AIP Seed is Poland-based one of the first pre-seed funds in Europe investing in a straightforward model at the earliest stages of startup development.  Darek Żuk is a CEO & Founder in AIP Seed, who creates a startup and entrepreneurship ecosystem in Poland. Let's look into some more details about him:

• In 2004, he founded the Academic Entrepreneurship Incubators (AIP), which spawned over 20 000 startups, created over 160 000 jobs, and developed a unique global model for starting and growing businesses without company registration.
• In 2011, Darek established Poland's first coworking network - business.link, which has since grown into a network of over 30 000 square meters of coworking space and became a coworking leader in CEE.
• In 2017, business.link secured the largest VC funding round in Poland that year (20 MLN EUR from Skanska). Two years later, global Skanska acquired stakes in business.link.
• In 2015, Darek, together with Rafał Brzoska and other investors, founded the VC fund bValue.

The fund has so far invested in and developed projects like CallPage, Plenti, Foodsi, GLOV, SiDLY, and Qpony-Blix. In 2022, AIP Seed 2.0 was established with a capitalization of 25 MLN EUR, aiming to invest in 100 more startups from the CEE region by 2025. This 100% private capital VC fund also actively support women hiring them at the C-level positions, e.g. CFO and CLO and investinf in female founders' startups.

Fund Strategy Overview 

Geography: Poland & open for the CEE region. 
Preferred industries: Agnostic, but they love and have a great expertise in:

• circular economy
• sharing economy
• fintech
• process/business automation
• medtech & healthcare
• marketplace
• edutech
• smart city
• green tech

Investment ticket: 200 K EUR and they invest with co-investors 
Company stage: pre-seed
Product type: all, including: B2B, B2C, B2G, B2B2C and others 
Product stage: MVP
Revenues: Great if startup has revenues, but we are open also just for MVP.

Q&A

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

• Team – we want to see how your team has a unique capability to solve the problem that you are tackling. Additionally, we partner with teams that make informed decisions and understand the value of analytics from the very beginning.
• Verified target market – is it there, and is it big enough? Have you done your competitive landscape homework?
• First traction – best to get your first five clients or sell a small batch of your product before our investment.
• Growth potential – can you quickly grow to $1 M EUR annual revenue and then 3x going forward?
• Financing strategy – do you understand what partnering with VCs means for your business? We are focused on startups that will raise capital again in the future.
• Impact – we prefer to invest in projects that have an impact component and add value in a broader sense.

What disqualifies a startup as your potential investment target?

1. Startups that are in the very early stages, solely based on a presentation, idea, or pitch deck, as it lacks tangible evidence of execution and market validation.
2. Startups providing solutions connected with cryptocurrencies, betting, or operating in alcohol or CBD industry are excluded from consideration, as these industries often pose regulatory and ethical challenges.
3. Lack of communication or no contact from the startup founders is a red flag, indicating a potential lack of transparency, commitment, or responsiveness, which are crucial for a successful investment partnership.
4. Startups with incomplete teams or teams lacking the necessary qualifications for their specific business are disqualified, as a robust and skilled team is essential for overcoming challenges and executing a successful business strategy.
5. Startups with limited societal or environmental impact. We prioritize ventures dedicated to positive contributions and sustainable practices.

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

Hustlers - the best founders stand out by being true hustlers, demonstrating a relentless work ethic, resilience, and an ability to navigate challenges with determination and creativity.

Focus - clear focus distinguishes exceptional founders, as they possess a strategic vision that enables them to prioritize tasks, make informed decisions, and steer their startup towards defined goals.

Big dreams - the ability to dream big sets top-tier founders apart, as they envision ambitious goals, inspiring their teams and attracting the necessary resources to turn those dreams into reality.

Driven by delivery - outstanding founders are defined by their consistent ability to deliver results, translating their vision into tangible accomplishments, and showcasing a track record of execution and success in their entrepreneurial endeavors.

