. First two investments have been finalized and will be announced shortly.
A bit over a year ago when we announced that we planned to hire an investment team in Ukraine we did not expect that Ukraine would shortly show up on all the news channels globally due to the Russian invasion on the country. Back then we wrote:
Why Ukraine? When we were deciding on the next countries, we took three things into account: engineering talent pool, startup founding experience, and proximity to Poland. Ukraine is an obvious choice. The country is as big as Poland in population and its engineers are famous worldwide and are already fueling the growth of Silicon Valley’s top companies as well as creating its own unicorns like GitLab, or Grammarly. We already have dozens of Ukrainian founders in the pipeline, so all this combined, the expansion east sounds like the natural move for SMOK.
Today we stand by the above even more firmly. Having seen the bravery of the Ukrainian nation on the front line and having observed the vibrant tech ecosystem adjust very quickly to the new conditions and keep building, we knew we wanted to build our presence in the country regardless of the politics.
Why the Baltic states?
Lithuania, Latvia and most of all, Estonia, are small European states with a disproportionate success in founding fast-growing startups, just to mention Pipedrive, Bolt, Wise, Vinted, Veriff or Prinful as some of the most prominent unicorn examples. We’ve already made two investments into Estonian entities (MX Labs and Bitskout) and we’ll be announcing our first investment in Latvia soon. We’re planning to double down on this geo by building a dedicated team to cover the Baltic region led by Sasha, so if you’re an early stage investor, angel or ecosystem builder from one of the Baltic countries, expect a call soon!
Who is Sasha?
Sasha has been one of the key figures in the Ukrainian early stage startup ecosystem for nearly a decade. He helped build BRISE, a boutique pre-seed venture firm as founding partner, where he invested in companies like Vochi (exit to Pinterest) and Finmap (1.2m funding raised from Presto, SID). He participated in the selection of startups for the Ukrainian Startup Fund. Sasha was also named the most friendly Ukrainian investor by local founders and Ukrainian ecosystem builders in 2021. Before becoming a VC, he had his own web studio, travel agency and worked as Chief Digital Officer at dentsu Ukraine.
At SMOK everything is about culture. Culture defines who we fund, who we work with and even who our investors are. We have a long-term plan to become the go-to fund for founders all across Central and Eastern Europe. We believe teaming up with Sasha will help us achieve this goal faster. We’re absolutely excited to have him onboard!
Are you raising for your Ukraine or Baltics-based startup?
Recipe for a successful pre-seed round? An experienced team, focus on being global from day one, stellar co-investors and a growing technology trend. Here’s why we invested in Bitskout.
Founders, founders, founders
In early-stage startup investing, founding team quality is the most important success/failure indicator. The product will likely change a 100+ times in the next 2 years, markets will shift, new competitors will show up, and the team will be there to navigate it all.
This time we made a bet on Ilia’s and Alexey’s experience and proven ability to deliver. Many years in the world’s top tech corporations and entrepreneurial mindsets made a great foundation to become startup founders. And yeah, if you didn’t notice already, they are brothers! One may say that SMOK, also being co-founded by two brothers, may have an affection for these types of deals, but hey – if it works, it works.
What is also worth mentioning, Ilia and Alexey managed to deliver a working product in just a few months, with no budget. They literally did that by the book. Before reaching out to investors they established key product hypotheses, created an MVP and proved that it works.
Stellar co-investors and global mindset from day one
The round has been filled with investors from three distinct corners of Europe. Bitskout managed to convince SMOK Ventures (American fund investing in CEE), Shilling VC (Portugal) and Octopus Ventures (UK). Why is that so important? Because it will be a major multiplier for Bitskout’s business and VCs network, especially when fundraising for the next round. Bitskout had these two elements from the start:
Global mindset – rather than focusing on local market;
Long term vision – as the current round is not a destination, but rather a beginning of the journey.
Founders of Bitskout – Ilia Zelenkin (left) and Alexey Zelenkin (right).
No-code AI
Bitskout allows users to make use of the most powerful AI engines in the world, without writing a single line of code, and all of that directly in the user’s working environment. It means that users can employ powerful AI with close-to-none effort. I believe that no-code is the next step for work automation. Rather than software replacing people, it should make them more efficient. People who work with manual and mundane processes should have easy access to the best automation tools, and Bitskout makes it happen.
