My pitch

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  • Industrial tech harbours a wealth of innovation potential

    Industrial tech harbours a wealth of innovation potential

    “Industrial tech harbours a wealth of innovation potential”

    Markus Kückelhaus has spent over 25 years driving innovation, strategy and financial topics for corporations – and has worked with many start-ups in the process. The 53-year-old has now joined High-Tech Gründerfonds as a partner. In this interview, he outlines the opportunities that arise when corporations and start-ups cooperate, takes a look at industrial tech trends, and reveals what he expects from start-ups in Germany.

    Welcome to HTGF, Markus. We’re delighted to have you on board. Would you like to introduce yourself?

    Thanks for the warm welcome, and sure, it’d be my pleasure: I have been working on innovations, finance and strategy topics for over 25 years now, including in my previous role at Deutsche Post DHL Group, where I was responsible for the company’s innovation activities as Vice President Innovation & Trend Research. And since Deutsche Post DHL is a HTGF fund investor, I also got to know High-Tech Gründerfonds really well through our close collaboration. That’s why I’m especially thrilled to have the chance to join and support the team here with the experience I have gained.

    Markus Kückelhaus, Partner Industrial Tech at HTGF

    How would others describe you?

    That’s a good question. They would perhaps say that I’m a really good judge of what will work – and what perhaps won’t – when it comes to innovation. Amid all the hype that so often surrounds the world of technology, we all need to differentiate between which topics are relevant and which aren’t. And I’m relishing the chance to do so at a VC in the early seed stage. HTGF was highly professional in our dealings over the years. I always felt our collaboration was one built on a spirit of mutual appreciation and friendship. It’s this combination that convinced me to join the team.

    You still have a somewhat external perspective to draw on. In your previous role, what did you value in your collaboration with HTGF?

    As a HTGF fund investor, Deutsche Post DHL Group – and also myself as a representative on the investment committee – gains a great deal of insight into the start-up ecosystem. The screening performed by HTGF here in Germany is quite unique, and it presents major corporates with an excellent opportunity to discover technologies and trends. At Deutsche Post DHL, we frequently cooperated with HTGF portfolio companies and conducted proof-of-concept testing for innovative solutions – from cleaning robots to inventory drones – to explore their use in logistics settings. Thanks to these tests, it quickly became clear which technologies would hold up in the tough world of industry, and how the specific costs and benefits would stack up.

    You said at the start of our interview that it’s important to evaluate what will work and what won’t. What does that mean for start-ups? What does work when collaborating with corporations?

    Start-ups need to understand that corporations are interested in systemic solutions, not just technological components or a piece of hardware. They want to realise efficiencies, expand their portfolio or facilitate new business models. In my experience, it’s something that a lot of start-ups struggle to grasp, especially in the industrial sector, and they run the risk of focusing on a single technological component they’ve developed rather than thinking in terms of systemic solutions. Corporations need solutions that can be deployed for a number of years. And with everything that entails, of course.

    What do start-ups need to consider when they begin working with corporations?

    At the start of a collaboration project, large companies ask themselves the following questions: How far do we want to go? How much do we need to invest? Innovations that optimise internal processes and thus reduce costs, for example, are of course quick wins. In this field, this is one of the easiest ways for start-ups to start doing business with corporations.

    When do things get tougher?

    When corporations want to use a start-up idea to tap a new market, things can quickly become more complicated as they have to set up new structures. It becomes even more challenging when they want to integrate a new product that falls outside of their core business. Both sides – corporations and start-ups alike – need to be aware of these processes. And this needs to happen at quite an early stage so that they can gauge what will – or perhaps won’t – work, like I said before. Moving forward, this is something that I’d like to help both sides with, by sharing my experience.

    In your previous role, you worked with start-ups from around the globe. What are your thoughts on the scene here in Germany?

    It’s quite incredible to see what’s coming out of Germany, especially from the research being conducted at universities and institutes. At the same time, though, I’d like to see more courage to launch and scale good technological solutions at a faster pace. I sometimes feel that this courage to scale is in somewhat short supply in Germany, especially compared to other countries. But the bedrock of good ideas, technologies and business models here in this country really is great.

    You’ve taken on the role of partner for industrial tech. What are the major trends you see?

    Robotics coupled with automation remain a huge topic that is relevant for the entire manufacturing industry. Robot gripper technology has really come on leaps and bounds in recent years, but there’s still some potential to be unlocked, such as in combination with computer vision. We’ll also see a lot of advances in human-machine interaction, such as with bionic enhancement. It’s less a matter of “human or machine”, but rather “human and machine”. How can smart glasses, exoskeletons and other technologies help humans go about their work? On top of that, you also have the Internet of Things (IoT), which will remain a relevant topic. And in this field I’m hoping to see developments moving away from silo solutions.

    Could you share some more details?

    There’s been a been a great deal of hype over IoT for years. But so far there’s been lots of individual solutions. We now need to come up with an answer to the following question: How do we take this combination of hardware, software, new transmission technologies like 5G, and analytic capabilities, for example with the aid of artificial intelligence, and leverage it across value chains. Especially in the industrial sector, which is a lot more fragmented than the consumer market, we still need to find good answers. And that’s why this is an area that, much like the entire industrial tech space, harbours a wealth of innovation potential.

  • Important developments to watch out for in 2022

    Important developments to watch out for in 2022

    Important developments to watch out for in 2022

    What trends does next year have in store for us? Five High-Tech Gründerfonds Partners take a look into the crystal ball, reveal the technologies they feel will become relevant, and explain why start-ups need to focus on corporate culture and employer branding from an early stage.

    Implementing good ideas very well

    In 2022 we’ll be looking beyond the pandemic. If the extreme developments are able to be kept in check, we could see the economy recovering and picking up quite rapidly. Start-ups from the travel and consumer sectors in particular can expect to enjoy a resurgence, and B2B orders that had been pushed back can finally be implemented.

    I also foresee a very positive development in terms of sustainability: A transformed political landscape, society’s continued desire for change, and companies’ growing willingness to actively invest will further drive developments and innovations. I see huge opportunities unfolding for start-ups that manage to implement a good idea very well.

    First and foremost, however, 2022 should be a year in which we seize all available opportunities to lay the foundation for greater tech leadership and also take the initiative when it comes to highly scalable trend topics. That really would make 2022 a lasting success!

    Dr. Tanja Emmerling

    Investing more energy in researching infectious diseases

    The pandemic has demonstrated what science is capable of. It’s fascinating to see just how quickly companies have been able to develop effective Covid vaccines with good tolerability profiles, with mRNA technology set to become increasingly relevant. As a society, we’ll need to invest more energy in researching infectious diseases and treatments in general as we move into the future – whether it’s to combat viruses or bacteria that have become resistant to antibiotics. In addition, the renaissance in diagnostics will grow stronger in the coming year. And we can see just how important that is: It used to take a number of days to distinguish between virus variants, such as the omicron and delta variants, and to gauge the consequences that the emergence of new forms of the virus will have. But this is now happening widely, and in a matter of hours. I strongly believe that we’ll experience significant advances in the way health data is evaluated. Machine learning will become more relevant and will, for example, be used to help interpret gene sequences or image data. However, algorithms are reliant on input data quality. That’s why thorough scientific research – and thus collecting accurate data – will remain of paramount importance moving forward.

    Dr. Bernd Goergen

    A year of pioneering technologies

    2022 will also be a year in which innovation and pioneering technologies are in focus across all areas and industries. The crucial aspect will be how business and society as a whole embrace the surge in technological advances and harness them for our benefit. When many companies talk about artificial intelligence, they’re only really talking about big data topics. But AI has more to offer. I am certain that we’ll see a huge leap in the near future, and that we’ll reach a whole new level where the things that seem impossible today become reality. There’s a great deal of potential to be leveraged here, such as in decoding complex biological processes and healing illnesses, or also in the energy sector, with the management of renewable energy generation and decentralised electricity grids. Decentralisation is a trend worth highlighting in general, and one that will enjoy a strong development in 2022. This also includes blockchain technologies, with Europe in a position to gain significant competitive advantages over China and the United States thanks to its decentralised structures. And I’m also sure that we’ll see more robotics applications, both in the industrial sector as well as in the public sphere. A number of Asian countries are already using service robots on their streets, and that’s something we’ll be seeing more of here in Germany in the coming years.

    Markus Kreßmann

    New opportunities with quantum technology and new space  

    We’ll have huge opportunities in 2022. We’re learning to live with Covid and we’ll get better at managing the epidemic. The new German government will inject fresh ideas and generate significant momentum. I’m confident that the problems like the current supply chain bottlenecks will be overcome and that normality will return to many parts of the economy. So there’s a good chance we’ll see a new spirit of optimism, and greater courage in our society when it comes to innovation and new developments. I strongly believe that innovations will become more and more important in our society. Start-up technologies are becoming more relevant and can generate a high societal impact – take Biontech for instance. Trend topics of the past, such as sustainability, are becoming increasingly relevant. Here at HTGF, we’ve been active in this area for quite some time already, and we are aware of the great potential for change that our start-ups possess. Current trends such as quantum technology and new space, i.e. innovation and new business models involving quantum computing and space, are entering the spotlight. The new technologies being born here have the potential to permanently transform an array of different industries.  

    Klaus Lehmann

    World of work in flux – Constant battle over talent 

    One of the key themes for start-ups in 2022 will be: How do I go about finding the right employees to fuel further growth. It’s not just corporations and mid-sized firms that are feeling the impact of the skilled worker shortage, as young companies are also being hit hard. My advice for start-ups is to ensure recruitment and employer branding form a core element of their corporate strategy. Compensation packages are interchangeable. It’s vision and company culture that make all the difference when companies are vying to attract the most talented candidates. 

    In parallel to this, there’s also another development impacting the labour market in particular. I believe that software will remain a key driver of innovation across all industries. And this especially includes topics relating to AI, which in the medium- and long-term will take over tasks that are performed by humans today. It’s a development that we’ll have to keep a close eye on as a society. 

    Romy Schnelle

  • Post-merger integration as a key factor

    Post-merger integration as a key factor

    Post-merger integration as a key factor for successful acquisitions  

    An acquisition is far from over with the signing of a contract – what then follows is the important process of integration. This is why High-Tech Gründerfonds (HTGF) is offering a think tank on this topic at the High-Tech Partnering Conference in February. The aim of the think tank is to discuss the topic with experts from different viewpoints. In this interview, Anke Caßing and Axel Nitsch, both principals at HTGF, provide a bit of background on the planned format. 

