We promised a second round of good advice, so we kept our word. It is crucial for startups and founders to meet each other, connect, share experiences, and learn from successful people who’ve “been there done that”. Given the latest circumstances, we created this meetup series as an alternative platform, where everybody can just meet up online, wherever they are. The plus here: no limits, no excuses, no holding back.
At Startup Europe Networks, we are passionate about building stronger bridges and encouraging collaboration between our regions to create a lot more value and give back to our startup communities. So, for our second online meetup, Tytus Cytowski (lawyer and angel investor, founder at Cytowski & Partners) and Katarina Martisova and Marian Porvaznik from Sparring gave us plenty of amazing insights on legal considerations when fundraising. Let’s take a look at what we learned.
The Central Eastern European way
We have been holding on to this paradigm: what does Silicon Valley have and the CEE doesn’t? Are these two parts of the world even comparable after all? “In the beginning, people in the CEE wanted to mimic Silicon Valley”, says Tytus, but “there is an Eastern European way of doing startups”.
Is there any recipe for success then? For some countries, success lies in culture and how founders get to do things. As Tytus mentions, countries like Estonia and Czech Republic have achieved a lot, by building this culture of giving first and mutual support (respect), building communities over just simple networking. This is much more related to culture than just raising money or being directly connected to more developed ecosystems like Silicon Valley or London. Tytus, also highlighted the importance and the power of CEE tech expats who are big patriots and they advocate their region in Silicon Valley and London. As they become successful founders and investors they are tapping into the CEE ecosystem for R&D talent and deal flow.
For startups with ambitions of going global: it’s about building a product that people love on a global scale. So, think global from day one. CEE founders and VCs can play on their competitive advantage, of both being able to build complicated deep tech products fast and cost effectively and going global from their markets. While competitors in the Bay Area are closer to the capital and the advisory networks, it’s not that easy to build technology heavy products fast and cost effectively in Silicon Valley.
UiPath, Productboard, Bitrise, and other successful companies prove you can grow good companies from CEE, but you need the right mindset to build a product that solves a world problem. “Big dreams cost twice, you need to take risks and double down on risks all the time”. And maybe after all the CEE does not lack anything, “it’s just a different school of doing things”.
Fundraising: US vs EU
In a comparison between the EU and US markets, what we learned from Katarina and Marian is that if you want to go fundraising in the US, you should think it over. A friendly advice: prepare and be ready for the US market, maybe go up to Series A in Europe and then spend time in the US for the next steps. And you might also want to think about costs: if you raise money in the US and hire people there, it might shorten your runway. Hiring locally and with money from a European country might be more in your advantage.
Geographically speaking, the EU is much more diverse, there are several different countries and markets, with their own laws and regulations, which makes it a bit more complicated than the US scene. There’s more uniformity over there, and the VCs are the same nationally. European geography can make it difficult for startups when they want to expand to other countries, also considering language barriers beside administrative ones. Also consider the type of market: the US market is older, more standard and the behavior of VCs and startups is more predictable. While Europe is more dynamic: even though there might be more risks, there are upsides too.
In the EU, you can find an immense proportion of public funds from the Member States and from the EU itself. Even if this might seem tricky for entrepreneurs, as they have to accept and run with the burden of certain conditions in order to access these funds, not all public funds are “the black sheep”. Those schemes funded by the EU directly are often more lightweight.
Make your choice and go after the best investment possible, and after investors that can grow the bottom line of your company. It’s about what the investor can bring in terms of strategic growth, not only money.
And some friendly advice from our speakers: think it over and think long-term – what you can do differently and what you can do for your company. Also, bring value to your clients, wherever your target market is. “Once this is done right, you have the right tools to conquer the world”.
Written by Iasmina Cioroianu