In this episode, we dive into another part of the technology transfer and entrepreneurship ecosystem - venture capital (VC) and business angels. We discuss the different VC funds in Slovenia, how startups should approach funding, opportunities and challenges in the local area, as well as success stories in the region, and perspectives abroad. We host three experts from the Slovenian venture capital scene:
Timestamps:
In this episode, we dive into another part of the technology transfer and entrepreneurship ecosystem - venture capital (VC) and business angels. We discuss the different VC funds in Slovenia, how startups should approach funding, opportunities and challenges in the local area, as well as success stories in the region, and perspectives abroad. We host three experts from the Slovenian venture capital scene:
Timestamps:
Hello, and welcome to the ASEF podcast. My name is Frenk Dragar, ASEF fellow 2023, currently studying artificial intelligence at Utrecht University and an alumni of University of Ljubljana, Computer Science and Mathematics. I'm hosting the vertical on Business and Technology, where we explore how businesses can leverage innovative technology, the ecosystem behind these companies, and take a look at the state of entrepreneurship in Slovenia with a perspective abroad. Previously, we took a look at youth entrepreneurship as well as university spinouts. Today, we'll be talking about an important, often crucial part of the entrepreneurship and technology transfer ecosystem, venture capital. It's my pleasure to introduce 3 distinguished guests from this field in Slovenia. Joining us today are Nina Dremelj, managing partner at VESNA Deep Tech Fund, president of Slovenian Business Angels and board member of the European Business Angels Network. Welcome. Thank you. Gregor Rebolj, a serial entrepreneur and investor, And Rok Habinc, partner at Pan-Adria Partners, previously partner at STH Ventures Fund, and an active business angel as well as board member at Business Angels of Slovenia. Welcome.
Rok:Thank you. Thank you for having us.
Frenk:Alright, so let's start with some basics. Gregor, could you please explain to our listeners what venture capital is and what kind of companies, maybe startups, typically seek VC investments?
Gregor:Yeah. So venture capital is usually money invested in companies so that this money speeds up the development of this company. So if you could, on one side, organically grow the company, but that takes a long time. Or you can take venture capital and actually speed up the whole process, doing things uneconomically at first, but, basically, you know, speeding up the whole scaling up phase to get there sooner. Right? And for that, usually, you have venture capitalists, investors that invest this money for a stake in the company. And for that very reason, of course, these companies are extremely rare. So basically, they need to be they need to have a potential to have a global reach, so to be a global company, and to actually grow to a point that's let's say that, you know, that they actually make it to an exit, which is like a meaningful exit, like more than a 100,000,000 exit. Because otherwise, the mathematics of venture funds does not actually, work out.
Frenk:Yeah. Like, a common statistic is that also 95% of startups fail. So, of course, when you hedge that risk, some of them need to succeed so you cover. Exactly,
Gregor:yeah you need to calculate that in, yeah.
Frenk:All right perfect thank you and Nina, could you shed some light on the main differences between business angels and venture capitalists, please?
Nina:Yeah. For sure. So business angels are usually treated as individual people who invest their own personal money into the startups just like Gregor mentioned before. So the fast growing, companies who have a potential at least on, let's say, from our perspective, European, but it should be global rich. And, they are investing according their own preferences. So usually, it's like that, they invest into the things that they they found similar to their knowledge or expertise. When it comes to the venture capital funds, it's usually that people, in also many cases, who are successful business angels transferring to the venture capital, managers, they do manage others' people money among the others and also their own money. So they are becoming much more professional, spreading bigger amounts of money into the, let's say, well defined strategy where they will invest and also according to their thesis and according to the tickets they that they already predefined before. So it's not like, by inspiration, but it's well professionally organized investing.
Frenk:Alright. Thank you.
Rok:To add perhaps the, venture capital funds usually get also investments from institutional investors. This is something that business engines don't get usually, but venture capital funds typically also get larger investors to come aboard because they have professional management running the funds. Yep.
Frenk:And also business angels take a more active part in, let's say, advising the startup, or how does that look?
Nina:Depends. I mean, again, it's about each person individually, but, yeah, many of them are acting like so called smart money. So they provide not just money, but also knowledge, connections, etcetera. It is changing this stuff in Slovenia particularly, so the business angels are well educated. We are known as one of the most, let's say, organized and known and successful business angel network within the Europe. So, our angels are more treated as a super angels, not classical angels anymore. Why? Because usually, it's like, I'm now saying about the European standards. Angels do invest smaller tickets per investment per investor, which is like if we compare Baltic or Nordics or Northern part of Europe, it starts with 5,000 per investor per, per startup, which comes to the for instance, Slovenia, it's around average ticket is €100,000. So we are investing much more boldly, we are much more educated, but we are on the other side much more conservative also when it comes to the decision making and the whole process.
Frenk:Okay. Thank you. And we'll talk more about some cultural differences a bit later on as well. Each of you represents a fund focused on early stage startups. Could you tell us a bit more about your fund's history and focus areas? Maybe we can start with Nina, then we'll head to Gregor and then Rok.
Nina:Okay. So if we're talking about, VESNA, it's gonna be the 1st Deep-tech fund, which means there's no history, existing before, But, this fund will cover Slovenia and Croatia primarily, plus, some small part will be devoted to the other European potential investments. We were purely focused on technology transfer, meaning that we will invest in companies that were arriving from research institutions, public or private ones, and they successfully created spinouts or spin offs. And we will support them with the money on their way to the growth. It's gonna be the first one. Why? Because, the reason lies, in the market. There's, maybe one statistic that is quite surprising. So Slovenia has 5% PhD people, per capita whereas the world average is 1%, which means that pretty much if we compare this to the patents that are filled on European level from Slovenia, we are lacking behind. Meaning that pretty much zero of this knowledge is commercialized and, this will be actually our focus. But with the other funds before to that, so we were, at that time, investing in classical, let's say, with that fund, that fund, and all the other ones. Dafont may be interesting because it's the first angel pure purely angel fund that was created, in Slovenia. We invested b to b software, so which is pretty much the most common stuff to invest in because it's also the most scalable. The the the quicker scales scale ups can be done within this sector, but we already went into the exit period, meaning we stopped investing.
Frenk:For sure. And so the Vesna funds, university spinouts or I guess, the knowledge transfer kind of companies. Where do they seek funding? What is the timeline there? So sometimes it's more, you know, a typical startup might seek funding when they have some traction. How is that with a deep tech startup, let's say?
Nina:So with deep tech startup, funding needs to start much earlier. We are focusing on so called technology readiness level phases, which means that from basic research up to the being present on the market is 9 stages, in between. We will start investing at lab prototype level, which is TRL 4. Just simply because of that, we would love to do also a bit of capacity building and also, empower researchers to become entrepreneurs. We're also aware that the majority of those, let's say, investments will be write offs and it's fine because the average ticket will be smaller one. It was well checked on the market through the interviews, research, and everything else. So with this money, we will actually push them to become entrepreneur, to create spin off, and to finish this lab prototype, and then funding will carry on if they will be able to graduate. But, in deep tech, tickets are much bigger. It will also involve much more co-investments with other investors. But I'm not saying that this something can be really slow. Deep tech can also be super fast, especially when it comes to the AI, some health care stuff, quantum computing, etcetera.
