Quo vadis e-fuels? The road ahead for alternative fuels

What role will e-fuels play for the drivetrains of tomorrow? It’s a topic that is being talked about more and more in politics and across society – sometimes in a highly emotional way. After all, many believe that the use of alternative drivetrains hinges on a fundamental question: Will we ever be able to move away from the principle of using combustion engines?

The discussion at the start of the year was an important one, as it shone a spotlight on the important topic of e-fuels and drivetrains of the future. That’s at least how Jens Baumgärtner sees it. He’s a Principal at High-Tech Gründerfonds (HTGF). His portfolio contains a number of start-ups that specialise in driving the implementation and widespread use of alternative fuels. INERATEC is one such start-up. Based in Karlsruhe, the young company is seen as a pioneer in power-to-liquid applications. It delivers and tests sustainable fuels and chemical products. At the start of the year, the start-up successfully concluded an additional financing round. HTGF, Honda Motor Co. Ltd. and other investors are among the firm’s shareholders.

Primary goal: climate neutrality by 2045

The ultimate goal underpinning efforts to promote the use of sustainable fuels is for Germany to become climate-neutral by 2045. But policymakers are also setting intermediate targets, such as reducing greenhouse gas emissions by 65% compared with 1990 levels. That particular goal is supposed to be achieved by as early 2030. “E-fuels can play an important part,” says Baumgärtner. You need to be open to all types of technology, and first and foremost actively consider all types of mobility, he explains. The auto industry is in fact not his primary focus at all. That sector is already on a solid footing with electric powertrains and the potential use of hydrogen, the expert says, noting that short distances of up to 1,000 kilometres are possible.

However, e-fuels have a lot to offer when it comes to ships or aeroplane engines, where going fully electric is simply not an option. Batteries are too heavy and too expensive. And on top of that, they are not able to provide enough power for a sustained period of time. Incorporating the use of sustainable fuels, and then doing so in greater and greater volumes, could lead to a significant reduction in emissions.

More start-ups, more innovation – but does that mean more challenges, too?

The developments over the past few years, and the realisation that we need to transport heavy goods in a climate-neutral way in the future, has really helped the start-up industry, Baumgärtner says. Overall, there are more start-ups on the market, the expert observes. This has been buoyed in part by an industry that has realised how important young companies are.

But there are still challenges to overcome. For example, researchers aren’t just working on a single standard, but a multitude of solutions. What’s more, technological implementation is in many cases very costly. While it is true that there are many investors injecting funding in the seed phase, you tend to find that, particularly in the later rounds, there’s just not enough capital. Many start-ups are then at risk of running out of steam, according to Baumgärtner. In addition, people with the requisite know-how are in short supply, and that’s an issue that is often underestimated. Experienced employees tend to work at large-scale corporations with a lot of funds at their disposal. Young companies have to fight hard for new staff. Sometimes they have to hire from abroad or train up their own employees. That takes time.

We need to up the tempo, says Baumgärtner. To achieve the ambitious climate targets, we need to act now. And, together with industry and research, we need to further ramp up the use of technology.

The best network is an active one – how HTGF supports C-level recruitment

For every company, finding access to specialized expertise and especially finding the perfect individual to complement a team can be a lengthy and resource-intensive search. This is where the HTGF can offer excellent support, thanks to its extensive network. It connects those who are seeking with those who are offering. For nearly three years, these threads have come together through Christina Siebel, Senior HR Relationship Manager. With over 15 years of professional experience in human resources consulting, she is well-equipped to guide this process. In her interview, she provides insights into her work and demonstrates how she can make life a little easier for companies, in particular.

Christina, you bring together executives and experts from the HTGF network. Can you tell us how that works?

Our portfolio companies are in a state of constant evolution. And sometimes, they need additional senior expertise to help them take the next steps. We have built an outstanding network of people who are real experts in their field and want to drive innovation. This network is a valuable asset that we share with our portfolio companies and fund investors. In a nutshell, we connect people who can help each other move forward – on a very personal, direct and individual level.

What type of contact do you establish?

We have a pool of top experts who we know and deem to be suitable, such as company founders or experienced executives. Based on this pool, we can propose candidates for board or advisory positions, to act as sounding boards, or even for C-level roles. When it comes to business development, for instance, experience and entrepreneurial spirit can be combined. It’s a win-win situation, bringing together the founders of new technologies with people who possess a great deal of expertise and experience. That is also part of my job.

Where do these contacts come from?

Venture capital is a people business. For 18 years, the HTGF has been forging and nurturing connections, building a network that is both broad in scope and deep in content. This is credited to our management team, our partners, both former and current employees, as well as a collaborative spirit pervasive throughout the entire startup ecosystem. Through joint investments, events, and exits, we have amassed a wealth of experience that I am privileged to draw upon in my work. Naturally, we continually add new contacts, and our pool is also supplemented through applications. Leveraging this network of relationships, we can readily access specific and qualified individuals, often with highly specialized knowledge. The beauty of sharing a network is that it fosters further growth.

How do you connect people from this pool?

We have devised criteria that we use to determine the needs and priorities of the company looking to fill a role. This can often be quite tricky for portfolio companies, but it is in fact key to success. We can provide great support in this respect. In addition, we engage in extensive dialogue with the people looking to work with start-ups at different levels, and we also get references. This enables us to gauge their experience and expertise, and also understand their motivations. We gain a high-quality, precise overview that allows us to satisfy the demand coming from the portfolio individually. Personal and cultural fit, along with the professional and personal expertise in the start-up environment, are our first “quality gate”.

How often do you receive such enquiries?

We regularly receive requests from start-ups looking for external experts – around two a week on average. We talk to them about their specific requirements, and then search for ideal candidates in our network. It’s time well invested. However, we also want to provide our portfolio companies with the best possible support at the start of their growth journey. We’re not always able to help directly, as – unlike headhunters – our search doesn’t extend beyond our network. In cases like this, however, we can recommend external specialists to assist our portfolio companies if they so desire.

Can you give us an example of how you connect people?

Sure. Just recently we received a request from one of our partners, who told us that a medtech company from their portfolio was looking for a COO. They wanted someone to provide some fresh impetus, and to drive growth. Our network is ideal for this. Within a short space of time, we were able to propose three potential candidates for the position. This was then followed by a professional recruitment process with all stakeholders – i.e. company founders and investors. The person who was ultimately selected for the role was somebody who we had in fact added to our network just two months before, on a recommendation. And now, I’m delighted to say, she is supporting the team of founders very effectively.

In which situations do start-ups tend to approach you most often?

Start-ups often come to us when they reach a crucial crossroad in their business – usually after an investment, but often also ahead of a financing round. Topics include growth and sales, but we also receive requests from start-ups looking for a sounding board to help them more effectively navigate challenges facing their market or organisation. They are in need of expertise that would take time to build up internally. Every start-up is unique – there aren’t any “off the peg” solutions or standard requests.

Is there anything I’ve not asked about that you’d still like to share with readers?

The pool is always open to new interested candidates. We now work with recommendations from our network 85% of the time. Our pool is constantly evolving because people’s needs, both professionally and privately, change, and business models change. The best network is an active network!

Thanks very much for sharing your thoughts, Christina!

Investments in drug development: “We need to get to the source of the deals”

Dr. Frank Hensel is Principal at High-Tech Gründerfonds (HTGF), where he is primarily responsible for start-ups from the field of drug development. Before joining HTGF, he was a successful entrepreneur himself and is now able to share his practical experience with start-ups. We sat down for a chat with him about the challenges of the sector, how HTGF is on the lookout for new innovations and why partnerships are especially important in this field.

Frank, your investments are focused on the field of drug development. What is the general state of this industry in Germany?

Frank Hensel: Germany is traditionally very well positioned in this field. We have a strong pharmaceutical industry that is held in high regard throughout the world. This is due to the excellent research landscape in Germany as well as our universities and scientists. But we also see a number of challenges. Transfer between research, science and industry could still be improved. That’s something we need to work on.

What do you mean exactly by transfer?

Frank Hensel: Transfer is all about translating scientific results into business models and start-ups, thus ensuring that commercialization takes place. Many researchers in Germany are not even aware of this potential. They mainly focus on publications – which are undoubtedly very important. But if we look at the situation abroad, particularly in the US, then we see that both is possible – scientific publications and the translation of scientific results into business models.

Why is this something that Germany struggles with?

Frank Hensel: We lack the necessary structures. It’s like we have two separate fronts at the moment: academia on the one side and the biotech/pharmaceutical industry on the other. We need to establish more links between the two. There is a lot of wasted potential – both from an innovative and a financial perspective – that we at HTGF are looking to tap into.

How are you exploiting this potential?

Frank Hensel: We directly approach the universities and tech hubs and speak with professors and potential company founders. We look to find promising ideas and innovations. And we coach scientists there in entrepreneurship and talk to them about founding an enterprise. Our aim is to reach out to these people perhaps before they themselves have thought about starting a company.

How do you approach the universities and tech hubs?

Frank Hensel: We tend to stay in close dialogue with the universities in general. But events like our Pitch Days are certainly a key aspect, which we stage very successfully with the universities and research centres, and we also take part in conferences. This helps us to bring together the community of investors, researchers, and entrepreneurs. We also work with first-class research institutions and have a very close partnership with major technology transfer companies in Germany. This is another way in which we establish contacts and enter a dialogue with potential partners.

Why is this exchange so important?

Frank Hensel: On the one hand, it is of course important that we at HTGF get our name out there. And we want to spread more knowledge about founding companies in the field of drug development. But at HTGF, we also see ourselves as a networker. We are an anchor point that brings together people and ideas. This task is especially important in this field, as people from the life sciences are traditionally more cautious when it comes to starting companies. We want to show prospective entrepreneurs that we have a network they can use and tap into at an early stage. We are thus helping to break down the barriers between science and industry. This is something that’s really important.

In general, what does HTGF look out for when investing in new drug development innovations and technologies?

Frank Hensel: One important aspect is to ensure that they are of interest for pharmaceutical companies and potential partners alike. Investments in drug development are very costly. The investment needs to be worthwhile in the long run and to help a lot of patients at a later date. The prospect of this has to be ensured as early as the seed phase. Partnerships are so important in this regard. At HTGF, we are part of large international consortia that jointly invest in drug development start-ups. These consortia include other institutional investors as well as private investors and pharmaceutical companies. It is only together that these huge investments can be made in the long term.

How is HTGF’s portfolio positioned in the field of drug development?

