Felix Faltin is a philosopher and economist of training and has always wanted to go to public policy and do something big. With EPI diplomas from the University of Warwick and a master’s degree in Georgetown public policy, his career began in Vienna where he managed the reform of health care. After that, he went to develop new service lines for a health company across Europe and Asia. However, there are two main highlights of startups in his career – in 2016, he was the right of the Austrian Federal Minister of Innovation and the Economy infrastructure and adopted an initiative of 185 million euros to support the national startup community. After that, as it was the next most logical step, Felix joined the Austrian investment fund Speedinvest as manager of strategic projects.
As one of the rare people with government history in VC, Felix knows the two worlds which are sometimes so difficult to bring together. The team of Campus XThe incubator of technological talents and companies of Sofia invited Felix to give a conference on venture capital and industry trends, so that trendy subjects took advantage of the opportunity to ask him what he learned during the seven years of his career between the various definitions of innovation.
Trendy subjects: before Speedinvest, you have been part of many other interesting initiatives. The government’s software package of 185 million euros in Austria is one of the projects in which you have been actively involved. What triggered this process in Austria? How to work with public institutions on such a question?
Felix Faltin: This is something that in Austria, and I think that in all Western European countries, has always been on the agenda. The question is how attention startups get in relation to other things on the agenda. In Austria in 2016, the Prime Minister at the time, who had training in the private sector, put a lot of energy to these subjects. I think it’s always on the agenda, in the EU too. Just look at EIF money (European Investment Fund) pours into VC.
Many entrepreneurs say that the government must do more. I would say that governments do a lot, they are just very far. As a political creator, you speak a completely different language. It is frustrating for both parties, but if you manage to collect them, it can be productive.
How does it work at the practical level?
Talk. As a government, you must be ready to descend and hang out in incubators and accelerators and with investors to have an idea of what is going on. Likewise, as a technological entrepreneur, as an investor, you have to take the time to speak to people who speak a different language. You must also understand as a entrepreneur or investor, that government decision -makers must move much larger ships. They move more slowly because they have a lot of interest in balance.
Who should an ambassador for the ecosystem speak? What are the backs and donations?
Talk to the one who calls the gunshots. It is different in each system and depends on your goal. If you are an entrepreneur and you just want funding for your business, you need to know who is in charge and talk to them. If you have a more important mission for the ecosystem, it is probably paid to find out who are the advisers concerned for the politicians concerned. As a principal decision -maker, it was crucial for me to have consumable information, and I was grateful to the people of the ecosystem who sent me exploitable briefings.
It is important to understand that politicians are allergic to public pressure. Press them publicly can produce a result or prevent them from acting because they feel like they are walking on their guard.
What would be your three main tips for the local ecosystem in Bulgaria and organizations trying to transmit similar initiatives?
My advice number one is to provide well -written and concise concise political recommendations which are really implemented. As a politician, you run all the time and sometimes have trouble prioritizing. The more specific the advice, the more you get it – the better. Two, building a relationship free of alarmism. If you are constantly talking about the severity of everything, you will not strengthen your case. Build a relationship with people, help them understand what is really a problem.
What is the role of the State in the development of a start -up ecosystem?
An example: I was in Silicon Valley a few months ago and I spoke to a successful authoritarian entrepreneur there. He told me that moving to the United States opened his eyes for the fact that the regulations are boring everywhere. Have you ever tried to get a social security number in the United States? The State has two clear responsibilities concerning startups – education and financing of very early risks, generally through subsidies and research grants – for technologies that are somewhere between the development stadium and the market, too early for private investors. If you come back to history, each major technology that we use today, like the iPhone, is the result of a massive government investment. In Austria, we have tons of public subsidies and many of the best companies use them. This gives them a track, they do not need to give equity and they use it to hire early staff. It is well spent money.
Why are Bulgaria and the ECE region interesting for Speedinvest? How many companies in the region have invested?
I am part of the Tech Deep team and for us, everything is on the map – EEC is an excellent source of deep technological offers. In Bulgaria, we have two investments – Dronamic And Metrilo. We have a number of investments in Hungary, Slovenia, we have supported Faviar or Blubblub. About 20 to 25% of our investments can be found in EEC and Balkans.
Are there agreements related to current Bulgaria?
I have met 20 companies today. I think we are going to follow with three of them. But it is important to have in mind that we see 3,500 companies per year and only invest in a small percentage. We collect fundraising for the dronamic, they are doing very well.
We see many Bulgarian founders and one of the reasons why we are here is that many of our companies employ talented people in Bulgaria.
What is the next strategic movement for Speedinvest?
We have an office in the United States which serves as a commercial development platform for our portfolio. As our portfolio matures, more companies will try to access the American market, so I work with our American team to prepare. Of course, we are also working on other exciting projects.
You talk a lot about reinventing VC. What does that mean?
What we see is that a lot of VC promises the moon to companies when they try to invest: support with hiring, with fundraising, intros to customers, etc. Only very little VC hold this promise. We have built a model that allows us to do so. If you look at our website, you will see a very large team. These are all specialists who work for our portfolio. They provide support in areas such as HR, marketing, growth of growth, business development. In the United States, we have a just commercial development team for our businesses. We do it because we see a need. Above all, this support concerns solid companies that will benefit from our work.
And how do you pay that? Traditionally, funds obtain 2% of the capital hired each year. How do you support a 50-year team?
We have developed a unique model to pay this – our growth partner program. We agree with the founders on certain milestones and if we hit them, we are reimbursed with small challenges in shares. The advantage is that we are not burning money, the founder is still in control and they are all difficult to stock up on the market.
How do you work with other funds?
We have co-invest with almost all, if not all, the main European VCs. We like to co-invest. There is a lot of research according to which companies, which have co-investors, end up increasing the A series, for obvious reasons such as the largest networks, etc. We want to be main investors and invest in all of Europe – from Scandinavia to Bulgaria. We have also co-invest with American funds.
Is there a difference between working with American and European VCs?
Size is a big difference. The entry prices in Europe are lower than the United States. So smaller outings can always have many multiple. In the United States, there is an assumption that it must be a unicorn or a decacorn to pay. This is not the case in Europe. As funds, we can have good yields with 500 m to 1b of companies. Our experience is that American investors take very few comments from Europe, many of them have never been professionally here. It’s very different for us, of course.
There seem to be enormous differences between the VC offer in the Western and East countries of the EU. Is it correct and what is the reason? What does this mean for Bulgaria companies for example?
It is very easy to obtain visibility as a bulgarian company. Just go to the events and take an excellent pitch. Be ambitious and do not think you can only get funds or customers from Bulgaria to Poland. Go to France, Germany, Italy, etc. These are huge markets waiting to be taken. One of the practical challenges that we see again and again in the less developed venture capital markets, including Austria, is the need for professionalization among business angels.
We see a lot of large companies with broken caps because the angels have arrived too early and have taken too much equity. Sometimes it makes it impossible to obtain follow -up funding. On the investors’ side, these are construction volume and critical mass. Speedinvest also started with a fund of 10 million euros. You have to do your job and build a big brand. Many CEE funds are still very young and it will take time to prove their merit.
Speedinvest is an investor in Trendingtopics.