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

1. Personality and sectoral match - before entering into a deal with a VC fund, startups should consider whether there is a personality and sectoral match, ensuring compatibility in both the personal dynamics and industry focus.
2. VC should offer more than just capital - it's crucial for startups to evaluate whether the VC fund offers more than just capital, exploring additional resources, networks, or expertise that can contribute to the startup's growth beyond financial support.
3. Supportive VC - startups should assess whether the VC is a supportive or obstructive investor. They should be looking for a partner who actively contributes to the company's success rather than creating obstacles or hindering decision-making processes.
4. Reputation - the reputation of the VC fund should be a key factor, as startups need to ensure that associating with the fund enhances their credibility and opens doors to future opportunities in the business ecosystem.
5. Experience - evaluating the VC's experience in previous investments is essential, as startups should seek a fund with a successful track record and expertise relevant to their industry, increasing the likelihood of a mutually beneficial partnership.

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

Our approach involves seeking a minimum ownership of 5% in the company, indicating our commitment to meaningful involvement and alignment of interests with the startup's success.

We typically consider valuations up to 2 MLN EUR, reflecting our evaluation criteria and the financial parameters within which we prefer to operate.

We maintain flexibility in our approach, being open to negotiations regarding the startup's valuation, recognizing the dynamic nature of pre-seed stage ventures and the importance of reaching mutually beneficial terms for both parties.

How do you support your portfolio companies?

Co-investors – we always invest with co-investors who not only provide capital but also share their knowledge, experience, and extensive network. Those components are essential for the rapid development of startups. This collaborative approach allows us to offer comprehensive support, assisting businesses on various fronts.

Competence Hubs - we offer comprehensive support to our portfolio companies through our unique model consisting of 6 Competence Hubs. We empower our startups with easy access to industry-leading advisors, freelancers and agencies who are grouped in following devisions:

• Finances & CFO on Demand
• Legal Competence
• Next Rounds & Co-Investors
• Marketing, PR & Growth
• AI & Technology
• People & Culture

AIP Seed team – our team, including Our CEO, Darek Żuk, is readily available for our startups, providing assistance with any urgent issues, and we actively engage with our founders, offering hands-on involvement when needed. We have experience in 120+ investments, which make us a leader in the CEE region.  

What are the best-performing companies in your portfolio? 

Foodsi, Plenti, SiDLY, GLOV, EduCat, Bizky, BiznesHub, Audiomagic, PowerCanvas, Townely, Park Edukacyjny Interakcje, Saloner.

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

When we look back at investments that didn't quite pan out, we've picked up some useful lessons. One of them is connected with the fact that having a solid, well-rounded founding team is key. Whenever the team was incomplete or faced internal challenges, it hindered the company's development.

Timing is also a big player. Investments made during unfavorable market conditions often resulted in suboptimal outcomes. 

Finally, we also learned from mistakes made by teams, such as premature fund utilization, issues with MVP, and poor recruitment decisions. These experiences underscore the importance of thorough due diligence and strategic decision-making in our investment approach.

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

1. Artificial Intelligence is a primary focus for us as a VC, recognizing its transformative potential across various industries and its role in shaping the future of technology.
2. The Circular/Sharing Economy is another market that captures our attention, given its sustainability and efficiency-driven models, aligning with the growing global emphasis on responsible consumption and resource utilization.
3. Impact-driven ventures hold a special interest for us, as we actively seek opportunities in markets where businesses aim to create positive social and environmental change, reflecting the increasing importance of purpose-driven initiatives.
4. Healthcare remains a key area of our interest, driven by advancements in medical technology, telehealth, and the overall potential to address critical healthcare challenges, especially in light of recent global events, making it a focal point for investment due to its lasting societal impact.

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

Due to financial constraints, VC firms are expected to become more discerning and conscious in their investment decisions, prioritizing opportunities with strong potential and sustainable business models.

The increasing prevalence of AI in the European VC landscape is likely to lead to a more rigorous technological background check, driven by past incidents and a heightened awareness of the importance of thorough due diligence in AI-related investments.

The impact investing trend, influenced by EU initiatives and broader societal shifts, is anticipated to gain prominence, with VC firms showing a growing interest in ventures that prioritize positive social and environmental outcomes alongside financial returns.

We will see the shift of focus to projects that deliver lasting results. It's about taking the time to build solid teams, more like a marathon than a sprint. In our case, we're looking at projects with a longer-term perspective, steering away from rapid growth that doesn't make sense in the grand scheme of things. It might be a longer journey, but on the flip side, the project is building a lasting value.

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