• Bucharest-based Underline Ventures announced the complete closing of its first fund of USD 20M
• The fund is private-only and solo-GP
• The VC firm plans to continue helping CEE startups (and startups with CEE founders) to grow EU-wide and globally

This November, the young but already well-known VC firm Underline Ventures announced the final closing of its USD 20M Fund I. With 7 investments already under its belt, the fund plans to invest in 20+ broadly local startups with the average ticket of USD 500K+.

Diverse Partners for Multi-Faceted Assistance of Startups

Launched in 2022, Underline Ventures takes pride in listing seasoned entrepreneurs coming from various backgrounds (including such renowned companies as Microsoft, UiPath, FintechOS, How To Web, Bitdefender, and more) among its partners. This allowed the VC firm to create a platform where portfolio companies get provided with both actionable advice and practical assistance in recruitment, PR and communications, growth, venture strategy, financial planning and fundraising, integrated marketing strategy, etc. whenever they need.

‘Underline Ventures was one of the first funds that joined our seed round at Nestor and we are extremely grateful for their continuous support in multiple areas ever since. Starting from introductions and advice during the closing of the round, to post-investment strategic guidance and operational help in areas like recruiting and marketing, they have always been close to us and eager to help,’ Nestor’s co-founder and CEO Bogdan Apostol confirms.

Influence and Trust

Essentially, the fund evaluates the startup and its founders to provide them with useful feedback, which they may discard. Then, the fund is there to provide the support the startups need.

Underline Ventures’ general partner Bogdan Iordache believes that you can feasibly help founders by telling them your opinion, even if sometimes it’s not what they are looking for. Good investors can help founders identify the unknown unknowns because the known unknowns are much easier to address.

‘I need the freedom to tell them directly whatever I think, even if sometimes I might be wrong. Founders have the freedom to disregard it completely. At the end of the day, it’s their business, and their responsibility, to set the right course.If I don’t believe they have the capacity to set that right course, we do not invest in the startup,’ the investor continues.

Veridion’s head of growth Stefan Gergely points out that trusting the founder’s judgment and influencing its decisions are not necessarily mutually. He describes Underline as a very supportive VC willing to go the extra mile to help a portfolio startup out when needed. 

‘In our ascent, having Underline Ventures alongside us as investors has been instrumental. Their belief in our potential has not only provided financial backing but has also fostered a collaborative environment rooted in mutual support and shared values,’ Videowise’s founder and CEO Claudiu Cioba adds.

Mr Apostol agrees that in terms of investor’s influence towards a startup Underline is an exemplary investor that strongly believes in the startup’s vision, mission, and the team’s capability, but is also always there to help without interfering in the company’s day-to-day decision-making,’ 

Naming and Other Challenges

Another feat is that the budget has also been raised from tech founders and operators for the most part, with the participation of other business leaders and international fund-of-funds. One cannot but notice that a private-only fund is unique for the region.

However, Mr Iordache notes that picking the right name for the fund was also among the big challenges in the beginning. He recalls that the team wanted to find a name that would reflect the commitment to supporting founders in helping them build the companies that they want.

The VC firm’s tagline reads: ‘We underline founders.’ According to Mr Iordache, this is meant to embed in the firm’s DNA its dedication to building a partnership with the first and foremost purpose of helping, supporting, and guiding startups, and not to be their bosses or just a capital allocator.

‘At the same time, we wanted to have a simple, non-flashy, atemporal brand,’ the investor adds.

Commenting on VC/startup-related regional specifics, Mr Iordache reminds that the CEE market is still in the early stages, which provides a great opportunity to start a venture capital company – significantly easier than starting in San Francisco or New York City or even London.

The investor believes that the biggest challenges lie ahead, in the next 5 to 10 years, when CEE will become an integral part of the European tech market, and CEE funds will have to compete with all the top European seed funds. The latter will be even better investors than they are today, so the local players need to be on par with the best ones to remain competitive.

‘At Videowise, the journey from inception to where we stand today has been incredibly rewarding. We are immensely privileged to have reached this stage, especially considering our roots in an emerging market. Our growth story mirrors the resilience and determination emblematic of businesses born in similar landscapes. The alignment of our visions and the shared experience of navigating similar landscapes forge a unique bond, allowing us to support each other’s growth trajectories while contributing to the larger entrepreneurial landscape in our region. This synergy between our businesses, born from common origins, reinforces our commitment to driving innovation and excellence in our respective domains,’ Mr Cioba comments from his side.

Reinvention of Industries and Its Obstacles

Overall, Underline is vertical-agnostic, but it does pay special attention to enterprise automation, AI, cyber security, industrial tech, defense, and climate-related startups. The partners believe that these areas are undergoing reinventing – albeit each of them for different reasons and with different forces or contexts in play.

‘For example, in industrial tech, we see that the global supply chain challenges brought first by COVID and now by the changing geopolitical landscape will accelerate the development of the industrial sector in Europe and the US. In Europe in particular, this development is further impacted by the lack of qualified workforce – from robotics specialists to blue-collar workers. These problems need to be addressed in the near future, and we believe technology will provide solutions to them,’ Mr Iordache explains.

The reinvention, however, isn’t a smooth ride. In this climate, founders have to show a lot of resilience, but Mr Iordache is convinced that while this may be a difficult start, it will turn out for the best in the long run.

While it is indeed a more difficult environment than in 2020/2021, the habits startups will build in this period of time can help them to be more efficient and result-driven. This may help them address more urgent needs, achieve a better product-market fit, and scale faster in a few years when the market will improve, of which there is no doubt, Mr Iordache states.

If anything, such founders are immune to wasting years on problems that are not very much relevant to customers, and couldn’t provide venture outcomes, but could be investable in case of too much capital on the market.

Firm CEE Focus

Realizing these challenges, Underline Ventures remains CEE-focused in the broad sense, i.e. investing in CEE startups, as well as foreign startups with CEE founders. Part of the VC firm’s ethos is about bringing complementary value to what International VCs bring by helping a startup develop its technical teams in the region and also having a cultural liaison for developing the collaboration further. As such, Underline Ventures sees the CEE region as the place to be and doesn’t plan to strengthen its presence outside the region.

Having fully raised a private-only fund in Eastern Europe as a solo GP fund is no small feat. Neither is putting together a team of diverse yet equally valuable partners, making a number of newsmaking investments, some of which are overperforming. Yet, the Underline team still sees plenty of room to grow – specifically, developing the platform and ‘building some more elements of our future architecture.’

‘Ad astra per aspera,’ Mr Iordache concludes.