Sunil Sharma @ Techstars and Slawek Potacz @ InMotion Labs
Startup Grad School Stage
Ascent Conference 2020
Sunil Sharma [00:00:03] OK, ten-thirty in the morning, I assume it’s time to start. So good morning, Ascent. My name is Sunil Sharma. I am the managing director of TechStars in Toronto. TechStars is the global platform for investment in innovation. And on the other side of this Zoome call is my good friend Swanwick Protest, who is in Krakow, Poland. So maybe you can introduce yourself for a second.
Slawek Potacz [00:00:30] Hi, everyone. I am so I am a founder of a company that focuses on making sure that when you buy your car used car line, you know what you’re buying and have a transparent overview of its condition. And actually, for me, it’s half past 4:00 p.m. So we have a great day, everybody.
Sunil Sharma [00:00:49] Yeah. So the company that’s what I like is the CEO of and and co-founder of is called Car Scanner. And the reason we’re here at a scent is to tell a little story about how we met and the relevancy of what a scent has been to our connection and our future of business together. And then to expand that into a general conversation about how we use conferences like this, especially now in this virtual world for investors or accelerators like TechStars, how we how we can effectively source companies in this new model. So what happened was last year, at a sense, I had the privilege of flying down to New York and being one of the speakers. And I spoke on a general panel. I was talking a little bit about it was more of a fireside like this, talking about the growth of the tech ecosystem and the tech economy up here in Canada and in particular in Toronto. We have been very fortunate to have a very vibrant tech scene. Tremendous number of new startups have launched. There’s been growth of some very substantial companies hiring a lot of people and really contributing to the overall economy. But also, Toronto has become one of those cities that has leap to the forefront of innovation and tech startup worldwide. And there are several reasons, I think, why that is the case. One of them is about immigration and finding great entrepreneurs who find it either intriguing or desirable to shift part or all of their company to Canada and to come in to Canada as an immigrant. And that’s in that’s a contrary theme. What to what we see in some other countries in the world right now where it’s in fact more difficult than ever to gain entry to secure certain types of visas and in some cases even basic travel where countries have not been welcome to travel, at least in the in the short term. And this, of course, is all pretty covid pre pandemic, which is added to an entirely new layer of complexity. But I wanted to bring it back to our experience at Ascent, which was following my fireside talk. I met a woman I remember her name is Isabel, who introduced herself to me. And she told me that that was a really interesting talk. And she had brought a huge group of startup founders delegation that she had responsibility for, mainly from two countries, from Poland and from Estonia. And the question was what I like, what I like to meet them. We’re now, of course, in the in the social drink section of the of the event. And everybody’s having a good time mingling. And my immediate reaction was, of course, I would love to meet them, in fact, because that’s my strategic focus of how to find startups, is to look for great companies, great entrepreneurs coming from some international markets, potentially even emerging markets or coming from countries where there is a rise of technology and innovation. But where we think and I think there’s an opportunity to leverage the Canadian tech ecosystem and the the legal structures and the access to capital and the livability of cities and try to pair that together and maybe create a fantastic company. So we met a group of people, including this gentleman here, who gave a great demo, a great description and a visualization of Castanon on his phone. And I was quite intrigued. So that led to a great dinner that evening at the conference I have sent with with many other founders who were part of that very same delegation. And then I thought, you know, the next morning I had some free time and I’m in a hotel somewhere in Manhattan. So why not host some office hours for these companies and talk more about TechStars and about the potential fit for investing in one or more of the companies and maybe even bringing some of the founders over to Canada? So we use the lobby of a very small hotel and we did a whole bunch of office hours. And it struck me that it’s kind of fun that you have this Canadian person up from Toronto meeting a bunch of founders from across Eastern Europe, from Poland, from Estonia, in New York City, in a rush kind of time frame before flights had to be boarded to take us all back home. The outcome of that was developing a really good relationship with Swanwick. And subsequently, I made a quick trip to Poland after the Web summit and got to meet his CTO and got to demo the product. Got to see it in action Coruscant, or we’ll talk a little bit about that and was thoroughly impressed. So basically made made the kind of agreement shortly thereafter that we will be about. Sitting in a car scanner and from that point we took it one step further. We thought what would what would be interesting for the company is to, in fact, re headquarter the company into Canada with the top coat, a top level company. And there’s some reasons why that makes business sense. And then effectively, what we’ve done is we’ve created kind of a small multinational company where you have the strength of engineering and and R&D development and some of the sales and the executive functions in Poland. But we expect to build a team here in Canada as well, maybe even with Rick and his wife, who may may find themselves enjoying living in Toronto and taking advantage of a direct flight between Warsaw and Toronto, as we’ve already done a few times. So it’s so like I want to turn it over to you. Maybe I’ve over simplified things, but I feel like the conference did catalyze this relationship. And now we have a really strong company yours in the TechStars portfolio. We’re excited to have you. And what was your what are your thoughts about how we use the descent to meet and how it’s sort of changed the fortune of of our of both of us?
