5 startup investments in 5 industries: How can Practica Capital handle this?

Lithuanian startup investor Practica Capital has made 5 investments in 5 radically different industries this year. Does it make sense?

We decided to ask directly. Donatas Keras, the partner responsible for early-stage investments at Practica Capital, comments on the peculiar mix:

These radically different startups have the most important thing in common: a potential for high-growth business and long-term value.

But why them? Scroll through the facts on space startup Nano Avionics, food startup Hello Hungry, furniture startup TableAir, fashion startup Newstory and gaming startup JetCat Games. Who knows, maybe you will invest in their next rounds?

NanoAvionics

• Date invested: Mar 2015
• Stage invested: prototype and first sales
• Amount invested: 200 000€

NanoAvionics is an aerospace technologies company founded as a spin-off from Vilnius University, Lithuania. We have covered them here.

The company specializes on integrated CubeSats and Small Satellites solutions for commercial and scientific missions: mission design, hardware assembly, integration and verification, testing campaigns, project documentation, launch provisions management, standardized products (highly integrated Communication, On-board Computing, Attitude Determination and Control Systems, Solar panels, Structural elements), modular chemical propulsion systems based on non-toxic fuel.

Progress since investment:

• Grew the Team from 5 to 11 employees;
• Expanded product portfolio;
• First participation in exhibitions, conferences and industry days;
• Attracted a funding grant for product development;
• Assembled 2nd salletite LituanicaSat-2 to be launched in 2016.

Next milestones:

• Launch LituanicaSat-2;
• Small-scale manufacturing of parts and satellite assembly;
• Expand client network for sales.

Why?

Comment by Donatas Keras (partner): We are among the first VCs in Europe to invest in a space startup. Their business may look complicated, and specific know-how and different level of testing is needed, but, in essence, it is small-scale and high-precision manufacturing of parts, chip systems and coding for satellites and their assembly. Conceptually, this is similar to lasers or medical devices. If VCs invest in those, why not in space?

Another reason we invested is the team. Very talented, young, but already experienced founders with long-term vision for nano satellites and their applications. Two teams from Lithuanian universities launched separate nano sats at the same time which laid initial solid foundations for engineering talent and infrastructure to develop in Lithuania. Add to this team with entrepreneurial and managerial skills, connections to NASA, European Space Agency and it becomes a solid startup investment.

How did Practica Capital contribute?

Comment by Donatas Keras (partner): One of the biggest challenges was to change team’s mindset from being scientists to being a space company with a bold long-term vision. We spent a lot of time with the team before investing. Most of it included discussing what value they could create on a global scale. We also helped with setting up their legal entity, IP issues, other legal agreements, KPI’s, budget, product lineup.

After investment we helped NanoAvionics connect with a major US company active in avionics, aeronautics and medical device fields. We developed more concrete plans from our overall strategy, including potential next round investments and expansion to the US. We helped where we could, including their web page, sales system, online marketing and other small but important things.

Lesson learned: Space isn’t only for superpowers, great products from small countries can also enter the industry and do business there.

​Hello Hungry

• Date invested: Apr 2015
• Stage invested: idea
• Amount invested: 120 000€

Hello Hungry is a healthy food startup aspiring to change bad nutrition habits at work and encourage healthy eating. Their first product is a liquid meal that replaces snacks for busy people not eating lunch on time. See ArcticStartup’s review here.

Progress since investment:

• Developed the recipe, produced and validated the product;
• Crowdfunding campaign on Indiegogo;
• Ran a product testing campaign at offices in London;
• Supplier deals with first offices;
• Shipped to 15 countries worldwide, from UK to Singapore.

Next milestones:

• Recipe and flavor improvements, based on user feedback;
• Office in the UK;
• Enter retail market.

Why?

Comment by Donatas Keras (partner): Hello Hungry is a perfect fusion of experienced founders and a great idea. The team has solid understanding of the foodtech market. Adomas is a drinkpreneur to his bones.

How did Practica Capital contribute?

