Niko Bonatsos, Managing Director of General Catalyst, discusses the investment opportunities he sees going forward, shares his view on the Greek tech ecosystem, as well as insights for Greek family offices and points out the importance of building strong networks and creating the entrepreneurial facemap in Greece.
Currently, I am mostly interested in the future of work sector. Firstly because a huge part of the labor pool are underemployed or unemployed, and also, because of all the technological advances and the pressure from COVID, people are looking for more opportunity. I love the future of the workspace because we can invest in individuals, solopreneurs, and SMBs, in order to provide them with access to more opportunities, help them make more money, and live a more fulfilling life. So in a world where all of us learn how to work from home, this presents even more opportunities. For me, the future of workspace translates into vertical labour marketplaces, often targeting individuals and SMBs that have been left behind historically by Silicon Valley. At the same time, future of work means empowering new ways to work, like the tools and services distributed teams and the remote talent are using.
The second sector is whatever the cool kids are doing online. After a year of all of us being stuck at home, and also Gen Z now coming of age and having their own preferences, consumers’ opportunities are coming back into play. I am really geared to come across new ways for us to fall in love, communicate, entertain ourselves online, and we’re now seeing because of some new hardware devices becoming really cool and having some good distribution, also brand new experiences on the line, virtual reality included. Overall, at General Catalyst, we are very eager to meet founders who are ridiculously ambitious and hopefully have what it takes to go the distance. And this could be across many sectors and stages. Healthcare is a sector that we all collectively are spending a ton of time on, because that’s one that needs to be digitised, come online and consumer demand shows over the last year that they’d rather do a lot of stuff from home.
People should be patient, first and foremost. Right now, there is a lot of excitement for any kind of investment opportunities in the world of technology, both in private companies across all stages, as well as the public tech stocks. If you have a macro point of view, tech is still in its early days, since now it accounts for a minority of the economic activity; around 10-20% of the GDP in the mature economies, but there’s a lot more to come. Any Fortune 1000 company that has no software engineers or has a hard time attracting them, will get disrupted in the future. So, I do see a lot of opportunity in sectors that historically have not been touched by technology.
In countries like Greece, COVID has presented a phenomenal, once in a lifetime opportunity. It’s almost like giving the country and the economy a reason to rejuvenate, since Silicon Valley is a mindset today, and a lot of high quality talent that acquired amazing work experiences overseas, is now eager to move back. What the Greek ecosystem is missing mostly is senior and mid level management and if we can attract people who have worked for 5-10 years overseas in the US or in Europe for mature tech companies, this will make Greece’s existing ecosystem leapfrog.
Also, it’s interesting that, today there are a few tech companies in Greece with 100-200 employees each, who have built some critical mass. What we are seeing today is the second and third generation of young upstarts getting founded in Greece, who have more experience than anybody else before. At the same time, overseas investors like me, who are representing funds from the US or other parts of Europe, are now paying attention to what’s going on in Greece. Today, we can point to Greek companies that have been sold for a few $100M. We can point to individuals from the US or Europe, who have moved back to Greece to join Greek companies. And we can point to other peer firms that have taken the early leap of faith, and have invested in seed A and B stage companies coming out of Greece.
Lastly, in a world where all of us are investing from home, location doesn’t matter as much. And if companies have a hybrid structure, we’re still very good to invest. For anyone looking to invest in tech in Greece, either directly into companies, or into local funds, I think this is a phenomenal time. Never before we saw this kind of new venture creation with seasoned talent and hybrid structure from day one with Greek founders. But obviously, the ecosystem is still in its early days. So I think the best is yet to come!
Firstly, you have to be patient. Secondly, you should reach out to others who have invested in tech, have invested as angel investors, or to major investors in private companies. Thankfully, there are several family offices with Greeks who have exposure to both US and European funds, late stage tech companies or public equities. It’s also always good to get opinions from people who manage capital on behalf of family offices; firms like Cambridge Associates.
