Ep 182: Uve Poom
VC Reveals Practical Tips For Fundraising and Managing Investor Relations in the Current Climate, Signs of a Bad Product & How and When You Should Think About ESG
Uve Poom is the Head of Operations at Tenity Tallinn - one of the 6 hubs in Tenity's international ecosystem. Tenity is a global fintech accelerator and VC. In addition to advising startups in Tenity's portfolio, he also works with financial and state institutions to drive their innovation agendas. Uve firmly believes in building ecosystems and leveraging the strength of weak ties. Before completing his MA at Stanford, Uve spent 5 years as CEO of the Unitas Foundation (founded by 2x Estonian Prime Minister Mart Laar) and as a fundraising consultant at Civitta, a leading independent management consulting firm in the Baltics and CEE.
On this episode we talk about:
Building an Ecosystem for FinTech and Climate Finance
Fundraising Landscape in 2024
Traits of a Standout FinTech Company
Best Practices for Founders in Building and Maintaining Investor Relationships
The Role of ESG and Climate FinTech
Opportunities and Challenges in Neo-Banking and Digital Lending
We are on YouTube and Linkedin as well
Watch select full-length episodes on our YouTube channel > https://www.youtube.com/channel/UCP6ueaLnjS-CQfrMCm2EoTA
Connect with us on Linkedin > https://www.linkedin.com/company/pursuit-of-scrappiness/
Read the full episode transcript below
Uldis (00:02.591)
Hello, hello, hello, dear listeners. Welcome to another episode of the Pursuit of Scrappiness podcast. Whether you're building a business, running a team, or just starting out in your career, we are here to bring you scrappy and actionable insights to help you become more productive. My name is Uldis Teraudkalns s and my co-host is Janis Zeps.
Janis Zeps (00:22.946)
Hey everyone.
Uldis (00:24.927)
Before we start, a quick reminder to follow us on YouTube, Spotify, Apple podcasts helps more than you know. In return, you will see more than 180 episodes with ageless wisdom. And also we have recently started a new segment called Insights, which comes out on Thursdays, which will share the most valuable moments from our past episodes. So be sure to check out, be sure to subscribe and be the first one to know when we come out.
every Tuesday with the main flow. So open your Spotify, Apple Podcasts, YouTube and click subscribe. About today's topic. So doing business and making money is what most of our lives are centered around. Maybe even more so in the financial sector. But there won't be a possibility to continue business as usual if we leave things as they are. If climate change challenges are unanswered.
As recent storms in the US show, there's going to be an increasing financial and human price to pay and we must find all the possible ways to make a difference. And today we are going to look in maybe an unexpected place. So sustainable finance can turn out to be key to making the green transition work. And the new Nordic region is quite up there when it comes to initiatives in the space and ranks.
Uldis (01:51.491)
globally for climate fintech startups and Tenet TVC is among the leaders in driving the space forward. So today we have invited Uve Poom to go deeper into this topic. Hi Uwe!
Uve (02:04.917)
Hello everyone.
Uldis (02:07.647)
So, Uwe is the head of operations at Tenity, a venture capital firm and innovation ecosystem that focuses on FinTech, InsureTech and related industries with a mission to drive growth for startups through funding and strategic partnerships. They have helped numerous companies scale and also enable collaboration with large corporates and incumbents in the space. yeah.
Today we want to talk about building in FinTech and climate in particular and other exciting verticals as well as some fundraising tips in the end. So let's dive in and maybe let's start with what's what tenet is all about and what brought it to Baltics and Tallinn in particular.
Uve (02:57.471)
Yes, so first of all, thank you for having me on your show. Been a fan for a while and an honor to be over here speaking. Love to start off with who we are and where we come from. So, Tenity in the Nordic Baltic region is a fairly new player. We had set up shop here in August of 2023.
