Deep tech ventures stand at the confluence of groundbreaking technology and significant market potential. Yet, not everyone can navigate this terrain. It requires a specific skill set from the founders’ side and some bold investors that understand the solutions and their potential.
As Pawel Bochniarz, General Partner at the Polish DeepTech VC Radix Ventures, mentioned in our interview “Deep tech teams need to be complex. Quite often the founders who have originated from the science field, they don’t have a business background. That is why they need to get on board people with entrepreneurial and managerial skills.”
With a history of investments in deep tech startups, overseeing exits and IPOs, Pawel Bochniarz shares with us his views on the DeepTech scene in Central and Eastern Europe. He will talk more about this topic at the 0100 Europe Conference taking place in Amsterdam next week on April 16-18.
The Deep Tech Ecosystem in Central and Eastern Europe
While the deep tech ecosystem in Central and Eastern Europe is growing, it remains in its early stages compared to Western Europe. As many other ecosystem observers, Bochniarz stays optimistic about its development.
“The ecosystem is growing. It’s not growing at the same pace everywhere, but countries like Estonia, the Czech Republic, and also Poland are pushing ahead quite strongly,”
he mentioned acknowledging the success stories of the Polish ElevenLabs or the Romanian UiPath.
However, he hopes for a stronger international connectivity and cooperation between the CEE countries.
“One of the things that made ecosystems like Estonia, Israel or Singapore very successful is that they have invited founders and investors from other countries. Also, they invest a lot of time promoting themselves out into the world.”
Investment in Deep Tech: A Specialized Approach
The investment in deep tech sectors requires a distinct set of tools, knowledge, and skills, particularly around the analysis of a startup’s intellectual property (IP) portfolio.
Bochniarz underscores this need, stating that “DeepTech does require a special approach. We need to understand the breadth and depth of a startup’s IP portfolio.” This emphasis on IP reflects the inherent value and competitive edge that DeepTech companies can leverage, even before achieving significant revenue streams.
Geographic Focus and Expansion Strategy
While Radix Ventures has a strong footprint in Poland, its strategy extends across Central and Eastern Europe, including collaborations in Romania, Bulgaria, and Hungary. This expansion leverages the team’s extensive network within the DeepTech and research communities, aiming to tap into the burgeoning potential of the region’s startup ecosystem.
As Bochniarz mentions, they “teamed up with people across the region who can provide us with access to deal flow.”
Investment Criteria and Process
Radix Ventures targets late-seed stage startups, focusing on those that have demonstrated progress yet require significant capital and strategic guidance to scale.
“We would like to invest initially around €1.5M,”
Bochniarz adds.
This preference stems from the belief that there’s ample capital available for earlier stages, whereas late-seed stage DeepTech startups, having typically progressed beyond initial funding rounds and grants, present a ripe opportunity for strategic investment to propel them to the next level.
“We have a good pipeline with startups from Ukraine, Hungary, Latvia, even from Turkey. They come from different fields of science such as biology, physics and chemistry. We hope to make the first investment from Radix next month.”
When it comes to the evaluation process, Radix Ventures follows mostly the typical VC process. Yet, there are some differences.
“When you deal with research based innovations, you cannot use the same tools. Here you need a thorough evaluation to assess their scientific credibility,”
Bochniarz explains.
“Another important aspect that maybe it’s not so relevant in some other fields is regulations. In the DeepTech field it very often means that you’re working on products for which there is no established regulatory framework yet. Blockchain and AI are some of such areas and the absence of a firm legal framework poses additional risks,” he adds.
Advice for DeepTech entrepreneurs
For those considering the leap into entrepreneurship, especially from academia or corporate backgrounds, Bochniarz advises, “Do not try to do it on your own. Look at yourself critically and see where your strengths lie and where you might need partners or team members to fill gaps.”
A balanced team, where technical expertise meets business savvy, is often the key to navigating the complex waters of entrepreneurship successfully.
As the DeepTech sector continues to evolve in the CEE region, strategic investors are an important piece of the puzzle. To discuss the latest trends and future strategies, LPs and GPs from across the globe will meet in Amsterdam on April 16-18 at 0100 Europe Conference.
