ZAS Ventures aims to raise USD 15m to invest in CEE startups

The soft marketing of the fund began in April 2021, with the launch taking place in June 2021, Zinchuk said. ZAS has so far raised around 15% of the fund, he added.

The fund will have a 10-year lifespan and a one-year extension, Zinchuk said. The fund is domiciled in Delaware and is fully incorporated, according to the founding partner.

ZAS plans to allocate 65% of the fund to seed investments and the balance to follow-on Series A rounds. Around 70% of investments will be in software-as-a-service (SaaS) and 30% in cloud infrastructure startups, Zinchuk said.

ZAS will acquire stakes of 10-20% in the targets, as it would prefer to maintain 10% equity on a pro-rata basis in follow-on rounds, Zinchuk said.

The firm will aim to complete 22 seed rounds and seven follow-ons, with the average investment size per seed round being around USD 350,000 with a minimum ticket size of USD 200,000. For follow-on rounds, this would increase to USD 600,000 and USD 400,000, respectively.

ZAS can co-invest with other VCs and family offices. It has not yet made any investments but plans to ink the first one in October, Zinchuk said. The firm already has more than 10 potential deals in the pipeline with initial due diligence done.

The initial investing period is expected to be between 2021 and 2024; 10% of the fund will be deployed in 2021, 35% in each of 2022 and 2023, and 20% in 2024, according to company documents. Follow-ons are planned to be between 2023 and 2027, while exits are expected to take place throughout the next decade.

The fund will find its potential targets in Ukraine, the Baltic states, Poland, Belarus, Romania, Bulgaria, Hungary and the Czech Republic, Zinchuk said.

There are more than 1 million developers in the target countries and they are increasingly launching startups after gaining experience in US- or Europe-orientated IT outsourcing companies, Zinchuk said. He cited UiPath, Robin Hood, Wish, Skype, Bolt and Vinted as some examples highlighting this trend.

Zinchuk added that the pre-money valuations at seed stage in CEE are more than three times lower than in the US, while they tend to produce more than five times more revenue per invested USD. Even small early-seed cheques in CEE startups can result in significant global sales, he said, adding that by helping startups move to the US, ZAS would take advantage of a lower seed valuation base and improve fund returns.

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