What was your inspiration behind building GSD Ventures? There are four pillars of inspiration behind GSD: The first pillar of inspiration is that intellectual capacity is evenly spread throughout the world and opportunity is not. Gary has been coming to Eastern Europe since 1992 and has seen the amazing technical talent that builds great tech companies financially efficiently. Because of political and cultural dynamics, it’s sometimes like having this amazing car in the garage but because of Silicon Valley is so far away Eastern Europe startup has not debuted on the race track. GSD partners with apolitical startups and entrepreneurs from Eastern Europe to create AI companies that are truly global and country agnostic. We do this starting in Silicon Valley because it is a port to the rest of the world. In the second pillar, we discuss that globally there is a gap in both intellectual and financial capital for startups. On one side of the pendulum is the “Art of the Start” led by the accelerator movement that includes YC and TechStars followed by Eric Reiss and Steve Blank’s “Lean Startup”, we saw the rise of seed Investors and Micro VC. Those resources are all around getting as many people as possible to start companies. On the other side of the pendulum is growth capital which is largely led by Mary Meeker, SoftBank, and others which helps when you need a substantial amount of capital pre IPO. There is a massive gap in the middle. When companies have product-market fit, a couple million in ARR but are not ready for a unicorn round and that is precisely what GSD is addressing. The third pillar is GSD has trust, value, and experience in both Eastern Europe and the United States. Gary has started many successful companies in both Russia and the US including popular Russian entrepreneur David Yang. Gary also Co-founded an early Russian accelerator GVA launch Guru. Gary was on the original management team of Click Software which recently sold to Salesforce for 1.3 billion dollars. Derek has a diverse background working in several startups in New York and California going from $0-$2billion, he ran and sold a story-telling marketing firm, served in the US Army and helped run and start a national accelerator Bunker Labs. The fourth pillar is that to become a global company the team must be both full of grit and at the same time be diverse. There are a lot of studies that show that being bold and having grit is important. We believe no population has been through more and has demonstrated grit than eastern Europe. According to a McKinney Study, Gender Diverse teams lead to 35% higher returns. Diverse teams with grit is a combination that makes our companies very powerful.
What informs the ideal startup to work with? How do you select?
We travel the world investing in resilient teams bold enough to #GoGlobal. We look for companies that have a strong Artificial Intelligence product and talent or ones that can have it injected into it them via our network and connections. Our due diligence is very strong to ensure the product works exactly as advertised and the cap table is investable. What are some important metrics and data that startups wanting to move into the US from Europe should know? In today's world, financial efficiency will matter. Eastern Europe startups have an edge here because they have great talent at a low price. You have already worked with some great startups under the GSD Venture model. What are some free to share lessons you can help give startups struggling to take their businesses global? There are hidden metrics that don’t get discussed enough. One is the ratio between your traction and the number of months in business. The ratio between how long you been in business and reached $1m in ARR. There is not a set formula but investors and consumers both want to be on winners. Especially investors want to feel like they are adding gasoline to a fire not contributing to a slow-moving project. Western consumers and businesses don’t buy features and benefits alone. Remember large companies like Apple, Nike and Salesforce sell what they believe in not a show with good support or a phone that call others. Once you identify a startup to work with, what happens after that up until the stage when they are now a global company? Describe the work process.
Most early-stage companies are set up around a strong product and that especially true in Eastern Europe. However, GSD adds 4 things simultaneously: A strong sales and marketing strategy and execution. We design a story, website, make product recommendation and use our network and team to identify early US adopters. A strong influencers strategy: We align with the company with the best advisors from business, academia and more to ensure that the startup is intellectually part of the intellectual discussion in the category they are monopolizing. An investment strategy: we develop and execute a strategy that intertwines with their sales and marketing and influence strategy Systems: We develop and design optimal systems but also ensure that the company is designed legally and operationally in a way that is comfortable to VC. Startup accelerators and investing partners are alternative options for startups. How does GSD Ventures differentiate itself? Accelerators are great for when you first start. However, they were designed to fit into 13-week summer vacation. AI startups simply need more support than that. Additionally, there is plenty of resources around starting. GSD addresses what happens after you start and have traction. What does the future of GSD Ventures look like beyond 2020? We want to change how companies and started and who they are started with. We have plans in place to develop a partner and operations model that is global that is similar to what Derek helped designed with Bunker Labs and believe that we can first develop billion-dollar portfolio companies and in turn develop GSD Venture Studio in a billion-dollar brand.