In 2020, Warsaw’s startup ecosystem is ‘a place to observe carefully’

Part 2 of our survey with top Central and Eastern European investors

If you listed the trends that have captured the attention of 20 Warsaw-focused investors who replied to our recent surveys, automation/AI, enterprise SaaS, cleantech, health, remote work and the sharing economy would top the list. These VCs said they are seeking opportunities in the “digital twin” space, proptech and expanded blockchain tokenization inside industries.

Investors in Central and Eastern Europe are generally looking for the same things as VCs based elsewhere: startups that have a unique value proposition, capital efficiency, motivated teams, post-revenue and a well-defined market niche.

Out of the cohort we interviewed, several told us that COVID-19 had not yet substantially transformed how they do business. As Michał Papuga, a partner at Flashpoint VC put it, “the situation since March hasn’t changed a lot, but we went from extreme panic to extreme bullishness. Neither of these is good and I would recommend to stick to the long-term goals and not to be pressured.”

Said Pawel Lipkowski of RBL_VC, “Warsaw is at its pivotal point — think Berlin in the ‘90s. It’s a place to observe carefully.”

Here’s who we interviewed for part one:

For the conclusion, we spoke to the following investors:

Karol Szubstarski, partner, OTB Ventures

What trends are you most excited about investing in, generally?
Gradual shift of enterprises toward increased use of automation and AI, that enables dramatic improvement of efficiency, cost reduction and transfer of enterprise resources from tedious, repeatable and mundane tasks to more exciting, value added opportunities.

What’s your latest, most exciting investment?
One of the most exciting opportunities is ICEYE. The company is a leader and first mover in synthetic-aperture radar (SAR) technology for microsatellites. It is building and operating its own commercial constellation of SAR microsatellites capable of providing satellite imagery regardless of the cloud cover, weather conditions and time of the day and night (comparable resolution to traditional SAR satellites with 100x lower cost factor), which is disrupting the multibillion dollar satellite imagery market.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
I would love to see more startups in the digital twin space; technology that enables creation of an exact digital replica/copy of something in physical space — a product, process or even the whole ecosystem. This kind of solution enables experiments and [the implementation of] changes that otherwise could be extremely costly or risky – it can provide immense value added for customers.

What are you looking for in your next investment, in general?
A company with unique value proposition to its customers, deep tech component that provides competitive edge over other players in the market and a founder with global vision and focus on execution of that vision.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
No market/sector is too saturated and has no room for innovation. Some markets seem to be more challenging than others due to immense competitive landscape (e.g., food delivery, language-learning apps) but still can be the subject of disruption due to a unique value proposition of a new entrant.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
OTB is focused on opportunities with links to Central Eastern European talent (with no bias toward any hub in the region), meaning companies that leverage local engineering/entrepreneurial talent in order to build world-class products to compete globally (usually HQ outside CEE).

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
CEE region is recognized for its sizable and highly skilled talent pool in the fields of engineering and software development. The region is well-positioned to build up solutions that leverage deep, unique tech regardless of vertical (especially B2B). Historically, the region was especially strong in AI/ML, voice/speech/NLP technologies, cybersecurity, data analytics, etc.

