HTGF Family Day goes Berlin: A look behind the scenes

HTGF Family Day is taking place in Berlin for the first time. In this interview, Stefanie Grüter, Partner Communications & Relations at HTGF, and Event Manager Maren Breuer reveal what our guests can expect on June 11 and 12 at STATION Berlin, what highlights are planned and what innovations there are.

Can you tell us more about the idea behind the HTGF Family Day 2024? What is different this time around?
Stefanie Grüter: The Berlin location and the venue offer us and our guests new opportunities. We have significantly more space and can therefore respond even better to the individual interests and needs of our target groups. Two stages for keynotes, impulses, sessions, panels and pitches. Plus curated master classes, an exhibition area and sufficient space for important and confidential discussions and meetings. This wish has been expressed frequently in recent years. We want to offer concrete and sustainable added value with the program and new networking opportunities. After all, we are expecting up to 1,500 guests. We want them to go home with at least one concrete input for their business and new, valuable contacts.

So networking plays a crucial role?
Maren Breuer: The exchange between the various stakeholders of the startup ecosystem with industry and politics is important for driving innovation. For almost 20 years, we have been offering a platform for this with the HTGF Family Day. Our matchmaking tool enables participants to make targeted contacts with potential partners, investors and industry experts even before the event begins. This allows the event to be used optimally for meaningful interactions. Last year, more than 3,100 one-to-one meetings were created using our tool. We want to beat this record again this year. And, of course, there is also room for spontaneous encounters, e.g. in the exhibition area.

The agenda for this year’s event was recently published and promises some highlights. What should participants not miss?
Maren Breuer: We are offering many highlights, some of them in parallel, so our guests can put together their own program according to their individual interests from the extensive range on offer.  We are looking forward to welcoming AI expert Dr. Feiyu Xu, investor Daniel Gutenberg, Verena Pausder from Start-up Verband, Björn Tremmerie from the European Investment Fund and serial founder Miriam Wohlfarth as well as Ingrid Hengster, CEO Germany, Global Chairman Investment Banking at Barclays, Bernd Leukert, Chief Technology, Data and Innovation Officer at Deutsche Bank and Ingo Generalleutnant Ingo Gerhartz, Inspector of the German Air Force, among others. I am sure that their insights into important trends and pioneering technologies will inspire and inform participants. Sessions on topics such as AI, M&A and the regulatory environment are particularly relevant for participants looking for strategic and new insights. Discussions on topics such as New Space, ESG and Venture Clienting offer valuable insights. We are particularly looking forward to the speech by Federal Minister of Economics and Vice Chancellor Dr. Robert Habeck. We also welcome Heiko Thoms, State Secretary in the Federal Ministry of Finance, and Anna Christmann, Federal Government Commissioner for the Digital Economy and Start-ups, from federal politics.

That sounds like a lot of input. What supporting program do you offer?
Maren Breuer: A special musical highlight awaits guests at the traditional Seed Club this time.  We also have something new: if you get up early, you can also get some exercise. On the morning of the second day of the event, all those interested can look forward to a joint running training session with long-distance runner Maciek Miereczko.

Another highlight will certainly be the opportunity to get to know start-ups from the HTGF portfolio. What is planned here?
Stefanie Grüter: There are over 70 pitches on the Innovation Stage. We have the advantage of a broad portfolio. Interested investors, but also representatives of companies who want to work with startups, will get to know highly interesting technologies and business models. From various areas such as deep tech, climate tech, medtech, pharma and digital tech. From AI solutions to quantum technologies and biotechnological advances. After all, HTGF is one of the most active investment funds in Europe in the fields of climate tech and quantum technology.

What do you want participants to take away from Family Day?
Stefanie Grüter: We would be delighted if the participants leave the HTGF Family Day 2024 with a smile, new insights, contacts, ideas and perhaps even concrete to-dos. Whether it’s forging new partnerships, finding investment opportunities or gaining valuable insights into the technologies of the future: HTGF Family Day aims to provide an enriching experience for all.

This is how we did it – Episode 1 with Leonie Althaus from traide AI

The decision to found your own start-up is always a challenge. In our series “This is how we did it”, we speak to company founders from our portfolio who first experienced life as an entrepreneur during challenging times. They offer first-hand experience and valuable tips. Leonie Althaus, founder of traide AI, kicks off the series. Her start-up uses the latest cloud and AI technologies to support companies of all sizes and from all sectors in adhering to customs regulations and automating their customs processes. In this interview, the entrepreneur shares her experiences and has a clear message: “seek out opportunities.”

What opportunities did the crisis present you with as a young company?
In terms of customers, we identified that there was a lot of interest in saving resources and money through the latest AI technology. This is something we tapped into with our product idea.  In terms of investors, it is undoubtedly important to show that you are earning money and can put the investment to good use. Right from the start, we had a firm focus on sales and managed to keep our costs in check. 

What did you learn most from this time?
In some industries, it can sometimes take a while until the first signs of success can be seen – this is partly due to their possibilities and openness towards technology. It’s always worth plugging away with topics. You have to open up a lot of opportunities.

What developments or challenges – perhaps even unexpected ones – did you encounter in the early phase, and how did you respond to them as a team?
For us, the new large language models (LLMs) were incredibly important and helped us to gain acceptance on the market. Our quick response as a team really helped us out in this regard.

What should entrepreneurs pay particular attention to when founding a start-up at the moment?
Ideally you want to have a business model where you can start earning money quickly and, if necessary, be independent from external capital. 