Frenk:Great. Thank you. Okay. Maybe let's move on to Gregor.
Gregor:Yeah. So Silicon Garden is already a 3rd fund in the row. So this time 30 million covering the whole region. So basically, we invest in companies that are that are started or the founders are actually from the region. So it doesn't need to The region being? Being Slovenia, Croatia, Serbia. That's yeah. And actually so you could say ex Yugoslavia. Yeah. Just that these three countries are so far have been most active out of the the others. And we are having, you know, completely private money. We don't have any restrictions into, you know, just investing in specific like, Slovene d.o.o. We can actually invest freely into a company that started by somebody that went to study in US and then actually sort of came up with a company with an idea, a company, and then actually we invest. So how we usually emphasize the difference is that between us and other funds is maybe, you know, if we look at how we actually look at selecting the the different investments. Right? So when you look at the team, especially in the early stages, pre seed and seed, team is basically everything. So idea, it's great that it goes in the right direction and that it's in the right market, but the team is the most important. And here, we look at, you know, a couple of examples or a couple of segments. Right? So, there's the exited founders. So founders that have actually already, you know, made an exit, so built their own companies, and now this is their second, third time building a company. For these guys, you always sort of when you look at the fund model, you see that their graduation rate between different routes is way higher because they know what they're doing, they have the confidence, they know the network, and just basically they know how to execute. Right? So in these guys, they usually also don't have issues raising capital. Then you have a category that we call experienced founders. These are sort of people that maybe have worked at, you know, larger scale ups and have gained experience. And because of that, they also sort of became, you you know, gotten experience with what does it mean to actually scale a big company. And then the first time founders, right, which are actually sort of people that, you know, maybe just start, have their own idea. For them, usually, the path is much longer. Right? Because they need to get the confidence. They need to, you know, also build a network and so on. And and, actually, what's really important, you know, set the ambition high enough that it's interesting. Right? And if you think about it, you know, how we actually allocate our money and sort of focus our investments on, you know, where, of course, the probability is higher, Silicon Gardens, sort of, the idea is that we are ex founders that all made successful exits or some are still running successful companies right now and have, you know, nice dividends so they can reinvest back. But basically, you know, the whole so right now in Silicon Gardens, we have between 8100 individual investors from the whole region. So meaning out of the partners, so it's me coming from Sportradar, Rok Zorko coming from Outfit7, and Izet Zdralovic, Croatian, who's actually coming out of Microblink and Photomath. These were, you know, just Microblink was I think it was around 200 million secondary, in 2019. And Photomath actually just exited to Google last year for around half a billion. And LPs are sort of on a similar level. And, basically, what we're saying to the founders is look at the different funds, different options, and expect more. Even though when you said before that maybe angels are more active than funds, that's not necessarily true. I mean, just, you know, don't look just for money. Also, look for what else the fund can actually get you. Right? And by, you know, using our own DNA, for us, it's, of course, way easier to, you know, show them the ambition, show them the you know, how this can be done. We can actually help them with HR. We can help them with, you know, strategy and so on. Network is super important. For us, building a network of follow on VCs is way more easier because I can just pick up a phone and anybody would like to talk to exporter. Right? So, and and that's why, you know, just what I'm saying is don't look just for money, look for also what that money can actually bring you, especially in the in the early stages. And this is where I think that, you know, the core competence of the Silicon Gardens Fund lies.
Frenk:Thank you. So, like Nina mentioned before, smart money, right, not just the capital but also the entire kind of ecosystem around it. Thank you. Rok?
Rok:Yes. So, we're building a fund that is gonna focus on even more later stage companies. So if if Nina's companies come in at the very idea stage and then Gegar invests in early stage, pre seed and seed, we're looking at companies that are post seed that are in so called early growth phase. Our tickets will typically be a little bit bigger. I think we'll invest between half a 1000000 and 3,000,000 on the onset. Our fund is gonna be around 70,000,000, of which 40,000,000 is already committed by large European public money. So European Investment Fund and Slovenska Slovenian Development Bank have committed. What we also pride ourselves is that we have been able to gather interest of a little bit different spectrum LPs, so investors, which are primarily entrepreneurs, Slovene entrepreneurs who who are not necessarily from the tech sector, but have made their fortunes in some other industries, and we've been able to attract them to invest also in young Slovenian startups. So we will focus primarily on Slovene companies looking at the region as well similarly as as Gregor Fund is doing, but Slovenia is definitely going to be our primary target. And our thesis is also a bit broader. We're not going to be looking at software startups per se only. We'll look at different industries. We we're currently quite active in energy transition, in green tech. AI, of course, is always an interesting topic or area. As said, the companies need to be a little bit mature. They need to already have their business developed, have a defined product, defined service. Business model is is well defined. They have their first clients. They have reached 100, 200 k, a 1,000,000 of revenues per year. This is where we are interested in in entering to help them grow internationally. We have 3 partners in the fund, 2 of which are are already long term VC investors, and the 3rd partner which is a start up executive. And all of us have a lot of experience in b to b sales internationally so we know how to grow, establish and grow, international sales networks, how to get first clients in certain markets, how to open markets, how to price your products. Our network is also vast. Help them open open new markets, strategically place themselves, etcetera etcetera. So this is where our forte is. Another one of another part that we really wanna do with this fund is also grow a team of younger fellows, younger colleagues in the investment business. Slovenia terribly lacks, and we'll talk about it later, but terribly lacks VC investors, And this is something we'd we'd like to promote the industry as such, the the venture capital industry among Slovenian youth, and have some bright minds join us who will find their career in investing, in venture capital investing.
Frenk:Okay. Thank you. So we've covered a little bit of the benefits that a venture capital fund can provide. So I just like to mention a few more funds in the region, so maybe like Capital Genetics, Fil Rouge, Labenna Labs, Soft Central Ventures and also maybe the SID, Slovenia Export and Development Bank. What distinguishes funds from each other in general? How can startups or how should startups choose between directing themselves to one fund instead of the other?
Nina:So I would maybe first start with the thesis that Gregor just mentioned before. So usually, you are checking funds by their thesis. This is normal connection because they need to understand you what your business is so they need to be the right, people on the other side. From perspective of startup, you should also check who are the people behind this stuff because in the end, I would say among all those functionalities and operational stuff, you are getting married with these people. So they there there needs to be some energy. And, usually, what we're saying, like, is, imagine that you're driving from Ljubljana to to Paris. So if you would kill each other after 2 kilometers, this is not no go for this marriage. And it happens also that, startups reject certain VCs. On the other side, it's also important to see that if this VC can guarantee you the next follow on around. Because usually, it also happens that, you get first investment and then second round, Nevertheless, your good is no go. So it needs to be structured well to to optimize your path also further on where they can actually also invite others. Like, we we all together, like, 33 of us also work together on the cases is we co invest together in some cases if this goes and it is aligned with our strategy. And there's so plenty other things, but let the guys also talk, not just me.
