Interview with Andris K. Berzins on angel investing

11.09.2014

Andris K. Berzins is a mentor and angel investor who’s had a tremendously important role in supporting the Latvian and Baltic startup community. He is the co-founder and Chairman of TechHub Riga as well as a board member at the Latvian Business Angels Network LatBAN.

 

Andris was interviewed by Marek Unt from JLP Communications Agency.

What was your path to angel investing?

I really call myself a small-time angel investor because I only have a handful of investments. Talking about ending up in angel investments, I simply saw an opportunity with a team I liked and at that time it made sense to me. There was no real planning, filtering, searching involved whatsoever. It was entirely opportunistic.

I invested in a company called Reach.ly that offers data mining e-commerce analytics. I’m not the exact chairman there. I’m more a hands-on than hands-in kind of a person.

 

Any other companies in your portfolio right now or perhaps extension plans?

I’d say that the rest have been personal investments for the companies I’ve been involved in as a co-founder. Also I’ve done such investments where I’ve devoted time in exchange for options.

 

Do you have a personal preference for a sector or for a business model?

I’m generally inclined to focus on the area of B2B rather than B2C since this is where my expertise and knowledge come from.


How healthy is the Latvian startup scene in terms of pipeline and investments?

Everything is relative – Latvian startup scene is relatively small but on the other hand it’s growing fast. We may not have as many startups as Estonia, also we haven’t had as much success, but Latvian ecosystem is growing. We see more people coming to the ecosystem and entrepreneurs starting businesses. Lately Latvia has seen a few success stories that have ignited a lot of interest.

 

Do you see an inclination towards games, consumer apps or businesses in the Latvian startup scene?

If there’s an inclination then it’s probably more towards B2B. The circumstances are similar to Estonia – there simply isn’t a large consumer market. If you’re a B2C product then you need to be either entirely online based and completely remote or you have to go to another market in order to get things going. In a word it’s a bit challenging to start a B-to-C startup in a country like Latvia.

For example if you live in Riga then you’re not necessarily in touch with people in London or New York. You may not be aware of what they want, right? In Latvia there’s a lack of variation in consumers. So I think that there’s more of a bias towards B2B startups such as e-commerce, payments and other various stuff.

Of course there’s Ask.fm, which is a consumer startup, and a rather strange one in terms of its makeup relative to the others, but it's sort of the exception that proves the rule.

 

Who do you see as upcoming stars in the next few years?

I think that many teams have been making a lot of progress right now. For example Infogr.am has raised money and is scaling up at the moment. Cobook that’s now part of FullContact has found its success. Also we can tell the same about Sellfy and AirDog. There are also new teams coming out of TechHub and many other startups.

 

How big a role does Latvian government play in supporting the startup sector?

The role of the government is not that great but it’s certainly not zero. Over the last 18 months we have seen quite a lot of positive changes in government’s support. Many of them have been driven by the very innovative, flexible and practial Latvian Guarantee Agency that is supporting the ecosystem of startups.

For instance TechHub came up with a concept of soft loan program tied to an accelerator program. LGA found a way to implement it relatively quickly by tacking it onto an existing program within Imprimatur Capital, one of the local VCs. So now they administer an additional fund up to 50,000€ for soft loans to start-ups.


Marek and Andris at EstBAN/LatBAN Angel Camp in Pärnu

The newly founded LatBAN and EstBAN have recently signed a cooperation agreement. What do you hope will be the benefits of that?

I think it’s more putting on paper what’s happening in practice. I’m not a big believer in paper agreements unless there’s something behind them. From day one the management of EstBAN and our management have had a good cooperation relationship. We’ve taken some advice from EstBAN on what to do in practical terms and the collaboration has been very helpful.

Today’s event (the interview took place during EstBAN summer camp – ed.) is one practical example where we can both help to increase deal flow and capital availability for start-ups. Latvia and Estonia are both small countries but there are plenty of opportunities for investments to go across boarder – certainly across the Baltic States and also across the Nordic region.

 

Do you see some competitiveness between different countries in the region in order to become the central hub for startups?

I believe to some extent competitiveness is there but that’s not a bad thing at all. I personally think that Estonia has a much better global reputation as a known hub for start-ups than Latvia or Lithuania – and with a good reason.There are benefits to both collaborating and competing. It is good and I believe in that because it keeps everyone on the edge.

 

What goals do you have for LatBAN in 2015?

Our goal is to try to get some real deal flow going through the network. Our main focus is finding the right startups, pitching them and encouraging angels to take a step and seal the deals. 

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