Dan Lupu, Earlybird, on the investor mindset: embrace uncertainty, avoid gambling

The documentary "Romanian Startups: Roaring Tigers of Europe", made by the start-up.ro team, spans across 33 years of history, from the first entrepreneurs in the transitional years to the initial technology company transactions that brought Romania into the international spotlight.

Romanian Startups: Roaring Tigers of Europe - The Extended Series will present the people who built the Romanian ecosystem and who discussed with the VideoCorp and start-up.ro team for this documentary. In this series you will find the extensive interviews and find out the stories of those who built entrepreneurship in Romania.

Starting from a background in computer science, Dan Lupu, a venture partner for Earlybird, one of the most active and well known venture capital firms in Europe, initially aspired to be a programmer but gravitated toward product and investment after completing a Canadian MBA program. This pivot introduced him to equity research and later private equity, where he discovered a stronger affinity for the buy-side of investments.

His journey continued with Intel Capital, where he engaged with early-stage startups in Eastern Europe and witnessed firsthand the embryonic and sometimes fragmented nature of the regional tech ecosystem.

Cum arată ecosistemul de startups din Republica Moldova

At that time, the ecosystem was characterized by a heavy reliance on outsourcing companies rather than product-driven startups, a structural lack of institutional capital, and significant government involvement that often hindered rather than helped growth.

Dan highlights the uneven development across countries in the region, with Bulgaria and Poland showing more progress due to better-managed government funding, while Romania lagged behind due to ineffective governmental policies and a persistent focus on outsourcing.

He stresses the importance of early-stage funding and how the injection of government-backed capital in certain markets led to a burst of startup activity, including companies relocating to Bulgaria to access funding.

A critical cultural insight that Dan Lupu shared with us is the fundamental difference between outsourcing and product companies, especially in mindset.

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Outsourcing companies have predictable revenue and transparency, while product startups face significant uncertainty until product-market fit is achieved.

Successful transitions from outsourcing to product companies typically require a clean break and new spin-offs.

When he joined Earlybird, a venture capital fund, the strategy was to remain generalist due to the limited depth of the market, investing across various sectors from consumer to hardware, reflecting the nascent stage of the ecosystem.

Highlights from our interview:

• Dan Lupu’s transition from aspiring programmer to investor was shaped by education and chance opportunities.
• Early-stage startups in Eastern Europe faced challenges due to a dominant outsourcing culture and lack of product focus.
• Government funding can stimulate startup activity but often risks toxicity and inefficiency if mismanaged.
• Bulgaria and Poland succeeded by channeling government funds through independent bodies, unlike Romania.
• UiPath’s success exemplifies overcoming regional stereotypes through leadership and adaptability.
• The startup bubble inflated valuations without sustainable returns, teaching important lessons for investors and founders.
• Moving early to the U.S. market is crucial for Eastern European startups aiming for global success.

Key Insights from Dan Lupu, Venture Partner Earlybird

• Outsourcing vs. product mindset: Dan sees a fundamental cultural and operational difference between outsourcing firms and product companies. Outsourcing offers predictable revenue streams and transparency, while product companies operate with high uncertainty until a product-market fit is found. This divide makes it almost impossible for the two models to coexist under one roof effectively. Successful product startups often emerge from spin-offs where dedicated teams break away to focus on innovation without the constraints of an outsourcing mindset. This insight helps explain why so few outsourcing firms transition successfully into product development.
• Government funding - a double-edged sword: Government-backed capital is essential for jumpstarting ecosystems in regions lacking private investment. However, when governments manage funds directly, it often leads to inefficiencies, corruption, or stagnation, as seen in Hungary and Romania. Bulgaria and Poland avoided this by entrusting independent entities with fund management, resulting in more dynamic startup growth.
• Success stories break stereotypes and inspire: UiPath’s rise from a little-known Romanian startup to a global leader and publicly listed company shattered stereotypes about Eastern European firms’ inability to compete internationally. The founder’s transformation—from an engineer with limited English skills to a visionary CEO—demonstrates how leadership qualities such as humility, flexibility, and relentless drive are crucial for overcoming barriers. This success story serves as a beacon for other entrepreneurs in the region, proving that global ambitions are achievable.

• Investor mindset - embrace uncertainty, avoid gambling: Successful early-stage investing requires comfort with uncertainty and making decisions without complete information. Dan Lupu distinguishes between taking calculated risks and gambling, emphasizing that good investors seek to minimize identifiable risks through due diligence and market understanding rather than blindly betting. This mindset is especially important in nascent ecosystems where proof points are scarce, and the margin for error is high.

“We want to take less risk. We already know that we take risks and the less risks we identify, the less risk we can control, the better for us. We are not gamblers.”

• Entrepreneurial spinoffs drive ecosystem maturity: Dan notes that one positive outcome from successes like UiPath is the creation of new startups by former employees who gain experience and confidence. These spin-offs contribute to ecosystem growth by recycling talent, spreading knowledge, and raising the overall ambition level in the region. This organic growth mechanism is a vital component of building a sustainable startup community capable of producing multiple successes over time.
• Avoiding the unicorn obsession: The investor cautions against focusing too much on the “unicorn” status as a measure of success, arguing that valuations are often inflated and not reflective of genuine business health. Instead, success should be measured by sustainable growth, profitability, and global market impact. This pragmatic approach helps align investor and founder expectations and encourages building resilient companies rather than chasing hype.
• Innovation and competition are global: Dan Lupu raises awareness on the fact that any novel idea developed locally is likely being pursued simultaneously by other teams worldwide. This global competition forces startups to continuously innovate, execute quickly, and differentiate themselves meaningfully. Being aware of this reality is essential for founders and investors to avoid complacency and maintain a competitive edge.

“Even if I cannot find anything similar, my working assumption is that there are 10 other teams that nobody knows of somewhere in the world from China to India, to the US, doing pretty much the same thing… you never know. You need to make decisions under uncertainty.”

Roaring Tigers of Europe is a production by start-up.ro and Videocorp, part of the Romanian publishing company InternetCorp, active for almost 20 years on the market. The documentary was made with the support of partners BCR, Orange, and 2Performant. Community partners included Guran Consulting Global, How to Web, Launch, Impact Hub Bucharest, Flaviu Simihaian, Rubik Hub, SoftServe, and the Romanian-American University.

Watch the full documentary in the video below: