Build it better

work in progress

• Price, such an important data point – lots to build just capturing that well. Botis started this for B2B. After a run with Markestro, Arturas co-founded Kainoteka, a consumer price comparison platform (they might have set their sights to Pricerunner, which was acquired by Klarna for $1 billion). Many other item prices to compare (and leads to generate) – Latvian Altero compares loans (cashflow business, added to a new list - lean and mean Baltic tech), Compare the Tools is for work equipment.
• Company data is another opportunity, European startups are much deprived by not having Apollo or ZoomInfo alternatives locally. In this direction, Okredo recently secured EUR 1.2m grant for AI/ML-driven scoring system. Coresignal leverages public data for market intelligence solutions. Aki is building Finance AI Research Lab with Alphanome and a new project. The Economics of Data Businesses is still a good read (for those pondering).
• Game world. Causation? Harry Stebbings claims that out of 13 unicorn founders in his portfolio, 12 excelled at video games at a young age. Blockgames is rolling out version 2.0, going after user acquisition challenges for games. Eneba is growing further, with approx 20 openings now, and positive economics (EUR 33m rev last year). Aras Pranckevicius have an interesting critical essay on Unity and its problems (adds a colourful caveat):

Caveat: personally, I have benefitted immensely from Unity going public. It did break my heart and make my soul hollow, but financially? Hoo boy, I can’t complain at all. So everything written around here should be taken with a grain of salt, this is a rich, white, bald, middle aged man talking nonsense.

• Troubles. Estonian Planet42 (car rental services in South Africa and Mexico) filed for restructuring – many questions if there is a path out of this. Estonian film and TV lighting manufacturer Digital Sputnik Lighting has filed for bankruptcy (approx EUR 8m raised). kevin. troubles continue with a third request for bankruptcy and growing employee complaints for the labour inspectorate.
• Big in e-commerce, LT entrepreneurs requesting Shopify payments feature to become available – sounds like it's coming. Smartproxy also released eCommerce Maturity Index ‘24.
• People moves. Jonas joins Contrarian Ventures as an associate. Linas Vaitulevicius, Rubedos co-founder, is open for next play. Justas Kaveckas, founder of Foros, joins Arbonics as country manager. Vytis moves from Shopify to Neko Health. Marta joins Baltic Sandbox Ventures. Ingrida has been appointed as Chief Scientific Officer (CSO) of VUGENE. After few years with Synternet, Mikas is exploring new.
• Calendar. Katalista Ventures X Jaunimo Linija to run a hackathon in Oct. Interesting talk: How to scale from an emerging place into a global race?

rounds and capital

• Tingit is building a marketplace for ‘zero-effort’ repairs, starting with fashion – and also received a generous write-up on Techcrunch, right after closing EUR 500k round led by FIRSTPICK, with BADideas.fund, PurposeTech and Heartfelt participating.
• CBRX (say CyberX, previously Cyberalerts.ai) secured EUR 275,000 in pre-seed round with ScaleWolf and FIRSTPICK. Startup introduced a product designed specifically for Security Operations Centers (SOCs) and cybersecurity teams to automate the work and save time.
• Estonian UP Catalyst closes EUR 2.36M investment round for developing CO2 processing technology; backing from Warsaw Equity Group and the SmartCap fund.
• London Lions is officially now part of Tesonet House of Brands. Godspeed!

sponsors

Meet our friends pushing the startup scene forward.

Cloudvisor [AWS partner dedicated to startups]
PayPal [Global integrated payments solution]
Vinted [largest C2C European marketplace, always hiring]
Tech Zity [tech hubs and campuses across Lithuania]
Presto Ventures [investing in startups at the forefront of security, defense, aerospace]
Wargaming [award-winning game developer, careers]
15MIN Group [all the news you need to know]

three questions

Alex Prokofjev, Founder, Cauma Group, also Founder, RollUpEurope.

Help us understand what you are building with Rollup Europe and Baltic Family Capital?

Baltic Family Capital draws inspiration from Scandinavian serial acquirers like Teqnion, Lifco and Visma. Think of these as private markets value investors. They acquire high quality SMEs that share features such as: recurring revenue; stable profitability; asset-light business models; and moats (IP, client relationships, regulatory etc.). Why SMEs? Because for sub 10M revenue businesses there is very little competition from Private Equity. Which industries? Most serial acquirers do not have a single narrow specialism because that would hurt pipeline quality and consequently investor returns. They do, however, develop expertise in several industries. For example, Lifco, a $13B market cap HoldCo giant, has bought a lot of Dental and Demolitions Tools businesses. Check out my deep dive on Lifco.  

Regardless, all serial acquirer investment playbooks share two important features:

• Simplicity and focus on simple capital-adjusted profit goals
• Culture of autonomy that helps loosely integrated, industry agnostic HoldCos remain viable at scale

There is no forced integration. No forced cross-sell. On the other hand, there is lots of emphasis on sharing playbooks on sales, working capital etc. 

