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. 

What have you learnt? Episode 3 with Lymphaticas Valentina Triacca

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. Valentina Triacca, Co-Founder and COO of Lymphatica, joins us this time round.

Lymphatica Medtech develops medical systems for the treatment of lymphatic diseases. The first product, LymphoDRAIN, is the world’s first active lymphatic bypass for the treatment of chronic lymphedema, a debilitating disease that affects millions of people worldwide.

What was your last major learning that helped you grow personally?

Step back from time to time and look at things with a fresh mind. It sounds simple and obvious, but it is very difficult to detach yourself mentally from your start-up, even for a few days: turn off email alerts, take time for yourself and you’ll be a better person at home and at work.

What do you take away from your startup journey so far for the rest of your life?

The privilege of having a job that I love, and the pride of working towards a noble goal shared with a great team. During my start-up journey, I learned how to handle the stress and the unknowns, and to be able to fully focus on the bigger picture.

How important is learning for founders in general?

As a founder with a scientific background, you often lack knowledge in everyday administrative tasks and people management. You have to be ready to learn something new all the time and to quickly select the right resources to learn from.

Built on a firm belief: The greentech node.energy

“To achieve success, you need perseverance.” It’s a phrase you might hear in the world of professional sport, but it’s also true for entrepreneurs, says Matthias Karger. The former professional volleyball player is now Co-Founder and Managing Director of HTGF portfolio company node.energy. The greentech’s software-as-a-service solution helps companies with their own wind turbines and solar panels to keep on top of their administrative duties and get the most out of their power generation systems. The young company has just concluded a Series A financing round, securing €7 million in funding. A third of all wind turbines in Germany already benefit from node.energy’s solution. But for Matthias and his team, that figure can go even higher.

Congratulations on completing your Series A financing round, Matthias!

Matthias: Thank you very much! For us it was really important to not just secure fresh capital but, above all, to get on board partners who bring strategically important skills to the table. And we succeeded in gaining some great investors in all important areas for our company, like real estate, sustainability, software and energy. It’s an important mix to have, and it’s a huge success for our organisation.

What do you plan to do with the fresh capital?

Matthias: We remain clearly committed to our mission of developing software to radically simplify renewable-energy planning and management, and thus playing our part in making the energy transition happen. Our target group includes professional operators of renewable energy systems, as well as those looking to follow that path. And it’s in the second part of that sentence in particular where you’ll find such an incredible amount of potential. You still don’t see anywhere near enough commercial and industrial firms with solar panels on the roofs of their buildings. Our software solution makes it easier to adopt these business models. We want to show how continuous operation is something that’s easy to handle. It’s a way of reducing CO₂ emissions while earning money at the same time.

How does that work – doing something good for the environment while making money?

Matthias: A few years ago, some may have felt the two things did not go together. But for our team, we stopped seeing a contradiction a very long time ago. The start of the energy crisis a few months ago provided final proof, if any was needed, that renewable energies are indeed the most favourable form of energy – not just in terms of costs, but also from a geopolitical point of view. We can all see just how much more renewable energy we do in fact need.

So how does the software work exactly?

Matthias: To operate solar panels and wind turbines, you need to meet extremely high bureaucratic requirements. This often involves resorting to Excel and DIY solutions. Our software automates and simplifies the requisite processes for operation. The software collects all relevant data and sets up the configuration in the interface: What systems do I have? What am I planning to do in detail? Further information, such as on the relevant grid operators and fees, is automatically added. The software then uses this information to determine which obligations will need to be fulfilled, like notification obligations towards grid operators, the authorities and the like. By accessing the respective energy data from electricity or gas metres via an interface, the software is able to automatically prepare the notification documents. Our system offers such a wide range of functions that it can even handle the processing and invoicing of solar power supplied to individual building occupants.

Who uses your product?

Matthias: Our focus is on professional operators of energy systems, as well as those looking to follow that path, such as real-estate companies. For the most part, staff at these types of companies plan and operate wind turbines or large-scale solar-energy systems. But there is in fact a broad spectrum of clients, ranging from DHL, Trumpf and Deutsche Bahn to small energy cooperatives looking to make their village energy self-sufficient. They’re all banking on our system.

The electricity market is already becoming decentralised.

Matthias: It is indeed, and that’s what’s exciting about power generation in tomorrow’s world: It’s decentralised. You no longer have a small number of large generation firms feeding electricity into the grid. New stakeholders are emerging: Private individuals, cooperatives, and industrial and commercial firms. And of course having these different types of players generating power gives rise to an increase in administrative requirements.

What would you say is currently the biggest challenge in expanding renewables?