Do you have any other advice to pass on to our readers?
We quickly realised how important our office culture was for us in the early stage. Having days where the whole team is in the office works really well for us, as it ensures that we get to see each other in person several days a week.

Media contact
High-Tech Gründerfonds Management GmbH  
Tobias Jacob, Senior Marketing & Communications Manager   
T.: +49 228 – 82300 – 121 
t.jacob@htgf.de

Interview with Verena Pausder: Entrepreneurial awakening – make it in Germany!

At Family Day 2024, you’ll be calling for an “entrepreneurial awakening” and for companies to “make it in Germany”. How can this happen?
If “Made in Germany” was a seal of quality in the past, then I believe that “Make it in Germany” should be our objective for the future.This can be achieved by supporting a start-up culture that welcomes diversity and talented individuals from around the world. Germany should show itself to be an open location that supports innovation and breaks down bureaucratic hurdles. We need to create an environment in which we mobilise more private and institutional capital, particularly for deep tech start-ups, in order to ensure that start-ups founded here can also make it big here.

In a new post on social media, you call for a new kind of German spirit and criticise the voices suggesting that Germany is on the decline. How can we bring a more positive spirit to the German innovation scene?
We need to promote our success stories more and do better at telling people what a positive impact innovation and new technologies can have on our work and lives. Times of crisis are a great opportunity for entrepreneurs. Despite the global uncertainty, almost 2,500 new start-ups were founded in Germany last year. This contradicts the notion that Germany is on the decline.  And Germany has the perfect ingredients to look ahead to a confident economic future: a lot of innovative ideas (particularly in the field of deep tech), talented entrepreneurs, an outstanding international research landscape and a strong industrial base.

You have been the Chairwoman of the German Startup Association for around half a year now. Has your view of the scene changed in that time? And if so, how?
Since becoming Chairwoman of the German Startup Association, I’ve witnessed the diverse nature of the scene. And I’m increasingly realising that our decentralised, federal economic structure is one of the key strengths of our country. In Germany, start-ups are not just popping up in the capital, as is the case in France and England, but impressive companies can be found up and down the country – from Isar Aerospace and Marvel Fusion to Flix, Getyourguide and 1KOMMA5. At the same time, I am obviously aware of where political and economic conditions need to be improved to provide a further boost to growth and innovation in this country.

What do we need now to further strengthen the start-up ecosystem? What potential can be better leveraged?
To further strengthen the start-up ecosystem, first and foremost we need bigger funds and more late-stage capital so that we can retain innovation and start-ups in Germany in the long term and ensure that companies do not predominantly belong to non-European investors at some point. We also need to create more spin-offs from our world-class research, improving the structures at universities to do so. And last but not least, we need to revive our stock exchange to make sure that profits, talented individuals and IP are not lost through IPOs abroad.

AI, climate tech and deep tech are the major topics in the industry. How is the German start-up scene positioned in this regard? And what do you consider to be the important trend topics?
The German start-up scene is in a great position in general, but we need much more capital in the areas mentioned and bigger funds to be more competitive on the international stage. Major trends such as space tech, quantum computing, battery storage, fusion energy and biotech also require the necessary framework conditions on a policy level. For instance, the state should become a customer of these companies at a much earlier stage and also make it easier for start-ups in these fields to take part in tenders.

We talk a lot about the cooperation between SMEs and start-ups. What factors do you think are important to strengthen this cooperation?
First of all, we need to create platforms for start-ups and SMEs to come together, get to know each other and learn from one another. Good examples of this are the Pioneers Club in Bielefeld, the Munich Urban Colab in Munich and BRYCK in Essen. To strengthen cooperation, it is important to build up trust and support joint projects.

At HTGF, we have numerous start-ups in our portfolio that come directly from the world of research and science. You recently spoke about the need for a stronger integration between industry and research. What’s your take on the matter?
Germany is a world-class research location on a par with the USA. We register the most patents in Europe. But all too often, this research does not lead to market-ready products or companies. Start-ups are the best mechanism for ensuring scientific breakthroughs can quickly make their way into corporate practice. The UnternehmerTUM entrepreneurial centre, which is affiliated with the Technical University of Munich, is showing how it’s done: more than 50 fast-growing tech start-ups are founded there each year. Through its own venture capital fund, the university invests in promising tech companies and offers a 1,500 square-metre high-tech workshop for building prototypes known as the MakerSpace. The centre has already led to the establishment of 11 unicorns, such as Celonis, Personio and Lilium.

You are an entrepreneur yourself. You have developed apps for children, started a digital education association and are the co-founder of the women’s football team FC Viktoria Berlin. From your own experience, what would your advice be for entrepreneurs looking to get started today?
I would ask them: what will you do if it works out? What kind of company can you build, how can you influence a whole industry, what corporate culture can you create, how can you educate young people and how can you contribute to making our country fit for the future? These questions are so inspiring and they show that we shouldn’t always get bogged down in the risks, but that we should look forward to the opportunities ahead.

You’re seen as a great networker. Why is an event like Family Day important for the scene? What are you expecting?
Events like Family Day are important to get to know people, share experiences, come up with ideas and learn from others. I’m expecting that this exchange will result in inspiring discussions, new partnerships and innovative ideas and help to advance the German industrial and start-up landscape.

Successful pitches: 10 tips for an impressive pitch deck 

In their day-to-day work, Kilian von Berlichingen, Senior Investment Manager at HTGF, and Arnas Bräutigam, Co-Founder of AddedVal.io, look at numerous pitch decks critically. In this blog post, they provide a series of tips on how you can avoid making the most common mistakes in your pitch deck 

1. Keep your pitch deck short and sweet:
Your pitch deck should be precise and to the point. Many founders make the mistake of filling their presentation with unnecessary information (at such an early stage), which leads to key aspects of the pitch being drowned out. Keep your pitch deck to just 12 to 15 slides if possible.