Frank Hensel: We have a very broad and highly diverse portfolio. We are currently invested in around 40 drug development companies. That is a considerable portion of the German scene. I can point to Smartbax, for example, a company that develops new antibacterial compounds with potency against multi-drug resistant bacteria. Or there’s also Tubulis, which aims to bring innovative and targeted drugs into hospitals that are potent against various cancers. The company has already signed a major collaboration deal with a pharmaceutical company. And it’s also worth mentioning Myr Pharmaceuticals, which was not only the most successful exit in HTGF’s history, but one of the few drug developments that made it all the way to approval in Germany. This just goes to show the potential of this field.

How the circular economy will change our world 

Many companies are transforming their operations from a linear towards a more circular economy. The transformation process often takes a long time, is complex and costly.  Developing and promoting the circular economy is not just beneficial for the environment, but obviously it creates the possibility of better and more sustainable access to raw materials in the long-term. It might help to reduce the dependency on international suppliers and can strengthen the own position in the value chain. One example is ESy-Labs GmbH, a portfolio company of HTGF based in Regensburg, Germany. Esy-Labs uses electrosynthesis to extract valuable raw materials such as zinc from waste that currently goes to landfill. 

We have to start now! 

The market for circular economy companies and start-ups has been growing steadily in recent years. Many consumers have recognised the importance of sustainable raw materials. And the political and social tailwind is also helping, for sure. We need to take off now and invest optimally to make ideas that have not yet been considered fundable. This requires venture capital, but also networking between science, politics, business and start-ups. 

Changing established processes is always costly and often takes many months or even years. Companies need to learn how to transform their supply chains without interrupting their business. One very important aspect is how companies return raw materials to the cycle once they have been used. This type of recovery is often complex and expensive. And it competes with the simple and often cheaper procurement of new materials in the linear economy. 

One solution: reducing complexity! 

One way out of this dilemma is to reduce complexity through innovation – as demonstrated by Eeden GmbH from Münster (Germany). The HTGF portfolio company transforms textile waste into valuable raw materials for new fibres. In a green chemical upcycling process, cellulose is extracted from old fabric scraps, which in turn can be used to make viscose or lyocell fibres. This enables textile manufacturers to comply with increasingly stringent environmental regulations. With its innovative technology, Eeden is opening a large cycle in which old textiles can be turned into new, high-quality materials. 

Such business models hold a clear advantage for start-ups over established companies. They don’t have to adapt to existing processes. They can implement innovations straight away. Moreover, when start-ups break new ground, new needs arise. In the textile example, this could be machines that sort fabrics. This creates space for other companies. And with it, a new sector of the economy. So, the circular economy is not just a cycle. It is the starting point for new major developments. 

About the author
Dr Nik Raupp is passionate about the circular economy and a recognised and experienced recycling expert. The senior investment manager worked in the chemical industry for ten years before joining High-Tech Gründerfonds. More than half of that time was spent working on sustainable chemistry and renewable raw materials.  

Start-up Stories with Betterfront: delighting customers!

How can technology help venture capital firms make better investments? We explore this question in the latest edition of Start-up Stories, HTGF’s short video format. Our guest is Michel Geolier, co-founder and CEO of Betterfront. The Munich-based investment technology company offers a fundraising and data analytics platform that enables fund managers to attract, engage and retain institutional investors. In doing so, Betterfront is creating the largest secondary market platform for LP funds and bringing the seller and buyer markets in the industry closer together.

Before building his own company, Michel Geolier himself worked as an investment manager in a VC fund. To get the right and important information, he often had to scour multiple sources and databases. Spreadsheets and email were the two instruments at his disposal. But with the speed at which the investment industry works today, these tools can no longer keep up. That’s how the idea for Betterfront was born.

In the current issue of Start-up Stories, Michel tells us about his path to owning his own company. We learn how, as a young team, you manage to win and keep your first customers. How to place a new brand on the market and what tips he would like to give young founders.

Interview with Kenza Ait Si Abbou: emotional AI can read humans – even better than we can

Could machines soon be capable of understanding us better than other people? There’s a good chance they will, believes Kenza Ait Si Abbou Lyadini. Here in Germany, the engineer is one of the most well-known experts in artificial intelligence, or AI for short. In her latest book “Menschenversteher” (Understanding humans), she explores the development of emotional AI. We sat down for a chat shortly before her keynote speech at the HTGF Family Day in May. In the interview, we talked about AI as a personal companion, the key role played by start-ups and tech corporations in AI development and the responsibility they hold, as well as the future of human–machine interaction.

Kenza, can you tell us what you mean by emotional AI?

Emotional AI refers to the ability of a machine to recognise and analyse human emotions. So, it’s not about the machines having emotions, which they don’t. Instead, it’s about them being able to read people and, to a certain extent, imitate them.

Your latest book is called “Menschenversteher”. Are machines starting to understand us, like the title suggests?

That is indeed the bold theory that I’m setting out. Consider the latest developments in AI: For the first time we have a “species” – if that’s a term we can use here – that can understand and read humans. You might even say that it can do so better than us.

How so?

Human–machine interaction continues to make big strides. People are beginning to have serious conversations with AI, sharing intimate secrets and talking about their childhood. That’s because we trust it. Because we know that it won’t tell anyone else. For me, that’s a huge development, as the machine is getting ready to fill a gap. People are finding less and less time for each other. We’re busy. You could even say that we’re finding it harder and harder to find the energy and drive to take on other people’s problems. That’s where AI comes in. There is a growing number of applications focused on closing this gap and engaging in deep, emotional conversations with people, and helping them. All of a sudden, algorithms are starting to read us and make us feel like they understand us. The machine appears to be empathetic – but it’s all just a simulation.