How should investors in other cities think about the overall investment climate and opportunities in your city?
CEE (including Poland and Warsaw) has always been recognized as an exceptionally strong region in terms of engineering/IT talent. Inherent risk aversion of entrepreneurs has driven, for a number of years, a more “copycat”/local market approach, while holding back more ambitious, deep tech opportunities. In recent years we are witnessing a paradigm shift with a new generation of entrepreneurs tackling problems with unique, deep tech solutions, putting emphasis on global expansion, neglecting shallow local markets. As such, the quality of deals has been steadily growing and currently reflects top quality on global scale, especially on tech level. CEE market demonstrates also a growing number of startups (in total), which is mostly driven by an abundance of early-stage capital and success stories in the region (e.g., DataRobot, Bolt, UiPath) that are successfully evangelizing entrepreneurship among corporates/engineers.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I believe that local hubs will hold their dominant position in the ecosystem. The remote/digital workforce will grow in numbers but proximity to capital, human resources and markets still will remain the prevalent force in shaping local startup communities.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
OTB invests in general in companies with clearly defined technological advantage, making quantifiable and near-term difference to their customers (usually in the B2B sector), which is a value-add regardless of the market cycle. The economic downturn works generally in favor of technological solutions enabling enterprise clients to increase efficiency, cut costs, bring optimization and replace manual labour with automation — and the vast majority of OTB portfolio fits that description. As such, the majority of the OTB portfolio has not been heavily impacted by the COVID pandemic.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
The COVID pandemic has not impacted our investment strategy in any way. OTB still pursues unique tech opportunities that can provide its customers with immediate value added. This kind of approach provides a relatively high level of resilience against economic downturns (obviously, sales cycles are extending but in general sales pipeline/prospects/retention remains intact). Liquidity in portfolio is always the number one concern in uncertain, challenging times. Lean approach needs to be reintroduced, companies need to preserve cash and keep optimizing — that’s the only way to get through the crisis.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
A good example in our portfolio is Segron, a provider of an automated testing platform for applications, databases and enterprise network infrastructure. Software development, deployment and maintenance in enterprise IT ecosystem requires continuous and rigorous testing protocols and as such a lot of manual heavy lifting with highly skilled engineering talent being involved (which can be used in a more productive way elsewhere). The COVID pandemic has kept engineers home (with no ability for remote testing) while driving demand for digital services (and as such demand for a reliable IT ecosystem). The Segron automated framework enables full automation of enterprise testing leading to increased efficiency, cutting operating costs and giving enterprise customers peace of mind and a good night’s sleep regarding their IT infrastructure in the challenging economic environment.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
I remain impressed by the unshakeable determination of multiple founders and their teams to overcome all the challenges of the unfavorable economic ecosystem.

Michał Papuga, partner, Flashpoint VC

What trends are you most excited about investing in, generally?
HR tech, companies supported by the remote work trend.

What are some overlooked opportunities right now?
Travel for a post-COVID age.

What are you looking for in your next investment, in general?
Defensibility, solution proven to work even facing another [round of] lockdowns.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Delivery and micromobility solutions. Most of them seem to be overpriced versus alternative solutions — e.g., e-scooters vs. Uber, plus the competition is fierce.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More than 50% outside of country, focused on Baltics and CEE region.

What are companies you are excited about (your portfolio or not), which founders?
Booksy, Infermedica, Tidio.

How should investors in other cities think about the overall investment climate and opportunities in your city?
For Poland and Warsaw — there is a huge domestic market, plenty of universities providing developers at competitive prices versus WE. It is a great place for starting the IT company.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I think that founders will still operate within main tech hubs. However, I expect their team to be distributed and work remotely.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
All the B2B SaaS solutions with higher tickets and longer implementation periods will suffer because of the lack of human interaction in the sales processes. Most of the tech companies will be hit severely. However, I believe there would be a great potential for new services for travel, which will redefine the industry in the post-COVID era.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
SaaS models have proven their defensibility when facing COVID. The biggest advice is to raise more money than it is needed to. Although there is plenty of VC money in the system right now, most of the funds are really defensible at the moment, which results in more money going to the best companies at crazier valuations. This might be a problem for the companies that are not positive outliers, but still good businesses.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, especially in B2C solutions allowing customers to avoid direct meetings (e-commerce, remote services, etc.).

Any other thoughts you want to share with TechCrunch readers?
People are always exaggerating in both life and investments. The situation since March hasn’t changed a lot, but we went from extreme panic to extreme bullishness. Neither of these is good and I would recommend to stick to the long-term goals and not to be pressured.

Michal Bachmacz, partner, Aper Ventures

What trends are you most excited about investing in, generally?
We’re generalists, but investing in markets that we feel will boom in the next 10-20 years.