But as an organization, Tenet is actually quite a bit older. So it was set up around 2015 and it's actually a spin out from the Swiss Stock Exchange 6. And it's a pretty unusual founding story, I would say, because our founder and CEO André Azitin, used to run the innovation hub of the Six Stock Exchange. And the stock exchange is owned by more than 100 banks in Switzerland. So it has this kind of organic
role in the marketplace to serve as an innovation hub. It's already offering infrastructure for the market. And then they at some point decided to start doing the soft side of innovation as well, organizing incubation programs, connecting fintechs with financial institutions to drive innovation. And then more recently, we have actually tagged on a VC fund tweet as well.
So initially we actually managed the CDC of the Swiss Stock Exchange itself, but last year we started making investments out of the current fund that we have. And that has a global mandate. So we're effectively investing in Europe and Asia. This is where we have a geographical or physical presence. And we are in the first ticket fund. So we start off with very small tickets of 50,000 euros in our eurozone.
The 50,000 is coupled with an accelerator program where we do as much as we can to connect the startups with players in our ecosystem, whether it's financial institutions, investors, mentors. And then we can do some follow on investments down the road as well. But the ultimate idea is that combining the VC fund with innovation activities targeted at financial institutions.
Uve (05:11.135)
We basically built this two-sided ecosystem and that propels the startups further than perhaps a single or just a standalone fund would.
Uldis (05:23.605)
So I guess you are exceptionally patient guys. If you invest in fintech at this stage, it's probably not much more than a PowerPoint presentation or maybe a proof of concept of sorts, but then it takes usually quite a long time to actually get something going. Is it true or maybe not so?
Uve (05:51.265)
I I would say it really depends on the business model. It's true that we understand the sales cycles in finance that they tend to be quite low. Unless you're doing consumer angles, then they can be as fast as anything. So as far as the sales cycles go, we're OK to support the companies through that and not be unnecessarily demanding or unrealistically so.
On the other hand, would have to say that a lot of the companies that come to us, they already have an MVP and now they're looking to benefit from the network or from the ecosystem itself. Because, you if you come with a PowerPoint, we can make a couple of bank introductions to validate the proposal and it's worth a lot actually that way. But companies tend to benefit much more once they are closer to the market and can
actually sell something. This is where the banks hear them out with more interest.
Janis Zeps (06:51.667)
Overall, we've pretty discussed this topic, but I think it could be interesting also to other founders who want to raise in this climate. What's your overall outlook on the climate? in early stage investing in 2024 in fintech, how eager are investors to invest and how easy it is for those companies that let's say you backed to raise subsequent rounds and go further?
Uve (07:23.006)
So the environment is obviously complicated. It has been now for almost two years, I would say. there's the Silicon Valley Bank, credit space collapses. They really ruined the mood for FinTech in particular. And then on the other hand, there's the general cool down.
Now with Yurib or other base rates going down, would say that venture capital investments will likely pick up again. And in the region, I can also anticipate that in Latvia in particular, new funds are coming online next year. So I think that there will be a lot more investment activity in the next couple of years. looking past, looking at the past 12 or so months, mean,
To a degree, we have been some of the or one of the most, in a way, don't want to say aggressive investors, but high conviction investors that however small our ticket is, we would still invest it in the companies. And we can follow on with 250,000 ourselves, but it's as long as the company can raise from elsewhere, from a lead investor.
There have been very few conversions, but right now they're actually maturing. So, you know, things take time, but I think that things would have been faster at a different era in the market.
Uldis (08:52.413)
I think you mentioned this that it has been tough for the past two years and maybe it has been normal. Maybe it just has been normal. Before it was a bit overexcited and overinflated and now it's just the usual grind.
I mean, obviously there are people who will subjectively say that this company maybe didn't make it because they couldn't get funded, but they were good. But honestly, I cannot say that I've heard too many of such cases that, you know, good fundamentals companies would go bust because of fundraising environment.
Uve (09:35.649)
So I think a good way to measure whether it's normal or not is to take a company that has strong founders and a compelling idea, whether they can raise money with a PowerPoint. And then that somehow shows you whether Appetite is healthy or not so. And I don't really want to start.
mentioning names here because this is just a thought experiment and hasn't been checked with anyone but the thought experiment resulted in the conclusion that strong founders, say with know ex-unicorn from fintech backgrounds, when they would set out to raise money off of an idea they would probably have a very hard time right now and then I'm not sure if that should be the case.
