AIN shares the list under the opinions category. You can read the full article by following the link to the Level2 Ventures blog page, here.

A robust post-investment partnership doesn’t just leverage the financial aspects but harnesses the full spectrum of resources that investors bring to the table. There are a few effective strategies for startups to maximize the benefits of their relationships with venture capital partners:

Establishing effective communication channels

Clear and consistent communication forms the foundation of any successful relationship, including the one between a startup and its investors. Establish a routine of structured updates and regular check-ins, such as monthly newsletters paired with quarterly meetings. These interactions should not only report on financials and key performance metrics but also explore strategic discussions and solicit guidance. A transparent approach fosters trust and respect, facilitating a more engaged and supportive investment partnership.

Leveraging investor expertise for strategic advantage

Venture capitalists bring knowledge and a unique perspective, informed by diverse experiences with both successful ventures and instructive failures. Startups should consider actively seeking their investors’ insights on significant business decisions. Whether contemplating market expansion, adjusting business models, or navigating complex regulatory environments, investors can provide invaluable guidance.

Expanding opportunities through investor networks

A distinct advantage offered by venture capitalists is their extensive and often influential network. This network can open doors to potential customers, strategic partners, key hires, or even future funding rounds. Startups should work closely with their investors to identify how best to engage with this network.

Proactive engagement in problem solving

Instead of waiting for challenges to escalate, startups should proactively involve their investors in problem-solving. Venture capitalists can provide alternative perspectives and innovative solutions, potentially averting crises. They may also serve as strategic advisors during critical junctures, offering insights that steer the startup toward stability and growth.

Cultivating a supportive community

Many investors nurture a community among their portfolio companies, creating a supportive network that enables peer-to-peer learning and collaboration. Active participation in such communities can yield significant benefits, including shared resources, collective learning sessions, and networking events designed to foster connections and growth.

The dynamic between a startup and its venture capital partners is pivotal and extends well beyond mere financial support. It’s worth taking benefit of.

AIN.Capital shares the list.

10 hiring trends to prepare for in 2024

1. Providing a great recruiting experience for candidates was a trend in 2023, and it will continue in 2024. According to a survey conducted by the F1V talent acquisition team, candidates’ interactions with both recruiters and hiring managers directly impact their decision to accept a job offer.
2. Compared to previous years, candidates are now more willing to complete test tasks, considering them as a way to demonstrate their expertise.
3. Despite the job market being shaken by massive layoffs in the first half of 2023, acquiring strong senior or C-level executives is still hard. Finding the perfect fit for early-stage startups also remains challenging, increasing the time recruiters spend to fill the vacancies.
4. Hiring people from around the world is becoming more popular. Companies that only hire in one location might miss out on talented individuals compared to those with offices in different countries.
5. In the U.S., candidates tend to drop out if there are more than 3 interview steps. Ukrainian applicants usually persist through 5-6 hiring stages. Also, Ukrainians are eager to take on more responsibilities, being high-performing and more flexible in fast-paced environments.
6. While the LATAM market is booming and salaries are slightly rising, finding candidates who speak English fluently remains a challenge.
7. Comparing markets in the U.S., LATAM and Ukraine, candidates in the U.S. tend to prepare for interviews better by researching the company and its tech stack. Job seekers in the U.S. and LATAM generally showcase better soft skills than Ukrainians. But Ukrainian candidates have a stronger product and technical background.
8. Despite global downsizing in 2023, there is an uptick in profit-generating positions. This trend is particularly noticeable in areas such as sales and marketing, where higher salary ranges are becoming more prevalent.
9. Outsourcing is dying, while “product” is hiring. Currently, many companies are seeking specialists with expertise in product development.
10. Remote and flexible work options remain some of the most desirable perks for potential employees.

“Are valuations of tech companies falling? Yes, the numbers confirm it. Inspired by a recent post by Pawel Maj, I decided to take a closer look at this trend. Because, well… I don’t see anything wrong happening.”

Do we have a major problem in the tech market? No. And here’s why:

• Valuations are still high. Valuations at 11.9x EBITDA or 3.1x revenue are still considered high valuations. Many industries would dream of such valuations.
• The median EBITDA multiple of 11.9x is higher than in 2014. The median revenue multiple of 3.1x is similar to valuations in 2013, 2014, and 2017. These are normal valuations.