Rok:First of all, I mean, when a start up when a founder approaches a a VC, an investor, any kind of investor, not just not just a VC, maybe Business Angels maybe, they need to understand what that investor is about. So do not I mean, do your homework, read a little bit of background on and everybody's bios are present, everybody's thesis, who what we invest in is well known, is published. So don't approach us with something that is absolutely outside of our scope of interest, our scope of of investment. So, depending on the amount of money you're trying to raise, depending on the stage where your company is, select an investor that is appropriate. Because otherwise, you're just wasting your own time and the investor's time. Apart from that, it is very much a personal personal click. Just as Nina said, you need to be comfortable with with your venture partner. You need to see what are the investors able to offer to you, not just money. I mean, look for for treats outside of, outside of pure cash. What can the investor bring to the table that will help you grow as a person, that will help your company grow and your team do better, and have a better future for for your company.
Gregor:And maybe just adding, so I think for, you know, to have a really good ecosystem here, we need to have lots more of these funds. Right? So most of these funds that you listed or that you said are not really funds. Right? But, they might be they might become, you know, at one point. Right? But we need to have more. Right? Because at the end of the day, if you look at a really, you know, competent, really developed ecosystem, you need to have specialist funds also, you know, funds that actually focus on just specific niche. And, you know, out of all these things, at the end of the day, what I'm hoping is that there's gonna be, on one side, more money invested into this asset. Mhmm. You know, it's really a shame that for for a lot of Slovenians, while the Slovenians, real estate is, like, the number one, you know, asset that you should invest. At the end of the day, that does not help Slovenia at all. Right? So in this case, if you're actually investing in, in young companies, you're investing in actually, you know, potential businesses that are gonna employ 100, thousands of people. Right? So that they're gonna import, you know, or export services or products outside. So, basically, it's gonna bring money in the in the country. So it's it's an active type of an investment, so which is actually way, way better than just sort of investing in, like, brick and mortar. So, and we need to have more of that. And what I'm hoping that what we're doing here, we're pioneering this, this type of asset, and we need to show that, you know, this is a good investment that, basically, you can achieve good returns, and also show what kind of, you know, side benefits it actually achieves. So I'm hoping that in 10 years' time, there's gonna be 10 times more of these funds in the region. Yeah.
Nina:If I may add something, I just remember. But I would also suggest to the startups, yes, more start more funds we will have, better the ecosystem will be. But, what we are currently lacking lacking as investors, not just VCs, but also private investors angels, is investment ready startups. Meaning that, it's not just enough to have a good idea. It's also you need to be as a founder capable to discuss and talk with investors. So terminology, strategies, logic. So you need to be ready to present your case to investors. And, usually, what's the best way is that actually you you check with some certain people on the market how they like your product or idea or solution. And then the best way to get to get in is a warm intro by this person to the directly to the VC. It usually brings a confident and trust on the table. Yep. But, again, what I would recommend especially for Slovenian startups or the ones who will listen, educate yourself because there's never enough knowledge. Also, we are learning every day as the VCs, But really, according to our, let's say, still developing ecosystem, also knowledge is missing on the side of the startups. I'm not saying all of them. There's plenty of good ones, but it's process so it needs to be updated every day, every month, and you need to be capable to to speak with investors. Otherwise, the doors will will close and it's hard to get in.
Rok:In general, we like to see founders who are willing to learn, who are coachable, who don't come to us thinking and expressing they pretty much know everything, all I need is money. Yeah. This is never a good story. You know, we have all of us have a lot of traction, have a lot have been out there in the market. We do know many things, many people, and are able to help you, but you'll need to accept that some of our knowledge is also worth, and follow some of the advice.
Frenk:For sure.
Gregor:Maybe this is also a good point to mention. So, Silicon Gardens actually started 15 years ago as a community. So we we actually started organizing events in Kiberipa, and and that's how the fund actually grew out of those early beginnings where where we actually said you know, initially, we were sharing our knowledge, and what we learned. And eventually came to the point that, well, maybe it makes sense that we also put some money into into, you know, these these companies. And we continued that. So, basically, Silicon Gardens is, apart from the fund, there is also a community which is now more than a 1000 entrepreneurs, regional entrepreneurs strong, and it's organized as a Slack where you basically can just go in and, you know, talk to the people that have, you know, done the same things or maybe are sort of in the same stage as you are. So I think that really helps. And we need to, you know, sort of connect the founders between each other because, you know, being a founder and running a company is a relatively, you know, solitary job. It's, of course, a very tough job, but it's it's way, way easier if you have people that either have gone through the same thing or actually are in the same thing right now. So, basically, if anybody is sort of interested in that entrepreneurial path, just sort of contact me or anybody from Silicon Gardens so that they can join that community.
Rok:For sure. That's that's I'm sorry. That's, there really is an advantage in Slovenia. I mean, we are a small market, and that has many plenty disadvantages. One of one of the advantages is that everybody knows everybody. We know each other. So anybody you wanna get in contact with, it may be also outside of Slovenia, but especially in Slovenia, 2, 3 steps, one phone call is enough. So and and there are plenty of people with experience that you can get in touch with and and most people, the vast majority is willing to help others in the ecosystem. Everybody had received help throughout their entrepreneurial path and the vast majority is more than willing to help others give something back to let others be successful.
Frenk:Yeah. Here I would also mention another part of the ecosystem which are incubators and accelerators. You mentioned the importance of education and I think Slovenia especially is perhaps lacking a bit in the entrepreneurial culture and experience. So what are your thoughts on, yeah, like how is this connected, the accelerators and incubators with VCs?
Rok:I'm very appreciative that in the past, I would say, 20 years, very good ecosystem had been built in Slovenia primarily with public money, but that's okay. This is where public money is very well spent. And we've built a network of accelerators, incubators in Slovenia. So a young or starting up entrepreneur can find their way into one of these ecosystem players where they will help you grow your company. Well, they'll have you build. They'll help you strategize. They'll help you, do the processes right. You know? You may have a great idea. You may have a great product, but there's there's many more bricks that have to be pulled to put together to build a great company. And this, you can learn you will learn in these programs. So I'd I'd really strongly, advise and suggest to join one of those programs, whichever you you find best for yourself because you'll learn a lot of the traits that otherwise you'll have to learn by yourself doing the hard way. Whereas there you will have help, and you will be in an environment that will help you. You'll be around other entrepreneurs who are facing the same difficult decisions, the same difficult choices. And helping each other out is really something that all of the founders really appreciate but also gain a lot from.
Frenk:So like Gregor mentioned before, especially for first time founders, I guess, incubators are the most appropriate. Right?