Uldis (10:28.059)
Yeah, that's I guess a discussion in itself. With so many variations in fintech and so many companies building, like what does a standout company even look like these days? Because I think that there has been so much promise and some of the biggest companies in Europe are fintech. So I think there's a proportionally large number of founders going after financial related
challenges and problems. So how to stand out in this crowd? What have you noticed? What makes for the most exciting companies these days?
Uve (11:07.233)
So let's say that from VC perspective, the rule of thumb is obviously that the more traction you can demonstrate, the more appealing you are. So that's a rule of thumb, but that doesn't really come as a surprise to anyone. The second aspect, again, not a surprise to anybody who is investing at the earliest stages, is a focus on founders.
So founders who have demonstrated success before, who have demonstrated the domain expertise, and ideally someone that the investor has known for a while, seen for six months, maybe 12 months, the traction. Again, not surprising, but it really helps. And I think one thing that a lot of founders underappreciate is the value of investor relations and the longevity of them.
You need to have your investor updates, your newsletter, you have to be sending updates on a frequent basis and build trust. And this is really not in the blood for many founders in the region and first time founders in general. So founders who can do that, they will certainly stand out. And the other thing that is always tricky is, if you have founders with domain expertise, they tend to be quite enthusiastic about
their trade. So if you have a background in lending, then you're enthusiastic about lending. And if you're into AI, then you want to build the coolest AI tool. However, founders often get very carried away with their innovation and they don't focus on the market opportunity at hand quite enough. And you know.
They're engineers oftentimes. So it makes sense that they like the gadget, not what you can accomplish with it. founders who have the business acumen to show the market potential, what the trends are, whether it's technological trends like AI, maybe it's regulatory trends like ESG, something that is really happening in terms of market timing and then somehow quantifying it.
Uve (13:22.657)
And it's not about, know, that we have the biggest possible TAM out there. TAM is a pipe dream. So it's also important how they demonstrate that, yes, in the next 18 months, we can build that much traction in a kind of a believable manner. So that would be certainly a trait of a compelling founder.
Janis Zeps (13:45.271)
One tactical question is follow up to this investor updates. Many people have talked about it and some have shared now also on LinkedIn how they do it and what they like, what they don't like. Maybe, I don't know, from your perspective, what kind of, what is the structure of an update you would like to receive from one of your portfolio companies that is, you know, not too long, makes it clear, doesn't hide the issues, any kind of good examples that you can recall?
Uve (14:13.631)
I think as far as best practices go, first of all, just leave it in the email body. Don't build the PDF that has to be opened up separately. And that also makes it very simple. It forces simplicity. It's nice to have some graphics in there and diagrams and see the hockey sticks. But I would say that it's more important to have something concise, convenient to read than a particular hockey stick. The hockey stick I can...
Uldis (14:34.251)
you
Uve (14:43.009)
check out maybe in your, I don't know, when we meet up again and catch up. So put it in the email body. Second thing is that try and avoid using a newsletter engine because that will assign the email to a promotions category in a lot of inboxes. So the recipient will just not get it. There's a very tactical pieces of advice. Beyond that, less is more. And if there is indeed like,
Janis Zeps (15:00.822)
Hmm.
Uve (15:12.193)
What are the main traction metrics? Maybe one little section devoted to that. What are product updates? Something that is on the roadmap, something that you have discovered, market trends, that would be the second one. And the third one could then be challenges that you need help with. And I think three, as these things go, is the magic number.
Uldis (15:33.513)
And if it's not a portfolio company, do I get it right that founders should be kind of shameless in the sense that, know, Uwe said no, but still I'm going to send him updates and then it's up to Uwe to do something with it or not. Is that the approach you're advocating?
Uve (15:50.849)
No, I always ask for content. that's a question of professionalism. Make sure that the person has opted in.
Uldis (16:03.807)
That makes sense in many areas of life. So we spoke about things that excite you and how to stand out and are there any areas of fintech that maybe have been like over saturated and are not as exciting anymore that you receive a picture like, not again one of those.
