A breeding ground for European entrepreneurs, Berlin has a knack for producing a lot of new startups: the city attracts top international, diverse talent, and it is packed with investors, events and accelerators. Also important: it’s a more affordable place to live and work when compared to many other cities in the region.
Berlin ranked 10th place in the 2019 Global Ecosystem Report, trailing behind only two other European cities: London and Paris. It’s home to unicorns such as N26, Zalando, HelloFresh and pioneers of the scene such as SoundCloud.
Top VCs include Earlybird, Point Nine, Project A, Rocket Internet, Holtzbrinck Ventures and accelerators such as Axel Springer Plug and Play Accelerator, hub:raum and The Family.
To get a sense of how the novel coronavirus has changed the landscape, we asked ten investors to give us an insight into their thinking during these pivotal times:
- Jeannette zu Fürstenberg, founding partner, La Famiglia
- Jorge Fonturbel, associate, Target Global
- Luis Shemtov, founding partner, Lunar Ventures
- Mike Lobanov, founding partner, Target Global
- Ludwig Ensthaler, founding partner, 468 Capital
- Mathias Ockenfels, partner, Speedinvest
- Axel Bard Bringéus, partner, EQT Ventures
- Eckhardt Weber, managing partner, Heal Capital
- Joerg Rheinboldt, managing partner, APX Axel Springer Porsche GmbH & Co. KG
- Christian O. Edler, partner, Christianedler.com
Jeannette zu Fürstenberg, La Famiglia
What trends are you most excited about investing in, generally?
Generally, we believe in a future in which we can leverage technology to free up humans from repetitive and tedious work and to empower them to shift their focus to what they consider more meaningful and impactful: that is creative and interpersonal activities. Thus, we are excited about founders working towards that future and finding answers across multiple industries, such as manufacturing or logistics, across all working-classes, and across different eras – before, during and after COVID.
What’s your latest, most exciting investment?
One of the recent additions of our new fund is Luminovo, a Munich-based company that develops a solution in the electronics industry to reduce the time and resources needed to go from an idea to a market-ready circuit board.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
So far, we have only scratched the surface of the kind of efficiency gains that can potentially be achieved – particularly in industries that were considered to be boring and sluggish in the past, such as insurance or logistics. Even small improvements driven by technology can have a massive direct impact on P&L.
What are you looking for in your next investment, in general?
In general, we love to back visionary founders in the seed-stage that tap into giant industries with a high potential for digitization across Europe and the US.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
COVID has sprung a myriad of companies in the communication and collaboration space into existence. While we believe in a future in which products and processes will be inherently remote-first, we will see a consolidation of that space that only allows for an oligopolistic market structure similar to how there is only one Zoom and Google Meet in the video communication space today.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We have always considered ourselves as one of the few funds in Germany with a significant investment footprint both in Europe and the US. COVID has emphasized that we are able to invest entirely remotely and hence we will continue and even increase our activities across multiple hubs, such as Munich, Paris, or London.
Which industries in your city and region seem well-positioned to thrive, or not long-term? What are companies you are excited about (your portfolio or not), which founders?