2. Use enticing and meaningful headlines:
The first thing anyone reads is the headline of your slide. If the headline is meaningful and exciting, then investors want to find out more. Instead of generic headers such as “Problem” or “Solution”, you should look to convey the key message of the slide in the headline. Use concrete facts and figures to hook your audience and to provide an insight into what your start-up is all about.

3. Quantify the problem and show its impact:
The “Problem” slide is one of the most important in your pitch deck. However, many founders do not put enough time and effort into quantifying the problem and explaining its impact. Provide concrete figures and data to highlight the scale of the problem in terms of time and money. By doing so, you can show investors that you have thoroughly analysed the market situation and that there is a real demand for your solution.

4. Emphasise the experience and know-how of your team:
Investors don’t just invest in ideas but above all the people behind these ideas. The younger your company is, the more important your team is for investors, as you will not yet have built up traction or have a lot of performance indicators that you can point to. It is therefore essential that you place your team’s expertise and experience front and centre. Don’t just list the names and positions of your most important team members, but also highlight their professional backgrounds and successes – ideally backed up with figures. Show why this is the right team to lead your start-up on the road to success.

5. Present your current development and business traction:
Another important aspect overlooked by many founders in their pitch decks is to present the current economic (!) development and business traction of their start-up. Investors want to see that an idea doesn’t just exist in your head, but that there is indeed a market for your solution. Make sure to give clear figures and data that highlight your current development and business traction as well as the future potential of your start-up. Key performance indicators include revenue, revenue per customer, number of customers, sign-ups and pipeline.

6. Show what sets you apart from the competition:
What makes your start-up stand out? Clearly distinguish your company from the competition through your target group, product features or go-to-market strategy. Investors always have an eye on the competition. As founders, you can use your pitch deck to show that you have analysed the competitive landscape.

7. Clearly show how far you can get with this round of funding:
On the “Funding” slide, many founders highlight how much money they need and what they want to spend it on. However, it is much more important to show what milestones you can achieve in terms of recruitment, product development and traction and how long you could get by with the funding. This gives investors a clear picture of how ambitious or realistic you are and whether they believe the traction will be sufficient to successfully raise the following round of funding.

8. Make sure to have a consistent and appealing design:
You don’t need to have a professional design that costs a lot of money. However, a consistent and appealing design is crucial to your pitch deck looking professional and being easily accessible. Be consistent in your use of fonts, colours and formats. A design that has been well thought out helps to keep the audience interested in reading the slides and also leaves a positive impression.

9. Don’t be too wordy and focus instead on bullet points:
Putting too much text on a slide can lead to important information getting lost. Focus instead on using bullet points to present all data and facts in a clear and precise manner to ensure that no relevant details are neglected.

10. Add your contact data and a call to action:
At the end of your pitch deck, it is essential that you provide a way for people to get in contact with you. This might be a personal email address or telephone number; a calendar booking link also provides an easy way of setting up contact.

If you follow these 10 tips for optimising your pitch deck, you can increase your chances of impressing investors and securing funding for your start-up. A compelling pitch deck is the key to success and can make the difference when it comes to getting investors excited about your business idea.

About the authors: 
Kilian von Berlichingen is Senior Investment Manager at HTGF where he has worked at the company’s Berlin site since 2020. Arnas Bräutigam is Co-Founder of AddedVal.io, a platform that makes introductions between (pre-)seed start-ups and suitable business angels. 

Digital health investments: Road to success requires bold steps and an interdisciplinary approach

Since as far back as 2012, High-Tech Gründerfonds has been investing in start-ups that operate at the intersection between healthcare and digital solutions. In this interview, our Senior Investment Managers Louis Heinz (Digital Tech) and Niels Sharman (Life Sciences) share some insights into the synergies that arise from the HTGF team’s diverse perspectives and also give their take on where the sector stands in Germany and internationally.

Digitalisation has become such an integral part of our society and the world of business. What makes the trend in the healthcare sector so interesting for you?

Louis: Digital health solutions are a macro trend. They are becoming more and more relevant, and they’re integral to solving existing problems. But the question is: When will we see their widespread application, and which business models will come out on top? More and more investors are aware of this and are banking on digital health. And that means that promising companies have got relatively good chances of securing follow-on financing.

What I find fascinating in the field of digital health applications is the fact that validated therapies are being created at the intersection between technology and medical science. All digital health applications that are covered by health insurers are validated based on study data and are backed by scientific evidence. And that puts up a barrier for me-too products looking to get in on the action.

Niels: Something else I find fascinating is that, in an ideal scenario, a relatively low-cost solution can create a win-win situation for patients, doctors, the healthcare system and potentially even pharmaceutical companies. For example, patients are able to manage their illness more effectively and track the medications they’re taking, helping to reduce side effects. The pharmaceutical industry gains access to anonymized “real life” data on how effective their drugs are, which side effects they cause, and whether patients can adhere to the treatment plan. These insights can be leveraged to optimise future R&D processes. And for doctors, who must keep an eye on lots of patients, these digital solutions are great for bridging the time between personal appointments.

HTGF has already invested in a broad portfolio of digital health start-ups. Do you have a special approach when it comes to this field?