Uve (16:08.17)
Yes.
Uve (16:29.535)
Yes, so everything that has to do with neo banking and neo brokers, I mean, they're quite expensive to pull off and they're certainly very limited appetite for that. I mean, just last week, right, we saw also some consolidation affiliated to the region. So Moniz was sold to Pocket in the UK and that is not the single instance of such deals recently.
The other thing which a lot of founders in the space often get wrong is that VCs tend to be kind of reversed to asset heavy business models. So if you come up with another digital lending solution, then there has to be something really magical about that to stand out. And I mean, it's obvious because scaling them is hard. It depends so much on the type of liquidity you can attract.
Again, this is not to say that it's impossible. think you have some interesting trends in crowd financing in the region. Again, it's an old topic, but you do have stuff going on. Everything with climate, fintech and nature-backed assets. These can be asset-heavy business models. Carbon set-off quotas, they have to be traded and there has to be liquidity somewhere in there.
It's possible, but the vanilla lending solutions are very unlikely to be interesting these days. Having said that, I do have to say that since the base rate is coming down, one could argue that the lending will go up because it's more affordable. So in that respect, the business is in the lending space. Again, there is probably a wave or a tide coming that will lift these boats. But whether it merits
a new lending startup, not sure.
Uldis (18:31.772)
Yeah, neobanks.
is something that I think many people are tempted to go for. It's something that everybody understands and there's good examples how it's done well can be successful but then it's so much work, so much infrastructure, so much money that goes into that. it's yeah that will be interesting to see if some for example as you mentioned you know high credibility founders would go
with such projects how they would fare in fundraising. But you mentioned parts of climate tech that may be also facing potentially tough times raising. However, it is clear that you as VC are quite focused on climate tech. You're releasing this climate fintech report.
So maybe let's start by defining what do we understand as climate fintech in the first place.
Uve (19:37.717)
So obviously a good question. And I think one way of thinking about it is that the green transition is being, let's say, enacted through the financial system. banks will need to be collecting environmental footprint reports from their portfolio companies in the sense that they have have lent money to. And the same a little bit may apply to
private equity VC investors, they also need to keep an eye on what their companies are doing environmentally speaking, especially if they are that type of impact fund. So the broader need for climate fintech or sustainable financial tools comes from the fact that the financial system is the conduit for the green transition. Then the next step is thinking like what really qualifies as
was the function of climate intact tools. I would say that anything that drives environmental behavior, especially through, let's say, financial incentives, so whether it's decarbonization or reducing the footprint of an organization, oftentimes it is the financial manager and or the treasurer in large organizations who own the topic.
And that is in part because lending is increasingly affiliated to environmentally friendly behavior of the companies. So, you know, it naturally sits to a great extent in the financial function. And then as a result, Climate Fintech in that respect will be a very important, let's say, know, cog in the system, a certain mechanism that is critically needed to
enact the green transition.
Uldis (21:36.777)
But can you mention some more use cases like, yeah, we spoke about these CO2 emissions related to like companies like Arbonics, I guess would be what could be mentioned there. But what other like practical use cases can you mention? How is this being implemented?
Uve (21:47.713)
Mm-hmm.
Janis Zeps (21:54.48)
do we save the planet? What do we need to build in order to do that?
Uldis (21:58.131)
or what do we need to buy, which app we need to download.
Uve (22:01.449)
Yes. So everything that has to do with these nature-backed assets can be quotas or credits you get from forestry, from better farming practices like agronom and heavy finance, for example. We have also kind of origin of proof for renewable energy. There is an Estonian company that is raising its head, Soldera, right now.
Uldis (22:18.495)
Mm-hmm.
Uve (22:30.987)
So that's, know, digital, green digital assets is certainly one big taxonomy or category. The other big one I would say is everything that has to do with ESG tools for banks and corporates, whether it's then to assess client portfolios or their supply chains. And there you have, you know, everything that has to do with materiality assessment.
a particular company should look at and then that's the substance of it. Then you need to report around that. Also quite important. And then there is everything in between that has to do with the standardization of ESG reporting. So we held this climate hint at report publication event last week and we invited a handful of bankers and state officials over for a discussion on ESG reporting.
