Balnord is a high-conviction early-stage fund investing in frontier and dual-use technologies across the Baltic Sea Region. It backs founders tackling the hardest problems in critical industries, drawing on our experience as former entrepreneurs and operators.
Supported by the European Investment Fund, PFR Ventures, and leading European family offices, Balnord is currently investing from its first fund, which has surpassed its €70 million target. Focused on building the technological backbone of Europe’s re-industrialization, the firm reserves more than 60% of its capital for follow-ons and intentionally backs a concentrated portfolio, working closely with each company from day one.
The firm’s General Partner, Marcin P. Kowalik, told Vestbee more about its strategy and investment approach.
Fund strategy overview
- Geography: founders from the Baltic Sea Region (Poland, Baltic states, Nordics, and Germany) with global ambition from day one.
- Preferred industries: frontier and dual-use technologies: space, industrial resilience, semiconductors, advanced manufacturing, robotics, healthcare/bio, and cybersecurity.
- Investment ticket: €500k-3M initial checks, up to €12M maximum allocation per company, with 60% of the fund reserved for follow-ons.
- Company stage: initial investments preferably at pre-seed and seed with follow-ons at Series A and beyond.
- Product type: deeptech and data-driven solutions with dual-use potential. Balnord backs both hardware and software businesses with clear technological or market defensibility.
- Product stage: stage expectations vary by sector. For experienced founders, the firm can invest pre-product. For commercial applications, it looks for early validation or initial traction.
- Revenues: is not a strict requirement. Given Balnord's focus on frontier technologies, it assesses companies based on technological maturity, defensibility, and market validation appropriate to the sector.
Q&A with Marcin P. Kowalik, General Partner at Balnord
What are the 5 main things you look for in a startup?
Level of ambition. Our goal is to back companies that materially impact Europe’s GDP and technological sovereignty. The Baltic Sea Region produces exceptional technical talent — but talent alone is not enough. Founders must think globally from day one and aim to build category-defining companies.
Sebastian at ATMOS Space Cargo is a strong example: building in Munich, his company is addressing Europe’s structural dependency in space logistics. That is the level of ambition we look for.
Technical defensibility. We invest in businesses protected by real barriers: proprietary technology, patents, unique datasets, deep technical know-how, or meaningful engineering complexity.
In frontier sectors, defensibility must be structural — not narrative.
For example, Skycore Semiconductors is developing a novel chip architecture designed to overcome fundamental efficiency bottlenecks in high-performance computing. That level of deep technical innovation creates barriers measured in years of R&D, not marketing spend.
Authentic founder-problem fit. In frontier and dual-use technologies, depth beats hype. We look for founders with lived experience of the problem — researchers, engineers, operators who have often spent years in the domain. When we invested in SATIM, the founders had spent years in satellite imagery analysis for both commercial and defence applications. That domain expertise compounds and becomes a real moat.
Disciplined execution in capital-intensive fields. Frontier technologies require patience — but also rigor. We look for founders who set clear technical and commercial milestones and understand capital efficiency, even in long development cycles.
Dual-use potential and strategic relevance to European technological sovereignty. We evaluate whether technology can serve both commercial markets and address critical dependencies. Astrolight's laser communications work for both satellite operators and naval applications. The best dual-use companies have strong commercial foundations.
What disqualifies a startup as your potential investment target?
- No structural technological edge
If the product can be easily replicated or relies purely on go-to-market speed, it’s not for us. In frontier and dual-use sectors, defensibility must be embedded in the technology, data, or unique expertise.
- Weak founder commitment or misaligned incentives
Frontier technologies require years of focused execution. We back founders who are fully committed, properly incentivized, and prepared for a long-term journey.
- Shallow domain conviction
We avoid teams that approach complex industries opportunistically. In deep tech, surface-level understanding becomes visible quickly. We look for founders with genuine insight into the technical and regulatory realities of their field.
- Venture-scale ambition mismatch
We are a high-conviction fund backing concentrated bets. If the ambition is to build a steady, profitable niche company rather than a category-defining global leader, we are likely not the right partner.
What, in your opinion, differentiates the best founders from the rest?
Intensity that bends reality. The best founders operate with a level of obsession that attracts talent, capital, and customers. In frontier and dual-use sectors, progress is hard technically, commercially, and politically.
The exceptional ones attract world-class engineers before they can pay market salaries, secure strategic partnerships before the product is fully proven, and sell a long-term vision to demanding customers across both commercial and defenсe markets.
Their conviction compounds, draws others in, and aligns them around it.
What startups should take into account before making a deal with a VC fund?
- Is this investor truly equipped for your sector?
Frontier and dual-use technologies are not generic software businesses. Founders should ask whether the fund understands regulatory complexity, capital intensity, and long development cycles, and whether they can open meaningful doors to strategic customers, government stakeholders, or later-stage capital.
- Can they support you beyond the first check?
Deeptech companies require sustained backing. Founders should examine the fund’s follow-on reserves, pacing strategy, and track record of supporting companies through difficult rounds, not just leading the first one.
- How do they behave when things go wrong?
Every frontier company faces setbacks. Speak to founders who went through delays, failed experiments, or tough financing environments. The true quality of a VC is revealed under pressure, not in headline moments.
What is your approach to startup valuation and preferred share in the company?
We aim to be among the largest investors in our portfolio companies, actively supporting them as lead or co-lead through multiple rounds. This isn't spray-and-pray. It's the process of building ownership that matters throughout the company's journey.
Valuation is market-driven but reality-tested against European and US benchmarks while factoring in frontier tech dynamics. A pre-seed space logistics company and a pre-seed SaaS tool shouldn't carry the same valuation just because both are pre-revenue. Capital intensity, technical risk, and validation timelines differ completely.
