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Seed-Stage CEE Investors Are Looking at These Key Trends: An Interview with Polish Inovo VC

With their recent success in raising a €100 million fund, Inovo VC is poised to make a significant impact on the startup ecosystem in CEE.
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With their recent success in raising a €100 million fund, Polish Inovo VC is poised to make a significant impact on the startup ecosystem in CEE. Since its inception in 2014, as a seed stage VC, Inovo has invested in over 40 companies and supported the growth of 100 talented entrepreneurs.

The fund has built a reputation for its strategic investments in a range of industries, particularly in B2B enterprise, marketplace, healthcare, developer tools, and data science. With a commitment to nurturing early-stage startups, Inovo VC provides funding of up to €4 million, enabling founders to realize their visions and propel their businesses to new heights.

In this dual interview with Inovo’s partner Michal Rokosz and principal Karol Lasota, The Recursive delves into the funds plans for the CEE region, their investment strategy, and their vision for the future.

Prior to becoming a partner at Inovo, Rokosz was head of marketing at Rocket Internet and managing director at FoodPanda CEE (later acquired by PizzaPortal). He invested in several technology companies, including Booksy, Infermedica, Tidio, Zowie, Index Health and Jutro Medical.

A former startup founder and operator, Lasota is now a principal at Inovo. Previously, he was VP of Venture Building at Daftcode, responsible for launching new data science and deep tech startups as CEO/COO. Lasota has also co-founded a B2B marketplace startup Cateringoo, and within a year from the start raised a seed round, scaled it to over 15 people and 100 enterprise clients. He has also participated in over ten investments and M&A deals totalling over $100M.

The Recursive: What is your investment thesis at Inovo, and how do you identify startups to invest in?

Michal Rokosz: If I had to describe our investment thesis in one sentence, I’d say that we believe that CEE, as a region, is home to an enormous number of extremely talented tech professionals, and that we expect a sharp increase in the number of unicorns coming from the region in the next few years.

We are heavily betting on CEE, and not only because of the great tech competencies. We also believe that money is spent way more efficiently here than in Silicon Valley or Western Markets, and that people in the region are very entrepreneurial. Success stories such as Booksy, DocPlanner, UI Path, or Grammarly further reaffirm our belief that it’s completely possible for huge tech companies to come from CEE.

When it comes to how we identify the startups to invest in, we have a variety of methods that enable us to find new and exciting projects, but all of them revolve around one goal: we want to know all of the smartest and most prospective entrepreneurs from the region and offer them our help in building huge, global tech businesses.

How does Inovo differ from other seed-stage VCs, and what advantages do you offer to founders?

Michal Rokosz: There are four pillars that make up our strategy for supporting companies. Firstly, we strongly believe that our main goal is to help the startups we invest in to raise a top series A in the next c. 18 months. We have a network of very strong series A investors, which let us not only provide the intros but also to understand in detail what later-stage investors are currently looking for and what KPIs should be delivered by a particular company before the next round.

So far, our follow-on rate is ~70%, with many of the rounds being led by tier-1 global funds like Insight Partners, Tiger Global, or Gradient Ventures. We help with recruiting (especially when it comes to executive-level positions) and provide intros to prospective clients.

Besides that, we put a lot of effort to link the entrepreneurs with people who have already built huge tech companies and whose knowledge and advice could be priceless during the strategic workshops and management boards. We are proud to say that over 50% of our portfolio companies work with advisors or angels introduced/recommended by us.

How has the startup ecosystem in Central and Eastern Europe evolved in recent years, and what opportunities do you see for growth in the region?

Karol Lasota: In the last few years, we’ve seen some serious growth in the region. Just look at the number of unicorns or soonicorns coming out of places like Poland, Czech Republic, Romania, Bulgaria, Baltic region – to date there is over 25+ of them, where a few have even reached a decacorn status, and I think that’s pretty impressive, given the starting point for our region.

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These first successful startups are in a way “trailblazers” for the entire ecosystem, from which new generations of startups can learn. Oftentimes we see that employees from these companies later on launch their own companies, drawing on the learnings they made in these unicorns (e.g. Wise, Skype, Telerik, UIpath soon).

We also see a much larger number of serial entrepreneurs, people who launch their second, third, etc. company – we believe that these are some of the top people to bet on. No matter if their previous venture was successful or not, the learnings they made working on the previous ventures are invaluable – fortunately, we see a shifting mindset about these founders among a larger and larger group of investors.

This is also reflected in the number of startups that receive funding each year, and especially later stage funding, which has grown exponentially over the last years. There is also a growing variety of the verticals that the startups operate in, and at this moment, probably every imaginable sector has its CEE representation, including industries such as space tech, biotech, fintech, etc.

Of course, there are challenges to be faced as well – e.g. access to funding can be a barrier for many startups. But overall, I’m really excited about the opportunities in the region, and I think we’re going to see some truly innovative companies emerge in the coming years.

