KAYA is an early-stage VC fund (fka Enern) with €270M AUM, based in Prague. Since 2010, the fund has been investing in founders of tech and tech-enabled businesses, from studio projects and pre-seed through Series A and follow-ons across Europe. Among four partners, two have an operating and two have an investing background. KAYA supports startups that make a positive impact in addition to creating financial value and within its portfolio, you can find a.o. companies like Docplanner, Booksy, and Rohlik.
Fund Strategy Overview
Geography: pan-European, with a focus on CEE
Preferred industries: E-commerce, Healthtech
Investment ticket: 200k – 2M EUR
Company stage: Pre-seed to Series A
Product type: Software, hardware, content
Product stage: post MVP
Revenues: not required, up to 5M EUR
Q&A with Martin Rajcan, General Partner at Kaya VC
What are the 5 main things you look for in a startup?
We look for founder qualities that reflect a high level of intelligence, energy, and integrity. Our team gets enthusiastic when startup founders demonstrate a unique insight about a market gap that needs to be filled and how they can execute that with high product and hiring velocity.
What disqualifies a startup as your potential investment target?
Our fund doesn’t operate in vice industries and highly regulated industries. Also, we have zero tolerance for lack of integrity, as many other weaknesses can be managed, but not character.
What in your opinion differentiates the best founders from the rest?
Qualities such as off-the-charts energy levels, mental agility, resilience, and obsession with the customer are definitely the ones that distinguish prospective startup founders.
What startups should take into account before making a deal with a VC fund?
Most importantly, if I were a startup founder, I would try to understand how the partner leading the investment behaves when things don’t go well. It’s always good to connect with other portfolio startups and ask them for feedback. It’s worth knowing first-hand how investors behave in tough circumstances before making the final decision. Integrity and business understanding are super important too.
What is your approach to startup valuation and preferable share in the company?
We value businesses on potential, triangulating it with historical productivity and hiring capabilities of the leadership team. The preferable share is 8-15% built over time.
How do you support your portfolio companies?
Our partners have over a decade of operating on VC market and gaining boardroom experience. Having had major successes and setbacks at those levels provides a good basis for sharing advice with founders.
We also have a Talent Partner who helps our investment portfolio build sustainable organizational structures, an entrepreneur in residence who is a repeat founder with a superb skillset, and a set of venture partners with various “superpowers,” i.e. functional skills such as sales or business development. Moreover, the founders can choose ‘à la carte’ depending what acpect of the company they need to work on the most, we put an emphasis on tailored support.
What are the best-performing companies in your portfolio?
The ones who have reached growth stage and attracted the most capital so far are Rohlik (CR HQ), Docplanner, and Booksy (both PL HQ). Many other companies perform really well, they have however not reached a significant scale yet (200+ people).
What are your notable lessons learned from investments that didn’t work out as expected?
Don’t compromise on founder attributes. A lot of the other things can be fixed, however, if the founder cannot attract strong talent that executes well, there isn’t much we can do to help. We of course try to invest in sectors with a lot of growth potential but have seen even the best founders struggle if the chosen market segment isn’t attractive or undergoes an unforeseen change.
What are the hottest markets you currently look at as VC and where do you see the biggest hype?
Putting aside the exceptional liquidity we noticed in 2021, we see that almost every subsector is experiencing growth. comparing to the past.
We see the market rationalizing somewhat, with a certain ‘flight to quality’ in face of increased uncertainty. We will only know with hindsight where the hype was justified and where it wasn’t, however, we generally believe that business models with questionable economics that in the past were able to attract capital, will have a tougher time now.
Moreover, it’s no secret that talent is flowing into crypto and climate tech areas. We are spending a lot of time on health tech and energy transition.
In your view, what are the key trends that will shape the European VC scene coming years?
I think there will be a recognition that it’s much harder to be a successful VC in the next few years than was the decade before. The top funds will still do really well, unlike the average funds. We’ll also see a healthy trend away from ‘tourist’ VCs and a trend toward more solo GPs with a very tangible value add proposition for founders. The entrepreneurs courageous enough to build in a tougher environment will be rewarded.
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