Almaz Capital is a global VC fund with its headquarter in Silicon Valley and offices over Europe, investing in early-stage, capital efficient technology companies in high-growth sectors. Almaz Capital has a unique model with the physical presence and network within the Silicon Valley ecosystem and Europe, helping bridge companies from emerging tech regions to the global marketplace and building strong capital-efficient engineering teams across different geographies.
The fund's investors include the European Investment Fund (EIF), Cisco Systems, the European Bank for Reconstruction and Development (EBRD), and International Finance Corporation (IFC), a member of the World Bank Group and successful tech entrepreneurs.
Founded in 2008, Almaz Capital has 18 exits and over 25 portfolio companies, among their most famous deals are Yandex (IPO NASDAQ), Xometry (IPO NASDAQ), Qik (sold to Skype), Sensity Systems (sold to Verizon Communications), Acumatica (sold to EQT), and others.
Fund Strategy Overview
Geography: Central and Eastern Europe, USA
Preferred industries: B2B software space, including AI/ML and Blockchain applications, IoT and Edge Computing Enablers, Cybersecurity
Investment ticket: $2-7M
Company stage: Series A
Product type: Software and Hardware
Product stage: MVP
Revenues: first customers
Q&A with Sasha Galitsky, Co-founder and Managing Partner at Almaz Capital
What are the 5 main things you look for in a startup?
Actually, nothing special from first sight, however for us those details make a difference. We want to see startups developing in a big fast-growing market, that address real problems by right and accurate solution. Also, we always check the startup’s technological advantages and strong differentiation from other market players, its business model and go-to-market strategy. Not to mention, the team and people that are actually the most important factors, since we will be in the same “boat” for many years and share not only success but also lots of difficulties during the business journey.
What disqualifies a startup as your potential investment target?
First “no go” is a random mailing with an investment proposal without searching basic info about our fund and our team, using the third parties for raising capital and presenting the company. The second reason for startup disqualification is any hidden “skeleton” at the due diligence stage. I do appreciate when the founders openly talk about their problems and issues upfront and are not afraid to directly express what they need.
What in your opinion differentiates the best founders from the rest?
Best founders stand out by having a vision, passion, team-building skills and leadership ability. They need to be goal-focused in order to systematically achieve progress. My favorite one, definitely worth highlighting, is the ability to hear and listen to all surroundings i.e. colleagues, customers, partners and investors.
What startups should take into account before making a deal with a VC fund?
First of all, startup should make a solid research on targeted VC funds and their teams with a goal to find the best fit to its vision. Besides, they also need to conduct thorough due diligence of VCs and their team as well, after receiving a Term Sheet from them.
What is your approach to startup valuation and preferable share in the company?
The company needs to raise enough funds with the idea to move on to the next strategic milestone and catch the opportunity for a reasonable transition to a new round. We should keep in mind that the reasonable dilution in each following round is from 15 to 25%. For me personally, it’s not about valuation, it’s about proper financial planning.
How do you support your portfolio companies?
We are called a “smart money VC”, however, this “smartness” depends on the founders. I always repeat that VCs are service companies, so according to that thought, we help entrepreneurs realize their dreams and support them with hiring new team members, providing opportunities for expansion, assisting with experts, bridging companies from various ecosystems, and more. Sometimes, startups can perceive us as “experienced nannies”.
What are the best-performing companies in your portfolio?
I am proud of all our companies for sure. Many of our portfolio startups already exited from Fund I and II. However, we still hold some of the best performers: Fund I – Acronis and Hover, Fund II – Esperanto, GridGain and CarPrice, Fund III – Dmarket and Refurbed, so far.
What are your notable lessons learned from investments that didn’t work out as expected?
A great team is crucial in achieving success and great technology is the key for surviving over the possibility of making a pivot.
I was hunting for great technologies at the beginning of my VC career. Remember, that I have been a “tech guy” all my life and thought that great technologies always win. Fortunately, I soon discovered that the great leading technological position of any company could be lost quite quickly and unexpectedly if you do not manage the company’s business growth accordingly.
What are the hottest markets you currently look at as VC and where do you see the biggest hype?
We, in Almaz Capital, will continue to focus on edge computing, AI and marketplace, but I personally strongly believe in the upcoming new “waves” in Open Source Software and Open Architecture (RISC V and OpenRAN) “wave”, augmented reality (AR) and everything related to the metaverse.
Moreover, Covid-19 pandemia is the main “contributor” in business and personal life processes changes. We need to rework our past “pre pandemia life” and adjust all tech tools that supported it - it’s almost a “greenfield” for entrepreneurs and VCs. For example, our workspace has become hybrid (offline and online), and this requires intensive tech support: changing: hybrid cloud and multi-cloud fast adoption, new hybrid workforce tools, decentralized database, etc. Another example could be supply chain and labor shortage problems. This is a new “breath” for fast-moving automation, replacement of some human activities by Artificial General Intelligence, business and industrial processes based on reliable machines, and expanded use of analytics in digital transformation.
In your view, what are the key trends that will shape the European VC scene in the coming years?
Europe is very fragmented and it is very difficult to look at it as a single market. It is also far behind the USA while taking into consideration the consumption of new innovations, since technology risk isn’t in the DNA of European executives. This is a reason why we are still focused on our so-called “bridge” model from Europe to the USA. On the other hand, I firmly believe in European leadership and tech innovation power. I think that regulated markets such as FinTech, Healthcare, or similar provide a chance for European entrepreneurs of becoming a unicorn “playground” for many regional VCs to compete in the markets of SouthEast Asia, South America and MENA regions.
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