Introduction to Marathon Venture Partners
Marathon Venture Partners, a venture firm based in Athens, has successfully closed its newest fund with €75 million in capital commitments. This brings the firm’s total assets under management to €175 million, a significant amount for an eight-year-old, seed-stage investor in Greece. The firm’s success can be attributed to its impressive exits, including the sale of Augmenta to CNH for $110 million and the sale of some of its shares in Hack the Box to Carlyle.
Why Greece?
Greece has historically seen less venture investment than other European countries. However, Marathon Venture Partners has been able to raise a substantial fund despite the challenging global fundraising environment. According to partner Panos Papadopoulos, the firm’s success is due to its strong track record, with its first fund being a top percentile performer globally in terms of realized returns. The firm’s portfolio has captured the current market trends, including AI-assisted scientific research, robotics, and defense, well before they became mainstream.
Investment Thesis
Marathon Venture Partners’ investment thesis is to back founders who are working on hard problems in important markets. This can include unique knowledge, such as a research PhD, or high agency, meaning understanding of a regulated or overlooked industry like power grid management. The firm is committed to doubling down on its fast-growing community, which has been accumulating experience and expertise, along with ambition.
Evaluating International Growth Potential
Greek startups have traditionally faced challenges scaling beyond the domestic market. However, Papadopoulos disagrees with this assessment, stating that Greek startups leverage local talent to serve leading global customers and markets from day one. In Marathon’s portfolio, virtually no revenue comes from the domestic market, with companies instead serving top Fortune 500 companies. The firm evaluates a company’s international growth potential by looking at its ability to serve global customers and markets, as well as its capital efficiency and team grit.
Expected Timelines and Returns
The firm’s conversations with limited partners have not been affected by the current market trends, with a focus on providing meaningful returns through secondaries and strategic M&A, rather than relying on IPOs. Marathon’s fund sizes are small, and the firm maintains substantial equity positions, providing opportunities for returns even in a challenging exit environment.
Deep Tech and AI
Many European VCs are emphasizing deep tech and AI, but Marathon is taking a more generalist approach, focusing on people changing their sectors rather than specific technologies. The firm was one of the first to invest in defense before the Ukraine war, demonstrating its willingness to take a contrarian view.
Valuations and Returns
Greek founders have historically received less funding than their counterparts in other European countries, but Papadopoulos believes that this is not about geography or price. Instead, Marathon is backing founders in non-consensus opportunities that most VCs would ignore, moving fast with conviction and not asking who else is investing. This approach can lead to better returns, as the firm is not competing with other investors for the same deals.
Strategic Alternatives
Given the challenging global exit environment, Marathon is advising its portfolio companies to consider strategic alternatives like secondary sales or acqui-hires. The firm works with its portfolio companies to develop "default alive" scenarios, where all options are on the table. Secondary sales can actually help founders achieve their long-term goals, and Marathon is supportive of such scenarios.
Non-Dilutive Capital
The EU has emphasized supporting startups through various funding mechanisms, including non-dilutive capital. While Marathon welcomes these initiatives, the firm advises its portfolio founders not to waste time on non-market-related activities. Instead, the focus should be on building a strong business that can attract investment from venture capital firms like Marathon.
Improved Macroeconomic Situation
Greece’s improved macroeconomic situation has not had a significant impact on Marathon’s fundraising process or the quality of startups the firm is seeing. Instead, the firm believes that adversity can be a driver of innovation, and that the talent pool in Greece is strong regardless of the macroeconomic environment.
Opportunities for Local Funds
The pullback of American VCs from European investments has created more opportunities for local funds like Marathon. The firm believes that it must always count on itself and be aligned with founders for the long term, rather than relying on external investors. This approach has allowed Marathon to build a strong portfolio and achieve significant returns, despite the challenging global environment.
Conclusion
Marathon Venture Partners’ success is a testament to the strength of the Greek startup ecosystem and the firm’s own investment thesis. By focusing on hard problems in important markets and backing founders with unique knowledge and high agency, Marathon has been able to achieve significant returns and build a strong portfolio. As the firm continues to grow and invest in new companies, it is likely to remain a major player in the European venture capital scene.