Comment by Donatas Keras (partner): We were very active from the beginning. We helped them choose their marketing agency and spent a lot of time together, working on the concept, budgets and long-term plans. After the initial setup, the team took off rather well. We still help with expansion plans, strategic opinions and fundraising, but for the rest – they are more than able to handle.

Lesson learned: Anything can be reinvented if the need is strong enough. Even the food/beverage industry.

​TableAir

• Date invested: May 2015
• Stage invested: prototype and first sales
• Amount invested: 200 000€

TableAir is creating and developing work ergonomics products for healthylifestyle.

Powered by a spine-straightening mission to increase work productivity through a healthier approach to office life, the team pledges they have worked tirelessly to tackle these problems with a great deal of style and fun. The founders believe that everyone’s working environment deserves an exquisite extension of healthy habits, and a functional office equipment with a tad of good taste is the solution.

Progress since investment:

• Updated design;
• Optimized for assembly – reduced parts from 19 to 3;
• Improved production process;
• Sales Machine Started and Tuned;
• Certification completed;
• Core Team Rallied;
• Firmware, App, Website Updated, Android app launched;
• Participated at 100% Design – Largest furniture design expo in London.

Next milestones:

• Gather traction for expansion;
• Grow B2B partner network;
• Grow direct sales to end customers online.

Why?

Comment by Donatas Keras (partner): TableAir might look as a straightforward “hardware” investment in the startup producing high-end height adjustable tables with smart features and app functionality. However this is just a first glance. It wasn’t the table that got our attention, even though the sales are picking up better that expected. We see this product is just their entry into the bigger market. Founders got our attention because of their long-term vision of how our workspace and office will look like, behave, interact and increase. They can see and feel the overall well-being and productivity of a modern office worker in 10-20 years. This goes well beyond making a cool-looking high-end table. We believe the founders are visionaries and we are here to help them make the next steps in achieving their vision. If we say Apple is just another PC company, then TableAir is just another table company.

How did Practica Capital contribute?

Comment by Donatas Keras (partner): At first, we helped with very practical things: setting up accountancy and reporting, cleaning up HR and IP staff, setting up ESOP scheme, main KPI’s and projections. We found a mentor, angel investor and advisor from furniture business. Helped to find a showroom in the UK. One of our partners, Anatolijus, helped with supply chain management and logistics.

We then moved to the broader picture, advising a lot on strategy. We connected the team to various business owners and investors, which helped them shape the business. We also provided a sales manager, who handles all B2B sales.

We continue to work on long-term vision for the company. It is very closely connected to possible next round investments and fundraising strategy. Practica is deeply involved in preparing the narrative, main assumptions and plan.

Lesson learned: Interface designer from a bank can be a really good furniture designer. And, yes, it is possible to reinvent the table.

Newstory

• Date invested: May 2015
• Stage invested: idea
• Amount invested: 200 000€

Newstory is changing the way consumers shop for outfits. Inspired by global fashion trends, Newstory provides ready-to-wear product combinations that are designed to flatter your look, no matter your age, body shape and weight.

Progress since investment:

• Launched first website, tested the product with early adopters;
• Gathered a lot of excited user feedback;
• Signed 50 agreements with designers;
• First sales.

Next milestones:

• Launch version 2 of website, pivoted based on user feedback;
• Compare performance with version 1;
• Expand partnerships with designers;
• Grow userbase and sales.

Why?

Comment by Donatas Keras (partner): E-commerce is growing fast and new types and models are hot. Newstory is exactly that, and more. They seek to offer new and unique experience for e-commerce assisted by a personal stylist. And they are the right team to do it, as their leader is very experienced in international e-commerce and is ready for a challenge. They work closely with their customers, iterating based n user feedback, with an ultimate quest to design just the right complete fashion shopping experience.

How did Practica Capital contribute?

Comment by Donatas Keras (partner): We have a very experienced founder and CEO here, so our involvement after initial kick-off is limited to HR efforts and fundraising activities. We are planning a two-step fundraising process, so our main role is to prepare a solid budget, expansion plans and line up the best local and regional investors for the round.

Lesson learned: If the new business model does not make you feel at least a little uncomfortable, it is not that new.

