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VC Profile: Vlad Panait, Managing Partner and Founder Sparking Capital

"Technology-wise, the region has strong competencies in RPA, cyber security, gaming, and crypto – just to mention a few. The technical skills in the CEE abound, and at lower prices than in Western European countries."

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Hello Vlad, it’s been a while since our first talk. Thank you again for having a chat with me and sharing your vision with our community.

Glad to be here again and thank you for the invitation.

Looking ahead in early-stage investing, what are you most excited about? What makes you jump out of bed these days in terms of CEE startups and technology?

There are more and more teams willing to find startups with products addressing many big problems in the field of cyber security, green-tech economy, advanced e-commerce AI, or others. The ecosystem is effervescent these days, and this is the first step. The second step will be when all players: investors, incubators and accelerators, advisers, former successful founders, companies, and other ecosystem players will start to contribute by investing money, time, and know-how, to help the ecosystem grow and spin “the flywheel” which will generate exponential effects in return, later on.

CEE countries have the lowest weight of VC funding relative to the weight of GDP and population in Europe (5% weight of funding vs 10% weight of GDP vs 27% weight of population) which means there is a significant potential in the next years to close the gap, as the ecosystem is getting more mature.

Technology-wise, the region has strong competencies in RPA, cyber security, gaming, and crypto – just to mention a few. There are almost 280,000 software developers in Poland, 190,000 developers in Ukraine, and 120,000 in Romania, all three countries ranking in the top 10/15 in Europe. The technical skills in the CEE abound, and at lower prices than in Western European countries.

Do you have a model or a vision of the world that you use when assessing companies?

We have a model which evaluates and assigns weights to different criteria: market opportunity, the strength of the founding team, the transient advantages that a startup is planning to build, value creation & capturing, our fit with the founding team, our ability to add (or not) value, etc.

Could you be more specific? For example: what led you toward KFactory? What led you toward Ecotree? You’re not taking a dartboard approach. What’s the frame you use to evaluate companies?

In the case of KFactory, which is a B2B offering SaaS for the smart manufacturing automation vertical, we have met a very experienced founding team, with strong industry insights. Smart manufacturing automation is in the early adoption stages in SMEs, and even for many multinationals from significant industries. RPA technology players didn’t focus much on this vertical, therefore there is a strong potential for efficiency gains for the manufacturers using SaaS platforms.

In the case of EcoTree, we considered that waste management has a huge potential, taking into account the 11% EU average on recycling of waste and the European Commission ''Fit for 55'' legislative initiative to cut carbon emissions by 55% by 2030.

Pain is knowledge rushing in to fill a gap. Could you share a critical lesson learned about startup investing and how it has changed your approach?

Listening to the founders with empathy and open heart; listening more to their different ways to pursue their goals, and abstaining from judgment.

I had a somewhat stronger argument with one of our founders and I was wrong, even if my intention was actually good. This damaged the relationship in short term but I managed to repair it by acknowledging openly that I was wrong and that I will change, and now we’re having an even stronger relationship.

Sparking Capital invested in Hyperhuman twice. What convinced you to bet on their vision?

Hyperhuman has an excellent founding team, with both entrepreneurial and multinational experience (e.g. Fitbit) with very strong insights in an industry with very strong tailwinds. The digital fitness industry is forecast to grow from 10.7 billion in 2021 to 59 billion in 2027, and content creation and distribution will be king. The consumer behavior switch (toward omnichannel video fitness con-tent) is on a growing trend, accelerated since Covid 19.

What potential growth path do you see for Hyperhuman?

The development of the B2B pillar has strong potential to grow, as many fitness and physiotherapy chains, fitness hardware producers, etc are looking to blend in their strategic initiatives new ways for omnichannel digital content creation and distribution.

The exit could be towards different ecosystem players which will get synergies with Hyperhu-man, both technologically and commercially, via the customer and creators bases, and the produced content.

How do you plan to contribute to the growth and success of the company?

We have organized various intros to a few major hardware and other ecosystem players, helping them to shape their G2M strategy, facilitating and connecting with potential investors for future funding rounds, advisers, key personnel, and so on. As a direct example, a few weeks ago we have organized for some of our portfolio companies, a webinar with Marius Istrate – former Chief People Officer at UiPath – on the subject of “Scaling Leadership in fast-growing startup”.

What do you think of the market prospects of the Fitness & Health industry in general?

The F&H industry will continue to grow in tandem with the health & wellness macro trend that started more than 10 years ago, as heart disease, type 2 diabetes, obesity, etc – unfortunately – are still at high levels. Covid 19 will augment this trend because the need for a healthier immune system can be satisfied via physical exercises, a healthy lifestyle, and nutrition.

If you could give entrepreneurs one piece of advice, what would it be?

Pursue your passion, be humble, and build and maintain a growth mindset. Act fast without being afraid to fail.

Thank you for sharing your views with us.

My pleasure. Thank you for the invitation.

Learn more about Vlad Panait | Sparking Capital | Hyperhuman investment opportunity

By Bianca Iulia Simion

PublishedMarch 02, 2022


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