Startup Grind Prague hosted one of the most successful individuals from the Czech startup scene, Ondřej Fryc. Thanks to this event, Prague became a member to a global community of entrepreneurs, who share not only their success stories, but also mistakes from business and life. Ondřej shared his view on the current boom of investments into startups and a story that is behind his new project – investment fund Spread Capital.
With Ondřej Fryc we talked about his business beginnings, from the inception of his great ambition, through his first business all the way to building an ecommerce leader with 10 billion CZK revenues.
Ondřej Fryc is the founder and for 16 years, CEO of Netretail Holding. He sold the company for 5,4 billion CZK.
The first Startup Grind Prague was a great success and we bring you the best questions and answers from the interview with Ondřej Fryc:
You started investing in startups via your fund Spread Capital, can you tell us a little bit more?
I started Spread Capital, but I don’t know if I will be doing this in the long term. I greatly enjoy it now and it is giving me a lot of energy.
Working with small teams with a lot of spark in their eyes and enthusiasm is great. I enjoy being around this spirit -- I really missed this at MALL, which became very big.
The fund has 40M EUR committed funding, all my private money. Since there are no other limited partners, it gives us great flexibility without a bureaucratic decision making process. The focus is on Seed investments between 100k-400k EUR and Series A investments between 2-3m EUR.
Our strategy is to invest in great people and teams. We don’t have a particular industry or geographic focus. I must simply like the guys behind the project.
What business would you start in current ecommerce if you were 25-30 again?
It is always about the time and opportunities that are just evolving. In 2000 we were all jealous of the people that started importing PCs, it was the golden age of HW). But that opportunity was already over, the market was occupied. We felt it was unfair, but we spotted a new opportunity in ecommerce.
Today it is the same. Young guys claim we were lucky to be there when it all started and now we are too big for any competitor. However, there are other new opportunities that are out there such as mobile. But I don’t know what will be the next unicorn.
How do you choose your investments?
The most important thing is always the personality of the founder. It is not about the sector, that I think will be trendy and great.
Of course I would not invest in a great founder riding a dead horse. I would invest in a great founder if I think the product makes some sense. We need to be on the same mindset and have some resonation and trust in each other looking.
Valuation? Just a game!
What about the valuation of the startups?
Valuations don’t make sense. Valuation is only a game and is not about performance. It is only about making money (if there is anybody who will buy the company for more, or you can float it on the stock market).
You are investing at crazy valuation, yes, but hope to sell for more. Don’t be fooled by all the headlines on TechCrunch and similar – this is only media. People don’t see the exact terms of these deals like, which in the end might not be that lucrative at all for the founders.
How important is to have a good lawyer for a startup?
It is important of course, but what is more important is that you read the contracts, you have to understand the conditions. The lawyers don’t see the world with your eyes.
My contracts with Intel and Naspers, I did them myself, I understood every single word. The main contract had about 140 pages of Arial 10 of legal English. It took me hours and weeks to understand the chains and all the references. But in the end I knew what’s in there and where are all the boundaries.
When you have your 1st investor or when you are exiting your company, all these times you need to know what you are doing.
What is your message entrepreneurs?
I will tell you one thing that resonated with me when I was in Silicon Valley last week. Everybody is an entrepreneur there, there is an app for everything and startups are everywhere.
One of the mantras, which I hate, is fail fast. I think, when you are starting a company, there are always some problems, hiccups and situations when you want to give up.
My advice is to never give up. A complete opposite of Silicon Valley mentality but I am convinced my approach is better.