About the Fund

Simpact is the first impact VC investment fund in Poland. We are currently investing within the Simpact 2.0 vehicle, in which the largest investor is the European Investment Fund.

Our average investment ticket is about PLN 3-4M, which we can expand as part of follow-ons to over PLN 10M. We invest from Pre-seed to Serie A, but with a focus on Seed deals.

FAQ

1. Is this impact for real? 

It is. This is one of our basic criteria of our investment policy. We take this as seriously as possible, and together with our companies we try to work out such solutions for defining and measuring social impact that, on the one hand, they define to the greatest extent possible the mission and goals of the specific company and founders, and on the other hand, they are as objective, measurable and specific as possible. For each company, we define specific (2-3) KPIs on social objectives.

Social impact is not, and should not be, just a side benefit of a company’s operation. We are not looking for companies that “do no harm,” “have no negative impact,” or, on occasion, incidentally impact an area of life or a problem.

At the stage of the investment process, together with the founders, we develop impact goals, define metrics and how to report it. We support our companies in achieving their mission. This is also reflected in the provisions of investment documents.

2. I don’t know if I am an impact startup? How do I find out?

The concept of impact investing is a relatively new area. There are many definitions in the public sphere, concepts of socially responsible investing, implementation of ESG, non-financial reporting, etc. are mixed, initiatives and new nomenclature are emerging. 

You don’t have to be proficient in these areas. What matters to us is whether you want to solve a problem that affects people. Is it in your DNA to change the world for the better, and can your idea/product/service contribute to that.

We can help you with this.

3. Are there any additional responsibilities associated with this impact?

More than in terms of responsibilities – we see it in terms of benefits. Together we will develop impact goals and indicators. This is in addition to purely financial indicators to show and describe your company. For our part, we expect you to measure/report impact indicators and share with us your progress and plans in this regard – on par with financial indicators.

4. What are you not investing in?

Our investment policy includes specific investment restrictions – industries and areas in which we do not invest.

We do not support companies and entities that are directly or indirectly related to or perform the following activities:

(a) whose business activities consist of illegal economic activities (i.e., any production, trade or other activity that is illegal under the laws or regulations applicable to the Fund or the company or entity in question, including without limitation human reproductive cloning; or

(b) which are largely focused on:

(i) production and trade in tobacco and distilled alcoholic beverages and related products,

(ii) financing the production and trade of arms and ammunition of any kind,

(iii) casinos and equivalent enterprises,

(iv) research, development or technical applications for electronic data programs or solutions that

(x) are specifically aimed at:

– supporting any of the activities referred to in (a)-(b)(iv) above;

– Internet gambling and online casinos; or

about pornography,or

(y) are designed to enable illegal:

– inputs to electronic data networks; or

– downloading electronic data,

(v) fossil fuel energy production and related activities, such as:

(a) Mining, processing, transportation and storage of coal;

(b) Oil exploration and production, refining, transportation, distribution and storage,

(c) Natural gas exploration and production, liquefaction, regasification, transportation, distribution and storage,

(d) Electricity generation in excess of the emission standard (i.e., 250 grams of CO2e per kWh of electricity) applicable to fossil fuel-fired power and thermal power plants, geothermal power plants and hydroelectric power plants with large reservoirs,

(vi) Energy-intensive and/or CO2-emitting industries, such as:

(a) Manufacture of other basic inorganic chemicals,

(b) Production of other basic organic chemicals,

(c) Production of fertilizers and nitrogen compounds,

(d) Production of plastics in primary forms,

(e) Cement production,

(f) Production of basic iron and steel and iron alloys,

(g) Manufacture of pipes, tubes, hollow sections and similar fittings of steel,

(h) Manufacture of other pretreated steel products,

(i) Aluminum production,

(j) Production of aircraft powered by conventional engines and similar machines,

(k) Conventional air transportation and airports and service activities supporting conventional air transportation.

In addition, we are an industry opportunistic Fund. Detailed investment rules are included in our investment policy.

5. Where do you invest?

We can invest in companies located anywhere in the world, however, we are a fund that operates and mainly focuses on Central and Eastern Europe. The main geographic criterion that we have is our ties to the CEE area, i.e. we invest in companies that are based in CEE or have operations here (from Estonia to Austria).