Matthias: The approval process, without a shadow of a doubt. I was recently at a conference in Hamburg: It currently takes five years on average for a wind turbine to go through the approval process in Germany. That’s too long. But, don’t get me wrong, the people working at the authorities aren’t the ones to blame – the official bodies are quite simply understaffed. When you think about what we’re in the process of doing: We’re not just overhauling the energy system of one of the world’s biggest industrial nations – we’re doing so in a short space of time.

Before you became an entrepreneur, you were a professional volleyball and beach volleyball player. Did your sports career teach you anything that’s helped you as an entrepreneur?

Matthias: To achieve success, you need perseverance. To a certain extent, that’s also true when it comes to transitioning to renewables. As entrepreneurs, we were quick to spot the untapped potential in decentralised power generation. In Germany, it’s not the technical implementation that’s the problem, it’s the complexity of the regulatory framework. We need easier access. We’re firm believers in what we do. We believe in renewable energies meeting our power needs. And, for the sake of future generations, that can’t come soon enough.

What have you learnt? Episode 2 with finmarie’s Rica Klitzke

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. Rica Klitzke, Co-Founder and CMO of finmarie, joins us this time round.

Finmarie’s mission is to help women become more financially independent. Founded in Berlin in 2018, the start-up offers conventional financial coaching as well as a range of robo-advisors and an e-learning community. On top of that, it also has various other offerings to promote financial education.

Through their idea, the founders have been able to help lots of women improve their financial knowledge – and they themselves have also learned a great deal in the process. Rica Klitzke, Co-Founder and CMO of finmarie, tells us all about it in this latest episode of “What have you learnt?”

What have you learnt, Rica?

‘Everything is figureoutable’. Don’t wait until you’re feeling 100 percent ready to take on a challenge or you’ve completely understood everything – the truth of the matter is hardly anybody does. Instead, you should start gaining experience and learning, and in the process get better and actively seek support from your network.

What have you learnt from the process of founding your company that has stuck with you? 

At 37 I’m already among the older generation of founders, and I wasn’t sure whether I still had the courage to take that step at that point in my life. But it’s never too late to learn new things and pursue something that you feel passionate about. In our late thirties we still have over half of our careers ahead of us. That’s too much to just take your foot off the gas.

What advice would you give to other company founders?  

Firstly, learn how to deal with uncertainty; secondly, build up your network early; and thirdly, make sure you keep going!

How important is the notion of learning in general for founders?  

It’s absolutely vital. As an entrepreneur, you face new challenges on a daily basis. You encounter lots of topics for the first time and don’t have a boss to tell you what to do. Continuous personal development is hugely important.

In the next DeepDive newsletter, which will come out in early November, Valentina Triacca will tell us about what she has learnt. Valentina is Co-Founder & COO of the medtech Lymphatica.

Episode 1 : What have you learnt? With Miriam Mertens and Peter Goeke from DeepSkill

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 others. And because we firmly believe in the power of peer-to-peer learning, this newsletter sees the launch of our new column: What have you learnt? Once a month, company founders from our portfolio will be offering tips and advice. The first to do so are Miriam Mertens and Peter Goeke from DeepSkill.

DeepSkill only recently became part of the HTGF family. The Cologne-based start-up obtained seven-figure pre-seed funding, with High-Tech Gründerfonds among the investors.

DeepSkill is the EdTech-platform for digital people development. Founded by Miriam Mertens and Peter Goeke, the company helps employees develop strong deep skills through personalized learning and coaching programs with custom-fit coaches, formats and content. With their help, emotional skills will be omnipresent in organizations in the future and enable them to be more productive, sustainable and human.

 What have you learnt, Miriam and Peter?

Miriam: The biggest thing I learnt most recently was to make sure to take break – even during stressful periods. You have to give yourself space both mentally and physically so that you can gather the energy you need to achieve what you are planning to do. This will also help you appreciate what you have achieved all the more. 

Peter: The thing I learnt most recently was during the financing round just now. As a company founder, you have to sometimes take a step back from the operational side of things in order to concentrate on raising funds. It made me realise just how essential it is to have a team and that I can completely rely on the DeepSkill team. 

What have you learnt from the process of founding your company that has stuck with you?

Miriam: Founding a company is not always easy. You learn something new from each success and failure, and this is always associated with emotions that you cannot allow yourself to get too caught up in. Although successes should obviously be celebrated. 

 Peter: It is important to have the courage to keep reinventing yourself. This is something I consistently did and it ultimately led me to founding DeepSkill together with Miriam. Looking back, every stage of my career has led me to this point – it’s a bit like connecting the dots.  .  

What advice would you give to other company founders?  