Germany’s economy relies on wealthy traditional companies sitting on top of capital to be unlocked which new entrants can make use of. This has been true before 2020, and COVID will only demand more and accelerated innovation across these traditional industries ranging from automotive, manufacturing, to the chemical industry.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Berlin and other German cities have consistently proven to develop and grow new leaders across multiple categories such as banking (N26), mobility (Flixbus and Lilium), or data analytics (Celonis). This is certainly driven by a mix of talents coming out of world-class educational institutions, the relative low cost of living in tech hubs, and large local incumbents with massive capital to invest and spend.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
While COVID has accelerated remote-first products and processes, we still believe that people will flock back to startup hubs such as Berlin or Munich, especially given the relatively low cost of living compared to other tech hubs like San Francisco. Nevertheless, we will continue to see an increasing number of companies scattered across multiple time zones building products that are inherently remote first, regardless where the general work environment will shift into.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
We are lucky in that our investment focus has been on sector verticals such as Logistics, Supply chain, manufacturing or the future of work, which have all captured significant tailwind from Covid.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
While our investment strategy on a high level will not change, we are putting longer sales cycles into consideration as potential customers of our portfolio companies now are focusing on capital efficiency which also holds true for our founders. Thus, we advise them to focus on extending the runway both by increasing capital efficiency as well as taking on additional funding.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
As our economy is still in the midst of dealing with the effects of COVID, it is too early to tell, but we definitely see positive indications driven by efforts of portfolio companies that could adapt quickly and shipped features catered to the current needs. One example is Personio, which extended their HR offerings with features that solve the need of customers who shifted to short-time work.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
What gave me hope was the cohesion of the German economy that fought together for solutions and support during these difficult times. One positive example was the German Startup Association that helped achieve additional governmental financial aid for German SMEs.
Any other thoughts you want to share with TechCrunch readers?
Similar to how the past financial crisis allowed companies such as Stripe or Shopify to become ubiquitous parts of our daily life, these unprecedented times now will also give birth to new forms and shapes in which new ideas will grow into large businesses and we are excited to partner up with founders willing to take a bet on that future.
Jorge Fonturbel, Target Global
Which trends are you most excited about investing in, generally?
Mobility, logistics, automotive, industry automation, supply chain.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
70% Europe and Israel, 30% rest of world.
Luis Shemtov, Lunar Ventures
Which trends are you most excited about investing in, generally?
We invest in the overlap of deep tech and software. in 2020 we’re focused on low data machine learning, private computation, shift to MLops, edge cloud, dev tools consumerization expanding into other software fields.
What’s your latest, most exciting investment?
Latest is Neurolabs.eu — developing a platform for computer vision synthetic data.
What are you looking for in your next investment, in general?
Pre-seed/seed global minded technical founders.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We’re Europe-wide, less than half in Berlin.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Berlin is rapidly evolving from its consumer/rocket past into a global hub for diversified software technology.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
At pre-seed stages, there are still major advantages to hubs by A stage and Silicon Valley by B stage, which remote work cannot solve.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
None. We invest in hard software. Some go-to-market strategies slowed down, but we’re not seeing correlation so far.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
So far most of the portfolio startups have accelerated. The biggest worry is investor behavior in line with the LP fundraising environment uncertainty for seed/Series A.
Mike Lobanov, Target Global
Which trends are you most excited about investing in, generally?
Fintech.
What’s your latest, most exciting investment?
Rapyd.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Cross-border B2B payments using blockchain.
What are you looking for in your next investment, in general?
We are looking at $1 billion outcomes with strong teams that have proven they can build stuff.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Lending and general insurtech look to be oversaturated.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We are investing about 40% in Germany while all else goes to Israel, U.K. and other places.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not)? Which founders?
Raisin (really well-done on German market), Rapyd (Israel), Thriva (U.K.), and Copper (U.K.).
How should investors in other cities think about the overall investment climate and opportunities in your city?
The opportunities are as good as ever.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes, but I would not overplay it. What really has happened is the major shift to online and this is BIG — the pandemic already did and will do more for the IT industry than both Apple and Microsoft did.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
I would do a consolidation play in B2B travel — those small agents are wiped out and it is time to put this industry online.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We are really doing business as usual — Corona is a type of beer.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
We see them in around 70% of companies. All strong companies are benefiting substantially.
Ludwig Ensthaler, 468 Capital
Which trends are you most excited about investing in, generally?
AI, open source, productivity, marketplaces.
What’s your latest, most exciting investment?