Louis: One of HTGF’s USPs is without doubt the fact that we’ve got the digital expertise as well as the life science/pharma know-how. On the one hand highly focused life science investors may sometimes struggle to understand when things get too “digital” and topics like customer acquisition costs and customer channels are in focus. On the other hand, tech investors can sometimes feel a bit uneasy when it comes to regulatory matters or the analysis of clinical data sets. Although we are two different teams at HTGF, we regularly talk to each other about the market and opportunities for the fund.

Niels: That’s right. But even with these two perspectives, when push comes to shove you need to be willing to take risks and invest in business models that are not yet established or, in some cases, not even tested – that’s often the case when it comes to digital health companies. As an early-stage investor, taking risks is practically part of our DNA. We’re often the first institutional investor to get on board, sometimes building on a business angel round, and work closely with the young teams to pave the way forward. And to a certain extent, I think that makes us one of the pioneers when it comes to digital health investments in Europe. In fact, we have been investing in this area for 14 years. At a time when the term digital health was just emerging.

Have you got any tips for founders on what you look for as investors and what they can do to win you over?

Niels: Since we invest in start-ups at a very early stage, the team is obviously hugely important. Their individual track record is a key aspect – but so (too) is having a team of people with skillsets that complement each other. The founder teams need to navigate their way through the duality of the pharma and tech world – an aspect that we touched upon earlier. But I think if they’re smart about how they go about it all, they can get the best of both worlds.

Louis: You’re spot on. Having teams with the right skills to juggle both worlds is key. We do of course also look for cases where there’s a tech component that is difficult to reproduce, or start-ups with a truly innovative business model. The “digital edge”, i.e., the innovations made possible by the digital component, should be clear to see.

Where does the sector stand internationally at the moment? And what does the future hold?

Niels: I think we are still pretty much at the start. Things will get exciting when we have an interconnected ecosystem and are able to tap extensive amounts of data and leverage synergies. To get there, we need to continue to break down data silos and increasingly digitalise all processes – electronic patient records, hospital software, and interfaces between doctors, health insurers and pharma companies. All market participants will of course have an obligation to handle the sensitive data with care, but that’s an issue that can be solved. This, as well as the growing volume of clinical study data, will in my opinion make it crystal clear that the widespread integration of digital solutions in the healthcare system makes sense.

Louis: From an economic perspective, I hope to see the first few major exits – company acquisitions or IPOs. That would help the entire ecosystem. Advances in Europe-wide regulation on insurance coverage for digital health applications would also be very positive. France and Belgium are clearing the road ahead for digital health applications, and things are happening in other EU states, too. That, in turn, means that in addition to local players, we can also build European champions that can expand in the US or potentially also be acquired by US firms. That’s what I’m looking forward to.

Thanks very much for sharing your thoughts!

2024: Trends, opportunities and challenges for founders

What trends and technologies can we expect to see in 2024? And what are the opportunities and challenges that founders will face? Our Partners Dr. Angelika Vlachou, Dr. Markus Kückelhaus and Markus Kreßmann provide an outlook, focusing on our investment fields industrial tech, life sciences & chemistry, and digital tech.

Industrial Tech, Deep Tech and Climate Tech: An outlook by Dr. Markus Kückelhaus

In the traditional industrial tech cluster, which encompasses fields such as robotics, IoT and sensor technology, we saw investors growing more cautious last year. The market environment will remain tough in 2024 as a result of macroeconomic conditions. Non-disruptive technologies are generally not so appealing for investors, with component solutions in particular having difficulties. Customers prefer all-in-one solutions.

Looking at our deep tech and climate tech clusters, we see much brighter prospects. In certain areas, we see an up to 50% increase in investment volumes. Despite the economic situation, investors were very active in the fields of AI, new space and quantum technologies – and that will continue.

With respect to future topics such as quantum technologies, it’s no longer a question of whether a key technology will emerge, but rather which one will prevail. Regardless of which approach comes out on top, an extensive periphery is needed, such as connectivity and cabling.

Climate tech will remain a hot topic in 2024. We have investments in the standard renewable energy fields, as well as in areas of the future, such as nuclear fusion. Beyond power generation itself, grids and infrastructure will be highly relevant topics in the coming year, together with the associated business models. E-fuels are on the rise, with a great deal of potential seen in aviation and shipping in particular. The challenges lie not only in the technology itself, but also in selecting suitable locations, determining the required amounts of green power, and capturing CO2 for their production.

That’s why deep tech and climate tech remain highly attractive segments from a venture-capital perspective. However, in view of their capital intensity, supplementary financing models are required. Public funding is vital, serving as a non-dilutive form of financing alongside traditional venture capital.

Even before actually founding a company, entrepreneurs need to think about how to optimally leverage the funding options available before or after foundation to make sure their technology goes as far as it possibly can. It’s a marathon not a sprint, and the focus must not be on achieving a quick exit.

A great example of successful financing in this context is traceless materials, which secured a sizeable amount of funding in a Series A financing round to build a demonstration plant. The company’s founders worked hard to secure non-dilutive funding. Having reliable financing partners that can also contribute considerable sums in later rounds is vitally important.

What does 2024 hold in store for the life sciences? Predictions by Dr. Angelika Vlachou

Precision medicine, which comprises targeted and personalized diagnoses and therapies, will play an even bigger role in the healthcare industry in 2024. Artificial intelligence and big data are currently key topics for everyone. These tools (technologies) enable the processing and evaluation of large amounts of data and support doctors in making evidence-based decisions. AI and algorithms help patients to better understand their medical conditions. The focus here is on patient-centered and data-driven medicine, with privacy playing an increasingly important role alongside evidence and a positive cost-benefit ratio.

