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What to Say and Show When Negotiating With a VC: Insights From Valentin Filip of Fortech Investments

What to Say and Show When Negotiating With a VC: Insights From Valentin Filip of Fortech Investments, TheRecursive.com
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Since 2021, one of the supporters of startups in CEE and beyond is Fortech Investments. Based in Cluj, Romania, and managed by Valentin Filip, the venture fund already invested tickets of up to €500K in 15 early-stage startups in Healthcare, Manufacturing, Automotive, Energy, FinTech, and other related industries. Startups like Bright Spaces, Easy Sales, Telios Care, Synaptiq, Sales Partner, Licenseware, FindMeCure, and others have benefited from Fortech’s investment.

To learn more about how Fortech Investments analyzes the startups, what deal breakers they could experience during the due diligence and how evolved since the last interview we had a chat with Valentin. Also, they are one of the Romanian VCs active in 2024 and are getting ready to find their next innovative portfolio startup.

“We have seen founders trying to address too many buyer personas in the hope of increasing their market size. A big market is a good thing, but this approach usually leads to a lack of serious understanding of each persona, leading to confusion,” says Valentin Filip. 

The Recursive: What is Fortech Investments and what do you do?

Valentin Filip: Fortech Investments is a Romanian-based strategic investor for early-stage start-ups in Healthcare, Manufacturing, Automotive, Energy, FinTech, and other related industries. We like to support our portfolio founders in the long run, with a focus on bridging the gap between the technology and business aspects of their start-ups.

What’s your investment thesis and how many portfolio companies do you have so far?

As strategic investors with mostly technical backgrounds, we focus on a few industries that we know very well – both from a technical and business perspective. This is why we like to invest in the founders who can benefit the most from our expertise and the resources we provide.

Synergy, despite being such a “buzzword” nowadays is actually the keyword here. We focus on creating that synergy among our portfolio start-ups, and our partners, and, of course, it all starts by having a match between the founding team and us.
We invest in seed and late seed rounds, mostly B2B and we currently have 15 start-ups in our portfolio. We are geography agnostic but we do focus a lot on the CEE region.

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How long does your due diligence take and what’s a deal breaker?

Most deal-breakers arise even before the due diligence process and that’s when we try to address them. If they make it all the way to the due diligence, they need to make sure they are prepared with a comprehensive data room to prove everything that was previously discussed. Ideally, the due diligence phase should not bring anything new but confirm already discussed matters. What can happen though, is that we find issues regarding IP rights, accounting errors, misappropriation of revenues as MRR, lack of GDPR, and a few others. Although we’ve encountered situations like these, most of the time we can work with the founders to clean them up. When it comes to the duration of the process, it always depends. If they have everything in order, it should last between 2-3 weeks.

What would you recommend to founders who are looking to raise money from Fortech Investments?

At a general level, the first recommendation would be to assess whether or not they want to take the VC path. Venture Capital is not the only option for start-up funding, especially in the early stages. If they do decide to take this path, they need to understand what it requires – from how their ownership will evolve over time, how to think long-term when it comes to planning their fundraising rounds, and also what milestones they need to achieve with each round.
If they want to raise from us, they should research our fund, and our investment thesis, check out the other start-ups in our portfolio and decide if we are a good fit for them. After all, raising from us also means developing a relationship and we need to be a good fit – on a professional and, of course, a personal level.

What’s often a mistake you see founders make in startup growth and what would you advise them to do instead?

We have seen founders trying to address too many buyer personas in the hope of increasing their market size. A big market is a good thing, but this approach usually leads to a lack of serious understanding of each persona, leading to confusion. Ideally, they should pick a market that’s niched enough to be understood but big enough to matter, from a VC perspective.

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Any upcoming events where people can meet you in 2024?

Yes, we already started our event circuit, as we just got back from sTARTUp day in Tartu, Estonia. The next ones on our radar would be:

  • CEE VC SUMMIT 2024 by VestBee – March 19-20, Krakow
  • The Next Web – June 20-21 , Amsterdam
  • Techsylvania – June 26 – 27, Cluj
  • Bits & Pretzels – Sept 29 – Oct 1 , Munich
  • How To Web –Oct 2-3 , Bucharest
  • Slush Nov 20-21, Helsinki

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https://therecursive.com/author/elenaghinita/

Elena is a Startup Community Editor at The Recursive. In other words, she keeps close to the startup ecosystem in CEE and makes their stories heard. She creates educational and informational content about innovation, funding and startup growth.