The post was originally published in Polish on Szymon’s LinkedIn profile. Szymon kindly agreed to republish what we think is of great value to our readers.
The Venture Capital industry is overrated. This is my personal conclusion after more than a decade of dealing with investments. Its image is quite different from reality. When I took my first steps in it, it seemed to me that it was an elite group for which every entrepreneur should strive. First build a business yourself, then invest funds in the most promising companies that will bring spectacular returns over time. Together with the founders through thorns to the stars. So much for the theory, into which I bought myself.
Szymon Janiak, Co-Founder and Managing Partner at Czysta3.VC
In practice, a lot of this enigmatic magic is an image created by VC people, which is supposed to encourage people to take money from us. In many cases, this business has a purely statistical dimension – you invest in 25 companies that meet certain criteria so that half of them come out, some of which will be average, and 1-2 should return the fund and let investors make money. Nobody knows which one will turn out to be the jewel in the crown, so initially each one must be treated as potentially the best. However, this often fails and the fund loses investors’ money. From a financial standpoint, this means several years thrown down the drain.
Most importantly, however, you are only second fiddle to startups. They are the foundation of everything here. Without them, there is no innovation, no ecosystem, and even more so, no funds. I want to laugh when successive VCs tell the same fairy tales over and over again about how incredibly they will support companies – and all their involvement often has no impact on the company’s development at all. As a result, you are a spectator in the stadium, where everyone thinks they are a coach.
Importantly, this is not a reflection built on failure. I’ll never be the best, but I can play the game. I have been repeatedly indicated as the most influential VC investor. My fund’s statistics are very healthy – it will yield solid returns, and that’s the main measure of effectiveness in this industry. I get a lot of offers. It is therefore a matter of the tendency to self-reflection, distance to myself and what I do, and the awareness of having a number of alternatives. For me today, VC is just one of the businesses, an ordinary financial instrument, not some holy grail.
What I lack most in all this is the real influence on the development of the companies with which I deal. You give up the reins and whether you make money depends on other people. Years later, however, I still feel more like an entrepreneur than an investor. It feels great to be operational and work on the front line with clients and the team.
In Poland, there is room for circa 20 funds. There are a few people who are great at this. This is enough to build our ecosystem based on the best projects. Power law still reigns here. The rest is burning the naïve money of dreamers and taxpayers.
One thing is certain, the more time you spend in this system – the more respect you have for startup founders. Without them, there will be nothing and there is nothing.
The comment section had to add:
Every VC gives ‘smart money’ and expects a discount in return… This is usually more like ‘Dunning-Kruger money’.
– Mark Friedman, Partner and Chief Growth Officer at Samurai Labs
The VC industry is overrated in Poland. A group of gentlemen who graduated from the same schools, tells everyone how to live on LinkedIn – no offense, very nice by the way!
VC as an industry practically everywhere in the world contributes positively to the development of the economy, i.e. 50% of companies listed on the US stock exchange were VC-backed in the past. Just look at emerging markets – here VCs have a huge field to show off in the subject of added value. No company from Indonesia has yet complained about advisors from global unicorns, with whom we have co-funded them. Quite the opposite!
It’s enough to go beyond the Polish backyard, and the VC industry is, in my opinion, underadvertised.
– Małgorzata Filipowska, Portfolio & Platform Manager at Seedstars
I believe VCs shouldn’t interfere in the operational business of a startup, because it usually ends badly, but should focus on building the company’s value, i.e. looking for new investors at higher valuations. After all, it’s a full-time job. The founder can focus on business development or investor relations. It’s difficult to pull both at the same time.
– Piotr Surmacki, Founding Partner at Surmacki&Co. Ltd.
Szymon Janiak is an investor and a business-driven Managing Director at czysta3.vc, a Venture Capital fund located in Poland. He has over 10 years of experience in the technology sector. Szymon is also a Member of the Supervisory Board at stockbroker Grupa Trinity S.A.