Frequenz.com, Vectornator, TalentSpace.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
There has to be a true alternative to the established ERPs (SAP and so forth) at some point but barriers to entry are so high.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Positive. Berlin has produced Delivery Hero ($20 billion market cap), Zalando ($15 billion) and HelloFresh (approaching $10 billion). So the city produces lasting success stories. This current wave is more product focused, more global from day one and more tech. I think it stands a good chance to yield even bigger companies
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes, I think remote work is real and here to stay.
Mathias Ockenfels, Speedinvest
Which trends are you most excited about investing in, generally?
I lead our network effects team at Speedinvest, so I’m particularly excited about marketplaces and platforms, i.e., business models with the potential to develop strong network effects — both B2B and B2C. Our team is agnostic to specific industries or markets, but we have a number of trends that play into our thesis that we closely monitor and follow such as creator (aka passion economy), social shopping, climate tech and sustainability, construction, procurement, govtech, health and well-being, and the future of work.
What’s your latest, most exciting investment?
One of our most recent investments that we are very excited about is German-based Schüttflix, a B2B platform for construction materials such as sand and gravel.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Climate tech is still in its infancy and there is much more to come. Also, COVID-19 has revealed how far behind many governments around the world are when it comes to digitization, which has proven the need for strong digital public services — for citizens and companies alike. However, there are still not many tech companies building services explicitly for local governments and authorities, so we expect more movement in that space. Alongside a general trend of “consumerization of software,” we also believe that B2B platforms will increasingly look and feel like consumer apps — a good example from our portfolio is Heroes.Jobs, which could be described as the “TikTok of jobs.”
What are you looking for in your next investment, in general?
Considering the early stage at which we’re investing (pre-seed and seed), the team continues to be one of the most important factors that we base our decisions on. This is an “evergreen” that will never change for us. In times of high uncertainty, prior (founding) experience will certainly play an increasingly important role, too.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
I’ve never been a big believer in crypto or the blockchain. For me, it always was and continues to be a choice of technology to achieve the ultimate goal of solving a real problem. Unfortunately, many people decided to build a company in the crypto space for the sake of “being in crypto,” not to solve a big problem that could (only) be addressed by blockchain as a technology. Maybe now that the hype is over, this will separate the wheat from the chaff?
Also, and this will come of no surprise, in times of COVID-19 and economic uncertainty, travel tech companies will continue to be under pressure.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
The Network Effects team works from Speedinvest offices in Vienna, London, Berlin and Munich. We’ve made about 75% of our investments within these hubs, and more than half specifically in London and Berlin. While a local focus is very important to us, we do not shy away from making investments in what other investors may consider “fringe” locations, such as Utah in the U.S., Helsinki or Warsaw.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not)? Which founders?
Berlin continues to be a major hub for fintechs — despite not having a strong finance ecosystem. It also has a strong base of consumer tech companies, such as Zalando, Lieferando/TakeAway and Delivery Hero, but has seen a surge in more B2B-oriented startups in recent years.
I believe the startup ecosystem in Berlin will continue to grow and become even more diverse, as it attracts great talent from across the world and becomes a go-to “playground” for entrepreneurs. As the first batch of successful B2B founders are exiting their companies and inspiring other entrepreneurs, I expect more opportunities in the B2B space in the future.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Berlin has seen a tremendous surge in entrepreneurial activity and, related to that, in investment over the recent years. Additionally, many VCs have either been created here or moved their offices/headquarters to the city. Currently, there are well over 20 VC offices in walking distance from our Berlin office. The tech startup ecosystem is at the heart of the Berlin economy and has created some of the largest companies and employers of the city in recent years. This will continue to create massive opportunities and investors should continue to be bullish about Berlin.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
At least for Berlin, we currently observe the opposite: Many founders with international backgrounds (e.g., U.S. or U.K.) consider moving here due to the unstable situation in their own cities. Berlin is a large city surrounded by “empty” countryside. It ranks very well against other major European hubs on population density, while still having a significantly lower cost of living compared to other, large European cities.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Weaker: Any market or segment that connects the offline and online worlds, i.e., has and will always have a physical component, such as a booking platform for gym classes.
