For SeedBlink, 2023 means a new paradigm and moving to the next level. Says the most powerful woman in Romanian technology.

Just a few days after we set up the meeting for the editorial project "23 for 2023", Carmen Sebe was included in the annual "50 over 50" list of the most important women in leadership in Europe and the Middle East, alongside other personalities such as actresses Helen Mirren and Sophia Loren, Nobel Prize winner for literature Annie Ernaux or Nataša Pirc Musar, the first woman president in the history of Slovenia.

"Carmen Sebe supports technology start-ups that come to SeedBlink to get to the next stage of their development, whether it's securing Series A funding or securing an exit." So sounds the "50 over 50" pitch from one of Romania's most experienced technology executives, who has been instrumental in developing businesses that have held the headlines in the technology transaction market, such as RAV, ePayment and Avangate, founded by Radu Georgescu.

File 23 for 2023. Where is business and society heading in Romania?

She is also involved, also with Radu Georgescu, from early 2020, in SeedBlink, an alternative start-up investment company founded by former bankers Andrei Dudoiu and Ionuț Pătrăhău together with entrepreneur Iulian Pădurariu. Since the fall of 2021, Carmen Sebe has been CEO of SeedBlink, propelling the company to the most important moment in its short history, at a time that promises to be complicated for the funding ecosystem for tech startups globally, as entrepreneurs in this sector are facing a paradigm shift from investors, who have begun to place more and more value on profitability, in a market characterized in recent years (only) by the desire for accelerated growth.

For SeedBlink, 2023 means both facilitating the new paradigm and taking it to the next level, as Carmen Sebe details in our discussion in a meeting room on the 7th floor of a building in Pipera, in the Mindspace coworking space, where the company's headquarters are located.

Among other things, this new stage of the company's development means attracting new types of investors, expanding the range of placements in tech start-ups, consolidating in strategic markets, launching a secondary market where investors can sell shares they have previously bought, implementing a new working model at the operational level, and launching a software product that Carmen Sebe calls "my brain child at the moment". Depending on market conditions, the company could even launch a fund this year. "It's going to be more difficult to fund this year, at least for the next six months. Most of these venture capital firms are very reluctant to invest in early-stage now and the only companies they will invest in are those that are somewhat profitable. In technology there's a lot of emphasis on growth, not profitability, and they're two absolutely different strategies, you can't change your strategy overnight."

The ecosystem of tech companies grew at an accelerated pace and attracted large volumes of funds from the market during 2020-2021, but 2022 came as a cold shower for the sector as well, which was most evident in publicly traded tech companies, where the US Nasdaq index ended the year down more than 30%. "The year 2023 will not be an easy year, because the confidence capital that technology had in 2020-2021 has diminished a bit in the past year (...) Venture capital companies are much more cautious about early stage investments. Towards the middle of the year we might see a rebound when it comes to investments after June, July. And these companies have to invest, they can't sit on the money for very long."

SeedBlink's perspective is one relevant to the experience of Romanian tech entrepreneurs because the platform is constantly connected to the funding ecosystem, including working with many venture capital funds to identify shared opportunities. As for the risks this year brings for tech startups in the region, Sebe says all entrepreneurs need to look closely at cashflow. "One of the risks for any startup right now is cashflow. My suggestion to all executives, all startup executives, is to pay close attention to cashflow. It's not the revenues that matter now, it's the cashflow that is as controlled as possible, inputs, outputs and costs. (...) This is the year of cashflow. It's important how well you control it so that you get to 2024 without any problems, when things will look better and better, inflation will be lower and financing will be unlocked." She says start-ups that 2023 "caught up with funding" are in a better position, and those that aren't funded and don't have much revenue should try to get funded as soon as possible.

"We've seen and I think we're going to have on the platform this year at least in the first half of the year, a lot of so-called bridge rounds, meaning start-ups that are between funding stages, haven't gotten to take a Series A, and will target bridge funding so they can get to the next round in a year's time. It's a good strategy for them, and it's a good strategy for investors in those bridges because they might be companies that wouldn't normally get on the platform because they would have been funded by VCs."

At the moment, money is flowing more slowly from funds to start-ups in this sector, but Carmen Sebe says it's important to "cross the bridge", i.e. watch cash flow, which could ultimately make the placement more attractive to a venture capital fund.

"Next year the paradigm might change and we'll be back again after mid-2024 to growth, growth, growth. And VCs will also be looking at how companies are going through this period. A company that makes it through this period is a good company. (...) So, on the one hand, it's going to be a tough period for start-ups, but with good management they can get through it and wait until 2024 to 'hit the ground running'."

Carmen Sebe pointed out that both the regional and global contexts call for caution rather than worry for the period ahead, but the hardest is not over yet. "I think the worst will be in mid-2023. We in Central and Eastern Europe, in Romania, are four to six months behind a crisis. You see it start in the States, it's coming your way, you get ready. (...) It will be a rather unpleasant half year. But it seems to me that there is money in the markets, not to mention European money, grants. There is private money in the market and it has to be invested somewhere. It's not necessarily worry, it's caution, everyone is more cautious."

The road to Europe

The SeedBlink platform was founded by former bankers Andrei Dudoiu and Ionuț Pătrăhău, and the company set out with the initial goal of bridging the gap between tech start-ups in need of funding and investors looking for placements.

SeedBlink attracted a €3 million Series A funding round in 2021, led by investment fund Catalyst II Romania, in which €1.1 million was raised through a crowd-investing mechanism run through its own seed fund.

In the spring of 2022, the company started to expand across Europe and started with the Bulgarian market and by mid-year was opening its second office, in Greece. A few months later, SeedBlink announced the acquisition of Dutch company Symbid, which operated one of the world's first crowdfunding platforms.