Miriam: Make sure to take criticism on board. It often hurts to hear negative feedback about your “baby” and we all have a tendency to either push it to one side or sugarcoat it. But if you find yourself often receiving the same criticism, there’s probably an important degree of truth in there.

Peter: Come up with an idea that is meaningful and something that you are passionate about. This will give you the energy you need to get your start-up going. Because founding a company is a marathon not a sprint.

How important is the notion of learning in general for founders?   

Miriam: I think it applies to everyone that you’re never done learning. Particularly as a start-up, you should be open to change and new things. Only those who develop and move with the times will be able to pursue their objectives in the long term.  

Peter: Founding a company and learning go hand in hand – you are always faced with new challenges. It’s a steep learning curve for company founders throughout all stages of a company’s development. Once the company has been launched, processes need to be put in place, followed by process optimisation and internationalisation etc. As a founder, you are having to constantly perform new roles and further your own development.

In the next DeepDive newsletter, which will be released at the start of October, Rica Klitzke will discuss what she was learnt as the co-founder and CMO of financial start-up finmarie.

At the HTGF Academy, you can look forward to the “Liquidity management – an important success factor in every phase of a company’s life” websession with the deutsche Bank on 28 September. On 04 Oktober , we’ll be hosting a Websession with KAUFMANN / LANGHANS on the topic of “Convincing rationally, inspiring emotionally – what matters in a good equity story”. You can find a overview of all events here.

Our mission? To help more people!

Cervical cancer is the most common type of cancer of the female genital organs. In Germany, there are more than 4,600 new cases of women affected by this tumour each year, according to the German Cancer Society (DKG). Conventional testing procedures are very unreliable. The team at HTGF portfolio company oncgnostics has therefore developed GynTect, a procedure that considerably improves the diagnosis of cervical cancer. The product was recently also approved in China – an important milestone, as founders Dr. Alfred Hansel (biologist and CEO) and Dr. Martina Schmitz (biochemist and CSO) explain in this interview.

Congratulations! Your testing procedure is now also available on the Chinese market. How did you achieve this success?

Dr. Alfred Hansel: You’d think that this would be a very protracted process. In 2016, we approached cooperation partners in China for the first time. We were on the lookout for licensees that would produce and distribute the product in China. And then in 2017, we found a really strong partner really quickly – GeneoDx, a subsidiary of Sinopharm Group.

And was the cooperation a good one?

Dr. Martina Schmitz: It was very good. Professional and collaborative. GeneoDx began a large-scale study with patients in China back in 2018. As is always the case with medical approval processes, a number of changes and improvements were made along the way. And the end result was fantastic. The testing procedure received final approval in China on 4 August.

Dr. Alfred Hansel: It’s also worth pointing out that the approval process in China is much more complex than CE certification here in Europe; it is more akin to obtaining approval from the U.S. Food and Drug Administration.

And do you now have the US in your sights?

Dr. Martina Schmitz: We can definitely make good use of the results to speed up the approval process when we look to take that step. But for now, we’re happy that we’ve launched our first product in China – ten years after founding the company. That’s a major success.

Is production in China up and running?

Dr. Martina Schmitz: Yes, it’s in full swing. There’s a production site in China that is able to meet our high demands. On 1 September, the product was officially presented by our partner in China.

What does this success mean for you?

Dr. Alfred Hansel: It’s obviously a big step for us. The Chinese healthcare system is much more flexible when it comes to such innovations and it takes much less time than here for you to recover your costs. We are very optimistic that we will be able to celebrate major successes very quickly once our testing procedure becomes established on the Chinese market. We will be able to offer more women better and more accurate testing within a short space of time.

What makes your testing procedure special?

Dr. Martina Schmitz: The conventional testing method can lead to an immense feeling of uncertainty that young women then have to live with. Cervical cancer can be caused by human papillomavirus (HPV) infections. But around 90 percent of all women with an HPV infection actually have nothing to worry about. Our test offers a much more accurate diagnosis and therefore puts women’s minds at rest as to whether or not they have the disease.

How have tests previously been conducted?

Dr. Alfred Hansel: With the aid of a swab that is then examined under the microscope. However, diagnoses are very prone to error with microscopic tests. If something conspicuous is found, this is typically followed by subsequent tests, which can be a major psychological burden for women. The physical interventions are also not without risk. After operations to remove any abnormalities, the risk of a miscarriage increases – particularly if a lot of tissue is removed from the cervix.

And your technology can help in this respect?