Is that a good or bad thing?

I don’t think we’re able to answer that question just yet. It’s too early to say. But things are changing, that’s for sure. We need to keep a close eye on it all and make sure science is able to keep pace with developments. Social research is particularly necessary.

Lots of people are scared about powerful AI possessing a consciousness. Will that happen?

Not with today’s knowledge. But it’s too early to predict how the technology will develop in the coming decades.

Can you understand their concerns?

I can. The latest developments can certainly cause fear. After all, humans are involved. And in the past, we’ve repeatedly seen that they don’t always have the best intentions. But I don’t think people need to fear the technology itself.

How well can the machines already read and understand us?

We’re still right at the beginning. We are seeing the first commercial applications. Take chatbots and conversational AI, for instance. And emotional AI solutions are already being used in market research. For example, to test how effective ads are. The people taking part are no longer asked questions – instead, a computer can read their emotions based on how their bodies react.

What do you think about generative AI like ChatGPT?

The big thing here is that the applications have now entered the consumer space. The technology has been around for years, even though if you ask me, it’s not yet mature enough for widespread application. Other factors like further increasing output quality and, above all, incredibly widespread availability are also adding to the hype. It’s no surprise that this is also causing people and the way we work to change. Take the creative industry, for instance. To keep up with ever-tighter deadlines from customers, many are reliant on generative AI for support.

What do these developments mean for the start-up industry? Where do the opportunities lie? And what are the challenges?

The opportunities lie in using AI as a tool. AI allows us to speed up processes and work more efficiently. But also to develop new ideas. We can see this quite clearly among the start-ups that leverage generative AI to develop new products and business models. As for the risks, I think they lie in the technology being used carelessly. Amid fierce digital competition, the technology sometimes gets used too soon. Problems like algorithmic bias and privacy issues only become clear afterwards. Too great a focus on profit speeds up the whole thing. Especially in the beginning, start-ups need to completely focus on their business – but they definitely need to be aware of the power of AI as a tool and act responsibly.

Are start-ups driving AI developments?

They are a driving force, yes, but you can’t underestimate the work that the tech giants are putting in. They are conducting the basic research, and creating the technological basis. What start-ups do really well is building specialised products on these foundations. They know the individual environments really well and can respond to special customer needs at great speed, both in B2B and B2C settings.

We’re here at the Family Day, with roughly 1,000 people taking part. So more human-to-human interaction than machine-to-machine. How important are events like this?

They’re very important, especially because such an event held in person allows people to engage in emotional dialogue. Emotions control everything. They influence our decisions – including in a business context. Using these emotions intelligently enables us to make better decisions.

Simone Menne in conversation: “We need to get back to basics again” 

Simone Menne is one of the most important voices on the subject of innovation in Germany. She has a really good understanding of the business landscape in this country. Having previously held roles as CFO of Lufthansa and Boehringer Ingelheim, today she is an active member of multiple supervisory boards and shares her expertise with a wide audience. She will also be the keynote speaker at High-Tech Gründerfonds’ Family Day taking place on 9 and 10 May in Bonn. Ahead of the event, we sat down for a chat about innovation, disruption and having the right focus. 

Ms Menne, the title of your talk at Family Day is: “The new order of innovation in Germany”. What is the situation regarding innovations within companies? 

There is a lot of innovation at major companies. New solutions are regularly being produced, discovered and improved upon. But this type of innovation is not very visible and rarely disruptive. 

OK, let’s just touch on the aspects of visibility and disruption. In terms of visibility, why does innovation tend to occur behind the scenes and out of public view?  

There are many reasons for this. One is the need to be discrete – to ensure that not too many people find out about what you’re working on. Another reason is fear – that the innovation might not work. In this instance, it is about minimising your own risk. 

Is it a problem that innovations at large companies tend not to be seen by the outside world?  

No, not at all. Those seeking to innovate need to exchange with others and share knowledge with the right people. If companies build a barrier of silence around them, then that will become a problem at some point. But larger companies can overcome these barriers internally. They are ultimately big enough to have colleagues that would also challenge somebody like me. 

You mentioned the idea of “disruption”. Why are innovations within companies rarely disruptive? 

We’re great innovators when it comes to things we do well. Take the example of the electric engine in the automobile industry, for instance. Germany’s car manufacturers jumped on this disruptive innovation later than others. But now we’re very good at catching up. We tend to build better electric engines than our international competitors. We also have the capability of building ever-improving battery technology. We can be very innovative. But we rarely call our own business models into question. 

Why is that? Why do we challenge ourselves all too rarely? 

Because we have been very successful over the last 30 years in Germany. And as can be seen currently, we can still be very successful even in challenging times. But our business models tend not to be sustainable and are shrinking. In order to grow, you have to allow for disruption. And that’s something we’re not good at in Germany. 

If we are to believe the findings of studies such as the Global Innovation Index, Germany is not among the leaders of innovation. What do we have to do to redress this issue?  

We need to get back to basics urgently. And by that I mean education and infrastructure. If we can invest here and successfully teach the next generation how to develop things and simply give it a go, then this will also have a long-term impact on the innovative capacities of our companies.  