Slawek Potacz [00:06:44] Sure. Yes, actually, also a bit of a story on my end, so actually a friend of mine, Max, from from Poland, actually, he was a judge at one of the pitching events back in my city in Krakow, Poland, where actually we took like very last place. And actually when I was leaving the competition back in, like, you know, a few years ago when I was just leaving the building, you told me, hey, Slavich, so we are actually guiding startups like you, helping you grow and everything. So, you know, let’s try to work out together when they can mentor you. And actually, like then, you know, he helped me out, secure our careers like precede investment and then pretty much our ways parted completely because of life, actually. And, you know, back in just like two weeks before Ascent, he told me, hey, Slawek, a long time no see. I’m flying to this conference together with Isabel at the New York City called Ascend. And trust me, you will not regret it. And actually, he was calling me out of the blue, which was quite interesting experience. And he told me, hey, Slavic, you’re flying with me to New York City in two weeks. And then actually, I you know, I felt worse. I had some kind of flu and I actually bought my tickets to New York pretty much 14 hours before the plane was actually leaving because I wasn’t sure if I’m feeling like good enough or still I have some headache or stuff like this. So, yeah, it was pretty much, you know, 14 hours before the flight, I booked my tickets, flew immediately to the New York City. I was actually in the middle of a deal. So I still remember that one day before I said I was actually at 4:00 a.m. in the morning in Brooklyn, pretty much on the sidewalk to our urban bee, negotiating the biggest contract in the history of our company so far with a customer that didn’t want to accept our terms. That was crazy. And then I you know, I went to ascend and somehow things played out in this way that. You know, I happened to meet you, and right now we are actually a Canadian company. Fast forward one year from that point and it’s like also super interesting because I’m personally, you know, I’m a biker. And some time ago, I just decided if there’s any chance in the world that I could be, you know, in Canada, it’ll be perfect because Canada has one of the best places to ride mountain bikes in the entire world. So it was super funny that, you know, everything clicked in place somehow, automatically. I’m not sure how, but yeah, it’s super great. And we were pretty much super grateful. So, you know, for you waiting for us to deploy to Canada because actually a quick insight also. There is so much difference in the startup ecosystems of Eastern Europe and, you know, the North American ones in terms of, for example, investor privileges. Well, the founder can do on his behalf before asking his investors and so on. Next, investors in Poland have far, far more control over a founder that is happening usually in their primary. So actually, also, you know, this entire corporate structure flip to Canada was taking so much time because actually we had to renegotiate pretty much the entire investment agreement of my existing investor guy.
