According to Crunchbase there are approximately 123 Venture Capital (VC) organisations in Berlin. This list is mixed with accelerators, incubators and actual VCs – therefore it isn’t really accurate. But we know Berlin doesn’t suffer from a lack of funding. Ernst & Young’s Startup Barometer Europe shows that in the first half of 2018 compared to the same period in 2019 investments rose 19 percent in Germany. And the country ranked third last year with an investment volume of almost €2.7 billion (behind France in first position with close to €2.8 billion). So why do Berlin startups have to close their doors? Undoubtedly there is a funding mismatch at play.
The ‘let’s take advantage’ game
No one in Germany asks for anything unless it is absolutely necessary. When German founders pitch, in my opinion, they have already done the cross-analysis with potential customers and they are asking for what they need to deliver the product or service these interested customers want. This is why I take German founders seriously. But what happens? An investment of €30,000 for seven percent equity. Once we stop this, we may be onto something. Being a VC is not the same as offering bank loans. If I was a founder, I would go to a bank if I wanted terms that were truly not enabling me to be successful.
Why we should take Berlin founders seriously, especially the German ones…
To become a founder takes discipline and courage and if you are a German founder it takes a lot to be culturally disruptive. When I’m being pitched to by a German founder, I take their ask very seriously. Five out of ten pitches I would probably do my best to provide them with what they are asking for – if they knew how to communicate their value proposition.
Advice for those seeking money and giving money
Founders: share what is protected, value your ideas, believe in your success, stay humble.
Investors: please stop using the risk-takers to educate you on new business markets and consider supporting founders on how to build their audience and sell their products/services.
Lawyers: protect brilliant minds.
Consultants: take money once the founders have raised money, don’t be greedy!
Who are the good guys?
Funding the future is not easy. Let’s be honest it is a roll of the dice. However, there are some good guys out there. Some investors who have my utmost respect. My list of investor qualities to look out for: accessibility and responsiveness, good character, humble, know how to enable, put founders first, have great mission statements and who mentor and strive to build teams that mirror the world we live in. There are several VCs doing great things in Berlin, but these six have made an impression on me the last four years I’ve lived here. They’re also founder-favourites.
June Fund was founded by David Rosskamp (ex Earlybird). This research-driven investment firm is led by a highly qualified businessman who is both technical and creative. The fund has invested in companies such as Grover, SimScale, Wefarm and Blockstack.
Creandum was founded in 2003 by Stefan Lindeberg in Stockholm. Creandum has offices in San Francisco and Berlin. Notable investments include Voi, Spotify, iZettle, TicTail, Careship, Klarna, Comtravo and more.
Blue Yard Capital is an early-stage investor and was founded by Ciarán O’Leary and Jason Whitmire who met while they were at Earlybird. The firm has invested in Meatable (my favorite investment), a company that grows meat cells in a laboratory, Vectary and others.
HV Holtzbrinck Ventures was founded in 2000 by Lars Langusch and spans the investment areas of early and late stage, private equity and seed investments. Investments include Limehome, Scoutbee, Sanity Group and more. They have already been quite active in 2020.
Earlybird. This Berlin firm was founded in 1997 by Cem Sertoglu, Christian Nagel, Hendrik Brandis, Roland Manger and Rolf Mathies, these guys know what they are doing. N26, Freight Hub, Xain, Arthro Kinetics, Amaxa Biosystems, Alantos, Wunderlist, carpooling.com and more. Earlybird has implemented the Leader for Climate Action Sustainability Clause, and they hire good people. Most importantly, they present a good product.
Cherry Ventures. This firm was founded by Filip Dames, Daniel P. Glasner and Christian Meermann. Notable investments include: Kitchen Stories, Flixbus, Infarm, Sanity Group, Hologate and more. I may be a bit biased (I sit on a board with one of the founders and I am an ex-neighbour), but … #foundersfirst catches my attention.
That’s all folks. See you next week.
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