We're flexible on structure. SAFEs, priced rounds, convertible notes, whatever aligns parties for the long term. We don't chase hyped rounds. If pricing doesn't make sense for our returns, we pass. Conversely, when we have high conviction, we lead rounds and set terms that attract quality co-investors.
How do you support your portfolio companies?
Strategic introductions across LPs, including institutional ones, family offices, or successful founders, government stakeholders, defence experts, potential customers, and co-investors from our Kauffman Fellows network.
Operational support from ex-entrepreneurs who've exited. One of our Partners, Jarek Pilarczyk, built, scaled, and exited two tech companies, including Skyrise's exit to stock-listed Etteplan, and brings real operational experience. We have more experienced people than the founders need. They help with hiring, fundraising, go-to-market, and navigating dual-use market challenges.
Communications and PR support for media strategy and positioning. We can help founders coordinate coverage for both commercial and strategic audiences. This builds credibility with customers, partners, and future investors.
Also, follow-on fundraising is critical. We have the capacity to lead or co-lead subsequent rounds. Even at Series A, we co-lead in existing portfolio companies, helping founders secure commitments that unlock external capital.
Ecosystem resources, including technical advisors, legal counsel experienced in export controls and government contracts, recruiting partners, and portfolio collaboration opportunities.
What are the best-performing companies in your portfolio?
SATIM secured contracts with Bundeswehr and Rheinmetall for Germany's SPOCK-1 satellite reconnaissance program. Their AI-powered SAR analysis serves commercial real estate and defence intelligence, winning multiple industry awards and demonstrating that Polish deep tech can compete globally.
ATMOS Space Cargo launched PHOENIX 1 on SpaceX Falcon 9, demonstrating Europe's first commercial space-return capability with 10x better downmass ratio than traditional approaches. Now contracted for multiple missions, including Space Cargo Unlimited.
Astrolight has closed a seed round. It develops an optical ground station deployment in Greenland for ESA. They demonstrated unjammable ship-to-ship laser links with the Lithuanian Navy and participated in NATO DiBaX in Latvia.
VitVio announced $8 million in funding led by Bek Ventures for its AI surgical assistant platform, addressing operational efficiency with documented ROI.
Infinite Orbits, where we participated in their €40 million round, holds €150 million in contracts for satellite servicing, addressing both commercial economics and strategic European space independence.
What are your notable lessons learned from investments that didn’t work out as expected?
Dual-use requires genuine commitment to both markets from day one. We learned this while working with a company that was speaking about both, but consistently chasing only commercial opportunities because they closed faster. When the commercial softened, they lacked defence relationships and product features to pivot. The winning approach isn't building for two markets. It's building inherently adaptable systems.
Technical brilliance doesn't compensate for commercial naivety. Exceptional PhDs solving hard problems while consistently underestimating go-to-market complexity — three years perfecting technology while competitors with inferior solutions gained market share through better customer relationships.
Timing matters more than initially appreciated. Some technologies are too early for the market, regardless of technical merit. The question isn't just "is this possible?" but "will this be adopted at a meaningful scale within VC fund timelines?"
Founder team dynamics are non-negotiable. Brilliant teams are imploding over equity disputes, role clarity, or diverging visions about commercial versus defence priorities. We now probe team dynamics deeply and maintain communication with all co-founders, not just CEOs.
What are the hottest markets you currently look at as VC, and where do you see the biggest hype?
Where we see genuine opportunity
- Space infrastructure and logistics
Europe needs independent access to space and in-orbit capabilities. Commercial space economy projected to reach €1.8 trillion by 2035. More importantly, European governments are finally prioritizing technological sovereignty. When Baltic seabed cables get cut, laser communications matter. When satellites fail in orbit, servicing capability matters. This isn't hype. It's infrastructure.
- Advanced semiconductors and manufacturing
The geopolitical fragility of chip supply chains is driving serious European investment. Poland alone invests billions in semiconductor fabs, creating opportunities in manufacturing automation, materials technologies, and testing equipment.
- Critical infrastructure resilience
Technologies protecting energy grids, communications networks, and supply chains from physical and cyber threats are moving from "nice to have" to essential. Baltic cable cuts demonstrated this viscerally.
Where we see excessive hype
- Generic AI without defensibility
Companies are adding ChatGPT APIs and calling their products "AI-powered." Most will be completed away. Real AI value comes from proprietary data, domain-specific models, and genuine process transformation.
- We pass on generic B2B SaaS without technical moats
Workflow tools competing purely on sales execution, not technology.
- We avoid Web3 applications
These are solutions searching for problems rather than solving genuine customer needs.
- We don't invest in consumer social or marketplace models
These require different expertise and don't build European technological infrastructure.
In your view, what are the key trends that will shape the European VC scene in the coming years?
European technological sovereignty becomes an investment thesis, not rhetoric. Geopolitical tensions, supply chain vulnerabilities, and defence awakening create genuine market pull for European-controlled technologies. Commercial customers increasingly value supply chain resilience. Infrastructure isn't static — it's a living network of technologies that adapt faster than traditional industry. Funds understanding this early capture disproportionate returns.
Increased specialization in specific funds separates winners from losers.
Generalist VCs struggle to compete with specialized funds offering genuine domain expertise, customer access, and operational support in complex sectors. LPs consolidate capital toward managers with demonstrated performance and real value-add beyond capital. We've seen this firsthand. Over 50% of our predecessor fund LPs doubled down in our current fund. 25% of them are the founders we previously backed.