6. What is your ticket?

We have a wide investment ticket. We can invest from 150 thousand EUR up to 3 million  EUR per company. Our sweet spot for an initial investment is about EUR 1 million with a seed round.

7. Do you do follow-ons?

Yes. We have allocated a significant portion of our budget to support portfolio companies. 

Being able to participate in future rounds is very important to us. Both to support the company and make it credible in the process of the next fundrising, and to maintain our ownership in the company and not dilute ourselves too much in the next rounds.

8. Can you be a lead or coinvestor?

We can act in both roles. We are comfortable with both. Which role we act in depends mainly on the design of the round, its size and the structure of potential investors.

9. Where does the money in your fund come from?

We are a private fund. We do not have government funds, public assistance, grants or subsidies. We act as managers of the funds entrusted to us, and our investors have no preferences or allowances. It is straightforwardly a market-oriented fund. Our main investors are institutional investors – including the largest, the European Investment Fund from Luxembourg. In addition to institutional investors, we also have several entrepreneurs who have been successful in the international market.

Of course, the fund’s Partners have also invested their own money in the fund – so in part we are also investing with our own money.

10. How many funds do you manage? How are they different?

We are currently investing in a vehicle we have named Simpact 2.0, which is a PLN 100M capitalization fund based on private, non-public funds. The fund is managed 100% by market standards, including Invest Europe. 

In 2022, we completed the investment process under our previous investment vehicle, Simpact 1.0. This was a fund with a capitalization of PLN 30 M, based on Bridge Alpha (National Research and Development Center) funds. Within this fund, we completed all investments, and we are currently focusing on exits.

All of our investments (announced) can be found under the Portfolio tab.

11. Is your investment public funds? Do they involve state aid?

In the current Fund – Simpact 2.0, we do not have measures that would involve public assistance in any way. We do not operate on grants, subsidies, etc. Our investment is purely an equity investment – implemented in any form, be it equity, convertible note, SAFE, etc. The only partner to talk to is us as a Fund, you do not have to talk, report, get approvals, etc. at other institutions or expect such approval by the Fund.

12. At what stage do you invest?

We invest from pre-seed to Series A. We are most interested in projects in which the market-fit has already been validated, but we have no specific requirements for whether the company is pre-revenue or post-revenue. We are open to discussions, however, at the present time (the life cycle of the Fund) we are unlikely to look for projects pre-MVP and without any validation.

13. What industries are you investing in, what sectors?

We are sector agnostic. We do not have a focus on specific industries, although naturally we are closest to edtech, medtech, cleantech, biotech. We do not exclude hardware projects. We are interested in both B2B and B2C solutions. We don’t invest in projects we don’t understand, hence it may happen that we reject your project because no one from our team or the closest network can help us verify it and get to know it better.

14. What are your investment criteria?

Similar to most venture capital funds investing in early-stage. Team – scalability (market) – product. We also pay close attention to exit strategies over a foreseeable time horizon (measured in years, not decades). We do not look exclusively for “dragons” – i.e. companies that pay off the entire fund, our ambitions can also be satisfied by companies operating in market niches, however large enough for the company to grow several times from our investment entry.

15. How long does the investment process take?

The best answer is – it depends. Mainly on three factors. The first is our role in the process. If we are the lead or the only investor we have full control over the process and can run it according to our rhythm. In other cases or with more co-investors – things usually take longer. Secondly, it’s a matter of preparing the company itself and the founders for the investment, and often other partners, including previous investors. The more market-oriented they are, the faster the process goes. Third and finally, often the speed of the process depends on the period in which the investment is conducted, i.e. it depends on how much work we currently have on our side (whether with other investment processes or portfolio management, for example). 

In our favor is the fact that we do not produce unnecessary documentation and lengthy descriptions (which are needed for investments involving, for example, funds with public money). In addition – we are able to make investment decisions immediately – our Investment Committee consists of only three Fund Partners – Jacek, Krzysztof and Wojtek. There are processes that can be closed in a few weeks, but there are also those that take several months.

16. Who makes the investment decisions?

The investment decision is made by the Investment Committee, which includes three Partners in the Fund – Jack, Christopher and Wojtek. In practice, we act as a team and before the Committee’s final decision, we try to come to a consensus among the whole team.