Can start-ups lend a helping hand? 

Absolutely! Start-ups are almost always disruptive and often have new ideas. The challenge lies in establishing a foothold when cooperating with companies. “Not invented here” continues to be a popular mantra among many companies. This means that many are not open to accepting new ideas if they haven’t been developed in-house. 

How would you describe the start-up ecosystem in Germany? 

I’ve learnt that there isn’t one single start-up ecosystem in Germany. Each regional scene is slightly different. I myself come from Kiel, where young companies are very active and successful in the field of future energy sources. In Munich, however, there is a completely different focus. It is important for start-ups in general to know what the optimal environment for their business is. And to set up shop wherever that best ecosystem may be. 

What do start-ups need to do to collaborate successfully with companies? 

Start-ups need to be well prepared. They need to find out exactly what solution they have to offer for which problem and for which challenge within companies. Many start-ups overreach with their ideas, creating solutions that established companies simply do not need.  

What advice would you give to start-ups? 

Be active and build up a network. Start-ups should know their industry inside out. And also find the right people. It is not typically the executive board that the start-up has developed a solution for, but rather another – potentially smaller – unit within a company. 

What do you expect from an event like Family Day? 

That start-ups, companies and investors have the chance to come together. Events such as Family Day are a fantastic platform to address the needs of start-ups. But it is also an opportunity to open the eyes of companies. They have the chance to witness the drive of young entrepreneurs in person and identify which mechanisms they might require. I’m really looking forward to meeting everyone there. 

Space for new ideas: investment in new space

In his earlier career, Christian Ziach used to work on space missions. Now, he’s investing in start-ups taking off into space. The HTGF Principal is viewed as an expert in the field of new space. In this interview, he talks about his latest investment, sheds light on the commercial use of space, highlights opportunities for start-ups, and he also reveals how he once helped to bring a rock sample from space down to Earth.

Christian, where does your fascination with space travel come from?

I was once able to accompany a successful mission into space. In 2012, I took up a position at the German Aerospace Center. Together with our French and Japanese colleagues, we sent a space probe to an asteroid in 2014 and successfully landed on it in 2018. Rock samples were collected and then brought back down to Earth. It was a textbook mission. SpaceX was already very active at this time and it was becoming increasingly clear to me that commercial space travel would continue to grow in significance and that a paradigm shift was on the cards.

The new space scene has developed strongly ever since. HTGF is also investing in start-ups from this field.

We’ve held a stake in Reflex Aerospace since December. They develop satellites that are precisely tailored to customer requirements, but at the price of a satellite from “off the shelf”.  

That sounds like squaring the circle.

While this might sound like a contradiction, it can actually be achieved through a fully digital approach to design and development as well as the use of state-of-the-art production processes such as 3D printing. The start-up also has a really good overall set-up with very strong partners and is part of the joint venture UNIO. The latter is a consortium of renowned companies seeking to establish their own satellite telecommunications constellation. Last week the EU also earmarked 2.4 billion euros to build its own satellite constellation, which will lead to exciting synergies. Ultimately, these and other satellites will have to be launched into space. We’re also well positioned in this regard with our portfolio company Orbex, which is developing a cost-efficient launcher and is well placed to secure a piece of the booming new space market.

Why has the commercial potential only started to be exploited in the last few years? The problem was always the really high start-up costs involved. With traditional rockets, it cost more than 20,000 euros to transport just one kilogram into space. With such high initial costs, nobody wanted to risk the possibility that the satellites wouldn’t work after being launched into space. They therefore underwent very intensive testing, which pushed the costs up even further. There was also a very low willingness to test out anything truly innovative in space. Instead, there was a focus on technologies that had been tried and tested in space, and innovations fell by the wayside. As a result, we didn’t return to the moon and we built the International Space Station at painstaking effort, but otherwise remained in low-Earth orbit in crewed space flight. Even in the commercial sphere, there were no truly successful business models for a long time – with the exception of the field of satellite telecommunications. That was until SpaceX transformed the market.

SpaceX is Elon Musk’s space exploration company. What impact is it having on current market developments?

Musk recognised that the high start-up costs were an obstacle to the increased use of space travel and that it was ludicrous to throw away rockets after only being used once. He therefore invested the millions he’d earned from his PayPal exit in SpaceX and set about establishing a rocket production process that was highly vertically integrated and through which he was able to drastically reduce manufacturing costs. He also succeeded in making the first stage of rockets reusable. Plans are even in place for the launch of a fully reusable rocket in the near future. For years he was ridiculed for the project by established companies, particularly in Europe. But nobody’s laughing now, with SpaceX launching rockets into space on an almost weekly basis and having taken a lot of commercial market share from Ariane in Europe. 
In addition to reducing initial costs, there were also many achievements in the field of microelectronics, which led to smaller, more efficient and less expensive satellite systems. All this has resulted in a paradigm shift in the field of space travel.

What characterises this new paradigm? Space travel used to be the domain of the nation state. Now we are seeing an increasing number of private companies entering the fray. Knowledge of space travel is no longer confined to just a few states. This is why we often talk of the democratisation of space travel. Companies like SpaceX or Blue Origin, set up by Amazon founder Jeff Bezos, are now able to send astronauts into space. Very real plans are already in place for the next space station to be set up and operated by private companies. NASA, ESA and Co. would then become tenants as it were. It can therefore be expected that costs for research, development and production in space will continue to fall drastically, which will help new business models to break through.