Sunil Sharma [00:09:51] I’ll just jump in. It’s clear, after having gone through this experience and many other companies where we kind of leverage the the the advantages of maybe a country like Canada would be the home country where the where the startup is truly based. I can see that there are some real advantages to the founders, into the companies in terms of valuation and the ease of capital raising, as well as just some of the legal structures. It can be painful at the beginning to go through all the work. And we did do a lot of work in this case. But as I as I see it and as I said, it’s I expect the growth of our scanner over the years to come. It’s going to be a huge positive for all partners, for all existing shareholders, for both ecosystems, job creation in in more than one country, perhaps more than two countries. And that’s really how companies take shape, especially in this era of truly a truly globalized world. And Poland and Canada, both of us do not come from dominant populations and huge economies relative to many other countries in the world. So by linking together, I feel like it’s a it’s a real position of strength. And I think we will start to see that now. Just we’re only a few weeks out of Demo Day, so we’re still in the early innings of the growth of car scanner and of our this particular portfolio. But already we’re seeing huge positives. And I will say that investors, both on both in both continents, but particularly here in North America, across Canada, in the US, have really your pitch and your story has really resonated with the ecosystem here. And I think once they start to appreciate how the company was sourced, that that’s part of the story. They do see that. So this company was met at an international tech conference, in this case at a ascent. But then proper things were done legally where we decided to structure the company in a way that it is very appealing to investors with the law firm that we we have engaged all the way to the VC funds that are that are getting very serious about Kerschner. So I think that’s the outcome that we can be proud of. And we’ll see more of that to come.
Slawek Potacz [00:12:14] Definitely. And just a quick perspective, actually, Poland and Canada are pretty much Furedi for the eight million people like citizens. And a quick perspective like, you know, in 2018 that I would say UBC founding in Canada was around three billion, a billion dollars, while in Poland it goes for million dollars, which gives you kind of perspective on where the U.S. markets are. So, yeah, it’s definitely a huge opportunity for us.
Sunil Sharma [00:12:39] Yeah. And so more on the point of for those who know me, know that I do spend time at conferences. I’m co-host of another conference series that’s a pretty large one called Collision and Web Summit. So I spend I’ve been involved with that group for quite a few years. And one of the one of the outcomes of being involved with large international tech conferences as a early stage investor, as somebody who’s working with TechStars, is sourcing startups like finding entrepreneurs, finding startups. It’s not always easy to do, especially in these very large conferences. They can number up to 60 to 70, 80 thousand people. And how do you find the companies when it’s a real life conference? Some of the strategies that I would employ would, of course, be booking office hours and using kind of having a lot of real life short meetings. Usually the conference will facilitate. Ascent does that paying attention to the pitch competitions, either as a judge or just watching the companies go through the the heats into the into the semifinals and finals, usually you can expect a high quality pitch and also a chance to meet the founder in person at the event. So now that we’re virtual and conferences, including this one and collision and many others have shifted entirely virtual, and I think it’s going to remain that way, at least for the short term. How do we take advantage of these online conferences to connect in the way that you and I did? And so maybe I’ll just ask you, as you’ve also attended many tech conferences, what what advice would you give to founders to make to simulate or replicate the kind of real life experience that you and I had last year?
Sunil Sharma [00:14:25] How to how do we do it now? Virtually.
Slawek Potacz [00:14:27] Sure. Yeah, a couple of things. First of all, I still do remember actually you being on the first drinking call with me where we actually had the beer over Zoom. So that was quite interesting. And I still remember that. Also, I do remember, for example, from our cohort, the guy called the Jack and Jack is actually the CEO of a company called RBC. And he was actually actually also very well remembered, maybe Vecsey, by the fact that he had some like a simple gaming tool which converted his face into a wolf and was super cool, animated. And also, you know, a great thing is, for example, when things got, I would say words with Kovar. And then I also introduced myself, you know, Zoome background in which I was sitting in a face and actually killing coronaviruses with lasers. So there are all those like cool little technological tricks that can make or break the ice. That’s one thing. And last but not least, they’re also sometimes super cool things in the background. The person that you meet with to start like no negotiations. For example, yesterday I had the couple with a big fan from from East Coast of the US. And actually I found somewhere that the guy was coming cool with was a huge fan of, you know, Narcos series on Netflix around the Pablo Escobar. And it turned out that he didn’t see the movie called Pablo, which was a great movie about the same thing. And actually, he sent me an email that, you know, he’s definitely going to see this movie because he wasn’t aware of that. So all those things around extra research prior to the call or during the first few seconds that can help you break the ice, I think are super important.