17. Do you give “smart money”?  Do you help companies with day-to-day operations? How much do you “meddle” in business?

Our investment decisions are largely based on faith and trust in the founders. We believe and know that you know best how to run your business. As a fund, we try to stay far away from a company’s operations, i.e., we don’t tell you who to hire, what decision to make, or how to develop your product – until you ask for it or we see that we can advise you on a particular process – based on our own experience or the experience of our portfolio companies. We talk, we discuss, we express our opinions – but we do not make decisions for you. What we can help you with most is to support you in your contacts, especially with the next rounds and preparations for them, connecting you with other founders with similar case as yours, or using our network and our investors to support you in your activities. 

18. Will you sign an NDA before I make the materials available to you?

We have no problems with signing NDAs. We understand that you may have such needs and we respect that. Provided, however, that it is an NDA that we send you through the DocuSign platform. To sign the NDA, we only need the email addresses of the people representing the company. Fill in the company details yourself and we are able to close the whole process in a few minutes.

We do not sign NDAs sent by you, we do not negotiate NDAs, we do not modify our design, etc. – we prefer to spend our time and that of our lawyers on more relevant investment issues.

In addition, we do not sign an NDA before the first contact, i.e., before we get a pitch-deck or basic information about the investment.

We are a professional, supervised fund that operates in accordance with laws and market standards. As a member of Invest Europe, we subscribe to the market standards – Invest Europe Code of Conduct (www.investeurope.eu).

We do not act as a venture builder, intermediary, broker or advisor, we act as a fund manager.

You can find a sample of our NDA here.

19. How many shares do you usually take?

As much as is it is based on our commitment to the round and the valuation of the company. Usually it is from a few to several percent. As a rule, we do not invest in companies with a broken cap-table and are careful not to spoil the cap-table with our investment. When discussing the valuation and size of the shares to be taken up, we are also open to another form of investment (such as convertible loans or SAFEs) or the introduction of mechanisms such as valuation adjustments.

20. Can you invest in convertible/SAFE?

Yes, we can (and already have) invested in other forms than share entry. We adjust the formula according to the company’s current situation and mutual expectations.

21. Can I count on feedback or at least an email saying that you are not interested?

Honestly – many emails, questions or messages (e.g. via linkedin) go unanswered by us. This is mainly due to the fact that they are unsuited to our fund (geography, size of the round, criteria, etc.), and operating in a small team, we focus on those that fit (at least significantly) into our policy. If we haven’t responded to your message, most likely your idea/company is beyond our interest. Physically – we are not able to interact with all projects that reach us and are rejected after initial screening.

22. Do I have to have a referral/friend, etc. – to reach you?

You can, you don’t have to. A referral or a project that comes to us from a person we know and trust – always has a better chance of interest. However, this is absolutely not a requirement. We have investments in our portfolio that have reached us through a form on the website or a message on Linkedin or a casual conversation at a conference. The more in the first contact (deck) you convince us that the project fits our policy and is worth studying – the greater the chance to meet and discuss it.

23. What does your typical term sheet look like?

We are proponents of including in the termsheet as many key elements of the future investment agreement as possible – and thus defining the principles of cooperation already at this stage. You can find our standard termsheet template here.

Our proposal to you will be based on this formula, and any changes that occur will be due to the specific situation of the company. In processes in which we are the lead investor, we do not anticipate significant negotiation and deviation from these principles, unless it is due to some very specific situation of a particular company.

24. Is signing a termsheet a guarantee of investment?

Unless unforeseen events (e.g., red flags on DD) or a sudden change in the market environment, practically yes.

We sign the Termsheet in good faith, investing our time and money, and our goal is to finalize the process in the form of an investment agreement.

25. What does your investment agreement look like?

We adhere to the principle that an investment agreement is not just a document for “bad times.” The agreement is supposed to be a signpost of the mutual fund-company relationship. But you won’t find much more there than in a term sheet.

26. Do you mind if we do due diligence on you? Will we ask other founders and funds about you? How do we get contacts to them? 

Not only do we not mind, but we even encourage such contacts. You can find all of our portfolio companies and the names of the founders under the Portfolio tab. You can easily find them on social media, or you can ask us to do an intro or contact the individuals.

27. Do you have any exits?

As part of the first Fund – Simpact 1.0 we have exited several companies. You can find the announced exits in the Portfolio tab or you can find information about them on the Internet. Within Simpact 1.0 we not only exited, but also paid out funds to our investors, always coming out on the plus side.

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