Dr. Alfred Hansel: Yes. With our diagnosis technology, we focus not on the virus, but on the genome, the DNA and the cells. No further interventions are required, as we can use the same swab that has already been taken. We subsequently process this sample in the laboratory and examine whether certain modifications are visible on the DNA, i.e. epigenetic information. If we’re then able to determine a change, this means that a cancerous cell is developing within the patient; if we cannot determine a change, this means that the patient has an HPV infection but is not currently developing or suffering from cervical cancer.

We work according to the principle of a PCR test, which everyone is now aware of through the coronavirus pandemic. The innovation with this procedure is that we can reliably detect DNA methylation, in other words the change in the genome. We are thus able to confirm diagnoses in a timely manner or, better still, correct misdiagnoses.

How did you come upon this idea?

Dr. Alfred Hansel: The initial idea came about in 2008 at the gynaecological hospital in Jena. In Prof. Dr. Matthias Dürst’s laboratory there, he had started working on the basis of GynTect, epigenetic changes in the context of cervical cancer. We took the decision early on to use these findings for diagnoses. We first participated in the Federal Ministry for Economic Affairs and Climate Action’s EXIST Transfer of Research funding programme, which aims to encourage the founding of companies at universities and non-university research institutions. We then founded our company in 2012, with High-Tech Gründerfonds coming on board as a seed investor.

Dr. Martina Schmitz: We soon realised that for High-Tech Gründerfonds, the focus is not just on capital, but also expertise. We have continually benefited from them since the beginning of our cooperation. Particularly when we were starting out, as we, the company’s founders, come from the world of science. HTGF helped us to add business expertise to our team, putting us in contact with Peter Haug who now oversees our business development and licensing business. The team at HTGF also offers support on legal matters. It’s not always easy to get a patent released by the university. HTGF was a huge support in this matter.

And what are your future plans?

Dr. Martina Schmitz: Our technology has the potential for applications beyond cervical cancer. It can also detect other types of cancer. Head and neck tumours are just a few examples. The big challenge is the rate of recurrence with these diseases. Through a simplified diagnostic process that uses a saliva sample, we might have the opportunity to identify possible relapses of cancer at an earlier stage. We are currently conducting intensive research in this regard – and are also working on tests for other cancers. We hope to be able to help many more people with our technology.

“A strong signal, especially for start-ups”

High-Tech Gründerfonds is launching its fourth fund, HTGF IV, which has secured over €400 million in commitments at first closing. That makes it the seed investor’s biggest fund to date. Dr. Robert Habeck, Germany’s Federal Minister for Economic Affairs and Climate Action, recently announced the first closing of the fund at the HTGF Family Day. In this interview, HTGF Managing Directors Alex von Frankenberg and Guido Schlitzer talk about HTGF’s successful fundraising efforts and explore the prospects that start-ups face.

Alex, Guido, another Family Day in Bonn at long last. It was about time, right?

Alex: I’ve done the maths: Exactly 1,112 days had passed between the last Family Day before Covid and Family Day 2022. It was absolutely fantastic to be able to meet up again. And with some 1,000 people in attendance, we once again had some great exchanges.

Guido: There was a really good atmosphere. People felt relaxed. We were delighted to be able to bring the HTGF family back together. And that family includes fund investors, network partners, venture capital colleagues, and current portfolio companies, as well as entrepreneurs who already have an exit behind them.

And then on top of that there was also some good news to share on HTGF IV. Economy minister Dr. Robert Habeck announced the first closing of the fund in his video message, explaining that Germany needs start-ups to drive the transformation through their business ideas. 

Alex: He’s spot on! Innovation and technology are vital when it comes to tackling the challenges of our time, and start-ups are among the innovation drivers.

Guido: We’ve made over 670 seed investments in the 17 years that HTGF has been around. We’ve therefore amassed a great deal of experience and we see the potential. Our new fund sends out a strong signal, especially for start-ups.

Before going into what start-ups can expect from the new fund, let’s first take a quick look back at the fundraising. The fund’s investors include the German Ministry for Economic Affairs and Climate Action and KfW Capital, along with 40 companies. Second closing will take place before the end of the year. Who’s on board?

Guido: It’s mainly the “Mittelstand”, so medium-sized companies, as well as a number of big companies and family offices.

Alex: Almost every industry is represented, and we’re really pleased to see such a wide range of sectors on board: software, mechanical engineering, medical technology, pharmaceuticals, chemicals, banking and much more. The insurance industry is the only one missing.

So does that mean an insurer could still register as a fund investor?

Alex: They certainly can, although second closing will take place before the end of the year. The high level of demand and interest, especially from the “Mittelstand”, surpassed our expectations. We’ve got experienced firms on board – the oldest one was formed way back in 1756. The youngest fund investor was established in 2008, which actually makes it younger than HTGF itself.