Sunil Sharma [00:16:02] Yeah, I mean, especially in this era or I guess in the segment of really early stage investing the way that accelerators invest. I mean, Tech TechStars, we have this motto of team team team is the most the three most important components of a good investment product. Market traction come later, but it’s really about the team. And when you meet in person, even if it’s briefly, if it’s at an event and you can sort of squeeze a dinner in or a breakfast meeting the next morning like we did, that that is very important to sort of develop a rapport and get to understand the personalities and and kind of assess maybe just the tenacity that one person might feel of the other in terms of their desire and resolution to build an incredible company when it’s virtual and you don’t get to meet in person. That’s harder. And I will say that we just finished our TechStars Toronto accelerator. We did run it entirely virtually. Swanwick never made it to Canada and that was disappointing and surprising. When I look back at the beginning, I really didn’t think that the international companies that were there were actually a few of them wouldn’t even make it into the country. But so we ran the entire program virtually. And I think it went very, very well overall. And I was impressed by the amount of collegiality and friendships that were created within this class among people who never met even one time, particularly the founders who aren’t from the country. And so that’s why, like, I’m just going to ask you for your comment on how do we use virtual tools, whether it’s accelerators or conferences, to create interpersonal connections that are, I guess, the kind that we need to have to make investments and to become very close with founders and between founders.
Slawek Potacz [00:17:57] Sure, yeah, so I would say that for me, actually, it was super interesting to have, you know, at all on the select channel that was pretty much scheduling like 15 minute calls between founders. So super supercool. So every every week what you guys did was actually randomly picking up to two CEOs from our hearts to speak for 15 minutes every every like the next day. And Coulombe was super helpful that actually, you know, just instead of trying to find a good term, hey, here’s my current building. Just schedule at your convenience. That’s that’s also very, very good. And also, you know, it’s just super interesting, actually, when we had us going from Poland and guys from Nigeria, guys calling from Turkey because you’re an Indiana Jones of searching start ups from across the globe. So all those different people having, you know, different electricity outlets in their walls, having different light conditions, for example, for hours, were already exhausted after their business day while some guys were just waking up and they had their first coffee today. So it was super interesting. And I would say that it also made some kind of, I would say a better understanding of that. We were in different regions of the world. And actually it was also, I would say, super kind of all the people that actually adjusted. So seven companies that were based actually in the American market had to adjust to us, three different companies from Nigeria, Turkey and Poland to meet our operational time zone so that we could be on the same coast. So that was super helpful. And they would also say that we’ve met during the three madness with you guys like close to one hundred mentors. And actually it was super cool experience as well, because I don’t think we would be able to meet, you know, mentors from the West Coast, from Germany and other places, actually, if it was face to face meetings, because they would not fly to Toronto and with them actually being the new commodity and the new normal, I think it made people much more used to it. And for example, one of the craziest calls we had with a mentor was a guy sailing actually for like somewhere in Ontario on the boat and actually providing us with a feedback will actually cruising with his ship for the for the like. So I would say it was super experience and I really, really did enjoy it. Actually, I think that because of covid and because of people getting more used to, you know, online calls, it really didn’t feel that weird after, like, you know, phytochemical.