Not that long ago I would have met all our portfolio founders offline a few times before making a decision. The Bitskout investment process is one of the first steps into the direction of fully remote or hybrid (online/offline) investing. Why so?
Obviously, I still want to meet founders and get to know them well before making a decision. Though, keeping in mind SMOK’s focus on investing across CEE, I cannot be personally present in each major startup hub in the region as much as I’d like to. So, much like many startups switching to fully remote, I need to hold up on the idea of having a beer with each team before investing. And honestly, it’s great! There will be plenty of time for social chit-chat in
So how exactly did the process look like in the case of Bitskout? I scouted the lead remotely, later we had a few online chats with the CEO. During the process we met face-to-face only once, with the CTO, who happened to be an expat living in Krakow, Poland. In the meantime, SMOK’s Venture Partner – Dan Bragiel verified the deal from Sillicon Valley standpoint. What was also of great help in the process, the CEO did a tremendous job in preparing an investors’ data room.
Are you working on a startup relevant to SMOK?
If you read the above, liked what you saw, can relate to how we think, communicate and act as a fund and you know of a startup we should be talking to, please read our investment FAQ and send me an email with the deck smok@smok.vc!
SMOK Ventures is a US venture capital fund investing between 100k and 1M USD in early stage startups in CEE. We like software and gaming startups run by serial founders who think global market domination.
SMOK Ventures launched in 2019 to disrupt early stage venture capital investing in Emerging Europe by connecting top local founders with VC and tech leaders in Silicon Valley and Asia. Now the fund is expanding to Romania and the rest of CEE and we’re looking to add first team members outside of the founding group. Someone like you, perhaps?
Who is behind SMOK?
We are a team of entrepreneurs and community leaders with the aim to help early stage startup founders build multi-million-dollar global software enterprises from Central and Eastern Europe.
We’re led by Paul Bragiel (https://en.wikipedia.org/wiki/Paul_Bragiel), entrepreneur turned investor. He has advised or invested in the seed rounds of 200+ companies which includes holdings in twelve unicorns including Uber, Niantic (of Pokemon Go fame), Stripe, Unity, GoJek, Carousell & Zappos. Paul has founded and oversees 7 funds with over $400m under management across 4 continents.
Diana Koziarska and Borys Musielak form the Warsaw-based part of the founding team. They’re both entrepreneurs and community leaders. Before SMOK they co-founded ReaktorX, an acceleration program which helped 150+ founders launch their first businesses. Borys also built a media & AI startup Filmaster and sold it to San Francisco based Samba TV.
We’re also supported by San Francisco-based Dan Bragiel, a venture capitalist and angel investor with an angel portfolio including a number of hyper-growth startups like Opendoor, Virta Health, ShipBob and Playco.
SMOK.vc team: Paul (left), Diana, Borys (right)
What’s our track record?
As SMOK we’ve made 12 Deals in 12 months (and added 6 more since writing that article) backing some of the top Polish entrepreneurs like Lech Kaniuk of the Delivery Hero fame, Dorota Rymaszewska, a former VP Sales at Booksy or Maciej Prostak, Maciej Sawicki, and Jarek Sygitowicz.
11 out of the first 12 companies we backed in 2020 have already raised follow-on rounds, with valuations growing more than four times in less than 12 months.
We’ve co-invested with top global funds from countries like Hong Kong, Singapore, Japan, Finland, Sweden, Germany, UK and the US as well as top global angels, including the founders and VPs of companies like Supercell, Rovio, Pipedrive, Affirm, FitBit or Mint. Top European funds like Creandum or earlybird backed our seed investments in Series A stage.
Those were good two years, against all odds 🙂
Why Romania?
In a very short time we became the go-to fund for serial entrepreneurs launching their new businesses in Poland. We’re committed to take it to the next level now, with the Central and Eastern European expansion.
When we were deciding on the next countries, we took three things into account:
engineering talent pool,
startup founding experience,
proximity to Poland.
Romania is an obvious choice. The country is half the population of Poland, but its engineers are famous worldwide and are already fueling the growth of Silicon Valley’s top companies as well as creating its own unicorns like UiPath and soonicorns like FintechOS, eMag or BitDefender.