• In recent years, we witnessed inflated valuations driven by various well-known factors (COVID-19, cheap money, accelerated digitization of virtually all aspects of our lives). Valuations at 19.5x EBITDA? Did anyone seriously think that would last?
• A lot of companies have been over-investing and over-hiring for the past few years, so when the market came back to normal and their businesses weren’t growing as fast as they thought, they had to start cutting back. And because the media picks up headlines about layoffs, it looks from the outside like something really bad is happening.
• The approach to startups has changed. It’s no longer enough for them to grow at all costs. They need to capture the market but also make money, increase revenue, and optimize costs.
• Bad press leads to more bad press. This is evident in the fintech industry. Huge fluctuations in cryptocurrencies have resulted in a lack of trust in such assets. The FTX scandal shook faith in innovative financial technologies. Large drops in valuations of giants like Worldline, Adyen, Stripe, Klarna. These articles get clicked on, and because there have been many of them in recent months, they distort the overall picture of the industry.

“So, are we witnessing a major problem? No. We have a correction that is normalizing valuations of tech companies. And that’s a good thing. The sooner valuations return to normal, the sooner companies will stop being overambitious and focus on their businesses. Consequently, they will return to growth more quickly.”

As for the rest? Well, some will be acquired, and some will fail. That’s how it has always been in business. And that’s how it will be now.

For now, the defence tech sector includes the bulk of most prospective industries in the hi-tech market, and the following three tips from accomplishment experts will help you build your defence tech startup more effectively.

As a bonus, Paul Clayton and Serhii Koshman kindly included in their speech opinions about the possibility of new conflicts emerging in the foreseeable future.

1. War is about technology

At the start of the meeting, Paul did an exhaustive summary: “War is a way for constant innovation”, and this principle has remained unchanged since the ancient times. In the distant past, weapons of war, intelligence instruments, and medicine have been continuously improved. Modern warfare has a similar nature: for a successful defense or offensive operation, you have to rapidly adapt, modernize, and develop new means of combat.

In the XXI century, the list of such technologies, especially in progressive countries, usually involves core digital industries like Machine Learning, Data Science, and the AI industry as a whole. Technically, modern algorithms which allow the processing and management of large amounts of data are a vital instrument for every current intelligence service and, perhaps, no less important than the spy network. Such software makes it possible to predict enemy’s potential steps due to highly accurate analysis of satellite photos, contemporary decryption systems, etc.

Unmanned Aerial Vehicles (UAVs) are at the high technologies’ “forefront” on the battlefield. They are being used more and more actively by Ukrainian forces and have produced noteworthy successes in recent months. We could observe dozens of notable developments and applications of such machines: well-known Bayraktar, tens of different kamikaze drone variations from Ukrainian enterprises, robot SPOT by BostonDynamics, and other autonomous instruments that can help to demine the territory without involving human resources.

2. Find new connections and allies

To ensure the correct operation of hi-tech software, we need high-quality hardware: advanced chips, semiconductors, rare resources, etc. In the context of Ukraine, we can observe some lack of such components. In order to build advanced production, you need to cooperate with Western companies, especially with large-scale industry representatives. These corporations usually acquire prospective startups and provide them with the required resources, funds, and specialists.

By the way, the latter, STEM-educated people, are no less important than hardware. Engineers, scientists, and mathematics are also vital parts of successful growth for every defense tech startup. They will provide idea generation, modernization, and implementation of new technologies. As Paul Clayton assumed, there is no lack of such people in Ukraine.

The war allows to establish new connections more easily because the defense industry in most countries is in the growth stage, and the effectiveness of your communication mainly depends on your activity and initiative.

3. VCs do not know about defense tech

Not every investor can and should know the difference between your UAV or an advanced computer-vision system for drones and the same product from your competitor. Thus, you should have an expert on your team with appropriate qualifications and sufficient experience to explain to VCs why your work deserves attention and funds.

Also, the experts mentioned a few countries with the most “friendly” defense tech market, open to new ideas: Estonia, Great Britain, and the USA.

The future of war

Paul Clayton, a NATO ex-commander, and Serhii Coshman, a def-tech industry representative, are, logically, competent in questions connected to war as a whole, so we definitely should not neglect their opinions about one of hottest debated questions of last year: will China invades Taiwan?