Sunil Sharma [00:20:27] Yeah, I agree with you, and I think that’s the inherent advantage of doing things virtually, is that it truly broadens, you know, the catchment area of of the people you can engage, whether it is investors or mentors or even founders. And so what when we’re having this paradigm shift to global online collaborative interactions, you don’t need to stay in a localized model with both founders and mentors, investors, companies, unless unless you want to, unless that’s the strategy. But here we have an opportunity to really engage the world. And of course, there are some challenges. Timezones is one. There were many times that I felt a little sorry for the teams in Eastern Europe, in Africa, in the Middle East, because we appreciate that there is a six to seven hour will, five to seven hour time difference. And it can be quite late at night, but we make accommodations for that. And even at TechStars, we have forty seven accelerators operating around the world. I actually find it is one of my favorite things is when when there’s a, you know, an all hands meeting or a big meeting where of all the accelerators, where it’s in an evening time slot for 4:00 Eastern Time because to accommodate some of the European or Asian offices. And I find that kind of refreshing in a way, because it’s just a way to kind of do something productive at night and do a quick 30 or 60 minute call and talk to some people and be respectful of their time. So I think this is the opportunity we have. The trick is meeting. I feel like well, it’s it’s it’s a contact sport. And we met in kind of a perfectly sort of set up way. But now we’re recruiting again for TechStars Toronto. So whoever is on this call, of course, the the the opportunity is to start applying. If you’re the founder of a fantastic tech company or a co-founder of a great company, we’d love to interact with you, either TechStars, Toronto or any of the other tech stars. There’s quite a few recruiting right now, but how do you do it? And I think it’s a way to get to get to that level of tech, to really understand a person’s personality and to understand the thoughtfulness of an entrepreneur and for them to really appreciate you. I think it can be done virtually. It just it just takes a slightly different shift in mindset. And you made a lot of friends here at TechStars, so I think it can be done.
Slawek Potacz [00:23:02] I would also add one thing to this complex that actually right now, a virtual bank. I would say the new normal. It’s actually much easier for, you know, farang founders. We’re actually still not there due to the covid to actually, first of all, our investors and also to save money on travel and everything. So, for example, you know, right now we have a few calls a day with different services. And still it’s like they don’t feel that, you know, where we’re coming from. Poland pretty much makes access to capital, I would say easier for, you know, founders from different parts of the world, because right now it’s the new normal. So I think it’s it’s very, very good. An interesting experience to have, you know, in this process.
Sunil Sharma [00:23:46] Yeah. Let’s just shift to talk about your country and maybe even a couple of the surrounding countries for a minute, because I must say, I was I was incredibly impressed by what I saw in Poland in the innovation economy, the number of startups, the caliber of engineering. I mean, there’s a reputation that Poland has, which I think is is that it’s a it’s a it’s a it’s an engineering and software development powerhouse within the region. And it’s a reputation that maybe isn’t fully appreciated across the world, but could be and should be. Maybe just tell us more about what you see as the strengths in the Poland’s in Poland’s tech ecosystem going forward.
Slawek Potacz [00:24:27] Sure. Yeah. So a couple of things. First of all, we are extremely early as a company, as a country, actually, in founding. So just to give you a quick perspective, I actually like vesi. Founding in Poland back in 2010 was around four million U.S. dollars. And right now, actually, Polish government kicked in and provided actually hundreds of millions of dollars to start businesses, which are part of private and public partnerships, meaning that, for example, like 70 to 80 percent of the entire capital, coal is covered by public capital, which makes pretty much a very good opportunity to shift the mindset of high net worth individuals coming from Poland, that they might actually become an angel and start investing in startups instead of, let’s say, flats are, you know, some other like banking proposals. And just to give you a quick insight, how. Rusticate is inclined, so actually, back in twenty nineteen eighteen, we had like forty million dollars in funding in the third country, which was for million people, and that was we had that three hundred and thirty five million. So from 40 million to three hundred and thirty five million in just a year or so, eight x growth and actually met yesterday or two days ago with an investor from, from the US that said he’s aware of that and he’s like super interested to see how this experiment actually plays out in the next few years, because first of all. Right now, there are tons of capital coming for like pressie and seed investments, but there is not enough capital for around investments in our country. So every startup that succeeds is actually looking for capital outside of Poland. So that’s one thing. But the second thing is that also when you have a grow from like, you know, 50 transactions into twenty eighteen to two hundred and sixty transactions in 2019, it also provides some challenges that, you know, people are scouting for startups that are surviving, even though maybe they shouldn’t. That’s one of the things. But also the second thing is actually that even though that early stage investments are coming from Polish investors that are public government backed, most actually of the funds is coming from international VCs. So just to give you a quick perspective, like 60, 40 percent of post round a funding comes from international funds into the Polish companies as well, and also about actually count countries like Poland, Ukraine.