Guido: We also see ourselves as a platform that connects start-ups with experienced companies. And we know that this strengthens the innovation capabilities of all sides in the long term. We thus hope to make an important contribution to bolstering both Germany and Europe as business hubs.

Since you talked about expectations being exceeded: You had €319.5 million in your third fund after second closing. Whereas this time you’ve already surpassed €400 million in commitments. Is that what you were expecting?

Alex: We had been targeting such an outcome. The feedback we received was very good. One of our fund investors came on board straight after we approached them, the very same day, while another had been watching us for 12 years and then decided that now was the time to get involved. Both very pleasing, just like the great deal of interest overall. It illustrates the confidence that others have in our work.

What was special about the fundraising?

Alex: This time we set about the fundraising on a very broad footing. The whole team was involved. So especially at the start, we invested a lot of time in enabling and supporting all members of the team. This great achievement is down to the entire HTGF team.

Guido: There came a point where we had the momentum, and things then just moved forward on their own. The final phase was obviously full on. A lot of interest is shown during fundraising, but the final commitments and documents don’t come in until the last five weeks. And then you’ve got to clear up any final questions. But then it was clear that things would work out.

What can start-ups expect from the fourth fund?

Guido: We will continue to invest in all important areas – digital tech, industrial tech, life sciences and chemicals. A growing number of complex, highly innovative topics are emerging, especially at universities and research institutions – whether it be in the fields of quantum computing, fintech, blockchain, pharmaceuticals or deeptech, to name but a few. I’m sure we’ll see some additional focal areas in these fields.

The economy currently finds itself in a challenging environment: Inflation, rising interest rates, stock market correction, especially in tech, and on top of that geopolitical issues and war. And despite all that, HTGF is continuing to invest, right?

Alex: You bet. The overall situation has changed completely over the past six months. The standard reflex from purely private investors is usually to scale back investment. But not us – we will keep investing in around 40 start-ups per year. HTGF was founded after the dot-com bubble burst, and we invested. We continued to invest after the financial crisis, in the late noughties, and also during Covid. HTGF is a stable anchor.

Guido: Nobody knows how things will pan out. At the moment it doesn’t look like we’ll see a crash like the one after the dot-com bubble burst. Today, we’re in a completely different place in the venture capital arena and in the start-up ecosystem. Our fundraising is a good sign: We’ve got more money available for start-ups.

What do you mean exactly?

Guido: To date, we’ve been investing around €630,000 per start-up on average in the first step. With HTGV IV we can certainly up that average figure, to between €800,000 and €1 million. So far, we’ve been able to invest up to €3 million per start-up, but moving forward we’ll be able to push that up to €5 million in isolated cases. The highly successful fundraising simply gives us more room for manoeuvre.

What’s your most important message for anyone considering founding a start-up at this particular point in time?

Alex: Entrepreneurs with conviction are not put off by any crises. Lots of successful companies were founded during difficult periods: SAP and Microsoft after the oil crisis in the 1970s, Facebook in the noughties after the dot-com boom had come to an end. That’s why our message is as follows: Don’t be put off – start a company anyway. We’ll be waiting in the wings as a reliable investor and partner.

GWA Hygiene and Dräger: From collaboration to investment

How does a company specialized in medical and safety technology with a more than 130-year history end up getting together with a six-year-old start-up? Common goals, collaboration on an equal footing and good partners are key aspects in this regard. That is at least according to Jens Altmann, President Business Unit Data Business at Dräger, and Tobias Gebhardt, CEO at GWA Hygiene. Dräger, a global corporation, recently invested in High-Tech Gründerfonds (HTGF) portfolio company GWA Hygiene. In this interview, Altmann and Gebhardt speak about their new-found cooperation, the challenge of hygiene in the day-to-day running of hospitals, and their collaboration with HTGF.

Mr Gebhardt, can you give us a brief insight into the work of your start-up GWA Hygiene?

Tobias Gebhardt: The issue of hygiene in hospitals has not yet been brought into the digital age in many places. Hygiene teams often spend half their time collecting and evaluating data by hand, despite not being trained statisticians. We are helping to change this situation by fitting sensors to hand sanitiser dispensers, thus creating smart hygiene dispensers. We can ascertain how often and regularly hygiene stations are being used by staff and how much sanitiser is being dispensed. We then aggregate all this data and assess where there is potential for improvement in terms of hand hygiene. This helps to ensure that everyone involved is keenly aware of the issue of hygiene.

Mr Altmann, Dräger is very active in the field of state-of-the-art hospital systems, such as connected medical technology and services, and is helping to drive forward digitalisation.