This conflict can directly provoke some kind of new global war, however, Paul Clayton expressed doubts that China will take this step. Firstly, because these actions will collapse China’s economy in a few months, and in this case, the invasion ​​is tantamount to shooting at your own head.

Serhii Coshman, in his turn, noted that military logic is not applicable to countries like Russia and China. These autocracies with a clear shift toward dictatorship are irrational in their nature and more depending on an individual’s (or groups of individuals’) personal whim rather than a critical assessment of economic and military capabilities. Therefore, you definitely should recognize different kinds of political, sociological, and other forecasts as the ultimate truth in the case of these countries.

As we all remember, a wide range of respected experts, before Russian global invasion in Ukraine, assured that such war was impossible: Russia would collapse in a few months, and Putin would probably never take such a suicidal step.

Author: Serhii Zhelieznikov

Mr. Liao spent the last six years as a Partner at 500 Startup, a worldwide Seed Venture Capital firm based in Silicon Valley, which provided the development of Reddit, Canva, and hundreds of other smaller-scale services and media. During his tenure, Marvin invested in over 400 startups, including fintech, digital health, adtech, and other industries.

Such circumstances make him extremely qualified to judge how an entrepreneur’s ideas should look like if they want to attract a venture capitalist with a big fat wallet. That’s why the Lift99 community couldn’t miss the opportunity to invite Marvin to roast a few Ukrainian startups who were brave enough to face wise advice and ruthless criticism.

So, here is the triad of the most crucial Marvin’s conclusions.

Advice 1: F*ck broad presentation

You may create the most beautiful presentation with dozens of complicated motion graphics elements and a wide range of infographics with meaningless digits about the country’s population and economic indicators; however, it does not make any sense if you miss crucial pieces of information about your target group, monetization system, range of prices, etc. 

Remember that you have only a few minutes to impress investors, so exclude all broad, insignificant, and well-known facts that spend priceless seconds of your speech. 

Advice 2: Stop dreaming, show me the digits

It’s great that you have far-reaching, ambitious plans for your project, and your head is full of brilliant ideas that you want to share with everyone, but keep it to yourself, okay? 

Investors do not give a fig who you are and what your passions are — they want to hear how exactly their money would work and which improvements will help you to gain more money. You should offer particular ideas with obvious and transparent conditions, benefits, and risks. 

Advice 3: Crypto? Explain yourself, sir

In the case your startup works with some hi-tech stuff like cryptocurrencies and NFTs, that, for most venture capitalists, logically sounds risky and incomprehensible, you have to specify your sources. Why should they trust your coin? Is there any guarantee of profitability, or at least that you will not waste 100 grand on some pictures that you will not be able to sell in the future? 

If you choose the way of crypto, you should be prepared for these questions and, perhaps, more importantly, be sure that your idea is feasible and relevant to explain in detail why it should work.

When someone in the audience asked Marvin about the formula of successful self-development, his answer was simple and exhaustive: to change yourself — you should change your environment:

“You are the average of the five people you spend the most time with. So you wanna get great? You gotta go where the best people are,”

Marvin Liao said.

Author: Serhii Zhelieznikov

But despite all the above, the world has recently seen historic growth of financial markets. We have not experienced anything like this in our lifetimes. Vital Laptenok, general partner at Flyer One Ventures, shared his opinion on the current trends in the VC market, which can help startups navigate this uncharted territory.

VCs fought in 2021, now they back away

In 2021-2022, VCs invested a lot of money in overvalued companies due to intense competition and lack of due diligence.

• The situation has since changed: Despite having raised significant funds, VCs are now waiting for the economy to rebalance, largely holding off on investing. To achieve a more sustainable deal flow, investors are anticipating startups to lower their valuations.
• It’s already been happening. I’d say 50-70% of the startups that crossed the $1 billion mark in 2021 are no longer worth that amount. 
• The number of new unicorns in 2022 was the lowest in 4 years, and existing unicorns are also losing their status. The telling example is Klarna, once Europe’s most valuable private startup, which slashed its valuation from $46 billion to $6.7 billion.

Not all companies have run out of money and accepted the new reality yet. But in 2023, they will have to.

From “growth at all costs” to “measured growth”

Over the next 2-3 years, investors will play it safe by carefully auditing startups before investing. VCs will be cautious, preferring to back established, “default alive” startups with a proven track record, healthy unit economics, and a viable product or service.