When it comes to targeted therapy, linking genes to the causes of diseases will continue to drive developments in the pharmaceutical industry. 2021 was the year in which the use of RNA technologies and therapies in humans took off. They will play a key role in the treatment of further indications. Cell and gene therapies also have the potential to save many lives in future, with long-awaited turning points in the treatment of cancer, immune-mediated diseases, anaemia, genetic diseases, autoimmune diseases such as MS and certain forms of diabetes. For example, CAR T cell therapies, which have already been used to successfully treat leukaemia, are all set to be used in the treatment of solid tumours.

In the field of targeted cancer therapy, antibody–drug conjugates (ADCs) are still seen as having great potential. They are booming in the biotech industry, with an increasing number of investments and M&A deals being made. The takeover of our portfolio company Emergence Therapeutics by a global pharmaceutical company and a licensing agreement worth billions between our portfolio company Tubulis and Bristol Myers Squibb reflect the growing interest in these developments. A promising future can also be seen for targeted radiopharmaceuticals, which involves targeted molecules that specifically recognise and bind structures on tumour cell surfaces or the DNA of a tumour cell. The radiation coupled to these targeted molecules is delivered to the cancerous tissue via the bloodstream with high efficiency. Similar to ADCs, small tumours and metastases can be efficiently reached in this way.

The financing environment has become noticeably tougher both in terms of seed financing and follow-on financing. The macroeconomic conditions are providing founders with challenges, although fluctuations in the life sciences sector are less severe than in other economic fields, as there is always a focus on health. Despite a slight recovery in the last quarter of 2023, investors are being cautious and more reactive, focusing increasingly on their own portfolio. Company founders are therefore having to do more comprehensive preparatory work to convince them.

Excellent research alone is not enough; you need a business-savvy team who can successfully drive ahead with an innovation and come up with a market-ready product or application from the development stage.
Receiving coaching and adding new team members with a sophisticated entrepreneurial mindset are also important. Company founders must actively commercialize their innovations and be ready to work on their further development. Building a team with an understanding for the science and the ability to translate this into a business plan aimed at investors and strategic partners is vitally important.

The message to founders is clear: build teams that work well together, form networks, actively take part in exchanges and be willing to translate scientific data into a viable business model that ultimately leads to the commercialization of a product or application. These are all essential steps in founding successful life science companies.

Markus Kreßmann on trends and opportunities in digital tech

Further exciting developments can be expected in 2024, particularly in the field of artificial intelligence (AI). Discussions about the possibilities and limitations of AI will continue to be held at all levels. The use of AI in companies will play a particularly important role. Aleph Alpha’s recent €500 million financing round, which our fund investors SAP, Bosch and Schwarz Gruppe participated in, underlined the efforts being made to integrate AI into products and processes in order to offer tailored solutions to companies.

Similar to the last few years, another important trend can be found in the field of IT security. With the increasing digitalisation of society and business, there are greater requirements in terms of the protection of sensitive data. We have already achieved a number of important portfolio successes in this regard, as was highlighted with our exit from DRACOON in the field of secure data transfer. The company was bought by Kiteworks.

The third key topic concerns the massive upheaval in the energy sector. High and strongly fluctuating energy prices are forcing companies to optimize their energy procurement and to look for potential savings in their production process. Software solutions play a crucial role in reducing energy costs and using energy more efficiently. Sustainability is also a key aspect, for example through the use of smart solutions for energy forecasts and energy distribution.

Cryptocurrency and blockchain technologies will be another important topic in 2024. The green light given by the SEC for the first-ever spot Bitcoin ETFs in the USA and the upcoming Bitcoin halving will generate considerably increased market interest. This will also accelerate further developments and smart solutions in the field of cryptocurrency and blockchain. Against this backdrop, traditional asset managers, insurance firms and banks will be particularly reliant on disruptive solutions from the cryptocurrency start-up scene, as external specialists are often further ahead with these technologies than in-house experts.

The current investment environment is quite distinctive compared to the crisis years after 2008 or 2001. In contrast to back then, when little or no money was on the market, investors are continuing to invest today, albeit more selectively. Although the investment climate has changed compared to the boom years of 2020 and 2021, start-ups can still operate successfully on the market. Investors are particularly focused on companies offering the right solutions for real problems who have a well-functioning business model with substantial growth and are led by a first-class team. The people factor is especially important. A team that works together well and with mutual trust in all areas – from technology and product to sales – has a chance of being very successful even during less dynamic growth phases.

The year in review – 2023 

As the year draws to an end, we sat down for a chat with the High-Tech Gründerfonds (HTGF) management team. Read on to find out what Romy Schnelle, Alex von Frankenberg and Guido Schlitzer had to say about how HTGF fared in 2023, which trends are becoming important, and what will really count for start-ups moving forward.  

What would you say were the highlights for HTGF this year?  

Alex von Frankenberg: Looking at the figures, 2023 was a good year for us – not only in terms of new investments, but also with respect to exits and follow-on financing deals. We far surpassed our own expectations. For instance, we racked up considerably more than the 40 new investments we had initially envisaged. And we raised the bar even further when it comes to exits: We had projected around five to ten, but managed 12 by the end of the year. On top of that, 2023 was our second-best year for follow-on financing deals since our organisation was founded, with a total volume of over €600 million.  

Romy Schnelle: EGYM was one of the companies that secured a major follow-on financing deal, collecting €107 million, with an additional €100 million available for further investments. One of the successful exits we achieved was undoubtedly Emergence Therapeutics, which develops cancer treatments based on antibody-drug conjugates. The partnership they have entered with a global pharmaceutical company will help advance development. Another example would be Wiferion and its wireless charging solution for electric vehicles. It was an important exit involving a well-known US carmaker. We can see just how relevant the technologies in our portfolio are. 