Gregor:Yeah. I guess so. Yeah. Or, you know, try and find a peer group that could help you. What I would just sort of add here is that, just an an advice that if an accelerator or an incubator, you know, requires that you give out a stake for their consultancy. You know, really look into it if that makes sense. I mean, of course, there are some global accelerators that are really good, and maybe for them, you know, it will make sense. But in 99% of cases, that is not the case. And it's like a black mark on your cap table. So be really careful. So treat it as as, you know, same way as when you're sort of selecting a VC fund. Does does this accelerator really help you in the long term?
Nina:If I may add, also, when it comes to the stakes and the knowledge, I would say that it's mega important that you check what are the services they can provide you. So what's the value they can build out of your company, and you can build together with them. Because at least, I would say in Slovenia, yes, we have everything. It's developed market, but by my opinion, it's a bit sleepy. It becomes a bit sleepy. Last 2 to 3 years. Also, it's related this is related with lacking of, VC money and investments, but I I can say that this is this is now rapidly growing. So the investors are here. Money is here. But ecosystem is not there. So it's not following as it should. So I also strongly recommend to all the startups to check, what they can offer. It's not just about TikTok and Instagram. It's about business, so we need to structure the business well. And then this can be added value to your start up.
Rok:Very simple advice, and it goes for all all your entrepreneurial parts. So whether talking to business angels, investors, VCs, accelerators, incubators, talk to people who have gone through the program. Talk to somebody who has been in the program. What have they gained? What were the positive? What were the negative sides? What they wish they had done differently, and that'll give you a lot of information whether this is the right program for you.
Frenk:Sure. Moving on to the next topic. So you mentioned a bit of this funding ecosystem changing, right? I've heard talk about a funding gap in Slovenia. Could you perhaps explain what that is and how has the landscape changed recently in bridging the gap between seed funding and later rounds?
Rok:Slovenia has a long history of public funding being available. So relatively small or reasonable sized tickets, about 50 k Euros, it was relatively easy to get, from public money. And then in the past, there were VC funds that were follow on on that, and that dried out. After 2015, there were no funds that were domiciled in Slovenia. So there there are international venture capital funds looking for investments in Slovenia, but the small tickets are relatively or the midsize tickets were relatively difficult to get. Then we're very happy to have Gregor and Silicon Gardens appear. That supported the the early growth. Also, there are business centers in Slovenia, so the that that offer ticket sizes or investments between, I would say, 50 k, 200 k, 300 k, But anything larger, so early growth was really difficult for for Slovene companies to obtain and this is where the the real gap is in in our view. This is where the companies were forced to seek investors from abroad. And it's often difficult. I mean, one of the first questions these companies get, but why don't you get this first, your Slovenian investor? I mean, why don't you have a Slovenian investor on your cap table? And it's difficult to understand there aren't any VCs in Slovenia. So this is this really is a gap or or there are very few and perhaps not in my in the field that I'm that I'm working in. And our funds are all trying to fill that gap so that finally we will have a family of venture capital funds in Slovenia offering tickets of all sizes and aimed at different stages of companies, different industries and this is where we had the gap, but we are with with our funds, with our already existing or coming up funds, filling that gap. A research has been made by the economics faculty at the University of Ljubljana a few years ago where they estimated that Slovenia lacks about half a €1,000,000,000 in investments, that about €70,000,000 per year could be invested, should be invested into Slovenian startups in order just to get to the median level of what Europe invests in their own startups. So we're really lacking behind. If you look at any statistics, Slovenia is totally on the bottom in terms of money being invested into start ups, and all of that we're trying to address with our funds.
Gregor:Maybe adding here that, you know, this is also a chicken and an egg problem. So it's it's not just money not being there. Right? Because at the end of the day, even if there would be a fund large as this one, so as, you know, like the gap that you mentioned, it wouldn't help. Right? Because at the end of the day, investors always look at the region, you know, historically, you know, what are the past successes. And sure, we had one unicorn exit, which was altitude 7, one half a unicorn exit, which was, a photo mat that was in Croatia, And then a number of sort of exits that are around, you know, 100 or a couple of 100,000,000. Right? And that's the fact right now. So we don't have decacorns. We don't have, you know, companies going, you know, to public markets and basically becoming like multiple unicorns. And at the end of the day, you know, the the whole so we need to work on this that there's there are more companies like that. Right? And on the other side also so if you look at the, you know, the dynamic that was happening in 21 22, there was, you could say, a lot of money. So and also money was cheap, so there was 0 or even negative interest rates. So, basically, even with small amount of traction, you could actually gain, foreign capital. Right now, maybe, you know, all VCs are a little bit more cautious. But I can say that if you have a good investment, nobody actually would even think twice of, you know, why wouldn't they invest in a Slovene company if they would have, like, good numbers. Right? And these good numbers, for example, if you talk about, you know, B2B SaaS companies, like, for example, for the next stage from us, it needs to be at least a million in revenues, ARR, so annual recurring revenues, and a potential that it can grow 3 folds every year. So there's not a lot of companies doing that. So we're hoping that, of course, there are some and that, you know, the ones that we invested are gonna do so. Our role, the way how we see it, is that we help these companies, you know, from the early stage, set them the benchmarks and actually, you know, help them get to this so that basically, if they reach that, then it's not a problem to actually get the, you know, the money that we said is like a funding gap. Right? Because there's tons of specialist, VC funds that are specifically looking for just that. Right? But we need to show ambition. We need to show that it's not okay if you just sort of grow slowly, like, 10, 30% per year. You need to grow 3 times per year. And that's what VCs are searching for. And if we get that so if we get that, you know, chicken or an egg, if we somehow solve this, then that gap will also go away.
Frenk:Thank you. So let's talk a little bit about a startup that's scaling, right? They perhaps got some capital in Slovenia and now because a lot of Slovenian startups and like you said VC funded startups, they have to look abroad like Slovenia, even the region is a very, very small market so in order to generate these returns, they have to aim for at least a European or global level reach, right? So what happens when this startup, yeah, goes looking for capital abroad? Maybe they incorporate, maybe they make a sales office, maybe they have the headquarters, let's say in the US and, I don't know, London, Paris, whatever.