And not too long ago, there was an Excel table that SMEs would have to fill out to report to banks. mean, if this day and age somebody would come to a company and say that you need to do your invoicing in Excel, then that would be dated. But in this nascent industry of ESG reporting, that's pretty much the standard. And you can imagine the allergies it creates in the
companies that are supposed to report. So there is, think, a lot to be done when it comes to digitizing the data, how you generate it, how you exchange it between systems. I mean, if you have to fill out, as I don't know, you're a food supplier, a food producer, you have two banks and the three retail shops that you're doing business with. If everybody would ask for an individual Excel sheet, you would
just go crazy. You would do it, but you would go crazy. So it's obvious that we have to standardize the generation and the exchange of this information. So that infrastructure is yet to come, of course, but it has to. And then you have a bunch of tools and solutions on the consumer side as well. I think it actually...
Uve (24:53.907)
mimics what the corporates need. So on the one hand, it is the environmental footprint of the person. And then that is often tied to personal financial management that has now a new dimension to it, otherwise a pretty thankless field. And then everybody can buy a little indulgence when you're buying your airplane tickets or bus tickets, then you can offset your emissions from the process. So that category absolutely exists as well.
Janis Zeps (25:24.687)
to hear that Excel is saving the planet once again. So many things are based on Microsoft Excel files working and running and the entire plan.
Uldis (25:24.765)
I wonder if this industry...
Uve (25:35.713)
But wherever there is an Excel workflow, there is a web app to be built.
Janis Zeps (25:40.656)
Exactly, Excel gets a good point. Like if you see someone using an Excel, that's a business opportunity.
Uldis (25:47.657)
and then they go back to Excel after they have tried 10 different kind of solutions of solving that problem. I wonder, does this industry exist outside of Europe? Realistically, mean it's...
It seems it's very driven by government. And it's also interesting that they chose financial sector to kind of enforce this. mean, it could be done also by some government agencies. And obviously it's understandable that the banks are weaved through the whole economy. it's wonder if it's something that they would choose for themselves.
Uve (26:34.411)
mean, interestingly, if you look at the history of ESG as a kind of a language, then I haven't checked the sources, but what I've been told is that it started out as a private sector initiative because larger corporates who have their general good corporate citizen duties, they started to think about the impact and how to measure and report and be a good corpora-
Uldis (26:34.858)
to do but but I'm just thinking about this
role of of fintech is it is it something that can make a real big difference you think
Uve (27:03.137)
good corporate citizens. And then they started to ask for some kind of standardization. So the initiative first came from the private sector. Then the state, including the European Commission, took over and of course got quite excited. As we know, the European Union wants to be the first in regulating everything. So in that respect, it's
Janis Zeps (27:30.609)
Yeah, that's, that there were leaders for sure globally.
Uve (27:34.079)
Yeah, yes. So one could argue that maybe somebody got carried away. But at the end of the day, the gut reaction is, this is more bureaucracy. And it's understandable where that gut reaction is coming from. But if you look at it from a more sober perspective, we do need a standardized approach to report on.
how we're saving the planet. And we can also give up on saving the planet. That's another approach. But as long as we're keen on doing it, then that language is needed.
Janis Zeps (28:13.961)
Is ESG, by the way, like, you know, somebody might be listening to this and say like, well, I have this SaaS app and, you know, we're just a bunch of guys with computers. We're not really burning coal and doing things like that. To what enterprises, what companies, what startups, ESG is actually relevant even to think about just in practical terms? it something that everyone needs to kind of observe and follow or more businesses that actually are
producing and polluting or you know if you have a bunch of 20 people with laptops is it relevant for you?
Uve (28:51.649)
So I would say that the software enabled businesses typically have a very, very, I'm not saying even a minimal footprint because there is something to be said for data servers and especially when it comes to Bitcoin mining and AI operations, they're very energy intensive. So in that respect, but if you go outside of the digital sphere, I mean, you could argue like if you're enabling or sustaining a lot of travel.
