In the minds of investors

Backed by their own investors, venture capitalists have a very distinct agenda.
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The fourth post of the blog-series by TheVentury Intern Sean Moakley, comparing his time working for Startups in Silicon Valley & Vienna.

I got the chance to pick the brains of a few venture capitalists in Vienna to try to see their side of the picture. What do these investors see in such a vibrant emerging market?

Venture Capitalists in Vienna

Now that I have a better grip on the funding situation, it’s clear to me that progress is being made and that at the seed level, entrepreneurs are getting the cash injections that closely resemble those in the Bay Area.

It is more than just cash, however. Investors are interested in your startup’s success, so they don’t just throw a check at you and send you on your way. They care about their money, so they do what they can to help it grow.

Angels operate in the same way. As soon as they invest, they’re a part of your team and your operations. And everyone, all the big names especially, like to invest on the side: From Jeff Bezos to Zuckerberg or even Magic Johnson (seriously), their investments give them money and help that they need to break into the 10%.

I sat down with a few venture capitalists based in Vienna. I wanted to see their side, to understand what they look for in a startup, and to hear their thoughts on the market here.

The overriding bit that you probably could have guessed: Venture Capital in Vienna consists of almost entirely early-stage investments. Confirmed!

David, a managing director at Push Ventures, explained to me that he was the third member of the Push team. After the two founders started a nice fund and started gaining some traction in Vienna, they brought him in due to a lot of his insights with other European venture arms such as Gruenderfonds, a Bonn-based fund with a branch in Austria as well.

He emphasized that this is, in a way, a university town—the University of Vienna does have a whopping 190,000 students—so there are clearly a lot of educated people looking to work.

Vienna

Naturally, students and graduates play a large role as interns and full-time workers for startups. With so many young minds in one place, they contribute a lot to the ideas that David might be considering investing in.

But as David spoke about looking for “exit-oriented” teams with a leader that has it “figured out,” I wonder about how a student in his or her twenties can commit to an early-stage startup looking to stay until exit.

And as Push usually limits their investments to under $500,000, are they planning on holding their startup’s hands for five to ten (or more?) years until exit? It didn’t quite add up to me.

Calmly, David explained how the smaller ventures such as theirs help in the transitional stage to bigger capital. “We never turn our backs on them… but once they get so big and have so many more investors, there will have more help than just us.”

Essentially, they could be the smaller amount of money that allows a startup to create or really refine the product that they can show to the bigger funds later—it’s not an exact model, I know, but it’s a blueprint for transition at what can be the most critical stage of a startup’s existence.

I left with a better understanding of that transition and the role that small capital can play. So moving forward, I had a lot of questions for both Markus, who does due diligence for Speedinvest, and Nina, a Speedinvest Principal.

Markus explained that a lot of the early-stage money to be raised in Austria is about the height of what a startup can get here before they “graduate” and raise from another source.

Nina concurred, explaining that “We [Speedinvest] focus all over Europe, but we mostly stay under three million with our investments.” She’s been with Speedinvest for more than 5 years and seen firsthand their fund 10x in its second round.

While they might be looming over what Push Ventures can offer, they aren’t exactly late stage.

If they’re looking around Europe and not limiting themselves, do they need to fend off other funds from taking their deals? In the overall European venture world, even Speedinvest is beaten by plenty of other firms in terms of fund size. And if Push is even smaller… does it get pretty cutthroat?

Nina tells me that they’re happy to work with other funds, and David explained that if another group wants to back an interesting startup that it’s often a good sign—if you’re not the only one seeing the potential, it’s probably there, right?

If you can’t beat them, join them—having a team of funders behind you can be an unbelievably huge advantage.

The most important topic I wanted to discuss was people. What do they look for in a founder, an analyst, a principal?

A company’s culture, to David, is much more important than their idea. He said he wanted to find those workers who were essentially willing to do whatever it took to succeed.

Nina agreed and expanded a little bit on the Speedinvest team. “We don’t take bankers,” she explained. (Did I say I’m majoring in finance? I was kidding). They want people who are relatable albeit unique, and between the two, of course, extremely driven.

I asked all three of them, Daniel, Markus, and Nina, if they would prefer a bland founder with a market-changing idea or a market-changing founder with a bland idea. All three preferred the better founder. “People like that can do amazing things,” says Daniel.

Clearly, it’s important to have the right culture from the beginning, because you can’t just go back and re-engineer it. In their eyes, the founder creates a culture as much as he or she does an idea.

I got a lot of good insights from them. We see pretty clearly that the startup scene here is young but once again, we see that it’s growing. And if it’s being backed by the eager and excited VCs that I’ve met so far, it’ll continue that way.

Does this mean that I won’t see the next unicorn being backed by Speedinvest or Push? I wondered, heartbroken.

Each smiled at that, giving me the similar forms of “Perhaps one day.”

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