In the dynamic world of startups, only some individuals possess the knowledge, experience, and passion to make a lasting impact.

With his diverse skill set, Paweł Zylm stands out as a seasoned investor in Poland. His dedication, experience, and passion for fostering growth and innovation make him a sought-after mentor and an invaluable asset to the startup community.

In this interview, we’ll dive into:

• Successful investments beyond large-scale exits.
• How to evaluate startups and founding teams
• People vs. Product — what is more important?
• What needs to be added to the Polish startup ecosystem?

Who is Paweł Zylm?

Paweł is a well-known community member of the local ecosystem in Poland, especially for his expertise as a business angel, entrepreneur, and investor. With a passion for startups in their early stages of development, Paweł is dedicated to fostering startups’ growth and supporting their journey to success. His extensive experience and insights make him a valuable asset in the startup ecosystem.

In addition to his expertise in the startup funding sector, Paweł is recognized as an expert and active participant in the insurance market. His in-depth understanding of this specialized industry allows him to provide valuable insights and guidance to startups operating in the insurance space.

What Inspired Paweł to Become An Angel Investor?

Paweł Zylm's journey as an angel investor began with an invitation that sparked his curiosity. A friend invited Paweł to a COBIN business angel club's investment session meeting in 2015.

“After twenty years of activity in the insurance sector and ten years as CEO of BRE Insurance, I was curious to attend this investor's event and discover new opportunities.

The first session led me to attend a series of other events and eventually to decide to invest in my first company.”

With limited knowledge of what a business angel entailed, Paweł embarked on a Google search to uncover the essence of this role. Paweł’s interest was piqued, particularly given his background in finance and insurance.

“I was always interested in the venture capital market, even if I wasn’t actively thinking about it.

I bought my first shares when I was 18 when the capital market began to form in Poland. Additionally, I have a high appetite for risks.”

Successful Investments Are Not About Exits

Now, eight years into his angel investing career, Paweł has accumulated a diverse portfolio of investments. While initially expecting quick exits within three to five years, he acknowledges that successful startups often require more time to mature and achieve substantial returns.

Paweł remains patient and optimistic, eagerly awaiting the opportune moments for these investments to yield the first exits while embracing the unpredictable nature of the startup world.

“After almost eight years of being dedicated full-time to startup funding and mentoring, it’s nearly time to chase my first exit events.

It may take three to four years for the first exits to come. White things might get delayed a bit due to the economic uncertainty from the past years, I realized it’s also about having a long-term vision.

__Investing in startups will not bring you 10x returns in a short time. It’s about being in a long-term game and helping these companies.”

What Success Looks Like From Paweł’s Portfolio

1. Noctiluca — Exit on the local stock exchange, 10x ROI for my investment

Noctiluca is a designer and producer of OLED emitters – a chemical compound that emits light upon application of electricity. This component is vital to any OLED display and determines its color, contrast, and lifetime parameters.

Paweł Zylm invested in Noctiluca because he recognized the company's tremendous potential for financial success based on the rare combination of two distinct worlds of science and business brought together by technology and backed by the experienced team at Rubicon Partners.

The company's listing on the local stock exchange signifies its stability and growth potential, making it an attractive investment opportunity.

2. Simpl.Rent —smart money

Simpl.Rent is a tenant verification platform that offers innovative solutions for reducing risks associated with renting properties. They provide services such as verifying tenants' credibility, conducting background checks, and assessing their financial capacity to pay rent.

Paweł recognized the value of Simpl.Rent's offering addresses a common challenge in the rental market. Simpl.Rent helps landlords make informed decisions and mitigate potential risks by providing a reliable and efficient way to verify tenants.

This aligns with Paweł's expertise and background in the insurance industry, where risk assessment is fundamental.

“This is an example of the perfect collaboration between business angels and founders. In this case, I put in a lot of smart money.”

How to Evaluate a Startup’s Potential?

When evaluating the potential of startups before making investments, Paweł Zylm takes a comprehensive approach that considers various factors.

Get to know the founding team

Paweł also pays close attention to the founding team. He looks for passionate and driven individuals who deeply understand their industry and demonstrate a solid commitment to their vision.

Building trust and open communication with founders is crucial for Paweł. This allows him to provide valuable guidance and support throughout the investment journey.

“I’m often in the position of telling founders that their plans or business goals are not beneficial for them.

So, before investing in a company, I’m always looking to invest in people who can embrace this type of feedback and have the power to pivot the business plans in the right direction.”

Competence & Commitment

When evaluating a startup before investing, Paweł Zylm emphasizes the importance of the team's competence, commitment, and synergy.

“The team members must be competent and committed and share responsibilities. Their competence lies in their knowledge of the industry and the business they aim to pursue.

I often encounter individuals who need more expertise or are focused on unrelated passions, such as cooking or gaming, resulting in a misalignment with the startup's objectives.

Passion and commitment are vital qualities that drive their dedication. Engaging with such individuals reveals their genuine interest and motivation to create something innovative and new.”

Invest in multiple founders

Paweł prefers a team of at least two individuals who are not only knowledgeable about the business they want to pursue but also passionate about it. He values their commitment and believes that their shared responsibility should be clearly defined from the beginning.

“I lean towards teams rather than solo founders vs. multiple founders because dividing the risk is crucial.

Although there are cases where solo founders excel, I know stories of startups collapsing due to the founder's burnout or unforeseen circumstances. Thus, having a team of at least two individuals is preferable.”

Conduct thorough due diligence.

Furthermore, Paweł evaluates the startup's financials and business model. He analyzes the revenue streams, profitability potential, and business sustainability. Paweł's background in finance and insurance equips him with the expertise to assess the financial aspects and identify any potential risks or challenges.

He also believes that due diligence goes beyond having a checklist. It requires in-depth conversations with the team, understanding their passion, competence, commitment, and how they work together.

“When evaluating startups for investment, there is no definitive solution or set pattern. I don't rely on a checklist because I believe having one is impossible.

Instead, I prefer engaging in discussions and seeking input from people who have worked with the startup team.”

By considering these factors, Paweł aims to identify startups with a strong team foundation, as he believes that a capable and synchronized team dramatically increases the chances of success.

“Another aspect I value is synchronicity within the team. It is beneficial if team members have previously worked together on projects, even outside the startup realm.

This familiarity and understanding contribute to a smoother workflow and predictability.”

People vs. Product

Paweł concluded that people are a startup's most crucial aspect, as products can change, but a strong team can adapt and thrive.

"People and team are more important than the product itself. While products can be altered or replaced, having the right people and a cohesive team is essential.

A good team has the potential to excel in various ventures, while the wrong people won't improve even with a great product."

What is Missing in Poland?

Paweł emphasized the importance of government backing for the innovation sector, which is crucial in creating new jobs. He also acknowledged the need for private venture capital and highlighted successful examples of private investment in the Polish ecosystem.

However, he also expressed concerns about the limited availability of large-scale venture capital and the relatively smaller size of the startup ecosystem compared to other countries.

"While our startup ecosystem has improved significantly over the past five years, we still face challenges that require government support. The government can play a critical role by offering startup grants, low-interest loans, and tax incentives. This can help fill the funding gap and encourage venture capital investment.

To become a more innovative country, venture capital investments and government support in education and training, regulatory support, or promotion of innovation are needed. It's crucial to nurture startups and pave the way for technological advancements."

Resources Mentioned in the Discussion:

Connect with Paweł Zylm:

• Linkedin

Others:

• COBIN Angels
• Noctiluca
• Simpl.Rent