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Show me the (Smart) money!

Managing Partner, Y Soft Ventures
Y Soft Ventures was established in 2014 with a clear and simple strategy: support local Central European startups that a) have a focus on the B2B market, b) have a service or product that integrates both software and hardware c) have a multi-vertical targeted product or service and d) have the potential of doing business on a global scale.
If that strategy sounds familiar, it is not a coincidence. That is exactly how Y Soft conducts its business. One could argue that such a narrow focus would make any venture capital program ineffective, but actually for us it is a pivotal part of Y Soft Venture’s strategy.

Let’s be clear though. Y Soft Ventures wasn’t founded to look for unicorns and quick exit opportunities. Honestly, at the beginning it was just fun to support young companies as it reminded us of our own startup roots. It also reminds us of lessons we learned the hard way that can now can be shared with young entrepreneurs easily and helps them grow.

What is “Smart Money”

That is why we started to collaborate with young companies who have similar DNA. We are able to primarily support their growth, not necessarily just their cash-flow. These companies can grow faster from our other assets: for example, from sharing our manufacturing capabilities, our established global business channels or just our know-how through consulting with our various teams.

It has been an unorthodox approach in the venture capital world but we see more and more VC firms doing similar. We call this approach Smart Money at Y Soft Ventures and we believe it could multiple the effect of our financial investments substantially. It is still very unorthodox for a corporate VC, like Y Soft Ventures, to include financing and knowledge sharing from external partners.
Take a look at the graphics below (or see it here as downloadable pdf). Our portfolio companies achieved, on average, a compound annual growth rate (CAGR) of 175 % in the last three years. (Did you know that the usual VC industry standard is to multiply the value of the portfolio 8x over the course of 8 to 10 years, which requires CAGR lower than 31%?).  And it is not only the financial performance that proves the effectiveness of our approach. Our portfolio companies are working with the biggest customer and partner names. Just last week, ESET, a global leading cyber security solution provider, announced that GreyCortex has become the newest member of the ESET Technology Alliance.

Why we do "Smart Money"?

If we are not looking for quick exits and have a long term approach, what is our investment strategy? It really is no secret. Just take a look at the areas Y Soft Ventures startup companies are focused upon:    a unique RFID solution by Sewio, artificial intelligence driven network security analysis by GreyCortex or intelligent video mapping for public building interiors by Lumitrix. While the information in the graphic covers our activity through 2016, this year we added Sensoneo - smart city solutions for efficient waste management -- to our portfolio. These are the most recent examples of companies that are using Y Soft Venture’s Smart Money.
Our portfolio companies are chosen carefully for their potential to bring a significant return on investment. As a corporate VC however, these companies also bring new business opportunities in IoT, Industry 4.0, Retail 2.0 and the Smart Office to Y Soft where there are synergies that may bear fruit in the long term for Y Soft’s future.

Either way, we are able to learn a lot. We are also able to support local Central European entrepreneurs… The fun of that alone brings us great joy.
Milos Sochor
Milos Sochor is the Managing Partner of Y Soft Ventures, the VC arm of Y Soft Corporation. When he is not busy building a community of Central European innovative startups with global business potential or scouting for new opportunities to enhance Y Soft Venture's portfolio, you have a pretty good chance of spotting Milos riding alpine passes or racing circuits on one of his motorcycles.
View all posts by Milos Sochor

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