We already have dozens of Romnanian founders in the pipeline, our partner Borys has been active in the ecosystem mentoring at How To Web’s Startup Spotlight program, so all this combined, the expansion south sounds like the natural move for SMOK.
Who are we looking for?
Working at SMOK is a lifetime opportunity to break into venture capital and together build one of the top VC funds in Central and Eastern Europe, one country at a time.
You’ll be working on:
building the deal flow and community around SMOK in Romania and other CEE countries,
analysis and due diligence of our investments in all markets,
supporting our portfolio companies,
attracting new LPs to the fund,
writing, talking and screaming about SMOK in our blogs, social media (we already started building online communities with the CEE Valley group on Facebook and on Twitter), press, meetups and conferences.
Basically, the same stuff we as SMOK founding partners currently work on. We’re a small team with huge ambitions and we require the same from our early team members.
The position is remote-friendly, but the preference is that you are based or prepared to move to either Bucharest, or Cluj Napoca and in the future travel a lot across those countries and potentially the rest of the CEE markets once it’s finally safe to travel, obviously.
How to apply?
We want the process to be transparent and simple.
First, think deeply about why you want to work at SMOK, how does it fit your long-term career goals. We want those to be aligned with ours.
Secondly, read our FAQ, specifically the investment criteria, and find us 3 top early stage deals in CEE that you believe we should invest in. Be prepared to justify your choice.
Big vision, successful repeat founders and technology that can literally save lives. There’s a lot to like in MX Labs, our most recent investment at SMOK.vc. Let’s break it down!
I’m proud and excited to announce that SMOK Ventures co-led the $1.5M seed round of Vue Storefront. Read the full article to find out why.
What is Vue Storefront?
Vue Storefront is setting the new standard in e-commerce by providing shopping experiences like native apps while boosting site performance. Technically it’s a headless frontend that works with all the popular backends like commercetools or Magento. With Vue you can upgrade your dated e-commerce store’s look & feel without the need to migrate all your products and the backoffice. Vue Storefront is currently the world’s fastest-growing open-source e-commerce frontend.
What do you mean open source? Do they give the software away for free?
Yes! And it’s beautiful 🙂
I’ve always been an open source guy. I’ve used GNU/Linux on my desktop and vim for text editing for the last 20 years. I’ve been on Signal since it launched. I closely followed the growth of MySQL, Git(hub), WordPress, Docker, Elasticsearch, MongoDB, Nginx, Redis and others. I understand the power of open source in terms of community building.
Open source model specifically works when your product is primarily used by software engineers. Engineers put more trust into those tools that they can verify themselves by looking at their source code and documentation. Open source model means free distribution and potentially exponential growth with little marketing. However, it can be a challenge to monetize.
The best companies in this space find a way to provide value to customers with their free product while upselling them with premium features like cloud hosting and storage, add-on marketplaces or services. Vue Storefront is no different here. Its free Vue.js frontend library Storefront UI is being used by 250+ e-commerce stores globally already with zero sales efforts. The company can focus on the bigger enterprise deals while not ignoring the long tail of users who are good with the free version. I think it’s brilliant and very future-proof as a significant fraction of users of the free version sooner or later converts to a premium, fully hosted & supported edition.
Mobile e-commerce market is booming, but still uses legacy desktop-centric software
Currently e-commerce merchants are experiencing a mobile gap. Consumers spend much more time than money on mobile devices. Conversion on mobile is much lower than in desktop browsers. This is caused by shitty user experience as the majority of e-commerce websites are created in a responsive web design paradigm, i.e. the design originally created for desktop is fitted into much smaller mobile screens in a responsive way.
The Mobile Gap in E-commerce
Vue Storefront is using a Progressive Web Apps (PWA) paradigm. The mobile frontend is created from scratch, using the state of the art user experience and design tricks, previously only known from the native apps. This greatly increases the mobile conversions, making the merchants more money.
PWA also has a huge impact on improving site loading times. 53% of mobile site visitors quit when the site takes more than 3 seconds to load. Vue Storefront makes sure this is never the case.