What’s your latest, most exciting investment?
Talent Alpha — which is like Upwork for enterprise clients, decreases recruitment time and cost, letting enterprises set up IT teams in couple of days.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
A far-fetched idea i’ve had for a while now is that i think that the future will blur the boundary between the human body and hardware/software. As we progress, the technology will become part of us and every deep tech startup tackling this area is something interesting for me.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Consumer social apps, mobility, smart IoT. I’m also becoming concerned about AI/machine learning becoming an empty phrase and buzzword tackling really narrow needs and not bringing any real change to the game.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Only about 20%-30% projects are from the Warsaw area. Others are either other Polish hubs (30%) or abroad (30%).

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
In terms of Poland as a whole I think that there is a huge potential in injecting technology into the traditional industries like production/manufacturing and even agriculture.

How should investors in other cities think about the overall investment climate and opportunities in your city?
[Poland is a] top five country in terms of IT talent pool and quality with relatively low labor costs, attractive valuations of local companies, a big market of 40 million consumers, a stable economy and improving investment climate.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
No.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Nothing special; we see rising interest in telemedicine and remote work solutions.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We have an additional tick mark when we analyze a project — how can COVID impact this? In terms of the companies that are already in our portfolio — improvise, adapt (cut costs to the bone), overcome.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
We never lost it in the first place ;)

Any other thoughts you want to share with TechCrunch readers?
Founders: Keep pushing. U.S. and Western Europe angel investors: Poland is a place to look for solid projects wanting to go global — Western revenues combined with Eastern valuations and costs can do miracles.

Pawel Lipkowski, partner, RBL_VC

What trends are you most excited about investing in, generally?
In financial institutions, this would be digitization and simplifying less-than-perfect processes within the middle office and back office.

What’s your latest, most exciting investment?
Autenti — digital signature of documents within a seamless platform.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
In Poland, there are currently few investment alternatives to the all-time favorite real estate investments. I would love to see (i) tokenization of the real estate investments based on blockchain, (ii) advanced roboadvisory with hyperpersonalization for discerning clients.

What are you looking for in your next investment, in general?
A well-defined market niche and good timing of the investment (market on the exponential curve or about to hit it). Motivated team.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
I think B2C marketplaces are an example of such an area. Seemingly easy to start, they need to overcome very significant growth and scaling challenges early on.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Poland — 60%-70%. CEE — remaining 30%-40%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Engineering capabilities lead to interesting developments in robotics, algorithms, space industry (Cosmose).

How should investors in other cities think about the overall investment climate and opportunities in your city?
Warsaw is at its pivotal point — think Berlin in the ‘90s. It’s a place to observe carefully. PFR Ventures is publishing an interesting report on the numbers growing from quarter to quarter, even in spite of COVID.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I see a trend of founders working remotely with less focus on where they’re actually located.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Startups should restructure themselves and look closely on the industries that are restructuring themselves. Being able to adapt and support large industries (like airlines) in the sea changes may lead to a large success. Even on a declining market, there’s still a lot of pie to be shared.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We’re putting focus not only on the revenue side of the solutions, but also on the capacity of savings and digitization.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes — as people move away from high-cost, short-term loans to buy-now/pay-later alternatives. Generally, all tools supporting e-commerce are growing nicely.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
SpaceX success, showing that the “first principles” rule that Elon Musk applied really works!

Tomasz Golinski, partner, CofounderZone

What trends are you most excited about investing in, generally?
Post-COVID-19 defensible companies.

What’s your latest, most exciting investment?
Nethansa GmbH.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
There is still much to do with e-commerce on the consumer side.

What are you looking for in your next investment, in general?
Post revenue with balanced business model that meets scalability and rational cost structure.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Sharing economy, micromobility.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Marketplaces are strong (Booksy, Docplanner).