To evaluate a company’s health, the startup and VC industry commonly use the Rule of 40, which requires a company’s growth rate and profitability margin to add up to at least 40%.

In a healthy economy, investors look at fast-growing startups. But in times of crisis, the growth rate of over 30% is rather a disadvantage. As a result, VCs are now shifting their focus to startups with moderate growth rates and positive unit economics.

The camel approach

Startups need to adopt a new approach to company building and money management. The days of WeWork-style excess are over. Instead, startups must operate in a “default alive” mode, using their resources sparingly.

“Think of a camel that can survive up to 15 days without water. A camel-startup would use money not to kill competition but to build a solid product and have healthy growth. It wouldn’t splurge on lavish offices and extravagant perks for employees.”

Here are a few things to focus on:

• having a clear strategy for achieving profitability,
• controlling expenses,
• maintaining a fair valuation,
• managing cash wisely,
• and not scaling just for the sake of scaling.

In the years ahead, investors will pay extra attention to a founder’s ability to rely on their own business for survival.

Vitamins vs. medicines

Businesses built on fundamental needs have much higher chances to survive tough times, as people and companies become more cost-conscious and begin to spend less on nice-to-have products. 

“Here’s a simple analogy: When someone is sick, they buy medicine and painkillers — not vitamins. Similarly, startups that offer solutions to urgent problems are like medicine and are more likely to succeed in the long run.”

Our investment team has recently evaluated a startup that simplifies access to medical services for relocated employees. It’s a great example of a “medicine” because when people relocate to other countries, they may face tons of troubles with insurance, doctor appointments, and medical treatment. It’s a much-needed product.

It’s time to build

It may seem weird, but a recession or crisis can be a good time to run a startup if founders are ready to face the headwinds.

In hard times, businesses can hire great talent and offer people products or services that solve acute problems. The examples of companies like WhatsApp, Uber, Airbnb, Pinterest, Slack, Venmo, and Instagram, which all grew during the 2008 recession, prove this.

Ukrainian founders are another great example of such resilience: They are building startups during the war, while the national and global economies are slumping. None of our Ukrainian portfolio startups has shut down since Russia started its all-out invasion in 2022.

“Founders who create businesses during crises are usually the most motivated, persistent, and capable entrepreneurs. They know their company may not generate high profits within the next 3-5 years. But fueled by their passion for the project, they are willing to work hard and face challenges.”

“If you’re Russian and you pitch your startup, it’s not a good idea to:
– hide being Russian by removing any Russian references from your LinkedIn / deck,
– pretend to be Ukrainian (wtf??)

Simply state where you’re from and what’s your stance on Putin / the war and move on!

I’m going to find out anyway, so why waste everyone’s time?”

Musielak wrote in LinkedIn blog post.

He didn’t specify the names of those Russian startups, but noted that pretending to have Ukrainian origins is already a trend among them:

“Happens all the time, actually. Both hiding (i can see this on every other Russian founder’s LinkedIn profile) and pretending (less often, but also multiple times).”

Commenting on the post, some users wrote that not all Russians are responsible for the war, and they may hide their roots to avoid harassment. But, according to VC, it is not a good idea.

“I feel for them, but unfortunately, it’s the hiding that will most likely get you unfundable, as I’d immediately suspect that you’re hiding for the wrong reasons. Be transparent and own it. There are amazing reasons to be proud of being Russian. Putin is just not one of them,”

Musielak emphasized.

Some also wrote that it is not fair to reject startups just for being Russian. Addressing those statements, Borys Musielak has shared some insights on how he decides whether to invest in a Russian startup after February 24, 2022, or not. AIN.Capital collected his comments into a column with the permission of the author.

“I’m not going to fund assholes. And if you support Putin and the war, or even if you’re claiming to be neutral, you’re definitely one.

I haven’t said that because they are Russian I automatically assume they support Putin and the war. What I’m saying is that if you’re Russian, you can’t remain neutral. You can’t say “oh, I haven’t supported Putin so I’m good”. No, you’re not. You need to be expressive in your support for Ukraine, and you need to be consistent in order for me to trust you that it’s not just a PR move on your side.