Opportunities: For those who can afford it, this is a great opportunity to actually repair and/or “change the engine” while the airplane is still on the ground without major implications — rather than at 40,000 feet in the air. Hence, I would encourage everyone to seize the opportunity and build the product they have always wanted to build but never dared to release. This is your time!
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID-19 hasn’t significantly impacted our strategy, as our founders are usually focussed on building their product for the first 12 to 18 months after investment. The main worries are ensuring businesses have enough runway and what the investment landscape will look like when they near the end of that runway.
Our advice to startups is always to keep a disciplined focus on the core of the business; now is not the time for side projects or distractions. Fiscal prudence now will be key to helping founders withstand any unforeseen circumstances the future might hold.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, especially among companies or products that help other companies deliver their services online, e.g., in the fields of e-commerce, video, mobility, etc.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
We’ve had three major rounds of funding within our portfolio close in the middle of the pandemic. One of which took a lot of unexpected turns, was quite complicated, and took a lot of time and effort. But, it eventually turned out very well.
Any other thoughts you want to share with TechCrunch readers?
I would like to use this as an opportunity to express my deep respect and gratitude to all our founders and their employees for their incredible grit, courage and hard work over the last few months.
Axel Bard Bringéus, EQT Ventures
Which trends are you most excited about investing in, generally?
Consumer trends and companies solving problems for SMEs, so providing access to services and solutions previously only accessible to large enterprises or not at all as they’re completely new. Companies that rethink how a problem is solved. Personal areas of interest also include fitness tech and journalism/media.
What’s your latest, most exciting investment?
Last year we invested in BEAT81, a fitness tech company in the midst of changing how people work out. No more stuffy gyms! The company is a consumer fitness company, but it’s just as much, or maybe even more, a coach company solving the pains and motivations of the modern fitness instructor. BEAT81 provides coaches with tech tools that help organise and administer training sessions, schedules and payments, but also with data and insights, which enables them to adapt and improve their classes. With data-based feedback for coaches and participants, and gamification, it’s a fun and safe way to workout. It’s challenging times currently, but on the other hand the concept also works perfectly in these times.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Particularly in light of the coronavirus pandemic, the importance of media has become increasingly apparent. Journalism has been destroyed by the free advertising model and social media. There are exciting things emerging but it’s a field where a lot more can and should be done.
What are you looking for in your next investment, in general?
Founders with experience who found in order to solve a problem from their experience or knowledge rather than founding for the sake of founding. I also look for simplicity, as well as modern and diverse teams.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
I don’t think we should look too much at competition, but these times have definitely highlighted the necessity of robust business models. Of course, many companies aren’t to blame for their woes in light of the coronavirus pandemic but, as the saying goes, when the tide goes back you see who’s wearing swimwear or not. Robust business models with recurring revenues win!
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not)? Which founders?
Germany has gone from an e-commerce and marketing technology monoculture to becoming very diverse, with some regional differences. For example, more industrial tech and B2B in Munich and more consumer in Berlin. There are also a lot more creative companies now. I’m also excited about more diversity — it’s still lacking and there’s a lot more work to be done.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Germany is economically robust and will continue to produce many founders, possibly as other less robust regions suffer. The investment climate remains strong — I haven’t seen a huge difference in Berlin.
Eckhardt Weber, Heal Capital
Which trends are you most excited about investing in, generally?
Heal Capital invests in promising digital business models at the convergence between health care and technology. Specific investment areas are: Data-driven health care solutions, fundamental basis technologies for the health care market as well as digital health infrastructure and enablers.
What’s your latest, most exciting investment?