    You are planning a think tank on post-merger integration (PMI). Can you give us a brief introduction? What exactly is it about? 

    Axel: Numerous studies indicate that many companies fail to achieve the goals they set themselves with an acquisition. In this context, post-merger integration is often an important aspect. 

    Anke: In the many preliminary discussions we have held with experts, we have clearly seen that successful post-merger integration takes place at various levels. Examples include the rapid standardization of accounting and reporting, the integration of process landscapes and, above all, the merging of different cultures from two separate companies. This is why such a merger is a highly complex process. It is important to look at it from different angles. 

    Are there typical processes that characterize a PMI? 

    Anke: First of all, such an integration is very specific to each company. There are numerous factors and influences that determine the course and nature of such a PMI. For example, there are acquisitions that entail a clear transfer of technology. A large company acquires the know-how of a start-up, and the integration subsequently focuses on how the buyer can develop its own product from this technology. The focus is clearly on knowledge transfer.  

    Axel: It’s different when taking over an existing business model, for example. A young company or a start-up has turned an innovation into a product and has already established itself in a market. Here, acquisitions are aimed at taking over the entire business model. Of course, finances and reporting also need to be consolidated, which can happen rather quickly. But depending on how deeply the company is to be integrated, culture plays a decisive role. 

    Why is this topic so important to you? 

    Anke: One of HTGF’s goals is to connect large and medium-sized companies with start-ups. Even though we as HTGF are no longer involved in the integration after an exit, we think it is important to shed more light on the topic for our portfolio companies and potential buyers. We want to give the opportunity to share experiences at the conference: What do you have to pay attention to? What are mistakes that can be avoided? That’s exactly what we want to take a closer look at during this think tank.  

    Axel: The topic is often given too little attention, as was repeatedly pointed out to us during our preparations. Often, not enough time and resources are allocated to the complex process of post-merger integration. The conference is aimed at partnerships between established industrial companies and innovative start-ups. Acquisitions are clearly part of this and the HTGF network includes many professionals with a lot of relevant experience. We want to share some success stories and practical approaches that can be put into action.   

     Who will be the guests at the event?  

    Axel: Our aim is to bring together experts from different areas. We look forward to welcoming Ralf Temporale, Head of Strategy, Consumer & Operations, Talent Partner at EY, who has directly supported many such integrations. He will certainly have a lot to tell us about the integration of branding, culture and employees.
    We will also talk to Sven Hänchen, Business Development Manager at Wolters Kluwer, an information services provider from the Netherlands. Acquisitions are an integral part of their business strategy. He will also provide valuable insights and talk about the depth of integration – an important aspect of PMI.  

    Anke: We are looking forward to welcoming Sara Khan, VP of Legal Affairs at LTN Global, one of the leading media technology companies. We will also be joined by Bernd Gross, who will be able to report from his first-hand experience. His IoT company Cumulocity was acquired by Software AG in 2017 – today he is CTO of Software AG.  

    Axel: He will also address the topic of incentivization. What incentives does a company offer to retain or even change a management team? This important aspect is underestimated all too often.  

    And why do you refer to this format as a think tank? 

    Anke: Because we look at the topic from different angles. We start with short keynote speeches delivered by the experts. Here, we get an initial insight into their experiences. We then jump into a panel discussion and delve deeper into the various aspects.  

    Axel: And of course we also want to engage in discussion with the conference participants. A format like this thrives on discussion. After all, our aim is to have a comprehensive exchange of experiences in which everyone can learn from each other and take away important impulses. 

  • The added value of collaborations

    The added value of collaborations

    The added value of collaborations

    How can established companies and start-ups develop side by side? The secret is cooperation, to which HTGF attaches particular importance. Alex von Frankenberg, Managing Director of HTGF, picks up on a number of successful examples from the roughly 200 collaborations between portfolio companies and fund investors to show why in some cases one plus one equals three.

    Alex von Frankenberg, what would you say are HTGF’s main tasks? 

    HTGF is a seed investor. And as this description suggests, we are often the first investor in a start-up. While we may sometimes be the sole investor, we’re also really happy to have other investors on board, too. When making these investments, we ensure that the start-up is well positioned after the seed round. For instance, we make sure that the intellectual property is fully retained by the company and that reporting processes or an advisory board are established.  The most important goal in the seed phase is to secure a Series A funding round. However, often there is very little time to achieve this aim – usually just 12 to 18 months. We provide assistance with strategic issues such as product/market fit, offer support with recruitment through our network of contacts and act as a catalyst for fundraising, for example by opening doors to follow-on investors.  

    HTGF is often seen as an interface between portfolio companies and fund investors. Can you elaborate on this role? 

    It is important to understand that our private investors are not solely interested in returns. This is obviously one of the aspects they consider, but they primarily want to secure tangible added value for their companies.  

    And what would that be? 

    We work closely with investors beyond just the fund investment in itself. We are firmly committed to providing our investors with access to the knowledge, experience and network that we have built up over the past 16 years. We help to maintain collaborations between fund investors and our portfolio companies. We want to strengthen our fund investors’ innovation capabilities, inspire them, connect them, and of course open the door to co-investments or acquisitions. 

    You just touched on the subject of cooperation. What form does this take? 

    There are many different types of collaboration. For example there’s R&D cooperation, where research is conducted on a collaborative basis. Then there are sales collaborations where a large company uses its power to market the product of a young company on a global scale. Or the two companies make joint purchases and take advantage of the better conditions of the company with the greater sway. But it can also go in an entirely different direction. For instance, our fitness company eGym is helping our fund investors Fraunhofer, EWE and DHL keep their staff fit and healthy. 

    Looking back at the previous funds, can you give us any examples of particularly successful collaborations? 

    There are so many. We’ve helped establish roughly 200 collaborations in total. Off the top of my head, I would have to think of Juniqe, an online shop for art enthusiasts that we’ve been involved with since 2014. Juniqe is collaborating closely with our investor Cewe. Europe’s largest photo service provider produces prints for Juniqe, not only generating sales for the company but also helping it to learn from the approach and spirit of the start-up. Elsewhere, our fund investor Bosch and the Bonn-based start-up Code Intelligence have joined forces to help make software safer in the automobile sector. Another example that springs to mind is the Swiss start-up AMAL Therapeutics, which we financed together with our fund investor Boehringer Ingelheim. Boehringer then bought the company for several hundred million euros. 

    So one plus one makes three in a way? 

    Exactly. In the best-case scenario, that innovative spark gets passed on. The small company comes up with a new technology or business model, and the large company learns from it without having to compete with the portfolio company. The investors gain fresh impetus and insight to help drive their cultural transformation and digitalisation while also developing or adding to their core business in a targeted manner. This worked extremely well in the case of Solandeo, for instance. The Berlin-based tech firm specialises in smart metering solutions and intelligent forecast and analysis products. For a large energy company such as EWE AG, this start-up was electric – in the truest sense of the word. EWE AG took up a stake in Solandeo and now both companies are working together to help make the energy transition a success.  

    And what role does HTGF play in this process? Are you a kind of “matchmaker” or “date doctor”?  

    We bring both parties together and place great value on dialogue. Each fund investor is looked after by two experienced investment managers who serve as central contact points. Their job is to find companies in the deal flow, portfolio or indeed on the market that match the search criteria of the fund investors. This often takes place at our regularly held events such as the HTGF Family Day or the HTGF Partnering Days. In many cases, the two parties would never have found each other without our help. Start-ups and larger companies often speak different languages. It can therefore be helpful when you have someone to act as an “interpreter”. 

    In some instances, neither side needs an interpreter. The two parties might be such a good match that the investor fully acquires the start-up there and then.  

    Yes, this has happened on eleven occasions in the past – most recently with JeNaCell. This was a biotech company that had developed a nature-identical material to treat wounds and burns in the field of dermatology and medical technology. In 2012, HTGF became one of the first seed investors in the company. Specialty chemicals company Evonik invested in JeNaCell in 2015 through its venture capital arm and is now integrating the firm’s portfolio into its own healthcare business. This is a great example of how we also help fund investors and start-ups to work together in the long term.  

    If I’ve understood it correctly, a hallmark of these collaborations is that both companies learn from each other. 

    This simply has to be the case, as our efforts should clearly lead to a win–win situation. The large company knows a thing or two – and the same applies to the smaller company. The two companies establish a dialogue and share their expertise with each other. One plus one often doesn’t make three, but five – we see quite significant synergies on a regular basis. What’s important to remember is that collaborations are only successful in the long run if both parties benefit. Again I’d stress here that while it is of course important that the High-Tech Gründerfonds portfolio shows good development, it is just as important that we support our fund investors in achieving their goals. We’re enjoying success on both these fronts. 

    Has the start-up scene in Germany changed at all over the last decade?  

    I think so. We’re seeing a lot of experienced founders reappearing on the scene. This never really happened before. The whole scene is also much more mature. The young business leaders are fitter, better and more professional. They know exactly what they want to do. And I’m also especially pleased to see that many entrepreneurs are more ambitious and setting the bar high.  

    And High-Tech Gründerfonds helps them to achieve their objectives? 

    Absolutely. We understand the special challenges that entrepreneurs face and understand their needs. In addition to flexible financing, we offer start-ups crucial benefits that are tailored to their individual situations. We primarily act as a strategic springboard for both our portfolio companies and our fund investors.  For our fund investors, we are the platform that offers access to start-ups and, in turn, the innovations of tomorrow – essentially we offer them a glimpse into the future. 

  • Life Science Pitch Day

    Life Science Pitch Day

    Life Science Pitch Day: Real entrepreneurs, real innovation, real added value

    It was a special moment when CureVac founder Ingmar Hoerr shared his business story at the Life Science Pitch Day. More than 30 start-ups, investors, and scientists took part in the event at the end of September, which was organised by High-Tech Gründerfonds (HTGF) together with partners Bayer, Boehringer Ingelheim and the Innovation and Start-Up Center Biotechnology (IZB). We spoke to the event organisers at HTGF: Dr. Caroline Fichtner and Dr. Martin Pfister, both HTGF Principals, touched on the latest trends and talked about the influence that the increase in media reporting has had on the sector during the pandemic as well as the topics that dominated the event.

    The Life Science Pitch Day took place at the end of September. What was it all about exactly?

