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28 September 2023·6 min read

Orbit Capital is the first Growth Equity Fund in the CEE. With the target capitalization of €200 million, it invests in emerging stars from the region, at the scale-up stage. The fund is focused on technology & tech-enabled businesses with global expansion aspirations. 

The fund is managed by two General Partners: Radovan Nesrsta, a co-founder of Enern, and Wiktor Namysł, former managing partner of McKinsey in Poland, with support of Pavel Mucha, a General Partner of KAYA VC. Orbit Capital has already invested in 4 companies: Booksy, MEWS, Preply, and Rohlik. Over the past 13 years, its partners have invested in over 60 companies, including DocPlanner, Packhelp, Tidio, Twisto, and Woltair.

Fund Strategy Overview 

Geography: Central and Eastern Europe

Preferred industries: Sector-agnostic, with focus on consumer services, small-business automation & collaboration software, logistics and supply chain, healthcare

Investment ticket: EUR 6-15m

Company stage: Growth Stage

Product type: Software and tech-enabled businesses

Product stage: Post product-market-fit / growth

Revenues: ARR, EUR 8+ million

Q&A with Wiktor Namysl, General Partner of Orbit Capital

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

  1. Solving a pressing market need. The most transformative enterprises deliver products or solutions that are “must-haves”, not “nice to have” for their customers.
  2. Proven stickiness of its client base, with clients who are willing to pay for the value the startup brings.brings.
  3. Strong unit economics paired with robust growth rates.
  4. A complete, fully-formed team, with complementary skills.
  5. Clear growth opportunities, going beyond the near future.

What disqualifies a startup as your potential investment target?

We do not invest in companies that function in industries that are harmful to the environment or societies, as well as sectors that we don’t see profitable in the long run, despite the short-term hype. 

There are also four major red flags:

  1. Unproven product/market fit. When a startup cannot demonstrate that its product resonates with a significant market segment, it means that it’s too early for us. However, this one might change in the future.
  2. Shaky economics. A startup with uncertain unit economics, where the cost of acquiring a customer is far higher than the lifetime value of that customer.
  3. Lack of growth. Whether it's in user acquisition, revenue, or market penetration, it suggests that a company may have peaked prematurely.
  4. Delusional founders. If they can’t objectively assess their standing, pivot when required, or receive feedback, they can become the very bottleneck to their startup's success.

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

Beyond business models and products, the essence of a standout startup often lies in its founders and team:

  • Resilience, enabling founders to adapt and surmount challenges.
  • The ability to gather great people around a common goal accelerates success, embodying both leadership and vision.
  • Big ambition, with a realistic approach. The best founders know their limitations, but don’t let them halt the execution of their vision.
  • Ability to learn fast, allowing startups to capture emergent opportunities, and pivot when necessary.
  • Ability to listen, that fosters trust and continual development.

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

  • The ability of the VC team to add value goes beyond capital infusion. It encompasses mentorship, industry connections, and strategic guidance, ultimately catalyzing growth and mitigating risks.
  • Alignment on strategy ensures that both the startup and its VC partners are working towards shared goals, creating a cohesive path towards success.
  • Startups must be ready to take and act on feedback/input from VC. Such receptiveness not only bolsters trust but also refines the business model, fostering adaptability and resilience.
  • As the investment relationship matures, startups should be ready to re-define governance. Accommodating investor needs in this realm ensures a harmonious partnership, balancing oversight with operational autonomy.

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

Valuation plays a central role, directly reflecting our commitment to our Limited Partners (LPs). Our focus is to target the requisite money multiples within a 4-5 year framework. We don’t take chances. We make high-probability investment decisions, so we need to offer reasonable valuations.

We aspire to gradually build a strong minority position that will allow us to play an active role in a company. We aim at taking up 10% or more of the shares.

How do you support your portfolio companies?

We have experience across key growth functions of a company: 

  • Scaling Sales: Drawing from our deep-seated experience, we transform budding ventures into market leaders by optimizing sales strategies.
  • Improving Economics: Our insights ensure startups are not just growing, but growing profitably, honing in on sustainable financial structures.
  • Re-organization for Growth: recognizing the dynamic nature of burgeoning companies, we streamline operations to amplify scalability.
  • Establishing Professional Processes: We emphasize precision and efficiency, ensuring companies operate with the highest standards.
  • Changing Governance: Adapting structures to meet both immediate needs and future aspirations, we balance control with flexibility, aligning governance with growth trajectories.

What are the best-performing companies in your portfolio? 

We have a small portfolio of 4 companies. All of them showcase impressive growth trajectories and rapidly improving economics.

Booksy is conquering market after market, most recently becoming the most popular app in the Spanish App Store. Mews is growing in the DACH region and has exceeded 500 customers from Germany, Austria and Switzerland. Obviously Preply has raised additional $70 million in equity and debt capital to take its Series C to $120m, with Horizon Capital joining us and other investors. And Rohlik makes huge leaps in fulfillment automation across all its warehouses, after successful pilots in Germany.

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

We don’t have such experience in our current portfolio. From our previous investments, we would collectively point out the need for the ability to openly discuss solutions to the problems with the founders. 

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

We are investing in the growth phase, so “the hottest” means for us solid, proven, and predictable. We are careful not to fall in the trap of FOMO and inflated expectations. As for the markets, we look primarily at consumer services, small-business automation & collaboration software, logistics and supply chain solutions, and healthcare technologies and services.

Clearly the biggest hype of now is AI, especially in the early-stage segment. But it’s not all bad. The innovations it represents create a whole new world. And, to be honest, we see AI as an enabler for our investments, both current and future.

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

We see three major trends shaping European VC, that happen simultaneously:

  • Stage transition: There's a noticeable migration of funds, with an increasing number moving up the value chain to engage in later stages of investment.
  • Focused approach: A clear trend towards specialization of funds at the series A stage is evident, indicating a more tailored investment strategy in this space.
  • Support augmentation: The industry is witnessing a build-up of professional support teams for portfolio companies. These "operating partners" play a crucial role in augmenting a company's growth trajectory and operational efficiency.

Related Posts:

VC Of The Month - Flashpoint (by Konrad Koncerewicz, Head of VC & Startups, Vestbee)

VC Of The Month - Molten Ventures (by Konrad Koncerewicz, Head of VC & Startups, Vestbee)

VC Of The Month - TechOne Venture Capital (by Konrad Koncerewicz, Head of VC & Startups, Vestbee)

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