That’s why I advise all the Russians that approach me or other Western investors to be extremely deliberate in how they talk about themselves as Russians and state their believes beforehand.

I’m obviously not going to be judgmental if you’ve done everything you could to state that you are against the war and against Putin (ideally at some point in 2014, and not only in 2023 when your economy falls, and you want out) and I won’t have a problem finding you as a Russian citizen if I believe that you are truthful to what you say. But I’m going to do a lot more reputational due diligence and KYC before I do, for obvious reasons.

If you are based outside of Russia, if you were vocal about being anti-Putin at least from 2014 till now, if you have no connections to Russia outside of family and friends, and if you are genuinely good people (yeah that’s a lot of ifs!) and I can verify all that, of course, I would consider investing.”

AIN.Capital talked to FIRSTPICK, Inovo VC, and Presto Ventures about OpenAI products, potential risks and opportunities of its new technologies, and found out if the funds are ready to invest in startups that are developing in this direction. 

Marijus Andrijauskas, Partner at FIRSTPICK 

OpenAI is definitely a company to keep an eye on in the tech world. Their products, like GPT-3 and DALL-E 2, are pushing the boundaries of what’s possible with AI and have the potential to revolutionize a wide range of industries. We think they are doing some really exciting work, and we’re even more excited to see what they come up with next.

Thinking about the potential risks and opportunities of new technologies such as ChatGPT and DALL-E 2, sure it is a powerful tool that can be used for a wide range of applications, but like any technology, they also have the potential to be misused. For example, there are concerns about the use of these tools to create deepfake videos or to spread misinformation that is a dangerous tool in the wrong arms. However, we believe that the benefits of these technologies far outweigh the risks and with the proper safeguards in place, we can minimize the potential negative impact.

“We’re always on the lookout for startups that are pushing the boundaries of what’s possible with AI, and we do believe that the advancements being made by companies in the AI field have the potential to revolutionize a wide range of industries. Moreover, we do see some nice transitions with the startups we already invested in.”

Our portfolio companies are always looking for ways to stay ahead of the curve and stay competitive in their respective industries. Many of them are already using OpenAI products like GPT-3 and DALL-E 2 in a wide range of ways. For example, we have seen startups using these technologies for things like natural language processing in chatbot and virtual assistant development, content generation for marketing and sales, and even in the product development process.

We think it’s safe to say that ChatGPT and other AI technologies are going to change the future of work in a big way. I mean, let’s face it, some of us already use ChatGPT more often than Google! In all seriousness, these technologies have the potential to automate a lot of tasks and make our day more efficient. As for how fast the entire transition will happen, I think we’re already seeing the beginnings of this shift, but it will take some time for the full impact to be felt. But one thing is for sure, the future of work will be much more “AI-fied” than it is today.

Bohdan Mashtalir, Investment scout at Inovo VC

I think OpenAI is paramount for the wider adoption of AI by non-technical people. That would be the catalyst for the next wave of a digital renaissance. As with everything, OpenAI has its threats and risks in its usage. The stronger effects, the stronger are side effects. Despite all the opportunities, threats of misuse are also present. Anything from students cheating on their essays to equipping digital criminals with more efficient processes. 

“ChatGPT already has changed the way we think of certain types of work. Even though it got very popular, I expect it to follow the classic adoption curve. Players like Google will present their solutions and implement them into the tools we already use every day. At that point, almost everyone would be using ChatGPT like tools without realizing that. As of timeframe, I would give it 2 years to become truly mainstream.”

Investing in new technologies such as OpenAI and ChatGPT is the next hot thing in the world of VC to look for the next winning generative AI solutions (like Jasper & others). Much like others, Inovo VC is open to interesting opportunities within our thesis. In general, assessing those companies in the same way as any other, with no special treatment. 

Jan Romportl, Deep Tech Partner at Presto Ventures

OpenAI is one of the most important AI-focused entities in the world. We’ve been following them closely since their early legendary work in reinforcement learning (OpenAI Gym) back in 2016, followed by their Dota2-playing system OpenAI Five in 2018. They certainly earned our full attention in 2019, after the release of GPT-2. When they released GPT-3 in the spring of 2020, it was clear that they’d become the world’s number one in the new generation of Foundation Models.

The work of OpenAI has been one of the most important milestones in the development of modern AI.

