To kick things off, can you tell us about Rockaway Capital and your role there?
Dušan: Rockaway Capital is a Czech investment group with an international presence that today operates in 17 countries and was founded in 2013 by Jakub Havrlant. His aim was to focus on the digital economy and digitize traditional businesses, which we continue to do to this day, even though our scope is now significantly broader. I came to Rockaway in its first year and from the beginning I focused on our venture capital division and investing in start-ups such as Storyous, Gjirafa, BudgetBakers or Manifesto. I'm also actively involved in our e-commerce and e-grocery projects.
You have been a part of Rockaway since 2014. What is it that you enjoy about working for a VC fund?
Dušan: There are many reasons, but the main thing for me is to have an opportunity to influence the future. We invest into promising companies with big visions and ambitions. They strive to create new customer experiences and improve our life. That makes sense to me and fulfills me.
Less than a year ago, you launched your own blockchain fund at Rockaway, which is set to become the largest in Europe. Rockaway's ambition is to invest in promising blockchain startups and also in other venture capital funds that deal with this technology in the next four years. Can you tell us a bit more about it?
Dušan: We started investing in projects based on blockchain technology back in 2019, but at first it was difficult because back then not many investors understood the world of crypto assets. When we started the Rockaway Blockchain Fund last June, it was even more challenging because financial markets around the world were struggling because of the pandemic, and that's generally not a good time to look for investors. But in the end, it turned out that we bet on the right card at the right time, because blockchain and decentralized finance (DeFi) are primarily designed to digitize financial services, and since Covid-19 accelerated digitization in general, blockchain began to skyrocket as well. Everyone can see this now, and it is especially evident in the performance of the fund. At the same time, we believe that the world of blockchain and DeFi has an even brighter future, because they have the potential to become the backbone of the financial system of the future. But I'm sure fund manager Viktor Fischer would be able to tell you more about it; I'm a member of the investment committee, so I'm part of the team that makes decisions, but otherwise I don't deal with blockchain on a daily basis.
You are investing in some of the most successful startups in their early-stages. When is it the best time for startup founders to look for VC money?
Dušan: That's a difficult question. First of all, I have to say that we aren't only investing in early-stage start-ups – in some sectors we're looking for such companies, but in e-commerce, for example, we prefer start-ups that already found their product market fit and actively pursuing geographical expansion. But back to your question. In my opinion, the founder of a startup should be bootstrapping while he can, then he should get an angel investor, who will ideally be an industry expert, to help the startup move forward, and the founder should look for a VC fund only when he knows what he is doing and wants to scale his business up. It's wrong to expect a VC investor to invest in a “good” idea. That's not most likely going to work for either party.
Why do you think startups should raise money from Venture Capital funds? What are the pros and cons?
Dušan: Because the bank probably won't give them money at this stage, and if they can't finance the start-up themselves, raising funds from VC investors is the logical approach. The advantage is that if a startup chooses well, the VC investor can help it, steer it in the right direction, professionalize it, find the right talent, and also give it credibility. The disadvantage is that it always has to give him something in exchange, hence it has to give up a certain share in the company.
What are the 3 most common reasons based on which you decide not to invest?
Dušan: Number one is always being disappointed by the team behind the startup. For example, by not behaving in a sufficiently professional and consistent manner. The second reason is that we find that ultimately the startup doesn't have the market potential that we would like, so the investment isn't as attractive to us. Lastly, some startups have very complicated cap tables. In other words, they gave their first investors too great a share, and therefore there isn’t simply enough share to be distributed to the future investors. Founders could, after dilution, lose their controlling stake, motivation or practically become just “employees”.
What are the 3 main values you are looking for in a Founder?
Dušan: Big vision, consistency and self-reflection, so that he knows where his strengths and weaknesses are and what he needs to work on.
Awesome! My last question is what was the boldest thing a founder did on an investor meeting, when looking to raise?
Dušan: I can't think of any such moment, and maybe that's the problem. In the Czech Republic we tend to encounter the opposite – founders aren't bold, they don't pursue their goal aggressively. That's something I really find lacking here. The Czechs aren't used to selling themselves, but rather a product and a market. And that's a mistake, because the investment is usually primarily into the founder, and only secondarily into the product and market potential. In short, when the founder doesn't thrill you, you obviously won't want to invest in his project.