Jens Altmann: Anyone who has been in hospital has likely seen or come into contact with a Dräger system. In our business unit “Data Business”, we are focused on applying digital processes to our devices and the procedures in place in hospitals, always with the aim of improving treatment and clinical outcomes. We rely on the increased use of data-driven solutions and on collaboration with partners such as GWA Hygiene.

How did your companies find each other?

Tobias Gebhardt: I spoke to a hospital hygiene specialist about the high risk of infection among premature babies; hygiene plays a particularly important role at incubator stations for newborns. As a HTGF portfolio company, we were invited to the High-Tech Partnering Conference where we got talking to Dräger very specifically about this problem. A few weeks later, we had our first meeting with Dräger in Lübeck. This resulted in an initial project being established at the start of 2021; since then a number of additional issues have been targeted.

So HTGF played a pivotal role. What added benefits do you gain from your collaboration with High-Tech Gründerfonds?

Tobias Gebhardt: Above all, credibility. If we just blindly sent out cold emails to large corporates, then the likelihood of us being listened to would be greatly reduced.

Jens Altmann: HTGF’s network is a massive help. HTGF has an incredible deal funnel. That helps companies like ours to gain impetus and ideas. Some fantastic projects have been established, such as our investment in GWA Hygiene.

How did you come to hear about the start-up, Mr Altmann? You obviously didn’t know about the company from day one of the collaboration.

Jens Altmann: That’s right. But we started to hear about the capabilities of GWA Hygiene. Last year someone came up to me and said: “Take a look at this company – they’re a cool team.” Shortly afterwards I was in the car on the way to Stralsund to meet GWA Hygiene. We hit it off straight away.

Right from day one?

Yes, I spent almost the whole day there. We discussed a great deal and developed many project ideas together. We were very much on the same wavelength. And then I headed back to Lübeck with all these ideas in my head. From my car I called our mergers and acquisitions team and said that we absolutely had to do something with GWA Hygiene.

How did you reach a decision to invest in GWA Hygiene?

Jens Altmann: It is really important for us to expand our knowledge and technology platform in the long term and to gain fresh impetus. I was always involved in very in-depth discussions with GWA Hygiene – right from my very first meeting. We see great synergies; together, the two companies offer all the right ingredients to create something new. We want to trace and digitalise chains of infection, while also automating the process. These are the firm foundations of our collaboration.

And what was your experience of the process, Mr Gebhardt?

Tobias Gebhardt: I found it to be very open, very transparent. We never felt like we had to plead, ask for money or worry that everything will hopefully be ok. We collaborate very much on an equal footing. For us, Dräger’s investment is a huge step forward; ultimately it’s the first strategic investor we now have on board. But what makes it feel extremely good is that Dräger has an exceptionally good technological understanding in our field.

Beyond the technological fit, would you say that culture is another very important aspect?

Jens Altmann: It is, of course, ultimately people that also drive developments and support cooperation. If everyone’s pulling in the same direction, then you can achieve a great deal. But if the fit isn’t quite right, then it doesn’t matter how many excellent capabilities you have – it just won’t work. The intensive exchange between the companies in terms of digitalisation is really important. And also cooperation – this only works on an equal footing.

A strong call for entrepreneurship

Think about your business from the perspective of the customer. Make sure you do not become arrogant. These two key tips to scaling companies come from someone who knows what he’s talking about. Prof. Dr. Dr. h.c. mult. Hermann Simon is one of the most experienced economic experts and advisers in Germany. He is also a professor emeritus who has taught at some of the most prestigious universities. In 1985, he founded the consultancy firm Simon-Kucher & Partners. Prof. Simon is the author of more than 40 books, which have been translated into 30 languages. He opens up about his story in his autobiography “Many Worlds, One Life: A Remarkable Journey from Farmhouse to the Global Stage”. In this interview, Prof. Simon talks about why he believes the German economy is highly innovative, and shares his take on the start-up scene in Germany. He also issues a strong call for people to show more entrepreneurial ambition. 

Prof. Simon, thank your for taking the time to speak to us. Let’s dive right in with the first question. How innovative is the German economy?

The German economy is very innovative on the whole. However, it doesn’t seem that way from the public’s perspective, partly because most innovations in Germany are not being seen. We don’t have any strong consumer goods brands like Procter & Gamble, Coca-Cola, Starbucks or McDonald’s; instead we are more present in the industrial goods sector. Cars are the exception here, although these are just machines that are sold to consumers at random. And this is something that is also reflected in the digital economy. We are much stronger when it comes to digital processes and products for industry than we are in the field of digital consumer goods.

Do we need to make sure that our achievements are being seen then?