How should investors in other cities think about the overall investment climate and opportunities in your city?
The Warsaw ecosystem is thriving with a growing number of local investors and founders from the whole CEE region.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Not really. The pandemic will affect mostly traditional businesses.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Events and offline entertainment are under huge pressure. There are big hopes regarding streaming and gaming.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
The challenges concern the next financing round. All of our portfolio companies introduced contingency plans to make the lifetime horizon until the next funding as long as possible.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, especially in e-commerce and gaming.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Economic data in Q3 are getting much better than expected.

Any other thoughts you want to share with TechCrunch readers?
Keep your eye on Central Eastern Europe as the potential next source of very promising startups. The talent base and seed funding is already in place. I believe we will observe more great projects with potential for international success in coming years.

Szymon Janiak, partner, Czysta3.vc

What trends are you most excited about investing in, generally?
Martech boosts business in general. COVID-19 has put digital transformation to a whole new level. Traditional businesses had to instantly start their activity in the web — otherwise they’d have to file for bankruptcy. Digital marketing technologies are an answer to their needs and the question: How to build strong brand awareness in the digital world in a short period of time?

What’s your latest, most exciting investment?
TSS, a company backed both by czysta3.vc and The Heart — a company builder supported by Mastercard. The company has invented several unique solutions in fintech and smart city industries.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
As a fund we’re seeking for opportunities in these sectors: Martech — natural support for all the businesses in the future, Digital transformation — startups that are moving offline solutions to online, where there is already a demand, Software houses — support for most startups as external parties in terms of execution, but thanks to IT, they became natural sources of innovation and launch their own products.

What are you looking for in your next investment, in general?
Professional, motivated teams with MVP and expectations to go global. COVID-19 has not changed a thing in our strategy.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Social media listening — there are a variety of companies that seek an opportunity in this sector, but their innovations are not bringing new value to potential customers; they are just small tweaks. Same goes for chatbots. Startups that want to disrupt need to show a completely different approach toward existing problems.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
So far we’ve invested 100% of capital in Polish companies, because there is still a huge potential in this area.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Martech and medtech can expect new golden age.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Both Warsaw and Wroclaw, where we operate, are full of opportunities although there’s a lot of competition, because more than 130 VCs claim to be active at the moment. On the other hand, VCs from CEE are positioned very well — and often tend to be more attractive than Polish funds.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
So far the most visible effects of COVID are: higher risk aversion amid investors (especially those who built their fortunes on the sectors most devastated by the pandemic), decreased startup valuation on seed and early-stage levels, liquidation of startup community due to lack of physical contact (conferences, lectures, etc.)

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Due to the fact that our area of expertise is martech and IT we couldn’t observe significant negative changes. It’s the opposite — demand is growing rapidly, so it’s a great time to invest and flow with the momentum.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Keep doing your job — it’s the only piece of advice that we spread among our portfolio companies. At the very beginning we helped founders secure their cash flow by making use of governmental aid, starting revolving loans and rescheduling most risky investments. We rather encourage them to take advantage of this situation and grow.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Definitely affirmative. The worst months were from February to April. During summer revenue streams tend to back to their normal levels, but there is a huge threat that a series of lockdowns will be implemented in Q4, so the macroeconomic situation will be even worse.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Two very interesting investments that we’ve closed last month & great perspective to finish another two negotiation processes next month. Being active throughout the worst pandemic time was a great move and a lesson.

Any other thoughts you want to share with TechCrunch readers?
A crisis is a great time to invest, because it’s a beginning of a paradigm shift in the economy, which will indicate the new, most promising sectors to follow.

Bogy Skowronski, partner, Mitefcee.org

What trends are you most excited about investing in, generally?
SaaS, clean tech, AI, health.

What’s your latest, most exciting investment?
Photon Energy N.V., FitAdept Sp. z o.o.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Too little SaaS in PL.

What are you looking for in your next investment, in general?
Capital efficiency, short time to break even, bootstrapping mentality among the founders.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Long time to break even, beach market focused on enterprises.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
50% local and 50% global.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Clean tech, software.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Lots of capital in Poland, which can be deployed to any EU company with Polish substance.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes, big hubs will lose importance.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Anything requiring physical interface will present a challenge.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Avoid hospitality.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Some companies are very resistant.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Increased motivation of the Polish founders to scale globally.