In what areas are we already seeing the advantages of space travel?

There are many. Take climate and the environment, for example. It was satellites that first showed us the extent of the hole in the ozone layer. Only then was a ban on chlorofluorocarbons, or CFCs, introduced. Only satellites are able to reliably supply us with comprehensive weather and climate data. We need this data to fill in knowledge gaps and to continue to change our actions accordingly. Or, to take a more specific example, satellites are already helping firefighters to detect and put out forest fires.

So satellites will continue to play a major role?

Absolutely! And not just in climate research. We need a close-knit and well-functioning satellite network to meet the ever-increasing demands in the logistics sector. In order to trace supply chains, for example. Or if we want to see more autonomy in road transport. These are just some of the many aspects that will continue to drive growth in the field of space.

And how are we positioned in Europe?

We’re late to the party. Let us take Ariane 6 as an example, the follow-up programme to Ariane 5, a European heavy-lift space launch vehicle. The new programme is set to be initiated before the end of the year. But the problem is that the technology is already outdated before the project has even been launched. Because Ariane 6 is still a throw-away rocket.

Why are we not quicker off the mark?

I predominantly see two major challenges in Europe. Firstly, there is a lack of courage to try and leapfrog a couple of technology generations ahead. Secondly, we are always simply observing the success of others. Falling into a trap of blindly copying what’s being done elsewhere. But this is too short-sighed. What we need in Europe are commercially driven companies and initiatives that also pursue truly self-supporting business models. It’s not enough to simply hold out for state initiatives and to be dependent on state subsidies.

How will the industry develop moving forward?

It will continue to grow! However, we shouldn’t expect a linear progression to continue on and on in the same direction. The Gartner hype cycle will not stop short of the field of new space. Setbacks and consolidation are to be expected. That is completely normal and has also been observed in other sectors such as the internet economy and fintech. We also can’t forget that start-ups from the new space sector often operate at the limit of what is technically feasible and only address existing markets up to a point. In some cases, solutions are also being developed for markets that are only just emerging. There are huge opportunities for investors here to bet on the right teams and topics at an early stage, but there’s also a risk that the timing isn’t right. For instance, the turnaround in interest rates brought on by inflation has made it more difficult for start-ups and they have to prove at an earlier stage that their business model is viable. The important thing is to not view space as a short-term trend. The Americans and Chinese see space as a new economic sphere to be leveraged, cultivated and safeguarded. They are therefore setting the course by optimising framework conditions for innovative companies, for example. Space travel can thus be regarded as a critical enabling technology. If we don’t want to fall too far behind in Europe, then state institutions and also investors will have to take consistent action.

Many thanks for speaking to us, Christian.

MedTech Pitch Day 2023: Connecting Startups with Industry Leaders, Investors, and Decision-Makers

The MedTech Pitch Day, organised by HTGF, Dräger, B.Braun, Techniker Krankenkasse and the Health Innovation Port, is just around the corner. What can founders expect at the event and why should they definitely apply? We spoke to Anke Cassing, Principal at HTGF, and Jakob Lilienweiss, Investment Analyst at HTGF, to find out.

The MedTech Pitch Day will take place on March 29^th in Berlin. Can you tell us more about the event and what founders can expect?

Anke: The event has developed into a true showcase for innovative start-ups in the medical technology field. Founders can expect the opportunity to connect with potential investors and decision-makers from leading medical technology companies as well as gain expert knowledge in keynotes and workshops.

Jakob: Our goal is to provide a platform for start-ups to network and promote their solutions. In recent years, for instance, we’ve seen a rise of digitalization in the Medtech sector, with many start-ups utilizing modern technologies such as artificial intelligence and machine learning to screen large amounts of medical images and data or combining these with hardware. The MedTech Pitch Day brings this disruption to one table.

Can you tell us about your personal highlights of past MedTech Pitch Day events?

Anke: Last year, we welcomed many innovative start-ups from all over the world and received more than 150 applications for the pitch sessions. I was thrilled by the diversity of cutting-edge technologies presented. One standout of the past editions was Angiolutions, a medical technology company that has developed the first device to treat small aneurysms. You can learn more about the founder’s exciting start-up story in our latest video interview.

How can start-ups apply to present at the event?

Anke: Start-ups can apply by registering on our website by January 31^st and uploading their non-confidential pitch deck. Our expert panel will review the applications.

What types of start-ups are you looking for?

Jakob: We’re looking for innovative start-ups in the Medtech and Healthtech fields.  We want to create an interesting mix between hardware start-ups, but also asset-light solutions.

Do you have any final thoughts for start-ups considering applying?

Anke: The MedTech Pitch Day is not only about the event itself, but also about the network which has been created. It is an excellent opportunity for early-stage start-ups to promote their ideas and assert themselves on the market. We’re excited to see the medical technology for tomorrow that will be presented at this year’s event.

Jakob: Yes, the MedTech Pitch Day is a great opportunity for start-ups to showcase their solutions in front of leading venture capital investors and key players in the Medtech industry. We encourage start-ups to take advantage of this opportunity.

Anke, Jakob, thank you very much for the interview – and if you out there now feel like being a part of #MTPD23, you can apply right here.

