Michał M. Kozłowski: Alex, you’ve been very successful in getting into Seedcamp. Many people think that it’s very difficult to get into a VC like Seedcamp and don’t think it’s worth the hassle. How did it all start?
Alex Ilyash: Right, Seedcamp is a UK-based VC that has invested in, for example, Revolut, UI path, and many other unicorns. They have a pretty good understanding of what can grow huge. So, that reputation alone opened many doors for us, but it’s not the only benefit.
Michał M. Kozłowski: How did you get to them while being a relatively small startup?
Alex Ilyash: It was simply by being bold and not really realizing what I was doing at the time (laugh). After my pre-seed, my investors advised me that my next round needs to be outside the Czech Republic – like a bird that has to leave its nest and start to fly.
So, I started researching the best VCs out there, and Seedcamp was at the top of my list. I saw that there would be a conference in London where the partner of Seedcamp would be presenting. I went to the conference, and I expected there would be space for networking. Indeed, well-known VC partners were there, but they entered the room from backstage, had a one-hour presentation, and then went backstage. They didn’t come out to the public, so there was no way to catch up with them.
Michał M. Kozłowski: Yeah, you would think that VCs would like to meet startups.
Alex Ilyash: Yes, but I was determined not to go home empty-handed. I thought, “Oh my God, I bought a ticket to London just to meet with them, so I can’t lose this opportunity.” When I noticed Carlos leaving the conference hall, I followed him out the back door, and as he was catching a taxi, I ran up to him, knowing it was time to pitch my startup. He said I had three minutes before his cab arrived. So, I started with the numbers, not the idea. He said, “Okay, it sounds interesting. Let’s meet with our team in a week.” We then met at their office, and within a month, we signed a term sheet. It was very fast and straightforward.
Michał M. Kozłowski: It sounds like there was a lot of perseverance on your part because people might say, “Oh, there’s no chance. Let’s just go home and give up.” And yet, you didn’t.
Alex Ilyash: Yes, for sure. It was just the moment to act. I’m an introvert; for me, networking and communicating with people means pushing myself out of my comfort zone. But we were running out of capital and space to stay in the comfort zone.
Michał M. Kozłowski: “Hunger” is a pretty strong motivator; it’ll get you out of your introverted shell!
Alex Ilyash: That’s how we met Seedcamp, and they were really fast, easygoing, and helpful. I would definitely recommend Seedcamp because a lot of VCs claim that they can add value, but few actually do. Seedcamp truly delivers on that promise.
I followed him out the back door, and as he was catching a taxi, I ran up to him, knowing it was time to pitch my startup.
Michał M. Kozłowski: What do you think is most valuable about working with Seedcamp?
Alex Illyash: All VCs provide credits for different platforms like Amazon and Google. Some VCs can give you a few, but Seedcamp offers around 100 different software tools for free. Another thing is their network of founders, which is really great, and you can get in touch with many of them.
Michał M. Kozłowski: Were you actually able to leverage this network?
Alex Illyash: No, I actually didn’t use the network much. Founders are incredibly busy, so it’s hard to share experiences. The communication between founders is like being in a group of people with the same problems, where you stand up and admit to having a problem, and others do the same. We simply support each other by acknowledging that we all have the same problems and advise each other on how to solve them.
Michał M. Kozłowski: Yes, I think that once you get to a certain level, it’s hard to remain anonymous in this circle of people who want your attention and advice.
Alex Illyash: The great thing about the founders-to-founders community is that you always receive help from someone because, once you reach a certain level, you feel the need to give something back to newcomers. So, when you’re starting, you ask for help, and nine out of ten people might not help you, but one person will. Because you remember how hard it was for you and how difficult it was to get there, so you try to help other founders in their path.
The great thing about founders is that you always receive help from someone because, (…) you feel the need to give back to newcomers.
Michał M. Kozłowski: Alex, let’s get back to your taxi pitch. When you were there, you started with numbers, not with vision. Was it premeditated on your part, or was it just in the heat of the moment that you felt this would be a good pitch?
Alex Illyash: It was just a feeling. Basically, investors don’t hand out free donations. They’re looking to monetize their investment, so the main thing they’re looking for is proof that your idea works. Numbers don’t lie. If you have an amazing idea, but it’s not showing the numbers when it gets to the market, it means it doesn’t work. In my company, we were doing some not-so-obvious stuff, so just to prove to him that it works, I told him the numbers.