    Caroline: Pitch Days take place in various formats. Start-ups can apply to take part, approximately ten of which get the chance to present their business ideas. We then invite investors from the sector as well as HTGF fund investors to attend. This format is not about presenting our own portfolio, which is why we always target companies outside of our portfolio as well as start-ups that do not necessarily need to still be in the seed phase. The Life Science Pitch Day, however, specifically concerns biotech and pharma projects.

    What makes your Pitch Day so special?

    Martin: Developments in the biotech scene are very wide-ranging. It’s important that investors and young development teams are able to find a good level of communication at an early stage. This is something we can offer at such dedicated events.

    Caroline: The field of drug development is very distinctive in its own right and is therefore very particular when it comes to addressing potential investors. It must adhere to long development cycles, strict provisions and specific development sequences. All of this means that the sector is very capital-intensive. Investors therefore have to dive deep into topics and posses the necessary experience.

    Do you share the opinion that the life sciences sector as a whole and biotech especially has experienced an additional upswing as a result of the pandemic?

    Martin: Definitely. We’re seeing that start-ups in the fields of biotech and pharma have been able to attract high levels of investment in the last couple of years. In Europe too, large financing rounds are commonplace. The pandemic and the subsequent focus on German vaccine manufacturers such as BioNTech and CureVac have obviously brought added attention. We’re now witnessing a shift to topics that have suddenly become more relevant, such as mRNA, gene therapy and antibodies. This has also been reflected in the companies taking part in our Pitch Day.

    At the same time, media reporting on the life sciences and biotech has also increased in the last few months.

    Caroline: Even before the pandemic, we and many experts were aware that biotech is an innovative field with real entrepreneurs and real successes creating real added value. But public discourse has now shown the public at large how great the potential for innovation in this sector is. Previously, the sector’s image was dominated by the notion of “nerdy” scientists and researchers. The issues being researched were too complex for the public to get a handle on.

    Martin: It’s great to see the sector receiving more media coverage. This is something we’ve witnessed first hand with companies from our portfolio. Cardior, for example, is a company researching a treatment against heart failure on the basis of mRNA and which is now receiving increased attention after attracting EUR 64 million in financing. The increased media reporting also provides a greater incentive for others to start up businesses. In addition, you have successful biotech and life sciences entrepreneurs who have been able to sell their companies after presenting patient efficacy data and are now launching new start-ups.

    Was there a trend that dominated the Pitch Day?

    Caroline: We’re seeing a lot of young companies in the field of oncology, i.e. cancer research. And platform technologies are being further developed. Research is being conducted on technologies that serve as a basis for developing several drugs to combat various diseases, in a similar way to how BioNTech operates. It was also interesting to see a number of companies from the field of genetic research who are working on a type of CRISPR/CAS 2.0, and are thus further developing the genetic scissors – a really exciting platform.

    Martin: Another remarkable development this time around was the fact that many of the start-ups had already received funding – often within an academic setting. They had been able to make great progress with their innovations within this framework and are now ready to take them out into the open. This makes their developments more tangible, with projects becoming more exciting as a whole for potential investors.

    Were there any companies that particularly stood out for you?

    Martin: There truly were a lot of good ideas. With RecTech, for example, we saw an interesting start-up from the field of genetic research that is looking to cure genetic diseases through its work. They develop high-precision genetic scissors, known as designer recombinases, which can correct errors in the genome and which, in contrast to other enzymes such as nucleases, work faultlessly.

    Caroline: Another pitch by an as-yet unnamed NewCo was also very intriguing – it’s researching a new Alzheimer’s drug based on small molecules. In contrast to current treatments, this drug would be administered simply as a tablet, and preclinical tests have shown the drug to be effective with fewer side effects. We heard about so many fantastic innovations. It’s great to see what’s going on in the scene.

    A special guest at the event was CureVac founder Ingmar Hoerr, who shared his business story. You interviewed him, Martin. What impressed you about him?

    Martin: It was a fascinating discussion because he spoke about the early days of CureVac. He also told his own personal story, which – and this is something that’s often underestimated – had a lot to do with adversity and being different. His courage to pursue an untapped, disruptive topic such as mRNA vaccines in the face of much resistance was particularly inspiring for myself and the many entrepreneurs at the event.

    So do you have any tips to offer? Beyond the Pitch Days, you work with investors and founders on a day-to-day basis. Is there any advice you’d like to share?

    Caroline: I’ll start with the company founders: Make sure to focus! With platform technologies in particular, there’s a danger that you’ll get lost along the way because the opportunities are endless. This is something we experience on a regular basis. Set yourself a clear target and don’t be too swayed by early offers from larger partners. This is something I always advise against.

    Martin: I’d also advise company founders to search for a partner that can help you navigate the jungle of options on offer. We touched on it before: the scene is booming and there are a lot of new developments. As a founder, you need an investment partner that you see eye to eye with and that knows what it’s doing. At HTGF, we’ve covered the market for more than 16 years now and have in-depth knowledge of the scene. We have good relations with start-ups and investors and know just how important know-how as well as trust between the individual stakeholders is. This is another reason why we stage events like our Pitch Day – to help create a common foundation for long-term success.

    Impressions from the Life Science Pitch Day
  • What HTGF can offer its fund investors

    What HTGF can offer its fund investors

    What HTGF can offer its fund investors (besides investments) 

     
    Ever since it was established 16 years ago as a public-private partnership, High-Tech Gründerfonds (HTGF) has always worked closely with companies. The third fund alone secured over 30 fund investors, and a fourth fund generation has already been announced. HTGF sees itself as a platform that offers added value for private and public fund investors, portfolio companies and the start-up ecosystem. In this interview, Alex von Frankenberg, the seed investor’s Managing Director, outlines the added value that HTGF offers its private fund investors.

    Alex, you’re Europe’s most active seed investor – and you work closely with your fund investors.

    We do indeed, but our cooperation extends beyond the investment itself. We want to share our knowledge and experience with our investors, and grant them access to a network we have built up over 16 years. We foster collaboration between business investors and our portfolio companies. We want to strengthen our fund investors’ innovation capabilities, inspire them, connect them, and of course open the door to co-investments or acquisitions.



    HTGF fund investor Evonik just recently acquired a portfolio company.

    That is a great example to mention, you’re right. The start-up in question is JeNaCell, a company we came across around 11 years ago during a meeting between a panel of judges. And then HTGF was among the first seed investors in the company, back in 2012. JeNaCell is a biotech company that develops nature-identical material that is used in medical technology and dermatology for the treatment of wounds and burns. It’s also used in hydroactive skin care. Evonik had taken up a stake in the start-up back in 2015 via its venture capital arm, and is now in the process of integrating JeNaCell’s portfolio into its health care business. That’s an example of how HTGF also brings together fund investors and start-ups for the long term. Overall, 11 of our portfolio companies have been acquired by our fund investors.



    HTGF is a seed investor with a very broad footing. It invests in young companies that are active not only in life sciences and chemicals, such as JeNaCell, but also in the fields of digital and industrial tech.

    That’s correct, our investment team is split across these three areas, partly in order to build up specific expertise and form networks. For each of these three areas, decisions are made by an investment committee made up of representatives of our fund investors and experts. An example of a start-up in the life sciences and chemicals category is MYR, the first company to develop a drug to treat Hepatitis D. It was acquired by a US company last year for way over US$1 billion, marking our most successful exit by far. We’ve also seen two highly successful transactions this year, with the IPO of Mister Spex and the sale of Next Kraftwerke to Shell – both of which happened more than ten years after the seed investment.



    Can you give an example from the field of industrial tech?

    I certainly can. Take our portfolio company R3DT, which has developed a virtual reality tool for industrial engineers. Our fund investor Bosch is already among the licencees. That’s a great illustration of how fund investors and portfolio companies can collaborate. There are numerous examples of this in all areas: FairFleet provides drone services and is cooperating with fund investors such as Bayer and Postbank. And our fitness company eGym helps our fund investors Fraunhofer, EWE and DHL keep their staff fit and healthy.



    Tell us about the networks that ultimately lead to collaboration or acquisitions – how do they form?

    We place a great deal of importance on communication. At HGTF, each fund investor has two investment managers as central points of contact. Our colleagues in relationship management also establish connections and organise events throughout the whole year. Even during lockdown, we were able to bring together start-ups, investors and companies. Our two most important events are the HTGF Family Day and the HTGF Partnering Days. Networking and inspiration work at all levels here at HTGF.



    And what does that mean?

    On the one hand, we invite big names from the world of politics and business to give speeches. At the HTPD, we heard speeches from two high-level government officials – German economy minister Peter Altmaier and health minister Jens Spahn – and also from former Deutsche Bahn executive Sabine Jeschke. On the other hand, we also take advantage of conventional networking opportunities. At HTGF, collaborations have been born at the buffet table, or over a beer and a currywurst.



    Your network must have reached an impressive size after 16 years.

    My colleague Claudia Raber, who is responsible for relationship management, just recently provided the figures in an interview about the added value we offer start-ups: We have around 9,000 different investors in our network, ranging from wealthy private individuals and corporate VCs to German and global VCs as well as private equity companies. And on top of that there are several hundred C-level managers, consultants and mentors who contribute all of their knowledge to our network. 



    You said at the start of the interview that you also share your knowledge with your fund investors. What did you mean by that exactly?  

    We have concluded more than 600 seed investments, as well as over 1,700 follow-on financing rounds and just under 140 exits. We share the insights we have gained from this experience, and in doing so help companies avoid making investment mistakes. We know what contracts and term sheets need to look like, and our processes always meet the highest standards. And on top of that, we share our specialist expertise in various areas. We’ve got outstanding contacts at leading universities, research institutes and their spin-offs. We know the German start-up landscape like the back of our hand.



    In two sentences, what is your message for fund investors who are interested in investing in the fourth fund?

    HTGF is a seed investor that leads the way when it comes to new, technological developments. We encourage our fund investors to come and be among the first to discover, support and successfully leverage innovations.

  • The success story of FOND OF

    The success story of FOND OF

    From backpack start-up to platform: The success story of HTGF fund investor FOND OF

    To some, FOND OF is simply known as the backpack start-up, but the Cologne company sees itself as a platform for development, unleashing potential and personal growth. So what does that mean exactly? To find out, we asked Dr. Oliver Steinki, founder and Managing Director of the start-up, which is currently one of High-Tech Gründerfonds fund investors. We spoke to him about finding the right work environments, navigating the path to creating the perfect school bag – and why you shouldn’t lock yourself away in a basement to work on innovative ideas.

    Oliver, 11 years ago you started out as a young start-up, and created the first ergonomic school bag. And now, you’ve united seven brands under the FOND OF umbrella. You describe yourselves as a platform for development, unleashing potential and growth – can you tell us what that means?