Gregor:So usually, advice that we give them regarding the sort of where to put the headquarters, right, is, you know, basically just look into the future, into your vision, and sort of think about where is your main market. If the main market is US, sure, go into US. And maybe it's better to go sooner than later, right, because then you have issues with sort of flipping over to to US. I don't know if the market is Germany or Europe. You know? Think about that. Right? But at the end of the day, the majority of the revenue, if not all of the revenue, is gonna come from these markets. Potential future investors, because we don't have that amount of, you know, that kind of money in the region, will come from from there. So it makes sense to make things easier for everybody to just move there. Even though for patriotic reasons, I would hope that, you know, at one point we will stop doing that. There's other gaps that we can maybe talk about. You can mention that. Yeah. So at the end of the day, I think that if you have a good company, even though if it's a Sloveneo with all the limitations that, you know, the stock options are hugely and unfairly taxed. The way how, you know, a DOO is actually structured is structured based on the, you know, German or Austrian GmbH, which are, you know, family companies. Right? So basically, it was never intended that you have multi tiered shareholder structure. So, you really need to twist an arm on a poor old DOO to actually have certain things that VCs actually require. At the end of the day, it's a risky investment. So usually, VCs require some sort of protection, in case if things go south. Right? So, and and that's it's not impossible, but it's hard. Of course, the requirement that you need to go physically here to to see the notary, it's again ridiculous from the perspective of, you know, what, you know, foreign VCs are used to. Again, not impossible. If you have a good company, they will come here and they will invest in a Sloveneo. But the reality is that the majority of the companies are sort of at the end of the day, you need to talk to 100 of VCs that you actually convince 1 to invest because you're you're you're in the gray area where basically you could make it or you could be a really good company, but you're not there yet. Right? And if you're sort of on the edge in this gray zone and you're on top of that in a jurisdiction that people don't know, then, of course, this is just another, you know, yellow flag that might be added on top of you. It might be, you know, in best case, just a discount on the valuation. But at the worst case also, you know, just somebody's gonna say, I'll pass. I have a big big enough deal flow. I'm just gonna look at something else.
Rok:Something as a as a founder and and a founder who's raising, you need to be aware of. You need to internalize this. This is your company. This is you you're one off. However, we investors and then for investors, they we see hundreds of companies. You know, you're 1 in a in a big multitude of of investment opportunities that we have, and, we need to filter those. And there are there are certain certain things that throw us off immediately. And since there is 99 other opportunities waiting in line, better make sure you make a good first impression and try to try to eliminate those those things that might eliminate you as early as possible. Now being incorporated in Slovenia is not a negative per se. If you have a great company, as as Gregor said, you will find investors both in Slovenia and abroad. We would encourage our founders, Slovene founders, to definitely start in Slovenia because it's, I mean, it's easier. It's cheaper. It has a lot of bureaucracy attached, but other other other, geographies also have bureaucracy attached. And then next, think about, as Gregor said, where are your biggest markets, or where do where will your investors come from? These are the two main reasons why you would relocate to anywhere. Although all 3 of us and the whole community is working on making the Slovene environment better, trying to introduce some changes in the legislation and taxation, It will take some time, but, hopefully, we'll make also the legal environment better and make it so that our start ups don't have a, a deficit already in the start so that others are just because they're incorporated elsewhere, have a have 10 meters advantage in in the race.
Frenk:Sort of reducing the friction, I guess, in the business process.
Nina:If I may add maybe something, it's also seen in the last 2 or 3 years with all those new funds that are now starting or or are already here on the market. It's also opportunity for foreign VCs to come to Slovenia and invest in Slovenian companies especially because, we need to be fair. Valuations here are much lower than in USA, which is also relation to the costs and the money you receive as a startup and what you can actually do with this money.
Gregor:And also the potential. Right? So at
Nina:the end of the day I mean
Gregor:in US, you could build the Decacorn.
Nina:Exactly.
Gregor:Probability is higher. While here, unfortunately, not yet.
Nina:Right? It's really hard, but it offers you that you can get, for instance, late seat or maybe, early a round investment already here. And this is a kickoff then to move stuff into the USA or somewhere else, which means that also bigger players can can come into the company at lower valuations for smaller amount of money, which is which can also be, again, case by case, also an opportunity for Slovenian companies. It's not always the bet, but if you start, as Gregor said, as a founder and you know that from the beginning your market will be USA or Asia, you will for sure put the company there. This case that I was talking about is more for or the existing company that started here had a had a market here as a first, let's say, tested market and now they are spreading out either to Europe or your US USS USA, sorry. And also it's important that I would say a bit the third factor is also business model, which is related to the market. But there are some companies that can work out from Slovenia and be market leaders everywhere. Depends. So it's a case by case, but, yes, these are the general advises.
Rok:The vast majority of of Slovene startups, of course, start on the Slovene market. And, again, it is, yeah, Gregor is nodding his head. I mean, I'm nodding. So, yeah, I'm saying Western Georgia. I'm not saying all, But for for a lot of the companies, this is, as we said, a small market, so it's easier to find somebody who will buy your product. So you know them somehow. You went to school together or your uncle went to school together. So there's all of that that familiarity, that friendship, which can help you gain your first customers. But be wary of those lessons. So so gain your first customers, learn from them, but the real sales start when you go abroad. So when you go to sell to somebody that you don't know, that is a total foreigner to you and you need to offer them a service or or a product that they really want and need and are willing to pay for. So, unfortunately, some founders, some startups have learned a lot wrong lessons in the Slovene market, which hampered their growth or even stopped or or some some failed because they took the lessons learned in Slovene market as global good good lessons for global, but but it's not true. However, in the recent years, of course, a lot of Slovene entrepreneurs are courageous enough to start on global markets. And and it's getting more and more normal to start a company and have be immediately present in all the global markets, especially in in b two b, businesses or in SaaS where it's it's relatively normal that companies from all over the world compete. But also beware, of course, because everybody in the world you're competing against. So you're not competing against living companies, but you're competing about anybody from Japan, Korea, India, Singapore, USA, Mexico, or Peru.
Gregor:Maybe just adding a little bit of color to that. So usually, if a company has some revenues locally, we usually completely discount it. And if they have no revenues outside of the region, we actually first challenge them that they need to somehow show us that they can actually sell outside the region. Because if you sell in the region, there's so many things that, like, there might be you know, it's a small community, small countries. So basically, you might know personally these clients. That sales process is not repeatable in Germany or in US. Right? So and we're looking for a repeatable process. So, basically, we're always challenging them that, you know, go out first, show us that you can actually do the same thing in, you know, outside markets and then
Frenk:we will invest. Thank you. You mentioned some of the bureaucratic challenges in Slovenia. Can we talk a bit about bureaucracy and legislation, perhaps also culture of entrepreneurship in Slovenia?
Nina:How much time do we have?
Frenk:No. No. Maybe No. It's a topic. It's a topic
Rok:that it says. I'm kidding. Let's not waste too much time on that, really.
Gregor:Sure. Yeah.
Rok:It's it's not worth yeah. Bureaucracy in Slovenia is very alive and well. There's there's a lot of bureaucrats on on all levels of of public administration that will, for any number of reasons, hamper you, make it make your life difficult. Now these bureaucrats exist also in in the countries outside of Slovenia, unfortunately. So it's not that different. And as I said, the whole European Slovenian startup community is working on making those bureaucrats and unbureaucratic, things go away as as quickly as possible or at least diminish those. One of the things is what we proposed recently is so called or lean holding company. A different start, a different type of of, incorporation structure whereby it's not a Sloveneo. It's not a Slovene limited company, which is much more geared, as Gregor said, towards family companies. But it would be a a joint stock company where different stock owners could have different rights, which is very important for for in terms of investors, but it doesn't have to cost as much as the Slovene typical joint stock company is does cost because these are large stock exchange traded companies. We're talking about a small company that can be started tomorrow with different rights, with very little money. We're proposing that no or at least very low, initial capital is required, very little. So we're trying we're working as as ecosystem on on bringing those bringing those bureaucratic obstacles down. So no notary would be required. We're also hoping that we will teach our techs, techs, people that it's worth, supporting investments in into startups, that these are where the best jobs come from. This is where the the most value is created, and it would be great that Slovene, people who have money could invest into start ups and have a little bit of tax advantage by investing there. And this is another step in in the path of of making Slovenia more, founders friendly and and entrepreneurs friendly.