Any other thoughts you want to share with TechCrunch readers?
Organizations like www.founderpartners.co and similar will have a big, positive impact on growing globally software startups coming from nonmajor towns.

Boris Kocot, partner, AIP Seed

What trends are you most excited about investing in, generally?
Impact, in particular circular/sharing economy.

What’s your latest, most exciting investment?
Plenti, an on-demand electronics rental company.

What are some overlooked opportunities right now?
In B2C we are looking for even more circular/sharing economy-oriented startups. As for B2B, gaming studios and dev agencies have blossomed — now they need appropriate tools across management, finance, HR and the technical work itself.

What are you looking for in your next investment, in general?
A team with a clear, convincing vision of what their target market will look like in the next 12-24 months, demonstrating a strong understanding of the impact that COVID has had.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
We don’t like to think that any particular niche is oversaturated. The best solutions will keep finding a way through.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Historically we’ve invested predominantly locally in Poland, however the current scope is broader and we are actively looking for opportunities across the entire CEE and beyond.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
We are incredibly excited about the founders that look to make a real difference. Some of the examples from our portfolio include GLOV (a beauty company that helps reduce waste), SiDLY (a telemedicine startup that literally saves lives with hardware and data) and Plenti, our most recent investment, which develops a circular economy for electronics.

How should investors in other cities think about the overall investment climate and opportunities in your city?
We believe that the investment sentiment in Warsaw is very positive. Whether it is in co-investment talks or working toward follow-on rounds, we are feeling a strong positive vibe.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
On one hand, we believe that there is still a lot of value in being based in a major city for founders. On the other hand, we believe that the hubs will expand to cover geographies outside cities, to include rural areas too. If we can say anything about the positive outcomes of the pandemic, this would definitely be one that we hope for.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
We’re cautious about the consumer space, in particular restaurant-related tech. Whoever correctly figures out what this area will look like in the next 12-24 months is very well-positioned to win.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
The worries are primarily related to runway management and being able to retain staff throughout the crisis. Therefore the usual “cash is king” advice that any VC hands out in a crisis is something that we resonate with too. Another area that we like to look at during COVID is the cap table — this is the best time ever to fix it.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, we can proudly say that the majority of our portfolio reported revenue growth during the pandemic.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
An update meeting with an incredibly driven team from our portfolio that stormed through the pandemic.

Any other thoughts you want to share with TechCrunch readers?
Don’t sleep on the CEE startup ecosystem :) Great things are coming.

Bartosz Lipnicki, partner, Alfabeat

What trends are you most excited about investing in, generally?
Enterprise software (vertical software markets, sector agnostic).

What’s your latest, most exciting investment?
Coinfirm, a global leader in AML and blockchain analytics in cryptocurrencies for banks, financial institutions, exchanges.

What are some overlooked opportunities right now?
Enterprise cloud communications.

What are you looking for in your next investment, in general?
We are especially looking for the founders (global mindset, abilities and experience) and market (enterprise software, vertical software markets, global potential) at seed/pre-Series A (with reference customers and revenue from at least two markets).

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
B2C apps without technology, traction and focus.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Poland, Central and Eastern Europe — 80%. Successful founders move toward bigger markets in Europe, U.S. and Asia.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?

Enterprise software, because of access to engineering talent pool. Companies to watch are Coinfirm, Intiaro, Recruitment Smart.

How should investors in other cities think about the overall investment climate and opportunities in your city?
I believe Poland has up-and-coming technology hubs, an untapped engineering and entrepreneurial talent pool and the timing is right for supporting technology startup founders that have a potential to make a global impact. There is such great talent and potential in Poland but it is so hard to make that impact. What is missing are best practices, cultural understanding and connection to the global technology finance ecosystem.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
All our portfolio companies have introduced remote work, which has been adopted by over 50% of their employees, especially the R&D and software development teams. However, offices and meetings are expected to remain in the major cities, e.g., Warsaw.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Productivity software for fitness clubs and sport facilities, because in Europe only 30%-60% of members returned to the clubs (B2B), whereas there has been significant growth in direct consumer services (B2C).