    When we started out with FOND OF, our focus was indeed on backpacks. We launched the company 11 years ago with the ‘ergobag’, a successful product for primary school children. Today, like you say, we have seven brands. But there’s so much more to us than backpacks. I’d say that we’ve now become a platform that sparks innovation. Our job is to create a work environment that provides a great deal of inspiration for many people. This then facilitates innovation in other areas.

    How did it all start? Had this development been on the cards from day one?

    No, it hadn’t. Our company launch was quite normal: Four friends with business degrees who had known each other for years wanted to develop an idea together. We were at a party and one of us came up with the backpack idea. It was an idea that we then rolled with – we worked on sales in the day, product development in the evening, and marketing at night. It was a very intensive time. We did of course make some mistakes, with no consultants or partners at our side. We struggled through and worked tirelessly on the product.

    How do you go from making school bags to becoming a platform?

    We wanted to create a follow-on product for later school years and thought about calling it Ergomax. But when we presented the name to an 11-year-old girl, it went down like a lead balloon. She said that Ergomax was uncool and told us that she was grown-up and didn’t want a product like that. And at this point it became clear, once again, that our ideas needed to be more target group-specific. At some stage we then started doing more and becoming more diverse. We do things that we find exciting, that we like. And in doing so, we create an environment that fosters individual development. We believe that as soon as you give people free reign, they can develop, and then success in business will follow.

    You now run your own logistics centre, you’ve created a modern office environment in the form of The Ship, and you’ve developed xdeck, an accelerator made by entrepreneurs, for entrepreneurs. And on top of that, you’re also a HTGF start-up fund investor. Would you say that all these activities also mirror your platform mindset?

    I most certainly would. The goal of a platform is always to promote exchange. For me, this constant exchange is an important way to remain innovative. Ideas often come about by chance – be it through chance encounters, for example, or stories you just happen to hear. All of this can give rise to a new idea and innovation. It’s a similar story when it comes to product development: Locking yourself away in the basement and working on some idea like a madman is not the right way to go about it. If you do that, you’re not going to have any exchange. We never said “This is the perfect school bag” – we just asked 100 mums what they needed. It’s not about being smart, but asking lots of people. 

    So you’re saying get out of the basement and hit the street if you’re on the lookout for innovation?

    Spot on! But there’s more to it than that. You need to frequently challenge yourself and your own innovation. To be successful, you need to have focus and always be informed. You need partners who know the market inside out. That’s one of the reasons why we’re a HTGF fund investor. We may be a start-up that’s only 11 years old. But in our business, that’s quite a long time. That’s why having a partner like HTGF – a seed investor that’s constantly active on the market, monitors all new trends and sees the big picture – is a smart and important move.

    So you’ve now also taken on the role of investor. What do you focus on when it comes to new financing deals?

    Three things: The team, innovation, and flexibility. The latter of the three is also related to swift transitions, which is something I just mentioned. The focus of our first business plan was completely different to what we’re actually doing today. Lots of successful start-ups are no longer doing what they initially set out to do. Being able to adapt gives companies a real competitive edge. And when these shifts come at a faster pace, companies also need to be able to respond more swiftly. The pace of change today is faster than it’s ever been. But moving forward, it will never be as slow as this again. And that’s something that all companies have to be prepared for.

    Oliver Steinki Fond Of
    Dr. Oliver Steinki, founder and Managing Director of FOND OF


  • Accelerator activities at SAP.iO

    Accelerator activities at SAP.iO

    Accelerator activities at SAP.iO: “Creating a win-win-win situation”

    Alexa Gorman is considered one of the world’s leading experts on start-ups. She began setting up a start-up program at SAP in 2017, and since May this year has been responsible for the software company’s global activities in this area in her role as Senior Vice President and Global Head SAP.iO Foundries and Intrapeneurship. In this interview, she talks about developments in the international start-up scene and SAP’s collaboration with young companies – and also reveals why the company values its cooperation with High-Tech Gründerfonds so highly.

    Alexa, you’re in charge of SAP.iO’s global start-up activities. Can you tell us about the latest developments shaping the global market?

    Sustainability is clearly a dominant topic at the moment, and there are lots of exciting and promising start-ups out there that are also of great interest to SAP in the B2B segment. Specific examples here include the circular economy and the measurement of CO2 emissions in the supply chain. In addition, the impact on business is becoming greater and greater. Take recommerce for instance. The effects of sustainability and green tech are felt across all industries in all kinds of different forms.

    Alexa Gorman Picture
    Alexa Gorman, Senior Vice President and Global Head SAP.iO Foundries and Intrapeneurship


    What other trends are there?

    We continue to see promising applications in the field of data and analytics. The big question here is how to effectively utilise the large volumes of data that most companies now possess. What role will machine learning play in the long term when it comes to gaining important business insights? These are topics that are also relevant when it comes to end customers.

    How do you reflect on the last few months? And how are things looking in terms of innovation capabilities in the B2B segment?

    We also sensed the uncertainty that reigned at the onset of the pandemic and thereafter, with many business meetings being cancelled. But once it became evident that this global crisis was set to loom large for some time to come, business picked up again. What then followed was a record number of meetings for our start-ups. Many companies were open for innovation, and this provided a real boost. For our start-ups, especially those active in HR and e-commerce, 2020 was well and truly a record year. In our team, we came to appreciate the benefits of hybrid working. We travel less, have more time and have become even more global – including in the ways we can get start-ups to join our programmes.

    You work closely with High-Tech Gründerfonds. How do you benefit from this cooperation?

    Our cooperation gives up deep insights into the start-up landscape. The HTGF team is highly active, enjoys a fantastic standing and maintains an extensive network. And that’s something that we can benefit from greatly. Exchanges always take place on an equal footing. We have very lively exchanges, and we work with HTGF when sourcing firms for our programmes. We’ve already been able to welcome a healthy number of start-ups from the HTGF portfolio into our programmes. And in turn, HTGF has also invested in a number of start-ups from SAP.iO programmes. On top of that, we’ve also made a joint investment. It’s a good collaboration between partners that delivers great results.

    Tell us about your start-up work at SAP? How did it all start?

    We have continuously refined our activities. We overhauled our operations in 2017, and we are concentrating on young companies that offer value for our customers. Our focus is now clearly on start-ups, supporting them on their journey toward becoming SAP partners and thus helping them to scale up their operations. We see start-ups as the next generation of SAP partners and want to offer them a faster way to join this partnership.

    So that means that start-ups become partners and suppliers for your customers with the help of SAP.iO?

    Yes, that’s the goal. We want to create a win-win-win situation. Young companies gain access to our platform and interfaces and may even receive SAP certification. They also benefit from being able to sell their products on the SAP Store to our more than 450,000 customers from almost all industries. Our customers benefit from innovative start-up solutions that we have taken a close look at here at SAP.iO. And SAP benefits from having a steadily growing ecosystem with lots of innovative partners that complement SAP solutions.

    Can you give us a concrete example?

    Our goal is to incorporate start-ups into our SAP ecosystem and then ideally integrate them into our sales operation. And as an example of what this can entail, I’ll tell you about BigID, a data and analytics start-up from Israel that now boasts unicorn status. Our partnership with the start-up grew, and its solution is now actively offered in our sales operation. To achieve this level of partnership, a start-up has to get to a certain size and generate a certain level of sales, of course, but it shows that we are able to help young companies grow.

    What does the process involve? How do you become an SAP.iO start-up?

    The start-ups need to offer B2B solutions. They also have to have secured their first customers and have already completed a financing round. That indicates a certain level of maturity and the potential they have to grow with us. Finding these start-ups and integrating them into our ecosystem – that’s the task of our team here at SAP.iO.

    How many innovation hubs, or foundries as they’re called, do you now have around the world?

    There are nine worldwide, and each foundry has two programmes a year on certain topics. When selecting start-ups, we draw on the experience of our in-house tech experts, but we also ask our sales team how they view a start-up’s potential. And we even invite customers to screening sessions to hear what they think.

    What advice would you give to other companies that are considering working with start-ups more?

    Working with start-ups just for marketing reasons is not going to get you anywhere. The most important thing is to clearly define the strategic objective. After all, there’s a difference between seeing start-ups purely as an investment case, using their help to create additional offerings for your own customers, or leveraging start-up support to drive your own company’s digital transformation. They’re all legitimate approaches, but you need to be clear when starting out. First and foremost, working with start-ups should generate value for both sides. Not just for the company, but also for the start-up.

  • What HTGF has to offer for start-ups

    What HTGF has to offer for start-ups

    What HTGF has to offer for start-ups (besides financing)


    With over 600 seed investments in almost 16 years, High-Tech Gründerfonds (HTGF) is Germany’s most active seed investor. Its investment teams have strong ties with business and science. HTGF has long seen itself as a platform that offers start-ups outstanding benefits alongside financing. In this interview, HTGF Partner Claudia Raber sheds further light on the subject.

    Claudia, as a HTGF Partner, you’re responsible for relationship management at the company. If you had to name five things that you offer founders besides financing, what would they be?

    Claudia: Expertise within the team, access to investors, external business experts, a network in business and science, and of course our HTGF Academy.

    It’s clear what you mean when you talk about expertise within the team. Your team has over 15 years of experience in seed investment, and many of your investment managers are from the world of science or have founded a start-up themselves.

    Claudia: You’re right. We always aim to interact with founders on an equal footing.

    Can you tell us what you mean by the second point, access to investors?

    Claudia: When our start-ups embark on additional financing rounds, we can help them find the right partner for any rounds that follow. Today, our network of investors spans the entire globe. In each and every region, we’ve got very good partners for the different phases and technologies of our start-ups.

    Can you provide any figures?

    Claudia: Our network comprises roughly 9,000 investors, ranging from successful private equity funds and corporate VCs to wealthy private individuals, some of whom invest exclusively with HTGF. And here we provide individual access, by engaging in very direct networking or organising events like the Family Day, where deals are sometimes born at the buffet table.

    You also mentioned business experts that you bring together with your portfolio. Can you tell us about them?

    Claudia: Sometimes our start-ups are looking for co-founders, additional managers or advisory board members, and here we can lend a helping hand. Our network includes over 8,000 C-level managers, consultants, service providers, mentors and candidates for advisory boards and co-founder positions.

    Can you provide any examples?