Gregor:The proposal was actually sort of modeled, based on the, you know, Delaware Corp, which is, you know, a company that you can actually now from Slovenia, I could open it up in a week to weeks time with I think it's $500, is the total cost already with, you know, services and everything. And that's important, right, that you basically can open up a company from wherever you want without actually physically going to the bank, going to the notary, going to IPAS and things like that, right, which right now you need to do. Right? And I hope that, the governments heard us and that, you know, they will implement it at the end.
Frenk:So, again, I guess reducing friction. Also, I think there's an example of Estonia having the 5 minute, limited company.
Nina:It's not like that. It's not so easy. Why?
Gregor:Of course. But it's
Rok:Why does it have to be why does it have to be difficult to start a company in Slovenia? Yeah. Yeah. I mean, there's so many things you have to face as a founder, as a as an entrepreneur. Why does the government or the state make it difficult for you? Yeah. It really they should really should they should support. They should be happy for everybody who's who's willing to go through this arduous path of being an entrepreneur, not hampering them on the way.
Gregor:And if you think about it, why Estonia actually? How they proposed this and how they marketed it? Right? So they said, well, also somebody out of Estonia, just come to us, entrepreneurs come to us, start a company here. I would wish that we, as Slovenia, would be as ambitious in that. Because if we would actually implement this proposal as it is, this would be a very unique proposal within the EU jurisdiction. So meaning that I think we could actually attract a lot of, maybe also adding some, I don't know, some tax incentives on top of that, we could actually attract a lot of entrepreneurship, actually, in Slovenia. And you could see that it's not impossible. A couple of years ago, it was it seemed impossible that France would be, you know, like a fast start up nation.
Rok:Today is Look at it now.
Gregor:Yeah. And, basically, just a little bit of focus, and not so many years have passed since since they started making these moves. And they made it. So right now, one of the biggest European companies on AI, Mistral, is based out of Paris, and a lot of other companies as well.
Nina:But they also threw 2,100,000,000 of money as a public money. What I would say is, Slovenia is missing, as a country, a vision, which is something that Estonia had, Denmark had, France has now. So it's a it's it's on a higher level or on a top down approach is we are miss missing a a huge vision where we want to be in the next 50 years, not just next year. This is the main problem. And, to be honest, when it comes to the not just as Gregor and Rook mentioned, the companies, but also investors, They are seeing us as exotic country, but not in a bad way. People would love to come to Slovenia to invest here, to spend life here, to to to go on vacation because Slovenia is really nice country to be. So we should not just support entrepreneurship on that level, but to make Slovenia a country to, as a place to be. That that's the point because we have options to do that.
Frenk:But we can maybe perhaps move on to opportunities.
Gregor:I actually wanted to tackle also the cultural question. Right? So, but maybe just to, just jump on what you said. So, basically, Slovenia right now is an ideal country to retire in. Right?
Nina:Exactly.
Gregor:So and and I guess we're going towards that. And I'm hoping that
Nina:Hoping about.
Gregor:Somebody's gonna turn the wheel and and change. Right? So on the culture, maybe I'm always joking that we're like Hobbiton, and we're, you know, hobbits. From time to time, somebody ventures outside and, you know, tries to gain some more experience. But because, you know, everything here is so okay and nice and everything is in order, Why change stuff? Right? And here, I think engineers and entrepreneurs actually have this thing in common, which is that when you look at some things, and you find that that it's not optimal, right, you don't accept it as this status quo and it cannot be changed, you basically look at it and say, well, I can change it, you know, and I wanna change it. Right? And this is what these companies are doing with their services and products, right? Hopefully, hitting the product market fit. And at the end of the day, also improving the world around us. So if Slovenia would act also in in such a way, I think that would be terrific. So, basically, I I think there's tons of things that we could change, be more ambitious, but we just need to show to everybody that, you know, ambitious actually I wouldn't say pay pays off,
Nina:but It's worth it.
Gregor:Yeah. I I actually don't know how to live the freaky. Right? So, but I I don't wanna put, like, a monetary value on it. But at the end of the day, you improve the world around you. And I hope that we don't need to start a political party to make this move, but
Nina:We don't have time for this.
Gregor:Yeah. But at the end of the day, I mean, we need to change the course, fight somebody that has a vision. The point of this cultural thing, it's not
Frenk:only about legislation and about what government should do. It's also showing by doing, right? So a lot of entrepreneurs, if they have a success and that's also how it happened in Estonia, if I understand correctly. So like from, let's say, the Skype mafia, you know, when the founders found something big, they show everybody that it's possible and then from that, it like Yeah.
Nina:But they got the support from ecosystem and government. This is the most important. So our successful people, entrepreneurs, they made a success, but the path that they had to go through was so bitter and so heavy that they, in the end, are not having good word for Slovenia as an ecosystem. They are, in the end, super mad on Slovenia. This is something we should change because in the end, all of them are still living in Slovenia, but they are never recommending start company in Slovenia. Because we are making ourselves lives lives not easier but harder with bureaucratization, with the adding additional rules because it's easier to monitor and observe people if we add, if we add rules instead of giving them the frames and now do your job. Make the magic. And this is, the problem of Slovenia. We are not supportive. We hate the ones who are successful. We hate the ones who fail. We are the the best with people who put who are putting heads down and are neutral. And this culture is having a huge problem. So we should we here are the ones who should do the mainstream and start pushing into the like you said, Gregor, change the course. And also government will have to face the reality that, Slovenia can be the best, but we are currently on the on the tail of Europe with everything that is not the best. So, obviously, something is really wrong.
Rok:What makes me happy here, Sergei Gurkur, is that Slovenia actually has a very strong culture of entrepreneurship. I mean, not perhaps high-tech entrepreneurship, but there's a lot of mom and pop small companies, started small, that have developed in in local regional stars with 100, 200 employees, 10, 50, 100,000,000 in revenues. Not very fast growing, but, you know, Slovenia there's not a car being built in Europe that has not a Slovene part in it. I mean, there's a lot of Mittelstand size companies in Slovenia. So entrepreneurship is alive in Slovenia in spite, not not thanks to the the government, but in spite of government doing everything to or a lot of things to to make it difficult for entrepreneur in Slovenia.
Gregor:Yeah. But I would hope that here, you know, if we zoom out, I mean, it's we do have a lot of, you know, good businesses, great businesses, but we need to make the next step. And if you zoom out, you really see that, what the more developed countries are doing. They're basically putting the work that has less added value into other countries. Poland, also Slovenia in this case is in that group. Right? So, sure, you can build great companies. But at the end of the day, we need to make this transition that we also create companies with our own IP here, with our own brands here. That's that's sort of the transition that we need to make. And it is a you know, it it takes time at the end of the day. Right? So I think that we should not be impatient. But at the end of the day, we should give you know, just showcase what are the best cases of people that are doing that already and that we just, you know, hope that there's gonna be more of it. Yeah.
