# Getting ready for the investment talks - Petar Atanasovski | Attic42

- Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community)
- Date: 2023-10-07
- Duration: 22:23
- Watch: https://streameth.org/watch/yt-kQtyeKdhImQ
- YouTube: https://www.youtube.com/watch?v=kQtyeKdhImQ

## Transcript

hello everyone do you hear me yeah cool I didn't expect so many people right at the moment when where the lunch is there but thank you very much for being here uh so right before we start let's see how many how many Founders do we have here in the room uh chaos number uh how many of you uh is Raising at the moment shy people okay how many of you have gone through through raising already before awesome and how many investors do we have now you can just talk to each other because you're already here so you can use this time it's much better than for me to talk anyway okay let's start this story then this story starts with you and your look at the mirror or if you don't have a mirror you need to improvise as well but basically you need to analyze free questions first one is what is your surrounding second one is what is your business idea and the third one what can you say about you and your teammates so when we talk about the surroundings why why it matters to me because if you look obviously most of us here uh come from Serbia and if you look at Serbia as as the market the reality is that we are not as close to the source of the ideas and the source of capital as someone who lives in in Sunnyvale for example it means that we are also not a huge Market if we look at the region itself and we need to think about what could be our advantage uh when when building a product where when building a startup so from our experience based on previous 10 years and free Acquisitions that we went through working together the big Advantage is when you're first on the market and that's what we try to do at ethic 42 we try to build uh we charge to build products and startups that are brick in the pre-competitive environment and then you can play for the global market and then you can win and have the advantage the second thing is when you're building a product you always have some some risks associated with that product and of course there are like four pillars of the risk one is the value risk are there people over there who are willing to buy your product usability risk can you build it in a way that others figure out how to use it feasibility risk do you have all the knowledge and the power and resources that are needed to to build it and business viability risk is the product that you're building aligned with the rest of your business strategy on the other side when you're building a startup it's pretty similar similar because you need to think about are there enough people who are willing to pay for it can we build it can we sell it in a in a time frame and can we sustain long enough to reach the break even so at the end of the day when building a startup and when building your product it always come up to to managing all those risks and the third the third look is the self-reflection and you need to be honest and say what are my strengths on the other side what am I missing uh in terms of uh in terms of knowledge in terms of skills resources where will I look for that help who can actually help me and what am I able to offer so when you answer all these questions it comes pretty hard to go and talk with people and then to get know as an answer in order to have a journey to a yes and a positive answer you need to put yourself in the shoes of others when I say shoes of others let's talk a bit about the investment side of the story in order to understand the investment side of the story I wanted to to go a bit deeper into the history of investment and such and I said okay let's see what's the history of investment basically I realized we as people are able we're able to invest from the moment when we were able to plan up front enough what does it mean from the moment when we had the Agricultural Revolution we were able to spend the whole year at one single place and as we were able to spend the whole year at one single place and as we were able to plan for the essential needs such as food we came to the point to think about okay now if I have some extra food what can I do with that extra food How can I invest it and earn something some something else that I need so when we are when we fulfill our essential needs and when we are ready to plan up front enough that's the moment when we can when we can think about investing and throughout history people were investing it comes with a pretty simple simple formula you have some resources some extra resources you want to invest them and you expect to to to get some greater uh return on investment at the end so it's it's pretty simple the methods were changing over time so uh what we know today as a modern financial investments were also presented in some ways in ancient Greece uh comparing to the banking system today but what we're particularly interested in came after the World War II and the the the the world of VCS or venture capital investment when you're considering what is the right type of investment you come to that third part of self-reflection what is the thing that you actually need and how much uh men men hours power and extra help do you need what kind of help do you need and of course there is this financial aspect which is always uh in in the focus itself so there are different types uh based on these two Dimensions human capital and financial Capital they are different different types of investment that you can you can take and I will start from the Venture Builder or startup Studio that we come from that's the model of investment where you uh get by far the the biggest Manner and the biggest help Hands-On but on the other side it's a bit less than than VCS in terms of financial capital and of course then you have accelerators and incubators and uh you have Angel Investors or individuals or groups of individuals who are investing uh with less of uh Financial investment but also a loss of human capital so when we talk about VCS there are a couple of things that you need to analyze before before approaching them before talking to them first one is the location why is the location matters because if you're talking about us VCS or if you're talking about EU VCS they have different approach in evaluating your company in thinking about how they will get their return uh USS U.S which is our uh more focused on the on the growth potential while European VCS are more more focused on your current revenue and the multiples that you can uh