1Mby1M Virtual Accelerator Investor Forum: With Roman Kikta, Managing Partner at Mobility Ventures (Part 4)

Sramana Mitra: Solutions looking for problems are much harder to get through to scale. I think it’s much better to start by solving a problem and then working out how you are going to market first before building something.

That is what we practice here at 1M1M – the need to understand what market you are going after and how you are going to position. It sounds like you are from Finland originally? 

Roman Kikta: No, I’m American. I’ve spent 25 years in Finland. My heritage is Eastern European – Ukrainian, Polish, and Czechoslovakian. I speak the languages and I work with the entrepreneurs in the region. There are some brilliant people as there are all over the world.

I want to discover the next big thing. We all strive for that. Everybody says that they want to hit a home run and get that 10x in return, but I tell you that it is also good to get singles and doubles. 

Sramana Mitra: That is a great segue into my next question. You can get 10x returns without chasing unicorns. You can get singles and doubles. There are many ways in playing venture capital. How are you doing it? Are you chasing unicorns? How are you thinking about your fund strategy?

Roman Kikta: Everybody wants to chase unicorns, but what I have learned over the past 20 years of being an investor is that it’s okay to double your money and just walk away from the deal.

I’ve done that several times where I was a seed investor in a company and then for whatever reason, the strategy and the dynamics of the company changed. Other investors also started to take the company in a different direction, so, in subsequent rounds, I exited. Though I made 2x or 3x my money, I walked away.

Sometimes that was the right decision to do. Sometimes down the road, that company with its new strategy and dynamics ends up failing. It could happen that it took them so much capital that the early guys were deluded because of the liquidation preferences. I was fortunate to get that single or double and call it a day. 

Sramana Mitra: Yes, and that’s perfectly fine. I agree with you. It has been so fascinating that in parallel with our entrepreneur mentoring, we also have a forum for seed investors to come and share what they are doing.

We have a mingling of people and their perspectives and what they are looking for. It helped us a lot to learn how investors are investing on their side. This is one thing that is coming up a lot.

The truth is, the bulk of exits in the technology industry happens at the sub-$50 million range. If you can build something capital efficiently and exit under $50 million and still make money, that is all strongly in your singles and doubles range of returns. That is an okay fund strategy.

The other thing that we are hearing a lot also is investors playing the early stage and exit into a Series B or C before huge amount of funding comes in and drowns them in liquidation preferences. Those are all fine innovations in the venture capital space. 

Roman Kikta: Absolutely. I think you covered it quite well. The thing is, it’s always about moving forward. Making a little profit is better than losing a lot of money. 

Sramana Mitra: If everyone chases after unicorns, there aren’t enough unicorns to chase. You are going to have to find your own position in this marketplace to see how you want to play the game. that is what we are seeing.

People are a lot more creative than they used to be earlier in the history of venture capital. Now that the market is so much more crowded, there is so much more money and many more firms that are playing on the investment side. They have to differentiate as well.

Thank you for your time.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Roman Kikta, Managing Partner at Mobility Ventures
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