Lighthouse Ventures is an early-stage and acceleration venture capital focused on technology startups with a global vision. They support startups financially as well as professionally, with an international team of highly experienced tech veterans, bringing together expertise in entrepreneurship, startup mentoring, mergers and acquisitions and media and marketing as well as a strong business network in the Czech Republic and abroad. The fund, which was named the most active fund in the Czech Republic for 2020 and 2021 in a row, has already invested in 37 startups.
Fund Strategy Overview
Geography: CEE
Preferred industries: Fintech, AI, Logistics
Investment ticket: 250k - 2.4M EUR
Company stage: early-stage, pre-seed, seed, later seed
Product type: B2B SaaS
Product stage: idea-stage, MVP, revenue-generating
Revenues: not required
Q&A with Michal Zalesak, Managing Partner
What are the 5 main things you look for in a startup?
We have identified the following criteria, that help us to make first assumptions about the startup:
- Committed and Ambitious Team
- Real market need & timing
- Product-market fit
- Traction
- Innovation & Disruption
What disqualifies a startup as your potential investment target?
An investment decision is a combination of many factors. It may happen that a weak factor will be compensated for by a stronger one. Red flags, in general, relate to a weak team, or a team that is not 100% focused on the company’s development, as I don’t believe that a startup can be run as a side business. Also, lack of focus is not a good sign - either too many product lines or too much service revenue, it is too much for a startup to manage.
What in your opinion differentiates the best founders from the rest?
I would say that the biggest differentiation is a combination of experience, personal motivation, ambition and drive. An experienced entrepreneur, either a serial entrepreneur or a past C-level in a startup, even of a startup that was not successful, would know better what to do and not do. The ability not only to dream big but also to achieve big targets and the capability to recover from tough times - all form a great leader. In general, we prefer to invest in a founding team that has both a business-oriented founder as well as a tech-oriented founder, both aspects are crucial for the success of a startup.
What startups should take into account before making a deal with a VC fund?
Getting funded is not a single event, but a long-term relationship. Founders should choose an investor not just for the financial benefits, but mostly for the added value and long term continuous cooperation. Go with people you like being in touch with for at least the next 5 to 10 years. Talk to portfolio companies of funds you are considering - references work both ways. Also, ask about the fund’s management style - hands on/hands off - and see if it suits you. Make sure that they get along well with the investors on a personal level too.
What is your approach to startup valuation and preferable share in the company?
We are investing at a very early stage startups, sophisticated models won’t help us much. We look at valuations in the perspective of the market and industry standards and the possibility of making good multiples in the next rounds. Also, we try to limit our acquired share to less than 20-25%, while encouraging the company to raise sufficient resources for the next 18 to 24 months, to avoid the disruption of another round in just a few months, rather than focusing on their KPIs and traction. Sometimes it is challenging to find the right point, but generally, valuation is agreed upon quite easily.
How do you support your portfolio companies?
I think that the strongest positive feedback that we are getting from our portfolio founders is about our support beyond funding. We support our startups in expanding their network in the market, getting introduced to potential customers or business partners and in support them in their efforts to raise the next round, and alike, as we have gathered a community a network of over 200 local and international European VCs. We also provide mentoring, directly from the partners or through external domain experts, when the need comes.
What are the best-performing companies in your portfolio?
While ago, we exited Pekat Vision bringing us a multiple of 8x towards the initial investment. Other well-performing startups from our portfolio are for example 4Trans, AhoyConnect (investment from Kaya and Inovo VC), Spaceti (investment from Whateeq and Venture to Future Fund), Investown or NutritionPro growing very significantly every month.
What are your notable lessons learned from investments that didn’t work out as expected?
In a term of three years, we had so far just a single, small write-off. I don’t think that we or the founders did anything particularly wrong that affected in a negative way the investor-founder relation.
What are the hottest markets you currently look at as VC and where do you see the biggest hype?
From a geographical perspective, CEE is a strong market to be in. From an industry perspective, we are big believers in FinTech, which is a very good direction to take. Our fund has always been focused on scalable and recurring business models, such as SaaS B2B and I don’t expect us to change this approach.
In your view, what are the key trends that will shape the European VC scene in the coming years?
COVID-19 and Ukraine changed and will change the VC & startup scene a lot. Growth at any costs is not VC's mantra anymore, the “sky is the limit” approach to valuations also changed the sentiment. Smart startups prefer longer runways and VCs that bring added value as opposed to promising stellar valuations that kill the investability and sustainability of the next rounds.
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