If it’s so obvious that PWA gives so many advantages, then why haven’t all the merchants switched to a modern architecture already? Well, the problem is that migrations suck. No one wants to leave the backend tools they are used to, reimplement the products database, or connect the new backend to all the external systems, etc. This is where Vue Storefront really rocks. Vue does not force the merchants to change their backend at all, as the system works with all the popular e-commerce backends like commercetools or Magento. With Vue you can upgrade your frontend to a modern, lightning fast, mobile-first experience while keeping all the good old backend systems intact. And when the time comes, they can still migrate to another backend while keeping the frontend. Decoupling the two and adding flexibility for merchants is why Vue Storefront became so popular so fast.
How have we met the founders?
Vue Storefront is a rare example of a software house spin-off that worked. The product has been incubated by Divante, a Wrocław-based e-commerce agency founded by the Karwatka brothers, Tomasz and Piotr.
I first talked with Tomasz and Piotr about potentially investing in Vue back in October 2019 during one of the founder meetups set in the beautiful region of Jura Krakowsko-Częstochowska in Poland. Pre-COVID times, we do miss you!
40+ top Polish founders met in October 2019 in Ogrodzieniec to hang out and exchange ideas. Two of SMOK investments were a direct result of the meetup so far!
Back then Vue was still part of Divante, but the brothers made the decision that the project’s potential was bigger than the company and that the only way to grow exponentially is to go separate ways. I’ve been in constant touch with the team ever since, advising the early founders and former Divante employees, Patrick Friday and Filip Rakowski on product, marketing and general vision of the company. Patrick is an experienced sales & bizdev guy and a previous founder. Filip is an quially experienced product manager and engineer. A match made in heaven! In January 2020 Bartek Roszkowski joined the team as COO. Bartek is a serial founder responsible for the success of startups like mfind and Nexto (both have been acquired). The founding team was set, and now it was the time to do the fundraise. I’d love to say the process was as lightening fast as the Vue Storefront frontend on mobile devices, but the truth is, it was rather long and painful (spin-offs are hard!). However, we were able to add Movens as a co-investor and we quickly agreed on the major terms with the team. We’ve been supporting the team together for most of 2020 and we eventually closed the deal in December 2020.
So, why have we invested, again?
It’s rare but Vue Storefront basically checked all the boxes for a SMOK investment into an early stage startup:
amazing founding team in Patrick, Filip and Bartek, best suited to disrupt the e-commerce tools industry,
fantastic advisors in Tomek and Piotr who support the founders on a daily basis,
phenomenal traction with the open source version of the software,
a good commercialization plan with positive early signals from enterprise customers,
great access to customers via founders’ network in the e-commerce world,
fast-growing e-commerce market with a number of legacy, not mobile-first systems waiting to be disrupted.
Are you working on a startup relevant to SMOK?
If you read the above, liked what you saw, can relate to how we think, communicate and act as a fund and you know of a startup we should be talking to, please read our investment FAQ and send me an email with the deck at borys@smok.vc!
SMOK Ventures is a Polish/American venture capital fund investing between 50k and 1M USD in early stage startups in Poland and CEE. We like gaming and software startups run by serial founders who think market domination.
12 months ago we launched SMOK Ventures, an early stage venture capital fund bridging Central European startups to Silicon Valley and Asia. I’d like to give you an update on how we’re doing.
Year 1 in Numbers
We’ve reviewed just under 1000 startups and made twelve investments, eight of which are public as of today.
We’ve covered many business models from game-dev studios (Exit Plan Games, Nibble Games), saas-enabled marketplaces (HiPets, inSTREAMLY), regular saas (Smarthotel, Authologic), direct-to-consumer (Sunroof, Gaminate) and enterprise.
Industry-wise we’ve invested agnostically. We’ve funded startups in hospitality, esports, foodtech, energy, pet services, proptech, ecommerce, game development, fintech and digital health.
An average ticket size was 260k USD. The smallest deal we made was 50k USD. The biggest was 500k USD.
Nine of the deals were in Poland, the other three in the Nordics (Sweden, Finland, and Estonia).
We spent ~3.5M USD , i.e. just below 35% of the fund in year 1.
What does a typical SMOK Founder Look Like?
We’ve noticed there are a few things similar across our portfolio.
Our average portfolio startup has 3 co-founders.
Average age of our founder is 39, and the median is 40. This is significantly more than an average age of a Polish startup founder which is 28 according to Startup Poland.
One in four portfolio startups has at least one female co-founder.