Frenk:For sure. So moving on a bit, we mentioned some opportunities also in Slovenia. Right? You mentioned we have a very high educated populace. Right? There's I think you mentioned a big percentage of PhD educated. Exactly. Exactly. So, yeah, what what should or what can start up founders in the region focus on? What what do we have a competitive advantage in? Have you perhaps noticed with your previous experience of, you know, what is, like, a benefit in Slovenia or yeah.
Gregor:So I could say that, usually, the benefit that we say the most is that we're very capital efficient. Because in the past, there was not enough capital and basically you just need to somehow figure it out. Right? So and that's great. Start ups are are ideal for that. Right? What we do lack is, of course, either really in-depth business knowledge of certain, you know, verticals, certain industries because this is where you can actually find what's you know, where the most added value is. Right? So and I would encourage that basically a lot of young people, they should go out, study out outside, and, you know, hopefully come back and build companies here. Right? Because there is no knowledge like that in Slovenia. Right? The other thing is that we've noticed in the past is we are really good with d two c companies. Why? Because you can do that from, you know, wherever you can. You know, it doesn't matter where you are. We understand the American values, the American, you know, how how they view the products. And we can actually sell, you know, different products to US from Slovenia without any problems. Right? What we do lack is, you know, b to b strong b to b companies. Why? Because these usually you know, first, they require a couple of companies that trust in you, that you're gonna make a great product. And then from that, you know, when you get some sort of attraction, you go on and and build a network. Right? But we don't have these types of, you know, strong customers that would be, that actually would be the right clients for these global b to b companies. So you need to do that immediately from the start. And to do that out of Slovenia, it is really hard. So if you want to sell something to Germany, b to b, it is not trivial. So, of course, you need to move, you need to just go out there and sell. But at the end of the day, of course, it would be way, way easier if you would be a German, you know, with your own German network and so on. We just don't have that. Right? So that's that's a minus. But I'm seeing that there's a trend, you know, towards the positive. You know, with every case that we build, you know, there's playbooks written on how you can actually best execute that either through partners or through, you know, just moving there or whatever. And I think so maybe a shout out to ASEF here. So I think what Asif is doing is really great because at the end of the day, I know that a lot of people are sort of really afraid of, you know, saying it a brain drain and so on. Why? At the end of the day, you I mean, you can only learn so much in Slovenia. You need to go out and learn. And at the end of the day, we, as Slovenia, need to provide the infrastructure for these people to actually return back.
Frenk:Exactly and we're also doing some research with ASEF about not brain drain but brain circulation, right? So people going out, getting educated, getting some experience, and then coming back. Also another shout out to TISS, so the, Slovenian Educated Abroad Foundation or organization. So very similar. And a lot of people that I talk to or at least professors in ASEF, they love Slovenia, they would love to come back but sometimes there's just not many opportunities but I do think there's potential to change that and there are examples of changes like that so perhaps I think Taiwan had a wonderful execution of returning one of their biggest companies, TSMC, is actually founded by a guy who went to the US, got educated there, work experience, came back in his I think 40s 50s and founded TSMC. Also, yeah, there's always examples of that so there is potential here and, yeah, with that, maybe we can take a look at some of the opportunities, also success stories in Slovenia. Could could one of you maybe share an example of, yeah, perhaps a company from your portfolio from previous investments of, yeah, like a Slovenian success story, let's say.
Gregor:So I can actually give you 2. I mean, I could give you more, but, I picked 2. 1 is what I mentioned before. So a b to c company called Birdbody, which is, you know, basically, they build an innovative product, mainly sold in US even though it's all over the world. Last year, they did 40,000,000 in revenues, and that's their 3rd year. This year, they plan 80,000,000. It's a very, very popular product. They're but, of course, they need to constantly innovate. They need to constantly grow. Right? So, that's one example, and it was really impressive to see how they validated the product before launching it. Right? So that's important, especially if you're an engineer. For you, it's way easier to build something first and then try to sell it, But it's wrong. I'm also an engineer by education, and I've done this mistake a number of times. You need to first sell it even though you don't have it, validate the market, decide if you want to move on with it or just, you know, start something else, or pivot or, you know, just push forward. Right? So that's Birdbody. The other one that's maybe, you know, closer to what you guys are doing, it's a recent investment out of fund 3. It's called ExtractAI. So 2 PhDs who actually both worked at, Institutio Josefmann. So and they created a SaaS solution which helps bigger, especially manufacturing companies that they extract data out of, you know, the different text communication documents and so on. Whatever was done in the past manually, Now you can do it without any training, with sort of zero shot. You just sort of define the structure you want to get the data from and automatically just works. Right? And these guys, they're a great combination of course, great engineering and research and on the other side also, great salesmanship. They knew, you know, from the beginning that they need to start selling in US and in Germany. They did that and they already have, you know, paid POCs and, you know, paid customers even though the company was founded in September, October, I think.
Frenk:That's great. Maybe 1 or 2, and then we
Rok:There's more more advice rather than rather than examples. Yes. I mean, I'm also an example of being educated abroad, studied in the US, and then came back. So certainly spend a part of your career, be it part of education of your career or part of your business career abroad. Slovenia is small market and then all of a sudden the world will open. You'll you'll see the world with different eyes. Now, also, if you are fresh out of college or finishing universities university, go and work for somebody else for a few years. Be it a start up, be it a corporation, be it, even an NGO. Spend 2, 3, 4 years working for somebody else learning there. Don't start your company straight out of school because there's lessons to be learned that other people have have learned the hard way. Don't repeat their mistakes. Don't don't. You don't have to start and do all the mistakes yourself. So that's why it's it is very valid to learn in this industry by being a part of it and then embark on your entrepreneurial part.
Gregor:Yeah. And maybe just adding on that. I mean, in Silicon Valley, we were constantly playing with this idea that we could form, like, some sort of internship program. You know, basically, we have our own, you know, Slovene blue chips, let's say. So if there's somebody that, you know, maybe doesn't have an idea but, you know, has this entrepreneurial drive, they should start work for, you know, Sportrader, for Outbrain, for, you know, maybe Tiltra, whoever. Right? And they should just sort of observe what's going on, learn from these companies. Maybe even, you know, say from the start, I'm gonna leave in 2, 3 years. And my ambition is actually to start the company. But, you know, funny enough, every one of these companies, they focus on whatever they're doing. Really focusing. Right? But there's tons of opportunities left and right. And I think the best option, if you're somebody just fresh out of college, is to actually start working in one of these companies. Just have open eyes and and just look for different opportunities and then start something when you already have it, you know, from your experience. Right? And potentially, you know, these companies that you work for could be your first client. Right? Okay.