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
The biggest worry of the founders is related to delayed sales/purchase decisions by the current and potential enterprise customers internationally as well as cross-country supply chains (if applicable).

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
The faster adoption of strategic scenarios that used to be potential end-game scenarios and are already explored at the moment e.g., an enterprise software company launching a wider industry marketplace, targeting more stakeholders in their industry.

Any other thoughts you want to share with TechCrunch readers?
One of the most important founder skills nowadays is the ability to filter information, access knowledge and mentors, learn faster and increase levels of self-consciousness. While some founders are aware of this, most are far behind. That’s an opportunity to better support the founders to make a global impact.

Radek Czyrko, partner, THC Pathfinder VC

What trends are you most excited about investing in, generally?
We invest up to €1 million in early-stage projects. Our focus is on innovative industries and emerging technologies and currently includes companies involved in esports, big data, cloud computing, fintech, logistics, industry automation and SaaS.

What’s your latest, most exciting investment?
GrenadeHub, a SaaS startup offering solutions for corporate team planning and financial management — it is a great tool for all software houses and IT firms. The product offered in SaaS model collects data from different areas of business activity, enabling the optimization of utilization of resources and teams. It streamlines the allocation and the tracking of availability of employees and contract workers.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
There are areas like tech-based green projects, waste management or media where a lot more can and should be done. We should encourage entrepreneurs with bold vision and proper business acumen to keep up and fight for a better future by helping them to build sustainable business models. Especially in the areas where technological progress is essential to save the planet.

What are you looking for in your next investment, in general?
The key factor is a strong, complementary team with a global vision and courage to approach big industries with high potential of digitization.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Business models that are too dependent on single platform or sales channel might have more troubles than ever before. Moreover, in the times of COVID-19 — the travel and sharing economy companies will continue to struggle as the pandemic is not close to being over.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Most of our investment is located in Poland, but we have our focus on the whole CEE region.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
In Poland we are able to deliver the best quality software and Warsaw is one of the biggest European technology hubs (which was confirmed by recent big infrastructure investments from Google and Microsoft). I believe that in the coming years we will see Polish companies among rising unicorns. On its way there, founders should analyze and admire the strategy and business mindset of such visionaries as Airbnb’s Brian Chesky, Shopify’s Tobi Lütke or Epic’s Tim Sweeney.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Warsaw is constantly becoming more accessible and attractive for entrepreneurs. The startup ecosystem is still growing and new exciting offers and projects show up on the map regularly (e.g., Google for Startups Campus or Venture Café Warsaw). The investment climate remains strong even though we needed some time to get used to the online-only networking approach sponsored by COVID-19.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
No, the biggest cities in Poland (with Warsaw on the top) are still able to attract the most talented and ambitious people. Entertainment, culture and lifestyle that Warsaw has on offer cannot be easily traded off. The pandemic might even have a positive impact on the startup ecosystem as more people might leave big corporations for new ventures.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Industry segments like travel, food or sharing economy will be certainly more exposed to the current situation and their problems will not be solved easily in the foreseeable future. However, pandemic times will promote and strengthen teams who are open-minded and flexible enough to adapt into new circumstances and be able to seize opportunities coming with potential shifts in consumer and business behavior. Anticipation skills and agility will be crucial factors to the success in the post-COVID reality.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID-19 hasn’t significantly impacted our strategy. Our founders were advised to focus more carefully on cash flow perspective and provide themselves with an 18-month run rate plan. We had some fears in the beginning of the pandemic. However COVID-19 was an accelerator for the digitization and automation in industries we were involved in — so our portfolio companies are stronger than ever and looking forward to the future.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes. Lockdowns had a positive impact (e.g., on gaming/esports companies from our portfolio).