2022 – High-Tech Gründerfonds end-of-year review

We’d like to begin this end-of-year review by saying thank you to all those who support us, enable us to do our work and place their trust in us. This particularly applies to the founders, numerous co-investors and shareholders of our portfolio companies as well as our fund investors. This year saw the launch of our fourth fund, HTGF IV, which more than 40 private companies have invested in alongside the Federal Ministry for Economic Affairs and Climate Action and KfW Capital. Among the fund’s investors are successful SMEs, including numerous hidden champions, as well as family offices and large corporations. They all recognise the potential impact that start-ups can have – and the benefits that can arise for both themselves and the start-ups through partnerships and cooperations.

We’re delighted to see this level of trust being placed in High-Tech Gründerfonds and were able to exceed expectations at first closing in June: significantly more than €400 million is available for seed investments in the HTGF IV fund. Final closing will take place at the start of 2023. The fund volume is considerably higher than that of our previous funds. More money is available for the roughly 200 start-ups in which HTGF IV will invest – a positive sign in these uncertain times.

2022 was the second-best year in our history in terms of exits. Good companies clearly remain in demand, despite these challenging circumstances. At HTGF, we have experience in dealing with crises. HTGF was founded at a challenging time back in 2005. Since then, we have experienced crises both great and small, including the 2008/9 financial crisis, the coronavirus pandemic and the present-day situation.

The HTGF portfolio is highly resilient. While our start-ups witnessed a slight dip in fundraising overall compared to the previous year, the funding volume remained at a similar level to 2019 and 2020, which is a good sign.

The entire HTGF team, which has again grown in size considerably this year, played a big part in these results. We are all aware that the present situation is challenging for many people. This will remain the case, as the crises are unlikely to be over soon. The financial climate may remain difficult for young companies, despite there being a lot of capital on the market.

Here at HTGF, we will continue to work hard to exceed the expectations of our portfolio companies and fund investors. This is a goal that unites the whole HTGF team. We will keep making funds available, as was the case this year – a year in which we maintained our investments at a high level and made more than 40 seed investments. We firmly believe that innovation and technology hold the key to solving many challenges.

For founders, the current situation requires them to fully concentrate on their business operations. Effectiveness and efficiency are key. Over 17 years of experience has shown us that successfully run start-ups are able to overcome challenging times; many companies were even founded in such circumstances. It is important that we all make the most of these opportunities.

We wish you a Merry Christmas and look forward to our continued cooperation in 2023!

Alex von Frankenberg, Guido Schlitzer and the entire HTGF team

2022 review and 2023 preview from our investment teams

What opportunities and challenges did we face in 2022? And what trends and technologies can we expect to see next year? Our three investment teams – industrial tech, life sciences & chemistry, and digital tech – reflect on an eventful year and look ahead to 2023.
Find out more.

2022 review and 2023 preview from our investment teams

What opportunities and challenges did we face in 2022? And what trends and technologies can we expect to see next year? Our three investment teams – industrial tech, life sciences & chemistry, and digital tech – reflect on an eventful year and look ahead to 2023.

Industrial tech

The effects of the climate crisis continue to place huge challenges on society. HTGF aims to be part of the solution. Since 2005, we have invested in around 60 climate tech companies and are well-placed with our current portfolio in areas such as energy, the circular economy, batteries and mobility.

An example of a new investment is Variolytics. The company offers measurement technologies and AI for wastewater treatment plants, thus actively helping to reduce greenhouse gas emissions.

Additional challenges such as the shortage of skilled workers, unreliable supply chains and increasing competition are helping to drive the digitalisation of production for many manufacturing companies. Our roughly 35 active industrial tech firms offer solutions for industrial companies from various sectors.

An example is one of our new investments in 2022: Syte, a start-up that offers an AI search engine which analyses the development potential of land.

Elsewhere, deep tech applications are increasingly finding industrial use in areas such as new space, quantum computing and artificial intelligence. Many of our 35 deep tech portfolio companies will achieve major technological milestones in 2023.

An example of a new investment is InCirt, a company that develops microchips which serve as a key technology for future high-speed wireless communication.

Important exits

• Enscape – Enscape develops high-value, real-time rendering and virtual reality software for the architecture, engineering and construction industries. The company has gained tens of thousands of customers worldwide in a short space of time. We have since sold our shares to a private equity fund, which is helping Enscape and other companies in the field of CAD to become category leaders. Our exit was a major commercial success for HTGF, achieving the highest ever multiple on invested capital. 
• FAZUA – FAZUA works on innovations in the field of e-bikes. Many renowned e-bike manufacturers already use FAZUA drive systems. In Porsche, the company was also able to secure a partner for whom the right drive system means everything.
• Arioso – Arioso Systems develops microspeakers for in-ear headphones. These microspeakers are up to ten times smaller than conventional speakers and they are extremely energy-efficient. In Bosch, we are delighted that the company was able to find a partner from our circle of investors.

Life sciences & chemistry

One trend continued to take hold in 2022: agility and resilience are becoming increasingly important for companies seeking to establish themselves in the fields of life sciences and chemicals. These are traits that often distinguish young companies and start-ups from major players and corporations. The start-up culture in the life sciences and chemicals industries is shaped by new ways of thinking, new approaches and new paths. This also applies to Rimasys, a start-up that HTGF initially invested in back in 2017. The company, which was only recently acquired by the AO Foundation, is helping to make surgeon training more realistic using gamification methods. For instance, they stream bone surgeries performed by experts in the field. And doctors throughout the world are able to observe their work via live stream.