Definitely, these systems pose quite serious threats – especially since uncontrolled and reality-detached online content can now be generated without any limitations. Given the current geopolitical situation and liberal democracies being endangered by cognitive warfare, this can be very dangerous.

Moreover, future versions of these Foundation Models are very likely to reshape the labor market and change social conditions of many people. We appreciate that these models are now included in the proposed EU AI Act as so-called ‘high-risk systems’, thus subject to more thorough EU regulations.

“Presto Ventures is ready to invest in startups that are developing in this direction, moreover we’ve just closed a deal with a startup in this space that is built directly on top of the original GPT-3 (i.e. already before the ChatGPT hype), working on a so-called “cognitive antivirus” – a software that helps protect human users’ minds while navigating the online space, such as reading the news or interacting on social media, in the metaverse etc. But together with that, we remain careful to avoid low-quality, quick and hyped startups – including those that started to emerge after ChatGPT.”

The generative models of AI technology and particularly ChatGPT will profoundly change many professions that are in the business of content generation – such as copywriters, graphic designers, musicians, or marketers. Eventually, it will make low-qualified or low-experienced humans in these fields professionally obsolete. Instead, these professions will become dominated by humans who are able to work in synergy with such AI tools. In other words, humans in these professions can benefit from AI, but they will need to adapt in clever ways. The same holds true for junior software developers, junior lawyer trainees, etc.

This will probably start happening as early as 1 to 3 years from now. The first ones to adapt are text-oriented professions, such as copywriters.

At the beginning of 2022, the financial media service Finimize conducted a survey among its community. Participants were asked to give predictions for this year. After the discussion, an arbitrary list of prophecies came out. Some of them looked a bit eccentric. Now we can see if they came true. 

Forecast №1: inflation will reach double digits by the end of 2022.

Of course, there was talk of rising prices at the beginning of the year. However, in the summer, the implementation of this forecast seemed unlikely to many. October inflation rates reached a historic high of 10.6% in Europe and a 40-year high of 11% in the UK. 

Forecast №2: tech companies will do great, and the meta world will take off.

It still did not come true. Let’s look at Meta. Mark Zuckerberg’s doubling of spending on the metasphere led to a sharp drop in the company’s shares in October. AR/VR technologies are still on the rise. However, we will have to wait many years, if not decades, before their introduction into everyday life.

As for the rest of the technology giants, their main problem is a significant slowdown in revenue growth. This may be partly due to short-term economic weakness, but investors also suspect that the aging of the companies. We will probably have to wait until at least the middle of next year before we know if this is actually the case. 

On the other hand, the slow growth of tech giants does not mean that technology is standing still. In recent days, probably everyone has tried ChatGPT to see the progress of AI technologies with their own eyes. Other technologies continue to develop, such as ClimateTech or bioinformatics. Every day, more and more progressive startups appear. In order to reduce the risk associated with investing in startups and increase the chances of success, you can join ICLUB Global / ICLUB Online, where you can invest together with TA Ventures, exclusively in companies selected by us.

Forecast №3: rising energy prices will hit the volume of cryptocurrency mining, which will increase the value of available digital coins. 

Unfortunately, no one could have predicted the collapse of Luna or FTX. Energy prices did rise. However, the cryptocurrency rate was falling. Perhaps there is a positive side to what happened. Regulators are likely to be forced to act more actively in this market. It seems that this is exactly what is needed now.

Forecast #4: global warming will lead to a powerful monsoon in South Asia.

Regional markets will collapse, long-term problems with supply chains will begin. India will start negotiations with Russia to buy land in Siberia. Extreme weather events are unfortunately becoming more frequent. It is not known whether this has already led to global supply chain problems. But it certainly hasn’t helped them.

The part that global warming will hurt regional stock indices has not yet been confirmed. The same Indian stock index has been a bright spot. Especially against the background of the dim Chinese one.

About TA Ventures

TA Ventures is an early-stage venture fund, backing companies in Europe and North America at Seed and Series A, alongside high-profile co-investors, across a wide range of tech sectors. Its typical ticket range is between $250,000 and $1 million. It also provides follow-on investments.

In December 2022, TA Ventures Ukrainian and Hypra, together with iClub participated in $5 million round of investment in Utorg, an Estonian crypto startup.