    Claudia: Sometimes we get successful founders and HTGF alumni on board as experts, as was recently the case in the influencer marketing business. And another person that immediately springs to mind is the co-founder of an internationally successful SaaS start-up who is now an investor and advisory board member at a portfolio company active in the field of enterprise software.

    I presume your company networks are just as big?

    Claudia: You bet. We’ve got more than 4,300 potential customers and cooperation partners from industry, the SME landscape and retail. Our HTGF Partnering Days are also an important networking tool. And here I’d like to really highlight our 35 fund investors, of course. Collaborations between these established companies and start-ups are common, and sometimes even result in an acquisition. One example I could give is our portfolio company Emma, which was acquired by Haniel last year. Haniel is also active as a HTGF fund investor.

    Speaking of fund investors, do you offer them similar benefits to your start-ups?

    Claudia: Yes, of course, and we can see that demand is constantly on the rise. That’s why we’re going to develop some additional formats.

    Can you tell us about how you work with universities?

    Claudia: Universities also form an important part of our active network, not just because successful founders often come from the world of science, but because we also want to give our start-ups access to experts. Also, with the HTGF Academy, we’re offering a comprehensive development programme exclusively for HTGF portfolio companies. This involves seminars and webinars about correct controlling and HR management as well as topics such as virtual share programmes.

    Do your start-ups help each other?

    Claudia: They certainly do. They often meet at our events and keep in touch with one another. We are strong believers in the power of peer-to-peer learning. We’ve even started to see successful founders from the past investing in our portfolio. We’re delighted to see just how well our platform concept is working.

    Thank you for your time, Claudia!

  • Start-up meets corporate – an interview discussing the successful collaboration between Userlane and B. Braun

    Start-up meets corporate – an interview discussing the successful collaboration between Userlane and B. Braun

    Start-up meets corporate – an interview discussing the successful collaboration between Userlane and B. Braun

    You could say that Alexander Katzung and Hartmut Hahn met by chance – and you’d be right, but it was in an organised setting. And it’s this idea that underpins the networking activities of High-Tech Gründerfonds when it brings together fund investors and portfolio companies. The portfolio company in this instance is Userlane, which offers software that explains other software to users as part of a step-by-step process that is easy to understand. HTGF invested in the company in 2016, and then a further financing round followed in 2018 in the form of a Series A investment. And so it came to pass that founder and CEO Hartmut Hahn met Alexander Katzung, Vice President Acceleration & Innovation at medical technology company B. Braun, at a HTGF event.

    We sat down with Alexander Katzung and Hartmut Hahn for an interview exploring their collaboration, the role that currywurst played when they first met, and how Userlane became a part of B. Braun’s accelerator.

    Alexander, how did you come across Userlane? Hartmut and his team are not exactly active in the traditional medical technology field with their start-up Userlane.

    Alexander: You’re right. We met at HTGF. B. Braun is a fund investor, and we have a regular seat and a vote on the investment committee focusing on the life sciences and chemicals – as you’d expect for a medical technology company like ours. But we can also take part in other investment committees as a guest participant, and here, the wide-ranging scope offered by HTGF is a major advantage. Take digital tech, for instance. It was there, in 2018, that I met Hartmut, a man brimming with confidence who made a convincing impression.

    Can you tell us what was going on at that time, Hartmut?

    Hartmut: The next financing round, our Series A, lay ahead. And as part of that we obviously gave a presentation at HTGF, which had already invested in our company as a seed investor. We were really confident during the committee meeting, Alexander’s right. We had already received a commitment from an additional investor. At Userlane, we help large companies simplify workflows and digital processes. Our technology is like a navigation system for the various software solutions used by companies. Alexander found our technology interesting, it would seem. During a break we ended up chatting and then we kept meeting up in the months that followed. And sometimes it was over a beer and a currywurst, like at the HTGF Family Day.

    Alexander: You’re right, our intermittent meetings were very important. That’s why I’m looking forward to events like the Family Day taking place in the real world again. Digital formats are fine, of course, but personal interactions, sitting down together – that’s all an essential part of establishing contacts and getting to know people better. The Family Day is a fantastic event for that.

    How did you end up doing business together?

    Alexander: One of my tasks is to give B. Braun access to external innovations. That’s why I take topics from the investment committee [or from the deal flow] with me into my organisation. After our meeting, I presented the Userlane solution to my company.

    What are the benefits that Userlane offers your company?

    Alexander: It’s a very good training tool, both internally and externally. It saves time and simplifies the process of onboarding new users. But it also helps when it comes to software that some people only rarely use. A simple example would be submitting travel expense claims – some people may be familiar with the process. If it’s something you only do every few months – or you now need to travel again after the pandemic – you may well have forgotten how to use the tool to submit said claims. And in that scenario, the Userlane solution, which guides users through the process, is very helpful.

    That said, it still did take a while before you two actually started working together.

    Hartmut: Around a year later, in 2019, Alexander approached me because B. Braun had launched an accelerator. He told us: Although you’re not active in medical technology, you might still be of interest to us.

    So why did it take so long?

    Alexander: We had been looking at Userlane internally and had presented the start-up to the operational units. The interest was there, but we weren’t able to pursue the idea consistently in our daily business. An important lesson for us was that B. Braun first had to establish internal processes for working with start-ups and testing their solutions. That’s why we created the B. Braun Accelerator.

    Can you tell us how your accelerator works?

    Alexander: We developed two programmes: A conventional accelerator programme for early-stage start-ups, and a collaboration programme for later-stage start-ups. With the collaboration programme we’re looking less for an investment opportunity but more for a supplier of innovation and innovative solutions. And the product also has to have reached an appropriate level of maturity. At the start we focused on solutions that help to improve processes in areas such as HR, logistics and finance. And on top of that, the collaboration programme enables us to not only discuss technologies and new business models in theory, but to also test them in practice as part of pilot projects. That gives us the insights we need to make further decisions. Userlane was a great fit in that respect.

    Hartmut, why did you decide to sign up?

    Hartmut: As the founder of a start-up, I’m obviously interested in sales, and I thought the programme presented a good opportunity to gain B. Braun as a new customer. And I was also impressed by the concept of the accelerator, which pilots innovative solutions as part of a “fast-track” process and then makes them available for B. Braun to leverage.

    So what does your collaboration entail?

    Hartmut: As a general rule, there are two use cases for Userlane – and we tested them both during the pilot project. On the one hand, our software works for internal processes such as CRM or HR software, while on the other, we can also help B. Braun customers. For instance, whereas previously customers often had to undergo on-site training for a digital supply and procurement process, this is now completely covered and explained by our software.

    Alexander: The Solution has proven very successful and our collaboration went so well that we’re now working together on a permanent basis following the pilot project.

    So that means your accelerator has clearly been a success, Alexander. What’s next on the agenda – will you be getting another HTGF start-up on board?

    Alexander: In the next round, the accelerator will focus on efficient and sustainable technologies. We defined our challenges internally, and then took a look at a lot of start-ups around the globe during the scouting process in a bid to find partners for our new collaboration programme. And as a fund investor, we’re of course also keeping our eye on HTGF’s portfolio companies – that’s a major advantage. And yes, we have again taken on board an HTGF portfolio company in the form of Panda GmbH. Panda really stood out throughout the entire selection process.

     

  • Finding Product-Market Fit

    Finding Product-Market Fit

    Finding Product-Market Fit: The “n=1” rule

    By Andreas Olmes (Principal / Proxy)

    Co-authored by Ulrike Kalapis (Investment Manager), Yann Fiebig (Senior Investment Manager) , Gregor Haidl (Investment Manager) and Fabian Hogrebe (Investment Manager)

    In a nutshell

    When you start looking for product-market fit, the rule of “n = 1” prescribes that you should initially focus on exactly one single customer. By contrast, introducing personas or generic customer segments is often found misleading.

    Quick wins

    • Consistently focus on a single customer: “n=1”
    • Create a persona from five single, uniform and paying customers
    • If you are backed by venture capital, start from “n=1” and check the scalability, i.e. applicability of the PMF to further customers
    • Consider any further topics such as additional features, sales partnerships or scalability topics as secondary and concentrate on a single customer

    Status Quo

    As found in our 2019 portfolio analysis, around 75% of our Industrial Tech businesses fail due to a lack of product-market fit (PMF). This far exceeds the failure rate of 30% for team-related factors and 10% for purely technological reasons. These findings align with observations with 101 US companies reviewed in the same year by CB Insights.


    When we ask entrepreneur teams to describe their own PMF, it is surprising that customers are often described only superficially. What’s more, customers’ problems are not captured in a tangible manner. In 2018, Gregor Haidl suggested that customer segments should be presented based on a concrete individual customer example. This was the basis for setting up and implementing the first PMF workshops in 2018. During these workshops, we work out with the founding team the basic success factors: customer -> problem -> solution -> cash customer + cash start-up. In an upcoming article, we will shed light on how such a workshop is conducted in detail.


    Even though we emphasize the focus on single customers prior to the workshops, we notice: Many teams still tend toward an abstract and generalized description of the target customers in the first PMF workshop. Obviously, we did not yet manage to communicate our important lessons learned to the founders.


    Here’s a short excursion on how PMF is typically addressed these days, and how start-up teams are characterized:

    • Based on a customer survey, a PMF canvas is made
    • Here all relevant themes are described: customer segment, problem, solution, added value, sales channels, suppliers, etc.
    • Unlike the strategy in the 2000s of asking customers after the product was developed, this method prevents founders building something no one is willing to buy 😉
    • Additionally, by focusing on “n=1” a persona is naturally captured: “This is Alice. Alice is 35 years old, works as a production manager and faces the problem that she is forced to stop production every 8 weeks for maintenance, etc. …”
      We recommend, however, not to focus on personas, as many start-ups end up stuck in long sales cycles, lose deals, and have a poor ratio of revenue to sales effort.

    So, what is going wrong?

    First, the generalization resulting from customer interviews to a canvas lead to the loss of a single customer focus. Even a persona is too general at the very beginning and not a tangible description.
    Further, sophisticated canvas models lead to a massive distraction for founders from the overarching understanding of the actual customer need. The canvas is thoughtfully filled out and the work gets done, but there is not enough deep questioning on whether the customer situation has really been understood.
    Our conclusion using existing canvas:

    • Too little focus on customer and problem box
    • Too many other boxes, which end up distracting from the first (decisive) step

    How do we solve this?

    Physics provides us with a toolkit to solve problems. One is to imagine extreme cases to derive key insights. With the goal to sell to as many customers in a target group as possible, looking at a single customer can help us understand more accurately what is happening than reviewing any other number of customers.