Guido Schlitzer: Our new fund also certainly counts as a highlight, with final closing of HTGF IV announced at the start of the year. With a volume of around €500 million, it’s one of the biggest funds to have achieved closing this year in Germany. That sends out an important signal for start-ups. 

What was all this success built on? 

Romy Schnelle: The depth and breadth of our team’s expertise, without a shadow of doubt. And that’s something we’ve been able to augment this year. We have welcomed new and experienced colleagues who know the dedicated markets and trends and have real expertise. The success we just mentioned and the high level of trust we enjoy on the market are down to the whole team.  

Guido Schlitzer: Thanks to our team and expertise, we have already invested in over 700 pioneering start-ups over the years and have built a strong industry network that mainly includes our 45 private fund investors who have invested in HTGF IV alongside the German Federal Ministry for Economic Affairs and Climate Action, and KfW Capital. These investors include market-leading SMEs, corporations, hidden champions and family offices, as well as Fraunhofer-Gesellschaft, one of the world’s leading research institutes. 

Alex von Frankenberg: It’s the substance that makes us strong. The substance of our employees, portfolio and investors. It’s a special combination. And for that, I would like to say a big thank you from all three of us – to our team, start-ups, investors and everyone who helped make 2023 such a successful year for HTGF. 

HTGF has had three people at the helm since mid-2023. What’s it been like working together as a leadership trio? 

Alex von Frankenberg: We’re on a really strong footing. Expanding the leadership team was an important step at the right time. We have a lot more power – and that will certainly come in handy moving forward.  

Guido Schlitzer: I completely agree. We work well together as a team. HTGF is growing, and new tasks are arising – not least thanks to HTGF IV, which we mentioned earlier. We are now able to invest more capital per start-up, and we’ve simplified the investment criteria, enabling us to add even more innovative tech companies to the HTGF portfolio.  

Romy Schnelle: Standing still is like taking a step back. We frequently evaluate where we stand as we look to advance our development – it’s in our DNA. We’ve taken some important steps, and some of them are clear to see straight away: We moved into a larger office in Berlin and opened a completely new site in Munich. We talk to entrepreneurs early on and drive intensive engagement with the ecosystem. We want to meet future start-up teams at an even earlier stage and are therefore becoming even more active at colleges and universities. 

What trends do you see for next year? 

Alex von Frankenberg: Artificial intelligence is a topic we’ll see again next year, that’s for sure. It’s one example of many. There’s still a lot of hype around it, and we can see a lot of movement on the market. After all, AI plays a key role in all areas, whether it be industrial tech, digital tech or life sciences and chemicals. We have a huge advantage here in Germany. Our industry and SMEs produce so much data – and this data can provide a really good basis for future AI models.  

Guido Schlitzer: We see lots of technologies and business models that can make a major contribution to our economy and society by safeguarding our future and ability to compete. That’s all very encouraging – and it’s exactly what we need to cement Germany’s status as a hub of innovation. Sustainability and impact investing are also big topics that are on the rise. Here at HTGF, we’ve got a really strong footing in the climate tech space. 

Romy Schnelle: That’s because for us, it’s more than just a “hot topic” that’s been en vogue for the past few years: we’ve been active – and very successful, might I add – in this area for a great many years. We also have some exciting start-ups in our portfolio today, such as traceless materials. This Hamburg-based start-up, which is developing a sustainable alternative to plastic, completed a Series A financing round worth around €37 million this year. 

What message would you like to share with start-ups? 

Guido Schlitzer: It will be a tough year economically. That’s why it’ll be the figures and, as Alex said, the quality of business models that really count.  

Romy Schnelle: The main task for founders will be to run their companies in a capital-efficient way while keeping them healthy. That’s something that HTGF has a great deal of expertise in, and our colleagues will be helping to make that a reality.  

Alex von Frankenberg: And there’s one thing that start-ups and all other teams should bear in mind: We shouldn’t focus too much on the crisis discussions. Politics, economy, energy and start-ups. With innovation cycles becoming faster and faster, the opportunities are soaring. We need to capitalise on them as we look to shape the future of our economy and society.  

ESG at HTGF: Helping to drive sustainable innovations  

In this interview, Claudia Raber and Dr. Adrian Fuchs from our ESG team offer insights into their work and present High-Tech Gründerfonds’ (HTGF) recently published ESG Report. They talk about the importance of sustainability in the start-up world and show how we and our portfolio are actively contributing to a more sustainable future. 

Our first ESG Report was recently published. What did it focus on? 

Claudia: The ESG Report centred on our fourth fund generation, HTGF IV, which was established at the end of last year. We look back at the year 2022, specifically the fourth quarter, during which the first investments in the new fund were made. We also offer an overview of the status quo to show where we are currently at and in what areas we are active. We focus on the issue of sustainability both on a fund level as well as in the portfolio and provide an outlook on where we aim to be. 

What does your ESG work consist of at HTGF? 

Adrian: On the one hand, we integrate sustainability aspects into our due diligence of potential investments. Another important aspect is the interaction with our portfolio companies. For instance, we offer trainings on various ESG topics to raise awareness and promote the adoption of sustainable practices. An additional focus of our work is the ESG reporting of our portfolio companies. Finally, our work also involves communication and active exchanges with our fund investors and network partners on ESG topics.  