Janis Zeps (29:10.238)
Yeah, travel maybe as well.
Uve (29:20.213)
But within software enabled businesses, there is this trend of green coding. And it's very similar to, I would say, agile coding practices, but you pay a bit more attention to the architecture of your software and making sure that you're using energy efficient software architecture, software languages. So that exists.
Other than that, I mean, it wouldn't be too worried. Sometimes these suppliers, they have, I don't know, software companies supplying to a major retail chain, then this retail chain has to ask about the environmental practices of the software vendor as well. And it can be a little bit, you know, stupid at times because these questions are standardized and then you have to, I don't know, report on your trash consumption.
even though you're not a manufacturing company or like waste production rather. So yeah, you have these absurdities, but I think, you know, don't take them too hard, too much and just move on. But everything that is, know, in energy production, in shipping, obviously, in agriculture, in heavy industry chemicals, there is so much to track and count. So it's a massive space in that respect.
but very fractured.
Uldis (30:41.95)
I just can't help but think that if this is kind of bureaucracy, the main driver, know, somebody said that we should do this and then we kind of go and try to find ways how to efficiently do it.
I kind of feel that it might not be enough to prevent the devastating storms and all of that that climate change is bringing. So I think we need some kind of radically revolutionary models and incentives that, you know, it's not because the government said so, but it's because it makes my life better.
faster, cheaper somehow and I guess AI is not exactly well I guess it can do both in terms of replacing search I guess it takes a lot more energy than search does but maybe it can help in other ways so yeah but this really feels like this kind of government driven bureaucracy let's say fitting its
Yeah, I am skeptical about that.
Uve (31:52.897)
I guess I'm a little bit more optimistic and I'm also paid to do that. you know, I have to be. But in other words, there are no silver bullets. There are hardly any low hanging fruits. So if you want to do anything about it, then this is one obvious way to go down. Again, the financial system being part of the air that we breathe in the economy. So
it's the logical thing to do. Whether it has been done in the best possible way or being rolled out in healthy doses, that's a valid question. But at the end of the day, if you think about it in Europe, it's only the largest companies who have to do it right now. mean, that will be impacting the smaller ones soon enough as well. But...
I think there is a management practice that justifies a lot of the regulations that are coming and it's the simple term that you can manage what you measure. And if you don't measure the impacts to begin with, then we can forget about managing. So we're right now at the very earliest stages of beginning to manage our impact in the traditional economy.
Non-profits have been doing it for a while. Impact startups have been doing it for a while. But now that paradigm is being expanded and I don't know, at the end of the day, it's better than nothing, even if it hurts.
Uldis (33:30.206)
No, you're absolutely right. It's easy to say that it's not working or it's not going to work. let's not do it. I mean, it's every step matters. And at this point, if we don't have anything better than that, we have to go with whatever we have. I mean, it's clear if you are not denying climate change, then I think it's obvious that something needs to be done. you know, whoever
a better idea, please step your foot forward.
Uve (34:03.681)
Mm-hmm.
Uve (34:07.777)
precisely.
Uldis (34:09.15)
Okay, so one thing that I wanted to talk a bit about your background includes a lot of...
fundraising related roles. obviously it's always, always an important part of any business. You talk to any founder, they're always fundraising. Talk to VCs, they're also pretty much always fundraising. So maybe there are some kind of key principles for fundraising that you have learned over the years and maybe they're universal between companies, non-profits,
or whatever kind of activities or if they're different we can separate them.
Uve (34:54.273)
This is a topic that I've spent a lot of time thinking about over the years, and especially having started out with sponsorship and soft funding for innovation and then moved into equity financing down the road. So it's a big space that has so many different variations of what you're going after.
You can go from angel investments to the European Innovation Council, where the bureaucracy levels are insanely different. similarly, like at TENETI, since we're first institutional checking companies typically, then we would apply slightly higher requirements when it comes to paperwork and professionalism than your average...
average angel investor would or even I would say many early stage funds. We are a bit more stringent in making sure that the foundation and framework of the company are solid. But then to answer your question, then I think the first thing you have to understand is that the fundraising is really a sales exercise. Often people don't quite see it in that way.