All startups have been founded by at least one serial entrepreneur. Yep, all of them. However not all our founders have founded typical startups before. Two had previous experience running agency or lifestyle-type businesses.
63% of our portfolio entrepreneurs have founded businesses before, 30% of them more than one, 11% more than two and 5% more than three.
75% had successful exits in one of their previous businesses.
This is not to say that we’re not looking to invest in first-time founders or entrepreneurs without a history of exits. We’re actually close to signing a term sheet with two such startups just now. But it definitely shows our preference for experienced entrepreneurs. If you’re just starting out, you need to show more traction to get us excited.
SMOK dealflow in 2020
How do startups contact SMOK?
Most startups contact us directly via a cold email. Although I used to be a vocal opponent of cold emails, I slightly changed my mind as three of those actually resulted in deals made. Still, most of the cold emails suck as they are not personalized and feel like spam. A well-written, personalized cold email can be better than a bad intro, though.
Sources of dealflow. SMOK Ventures @ 2020
As for the intros, community turned out to be our biggest asset. More than half of all intros came from our network of founders that we’ve built over the last decade. The second biggest source of intros was from fellow VC funds who either wanted us to co-invest or for which the startup was interesting but too early. Limited partners and portfolio founders contributed to around 10% of intros, and our own events did not make a difference for obvious reasons — we only threw one or two before the pandemic took off.
Sources of intros. SMOK Ventures @ 2020
Gaming, fintech and digital health among top industries for dealflow
As we’re a software-focused, industry-agnostic fund, we’ve seen dealflow from a variety of industries. Some of the leading industries turned out to be gaming and esports (14%), fintech (10%), health (9%), lifestyle and entertainment (9%), foodtech and mobility (9%), e-commerce and martech (8%).
Top industries. SMOK Ventures @ 2020
58% of closed deals resulted from direct communication with the founders
Seven out of twelve deals we’ve made so far resulted from a direct communication between a SMOK partner and startup’s founder. Either one of the partners reached out directly to the founder or the founder contacted the partner directly. Chasing top founders and being up to date is what we love doing at SMOK. We also made sure it’s common knowledge that we like to be the first check in new projects of successful serial entrepreneurs. This communication seems to be paying off.
3 deals were a result of a cold e-mail, namely HiPets, inSTREAMLY and Nibble Games. Although it’s worth mentioning that in all those cases we’ve received a number of positive recommendations from our network of founders before making the final call.
Intros resulted in, surprisingly, only 2 direct deals so far, Smarthotel (thanks Bartek Pucek!) and Gaminate (kudos to Michał Kulka).
Sources of deals made. SMOK Ventures @ 2020
Unconvincing team a top rejection reason
Sadly, we’re in the business of saying ‘no’ a lot. We’ve done it in 98.5% of cases. We’ve decided to track the most common reasons we decide not to invest.
We invest 50k-1M USD into software and gaming startups with at least a subsidiary office in Poland. Interestingly, 50% of startups pitches that we receive is an automatic no because of either no relation to Poland, not our industry focus or wrong stage (usually too late).
Out of the other half, the most common reason we did not get involved was an unconvincing team or product (28% of all cases) and no market validation aka traction (14% of cases). Other reasons involved a bad cap table, COVID-related, a conflict of interest with a portfolio company or simply radio silence on the side of the founders.
One of the key metrics of success of early stage startups is how fast they raise follow-on rounds of funding, and their valuation multiples.
Out of the first seven companies we backed earlier this year, four have already raised follow-on rounds, 2M USD in total, with valuations growing more than twice in less than 6 months.
inSTREAMLY has just landed a 600k USD seed round from London-based investor Supernode Global, after an introduction from our partner Diana, proving that women VC networks work. HiPets, Exit Plan Games and Sunroof also raised follow-on funding just months after we put our money in. Expect more news on the rest of our portfolio soon.
Co-investing with world’s top angels and funds
We like to be the first check in the companies we back so there usually isn’t a lot of space in those pre-seed rounds for others. However, we will always find space for value-adding angels or specialized industry funds that we respect.
So far we’ve invested together with some of the top early stage funds from Finland, Singapore and Japan. We’ve also co-invested with top global angels, including the founders or early employees of companies like Supercell, Rovio, Pipedrive or Mint.