Claudia: Our work also extends to our own team. This means that at HTGF, where we now have roughly 100 employees, we strive to achieve sustainability in various areas.  

HTGF has been making investments from the HTGF IV fund for almost one year now. What measures have been taken to ensure the aspect of sustainability is considered when making investment decisions? 

Adrian: As part of our due diligence (DD) work, we now also conduct an ESG DD with each potential portfolio company. Part of this involves ESG screening, which helps us to ensure that we can invest in the relevant sector in the first place. A recent example of this would be our decision to not invest in a software company active in the gambling industry. We also cover sustainability metrics such as emissions or diversity. This allows us to record initial ESG data points in addition to the reporting data that becomes available at a later point in time. As a final aspect of the ESG DD, we match companies up with the Sustainable Development Goals (SDGs) they are contributing towards, allowing us to split our portfolio up into basic clusters. 

Claudia: HTGF IV is an Article 8 fund. This allows us to continue our very successful work since 2005, which is to finance and promote young technology companies – but now with an additional focus on ecological and social aspects. This means that we work together with our ventures to ensure that the issue of sustainability is integrated into their business models.  

To make a distinction here, we are not an Article 6 fund, which completely disregards sustainability aspects. But we are also not an Article 9 fund, which pursues overarching sustainability goals in addition to ensuring the sustainable orientation of its investments. 

How can start-ups benefit from a focus on sustainability?  

Adrian: There are many advantages. First of all, investors place a greater focus on ESG topics in later financing rounds. It is worth getting to grips with the topic at an early stage, as investors in subsequent phases will increasingly inquire about such data.  

Secondly, a good position on ESG topics makes start-ups more appealing to employees, which in turn allows them to attract talented individuals. 

Thirdly, an effective ESG strategy can help to promote growth, as companies that are well-positioned in this field have a greater appeal for both B2B and B2C customers. This can be useful, for instance, if you are an indirect supplier of an automobile company that has switched its focus to carbon-neutral production. 

Fourthly, efficient ESG management can help to reduce costs with savings of up to 10 percent. This is especially relevant in industries with high levels of water and energy consumption. 

Fifthly, in some industries, such as aviation, a considerable proportion of turnover and profit is dependent on regulatory interventions. A solid ESG strategy can help to counteract this.

How does HTGF support start-ups in this area? 

Claudia: We have developed specially tailored services for our portfolio companies that cover a broad range of aspects. This includes onboarding calls as well as intensive deep dives in which our start-ups can work on their individual ESG journeys. What’s more, we offer a range of formats as part of our HTGF Academy that tackle topics such as carbon footprint measurement, diversity, legal aspects and much more.  

Start-ups also benefit from the support of our network. We see a lot; we hear a lot, and we talk a lot with other investors. All this feedback helps shape our work and we are able to pass it on to our portfolio. We want to see our companies as well-positioned as possible to enhance their appeal to follow-on investors. 

Let us focus for a moment on the United Nation’s Sustainable Development Goals (SDGs), which HTGF and its portfolio can contribute towards. 

Claudia: As mentioned at the outset, we are not a fund that is exclusively focused on impact. But we can point to SDGs to which we have made a demonstrably positive contribution. In this regard, we asked ourselves the question: what are we achieving at HTGF through our investments, and what are our portfolio companies achieving? Seven of the 17 SDGs stand out here, in particular SDG 9, which is focused on the improvement of industry, innovation and infrastructure. Moreover, many start-ups are contributing to SDG 3, which is focused on health and well-being. And SDG 8, which involves improving working conditions, is right at the top of the list. 

Climate tech is the latest hot topic. What role does it play in HTGF’s portfolio? 

Adrian: HTGF has been active in the field of climate tech since its origins in 2005. Across all four fund generations we have invested over €60 million in roughly 60 different start-ups from the field of sustainability. And more than €770 million has been injected into these start-ups by external investors in follow-on financing rounds. In the pre-seed and seed stages, we are therefore one of the leading climate tech investors in Germany – and maybe even beyond. We don’t need to shy away from comparisons with new climate tech funds. We have already made substantial investments in start-ups and achieved successful exits. 

Can you leave us with an outlook for the future? Where do you aim to be? 

Claudia: Top of the list of priorities is making sure we continue to consistently implement our ESG strategy. In doing so, we support our portfolio in ensuring they are optimally positioned in terms of sustainability. We will also continue to empower our HTGF team and to optimise our operational processes with respect to ESG aspects. On top of that, we want to further promote the issue of sustainability within the start-up ecosystem through intensive, outward-looking networking and through targeted training measures both internally at HTGF and on a portfolio level. 

Adrian: For HTGF IV, we have set ourselves the aim for 2024 to ensure that 80 percent of our start-ups report on their carbon footprint. We are well-aware that a report on its own does not automatically lead to more sustainable activities, but we are convinced that addressing the issue of ESG – even at an early stage – can have a positive effect on companies and industry. Our aims are focused on environmental aspects, as this is what’s called for by most follow-on investors. In terms of social aspects, we are as an example aiming to ensure that 20 percent of the young portfolio companies from our fourth fund generation develop a corruption prevention policy. For this goal, we are intentionally going down the route of voluntary commitments as opposed to contractual clauses.  

Claudia: We are of the firm belief that companies which think about the issue of sustainability right from the offset not only have a better chance of success in the future but will also have it easier further down the line because they do not have to reconsider or restructure their existing processes. And our aim within the ESG team is to provide the best possible support in this regard for our ventures to help drive sustainable innovations. 

Thank you very much for the interview!

Is Product Management the missing puzzle piece in Europe?