It is difficult to find reasons for optimism in the markets now. On the European ones — even more so. The continent is struggling with high inflation, a looming recession, and soaring energy prices. Despite this, we at TA Ventures continue to invest in Europe, which makes up about 50% of our portfolio. Among the investments, for example, Goin from Spain (savings app), Casc from Germany (home medical tests) and Party.Space from Ukraine (virtual events platform).

Here are three reasons why it is still worth investing in Europe:

1. Europe remains home to many quality companies.

Investing in the continent does not necessarily mean betting on its economy. More than half of the revenues that go to its companies come from outside the continent. Here are just a few examples of successful European companies from our portfolio that do business outside Europe.

• DeepL, a German neural machine translation service, supports 24 different languages and, by the way, is ahead of Google Translate in its accuracy.
• SumUp, a British fintech unicorn, now operates in more than thirty markets worldwide.
• Sheep Inc, a British clothing brand with a negative carbon footprint, sends its products worldwide.

Europe is home to international luxury clothing, spirits and car brands such as LVMH, Hermès, Kering, Richemont, Pernod Ricard, Ferrari and Porsche. The recent market downturn could be an excellent opportunity to buy their shares at a bargain price.

Of course, the luxury sector is not immune to the recession. However, its dependence on ultra-high-income consumers puts it in an advantageous position. These brands can raise prices without significantly affecting demand from their wealthy customer base. 

2. The second reason is that local companies have longer-term incentives to cut costs.

In the same industries as US companies, they have historically traded at lower price/earnings (P/E) ratios. The reason is that, all things being equal, European companies tend to have a more inflated cost structure than their American counterparts. All because of higher tax rates, labor costs and regulatory burdens. 

Rising energy prices will undoubtedly worsen the situation. But it is also a much-needed incentive for companies to focus on cutting costs. It will help to be competitive on a global level. 

3. The third reason is that Europe is also one of the leaders in the field of “green” technologies.

High gas prices and the urgent need for energy security will only accelerate the region’s transition to renewable sources.

At the same time, Europe offers better investment opportunities in the field of “green” technologies than any other market. For example, it is home to leading wind turbine manufacturers Vestas, Siemens Gamesa, and Nordex. And also leaders in producing “green” energy — Iberdrola, EDP, Enel, and Orsted. And the measures of the European Green Deal will continue to stimulate the growth of companies in this area for many years.

About TA Ventures

TA Ventures is an early-stage venture fund, backing companies in Europe and North America at Seed and Series A, alongside high-profile co-investors, across a wide range of tech sectors. Its typical ticket range is between $250,000 and $1 million. It also provides follow-on investments.

Previously in 2022, TA Ventures participated in a $17 million round closed by a New York-based biotech startup Gameto, together with private investor club ICLUB in a $125 million round of orthodontic Barcelona-based startup Impress, and invested in German fintech startup Forget.Finance.

Borys Musielak, Founding Partner at one of the most active Polish VC funds SMOK Ventures, supported the discussion and expressed his opinion about should VCs be still investing in Russian founders now. AIN.Capital publishes his LinkedIn post.

I’ve been thinking a lot about what to do as a VC in the current situation, especially that I’ve been reached out by a lot of Russian startups in the recent months. Their founders are desperately trying to raise by pretending to be Armenian, Serbian, Estonian or US startups now, but it’s usually pretty easy to track. A lot of those deals are potentially great deals, with very smart founders, so it’s not easy for me to say no, but I’m in no business of bailing them out.

We’re living in a black & white world. Especially in the times of war, there is no room for nuance. You gotta take a side.

So, if you are Russian, but don’t support Putin, you need to make it super obvious by either leaving the country, as a lot of smart people did in 2014 when Russia invaded Ukraine, or, if you’re living elsewhere, by loudly calling out the lies of Putin and supporting Ukraine / donating to its army and making it public.

I’m sure there are probably a lot of good anti-Putin Russians who still live in the country, scared to say anything. I feel for you. But I cannot take a chance as a VC to make business with you at the moment, I’m afraid.

Borys Musielak is a Founding Partner at SMOK Ventures, a Polish-American venture capital firm. AIN.Capital ranked it as the second most active VC fund in Poland. Having PLN 46.3 million under its management, the fund has already made 8 investments during the period from January 2022 to July 2022.

Check out the full ranking of top local backers here.