I believe it is a good time for Greek family offices to get more active and invest in tech. Greek family offices have to make the choice whether they want to make investments on their own. And it’s harder to do so for the first time, since they don’t have access to the right network and the founders do not know them. In general, I would advise anyone who is running a family office and has not done much in tech before, to actually co-invest alongside professional investors. Of course, the upside will be shared, but the founders would be able to turn to professionals when things are going wrong.
Tech has a risk. The vast majority of the startups don’t work out. And historically, most of the VC returns are not satisfying. But, undoubtedly, we’re almost at an all time high. A number of European funds are coming to Greece, like the EIF, and they don’t come with as many restrictions as they used to come before. And, of course, more capital means that any company that’s getting started in Greece has a much higher chance of getting funded than ever before.
I am very pleased about all the investments that the Greek investors have made in the local ecosystem and overseas. For example, It’s awesome to see Venture Friends invest in a number of European founders as well as other founders who end up going through YC. The same applies to Marathon’s work through the ‘‘Greeks in tech’ events and identifying all the various individuals of Greek origins that are building startups overseas or could potentially open offices in Greece. And it’s amazing to see as a result, companies like Causaly that Marathon has invested in, to start doing business in Greece. At the same time, Big Pi is trying to level up the ecosystem. Marcos’ leadership in the Innovative Greeks initiative and Big Pi’s work to move forward the policy in Greece stand as great examples. Overall, I am really pleased with the progress that all these VCs are making and the initiatives that they are undertaking. Frankly, this has resulted in the tech talent that’s coming to Greece to be much more qualified than ever before. At the same time, it’s great to see the various local funds collaborate with each other and syndicate investment opportunities. Because, historically, we Greeks are not doing very well on this front and so at least for now, it’s really interesting to see a number of co-investments among the local tech firms.
The market here is pretty small so from a sourcing stand point I would say they got it, they see pretty much everything. I believe that are two major things that they could do better at. Firstly, they could become more well known. Something that takes time, since they need to demonstrate that some of their companies become really viable companies that have a presence overseas and that serve global customers. Today, local VCs have made some investments who have the promise to really get there. The other thing is for some of them to be more active in a global discourse about specific sectors. Whenever their work events, online publications, online activities are happening, it would be nice to hear from local or regional investors here in Greece, because they have domain expertise in the sector. For example Point 9, which is probably the world’s best SAS fund, has done a stellar job on this front. They are out of Europe, working remotely for a long time, and anytime there is an event about enterprise SAAS, people ask them what do they think, what are they seeing in the market, what’s their point of view. So it would be nice to start seeing some thought leadership from the local VCs in Greece.
I only see upside here. A family office who has not done much in the tech world in Greece or overseas, can learn from some of the people who have been tempted and have invested in the local ecosystem before. Also, if you are an investor on the ground here, who wants to raise more capital, especially now that a number of the local funds are raising more capital, it’s a great time to dramatically expand your network, thanks to Endeavor. In countries like Greece, where historically, the traditional part of the economy might have not been very forward looking, a lot of those networks may be harder to reach. So if Endeavor can facilitate a trusted party to make these connections, I think it could be hugely beneficial for both parts of the equation.
Creating the facemap of individuals who are invested in tech and the prospective ones who may want to invest in tech or they are just eager to learn more about it, is of massive value. Since no such face map exists today, it is really hard to figure out who has already invested in the Greek tech, who is interested in doing it and who has the capital and the knowhow of doing so. Therefore, Endeavor’s work in creating this face map is incredibly valuable. I am certain that a few years from today, the local ecosystem will benefit from that, both the founders, as well as anyone who gets recruited by these companies. To sum up, I believe that it would be a pity a few years from today to see a company worth billions of dollars get started from Greece and not have a huge chunk of the wealth creation go back to the local funds, full time employees and family offices, but end up predominantly in the pockets of overseas funds instead.