In his daily work with early-stage Industrial Tech founders, our Principal Gregor Haidl places particular emphasis on deeply understanding the customer and defining a successful product. Effective product management is a cornerstone, vital not only for start-ups, but for companies of all sizes and industries. Gregor sat down with Elias Lieberich, who brings an extensive background in product management. 

Having spent over a decade at Google and YouTube building some of their biggest products with teams in the US and Europe, Elias is now co-founder of Product Matters, dedicated to improving product management in Europe. In our interview, Elias shares his unique expertise with our HTGF network and sheds light on the importance of customer centricity, the innovative power of engineering teams, and the lessons Europe can learn from the US.

Elias, you worked over a decade at Google and were leading some of their larger product efforts. What advice do you have for European tech companies?

In the US, the focus on modern product management and emphasis on engineering is much stronger. Successful companies follow an easy recipe: identify a customer problem worth solving, come up with a good candidate for a solution, get the team and stakeholders excited about it, try out and refine the idea closely with the customers and ultimately ship something that has an impact, both for the customer and the business. The focus is on the engineers, designers, and product managers that create the value. Somehow in Europe that message gets lost among all the frameworks, tools and processes.

Easier said than done, I am sure US companies also have some central tools in place to decide on what is being built.

The best ideas and products I have seen start in small groups and then take more and more shape as more and more people are convinced and buy-in. Of course, there are longer term strategies, but how these strategies are brought to life often is a decentral, social process in which the best ideas compete for resources. Let me be honest, there is no clear path from A to B, no matter how many roadmaps you draw. You might even end up in a whole different path. This can be pretty messy and stressful, but from my experience such journeys with their many detours are absolutely necessary to create a truly successful product.

How do European players differ in their approach?

European tech companies run their engineering teams very differently. They are typically more hierarchical and process heavy. They are afraid to leave the pre-planned route. Management often is much more in control of what is being built. This severely impairs engineers’ and product managers’ ability to figure out what their customers actually need. The outcomes often are overburdened bureaucracy, slowing down development, creating inferior products, and demotivating the entire engineering team.

This leads companies into a downward spiral. Management sees little or no progress, as development is slow and results are meager. The solution is often seen in the business and sales teams, as they supposedly know exactly what their customers need. Business then tries to create more clarity for development through more processes so that they can “just build stuff.”

More processes, more project management, more demotivated teams, lower output, worse products. A vicious circle.

How do you come out of this vicious circle? 

Getting out of a bad situation always requires a huge effort. Change is hard. Rearranging parts and pieces, such as introducing a new process or cutting another one,  won’t change much. You really have to hit the reset button. Europe has exceptional engineers. Combine that with modern product management and you pretty much have a winning combination. In this product-model, we let engineers do what they do best: come up with solutions to problems. To get that to work, you will need to throw away a lot of the old ways and learn how to deal with ambiguity. Rather than trying to prescribe an exact plan for your team to execute, you will need to allow your team enough space to try things out and to find the best possible solution. More often than not, the best solution will be very different from the original plan or something entirely different altogether.

There are individual success stories that give hope. Problems like that do not only exist in Europe. Let’s take Microsoft as an example. For many years the company was trimmed for business, but innovation was limited and the company was overtaken by its competitors. Today, Microsoft is stronger than ever and has a real product person at the helm with Satya Nadella.

Do European startups do it better than the big corporations?

Unfortunately, not really. This approach to product management, it is not a matter of size, it is a matter of culture. At Product Matters, I am working every day with companies of all sizes globally. In comparison, European companies tend to build up enormous process structures early on. Modern Product Management is a culture of how to approach problem solving – and it is not sufficient to read a few books. The best way to transform in that direction is to actually experience it. On the bright side for start-ups it is much easier to quickly try it out compared to a giant like Microsoft. For large organizations – we see the best results in piloting this way of working in small yet strong teams – rather than trying to convince everyone on day one. Once you demonstrate real success, it is much easier to make the case for the rest of the company. 

Looking at our early stage startups. What steps would you recommend for better product management?

Unfortunately, there is no paint-by-numbers recipe. What I would say is that start-ups deal with high amounts of uncertainty and that is exactly where great product teams can shine. Start-ups often thrive on the initial idea, the elevator pitch. That might help you raise money and hire talent, but that’s not a selling product yet. 

That’s where most projects really fail – startups never truly check their initial idea and simply build stuff no one needs. To me that is frustrating because it is easy to avoid. Most of the time it is not even that hard to test the assumptions. What is hard is changing plans, roadmaps or even killing ideas you once fell in love with.

I recommend starting by articulating (in writing) what the problem is that you want to solve, and what value your idea will bring to the customer against the specific problem at hand. Next, you want to parse out the main risks you see in actually creating that value. You’d be surprised how few start-ups (and teams in larger companies) actually have that written down. The real engineering and product work is finding out the real problems customers have and iterating on a solution that people are willing to pay for. 

A great real-life European example is Decentriq – they are deep tech innovators in the confidential computing space. Starting out they had cutting technology and the smartest people in the team, mostly ETH alumni. For them by far the biggest challenge was literally the transition from a vague problem to a very specific and clear value proposition for a clear customer profile. Their software has vast potential in all sorts of markets and industries. Early on, they applied the customer-value centric product-model and found a real application with paying customers

We are inviting you to join our HTGF Academy live session on December 5th  where you have a chance to hear Elias Lieberich speak live and answer your questions on the topic of Product management in Europe, we will also have Dr. David Sturzenegger, CPO at Decentriq as a special guest. Register now.

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.