    • Describe exactly one customer, i.e. rule of “n = 1”
    • Focus on essential points: customer -> problem -> solution -> cash customer + cash start-up

    What are the resulting advantages?

    The main advantage is the founding team can – and must – focus on a single customer. Details are no longer side lined and importantly the work becomes much easier. It is simply “only” about the customer Alice from company XY, who is described in great detail:

    • In the best case, this immediately leads to a first turnover through an order by Alice, because a real problem has been solved. And this is our goal.
    • In the worst case, we understand why a customer like Alice is not a good fit.

    As a positive side effect, the “story” of a single customer is a perfect basis to describe the start-up to investors and supporters.

    Is there a guideline for this?

    We have significantly simplified the standard canvas and focused on these essentials. Find out more in one of our future articles.

    What needs to be considered in parallel?

    If start-ups seek venture capital (VC), then they must be able to present a scalable product or service. Otherwise, the start-up is a project business. This can be quite attractive from an entrepreneurial point of view but does not offer a viable venture case. Therefore, start-ups with VC ambitions should critically examine the scalability or transferability of the PMF to further customers already with the first customer (“n=1”). Note that the road to scalability can include project business as a first phase to build a highly scalable product or service business.
    An additional consideration when analysing the customer Alice is to view her situation and her specific problem exclusively from her perspective (!) (customer’s problem space). Only then can a start-up evaluate if a solution can be found to Alice’s problem (solution space). As the saying goes: The problem is delivered by the customer, the solution by the start-up. This is also what Fitzpatrick writes in the warmly recommended book “The Mom-Test”.

    So, what comes after “n=1”?

    After “n=1” comes “n=2”, i.e. focus on the next single customer. Customer Bob should be as similar as possible to customer Alice. This allows us to start at a much higher level than with Alice. Though experience shows that surprisingly often further significant differences are revealed in the process. This is to be expected and affirms how important it is to focus on a single customer. As with Alice, the goal is to convert Bob into a paying customer.
    After Alice and Bob there is Carol, Dave, and so on. The idea is to step from one single customer to the next. The sum of these customers then forms the targeted market segment of the start-up, i.e. starting from “n=1”, “n=market segment” is developed.
    Over time, this enables you to uncover some common ground between customers, which can then be mapped to a persona or target customer segment to make it easier to identify the next customer.
    To the mathematicians among you: This is analogous to proof by induction.😉

    Literature:

    • [Bla 2006] Blank: The Four Steps to the Epiphany (2006)
    • [Kna 2016] Knapp: Sprint, How to solve big problems and test new ideas in just five days (2016)
    • [Fit 2016] Fitzpatrick: Der MOM Test (2016 translation, original 2013)
    • [Cag 2018] Cagan: Inspired, How to create tech products customers love (2018)
    • [Bra 2018] Bradley, Hirt, Smit: Strategy beyond the hockeystick (2018)
    • [CBI 2019] CB Insights, The Top 20 Reasons Startups Fail, https://www.cbinsights.com/research/startup-failure-reasons-top/ (6. November 2019, laut Recherche vom 12. February 2021)
    • [Hog 2019] Hogrebe, Haidl, Fiebig, Olmes: Product-Market Fit: Der Hauptgrund für das Scheitern von Industrial Tech Startups im HTGF-Portfolio (May 2019)
    • [Feh 2019] Fehr, Haidl, Hogrebe, Fiebig, Olmes: Product-Market Fit im Industrial Tech – Der Weg zum Kundenverständnis (July 2019)
    • [Hai 2019] Haidl, Fiebig, Hogrebe, Olmes: Woran erkenne ich Product-Market Fit als Industrial Tech Gründer? (September 2019)
    • [Hai 2020] Haidl, Fiebig, Hogrebe, Olmes: Wie erkennen Industrial-Tech Gründer den Product-Market Fit? (February 2020)
    • [Hog 2020] Hogrebe, Haidl, Kalapis, Fiebig, Olmes: Wie nähere ich mich dem Product-Market Fit an, wenn ich keinen habe? – Der Customer Development Prozess (July 2020)
    • [Olm 2021] Nachtwei, J. & Nachtwei, K. (2021). HR Consulting Review, Band 13 (Fokus Startups). VQP. p166-172
  • Why pivoting is a radically good move and fundamentally important

    Why pivoting is a radically good move and fundamentally important

    Why pivoting is a radically good move and fundamentally important

    After more than 600 seed investments, High-Tech Gründerfonds (HTGF) has conducted a study to see how founders can perform a successful pivot. Managing Director Alex von Frankenberg presents the results together with his colleague and Senior Investment Manager Gregor Haidl. In addition, the two experts explain why pivoting is also important for experienced companies – and why they believe “we all make mistakes”.

    Alex, your credo is: “We all make mistakes.” What do you mean by that? Shouldn’t we be looking to not make any mistakes?

    Alex: In my opinion, it’s really important to admit that we almost always make mistakes in life. Sometimes because things didn’t turn out as well as we imagined. But sometimes because they turned out better than we first thought. This mindset is absolutely crucial, because it helps us to always be prepared for changes. We can therefore adapt and react accordingly.

    Gregor: I’d even go so far as to say that always being right could be fatal. I’m sceptical when companies from our portfolio haven’t made any mistakes. It leads you to ask whether the start-up has taken sufficient risks. Many companies are hesitant and therefore avoid failure – but they also miss out on potential opportunities.

    Alex, why are pivots so important?

    Alex: A pivot is a radical move – an about-turn in a company’s models and ideas. It can therefore be described as a fundamental realignment. There are many famous examples of how a significant shift in focus can lead to success. YouTube initially started out as an online dating platform.

    Shopify, today one of the most successful shopping platforms worldwide, was once a small snowboard shop in Canada. Slack, a tool that has become essential in working environments, began as a gaming platform. Having the mindset that you can always make mistakes and being able to pivot are crucial factors in the success of young start-ups.

    Gregor: It’s important that this change of course comes from the founders themselves. Especially at the start, accepting you’re wrong about target customers, the market or a product takes a great deal of willingness and a lot of discipline. Such awareness is more prevalent in the software sector, but it is also important for start-ups active in the fields of high-tech, industrial tech and hardware. A lot of start-ups must first identify their product/market fit, which means that they will always need to pivot.

    You really know a thing or two about the subject of product/market fit, Gregor. You’ve even held several workshops on this topic. What have been your most important findings?

    The life of a start-up can be roughly divided into two phases: before and after product/market fit. Many start-ups want to scale up quickly, employ as many people as possible, raise funds and set up a large team. But this simply doesn’t make sense before identifying a product/market fit. Our study showed that if a team is too large, this hampers flexibility and slows things down – even when pivoting.

    Can the findings of the study also be applied outside the start-up world?

    Alex: Absolutely! Being successful in the long term is a continuous process; the markets are always changing. Companies should always reconsider their product/market fit and continue to pivot. This is essential for SMEs, family-run enterprises and corporations – particularly in the era of digitalisation. We therefore work closely with our fund investors to share our knowledge and experience. We see this as a cornerstone of what we do in the partnership we share with our fund investors. Ultimately, there are not many venture capital companies like HTGF that – with over 600 seed investments under its belt – can draw on such a wealth of experience.

    We’ve learnt that when pivoting, a team shouldn’t be too big. What are the other findings of the study?

    Alex: The younger the team is, the more chance of the pivot succeeding. Young people tend to be more fearless; their lives are shaped by change. This carries over into their professional lives. But experience also plays a role. The more experienced a team is, the more successful a radical change of course will be.

    That sounds a bit like the cliché: “We’re looking for a 20-year-old with 30 years of job experience…”

    Alex: (laughing) No, this obviously isn’t what we mean. However: It helps to get started while you’re young. To fail with small projects when you’re young doesn’t hurt as much as when you’re older and might be hampered by private pressures.

    Gregor: A diverse team can help to achieve a combination of young founders and those with a lot of experience. If I can select my team with people from various backgrounds, then I can tap into a great deal of experience. Diverse teams are more successful when pivoting.

    Alex: And this doesn’t just apply to age. Teams with a mixture of male and female founders enjoy more long-term success, studies have shown. Diversity in a successful team also includes people with experience of living and working abroad. There are many examples of this in Silicon Valley – but here in Germany, too.

    The study also found that too much success can stop companies from pivoting at the right time.

    Alex: I’ve witnessed this phenomenon for years. A start-up has an innovative idea, they implement this idea and generate an acceptable level of sales as a result. But the start-up never really takes off. It therefore continues to do the same thing and is no longer innovative. In the long run, these companies are unable to really establish themselves or are sold below their actual value.

    Gregor: It’s interesting to see how even start-ups – with their young company history – continue to fall into the corporate mindset. Some start-ups don’t pivot because they think they’ll be moving away from their core business and that they’re actually quite successful as it is. But even founders should continually ask themselves what their core business is and take a critical look at their own product/market fit.

    Alex: A lack of innovation and fear of change is a very human trait – something that affects us all. To move on from something tried-and-tested is a huge step. But our experience shows that taking this step is so important. And this has now been backed up by our study.

  • Challenges and highlights of 2020 and an outlook for 2021

    Challenges and highlights of 2020 and an outlook for 2021

    Challenges and highlights of 2020 and an outlook for 2021

    Overall, 2020 was a successful year for High-Tech Gründerfonds despite the difficult circumstances. And the seed investor just recently signed off on the best exit in its history. Managing Director Alex von Frankenberg takes a look back at the challenges and highlights of this past year and provides an outlook for 2021.

    Alex, congratulations are in order! In summer, your portfolio company MYR received conditional market approval in Europe for the first-ever drug to treat hepatitis D. US pharmaceutical company Gilead is now set to acquire the life sciences company for at least EUR 1.15 billion*. A real success story.

    We’re obviously delighted. And particular credit must go to our HTGF Partner Dr. Bernd Goergen. He himself is a hepatitis expert and recognised the potential of MYR at an early stage. This marks our first unicorn exit – a fantastic effort and a real success for all of us here at HTGF. However, as Bernd Goergen continues to stress – quite rightly – this first drug to treat the disease is above all good news for the millions of hepatitis D patients.

    How do you look back on 2020 as a whole?

    Overall, quite positively. Even though there were some stressful moments along the way. At the start of the pandemic, we had a case of the coronavirus within our team. One of our colleagues tested positive on 12 March. But we were lucky. He’s doing well and nobody else was infected. Like so many companies, we quickly made the switch to working online and remotely. Our team adapted to the transition fantastically.

