Investor Profile: Interview with Cristian Dascălu

As an entrepreneur, Cristian co-founded a series of significant businesses that aim to develop tech start-ups in the digital innovation field, such as GapMinder VC & Techcelerator, ClujHUB, Digital Transformers, TEDxCluj, NASA Space Apps Challenge Romania and others. In 2012, he launched ClujHUB, the second co-working space in Romania, a pivotal contributor to the regional start-up community.


SeedBlink: Cristian, what do you think is the difference between a start-up and a business?

Cristian: The start-up, as defined by Steve Blank, is “an organization formed to search for a repeatable and scalable business model”. This temporary organization, once it proves the value-adding model and records a 10x growth, it transforms into a mature business.

Paul Graham further strengthens the definition of a start-up and equates the start-up to the growth itself, saying broadly that, a start-up is an organization that grows exponentially. Of course, this exponential growth can be efficiently carried out by the founders that introduced the products and/or the distribution of products, via digital/internet channels.

SeedBlink: What do you think is the role of entrepreneurship in the development of a country?

Cristian: Entrepreneurship is one of the practical responses to a country's socio-economic challenges, due to the added value that the entrepreneur and businesses can create (through the taxation of the revenue generated by the project, the employees for whom the taxes are paid, duties and so on).

If we do not have the business sector moving, to create sufficiently large and scalable added value, the governments will not have budgetary resources. The healthier your business sector is, the stronger and richer the country so that it can take care of its citizens and has the resources to reinvest.

SeedBlink: The number of impactful investments is increasing. How do you see the current state of the start-up ecosystem in Romania?

Cristian: The ecosystem of start-ups in Romania has grown constantly and will continue to grow. The challenge is how much more and how well it can further grow.

Quantitative growth must not be always considered paramount, because we must also consider the good entrepreneurship and the performance of the start-ups.

It is not enough to have national programs that provide financial resources but also to make sure they are well allocated. A grant should not only generate taxes on the granted amount but generate also impact, revenue and added value.

For example, in Silicon Valley, the VCs have an interesting discussion with the start-ups that present 30-40% increase, from one month to the next. It is crucial to have enough start-ups so that some of them will grow by at least 30% monthly. And technology or digital start-ups present this opportunity.

We must make sure that we are comfortable with this mindset and that we understand that this is the healthy course of things. Fortunately, there are few Romanian companies that have already demonstrated this.

SeedBlink: What role do you think SeedBlink plays in this ecosystem?

Cristian: SeedBlink is a player who tries to aggregate the resources from the micro investors, who have surplus resources and are looking for an investment of their money, not in bank accounts or real estate investments, but in a more agile, more active & modern area, and to have an impact in the innovation area.

We are talking about technological and digital opportunities, vetted by a third party – be it an investment fund, a business angel, or an accelerator – that can back these companies as having proved their potential and being ready for the next business level.

SeedBlink is in a different and new direction than the other crowdfunding platforms we know. It was tried before in Romania, to place crowdfunding in the area of social entrepreneurs, using donations or rewards. But now, we are talking about equity crowdfunding, through micro-participation in companies. This is where the process optimization is needed, which only such a platform can provide.

SeedBlink: What is the importance of the social impact of start-ups? Do you see it as a significant criterion in deciding to invest in a start-up?

Cristian: There are start-ups with a focus on sustainability, which have a significant social impact, attribute prioritized before profitability by specialized investors.

In Central and Eastern Europe, we do not have so many "impact investors", but most investors do assess whether the product might do a disservice to society. Once this has been invalidated, the start-up is then evaluated very pragmatically based on the market potential and the profitability it promises.

The word entrepreneur comes from French: "entrepreneur" which refers to "person who undertakes something". This enterprise, in the first phase, can seem detrimental because it destroys what was previously considered functional and well accepted. One could say that e-commerce made redundant the people working in walk-in stores. To bring significant added value, one needs to change things that happen in the traditional way.

Most start-ups try to innovate the process side; not all of them are doing research & development of new products. So, philosophically speaking, you can say that the enterprise, right from the start, has an anti-social role by destroying the status quo. But we have been often shown that maintaining the status quo is not the most desirable thing.

SeedBlink: What should start-ups in Romania do, to be more attractive to the investors from abroad? How can a start-up in Romania succeed internationally?

Cristian: A good idea will always find investors. Investors who were previously searched for abroad, exist now in Romania too, especially for the initial stages – as said: accelerators, business angels, equity crowdfunding, seed-venture funds (like GapMinder VC). The start-ups that have grown sufficiently and are validated by local investors (pre-seed and/or seed), will present traction for the customer/market. They will need then international investors for series A financing: 5-15 million euros to continue their growth and expansion on the international markets.

The global markets for both investors and start-ups are quite competitive. Global investors are highly sought for, hence the start-ups from emerging economies such as Romania’s must come up with competitive offers. There were many situations when founders believed that, if they do not find money in Romania, they will get it very quickly from international investors. I think it is the other way round: you need local validation from those around you, from whom you can also receive permanent feedback.

