The challenge is to stay relevant to your stakeholders — an interview with Jan Habermann
“The challenge is to stay relevant to my stakeholders,” says Jan Habermann, founding partner at Credo Ventures, a Seed and Series A VC focused on companies in Central and Eastern Europe. Whether in times of crisis or prosperity, a successful VC must create value not just for his LPs, but also the businesses in which they invest. This is one of CREDO’s principles, as they manage over EUR 170m and a couple of well-known portfolio companies, including UIPath, productboard, or Explain Everything. I had a chance to interview Jan a short time after the coronavirus pandemic broke out.
Paweł Michalski: Jan, you’re not an easy man to find on the Internet. Although CREDO’s brand is well known in the CEE, there is surprisingly little information about you as an individual.
Jan Habermann: To be frank, I am not an extravert and public appearance is not important to me. However, I’ve recently decided to become more relevant as a public figure, which could help strengthen our presence in selected markets — in Poland, for instance.
PM: So how did you end up in venture capital, a profession that promotes extraversion as a means to success?
JH: The history of my career as a VC is a history of a friendship. You see, I’ve known Ondrej Bartos, my co-founder at CREDO, since primary school. We went to college with no money whatsoever, so we decided to do something about it
Our resources vastly limited our choices, so we thought about organizing events — this path required little upfront investment. Since we had just graduated from a course on investment banking, we thought ourselves experts in the field. That’s how Czech Capital and Investment Banking Forum came to life in 1996. Luckily, we found enough relevant partners and sponsors to make it worthwhile.
Our second business was also fairly simple — we started a software house with another friend who was a coder. Demand for software development was increasing at the time and we grew the company to 40 employees before selling it to a larger systems integrator company.
At that time, very few people knew how to do business globally, so while these experiences don’t sound like a typical VC path, they expanded our horizons. After our second business was sold, we traveled and read a lot about VC. Eventually, we started doing some angel investments offering simple value add: advising startups on how to talk to people, how to structure their businesses, etc. Over time we built some reputation and broadened our knowledge and network.
PM: Is that how CREDO started?
JH: It took us one more step. At some event, we met Tomasz Czechowicz, the founder of MCI Management (a VC & PE firm based in Warsaw — PM). MCI was expanding its presence in the region and we decided to join in 2004. It was a great fund management school for us, but eventually, we parted ways in 2008 to start our own fund.
PM: If that was a great school, what did you learn that stuck with you?
JH: First of all, there’s a difference between investing your own money and other people’s money. Another lesson was more philosophical: we wanted to do VC the Anglo-Saxon style. We found out that we prefer investing in outliers, real innovators who could make a meaningful impact on industries they’d worked in. That also meant not all of our investments would ever be successful. It’s a risky approach, but if you do it right, you could change the world around you. MCI had a different philosophy. But then again, everybody has to find their own way — that is the ultimate lesson here.
PM: How do you measure your success as a VC?
JH: The VC business has one very important KPI, and it’s the return on investment you deliver to your LPs. For me, how we get there is also important. In other words: it’s not only our investors who we treat as our customers but also the entrepreneurs we invest in.
PM: Having said that, what is the most challenging part of your job?
JH: The challenge is to stay relevant to my stakeholders. At CREDO we consider ourselves generalist investors which means that we don’t specialize in any vertical. In order to be relevant to founders I work with I need to maintain at least some level of industry knowledge. That’s a lot of ground to cover.
Staying relevant also refers to what you bring to the table. What’s important in the VC business is having a broad network of good contacts. I think this is the most scalable thing an individual can do. If you have a portfolio company that is seeking something, a network of contacts who could help find that something is what makes you relevant. I believe that our global network is one of the best things we could offer to our portfolio companies.
Besides, a career in VC requires a lot of discipline in terms of time management, setting priorities, and allocating resources. Truth be told, I’ve never been good at time management and still enjoy working at the edge of what I’m capable of. Now that we’ve grown and have more team members it’s easier to do our job and enjoy life outside of work. But that’s not easy.
PM: If you had a chance to do it all over again, would you?
JH: Well, I can’t imagine being employed, and I guess that’s telling. I’ve been working on something that is mine as long as I can remember and the fact that I still enjoy it is crucial for me. Venture capital is definitely not a boring career, and the potential reward is worth the challenges. You’re meeting brilliant people with deep domain expertise and can help them on their path to change the world.
PM: But is there something that you would have done differently?
JH: I think I’d have done more — as I grow older I begin to think that I was able to do more when I was younger (laugh). Looking back at the beginning of my professional career, I think I would have spent more time meeting people. I think that the networks that you build during your studies have the best quality because they are not “transactional”. I didn’t have time to do it back then, because I started working right off the bat. I also think that studying abroad would have been beneficial, but it wasn’t as easily available when I was younger.
Last but not least, I don’t think that there is one way to do it. I don’t like people following the same beaten path, listening to someone smart saying: this is how it’s done. We certainly didn’t. But we were working hard, staying authentic, doing things we thought were right.
PM: Do you think that the current crisis environment makes it more difficult for VCs to operate?
JH: Right now I think VCs who are in the market and have the money might have it a little easier right now. Having said that, the supply of capital will be much different. Many LPs will significantly reduce their stakes in this asset class, many might disappear altogether. Raising a fund will be much harder, and this, in turn, will make startup fundraising even harder.
I don’t believe that the supply of good companies is affected by economic cycles. Many people will be laid off — some of them might even decide to start their businesses. But in principle, the supply will not be influenced.
I do, however, think, that we have been in a bubble for some time. There was so much money in the market and everything seemed so rosy. Hype markets lead to bad decision making. It’s because in VC if you are aiming for outsized returns you have to be ready to strike a deal at all costs. I think that’s changed and we are back to basics.