Absolutely! There are numerous examples that underline the influence of German technology. Take LSTM, which stands for “long short-term memory”. This is something that hardly anyone knows about, although we probably use it multiple times a day. LSTM is the software behind Apple’s Siri and Amazon’s Alexa technology. It is installed on more than three billion smartphones. The brain behind the software is Jürgen Schmidhuber, a German computer scientist.
And there’s another example related to smartphones: According to Apple CEO Tim Cook, the company has 767 suppliers in Germany – an astounding number and a clear indication of just how influential we are in this country. We have many companies in Germany that operate in the background and are well and truly the innovation leaders in their field. They just often remain unseen.

Is that a disadvantage?

In terms of trade in the B2B sector, not really. A purchasing agent at an industrial company will ultimately know the market and who the best providers are. But when it comes to skilled workers and the next generation, it’s a big problem that young developers don’t know about our companies. Another challenge relates to raising capital. Chinese and American hidden champions in the digital sphere go to market at a very early stage and raise huge sums, which they then invest in growth. In contrast, Germany companies tend to remain family businesses, finance themselves through cash flows and therefore fall behind when it comes to expansion and investment.

Can it help companies to work more closely with start-ups – also as a means of strengthening their own research and development?

Collaboration built on trust can offer opportunities. It doesn’t necessarily work for everyone; it’s not something that applies as a general rule. For instance, many companies intentionally keep their research in house and are not keen on sharing their know-how. However, there are many other companies – such as traditional machine manufacturers – that lack in-house expertise when it comes to certain technological matters like artificial intelligence. In such instances, it can really make sense to cooperate with young, innovative companies. Indeed, it can generally be helpful to surround yourself with young people. I’m now over 70 and have amassed a great deal of experience; but my days of being a real innovator are behind me. Young people are essential for further development and innovation.

What’s your assessment of the start-up scene in Germany?

The start-up scene has gotten much better. I think the critical issue is no longer the number of start-ups around, but scaling. It’s a question of how you can turn a five-person start-up into one that employs 500 or 1,000 people.
This also has a lot to do with financing. I recently read an article about a start-up that researches rocket engines. They need €100 million for their ongoing development work. Unthinkable sums in Germany.

How can we ensure that German-made innovations also make a lasting contribution to value creation here in Germany?

That is indeed a major challenge, but it isn’t a new problem. I said 30 years ago that if our companies were as good at marketing as they are at research and development, then they could generate much higher revenues. One of the reasons for this is to do with education. When I was at MIT for my postdoc, I learnt that most young engineers there also undertake an MBA. They study business. This is something that would really benefit many of our scientists and engineers. But the good news is that our younger generation is now adopting a more entrepreneurial way of thinking. This is a really great development.

How can a company be scaled properly?

There are two really important points here. The first is to define your own business from the perspective of the customer. Only when I know what my customers will need in future can I develop in response to these requirements. The second point is to make sure you do not become arrogant. Success is the worst enemy of innovation. I don’t think that German hidden champions are too arrogant. But I’ve met many international companies in my time who have been adversely affected by arrogance. There aren’t too many of them around any more.

In your autobiography “Many Worlds, One Life: A Remarkable Journey from Farmhouse to the Global Stage”, you write about how you set up your consultancy firm. What is your personal experience of this? How do you get a major company off the ground?

My wife and I actually had very steady careers. She was a teacher and I was at university; on the traditional career path of a civil servant. However, we both felt an urge to dive into the world of business. She founded a media company, and I started the consultancy firm. Three years after setting it up, I got my first offer for the company – we only had a team of twelve at the time. I could have sold, but I wanted to remain a businessman. I find it very troubling that many young people simply hand over what they have built up when the first offers come calling. I’d like to issue a strong call for people to show more entrepreneurial ambition.

Quantum technology at the High-Tech Partnering Conference: Experience new opportunities  

Many experts believe that quantum technologies will take digitalisation to a whole new level. These technologies are set to unlock more powerful measurement tools than ever before, enhance communication security and support logistics processes – and solve previously unsolvable problems with the help of their vast computing power. But what is the technology already capable of? How can it be leveraged by industry? What are its initial applications? And where do start-ups, the research sector and companies currently stand in Germany? In this interview, we spoke to Johannes Verst, CEO of the Quantum Business Network (QBN), and Christian Ziach, Senior Investment Manager at High-Tech Gründerfonds, to find out.

You’ll both be participating in a deep dive panel discussion at the High-Tech Partnering Conference (HTPC) hosted by HTGF on 12 April, where you’ll be talking about the opportunities presented by quantum technologies and the impact they will have. Why is this such a relevant topic?