And now if you're doing sales, then this qualifies as very complex B2B enterprise sales, at least as far as startup fundraising goes. You're okay, sometimes dealing with angel investors, they're faster, but the more mature as a company you are, the more strategically you have to think about how, you know, make the sale happen. You take the long view.
You start nurturing the relationships early on and then you obviously have to understand your product. I mean, I've made this mistake myself and I see people do it to this day that they're very much in love with the startup they're building, with the product they're building. And they're just obsessed with what they have, not necessarily with what the market and customers need.
Uve (37:14.603)
To them, it's kind of obvious that the investor should appreciate what they're building and they don't understand why the investor is so dumb and doesn't. But typically that's an indication of the product being weak. in other words, the startup, maybe you have a great invention, but as long as you haven't run it by your customers, let alone sold it to customers, then you have a problem. So investors, again, I come back to what I said earlier, they don't want to buy the gadget.
that you're building, they want to buy what you can accomplish with it on the market. And that mindset is often a bit wrong. And then similarly in nonprofit fundraising, everybody's out there to do good and has this certain moral high ground. And then if the donor doesn't recognize it, then there is this sense of victimhood. But actually the donor, they always have a deal flow problem.
what's the most impactful project that I can back. And you need to understand the competition, not just have your hand out and go like, I'm doing the right thing, why don't you back me?
Uldis (38:25.544)
Yeah, I wonder, did you encounter this maybe people being offended by the tone or not by the tone, but just by the fact that like how to how to ask to contribute to a meaningful goal or cause.
at the same time, not making them feel bad if they don't, right? Because I think it's, at least I have felt sometimes when people have approached me, is that maybe I have better alternatives on the table, but from the get-go, I'm immediately made feel bad if I would pass on this opportunity. And that makes me even less likely to participate. Have you encountered such and how to avoid that?
Uve (39:12.469)
I mean...
To some extent, the biggest thing I've seen is the certain sense of victimhood that founders of companies that aren't of that high quality sense when they're rejected time and again. And that sometimes might be shown to the investor, oftentimes not to hear it more in the kind of kitchen side of things, but it just indicates a certain
lack of maturity either as a person or as a founder for that matter.
Janis Zeps (39:52.566)
Generally, sign of times we live in, and must say, in all areas of life, I have observed it quite a lot. Of course, it's always easy to say, you know, back in the day it was different. It probably wasn't that different, but like, it's still a popular thing, and I think people also have been brought up to sort of believe in this one idea. Like, you can do whatever, you just follow your dream, and you know, the world will...
adapt to you almost. This is actually the message a lot of, know, last few generations probably have been brought up with. And when you face it that's not the case, it's a very hard adjustment. And whether it's in business fundraising or it's like whatever career you've been doing and pursuing, it's a big topic to explore actually. And no wonder in fundraising, it's a very kind of direct field because like, I'm giving you money, I kind of expect to get it back. So you you need to...
Uve (40:41.633)
Mm-hmm.
Janis Zeps (40:50.966)
be very confident before investors are ready to sign in.
Uldis (40:56.052)
How much do you think is this kind of split or I don't know how to say between the company fundamentals, you know, who the founders are, what the traction is, what the time is and what the opportunity is versus how they sell themselves because because like a
founder could be not the best fundraiser right but they might be a great builder of a company not maybe I mean they're usually a pretty good storytellers but maybe not not in 100 % of cases have you seen cases where real good good potentially good companies are like left for dead because they're cannot sell and vice versa maybe not so great companies get funded because they can sell themselves better
Janis Zeps (41:53.977)
A very likable guy, charming, comes in, sells.
Uve (41:56.257)
Mm-hmm.
Uldis (41:57.46)
because I think it's very hard for VC to just see objectively the data.
Uve (41:59.509)
I mean, it...