    At the start of the crisis, you announced that the company would continue to invest. Did that work out?

    Absolutely. That is our job and we reached all our goals. We made 40 new investments, our portfolio acquired approx. EUR 400 million in follow-up financing and we sold 19 companies. Financially, it was a very successful year for High-Tech Gründerfonds. 

    And for your start-ups?

    For us, success is defined by the success of our start-ups. We obviously had companies in our portfolio that suffered a great deal. But at the same time, we also had a whole host of companies that did really well. Naturally, those companies focused on anything to do with digitalisation were successful, but so too were other companies from our life sciences portfolio. As MYR has shown, we’re also active in this sector as a seed investor. Before the pandemic, start-ups in the life sciences sector were struggling to obtain follow-up financing. But now all of sudden everyone is starting to see the value and innovation potential that start-ups have to offer in this field. This has also been aided by the success of companies like Biontech and CureVac that launched their IPOs this year.

    CureVac went public in New York, not in Europe.

    I’ve been saying for a long time that we need more IPOs here in Germany. There have been almost no IPOs here. We had TeamViewer going public last year and Delivery Hero joining the DAX, but these are the exceptions rather than the rule. Instead, we saw Rocket Internet withdraw from the stock exchange in Germany. This, unfortunately, is an aspect that needs to be considered when looking back at 2020. While various experts are expecting more German companies to launch IPOs in 2021, it is not yet clear whether they will launch on the German stock exchange or in another country. In total, we should be seeing 20 to 30 IPOs per year from the German start-up ecosystem – but in reality, it’s not even a handful.

    That aside, what did the year 2020 bring for investors?

    In March, the entire market was unsure about what was going to happen. But many investors didn’t hold back, contrary to expectation. Quite the opposite, in fact. Our VC colleagues at Atomico confirmed as much in their latest State of European Tech report. It revealed that US$ 41 billion was invested in the European market – a record high despite the crisis and roughly US$ 2.5 billion more than the previous year. This is a really strong sign for the European start-up scene. Nevertheless, we need to take a closer look at the situation in Germany. And the report reveals that around US$ 5.4 billion was invested in start-ups in this country, roughly 20 percent less than in 2019. However, Germany ranks second in terms of investment volume in comparison with other European countries – behind the UK but ahead of France and Sweden.

    What’s your view on the government’s financial support for start-ups? Are you happy with developments?

    This support was and remains extremely important. At HTGF, we quickly put into place a framework that enables us to leverage these “rescue funds” as part of our follow-up investments. We’ve already seen the investment of tens of millions of euros through this programme. I’m happy with these developments and I think it’s really good news that it is being extended. Originally, it was only set to run until the end of 2020. This has now been extended until 30 June 2021.

    Let’s consider June 2021 for a second. What do you think the situation will be for the start-up scene in Germany by then?

    I’m optimistic. In spite of the crisis, 2020 was a good year for European start-ups. We shouldn’t overlook the fact that there were also some start-ups and companies that unfortunately didn’t make it due to the coronavirus crisis. It’s also part and parcel of the start-up industry that some young companies simply don’t survive. That’s just the way it is. But the sector’s continued development despite the crisis and the inventiveness it has demonstrated shows that start-ups and innovation as a whole became even more important in 2020. I hope that in June 2021, this trend will have continued and the difficult months will be behind us – thanks in part to vaccinations that were developed by former start-ups such as Biontech.

    The coronavirus pandemic has had an accelerating effect on digitalisation. What would be your advice to Germany’s major companies and medium-sized enterprises?

    I can only advise all these companies to get on board with the digitalisation drive. At HTGF, we work with many family businesses, medium-sized enterprises and companies as fund investors. Together with us, they always have an eye out for the latest and most innovative developments in the start-up scene. And our exits show that this type of collaboration is worthwhile.

    Aside from MYR, can you point to any other examples?

    The sale of our portfolio company Emma, for instance, an e-commerce platform for mattresses that has developed into a very successful sleep company over the years. One of our fund investors, Haniel, acquired Emma this year. This was a huge success for the start-up, Haniel and, of course, for us. Because ultimately, whilst we are Europe’s most active seed investor, we also see it as our role to expand the entire ecosystem and the network that connects it. And we’ve been very successful in doing so. 

    Gilead Sciences, Inc. (Nasdaq: GILD) and MYR GmbH (MYR) announced that the companies have entered into a definitive agreement pursuant to which Gilead will acquire MYR for approximately €1.15 bn in cash, payable upon closing of the transaction plus a potential future milestone payment of up to €0.3 bn million (both payments subject to customary adjustments).

    Closing of the transaction is subject to expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and receipt of merger control approvals in certain European jurisdictions.

  • How passion and expertise led to a billion-euro exit

    How passion and expertise led to a billion-euro exit

    How passion and expertise led to a billion-euro exit

    As a High-Tech Gründerfonds (HTGF) partner, Dr. Bernd Goergen has just signed the most successful exit in HTGF history. US pharmaceutical company Gilead Sciences is set to acquire German biotech start-up MYR for roughly EUR 1.15 billion. In this interview, he speaks about the fight against Hepatitis D, drug development and his own personal successes.

    Bernd, congratulations are in order! In 2011, HTGF took up a stake in MYR. And now you’re about to close a billion-euro deal. And yet you’ve said that there was an even more important moment in your own personal history with MYR. What was it?

    The exit is obviously really great, truly fantastic, and I’m delighted. You might say that the sale is the icing on the cake. But it’s also true that perhaps the nicest moment came on 31 July 2020. It was late at night when I received the news that the drug, which MYR had taken from preclinical development to market launch, had received conditional approval from the European Medicines Agency. I got the champagne bottle out the very next morning.

    What type of drug is it?

    It’s called Hepcludex ® and it’s the first and only approved drug to treat chronic hepatitis D infections. Around 15 to 20 million people worldwide suffer from this disease and they will now be able to receive treatment.

    Investments in life science companies often represent very long-term gambles. Numerous studies need to take place before a drug is approved. A lot can go wrong on the path to an exit. So what convinced you with MYR?

    We got to know the founders in 2009. They had a really strong team. On the one hand you had Dr. Alexander Alexandrov, an expert with a great deal of experience and expertise in the field of drug development. On the other hand you had Dr. Jörn Möller, a co-founder who contributed a lot of financial expertise and formed the organisational backbone of the company. The scientific concept and the data that had been published back then were already excellent. So we initially invested EUR 500,000 in 2011 to get the company up on its feet and acquire further capital, which successfully took place.

    Isn’t developing these types of drugs quite capital-intensive?

    Yes, it costs money, but MYR worked extremely efficiently. For a long time, the company consisted of just the two founders. Even today, it only has around 35 employees. After the exit, I spoke to the original inventor of the active ingredient, Professor Stefan Urban, who is still researching hepatitis viruses at Heidelberg University Hospital.  He compared the progress of MYR with that of a marathon runner who runs barefoot for almost 42 km and who the public only take notice of with surprise when he runs into the stadium for the last lap without any shoes on and wins the race. I think this is a really fitting analogy.

    What makes this new drug so special?

    Firstly, it’s important to know that people only ever have hepatitis D in combination with hepatitis B. Most investors probably expected that a cure would be found sooner for hepatitis B, which, in theory, would also solve the hepatitis D problem. However, this ignores the fact that there are millions of people who suffer from a chronic hepatitis D infection and who need to be helped. To this day, there is no cure for hepatitis B. I think that the appeal of the market and MYR’s speed of development was simply underestimated. Right from an early stage, however, we were convinced that it would make sense to do something about the smaller indication, hepatitis D, to see whether the drug could also be used to treat hepatitis B.

    Why was that?

    Hepatitis D is a bit of a scrounger. In order to replicate, it requires the shell of the hepatitis B virus, which it essentially “steals”. Hepcludex ® is what is known as an entry inhibitor. It works by blocking the docking stations on the liver cell surface and thus prevents the spread of the virus from cell to cell. Since the shells are identical, it is, in theory, a highly innovative approach to treating both viruses. However, the biology of the hepatitis B virus is much more complex, which is why a combination of several antiviral strategies is possibly the only path to successful treatment. Hepcludex ® might play an important part in this process, but there is a lack of clinical evidence so far.

    You’re a hepatitis expert yourself. Did your expertise help you with the investment?

    Definitely. Over the course of my degree and doctoral thesis, as well as my time as a postdoc and seven years of marketing in the field of hepatitis diagnostics, I was able to develop a strong understanding of the illness and establish a network of key thinkers on the issue. I also dealt with the subject in my subsequent time as an investment banker.
    However, when it comes to investing, having in-depth technological expertise in a particular field means there’s always a danger that you’ll focus more on the risks and less on the opportunities, because you know about everything that might go wrong. I’ve dedicated the majority of my professional life to this subject and it seems as if we’ve struck the right balance at HTGF. 

    So this is also why the day the drug was approved was so important for you?

    Like I said, I’m delighted about the exit. But the day the drug was approved was much more important for the people who’ll now receive treatment with the new drug.

    Bernd, thank you so much for speaking to us.

    * Gilead will acquire MYR for roughly EUR 1.15 billion in cash, which is payable on closing, in addition to a milestone payment of up to EUR 0.3 billion (both payments subject to customary adjustments). The closing of the transaction is subject to the expiration or termination of the waiting period according to the Hart–Scott–Rodino Antitrust Improvement Act and the receipt of merger control approvals in several European countries.

  • Successful Internationalisation

    Successful Internationalisation

    Successful Internationalisation

    Markus Kurch joined Crealytics as Chief Operating Officer in 2013. He was given the important task of internationalising the online marketing specialist’s business. Today, Crealytics has offices in New York, London and Berlin. In this interview, Kurch and HTGF Partner Romy Schnelle talk about their successes and setbacks and explain how the analytical approach adopted by the search engine advertising (SEA) specialist might serve as a blueprint for other founders seeking to internationalise their business.

    Romy, HTGF has held a stake in Crealytics since 2009. Had the internationalisation of the business been planned from the start? 

    Romy: Right from the start, Crealytics was available as a software solution for search engine advertising in various languages. You could therefore say that internationalisation was in the company’s DNA. In addition, Crealytics had acquired an international client at an early stage in the shape of fashion label Asos. In 2013, we were already managing 15 markets for Asos. And we had a very international team, even back then.

    So how did things get started?

    Markus: At first, we conducted a thorough analysis of our business and decided that we should primarily concentrate on major clients. This was more in line with our orientation as a company and was also the better business model.