One thing is certain: The entirety of Central and Eastern Europe has finally got a permanent place in the map of the global technological ecosystem. It’s no longer seen as a ‘risky’ bet, but rather an opportunity to invest in the huge pool of top tech entrepreneurs to bring innovative ideas to life and build world-class companies. This allows us to look positively at the future of the entire market.

What are some challenges that CEE startups face, and how can they overcome them?

Karol Lasota: There are definitely some challenges that startups in Central and Eastern Europe face, but I believe they can be overcome with the right approach.

In my opinion, one of the biggest challenges (often depending on the country) is the approach to global expansion. It’s quite often that startups want to start their business in the local market, which in every country in CEE is not big enough to deliver big $1B+ business and attract top global investors at Series A stage and then expand after they deliver some things. It’s very difficult to shift that approach down the road. So if you want to build a VC-backed global business you should think international from day 1.

Second thing would be access to the capital. If you’re a founder with a track record of exits, delivering amazing results in top companies, experience in blue chip tech companies in your story, you shouldn’t have a problem raising a proper pre-seed/seed round and good investors will always compete to invest in you. However, if you don’t have such things it’s much harder to raise a proper pre-seed round, because access to capital is still limited.

Still, there are more and more new funds/next generations of regional funds with track record like us (, Credo, Launchub, Kaya, Underline, Eleven Ventures or 500 Startups. So I believe founders with good ideas, execution and approach won’t have problems raising capital.

Another challenge is access to talent. While I absolutely believe that we have some of the highest technical skills level worldwide, with an extremely large pool of talented engineers, developers, etc., we still lag behind in terms of business skills talent, with experience in global fast growing startups compared to our Western neighbors.

With the popularization of remote work methods, this is becoming, however, a smaller issue, and the CEE startups are becoming increasingly globalized, with a multinational workforce, which is able to bridge some of these gaps.

Overall, I think the challenges facing startups in Central and Eastern Europe are significant, but with the right approach and the global mindset, they can be overcome.

What are some common mistakes that founders make during the fundraising process, and how can they avoid them?

Michal Rokosz: A lot of startups struggle with raising a VC-funding round because of the reasons that are not easily fixable – lack of traction, poor retention, no user engagement, the opportunity not being big enough, doing things that are not scalable.

But there are also mistakes that you can fix quite easily. First of all, forget about the cold emails and try to figure out how to get a warm intro to the investor – the effort will surely be worth it. That kind of intro automatically puts you in a different category with a higher priority assigned to you and with no neutral but positive sentiment.

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Remember that the perfect time to introduce yourself to an investor isn’t during your fundraising – it’s months before. Being able to watch your progress massively helps investors in building conviction – it’s definitely a good idea to prepare a newsletter for your prospective investors, in which you give them monthly/quarterly updates of what you’ve managed to deliver.

Looking back, a big part of founders that I’ve historically invested in were entrepreneurs I’ve known for more than a year, and I know that I am not an exception here.

Finally, data quality really matters. When investors ask for your numbers (financials, KPIs, data regarding retention, etc.), make sure it’s top quality. It’s the perfect moment to show that you are data-driven, that you monitor proper metrics, and that you can actually use historical data to draw relevant conclusions.

What are the most promising sectors for startups in the CEE region that you’ve seen during the past few years?

Karol Lasota: There are several sectors that I think are particularly promising for startups in the CEE region. These are areas where we’ve already seen some successful companies emerge, and which draw on the strong technical talent pool we have available locally.

One of the sectors where we see lots of startups emerging (and the VCs favorite) isthe B2B SaaS. This sector is definitely very strong in the region, and some of our most successful portfolio companies operate in this vertical, e.g. Spacelift, Zowie, Symmetrical, which have raised subsequent rounds from e.g. Insight Partners, Target Global, Gradient, Tiger etc.

Another sector that I think is promising is health tech. The global healthcare spending is going through the roof, and any solution that makes these operations more effective will definitely find its demand. That is why more and more exceptional founders globally start new businesses in healthcare like for example the founder of Spotify launched Neko Health or ex-Penta Bank founder (Luka Ivicevic) started Index Health. That’s why we’re also focused on healthcare and have invested in numerous startups operating in the sector, e.g. Infermedica or Index Health.

Another promising sector is fintech. We’ve seen a number of successful fintech startups come out of the region, including payment processors, mobile banks, and investment platforms, Kevin or Payhawk could be great examples of top fintech startups coming from the region.

There is a lot of potential for further innovation in this area, especially as consumers continue to demand more convenient and affordable financial services.

Of course, there are other sectors that are also promising, often depending on the country and local specific e.g. Serbia seems to be particularly strong in the cybersecurity vertical.

How does the CEE region compare to other regions in terms of access to funding, talent, and other resources for startups?

