Sunfish Partners is an early-stage VC that invests in Polish deep tech startups with global ambitions. They are looking for the next Zlotycorn! Originally from Germany, they have been investing in Poland since 2019. So far, they have backed 12 of the country’s most promising startups, including Aether Biomedical, Alphamoon, Molecule One, Scramjet, and Solvemed.
Fund Strategy Overview
Geography: Poland
Preferred industries: deep tech, B2B
Investment ticket: initial ticket of up to €500k (plus follow-on of €500k)
Company stage: pre-seed, seed
Product type: software and hardware-enabled software
Product stage: from ideation on
Revenues: pre- and post-revenue
Q&A with Dr. Marcus Erken, Co-Founder and Managing Partner of Sunfish Partners
What are the five main things you look for in a startup?
1-2: big vision, 3-5: obsessed founders
What disqualifies a startup as your potential investment target?
1) Lack of focus. We invest in a founder’s one-and-only baby, not one of her many side projects.
2) Founders doing it for the wrong reason: Statistically, startups are one of the worst “get-rich-quick-schemes” in the world.
What in your opinion differentiates the best founders from the rest?
1) They are obsessed with a specific problem. (Otherwise, it will be hard to grind through all the nights when the world seems to be against them).
2) They can tolerate high degrees of uncertainty. (You must make decisions with imperfect information all the time.)
3) They take ownership. Always. (Even if something isn’t your fault, unless you, as the founder, take ownership, your startup probably won’t get far. Why? None will care as much as you do.)
What startups should take into account before making a deal with a VC fund?
Evaluate whether venture capital is right in the first place. If so, build a long list of VCs that fit the stage/ geography/ industry. Understand which VC best understands the vision, challenges, and opportunities. Do reference checks on the final VCs to get external feedback. Have in-person meetings to see if there’s chemistry on a personal level. Faster is not always better; meaningful relationships take time.
What is your approach to startup valuation and preferable share in the company?
Let’s be honest; valuation at the early stage is more of an art than a science. How much does the startup need to achieve an ambitious roadmap in the next 24 months? Do we believe in the roadmap? Does our check size match the expectations? Do we need and does the startup want co-investors? What’s a sensible dilution (generally between 10-30% per round)? What’s our target ownership stake (typically 10-15%)? Does all this fit together?
How do you support your portfolio companies?
In the beginning, we usually have several touchpoints weekly, from a regular catch-up to ad-hoc WhatsApp messages. Topics vary widely. From the nitty gritty, e.g., rewriting emails to increase the odds of closing a customer, to creating a list of potential follow-on investors and ensuring we close them together.
What are the best-performing companies in your portfolio?
Ask me again in five years :) We started investing out of our fund in 2019. Nothing is linear in startup land, and true outliers take 5, 7, 10 years to become gigantic. Of the 12 investments we have made so far, one is written off, and the other 11 still have the potential to become outliers.
What are your notable lessons learned from investments that didn’t work out as expected?
Most learnings relate to Poland and its peculiarities. I recently talked about “10 Learnings from 10 Investments in Poland”. You can check it out here.
What are the hottest markets you currently look at as VC, and where do you see the biggest hype?
We try not to play the hype game. Once something is a trend, we are too late, anyhow. We invest in what we consider the best technical founders in Poland. Historically, we have invested slower than most VCs in Poland to have more time to spend with our portfolio companies.
In your view, what are the key trends that will shape the European VC scene coming years?
Pre-seed investing will remain local. The top international funds aren’t interested in and don’t have the resources to cover hundreds of cities systematically. Series A investing will become more and more global. At that stage, the best startups will be on the radar of the best international funds. Competition among VCs with €100m+ under management will increase dramatically. Seed investing will be somewhere in between.
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