"In terms of the number of investors, we have exceeded 69,000 in 78 countries, which includes the company we bought. Ours must have been 12,000. Last year we also had very good growth in terms of business results and number of investors."

Thus, 30% of the active investors on SeedBlink fall into the category of "sophisticated investors", with average tickets of €6,400. The remaining 70% are retail investors, with average tickets of €4,700. At the same time, 40% of the total investments started through SeedBlink are of at least €10,000, and the largest ticket for an investor was €100,000.

The largest portfolio of a SeedBlink investor amounts to €500,000 and includes more than 30 companies. 70% of investors have at least five companies in their portfolio, which shows that more than two out of three people investing through the platform are not limited to one placement.

While it initially listed many opportunities in earlier, pre-seed stages of development, SeedBlink has now set its sights higher up the ladder of the funding ecosystem and has pivoted to larger companies as well, even reaching Series A rounds.

"We have moved away as a strategy from traditional crowdfunding, where you do $10 tokens to attract as many people as possible, we have raised the bar quite a bit in terms of the amounts you have to invest, the minimum token is €2,500 (...) We listened to what investors were telling us, that they wanted more interesting companies, from a lower risk area and we went and implemented the VC-backed strategy, meaning we were or are co-investors with venture capital companies, that's because the risk becomes much lower."

However, Carmen Sebe says some investors ask them to come back with such pre-seed campaigns because they help both the community and the startup ecosystem, as well as investors who are willing to take a higher risk for a potential higher return.

"The moment you get into an investment very early on, there's a higher chance you're going to have a 10x, 100x return, and they like that area. We'll probably create a space for more early stage companies as well."

In total, SeedBlink today records €58 million raised for various start-ups. Initially, the platform listed local opportunities for investors, but plans for European expansion and the way the business has evolved in recent years have changed that paradigm.

In November 2022, SeedBlink obtained authorisation from the Romanian Financial Supervisory Authority (ASF) as a crowdfunding service provider, being only the fifth platform in Europe to receive such authorisation under the new European legislation ECSPR (European Crowdfunding Services Providers Regulation).

"Authorisation was one of the most important events last year for us, because since we started we did everything based on the regulation, but as long as you don't have authorisation, you can't really do much, at least outside the country (...) We got authorised and immediately after that we 'franchised' pretty much all over Europe. Now we can operate, we can 'sell' the platform all over Europe, which is also seen in our actions, which are now directed right across Europe."

In 2023, SeedBlink will focus on Europe, starting with the countries where it now has a presence with offices, i.e. the Netherlands, Bulgaria and Greece. Today, SeedBlink is managing the integration of the Dutch company and how it can stay connected with the investors it had before.

"And in the other European countries we will go with online addressing. Now we also have to calibrate our platform because you also have to translate, depending on the countries you go to and the laws in those countries. Right now, 20% of the investors are from outside Romania and we want to reach 50% this year."

Even if this year is shaping up to be a more complicated one for tech start-ups looking for funding, Carmen Sebe points out that every crisis has its winners. So SeedBlink plans to focus more on green, sustainability and energy start-ups.

"It seems that now the winners are green tech companies, energy companies, those who can bring something innovative in the energy area, sustainability, which are also funded faster and which we really, really need. Everybody wants something in that direction. So there could be some winners."

SeedBlink's investment model works on the basis of entities known as SPVs (Special Purpose Vehicles), which were set up on a per placement basis and through which investors became indirect shareholders in the company they invested in. The whole process is a cumbersome one for investors and quite hard to "sell" as it expands to more international investors.

That's why the company decided to move to an Austrian market-inspired "nominee" structure, a structure that shortens the time it takes for an investment, the time it takes for money to reach the startup, and simplifies the sales pitch to international investors.

"Now I think there are at least half Romanian companies versus the rest of Europe. But what is very interesting is that the first time we proposed companies from elsewhere to investors they were reluctant. Now it's a profound change, no one looks where the company is from anymore."

"In our desire to be as European as possible, we need an operational model to help the European community invest. We are piloting this new model now, we hope it will work for us. (...) We are working with the first companies and if things go well, probably in the next few months it will be fully operational. It's a project we've been working on for a year now and it's been very complicated."

The launch of this project comes at the same time as the launch of a secondary market where investors can sell shares they have bought in previous rounds of financing.

"We will be launching the secondary market area by the end of this quarter, and it comes with liquidity for existing investors and we hope to please them. You have the ability to sell the shares, get the money out faster. It's kind of a safety net that you can get your money back, the same as you put it in or more, depending on how the market goes."

The company is also preparing to launch a software product this year, which Carmen Sebe calls "our love child at the moment". Specifically, SeedBlink will launch a so-called equity management solution. "The goal of this product is to help startups keep the 'cap table' (a document detailing who owns any stake in a startup - ed.) in one place, to be able to communicate in one place with your investors, with VCs, with whoever is your investor. Anyone who owns a company knows that keeping a "head table" and its history and keeping everything in Excel is very complicated. (...) What's more, you're also going to have ESOP management, because most tech companies have ESOPs for their employees and it's very hard to manage."

In addition to expansion and consolidation plans in Europe, SeedBlink hopes to achieve a unified approach through the platform over the next three years, offering both funding opportunities, investment opportunities and software tools to solve problems in the tech startup funding ecosystem.

"We're also working on a fund this year, which we're doing in a partnership. We want to be able to offer startups more than just an investment platform. To have for start-ups a product, an investment platform for funding, and a fund that can support companies in multiple stages, so to have a complex solution."