PurposeTech venture capital fund invests in 3 main verticals – healthcare, education and sustainability – across the region. Zdeněk Fred Fous, co-founder of the fund, explains in an interview how PurposeTech selects startups for investment, how the collaboration with Impact Hub works, and why it is crucial for it to support founders with great vision who are “not normal.”
Zdenek Fred Fous is an entrepreneur who has co-founded 15 companies over the past 6 years. In 2023, he founded an investment fund with Impact Hub PurposeTech, which is focused on supporting startups in Central and Eastern Europe that want to positively change the world. This pre-seed fund invests in founders in the earliest stages of their business, when they often do not have a finished product or revenue, but they have a big vision and basic validation of their idea. A typical investment is around EUR 100.000.
Startup Funding Bootcamp
The PurposeTech team also creates an educational program that helps aspiring startup founders better understand the dynamics of the investment world. One of them is, for example: Startup Funding Bootcamp – an online training program aimed at providing startups with practical knowledge about, What investors are looking for, what they focus on and what questions they ask.
The Bootcamp also includes Demo Day, an online event that represents the highlight of the entire program. On Demo Day, selected startups have the opportunity to present their projects to investors. From the total number of participating startups, only a few of the best prepared ones are selected and have the opportunity to present their project to representatives of 15+ investment funds.
Overall, the program offers startup founders general insight into how investors think, what factors are key to them and what needs to be done to make their startup attractive for investment.
And what does Zdeněk himself say about PurposeTech and its functioning?
Tell us more about how PurposeTech selects the startups it invests in.
PurposeTech is pre-seed fund, which focuses on supporting startups in their earliest stages. We invest when there is a small team – typically two to three people – who have an interesting idea and basic validation of the idea, but do not yet have a finished product or revenue. This is where we come in – we provide the funding and support that will allow the startup to move the product forward and bring it closer to the market. That is the definition of “pre-seed”.
What defines us is primarily investing in “founders,” meaning the people who want to start a company. So you could say that we are very much “talent investors” – we look for people with fantastic talent, ambition, and skills who want to build a large, global, successful company.
Laureen Holge from Mamio – one of the first startups in which PurposeTech invested.
We make decisions based on criteria, which are of course countless, but three are the most prominent. Approximately 70% of the decision whether to invest in a project is about quality of the founders. This means we are looking for people who are very smart, hardworking, quick learners and have big ambitions. The journey to building a successful startup is extremely challenging and requires determination. The founders we are looking for must be a little bit crazy and willing to go to extremes. I have been doing this for almost 20 years, and in my experience, these are exactly the things that are needed to succeed.
We are also looking at size of the opportunityIt is important that the startup targets a market with potential in the billions of dollars. Unless the total market size exceeds at least one billion dollars, VC investment typically does not make sense.
The third thing we address is the connection between the team and the opportunity. This is called “founder market fit.” Essentially, we’re looking at how strong the connection is between the founder and the problem they want to solve. We’re looking for founders who are uniquely positioned to solve the problem – whether it’s through their experience, education, previous work in the industry, or a strong network of contacts. In other words, we want startups with an unfair advantage over others who want to do something similar.
How many investments have you made so far and would you highlight some of them?
I would say that all the teams we have invested in so far have great potential. They have very talented founders who want to build global companies with the potential to dramatically change their specific industries for the better.
What is interesting is that out of our seven investments so far, only one founded and led by a manThe statistical share of startups founded and led by women in total startup investments is low (2-20% according to various sources, methodologies and geographies). In our case, this ratio is currently reversed, probably because topics around health, education and sustainability are typically of more interest to women.
In total, we have implemented seven investmentOur first investments include Mamio from the Czech Republic, Femble from Austria, eNOugh from Great Britain, , Tingit from Lithuania. And in recent months we have added another three new investments – ReloSync, a startup focused on facilitating relocation and integration for newcomers to a new country, Willow Stories, a platform helping people cope with the loss of a loved one and Lifeyear, an app that allows doctors to remotely manage and support patients with heart problems.
Tingit – a Lithuanian startup that PurposeTech invested in in the summer of 2024
What would you say to startups that would like to approach investors but haven't dared to do so yet or don't know where to start?
In my opinion, the path to reaching investors is not black and white – it's not about sitting at home and then suddenly going out to meet an investor. It's more of a gradual process where you need to take small steps forward every day.
Today there is a super support ecosystem, whether around Impact Hub or other organizations. The important thing, I think, is to become part of the community. The easiest way to start is to come to some events – whether at Impact Hub or elsewhere. At such events, one can meet other founderswho have already founded a startup, get inspiration from their stories and maybe even make valuable contacts. Moreover, they are often there themselves investors, which opens the door to important opportunities.
I would recommend going to such events regularly, ideally once or twice a month. I think this is a good start.
Why should startups want to collaborate with PurposeTech?
Our advantage is the ability to invest in startups very early on – when they only have a team and basic validation of their idea. What sets us apart from others is our focus on three main areas: health, education and sustainabilityWe understand these areas quite well and have an extensive network of contacts in them.
Another aspect is also our connection with Impact Hub, thanks to which we have access to an extensive network of entrepreneurs, mentors, experts and decision-makers, and we can easily open doors further for our startups.
As What does the connection with Impact Hub look like in practice?
Our cooperation with Impact Hubs is very close and strategic. We cooperate with several of their co-founders; among them are Impact Hub Vienna, Berlin, Bucharest, Ljubljana, Zagreb or Belgrade. I have personally visited most of these Impact Hubs at least once, either as part of various events or meetings. Our effort is to be integral part of the Impact Hub network and cooperate with each other.
We also share a focus on sustainability and positive social impact with Impact Hub. For us, investing is not just about returns, we try to create a successful fund while supporting people who have the ability to change the world for the better. This is extremely important to us and I think it's wrong that this mindset is not completely common.
