“We saw two engineers who knew how to make a very complex product to solve a big problem for humanity.” With this phrase, Panagiotis Papadopoulos, a partner at the Greek investment fund Marathon Venture Capital, summarizes in an interview with K the reasons why the fund financed Augmenta from the first stages of its development. The $110 million gold deal brought to the fore the elements that make a startup unique, that is, all those ingredients that attract investor interest. “The product must satisfy the customer, the founders must make it work. Those who don’t think so are not considered startups and will not succeed,” says Mr. Papadopoulos, who sold his own tech company BugSense to American giant Splunk 10 years ago. Marathon Venture Capital’s companies have already raised more than $200 million, and in addition to Augmenta, its portfolio also includes companies such as Hack the Box, in which US private equity fund Carlyle Group recently invested. Despite their positive stance, he expresses concern about market volatility, given that “what we have learned with zero interest rates over the past 15 years, we must forget”, characterizing state intervention as unnecessary, except for those that led to to capital accumulation and the creation of a critical mass of venture capital.

– Usually we highlight 3 main points. First, in the ability of the founders to create the product they present to us. Here, we usually look for products that will have market supremacy and make it difficult for new competitors to enter the market. That is, we see that the founders know well, while the rest do not know this or can hardly learn it. For example, few can advance AI and machine vision technologies to levels like the Greek lambda automata we recently invested in. Therefore, we are looking for founders who have developed significant capabilities and are willing to perceive market gaps and develop technology products. At the second level, we ask ourselves “why this group?”. How will these founders dominate the world? We want to see not just a team building a product, but a team trying to distribute or sell it to the global market.

An entry-level company rarely has marketing and sales knowledge, which is understandable. But we want to see the thirst of the founders to satisfy the needs of their clients. Founders should consider product failures, not how much capital they will raise. The product must satisfy the customer, he must make it work. Those who do not think so are not considered startups and will not succeed. Focusing on the customer and understanding the market the founders are entering (to understand, for example, the cost of the product, which markets to enter, etc.) are key criteria for investing in a startup. Finally, we invest in companies that are committed to improving people’s productivity. For example, companies that use technology to increase food production by reducing the amount of fertilizer or detect cyber attacks faster, etc. If this is achieved, then the founders’ product gets a place in the global market, since its impact on people’s lives is significant.

The product must satisfy the customer, he must make it work. Those who do not think so will not succeed.

– We saw two engineers who were able to make a very complex product to solve a big problem for humanity. At the same time, we also discovered a thirst to travel the world and find those who will use it. The company has developed a tractor-mounted system that helps farmers increase food production and reduce the use of fertilizers and chemicals. Using artificial intelligence and machine vision technologies, the system determines the areas of the field that need fertilizer or some other chemical, and automatically decides to apply as much fertilizer as necessary to the area of ​​the field where they are needed. So we can actually eat more with less fertilizer. After being acquired by CNH Industrial, the world’s second largest tractor manufacturer, the company’s main goal is to bring Augmenta technology to thousands of tractors over the next five years, as well as see large-scale change in the agricultural industry. For this, the team in Greece is being strengthened from about 50 to 200 employees.

– We expect the founders to focus on serving some of the first customers, meaning their products will become an integral part of the daily life and work reality (workflows) of their users. If this is achieved, then we help to find further investors so that the company can become a world leader in the sector in which it operates. Our goal is to acquire 15%-20% of the shares of companies and keep them until the sale. Here I want to point out that most of our portfolio companies have subsequently raised capital from the best investment schemes in the world. These are examples of Hack the Box, invested in by the American Carlyle Group, Learn Worlds, invested in by Insight Partners, Causaly, invested by Index Ventures, etc. Our portfolio companies have raised more than $200 million in capital. Thus, we have proven that the Greek founder network can be compared with the network of founders in other countries.

– I don’t think the biggest problem is the lack of funding for mature companies, as good startups, that is, with a turnover of at least 10 million, find funding. That is, even companies focused on the Greek market receive liquidity from international investors. Examples are Hellas Direct and Skroutz. I believe that financing instruments should be increased for companies in the early stages of development, and not for companies in the mature stages (growth). That is why we should create more funds like ours, investing in startups in the early stages of development (pre-seed, seed). This, in turn, will contribute to the development of more companies, which in the future can become quite large. There are no magic wands, and I personally think that government intervention is unnecessary because it does not contribute to the creation of better and more ambitious startups. Indeed, the state encourages the creation of funds, and without its contribution, we would not have this ecosystem. But I think this is enough. In addition, we will have better companies when we have the best human network (marketing, sales, engineers, accountants, etc.) with a better understanding of the market of their activities. In addition, it is important that the founders have great ambitions not to acquire, but to grow their company, and also take a cue from the people they see as successful in the ecosystem.

Luckily, the Greeks didn’t study well.

Yes, they are bothering us. What we have learned from the policy of zero interest rates over the past 15 years, we must forget. We have seen companies overvalued relative to their earnings, or loss-making companies closing huge funding rounds. Fortunately, however, the Greek founders were not “well educated”. That is, they did not raise capital at absurd prices and did not have easy access to capital, unlike their competitors in Silicon Valley. They have always acted conservatively. This characteristic, which was a disadvantage in 2021, is now becoming an advantage. The fact that liquidity has declined and that investors are stressing operating profitability is nothing new for the Greek founders. In the coming years, we expect a significant reduction in investment, as well as structural changes in the way products are developed with the advent of artificial intelligence.