SMOK Ventures is an early-stage US venture capital fund, investing in software and gaming startups in pre-seed & seed stage in the CEE region. With their motto of bridging Silicon Valley to CEE SMOK Venture’s goal is to invest in early stage of company’s lifecycle and work with serial entrepreneurs with a global vision.
Diana Koziarska is the founding & managing partner alongside Borys Musielak and Paul Bragiel and we had the pleasure of interviewing her for our VC Talks series.
How did SMOK come to be?
Borys, being a startup founder and entrepreneur himself (Filmaster), wanted to kickstart the Polish startup scene and in 2011 founded ReaktorWarsaw, an organization helping startups by leading a coworking space, mentoring sessions and organising monthly OpenReaktor meetings for the startup community. That is where I joined the party.
Seeing there are many first time founders who are keen to learn we decided to take it a step further and co-founded ReaktorX, a preacceleration programme for first time founders. We have just relaunched it with a new CEO in charge, Luca Stirbat.
And it is in this for founders by founders mantra that SMOK Ventures founded its way of operating since SMOK grew out of the community. Its focus is on emerging Europe aka CEE.
How come the CEE region?
Going west, the markets are too saturated, and since we want to have more impact as a fund, it is better to focus on emerging Europe. There is lack of capital and abundance of talent, and it is maturing as an ecosystem: unicorns such as Infobip prove we can build global companies out of CEE.
It is one of the fastest growing regions in terms of value it creates, and yet severely underfunded. Some capital is here, but not enough for the market. We feel we can be useful and bring value, money and expertise. Because it is not just about investing funds, it is also about educating the market.
We want to share knowledge and encourage entrepreneurs to take a chance – there is an advantage of developing a business in an underfunded area. This under-opportune environment shapes founders into being resilient and tenacious – to make it, they need to employ extra effort. And since they are often working in too small of markets, companies, in order to be successful, have to focus on being international from the get-go.
What is often forgotten is that our market has different needs, there are cultural differences, ones we can cater to more easily than companies coming from other places.
So we are trying to bridge this gap by speeding up the process of funding: in eastern Europe it is normal to close a deal in 3-4 months, in US you can do it couple of days – the pace is different. We are somewhere in between, working to be the first stop for investing (early stage) for companies that want to go west for later stage funding.
We are also working towards keeping the talent in the CEE and educating people to invest in tech companies in this area.
What do you look for in a startup/founder; what brings trust?
The most important for us is the team. The product can pivot, but it is all about the people executing and delivering value.
Team validation: we look at the founder team; their experience, track record, are they serial entrepreneurs, have they done this before, what role did they do in they career, reputation etc.
Product validation: what issue is it solving, what it looks like, what is its use case.
If they are first time founders then we look if they have worked for another startup – oftentimes first employees of unicorns start their own companies. For instance a founder of HiPets, Dorota Rymaszewska used to work in Booksy, one of the most famous Polish startups, and that experience of how a business operates is super useful to her now as a founder.
Who is your biggest success story? Has anyone exceeded expectations?
We have not had an exit yet. One of our startups, SunRoof, just announced raising a round of €13.5 million. We were their first investor back in 2020 and we invested because we liked the founding team, consisting of serial entrepreneurs (ie Lech Kaniuk), even though it is not our focus industry.
The previously mentioned HiPets is also a great story. Dorota came to our acceleration program, ReaktorX, and pivoted her initial idea. She even convinced one of the accelerator mentors to join her as a cofounder.
Any tips for early startup founders?
Join an accelerator program. From my experience they are a great way of getting other later stage founders as your advisors, making it easier to get connection to the investors as it often goes through recommendation by someone with credibility.
Getting peer mentoring is of immense value. People are eager to help new generations, pay it forward – use it to your own benefit. You can learn a lot, and establish important connections – you never know who knows who.
Interested in talking to SMOK Ventures? Contact them at [email protected]