Highlights from portfolio companies
Sunroof already made their first acquisition. They acquired a Swedish software company Redlogger to accelerate their bet on becoming an energy marketplace. Sunroof Germany also launched with an ex-Tesla director as country manager.
inSTREAMLY was not just the fastest to raise a follow-on round, but also quadrupled their revenues and won two important pitch events: Pirate Summit and Pitch To London (previous winners were Packhelp and Symmetrical).
Gaminate made more in revenues in their first four months of operation on the Polish market than we invested into the company back in April. They also just entered the German market and, if they show similarly strong numbers there, they will actually have a chance to become a top European brand for gamers.
Exit Plan Games were able to build a dream team of ex leads from CI Games, CD Projekt RED and Techland. Can’t wait to play their first game next year!
Smarthotel is now available in 100+ hotels and 1000+ apartments in Europe and Africa. More than 20k guests have already used Smarthotel for remote check-in and safe, contactless communication with hosts and hotel’s reception. This one I’m the most proud of. Given the circumstances and the impact of COVID on the hospitality industry, Smarthotel’s progress is simply breathtaking. I can’t even imagine what they are going to achieve once the coronavirus mess is finally over!
Authologic, our most recent public investment, launched only 3 months ago, but already has 2 corporate customers which launched their identity verification widget on production and 6 more agreements have been signed, pending implementation.
Exit Plan’s dream team
The anti-portfolio of SMOK
Occasionally we see a startup too late and miss a chance to properly evaluate it before the deal is done (or we don’t see it at all until it’s too late). In other times we love the team, the product, but we’re so ignorant about the industry that we decide to pass and support the startup from the sidelines. In a few cases the founders decide on a Delaware HQ and don’t want a subsidiary in Poland, which rules the startup out.
The list isn’t long and it includes companies like Jutro Medical, Pilot, Spacelift, nomagic, merXu, edrone, Ramp or Stonly. All those startups form an “anti-portfolio” of SMOK. I love those startups and try support them when I can even though we’re not shareholders and I believe each of them can become a huge and successful global business.
Lessons Learned
The thing I worried the most about when we were starting the fund was us missing deals or being outbid by other investors. So how did this play out?
Missing deals or being outbid almost did not happen. We’ve seen over 90% of the startups that raised funding in Poland during the year and only in 2 or 3 cases we might have invested if we learned about the deals earlier. Missing those still hurts, don’t get me wrong. But the reality turned out way nicer than I anticipated.
Speed counts. Almost every deal we made was competitive, i.e. startups had multiple offers on the table. We were able to close some of those deals strictly because we were faster and more committed than others.
Terms matter but fund’s reputation and culture-fit matter more. In exactly zero deals that we made we have offered a higher valuation than competitors. However, in all of those deals we did offer a clean, well-communicated and easily understood process with specific deadlines we thrived to honor.
Communication is key. Founders want to know where they are in the process, and how fast they will know our decision. Once we both agree to a deal, they want to understand what the process looks like between a term sheet and the wire. 100% of the misunderstandings we’ve had have been a result of poor communication on our side.
Are you working on a startup relevant to SMOK?
We’re constantly searching for talented founders looking to build global companies. If you read the above and liked what you saw, please read our investment FAQ first and then:
SMOK Ventures is a Polish/American venture capital fund investing between 50k and 1M USD in early stage startups in Poland and CEE. We like gaming and software startups run by serial founders who think global market domination.
SMOK Ventures launched in 2019 to disrupt early stage venture capital investing in the Eastern bloc by connecting top local founders with VC and tech leaders in Silicon Valley and Asia. Now the fund is expanding to Ukraine, Belarus and the Baltics and we’re looking to add first team members outside of the founding group. Someone like you, perhaps?
Who is behind SMOK?
We are a team of entrepreneurs and community leaders with the aim to help early stage startup founders build multi-million-dollar global software enterprises from Central and Eastern Europe.
We’re led by Paul Bragiel (https://en.wikipedia.org/wiki/Paul_Bragiel), entrepreneur turned investor. He has advised or invested in the seed rounds of 200+ companies which includes holdings in twelve unicorns including Uber, Niantic (of Pokemon Go fame), Stripe, Unity, GoJek, Carousell & Zappos. Paul has founded and oversees 7 funds with over $400m under management across 4 continents.
