Iron Wolf Capital - vc of the month
25 June 2021·5 min read

Magdalena Balcerzak

Manager, Vestbee

VC Of The Month - Iron Wolf Capital

Iron Wolf Capital is a seed-stage VC fund from the Baltics investing in startup teams with a global mindset creating disruptive technologies. Based in Vilnius and London, Iron Wolf Capital invests in smart people with innovative business ideas and global aspirations. The fund’s sights are firmly set on funding the most promising and ambitious startups in the region.

Fund Strategy Overview 

Geography: EU with focus on Baltics/CEE
Preferred industries: AI, Edutech, Marketplaces, Deeptech, Fintech.
Investment ticket: €250k - €2M
Company stage: Early seed/seed
Team:  Strong team with global mindset
Revenues: Traction in target markets

Q&A with Tomas Martunas, Founding Partner

What are the 5 main things you look for in a startup?

The first 3 are Team, Team and Team one more time:

  1. Team’s composition, experience, missing key competencies.
  2. Team’s cap table, which can show what is happening behind the scenes.
  3. Team’s hiring plan that helps us to understand how fast founders want to move forward and in which directions.

The team is a reflection of a startup as no matter what, it is the people who generate ideas and execute them - that’s why we pay very strong attention to the human factor. The other two competencies that we strongly consider, are:

  1. Product USP and Competition - if founders are good generals, they have to study the terrain well and know who they are fighting against and how they can win.
  2. Traction and business plan - it shows startup’s ambition and gives an indication of team’s execution capabilities.

What disqualifies a startup as your potential investment target?

It can be a lot of things that are red flags and discourage us from moving forward. Let’s highlight a few then. First of all, integrity problems and lack of clarity, dedication and ambition are definitely the factors that disqualify startups all along. Then, if we don’t feel that the presented business is a founder’s LIFE project - it’s a strong red flag for our VC fund, as we want to see full engagement and dedication of the startup team. What is more, we don’t want to get involved when the company’s technological backing is insufficient or not strong enough, and where there is a crowded target market and no Product USP. Not a clear go-to-market strategy, questionable valuation, problematic cap table, or too little traction also disqualifies startups as our potential investment target.

What in your opinion differentiates the best founders from the rest?

We always highlight the three most important qualities that we wish to notice in the founders i.e. being vision-driven, surrounding themselves with strong cofounders, and accentuating the execution.

What startups should take into account before making a deal with a VC fund?

Startups must consider our partnership as a long-lasting friendship and evaluate whether it can work for at least 5-7 years or much longer. And of course, they should be prepared to deliver what was promised during the process and don’t lose the excitement. So, it is very important to be ambitious but also maintain common sense and set reasonable goals.

What is your approach to startup valuation and preferable share in the company?

Each case is individual, but at the same time, there are some principles: pairs valuations and industry multiples. At an early stage, the most important factor for the startup is growth and customer feedback on a solution/product.

How do you support your portfolio companies?

First of all, we support startups by invested money. Apart from that, we are also engaged in other activities like doing introductions to clients and partners, helping in the hiring process, working on the strategy, having open conversations/mentoring sessions and most importantly, connecting with Series A funds.

What are the best-performing companies in your portfolio? 

We are happy with most of our portfolio companies so it’s hard to pick just a few of them. However, if we take into consideration valuation growth, it is eAgronom, Monimoto, Millo, Redtrack that should be singled out. When we consider huge product improvements (Deeptech/AI specific) – it is Integrated Fiber Optic, Sprana and Pixevia.
The rest are quite new in our portfolio, so there is still a long way to go together.

What are your notable lessons learned from investments that didn’t work out as expected?

The key lesson is to look at the company’s growth speed, as well as get a hiring plan before investment - in order to make sure that everything moves really fast when invested money reaches the startup’s bank account.

What are the hottest markets you currently look at as VC and where do you see the biggest hype?

We focus on our target geography - Europe (with a special focus on the Baltics and CEE) and seek strong startup teams with big visions. We are looking for disruptive companies that have the potential to bring distinguished innovations to the markets. Some of the hottest industries that we identify are AI, Big Data, Deeptech, Cybersecurity, IoT, Healthtech, Blockchain.

In your view, what are the key trends that will shape the European VC scene in coming years?

In the upcoming years, we may notice the growing maturity of countries’ ecosystems, and more funds being established. We expect to see more LPs, more cooperation, and more deals being done. Also, as climate change has become a key priority, the EU Taxonomy will have a significant impact on the whole VC/PE scene - it will oblige funds to reconsider their investments and hopefully bring more transparency to the whole ecosystem.

 

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