    Romy: That’s right, we took a clear decision to focus on targeting big companies as clients. We called it “elephant hunting”.

    Markus: And, of course, we studied the international markets very closely in order to decide where we wanted to expand. We contemplated the idea of Brazil and South East Asia, but naturally also considered Europe and the USA. At the same time, we made English the official language of the company. This enabled us to be closer to clients and to attract excellent personnel from around the world. 

    In the end, you opted for an office in London. Why not South East Asia or Brazil?

    Markus: As mentioned, we were looking to target major clients. So we did our research on the markets of these various countries. Online retailers or brands are crucial clients for us. In many South East Asian countries, however, there is just one dominant player in each country. We would have had to handle the various retailers differently in each country. That would have been a really inefficient way of doing things. And in China, Google – which was our major focus back then – was not particularly well-established, despite there being many providers there. We even sent a colleague to Brazil just to test the waters, but after three months we realised that there aren’t enough major clients there for our business.

    And in London, you already had a client in the shape of Asos.

    Romy: That’s right. But I just want to emphasise that the move to open up an office in London was not based on a random decision. It was instead the result of an in-depth analysis that Markus just alluded to. This is something that start-ups which go abroad should take to heart. And they have to know that even then, not everything will work out immediately. This was certainly the case at Crealytics.

    What happened?

    Romy: We didn’t have any luck with the first Chief Sales Officers we hired in London, although they could have been considered top hires in terms of expertise and experience.

    Markus: We had top-quality candidates, but unfortunately it didn’t work out on two occasions. We learnt that we definitely need to send someone from Germany to the city where we’re opening an office. That’s why our founder and CEO Andreas Reiffen upped sticks to New York with his family.

    In 2014, you set up an office London; in 2016 one in New York. What was your approach there?

    Markus: I’d studied in the USA and also written my dissertation about German companies in the USA in cooperation with the German Chambers of Commerce Abroad (AHK). The AHK was therefore a good first point of contact. It also runs a five-day programme (STEP NYC) for start-ups. Through this programme I was able to make the relevant contacts and meet headhunters. We also took part in the German Accelerator programme. However, our CEO didn’t yet have a visa and therefore couldn’t be there for the official start of the programme in July.

    So what did you do?

    Markus: We sent an intern who’d been with us for a month. He was subsequently going to work full-time for us for four years – and now he’s just set up his own company. And we hired a Chief Sales Officer from New York before our official launch in the USA. Neither of them knew the company particularly well at that stage and yet they had to introduce Crealytics on their first day of the German Accelerator. Our CSO would later jokingly say: “I did what every red blooded American would have done, I made it all up.”

    And did things start to pick up in the USA from that point onwards?

    Romy: To be honest with you, the first two years in the USA were a bit quiet. Things had been different in London, despite the initial recruitment problems. In this kind of situation, it really helped that Crealytics kept us investors in the loop and in the end, they delivered. Trust is key in these situations.

    Markus: You should also know that it took us six to nine months before we secured a client. What’s more, nobody had heard of us in the USA. I recall that we had the chance to pitch to Staples. At that point, we’d perhaps only been active in the USA for six months. I’m still convinced that Staples knew back then we were the best provider for them. But, of course, we were the riskiest option. We were just a wild start-up from Germany up against other established providers. So that didn’t work out at the first attempt. Today, however, Staples is one of our biggest clients.

    So the message here is that internationalisation requires time, patience and perseverance?

    Romy: Yes, in addition to reliability and the ability to build relations and look after clients. These are the basics in life really. But they’re really important ingredients for the internationalisation of a business. And don’t give up on one market too quickly to go looking for the next one.

    Today, Crealytics generates one third of its sales in the UK, one third in the USA and the rest in Europe. So the internationalisation drive was a success. How did your collaboration contribute to this success?

    Romy: Good cooperation is important. This isn’t just the case for internationalisation. When we decide to invest in a start-up, we focus on a specific target to work towards. There’s no one perfect strategy, meaning it’s important to exchange ideas. What’s generally important, however – and this is the foundation of our cooperation with Crealytics – is to always adopt an approach of mutual respect and appreciation. Especially in challenging times.


    Markus: That’s right. We were always able to speak openly with HTGF, particularly when things weren’t going well. It’s not about just communicating when things are going well; you have to have an honest discussion about future plans and together analyse what steps to take next. This is something that has been a great help – even beyond our internationalisation drive.

    Markus and Romy’s five tips for all start-ups looking to internationalise their business 

    1. Ask yourselves why you really want to internationalise your business and whether this is something you can implement on an organisational level. Define clear goals and make sure to time things right.  
    2. Analyse your target markets very closely and consider which country promises truly relevant business for your company. Don’t aim to do too much at once. It often makes more sense to set up in just one other important market rather than opening up five offices at once.  
    3. Keep in close contact with your office abroad, for instance by getting an experienced member of your management team to take up a permanent position in the new office.
    4. Make sure to take on the right people where your offices are located. Are they a good match for your company and the culture of your business? Are you launching with a good salesperson or a partner who will sell your products? 
    5. Make use of suitable programmes that will support you in internationalising your business. Invest time in setting up a local network, which you will then need to look after. And don’t forget that for all your perseverance, you’ll also need to show a bit of patience.  

  • Pivoting to become the market leader

    Pivoting to become the market leader

    Pivoting to become the market leader

    In this interview, Ralf Rottmann, Managing Director and founder of grandcentrix, and HTGF Partner Markus Kreßmann talk about how grandcentrix made a radical departure from its original business idea to become a leading IoT solutions provider – and why HTGF was the only conceivable investor for the team of founders.

    Markus, HTGF was the sole investor in grandcentrix. The exit took place just under a year ago, in November 2019, when Vodafone completed a takeover of the company, which has since gone on to establish itself as the leading IoT solutions provider in Germany. Is this the kind of success story that investors dream of?

    Markus: Absolutely. Not just on a business level, but also a personal one. Ralf and I have become great friends. We’ve gone through crises and challenges together, getting to know each other really well in the process.

    Ralf: I couldn’t agree more. And I can say right from the off that if we’d have had a different investor to High-Tech Gründerfonds, things would have gone differently. And we, the founders, would have probably suffered at least one burnout along the way. But our partnership was luckily a really good fit and HTGF was a real tower of strength for us.

    How did things get started?

    Ralf: grandcentrix originally consisted of myself and three other founders. When we came up with our business idea, the smartphone had just become programmable. And although it might be hard to believe now, back then it was unclear whether the smartphone would establish itself on the market. Only 30,000 smartphones had been sold in Germany at the time and surfing the internet on your phone was really expensive. Nevertheless, we had faith in its development and took a really strategic approach to the market.

    What was your idea?

    Ralf: We wanted to develop a platform that would enable larger SMEs in particular to take their solutions and business processes to mobile internet in the form of apps. In short, we wanted to develop an SaaS platform. We came up with a business plan and presented it to investors.

    Markus: Which luckily included us, since you spoke to a lot of investors. We were able to win out in the end. We really made an effort to make an impression, as the team of founders was more than promising, very experienced and the pitch deck was extremely professional. It would not be an exaggeration to say that we – the investors – pitched to you. We then closed a financing deal in March 2010.

    Sounds like you got off to a good start. At what point did the crises you mentioned earlier start looming?

    Ralf: In terms of business, things were running extremely well from the offset. We secured major, high-profile clients really quickly, particularly from the media and publishing industries. But these contracts were all about IT project business. So we ended up slipping into the service sector.

    Although you actually wanted to develop an SaaS platform?

    Ralf: Exactly. But instead of pursuing this development, we ended up taking on an increasing number of orders, hiring more developers and sales were rising. At the same time, we were acutely aware of the fact that this was kind of taking us in the wrong direction.

    How did HTGF react to this change of course so soon after providing the financing?

    Markus: Both we and the team at grandcentrix were, of course, delighted by the high sales in the first two years. But the costs were also increasing enormously, being spent on more personnel, more office space, etc. And none of this had been part of the business plan in which we’d invested. So we spoke to the founders, discussed a great deal and continuously challenged this development. 

    Ralf: It was a difficult time. We didn’t want to be a service provider, and IT project business can be extremely tedious. At the same time, an increasing number of start-ups had been set up in the USA with the same original idea as us and who were working with whole different levels of funding, as is typical for the market there. Internally, there was a great deal of pressure. But HTGF luckily gave us the time we needed. I dread to think what would have happened if we’d have had a VC that had pushed us to pursue Series A funding after just one month.

    Where did things go from there?

    Ralf: Myself and Martin Willow, one of our co-founders, took the decision in 2015 to make the pivot official and exclusively concentrate on the service sector. We also wanted to solely focus on industry clients. The decision was a tough one and led to disagreements between us founders. Things went so far that a long-term friend and co-founder ended up dropping out in what was a very painful process and we haven’t spoken since.

    How did you react to this decision at HTGF? By this point it had ultimately become clear that you wouldn’t be getting the product you’d originally invested in.

    Markus: That’s right. But this wasn’t a decision that was taken overnight; it was the result of years of discussion. We could see that the founders had tried everything and made sacrifices. And they again presented a very analytical concept for the pivot.

    What did it entail?

    Markus: The term “IoT” wasn’t in use back then, but we were in the early stages of such developments. You could see that an increasing number of industry clients would have to make use of networking technologies and the products were becoming more intelligent. And grandcentrix had the knowledge and experience to support companies across the entire value chain – from the development of electronics to a secure cloud service and their display on smart devices. This was what convinced us.

    And did the plan work out right away?

    Ralf: As soon as we reached this decision internally, we continued to grow very quickly and profitably. We were able to secure key corporations and industrial SMEs as clients within a short space of time. And with the support of HTGF, we were then able to set up a very good management team. We really started to have fun from that point onwards.

    So how did it come to the exit?

    Ralf: We weren’t actively looking for a buyer at the time, as things were working really well for us. But we were always open to the idea and had already spoken to Markus about it. Our first contact with Vodafone – which was on the lookout for an IoT service provider – was also set up by HTGF, who guided and supported us through the entire process.

    And you’re still in contact one year later?

    Ralf: Of course. We recently met up with Markus again because we want to become more involved in the ideas of founders as an angel investor. Ultimately, we know just how important it is to have someone believe in you.

    Markus: And that’s what it’s all about for us: bringing successful founders and up-and-comers together so that they can expand their knowledge. This is the key to a successful and sustainable start-up ecosystem.

    Thank you for your time!