Diana Koziarska and Borys Musielak form the Warsaw-based part of the founding team. They’re both entrepreneurs and community leaders. Before SMOK they co-founded ReaktorX, an acceleration program which helped 150+ founders launch their first businesses. Borys also built a media & AI startup Filmaster and sold it to San Francisco based Samba TV.
We’re also supported by San Francisco-based Dan Bragiel, a venture capitalist and angel investor with an angel portfolio including a number of hyper-growth startups like Opendoor, Virta Health, ShipBob and Playco.
SMOK.vc team: Paul (left), Diana, Borys (right)
What’s our track record?
As SMOK we’ve made 12 Deals in 12 months (and added 6 more since writing that article) backing some of the top Polish entrepreneurs like Lech Kaniuk of the Delivery Hero fame, Dorota Rymaszewska, a former VP Sales at Booksy or Maciej Prostak, Maciej Sawicki, and Jarek Sygitowicz who all sold their previous businesses generating profits for their investors.
11 out of the first 12 companies we backed in 2020 have already raised follow-on rounds, with valuations growing more than four times in less than 12 months.
We’ve co-invested with top global seed funds from Finland, Singapore and Japan as well as top global angels, including the founders and VPs of companies like Supercell, Rovio, Pipedrive or Mint. Top European funds like Creandum or earlybird backed our seed investments in Series A stage.
Those were good two years, against all odds 🙂
Why Ukraine?
In a very short time we became the go-to fund for serial entrepreneurs launching their new businesses in Poland. We’re committed to take it to the next level now, with the Central and Eastern European expansion.
When we were deciding on the next countries, we took three things into account:
engineering talent pool,
startup founding experience,
proximity to Poland.
Ukraine is an obvious choice. The country is as big as Poland in population and its engineers are famous worldwide and are already fueling the growth of Silicon Valley’s top companies as well as creating its own unicorns like GitLab, or Grammarly.
We already have dozens of Ukrainian founders in the pipeline, so all this combined, the expansion east sounds like the natural move for SMOK.
Who are we looking for?
Working at SMOK is a lifetime opportunity to break into venture capital and together build one of the top VC funds in Central and Eastern Europe, one country at a time.
You’ll be working on:
building the deal flow and community around SMOK in Ukraine, Belarus and the Baltics,
analysis and due diligence of our investments in all markets,
supporting our portfolio companies,
attracting new LPs to the fund,
writing, talking and screaming about SMOK in our blogs, social media (we already started building online communities with the CEE Valley group on Facebook and on Twitter), press, meetups and conferences.
Basically, the same stuff we as SMOK founding partners currently work on. We’re a small team with huge ambitions and we require the same from our early team members.
The position is remote-friendly, but the preference is that you are based or prepared to move to either Kyiv, Lviv or Odessa and in the future travel a lot across those countries and potentially the rest of the CEE markets once it’s finally safe to travel, obviously.
How to apply?
We want the process to be transparent and simple.
First, think deeply about why you want to work at SMOK, how does it fit your long-term career goals. We want those to be aligned with ours.
Secondly, read our FAQ, specifically the investment criteria, and find us 3 top early stage deals in CEE that you believe we should invest in. Be prepared to justify your choice.
Since launching SMOK in 2019 I’ve only had one goal in mind — to invest in every single globally successful startup founder coming out of Poland. We’ve reviewed about 1 thousand startups in the first 12 months of operation. inSTREAMLY is our third investment. What makes me believe they are one of the above?
What is inSTREAMLY?
inSTREAMLY automates the process of displaying content on multiple live stream channels, making live streaming more accessible for brands and media industry.
Brands can partner with hundreds of streamers simultaneously and display content on all the channels through one dashboard.
Streamers can effortlessly cooperate with brands and be paid for content distribution in an automated way.
The experienced founding team
It’s always about the founders first. If we don’t have a fit, if we don’t believe the founding team can build a global leader in their space, we’d never invest, regardless of how revolutionary the idea, the business model or the technology is. inSTREAMLY founding team consists of four amazing people:
Maciej Sawicki, CEO, esports veteran, 5-time founder, community leader and expert in the fields of video marketing and streaming,
Damian Konopka, CTO, lead programmer, previously founded a popular esports ranking site streamerzy.pl,
Wiktoria Wójcik, a former streamer, now responsible for relationship with the streaming community at inSTREAMLY,
Szymon Kubiak, an executive from the agency world, responsible for ad buying and revenue growth.