Karol Lasota: In comparison to other regions,  CEE  is still developing in terms of access to funding, talent, and other resources. However, there are some notable strengths that the region can leverage.

In terms of funding, the CEE still lags behind more established startup hubs like Silicon Valley, London, or Berlin.

According to Dealroom, the total amount of VC investment in 2022 in CEE-related companies was around $6 billion. When you compare it to what it looked like even 5 years ago, when the total value of investments was around $200-300 million, that is some enormous growth. This growth comes from 2 primary sources – we see a lot of new VC funds opening up around the region, and the growth in size of each fund.

For example, our third Inovo fund, with over $100M to invest, would have been unthinkable even a couple years ago. Second thing, there are more and more global funds interested in founders from the region after great successes of for example UiPath (Romanian founder) or Snowflake (Polish founder).

In terms of talent, as I have mentioned before, the CEE region is home to a large pool of skilled engineers and developers, which is a significant asset for startups. Many of these professionals have worked for global tech companies or have studied in top universities, and are eager to apply their skills to building the next CEE unicorn.

As the economy of the region is developing, we are also observing a rapid increase in the level of founders’ business skills, the knowledge how to sell their product, how to convince the investors, etc.

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There are also some unique advantages that the CEE startups can draw upon, like lower cost of living, wages, etc. which can definitely help in the initial stages that a startup goes through.

What role do you see Inovo playing in the growth and development of the CEE startup ecosystem?

Karol Lasota: We see our role as a facilitator and connector, helping to bridge the gap between promising startups in the region and global investors, mentors, and partners. Our goal is to invest in startups at pre-seed/seed, and help them to connect with relevant people (sales, product, growth) in order to start their unicorn-path and raise a proper series A from top global later-stage funds such as a16z, Insight Partners, or Gradient Ventures later.

We invest in founders from all CEE countries across the world, and we believe that the CEE startup ecosystem is stronger when we collaborate and share knowledge and network. That’s why we often organize events in many CEE tech hubs e.g. recently in Prague, Bucharest, Budapest, Zagreb, Belgrade, Wroclaw, and a couple more, where we met and try to connect top local founders, operators and investors – oftentimes the local startup ecosystems lack a space where founders can regularly meet and network, and we believe these sort of initiatives can bring an enormous value.

Our second goal is to foster the entrepreneurial spirit, ambition, and hunger for success that we see in the CEE. That is why we launched the “Founders Wannabe” event series. The goal of these kinds of events is to create a space where wannabe entrepreneurs can meet top global founders, or meet their co-founders, talk about their ideas, and possibly also look for investors. We have seen a tremendous interest in these, and we believe this is something truly unique on a CEE scale.

Overall, I believe that as one of the biggest early-stage funds in CEE, we have an important role to play not only by providing financing, but also in the growth and development of the ecosystem, both by investing in the local startups, connecting local tech communities, and fostering the entrepreneurial spirit.

As a region we have the potential to be a global player, so we have to believe in that and do everything we can to create new startups in the region from which we can be proud of!

What advice would you give to aspiring entrepreneurs and early-stage founders looking to raise capital for their startups?

Michal Rokosz: I think it’s crucial for the aspiring founders who are just starting their entrepreneurial advantage to firstly think about whether they want to raise capital for their startup at all – after all, only a small percentage of all business ideas are a good fit for VC.

Assuming that you’ve made an informed decision about going the VC-way, there are a couple of things you should keep in mind. First of all – a majority of VCs are looking for companies that can become huge in the next 5-7 years (think NASDAQ IPO or $1B+ valuation). To build such a company, you need to address a big problem/need that is being faced by many companies or consumers.

The best measure to use here is a market size, with >$1B opportunity usually being considered big enough to be VC-backable, and >$10B opportunity being considered “top”.

The earlier the stage, the more focus VC put on so-called founder-market fit. If it’s still too early to show any signs of traction, you should focus on your “unfair advantage” and highlight all of your previous experiences that make you a better candidate to achieve success in the field that you’ve chosen compared to other founders.

Another thing you should prioritize is the speed of execution. In the early stage, it’s extremely important for investors to see a founder who acts, builds, and executes fast. Keep in mind that it’s not only about what you managed to deliver but also how fast you were able to do it.

And ultimately – I think in the end, it’s all about the clients and their experience. Figure out their pain-points, frequently ask for their feedback, and lead to a situation where they truly love your product. Every serious VC investor will, at some point of a due diligence, ask to talk to your clients, and there’s nothing that better builds conviction within investors than clients being obsessed with the product they are using.


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Bojan is The Recursive’s Western Balkans Editor, covering tech, innovation, and business for more than a decade. He’s currently exploring blockchain, Industry 4.0, AI, and is always open to covering diverse and exciting topics in the Western Balkans countries. His work has been featured in global media outlets such as Foreign Policy, WSJ, ZDNet, and Balkan Insight.