Johannes: Quantum technologies can be used in every major industry sector. Quantum computing, for example, can solve highly complex problems that would take today’s high-performance computers thousands of years. Classical computers and smartphones work on the basis of bits, which can have two possible states – either 0 or 1. Even though it’s hard to imagine, we will need to leave this binary mindset behind in the quantum world. Quantum computers work with qubits, which can have an unlimited number of states – including at the same time. Multiple qubits can also be entangled. I’ll give you a comparison: Doubling the performance of classical computers requires double the number of bits, while quantum computers just need one additional qubit.

Can you give an example?

Christian: One obstacle currently facing modern applications in the field of artificial intelligence is the lack of computing power to process data fast enough. Quantum computing will change that, catapulting products and innovations to a whole new level. This will enable ultra-complex calculations in engineering, finance and medtech. Another example I can give is molecular modelling in the pharmaceutical industry. Simulating molecular structures enables the composition of active ingredients to be calculated individually, which could help optimise interactions between individual active ingredients in cancer treatments. However, today’s quantum computers are still too prone to errors and do not yet have the requisite computing power. Meanwhile, applications in the chemicals industry have come a whole lot further. The simulation of simple molecules in their environments could surpass the possibilities of conventional computers in the foreseeable future – HQS Quantum Simulations, one of our portfolio companies, is working hard on this topic together with industry partners.

Are there any other possible applications aside from the calculation of complex computations?

Johannes: You bet! Take quantum sensors, for instance. Ultra-sensitive quantum sensors are set to be utilised in the fields of mobility, energy, geology and the IoT, as well as in healthcare. They can be used in brain-computer interfaces to detect and research diseases such as dementia, as well as to improve cancer screening and make autonomous cars safer.

Christian: They can also be used in the field of communication. Today, we live in a highly connected world, with various types of data – including sensitive information – needing to be shared in real time. Quantum communication systems will drive a step change in this respect thanks to their encryption and decryption technology.

Johannes, you’re CEO of the Quantum Business Network. Can you tell us what the network does?

Johannes: QBN’s goal is to build a quantum industry in Europe as part of a collaborative approach. Our members include established companies, start-ups, research institutes and universities along the entire value chain, as well as ministries and public bodies. We identify the latest trends and developments in R&D and business, work on joint execution, initiate collaborations and give this field as a whole more visibility. But we also provide our members with practical support, offering assistance with business development and helping to find investors, for instance.

Where do German companies stand?

Johannes: Large-scale companies do indeed have experts that are working on the topic, although the technology is still in its infancy. As a result, companies often don’t give the topic the attention that I feel it deserves. But I’m pleased to see that interest is growing, and we now have an increasing number of SMEs reaching out to us.

Christian: A lot of managers are still busy overseeing the fundamental digitalisation of their company. They are often completely unaware that quantum technologies will unlock entirely new possibilities that will also need to be addressed. Aside from learning about the topic, it’s also a question of having the necessary capacities and expertise within the company.

Christian, what is HTGF aiming to achieve with its investments in the field of quantum technology?

Christian: As a seed investor, we finance promising business models that shape the ecosystem. So this also extends to start-ups that provide infrastructure for quantum technology. I’m delighted that our portfolio company kiutra will be joining us at the HTPC. The start-up develops magnetic cooling systems that enable industrial quantum technology applications in the first place. I’ve already mentioned HQS Quantum Simulations, which will also be attending the HTPC. The start-up provides software that material scientists in the chemical sector and in the scientific community can utilise to simulate quantum systems. HQS is working on quantum-level models of materials and their molecular properties, and thus supports researchers. Quantum technologies are also giving rise to a whole new industry. In addition, established companies will also need to create innovative, superior products. In Germany and Europe alike, we urgently need to become competitive in this field and drive innovation. A quick glance towards China and the United States shows just how much research and work is being invested in this field.

What other insights can HTPC attendees expect to gain during your deep dive talk?

Johannes: We’ll showcase technologies and illustrate the possibilities they offer. Christian has already mentioned two start-ups that will take part in our quantum deep dive discussion. I’m also looking forward to being joined by Quantum Brilliance, which is also a QBN member. The company utilises nitrogen-vacancy centres in diamonds to build quantum computers. The systems can work at room temperature and can later be installed in autonomous vehicles, for instance.

Christian: The HTPC has always been a platform of knowledge for exploring high-tech solutions and innovations. The deep dive talk on quantum technology is a special offering within this platform. We want to make it an easily accessible topic for Germany’s medium-sized companies in particular, as well as for corporations, and to connect them with the relevant network partners. Attendees will gain a clear picture of this new field of technology, especially in terms of the current level of knowledge and potential applications in industry.