After all the homework you’ve done on the deal you are still not a 100% convinced.
You never will be. Make the investment if you’re 60-75% convinced. Repeatedly!
In the CEE region there is no other way to encourage entrepreneurship.
There maybe more risks here but this doesn’t call for risk averse VCs; quite the opposite!
There maybe more VCs here with less experience and track record but this doesn’t mean they should be overly careful! Do more deals and build up the track record. It’s not about not covering the basics, it’s about being ready to dropping the money once the basics are covered. Too many deals fail because they’re over-analyzed.
There maybe also less experienced entrepreneurs here. The reality is that there are no career entrepreneurs in this region who speak your language and have a thorough understanding of your evaluation and decision making process. This is a VERY good thing! Go mentor them! Don’t outsource mentoring to advisers (who in the most cases just compensate for their incompetence) or to successful entrepreneurs who are not doing anything at the moment. You should do the mentoring! And for God’s sake: not by chairing business plan or elevator pitch competitions! We are not school kids here!
Deal flow may not be as significant here as in the Valley, but this means it IS possible to move fast on deals that make sense. It’s nice to participate at seedcamp, chair committees aiming to foster innovation, etc. In addition to this simply be accessible. This may sound sacrilegious: initiate contact to entrepreneurs!!!
The mentality and the model that works in the Silicon Valley does not work here: the conditions are not the same. Don’t force it, don’t try to be one of them.
I believe VCs must do more in the CEE.
They must FORCE conditions to be right. They must architect deals, not just wait until they emerge, presented on a silver plate by the Jack Welsh or some other proven management talent.
If you have a technology / product that has potential, but you’re missing the team, put the two together and vice versa: if you have an entrepreneur with good potential, find him something! If it’s not possible in one country, do it in another or do it in two!
Do not let good potentials slide back into the employment swamp! Have also less experienced but high potential entrepreneurs in your entrepreneur in residence program. Better yet: just have an EIR program!!!
If this means you need to find different limited partners, do!
I think VCs in the CEE must have a vision that is broader than that of their governments and their practice must always be aligned to this vision. This doesn’t call for imitators; this calls for very special players who are ready to re-defining this “industry”.