​JetCat Games

• Date invested: Aug 2015
• Stage invested: demo version of the game
• Amount invested: 100 000€

JetCat Games is a young indie game studio working on their first independent project – Heliborne. It is a multiplayer king of the hill arcade in which you can fly a wide range of aircrafts: from iconic helicopters from you favorite movies to lesser-known models on various battlefields – Korea, Vietnam, Iraq, Iran, Balkans, Somalia, Afghanistan, all in different timelines and scenarios.

Progress since investment:

• Updated the product: added new helicopters, maps, launched a closed alpha test;
• Gathered 2000 alpha test applications, 500 players already tried the game;
• 130,000 views of let’s play videos by popular YouTubers from Australia, US and Brazil.

Next milestones:

• Prove player interest;
• Gain traction and grow userbase;
• Expand and prove the business model.

Why?

Comment by Donatas Keras (partner): JetCat Games definitely stands out in our portfolio. We initially said we will not invest in games. It did not fit into our understanding of a good VC investment. We also lacked knowledge of the industry, had no advisers and could, therefore, bring little value for the company, besides the money. We knew some strong game studios in Lithuania, but not that close to ask for their help or advice. Nevertheless, over the last few years we looked more closely at 5-6 game developers and gained some knowledge.

Despite introductions from our portfolio companies, we did not consider JetCat Games very seriously during our first meeting. However, after talking to some game industry insiders and entrepreneurs from Russia, Ukraine and Belarus who now moved to Lithuania, we took another look. JetCat Games and their story, experience, product and level of readiness combined with the small investment needed made sense for us. Add to this an experienced industry insider in advisory board and a clear business plan – and we have our first investment in a gaming startup.

How did Practica Capital contribute?

Comment by Donatas Keras (partner): The team knew gaming better than we did. We were mostly acting as a general local investor, helping with things like agreements with accountants and lawyers, immigration and relocation issues. Our role will probably increase next year, with plans for growth after initial validation and preparation for additional investment.

Lesson learned: You do not need €1 million to launch a game.

Every investment is a great learning experience for us. It is amazing to see how the pictures turn into a game and a game into a B stage product. Great to read positive reviews from gamers across the globe.

Who is Practica Capital and how to work with them:

Scope: A full range of VC financing from pre-seed to late seed/start-up, co-investments in round A and investments in SME’s expansion.

Region: Baltics is a dynamic region catching up with the Nordic countries and Western Europe. Baltic home markets are too small for national-champion strategy, so most startups develop regional, international or global businesses from the start. It is an exciting ground to explore.

Team background: A mix of investment, technology and entrepreneurial backgrounds. Founded in 2011 by investment professionals with previous pan-Baltic private equity and investment banking experience in BaltCap, Hanseatic Capital, Evli, SEB Enskilda, MP Investment Bank and entrepreneurs who exited their businesses. One of the founders and senior adviser Anatolijus Faktorovičius is a founder and former CEO of Viltechmeda, medical device producer sold to a NYSE-listed Moog Inc. (USA).

Approach: Practica Capital is an active hands-on and value-adding business partner to entrepreneurs, attracting a network of high-level professionals as advisers. Focused on intimately understanding and resolving company’s business issues, which maximizes business potential and the probability of a mutually profitable exit.

Size: Launched €6 million Practica Seed Capital and €16 million Practica Venture Capital funds in 2012, both established under the JEREMIE initiative, which is managed by EIF, Ministry of Economy and Ministry of Finance and financed from the EU Structural Funds under 2007-2013 Economic Growth Operational Program of Lithuania. The Seed fund is around 100% and the VC fund is 70% financed by the JEREMIE Holding Fund, which is managed by the EIF. The remaining amount in the VC fund is invested by the team and other private sector investors.

Portfolio: Practica Capital has made 35 investments for €13m to date, with no exits yet. Earlier, Practica’s partners participated in 13 investments totaling €33.5m, 11 of which exited for €98.4m. Current portfolio of Practica Capital is available here.

Reach out: Send an email to [email protected] or contact any of the partners at www.Practica.vc. They are always happy to help and give advice to startups, as well as partner with investors.