When you address an international investor, you are asked from where have you attracted other investments. If you fail in your local ecosystem, where you have constraints but also many advantages (e.g. "playing home"), it is challenging to convince someone across the borders.

This is also a test preferred by the investors for the start-ups coming to them; together with the market traction and financial results, it shows that the product is needed and that it has growth potential. Without market traction, it is tough to talk to anyone, especially internationally.

SeedBlink: But don't you think there is a local specific, in the sense that some verticals are not supported locally because the niche in which they operate is not very well understood here?

Cristian: This sophistication of the local investors is a challenge, but it is handled with pragmatism. The major international trends and opportunities, nowadays are quite well covered here, and most start-ups are understood, especially if they manage to communicate well. Of course, there are many subtle things that are covered better by specialised investors, in certain niche fields, geographies or maturity stages. In GapMinder VC, we have become very careful with these issues, and we have focused on developing a set of international partnerships with such investors, specialized in particular industries. We are continually consulting with this community of partners, with whom we even get to co-invest.

SeedBlink: Speaking about interacting with investors, sometimes, entrepreneurs seem to speak a different language than the investors. What is your advice - how can they overcome this problem? What does the relationship with an investor mean?

Cristian: The blockage appears when the start-ups do not understand that the investor is trying to assess the risks. I think the language barriers you’re referring depends on how each part understands their goals – the start-up seeks liquidity for product development, business advice and networking while the investors understand this, but also try to analyse the risks. The sense of security is given by a competent team that covers both business and tech roles, along with a clear presentation of the market traction and the validations.

SeedBlink: What levers do you think are welcome to promote the access of the start-ups to the investor and business angels community?

Cristian: First of all, start-ups must get informed and know the investor market, their types and specificity.

At certain stages in the development of the start-up, you will turn to an angel investor or an accelerator or an investment fund. As you grow, you will even make custom mixes to complete the rounds or address the "smart money".

SeedBlink: What is the role of the Techcelerator when it comes to local investment?

Cristian: Techcelerator has evolved since 2014 when, in Bucharest and Cluj, some local programs have appeared in the market, and subsequently in 2017, they formed a joint team under the name of Techcelerator, GapMinder appeared, and a partnership with European Investment Fund was signed. By then we have become an accelerator that could provide financing and support for market validation and internationalisation.

In the acceleration phase, it is vital to have access to mentors, networking, and international guidance, but you need especially investment, via the program itself, or its partners. Of course, start-ups need to demonstrate that they are sufficiently prepared to access the money and that they know how to allocate it effectively to produce growth.

The accelerator's role has been – and will always be – to be very close to the entrepreneurs, understand their immediate needs and identify quick solutions in their local or international partner ecosystem. We also build communities of alumni founders around the accelerated companies, who continuously exchange feedback, recommend potential clients, mentors & investors, and support each other.

In the programs we provide this autumn, in addition to the available investment budget, the acceleration program and the crowdfunding platform (SeedBlink), we are pleased to have angel investors, corporate international players, massive international players such as Google, Google for Start-ups, Stripe, HubSpot, the European Fund for Southeast Europe - Development Facility, RoFintech, Romania's Digitalization Agency, EIT Digital, and many more. It is a set-up where you need to have specialised partners who support you in tandem with the program.

We are continually operationalising and aggregating the activities around the start-ups, taking a massive catalyst role and bringing new players into the national ecosystem.

SeedBlink: You are a key member of the Gapminder VC investment fund. How do you decide where to invest?

Cristian: We look carefully at the team, the capabilities they have and the traction (especially important in the seed phase). We check they have a viable product and that they have a market large enough, in which to grow. We look at the internationalisation side and the global approach they have, and how much they could scale. We look at the industries and the trends they follow and whether they are in the growing ones, and have potential. We also look at the customer typology, how B2B-fit they are, but also what distribution channels they use and how easy these are to manage and to scale so that we can help them directly or through the network of partners of the fund.

SeedBlink: What was the most courageous project you have invested in?

Cristian: We are investing only in courageous projects, with excellent scaling potential, bold but achievable. If they do not have a daring plan, we do not come to analyse how achievable they are.

SeedBlink: How do you think the ecosystem of start-ups in Romania will look 10 years from now?

Cristian: Based on the results we’ve seen in GapMinder and Techcelerator over the last three years, I am sure that the local start-up market will be much more developed; I hope that in 10 years it will reach multiplication by x10 square! It is very much up to us, as a national community, how well we will continue to work together.

On the investment side, it seemed sometimes strange that we did not want to take the “whole piece of the pie”, as the Americans would say. Together with the entire team of partners, from the very first beginning, we have advocated for co-investments and also promoted forming investor communities around the start-ups. Due to this, there is a constant growth of the collaborative spirit across the investors' community, business angels & mentors, and as crowdfunding activates the micro-investment communities, this will result in the ecosystem developing exponentially.

By Bianca Iulia Simion

PublishedMarch 26, 2021

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