In this episode we are asking Bogumil Balkanski, Partner @ Sequoia, what is he looking for in startups, and how he supports portfolio companies after investment

Inovo Venture Partners backs early-stage, post-traction startups that can grow 100x. We partner up with ambitious founders like Stefan from Booksy, Maja from Zowie, or Marcin from Spacelift. We invest between €0.5–2m in startups from Poland and the region.



TRANSCRIPT
Hi, This is Tomasz Swieboda. I'm a partner at Inovo a VC Fund focused in Poland and Central Europe. This is the very first episode of Inovo Podcast in which we are aiming the founders from the region to build a global tech company.

Today we are hosting Bogomil Balkansky - a partner at Sequoia, one of the best VC funds globally. If you're interested in what Sequoia needs to invest or how Bogumil will support your company after the investment, it's definitely a podcast for you. Let's start!


Hi Bogomil!

Hi Tomasz!

Pleasure to have you here! Bogumil if we could start with your story and you could share a couple of words about yourself.

Of course! As you mentioned I'm a partner at Sequoia Capital, we're one of the leading venture firms in Silicon Valley and the US. I think it's fair to say that we are the firm that invented Venture Capital as such. We have been in existence for 49 years, we will be celebrating our 50 year anniversary like next year. And all years we have partnered with many companies that all your listeners would have heard of. You know, Apple, Cisco, and more recently companies like Airbnb, Doordash and many others.

My personal story is I actually grew up in Bulgaria and came to the US 29 years ago, in 1991. I belong to that lucky generation of Eastern Europeans in the sense that I finished high school a year after the Berlin Wall fell and I jumped on the very first chance to come to the US and get an education.

So I came here for college and ended up sticking around and making life for myself in the US. I have lived in the Bay Area for the last 22 years. What brought me to the Bay Area originally was going to Stanford for my MBA and that was in 1998 through 2000 which if you remember was the very peak of the dot-com wave and so I found myself smacking the middle of all these exciting things happening around the Internet. And I ended up taking a job in the technology start-up when I finished my MBA and I have been working in technology ever since so 20-year career as an operational executive in software companies. Always in b2b enterprise and my entire career, I led product management and product marketing teams for various enterprise solutions kind of up and down the technology stack from deep data center infrastructure to SAS apps and anything in between.

I spent quite a few years at VMware focusing on data center infrastructure. Before VMware, I worked at Siebel Systems which was the leading CRM software at the time. After VMware, I went with a startup. I got acquired at Google so I spent a couple of years at Google. I ended up joining Sequoia earlier this year.

Okay, so it's your first time as an investor or did you invest before as well?

I'm a recent professional investor, but before that, I had been an angel investor for probably a decade.

Okay.

I also have been a board member at various technology companies for almost a decade.

That's an amazing story! Thank you for sharing this.

So what kind of companies do you focus on right now when you invest?

I personally focus on enterprise technology, very broadly defined and by the way, if you just look at our portfolio by the numbers, majority of the companies that we partnered with are enterprise companies.

I don't specialise anymore narrowly than that. Sequoia's approaches for all of us, to be generalists. The reason for that is that markets come and go. You now, certain markets heat up and there is a lot of innovation in them. And then a decade later, like the pockets of innovation move to something else and from that perspective would be somewhat dangerous approach as VC like to narrowly focus on particular markets, so again I'm like most of my, like all of my colleagues at Sequoia I'm a generalist within the enterprise.

Okay. And do you focus stage?

Yes. I am part of the early-stage team. The Sequoia investing team is divided into two teams early stage and growth. The early-stage team in the classic definition focuses on seed and series A and the growth team focuses on series B and beyond. However, these days there has been like such inflation in the lettering. If you want what you call seed versus series A and now we are even talking about pre-seed. And I'm really joking with colleagues and funders that a few years from now I'm sure we'll be talking about the pre-pre-pre-seed around.

And so the lettering convention has become pretty meaningless these days and so the easiest way to define kind of where the boundary is between early-stage investing and growth investing is the check size.

One thing that I wanna emphasize is that Sequoia partners with companies very early on - it's never too early to engage with us and no check is too small for us. We have a great track record of having partnered with companies very early on before they have written a single line of code or in some instances, we have incubated companies that means that we work with the founders very early on to help them explore their market, define their product etc.

A company like Palo Alto Networks which is a large publicly traded security software company was a Sequoia incubation many years ago. And so I really encourage founders to think of Sequoia early on in their Founder journey.

So even the Polish or outside of the US founder, that includes them as well?

That includes founders in Europe for sure. Early in the year, a few months ago we actually made an announcement that we hired our first partner who is going to based in London in order to extend our coverage in Europe. This partner isn't gonna be a lonely person, sitting in an office by herself. This is just the beginning of our European coverage and our European operation.

Now - we are not new to investing in Europe. We have partnered with European founders before but this year is really the beginning of us having a local presence in Europe. So yes, absolutely, partnering with European and specifically Eastern European founders is something that we're very serious about.

Okay. Can you comment - you mentioned your a generalist. But there are definitely things which you love or things which interest you more. Can you comment on a deal which would be interesting for you immediately? Like - if I see a deal I should know that I should definitely send this to you?

Because I'm a generalist I would say that the way we think about the investments really comes down to two things.

First and foremost, we obsess about the market size. In other words: whatever the product idea is that the founder has can we imagine that this product can be sold to enough people, for enough money so that maybe 10 years down the road you generate 300 million, 400 million, 500 million in revenue. This is absolutely like the first thing that we think about and the market size is the deciding argument for us to invest or not invest.

Now the keyword that I wanna emphasize here is that we need to be able to imagine that, you know, the company could be generating hundreds of millions in revenue like 10 years down the road. And I say imagine because very often we partner with companies that break new ground, we partner with companies that create new markets and we love these companies. So it's not the matter of finding and establish market and coming to us with a Gartner Report that says that like the market for X Y and Z is 10 billion dollars because, by the way, the fact that some other companies are making 10 billion dollars in some markets doesn't entitle you to a single cent of it as a startup.

And on the flip side, there are companies that are doing something new and innovative so there is not an established market but again, the key thing that we try to wrap our minds around is "Can we imagine, that there'll be a really big market for this particular product?". And the second thing that we're looking for is an exceptional team.

The exceptional team is not as simple as a founder who has worked at a blue-chip company, right? The exceptional team doesn't mean somebody who has worked at like a Google or something like that. Exceptional team means founders who have a set of exceptional qualities in some dimension. They need to be exceptional, not in all dimensions but at least in one dimension. They can be an exceptional technologist. They can be an exceptional salesman. They can be an exceptional marketer. And we always look for founders who are exceptional in some dimension and we're looking for founders who are daring. You know - we are looking founders who are bold, who dream big, who have big ambition and founders will have tenacity. In other words - founders who obsess about their ideas, who are willing to fight for their ideas like through good times and bad times. Tenacity is very, very important because the start of the journey is a long one. The overnight successes usually take 10 years to become overnight successes. And of course, like in over the 10-year period there will be good moments, there will be a lot of tough moments and so we are always looking for founders who are willing to persevere.

And so Tomasz, back to your question, like, you know - what kind of companies you should send to us immediately. Well, if you come across something that you can imagine we'll be a huge market 10 years from now and it's founded by a team that has some of these team dynamics and team ingredients, for sure send it our way.