We had pretty nice numbers, so it was an advantage. By the way, when someone asks me for advice on a pitch deck, and they’ve been in the market for five years, but I can’t find the numbers in the pitch deck, like how much money they make, customer acquisition cost, LTV, real numbers, not just how many active users they have, then it’s more straightforward for me. So, I just told him the numbers. The numbers were nice. Also, the idea wasn’t very obvious; it wasn’t something they’d heard a thousand times, and this got enough interest to set up the meeting. It’s like an advertisement on TV; you just need to get attention in the first 10 or 20 seconds.
Michał M. Kozłowski: You’re very business-oriented. You treat your startup as a business first and foremost. You’re laughing, but it’s not such a common approach. Many people focus on what kind of science they have or what kind of ambition they have, but you have a business-oriented mindset.
Alex Illyash: Yes, 1000%. Before, it was really easy to fundraise on just an idea, but now it’s time to make money. Even if you have a brilliant idea but can’t monetize it, there’s no capital for you. To be transparent and clear, for all investors, it’s not about changing the future; it’s really about making money.; 90% of investors are simply expecting that they will buy a share in your company for a valuation of 5 or 10 million dollars and exit for one billion dollars.
Valuations are based on revenue, not on active customers or users, etc. It’s a great thing. I was too tired of the times when companies were raising 100 million dollars just for an idea, and it was very hard to compete with them because they were spending a lot of money while their business units weren’t having healthy economics. It doesn’t make sense. Why should we do this if we’re not making enough money to cover costs and then investing a lot? I’m not a big fan of that.
But right now, it’s a beautiful time, an amazing time. Companies that were doing this are increasing their prices, laying off people, and finally, we are competitive. I see companies with ten times higher valuations than we have, that raised more capital than we did, and now, based on the data, they have the same revenue as we do.
Investors don’t hand out free donations. They’re looking to monetize their investment, so the main thing they’re looking for is proof that your idea works.
Michał M. Kozłowski: You said there was a month between your first meeting with Seedcamp and signing the term sheet. Can you tell me what they asked of you during this time, or what sort of negotiations you had? What did they want to know more about you than what you mentioned in those 3 minutes of the taxi pitch? How did they do their due diligence on you?
Alex Iyash: It was not so corporate at all. It was more about meeting with their partners, making a presentation, and answering their questions. You prepare the business plan, you send it to them, and they either answer yes or no.
Because no founder knows exactly how the business will look in 10 years. It’s the stupidest idea to request such strong commitments, and the best thing about a founder is their ability to adapt to any situation that happens in the market and adjust the business. It’s really not about an end of the journey a strict plan that cannot be changed; it’s about what is going on while you building it and changingaccording to it. That’s why bsy idea is create an MVP and show that it’s working because an MVP is proof of the idea and than imporve it.
Michał M. Kozłowski: Do you think their decision was made more based on who you are as a founder, or more on the merit or numbers of your business model, and whether they could predict your growth path?
Alex Illyas: It’s always a combination. It’s more about understanding if this guy knows what he is doing, if he is the right person to lead the company.
Investments are like a marriage; you need to like the partner that you are working with. If you don’t feel that it’s going to work out with this person, you probably will not go for a second date and ask for her hand.
Michał M. Kozłowski: That’s actually a good comparison because you don’t know what you will be doing. Maybe you’ll pivot, but you are locked with whom you will be doing it with.
No founder knows how the business will look in 10 years. You always start with an idea and adapt.
Michał M. Kozłowski: Tell me, is this path, going through Seedcamp in your case, a path that you would recommend? This is your second startup and a third company. Would you like to take it again with your next startup?
Alex Illyash: Honestly, there is no same path. It would be so easy if it were, but each idea is completely new, with completely new challenges in front of you, so it’s not possible to go on the same path twice. Doing a startup is extremely hard, but also really fun sometimes. During the week, you can feel euphoria and depression after another few day; you feel like you’re the best and know all the answers, and then on Friday, you feel like it doesn’t work the way you were expecting.
Michał M. Kozłowski: Yesterday I had a conversation with a founder-friend, and I asked him a simple “how it’s going?”, and he said, “Oh, you know, just living the startup life – doom and gloom between moments of tremendous triumph.” So, you get nothing in between.
Alex Illyash: Yes, and I’ve been doing it for six years, and I’ve learned that whatever is going on, I should enjoy the path as well. If we, for example, don’t have salaries to pay on Monday and today is Friday, We still have 2 days to find a solution (laugh) .
Michał M. Kozłowski: Nothing that hasn’t happened before.
Alex Illyash: You have two legs, two hands, and other things can be solved.
Michał M. Kozłowski: A cell phone, and you’re done. We sent people to the Moon with less computing power than you have in your phone, so there are no excuses here. Thanks for that, actually. It’s fun talking, but let’s move on to the second topic!