that you can get from there also you need to think about what is the lifespan of the VC usually it's around 10 years and to understand where in that lifespan you are at that particular moment and what is their investment cycle uh based on that you need to understand which investment phase they are focused on and what is the risk tolerance if they're entering early obviously they have different model than some visits who are entering the or who are specialized for serious C for example and who are getting you prepared for the IPO so those are all different totally approaches and different stages stages for you of course you need to understand based on that risk tolerance and based on the based on the uh on the phase that they are entering with you what is their expected return of investment and ideally but this is not always easy to understand you need to be much closer to them to understand what is their actual investment strategy when I say investment strategy mean it means in which Industries they are ready to invest uh on the geography is their focused what are the trends that they think are shaping the the industry that we are talking about what is the throughput or the number of Investments that they can handle per year uh what are the macroeconomics uh environment that we are talking about and and such so you need to analyze all of that because that will save you a bunch of time not to talk to to two VCS that you are not suitable for or are not suitable for for your idea and your business and uh when you or early resources are pretty important so time is one of those resources and you don't have much time until you come to the point to lose to lose your um to lose your money and to to get out of the business so you need to be very cautious about who you talk about when we look at this Dimension uh of course we all know about product life adoption curve and the life cycle of the product and when we think about the risk as the important aspect based on this time frame you come and say okay when we cross early market and we when we achieve when we achieve a product Market fit it gets much easier because the risk is decreasing we already know where is our place on the market and then over time of course there is continuous increasing but anyway it's it's much easier we are all focused in the early phases on Crossing this uh uh this border and coming to the product Market fit and that's how things look like from our perspective but on the other side if you look from the VC perspective uh risk is going uh continuously up and down because from the VC perspective they are focused on a specific specific time frame specific phase and they don't usually go with you through all these phases they know when when they enter when they exit and how how they can support you along that part of the journey so for them the risk is not the same distribution doesn't have the same distribution as as for you and when you're getting ready for for for talking with VCS usually we divide those stocks in in free uh so to say simple questions these are actually simple questions but they can come up with many other questions uh after that first one is where do you want to be and can you be there in the future the second one is where you are at this particular moment and the third one is is how did you come to this to this point it sounds pretty simple but usually we focus on these into during initial talks we focus on these first two questions why is that because where do you aim to be and where you can be in the future usually comes up with the pitch deck and you also cover that what is your vision what is your Market what is the problem that you're solving what is the strategy what is the plan to achieve that strategy what finances you need so you talk about the the future and the potential on the other side where you are now you usually talk about your team your product at this particular moment what is needed for the adoption and how well you are going through that and what are the what are the the finances at this particular moment so that's what all of that is familiar as all of us are familiar with this phase but then you come to something if you progress with these talks called due diligence and then you're more focused on how things stand now and how did you come to this place because you have done bunch of other things that you need to cover for these talks and to be ready and to have structured like what are your again finances but what are the Investments so far what is how your cap table looks likes uh what are the options warrants convertible saves Affiliates all the agreements that you have including agreements with the I don't know real estate including agreements with the vendors Etc what are the copyrights what are the pet patterns that you have what is the architecture of your of your product what are these disputes or lawsuits that you have even if it didn't come to the suit it can be only the the email itself as as a Potential Threat so all of that comes into place uh when you when you progress talking and when you go through through the due diligence itself so what we wanted actually to do at ethic 42 is not just to focus on the uh acceleration part which comes later and which helps you with the with the growth itself we wanted to to create a journey that will help you with answering all these possible questions and to compress that experience in a short time period by short time period because you really need to to to be focused and you really need to go fast for that Journey with validation or devalidation of your idea so we created the incubation program which lasts for for uh six weeks in total this is just a snapshot of uh of that Journey how that looks like but the point is that it is a six weeks program that goes with you for your risky assumptions ideation phase as well before that validation of your uh for of your idea then going through a video through defining the business model prototyping and again validation and then getting you ready for the for to all these talks with investment when we go when we talk about acceleration program which comes later uh on our journey that acceleration program is really focused on helping you not just to launch your product not just to build the MVP but also to straight and to understand how you can uh how can you reach your growth potential and achieve your product Market fit and it lasts uh 12 months but for the incubation we wanted to compress this experience and to see how you can actually how can you actually achieve the maximum of of this in just six weeks so the next cohort will start in September and we are