I’ve known Maciej for a while (more about that later). The moment I met everyone else I knew they are a well-balanced group of people who trust each other and stand for each other. They seemed like the people with something to prove. Experienced. Knowledgable. Hungry. Exactly who I’m looking for!
Bootstrapped till product-market-fit
One of the traits of top founders is their ability to bootstrap their way to the seed round without compromising the cap table. This was the case with two of our previous investments, SmartHotel and Exit Plan Games. Same goes for inSTREAMLY.
When you bootstrap you spend your own money. This shows your dedication to the idea, but also forces the founding team to act lean and spend efficiently. It’s a great foundation for the future. Whatever you’re building, you’ll most likely have to go through multiple crises before reaching the unicorn status. The lean start defines your culture and helps you survive when things go bad.
inSTREAMLY was funded by Maciej for the first year of operations. They built the software, they gave it to befriended esports teams. They got the advertisers interested. They started making money. The moment we got serious about investing the company was already making 25k EUR a month and some of the customers included Netflix and Sony Playstation. It’s a good situation to be at as a founder when you’re raising a seed round.
The huge and growing streaming market
We had a world-class team and good early traction that validates the initial business model. The remaining question was: is the market big enough to be able to produce a unicorn independent from scratch?
inSTREAMLY operates in the USD 42.60 billion video streaming market. Video streaming is one of the fastest growing platforms in 2020 and is projected to grow at a compound annual growth rate (CAGR) of 20.4% till 2027. The company started in the “niche” of esports — a 1 billion dollar market on its own — which the team knows best. But the technology does not restrict them in any way to grow into other niches in the future.
Top esports streamers are big and recognizable enough to be able to attract the advertising and sponsorship deals on their own. However the long tail of mid to smaller streamers currently have no way of monetizing their content except for using the restriction-heavy tools provided by the streaming platforms like Twitch, YouTube or Facebook. The current market is huge and fragmented and screams for an independent ad marketplace like inSTREAMLY to take over.
The timing is also perfect as the competition is still limited while the market is already big enough to produce an independent leader even if we only consider the long tail of esports streamers.
The fundraising process — a few insights
Founders often ask me how to best prepare for venture capital funding. My answer is always the same — build credibility by building things. And let me know about the stuff you’re building, the earlier, the better.
I first met Maciej briefly in 2013 when he had a video agency and they recorded the talks at our monthly OpenReaktor events. Maciej also spoke at one of my events in 2018. However, we only properly met later that year when Maciej reached out about “a few ideas he was thinking about” (not exactly the best pitch :>). One of those ideas turned out to be the early version of what later became inSTREAMLY. We chatted for an hour or so. I learned about how the esports business operates and then forgot about it for a year.
Maciej followed up in July 2019. I have to admit I slept over here a bit. When he reached out about the funding I was focused on another termsheet. I failed to respond to his linkedin message and we almost lost the deal in consequence. It was thanks to my partner Diana who organized a small roundtable about gaming and esports that we got back in touch with Maciej in November.
By then he has sold his agency and focused 100% on his startup. He was testing the technology to place ads into multiple streams at the same time in his own esports team Devils.one and a few other teams. The early results seemed promising. It got me interested. Maciej already had two termsheets on the table at this time so we had to act fast. We soft-committed only a few weeks later and officially committed to invest mid January, after Maciej met my other partner Paul Bragiel in Zurich. Termsheet negotiations took about 2 weeks and we got from commitment to signing the investment agreement in less than 2 months. We officially signed the deal on March 26th, in the middle of the COVID-19 crisis in Poland. It was my only in-person meeting that month 🙂
inSTREAMLY notary signing in the middle of COVID-19 crisis in Warsaw
Are you working on a startup relevant to SMOK?
If you read the above, liked what you saw, can relate to how we think, communicate and act as a fund and you know of a startup we should be talking to, please read our investment FAQ and send me an email with the deck at borys@smok.vc!
SMOK Ventures is a Polish/American venture capital fund investing between 50k and 1M USD in early stage startups in Poland and CEE. We like gaming and software startups run by serial founders who think market domination.
