I had the pleasure of interviewing Miloš Sochor, Managing Director of Y Soft Ventures. Miloš led Y Soft Venture’s transformation to fully focus on projects combining hardware and software and has expanded Y Soft Ventures’ potential by engaging with external investors.
Jean: Thank you so much for joining us! Can you share your story about how you got into the VC space?
I entered the venture capital business after a ten-year career in the US financial sector as a corporate banker and lecturer at two universities. I was responsible for small business financing and portfolio management for corporate clients. I then joined the risk management department, working on debt restructuring and foreclosure cases. When I returned to the Czech Republic, I managed the technology incubator part of JIC, a South Moravian Innovation Centre. The incubator was the largest technological incubator in the Czech Republic, where we helped hundreds of start-ups each year with strategic development and investment opportunities. Y Soft has its beginnings with JIC so when Y Soft wanted to start an in-house VC operation, Y Soft Ventures, it was natural for me to jump right into it. Now we have expanded to work with external investors as well.
Jean: What kinds of startups do you typically work with?
Because Y Soft Ventures does more than provide funding — we provide manufacturing facilities and resources and guidance from Y Soft in sales, marketing, finance and global operations — we look for companies whose focus matches our own which is in B2B –even B2G, with solutions that involve both hardware and software. We primarily invest in Central European start-ups who have solutions in 4 areas: Internet of Things — which can be Industry 4.0, Retail 2.0, Smart Office, Smart City and Smart Home; Cyber Security; Big Data; and Augmented/Virtual Reality. We focus on Central European start-ups because of all the consulting and knowledge transfer that we do, it is easier if we are geographically close to them.
Jean: What do you look for in the management team of your investment companies?
Foremost, I look for people who can execute. What do I mean by that? It is easy to have ideas but not always easy to execute on those ideas. So, the management team as to be a group of ‘doers’ and show that they have developed something and better yet if they can demonstrate with some revenue that the market is ready and wants the solution. The team should also have a sense of the finance and business side or a willingness to see that they need to bring in those skill sets. Because of what we offer, we can advise, mentor and help them build the right team.
Because of our interest in hardware as part of the overall solution, it is not uncommon for us to work with a start-up for up to a year even before we give them any investment. We do this so we can understand together whether the business can scale globally.
Jean: Can you share a story of a successful Angel or VC investment? What were some of the highlights?
Y Soft Ventures is only a few years old at this point, so we do not have any exits yet. However, we see some very good signs. For example, one of our companies sells its solution in more than 50 countries. This is a good example of how we select companies that can be global successes. Another company was able to get a very significant deal in Japan by working with our office in Japan.
We average triple revenue growth within one year of an investment. For a B2B hardware company, this is a very fast growth rate. The companies in our portfolio are overperforming the expected revenue growth and are able to become trusted partners of F500 companies — I believe this is because of our strategic approach of offering the know-how and assistance that I mentioned earlier. We call our approach Genuinely Smart Money because the start-ups benefit from Y Soft’s global expertise, often more valuable than the investment itself.
Jean: What is one piece of advice you would give a startup?
Start-ups always think they will achieve large revenues in a short period of time. They underestimate the time it takes to become trusted and accepted, especially true when we are talking about hardware.
I tell them that they shouldn’t rely on the investment for R&D. The investment should be for scaling the business. In other words, they should already have the product ready for the market.
Jean: Do you have a favorite book that made a deep impact on your life? Can you share a story?
There are many but Crush It!: Why NOW Is the Time to Cash In on Your Passion by Gary Vaynerchuk comes to mind because of what we discussed here. What I took away from it was the ability to do a truthful self-audit on my goals and abilities, make the right adjustments, being humble and focusing on what I am good at. I’ve discovered that I don’t want to run a big company myself; that I like working with small companies and I’m good at deal making.
I’m happy structuring investments, thinking about how to go about it. For me, all of this has translated into the advice I share with the start-ups during the time that we evaluate them — helping them be realistic.
The passion that the book talks about, I refer to that as the side hustle. As I said, the start-up should only get an investment for the purposes of scaling. That means that they have had to develop their idea into a product on the side, usually after their day job — using every minute of free time. They are hustling and making something out of nothing, becoming business savvy. When they can do this, they appreciate the investment much more as they have invested so much of themselves to get to that point. When we see this during our evaluation, we know the CEO and founders are dedicated.
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Jean: This was really inspiring! Thank you so much for your time.
Originally published at medium.com