Many of our portfolio companies achieved key milestones in 2022. oncgnostics, for instance, developed a testing procedure that makes cervical cancer much easier to diagnose. The product was also recently approved in China.

We’re going to keep up the hard work. Because there’s a lot to work on: infectious diseases, cancer, Alzheimer’s, the further development of RNA, better diagnostics, the improvement of hand hygiene, relieving medical professionals of tiring work, and sustainability in the medical and chemical sectors. These are all challenges that our portfolio companies are actively working on.

Important exits

• c-LEcta – c-LEcta is a leading biotech company specialised in precision fermentation, optimised bioprocessing and biotransformation for the creation of high-value targeted enzymes and ingredients. HTGF has been at the company’s side for over 16 years. 
• Kumovis – Kumovis develops 3D printing technology for the production of implants and medical technology products. The technology enables the production of highly individualised implants while remaining economically viable. 
• Rimasys – Rimasys is an innovator in the field of surgical training.  The Cologne-based company has an impressive track record in this field and will now be able to continue its success story with its new partner.

Digital tech

Three topics were particularly important this year and will continue to dominate in 2023.  

We expect to see a further boost for the field of artificial intelligence. AI applications will continue to make life easier for humans. An example of this is our portfolio company Natif.ai. Thanks to high-performance AI models and a deep OCR technique developed in-house, a wide range of documents can be analysed quickly and precisely, with the relevant data being extracted. 

Edtech, govtech and regtech will also remain relevant fields of growth. The digitalisation of schools and public bodies will continue to gain traction. Our portfolio companies are already assuming a leading role in this development in Europe, especially Sdui in the field of edtech.

And then there’s the field of cyber security: Innovative security solutions are already highly sought after. This will remain the case next year, given the diverse range of security threats throughout the world. This has also been underlined by the level of investment in our portfolio companies VMRay, Code Intelligence and Tangany. They all completed successful growth rounds. Start-ups from this sector performed well, with multiples only suffering slightly.

An example of a success story in 2022: Our portfolio company Code Intelligence partnered with Google to secure open-source components written in the most-used programming language, Java. While onboarding the most-used maven packages relevant to enterprise software into the testing platform, over 200 vulnerabilities have been prevented before landing in official releases.

Important exits/IPOs

• Quentic – With its modular software-as-a-service solution, Quentic simplifies management and reporting in the fields of health, safety, environment and quality (HSEQ) management, and environmental, social and governance (ESG). The company has now found a strong partner in AMCS. HTGF’s shared history with Quentic is a special one: HTGF has been at the company’s side for over 14 years of development.
• Rebelle – Rebelle is a pioneer in the field of the circular economy. This year, the successful online marketplace for second-hand designer fashion went public. Rebelle is the first IPO to have a Nasdaq Green Equity Designation within the global Nasdaq system. This was also HTGF’s first “green IPO”, in other words a stock market launch with a focus on sustainability.
• IPlytic – It is great to see that the IPlytics GmbH, with its Patent Analytics software, was acquired by the RELX Group and can expand further under the roof of its subsidiary LexisNexis in the future. As an early backer of IPlytics, it was impressive to track how the software convinced customers around the world, straight out of Berlin.

What have you learnt? Episode 4 with Prashanth Makaram of Crocus Labs

What have you learnt? This is a question we’re putting to company founders from our portfolio. Because if you found a start-up, run a company, make investments or work in management, you are learning something new every single day. You also have to deal with new situations. And continue to develop new skills. To cover the latter aspect, we expanded the HTGF Academy this year to offer a comprehensive programme for company founders. And because we firmly believe in the power of peer-to-peer learning, our newsletter now includes the column: What have you learnt? Once a month, company founders from our portfolio share tips and advice in this column. Prashanth Makaram, Co-Founder and CEO of Crocus Labs, joins us this time round.

Crocus Labs is developing revolutionary ultra-high efficiency smart lighting solutions for indoor farming. The lighting technology pioneers combine proprietary diodes with smart sensors and software to help growers achieve greater profitability.

What was your last major learning that helped your own personal development?

Prashanth: The last major learning has been to stop being afraid of conflict situations but rather to embrace them. In order to have a healthy and functional personal and business relationship, there is a need to argue (fairly) and come up with a solution that both parties can live with. This also means addressing critical topics early on instead of putting them off until later. 

What will you take with you from your start-up journey so far for the rest of your life?

Prashanth : A couple of things. Along your journey there are people (typically ex-founders) who go above and beyond to support you and your company at every stage although they don’t have to. I hope to also help others out for the rest of my life. 
The second thing is to keep persisting when faced with a sea of rejections and when met with challenges that go beyond your expectations. Once you realise that either it doesn’t matter in the long run or that no level of planning can avoid certain outcomes, you just have to make the best of the situation without compromising your mental health or happiness.

When you meet other founders today: What advice would you want to share?

Prashanth: Having the right team including co-founders with complementary skills that you can trust is the most important thing. Everything else can be figured out.  Establishing a start-up is tough, especially if it’s a hardware start-up. You have to be tenacious in pursuing your goal. 

How important is learning for founders in general?

Prashanth: As a startup founder, learning is a critical aspect of your life. As you are constantly learning and adapting your strategy to new information and situations. If you don’t learn, you won’t grow and neither will your company.