Nina:I I would expose 2 different things. So first one, opportunities, like, from investment side. I can expose one which I believe that has a huge potential. It says squeeze. It's not one of the currently, let's say, the most profitable cases, but they made quite a huge growth from in comparison year to year. And adding on this is the second point where the opportunities for founders. So what why why why why it's important to be coachable and listening and everything that Rook, expressed per before is because, Slowinski, we have a one problem, which is we are not entrepreneurs by heart and mindset, but we are more craft people, which is something that is about connect or connected with our with our history of all development of the country and everything else. And having that, people are usually quite, narrow with thinking and being open for advices. And this case is, for instance, the case of entrepreneur who had to pivot 3 times, have to listen the others, and also have to listen the market because he's doing the solution for production companies. Really hard market. Really hard to understand. Also, hard to understand for many of VCs because they are not familiar how the processes within the production companies are working, but they manage as a team to pivot and from having the product that is, structured with onboarding and product to do it yourself stuff for the production companies is now pushing them into the really like hockey stick at the beginning and creating a good money also onboarding foreign people and foreign companies really easily on a platform. And on the other side, what I would say that is also important opportunities for us in Slovenia is I think that we need to educate people when it comes to the investing. Therefore, we started 2 years ago with the program that we have once per month. We are educating startups for free. Just come and ask whatever you want. We are there for you. It's our investment, our time to you. Secondly, what we are doing for last 2 years, we have students like, inter some kind of inter interior program for people who wants to be close to the angel investing, VC investing. We give them work. We teach them what means valuation, what are the different terminology, how to do First Chicago, how to do venture capital discounted cash flow, how to monitor due diligence, how to execute it, etcetera, etcetera. They have different roles, but the goal is to to give them the kickoff platform or the touchpoint, and then we send them to the to the, I don't know, USA, France, whatever they decide to to go to study and hopefully come back one day. And this works really well because, as we said before, it was mentioned before, we are lacking of people who have knowledge. And it's hard also to fundraise for VC funds for us, because also successful entrepreneurs do do not have a clue what VC means. What that means, how to invest, how to be part of a VC fund, It takes a lot of effort for us to engage people to become investors into the fund. It's getting better, but I think that this is also some part of the,
Frenk:where you went to the US. I think you went to 2 or 3 faculties or universities there and saw some of their knowledge transfer processes. Can you tell us a bit about that and maybe if you guys want to pitch in about certain processes or certain elements of ecosystems that, of course, we can't just copy paste from, let's say, Stanford or from Silicon Valley but we can definitely look at them, say this is interesting, and maybe we can take inspiration from them, but, of course, not just blindly copy paste. Right?
Nina:Yes. So we were there in November last year with the delegation that is quite quite, let's say, on the governmental level and on the entrepreneurial level related to deep tech. We went to Maryland University, Boulder, Colorado, Denver, Colorado, and Stanford, San Francisco. And then in between, we were in plenty of federal institutes related to different verticals. What we learned and what was my, let's say, KPI when I went there was actually to confirm if our model for the fund works or not. And we actually figured it out that are far more than stupid, so we know how to do it. And we actually have done exactly the same logic of the fund that as they have and it's working well. Where we are different is that, not us as a fund, but let's say as a as a nation is that we are not so fast like they are. They start much more bolder. They start really early at the idea stage when it comes to the deep tech, supporting them already at the new university level, and they are purely business oriented. Meaning, if you're studying at university, yes, you can be a researcher, but they will push you more and more into the business side. Meaning, go out, commercialize, and do your stuff. It was the Google, chat, GPT, just name it. All the stories were done in the same way. Where we are maybe better if I can be bold on this side is that we are much more cautious when it comes to the due diligence. So we are not just spraying and praying with the money. We are much more cautious where we put money. It's also related that we have less resources for that stuff. And on entrepreneurial side or student side, I think that the biggest issue arise from how educational system is structured in Slovenia and how in USA. So in USA, you are, as a student, part of applicative knowledge, meaning you need to be able to use this knowledge. In Slovenia, it's more about how much you can memorize. And, depends again from faculty to faculty, but also engineers. We have astonishing engineers in Slovenia and in the region. But they are never pushed into the way how to do the business. And they are not the ones saying, we don't want to do business because we made the research. They just don't know how, and this component is missing. So I would say that, they were actually quite positively shocked about us being there, especially when it was on the level of a venture and a financing because at some points, we knew much more than they do. I'm I'm saying those people we were speaking with. But they they they can be successful, and they are executing because they have support. And it's it goes from bottom up and top down in in many ways, and I think that we have really good potential to do it. We are already starting it, but we now need to structure the whole ecosystem that it it will go hands in hand starting with how our people are educated and in which direction they are going.
Gregor:So, maybe from US, what I would like to take, right, is 2 things. So one is ambition. So, I mean, because in US, it's it happens naturally because it's a big market. Right? And you can it's a singular market. So basically everybody speaks the same language. Taxes are, well, similar, let's say. So it's very easy to expand from state to state. Right? And the other thing is storytelling, which I think we really suck in Slovenia. So we're not really good storytellers. Sort of reminded me when you sort of were explaining about, you know, your case that it's a little bit complicated and it has number of steps. Well, that might be already too complicated. At the end of the day, you know, the sales process needs to have, you know, least process least steps possible, because every step, you know, has some churn. And, of course, the whole story needs to be, like, very quickly understandable. So and we need to learn that. It's not so hard. At the end of the day, we just need to sort of think about clearly, you know, what exactly you're doing and just try to explain it in a simpler way in the simplest way possible. I think that that is something that when even when I compare Slovenia now to Croatia and Serbia, Croats and Serbs are way better in storytelling than we are.
Rok:I wish that we were better in risk taking, That I I wish the Slovenes as a nation, but, specifically, Slovenian entrepreneurs will be more risk takers. So go out there. Be bold. Don't be shy. Don't be introvert. Don't be scared that your product is not good enough. It is. It is as good as any product out there in the world. The world needs your product, so go there and and try to sell it and then improve on it. Don't be don't have such don't be so afraid of failing. You know, the Slovenes, unfortunately, are very hard on berating people who have failed and exposing those failures rather than successes. Don't be afraid to fail. If Gregor says they were looking for successful entrepreneurs, we also look for those who have failed but know why they failed, and have learned from from that failure. So just go out, be bold, try it. And with academia, I'd hope that they would be more application oriented, not so much basic research, but, you know, combine your research with with the companies out there. They need your research. They wanna work in research with you. There yes. We have a large number of PhDs. Unfortunately, too small of a proportion of those PhDs actually work in in industry or in any kind of business. They're too research oriented. So just we have a lot of good foundation. We need to build on that, but be bold. Go out there and don't be afraid to fail.
Frenk:Thank you. Closing off, I would like to ask each one of you to perhaps give a couple of words of advice to young founders. Maybe we can start with Gregor.
Gregor:Sure. So a lot of founders that we meet, you know, at that point, they're not investment ready. Right? And our advice is usually that start a report.