currently uh getting ready for accepting accepting uh new new startups uh for for that comfort that would be it from my side now we can go to questions or if you're shy just to lunch of your work is on VCS which are in traditional startups how do you see crypto VCS or crypto investors that invest how are they different good question so um first of all if you look at the macroeconomics point now I think that in general the the time frame and what they expecting this is in general not just for the crypto vs uh moved later in the face so now it's not just enough to have the idea now it is not just enough to to have you know the pitch deck everyone is ready to listen to you but on the other side say to okay come to come back to me to talk when you have the first users when you can monetize it etc etc so they are more focused now on the growth phase uh and why does it matter uh what what does it have to do with the crypto it is tricky because the whole industry is still early if we talk about the adoption itself um in in terms of the global market and the users that we have and now you moved and you shifted the point when when VCS are entering entering the market so basically uh along that Journey somehow you you are on your own and you need to validate or devalidate your idea much faster than before so that's if you look from the from the macro Point how how it looks like uh I I see less and less people talking about tokens uh itself more and more going towards the the the the traditional business model so to say and I see more and more advices like how can you actually not just be focused on web free but also you know focused on the traditional markets and then transitioning and uh achieving the adoption in the web free space questions clarification your Founders in Residence program is ongoing and this like compressed program starts in September or is didn't misunderstand something and the applications for the founders in Residence program are they ongoing or do they also start in September good question yeah so founder and residence is the name of the whole program itself which has different phases uh within it so now we just studied another phase as independent which is called incubation but you also have the acceleration which lasts from 6 to 12 months but usually it's 12 months six months is not enough so we don't make deals for for six months so yeah the the it's the ongoing program because we have cohorts from from this year and uh people that you that you met and that are pitching now so you can talk with the route 3 and you can talk with bislat and also some of them uh who are building but not uh pitching yet so uh the program is ongoing the next cohort for the incubation will start in September and then we expect out of that incubation to have uh accepted startups for for the acceleration phase and for the entire founder in essence for the next year yeah pre-face but all of that is found during residence basically um and what regions do you typically invest is it only limited to the Balkans or uh is it maybe like Central Europe yeah we are currently focused we just launched this publicly two months ago so to say uh we are basically we shifted us as a venture Builder two years ago but if you're more more internally focused uh like entrepreneurship uh now we just adjusted everything and launched the new brand and changed our corporate structure in order to support everything that I talked about uh and currently we are focused on the region but it's not because we want to be just focused on the region it's more because our Hub is here and that's the biggest support that we can provide at the moment it doesn't mean that we don't want to talk or we don't want to to support other regions uh in the near future so if you have you know something to to to to to discuss uh it's it's also you know we can talk now even about that okay great thank you first time second time not yet not yet a single one what do you think is missing in the podcast what what do you want us to build good question um basically we we built our whole ecosystem to answer that question particularly and how we imagine it we have different parts of the ecosystem let me just I have some bonus slides that I can not that not yeah so here here you can see two important parts of the ecosystem are 3327 and MVP Workshop of course everything is important but for for this particular question I will address this MVP Workshop is the company that we all come from and that we built like seven years ago and that's how we we went deeper into the the web free uh industry itself and it's a product development Studio that works uh with with clients mostly but that is also supporting our Ventures on the other side you have three three two seven which is doing a deep research uh for so to say Applied Mathematics and things that are about to come in two to three years from now those are bats of course and but the point is that you continuously need to explore what is about to come and then you decide what is the the the what is the time span that you want to to address of course you can go more up front but for us this time frame two to three years is more realistic because we cannot uh think about what will come 10 years from now and then you know try to to to bridge the gap for these 10 years we need to to to shorten that time span why why that matters it is because uh 3327 is looking at the technology itself and potential that will come two to three years now but on the other side it's not just enough to talk like this in the closed room you need to go to the market and that's what where MVP Workshop is very important because those people are continuously talking with different you know industry experts different clients they have big throughput of ideas circling and going around and also people who work in MVP Workshop have a chance to touch different parts of the industry in a shorter period of time and for that reason you have a window what is actually now happening on the market and what are the current trends so then you're doing the intersection of these two parts you look at what is happening up front and then or what is your bet that is happening up front and then you look what is happening now and when you do the intersection of that uh you you understand what should be your investment thesis on the other side Maria will talk after me and Mario is coming from 3527 so I assume it will be it will be interesting talk at the same stage and you will get to know better what the 3327 is doing at the moment and what they are betting for in the in the near future okay I guess that's it thank you very much [Applause]