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.
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 re-investing 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.”