Investment thesis: Infrastructure for innovation

The systemic “chicken and egg problem” in emerging markets and the role of a VC in building future ecosystems.


The root of all evil

Vicious cycles are endemic in emerging ecosystems — they are the byproduct of systemic deficiencies and make it difficult or even impossible for the emerging ecosystem to grow and develop. Example of such a vicious cycle at work in Central and Eastern Europe: the adoption of electric vehicles (EVs) is slowed down by the lack of the charging infrastructure; conversely, the charging infrastructure is not being built because of the lack of the EVs to use it.

Because of their systemic origin, breaking such vicious cycles is a capital-intensive and a long-term endeavor — the kind of task a VC fund is both qualified and responsible to assume.

On a high note — the root of all evil is where the promise of venture returns lies.

A (technological) leap of faith

Emerging ecosystems are strong enough to leapfrog existing technologies and adopt the solutions of the future. It happened in the past (see LTE adoption in Africa/India leapfrogging classical landlines) giving birth to a breed of companies that created their own markets. These startups are the backbone of the future ecosystem populated by dependent/client third parties.


The thesis: invest in startups that build the infrastructure for innovation and jumpstart new industries by breaking vicious cycles.


Examples of target industries and their needed infrastructure for innovation:

Mobility — needs a continent-wide network of charging stations (and open source data) to power the future of electric mobility.
Vicious cycle: EVs adoption vs charging infrastructure (as described above).
Solution/example: Ionity

Smart cities — need data collection systems to spawn and feed third-party apps.
Vicious cycle: public utility apps vs structured data providers.
Solution/example: INRIX

Workspace — needs office space affordable for companies of all sizes, where location-centric communities to grow and cross-pollination to happen.
Vicious cycle: affordable rent vs expensive real-estate development.
Solution/example: WeWork

e-commerce — needs end-to-end order fulfillment services (including shipping software, integrations and logistics).
Vicious cycle: small size online retailers vs the complexity of fulfillment.
Solution/example: Shipwire

Advertising — needs the self-service model applied to all advertising channels in order to democratize access and reduce costs (especially for SMBs).
Vicious cycle: high complexity/high costs of the professional services vs small marketing budgets
Solution/example: Facebook Ads, Google AdWords

Economy of trust — needs utility DApps that make life easier and replace (public) legacy systems; leapfrogging through blockchain.
Vicious cycle: middlemen vs end beneficiary.
Solution/example: [?]

Insect protein — needs supplies, knowledge centers and distribution platforms for insect protein.
Vicious cycle: new proteins adoption vs mass production capabilities.
Solution/example: Ynsect

Geography — regional ambitions

We look to add a regional dimension to the ideas that we invest in — start from Romania and expand across the borders in CEE.