Why would you acquire a bunch of boring businesses in the Baltics? Or perhaps a better way to ask – why others have not done that yet?

I did a Linkedin post on this very topic not long ago. In short. The market is too small / too risky / too illiquid. For the type of businesses that I target, normally there are 2 types of buyers: serial acquirers and PE backed rollups. The former isn't interested in our region because the opportunity set in Benelux, UK etc. is much bigger. The little experience they've had hasn't been great. Prolific mid cap PE like Triton or Waterland, which would be natural buyers, are absent from the region. Local investors are waking up to the opportunity, but they struggle with the industry agnostic and decentralized concepts. I'm not building an Infortar. I'm building a Teqnion. I don't want Baltic Family Capital to be valued on a NAV basis, but on a cash flow multiple basis.

You also have a thesis around tech companies for your fund in the Baltics. Where do you see the opportunity?

Just to be clear, we are not a "fund" :) Our structure shares some fund-like features, like incentive equity, but fundamentally our holding period is infinite. Which naturally limits our investment mandate to established businesses with recurring revenues and sticky customers. Vertical Market Software, or VMS ticks the boxes. Modern PLG SaaS businesses do not, for the most part. Nor do IT services businesses. Even if they are offered cheaply.   

Tech Philomaths' community - join

• Lean and Mean - small profitable Baltic tech firms
• Startup lists for the Baltics - Drone startups, Marketplaces, Sportstech
• Repeat Lithuanian founders - 40 serial founders building now

founder's guide

• Growing on socials? This is how channels do Tik Tok thing all the time.
• How to build a high-functioning board as a founder
• How beehiiv ships so quick so often - and became known for it
• Antanas (SearchNode) embracing uncertainty as serial founder
• Why not to do a startup

build, better

• Context. In the Baltics (and LT in particular) we've seen a lot of successful ventures in the consumer space (including marketplaces), where growth has been fueled by paid acquisition mastery. Among current early-stage teams, B2B dominates, so marketing play is different. There are less experienced leaders to talk too, too.
• Resource - How to Scale B2B Marketing Org,
• Comment by Veta Armonaite, Head of Marketing at Slite

further insights

• Thinking: is European tech just tracking the US, or will it become something of its own? Michael Dempsey telling that currently, every founder wants to be either Sam Altman, or Delian Asparouhov, or Nikita Bier – these are the dominant archetypes. Indie interview "At Home with the Asparouhovs" reiterates that low-hanging fruit in tech (software-only) has been picked, and that pulls VCs in all other directions.
  • Lenny's talk with Nikita Bier (how to consistently go viral) also dropped
• Media. Mentioned a few newsletters that have been interesting recently, and of course – people bring up Stratechery by Ben Thompson. He started 5 years before Substack (OG of the subscription-based model) and makes an estimated $5m a year writing his articles. New pod with Ben about all of that – How I Write.
• Ana. [Exclusive for Tech Philomaths' readers]
  
  Ana is a news assistant app, set to help fight news doomscrolling/news fatigue. Ana reads all the internet and shares 10 highlights twice a day, all neatly summarised with FAQs to dive deeper, and enhanced with a chat box.

As fans of Tech Philomaths, we invite the readers to be our first batch of testers. Click here to get a TestFlight link for ANA.

• Mega. The Huberman-ization of America (This Decade's Mega-Trend: Health)
• Betting. How bad is sports betting for consumers? Pretty bad

Every $1 in sports betting there was a $2 reduction in investments.

ecosystem

• It's fun to think about countries as products – with all their features. It's also a pricey product, since you move there, pay taxes, and consume locally. Imagine you've been sold all fantastic features, and this country now became OS of your life. Then suddenly after few years, some woke up logged out. Trying to sign in doesn't work, your account has been deleted. Access denied, you get informed you are free to find a new OS for yourself and the family. All users get told that some accounts have been deleted and will not get restored, but otherwise – no need to worry.

That's just an interpretation on issues we are having with IT and business people who moved to Lithuania. Our product should have more predictability, better process, and also officials need to show more professionalism and better communication (not being naive – it's really hard and nasty enemies around)

• A complaint about public services elsewhere. Low-cost government is no good.

roleplay

• Starting a sales career at an early-stage startup: there are challenges for sure, you need to proactively seek coaching elsewhere.

-- What makes tech careers different: there is less time for meetings.

P.S. notes for next week

• More interesting ideas/connections appear on the go, when reading or someone drops interesting link. Need to capture that narrative immediately, otherwise much harder to reconstruct even a day later!
• Tools want to try: Spiral, Napkin
• In an effort to put tech philomaths to rest, Rivalsense now has a weekly Baltic VC newsletter. (expect more fomo between venture funds in the region!). It's amazing how much AI is already able to do in terms of understanding and manipulating text. Still working on the counter-attack, but we will certainly bring more hopeless jokes and hand drawings into our newsletters – just to keep the human feel of it! Send thoughts and prayers or perhaps upgrade to paid below.