Uve (42:07.169)
Yeah. So, okay, there is the rule of thumb that good distribution and average product beats good product and average distribution. Right? So in that respect, distribution is absolutely fundamental. And as an investor, I would say that the
mean, if you show me your traction in numbers, it doesn't matter what your communication style is. It matters a little bit because you maybe have a harder time punching through and convincing me and so forth. But at the end of the day, if it's compelling, it's compelling. And how you got there, I mean, I'm very curious, but it's not necessarily any of my business as long as the results are valid.
But that I think is the minority of cases. So the majority of cases, you need a charismatic founder who can convince customers, convince investors, convince employees to join the team. And the better the storyteller, the more energetic the person is, the higher the likelihood that they can accomplish, you know, persuasion across
all these functions that are important. So it's a skill that you can maybe manage without, but it makes your life much more difficult if you don't have the sufficient amount of charisma.
Uldis (43:42.262)
Yeah, it would be interesting to see if there's data on like similar similar development companies with charismatic founders and and without although I have to say like probably we don't usually find out about those companies that don't have at least one charismatic founder because I think it's just so hard to make it and and if they do they they just go bootstrapped right there maybe printing money don't need to talk to any
Uve (43:48.779)
Mm-hmm.
Uve (43:54.517)
Mm-hmm.
Janis Zeps (44:07.552)
Yeah, well...
Uve (44:07.574)
Yes.
Uldis (44:12.246)
They don't need to convince anybody because they're just so good that their business models are so good that they just, you know, don't need anyone.
Uve (44:24.987)
The general idea is that, I mean, talking the talk alone is not enough, right? Now you have to walk the walk as well. And this is where you can trick an investor once, but if you then don't execute on your plans, the investor won't pick up the phone next time.
Janis Zeps (44:47.029)
Jails are full of charismatic founders in recent years. We see so many. Luckily in Baltics, think, maybe our region, we're also less sales and outgoing, it's different personality types. But of course, US is an interesting market in that regard.
Uve (44:50.742)
Yeah.
Uldis (45:06.77)
I think those types of personalities in the Baltics are maybe attracted to different kind of business than startups. think, yeah, startups is a bit low potential payout game for a con artist to go into. We don't have as many money hungry, but spending hungry VCs in the region yet.
yet.
Janis Zeps (45:36.894)
yet yet hope.
Uve (45:37.843)
I in Estonia, we've had a couple of unfortunate cases in fintech over the last two years, right? So since the court verdicts are not out, I'm not going to mention these names, but there are signs of fraud that you have in fintech as well, which has really destroyed a lot of the early stage investor appetite in this space. I mean, let's see, maybe it all recovers and there are bad apples as these things go.
But how should I say it? Luckily we're such small communities and societies, so your relationships, if you have strong relationships you will be trusted and it's fine if you don't. Or as soon as you're a con artist people will typically find out quite quickly. mean, reputations move fast around here. But it hasn't made us bulletproof.
Uldis (46:32.431)
You cannot move to the other side of Estonia and start over.
Janis Zeps (46:33.994)
Well excuse, don't.
Janis Zeps (46:38.988)
But Estonia just had so much money, right, compared to the market size. And it would be probably a surprise if this wouldn't happen at some point. Sooner later, just the size of rounds and companies and the amount of founders and legitimately good opportunities as well. It's quite massive for Europe even.
Uve (47:04.885)
Yeah, exactly. some point, the bets are worth it.
Uldis (47:11.028)
Alright, the bet that is always worth it is to bet on listening to this show. So thanks, thanks Uwe for coming on and sharing your experiences. yeah, thank you very much.
Janis Zeps (47:21.727)
This is not a gambling ad, by the way.
Janis Zeps (47:32.885)
Yeah, thanks, awesome.
Uve (47:34.347)
Yes, thank you, Anis. It is my pleasure.
Uldis (47:36.2)
And to the listeners, subscribe on YouTube, Spotify, Apple and save bet, save bet, save bet. All right.
Janis Zeps (47:42.759)
and bet on seeing us next Tuesday. And if not, then something has happened.
Uldis (47:49.206)
All right, thank you, bye.
Janis Zeps (47:50.921)
All right.
Please note that the transcript text is AI-generated. We apologize for any potential errors or inaccuracies. Thank you for your understanding.
