Getting your place at the table — an interview with Marcin Szeląg


Not even 40-year-old, Marcin Szeląg can already be counted among the forefathers of Polish venture capital. He is a General Partner at Innovation Nest, one of the few VCs in Poland investing internationally. Before embarking on the VC path, he was an operator at a Krakow-based startup epuls, backed by an international VC fund.

We discussed Marcin’s career leading into venture capital and how the Polish ecosystem transformed over the years. A man of strong convictions, he explained why confidence in your opinions is necessary to succeed in the VC game. Marcin mentioned the effort it took for Innovation Nest to expand internationally and why it’s crucial to earn a seat at the table. He may seem blunt at times, but in his own words, “venture capital is a business for extroverts.”

Paweł Michalski (PM): What were you doing in your twenties, and what lessons from that time stuck with you?

Marcin Szeląg (MS):
As a twenty-something-year-old, I was studying finance and banking. I traveled a lot. I was also involved in various initiatives. For instance, I’ve tried to establish the first incubator at my university in the early 2000s. It was still before Poland’s accession to the European Union, and there was no ecosystem, no understanding of what it’s all about, and almost no funding available.

In 2005, I started a startup group on Goldenline, the largest LinkedIn competitor in Poland, and it amassed 14,000 people at its peak. I also worked at COMARCH, one of the largest software companies in the region.

I think my first big breakthrough came in 2007. I joined a company that was developing a social network for teenagers called epuls. By the time I came on board, they already had funding from Holtzbrinck Ventures, a beautiful office, and a shiny logo at the reception.

What’s more important, their culture was great, and growth was very promising. Those were the “beginnings” of the Internet in Poland and I was very excited about it. Although I thought I knew a lot, there were a lot of unexpected unknowns. Many Internet companies were trying to make a profit using ads or selling things to their users. Almost nobody was able to monetize through their users.

We were also experimenting, but luckily for us, it ended up with an exit to a strategic investor. That is also how I met with Piotr Willam, one of my partners at Innovation Nest.

PM:
So how did you get into venture capital specifically?

MS:
It was 2011, and the Polish government has just backed the first incubators and real VC funds in the country. Innovation Nest was one of the chosen few. After leaving epuls, I was looking for an opportunity to be on the investor side of the ecosystem.

Back then, it was extremely improbable to join a VC fund. It was a tight-knit community and they were not recruiting. I was lucky to be introduced to Piotr by a shared connection — it was a coincidence, but everything went naturally from there.

PM:
What was it like to be a VC ten years ago?

MS:
I wrote my master thesis on the venture capital market. When I compare my findings from that time, it’s fair to say we didn’t have any of the things we have now. Ten years ago, nobody thought about going global. We were focused on doing something that would work.

Progress was plodding — everything we did felt like taking a stroll. To change that, we had to get to know relevant people and other funds. I don’t remember when we first made an international deal, but I think it was in our fourth year of operations.

Compare it to now, we are already part of a global ecosystem or at least the European one. Sure, we needed the last ten years in Poland to get there, but it usually takes time. Currently, we are experiencing an exponential growth period. Every month it’s new people, new opportunities. Maybe we don’t have the same density as in Berlin or London, but we still have great companies around.

From our fund’s perspective, we feel like we’ve been offered a seat at a larger table, but we have to prove we’re worth it. I still remember a Seedcamp event (PM: Seedcamp is a European seed investor with more than 360 investments so far) we attended in Budapest a few years ago. London-based VCs dominated it, and we felt like we didn’t belong. It’s different now.

PM:
What changed that perception?

MS:
For our fund, I think it was the European Investment Fund becoming our investor. For me, it was when we invested in three Portuguese companies in a very short time. We came out of nowhere and attracted three great companies. It changed the way I perceived our potential.

PM:
What do you wish you knew before becoming a venture capitalist?

MS:
I wish I knew that the whole startup world is aligned to be binary. Either you’re big — like Zynga, Facebook, or Salesforce — or you’re out. It’s tough to be between these two extremes.

If you are Atomico, Balderton, or Index, you might get a slice of the big pie. When you’re starting, you simply don’t have access to these kinds of companies, but people inevitably expect you to achieve the same result. This is where FOMO reigns and I wish I learned that earlier.

PM:
Would that change the way you operate?

MS:
We probably wouldn’t have changed our investment thesis, though we would have expanded on our initial vision — investing in SaaS businesses — sooner. Also, we would have acted more quickly and decisively in many aspects.

PM:
Have you made any regrettable mistakes so far?

MS:
I think that everyone makes them. Every firm has its own thesis, processes, internal dynamics. Sometimes there’s a deal that doesn’t fit that picture. I had one of those in my career, and if I broke our internal rules, it might have been one of the best deals we’ve ever made. But I didn’t. Now, we try to keep score on the deals we didn’t do by having a fantasy portfolio.

PM:
What is the most challenging aspect of your work?

MS:
I think it’s developing intuition and a relevant network. By intuition, I mean that as an investor, you should have an innate conviction about how the future will look and know where the proverbial puck will be in a few years. It’s an ability to foresee how customers are going to behave under different circumstances. You can develop it with age and experience.

The other thing is the ability to build your network. No investor is working in a vacuum. Somebody told me: “if you want to go fast, go alone. If you want to go far, go together.” It’s very relevant to venture capital. If you want to succeed, you need to have good friends, you need to get a place at the table. Venture capital is a business for extroverts who can easily become part of new networks.

PM:
Do you believe that having the above enables success in venture capital?

MS:
Look, this business is quite simple. The role of an investor is to find a good investment target. If you have a brand, the opportunity might come to you, but you have to earn your stripes. In the beginning, you have to offer something valuable to the founders.

Once you have your potential target, your role comes down to saying yes or no. Executing a deal is not as complicated at an early-stage, especially seed. I think that you need to have a firm conviction about a company and its team when you invest because it’s hard to change the course later on. After the deal is done, my experience is that your actions as a board member and advisor are largely irrelevant for the company’s ultimate success.

PM:
I know that you’ve been experimenting with various tools to find these exceptional deals. Do they make your VC life easier?

MS:
Yes, we believe that experimenting with analytical tools gives us a slight edge. I wrote an article about that a few years back, and it’s still coming up, despite being outdated. I think that every VC firm has to create its processes and tech stack that reflect their way of working. Being data-driven is especially important if you’re investing in sectors that enable data scrapping and analysis.

We have recently discovered Notion and we’ve been creating a lot of things in it, including our internal knowledge base. We are even thinking about moving our website to Notion.

PM:
What’s a practice that you would recommend to fellow VCs?

MS:
I’m a big fan of doing research. I’m reading numerous newsletters, which led to finding one of our Portuguese investments. It’s funny because I know that over the years, many investors had a chance to learn about UIPath and they didn’t think it’s worthwhile. So my advice is: do your research.

PM:
Finally, what has been your favorite accomplishment so far?

MS:
There’s a company in our portfolio brought to us by another investor who didn’t end up investing in them. My partners weren’t convinced but I insisted on taking them on. The company is thriving now. As I said — you need to have a strong conviction in venture capital. There’s always a lot of debating and potential scenarios, so if you don’t have one, you could be easily influenced.

Overall, I would say that seeing the founders succeed gives me the most joy. Not because I had something to do with it, but because I was correct about being in the right place at the right time.

Every investor has his own opinion and mostly, they are wrong. But in those few instances when they are right, they can deliver significant value to the ecosystem. The feedback loop in venture capital is long. When people come to me saying I was right years ago, I know that I’m doing my job right. It is still a work in progress, and I still feel the need to prove I’m good at this.