We invested in a digital platform designed to connect medical professionals and make their daily life easier. Siilo helps teams of physicians, nurses and other medical experts communicate with each other while improving clinical collaboration, levering productivity, reducing costs and improving their patients’ treatments. Some call it the WhatsApp or Slack of health care, which is a fair way of explaining what it does. The great thing about their solution is the way they take an existing user experience and adjust it to a professional setting and its requirements, thereby digitalizing health care from its ground up.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Our overall feeling is that, given the complexity of the health care market and the high standards for any product to go-to-market, companies focus more and more on industry niches to succeed — which is good, to a certain degree. On the flip side, we are not seeing as much “big visions” with end-to-end solutions yet, which the market definitely needs. But that is what we are here for: to back those visions that shape our health care experiences for decades to come.
What are you looking for in your next investment, in general?
Heal Capital’s sweet spot is to invest initially around €3 million per company around the Series A stage. We are looking for founders that are targeting the next breakthroughs in diagnostics, prevention and potential treatment of the most relevant diseases as well as for groundbreaking analysis technologies to improve patient outcomes. This usually goes hand in hand with teams focusing on increasing the efficiency and effectiveness of the health care system via digitalization, in particular with respect to the full patient journey and the integration and interoperability of systems.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
We looked quite extensively at the AI radiology space but have not made an investment yet. However, our CRM now includes around 80+ companies in this space and each one wants to become the platform solution in the end. Therefore, the company that comes out on top really needs it all: a great team, great traction and great investor dynamics. Furthermore, we like all solutions that combat chronic diseases, especially those that try to get their users to go through behavioral changes. These solutions have to be assessed more carefully though. Long-term user engagement in this area is more difficult to achieve as many people do not really like to change their habits.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Heal Capital is a European VC with a focus on the German health care market. However, we are open to support international companies in their market entry here as well as any other country throughout Europe. We do not have any distribution requirements with respect to any hub or market. The funding environment requires international category champions, our strong German network can therefore be a nice base to start from. Plus, German health care regulations are opening up more and more to digital solutions.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not)? Which founders?
Currently, Germany is very strong in providing RCT-based digital therapeutics. A new digital care act has been implemented that makes the reimbursement of such solutions possible for 83 million people. Additionally, Germany has always been strong in the medtech and pharma area. Therefore, we see very interesting new solutions and a great ecosystem in digitally adjacent products. If we look to Europe, especially to the U.K., Nordics and Spain, we see that patients and providers accept digital solutions much more, which makes for an impressive traction of digital solutions.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Berlin is a great hub, bringing together a whole world of driven entrepreneurs as well as great product and tech experts. It is also a thriving investor space with policy makers just a mile away, which is a great advantage in the health care area. We basically have everything and everyone we need to advance innovative ideas in one place.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Germany always had great hubs outside of Berlin, especially in the field of health care. Collaboration and investments beyond major cities have definitely increased through more virtual pitching and communication. However, being in a major hub has many advantages that play out and probably will play out in the future, be it convenient lunch dates, events outside or just meeting for coffee around the corner. This goes beyond the pure startup industry, meaning the investors, the industry and their hubs as well as policy makers and the like. So yes, everybody is coming closer together, but I still would not want to miss being in Berlin.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
I guess health care is at the forefront of positive COVID-19 business developments and that applies to classical life sciences as well as pure digital solutions nowadays. Especially telehealth has seen a spike and we are currently evaluating how that will shift consumer and provider behavior in the long run. We noticed a mindset shift for sure and are positive that there will be an overall move to more digital diagnostics as well as therapeutics.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID-19 did not impact our investment strategy drastically, as health care is well-positioned. Sometimes the rounds get even more competitive though as other industries are less sought after by VCs at the moment. However, we also see the overall economic implications trickling down to early-stage ventures, i.e., providers are rather looking for cost-cutting solutions than broad IT investments that return over the next years. So, sales and trials are a bit of a downturn. But in Germany, currently, everything seems to be back on track.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
We just started investing this year, so not with regard to our existing portfolio. Our first investment is profiting off the accelerated trend of digital communication in health care though.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The key majority of people in Germany and Europe seem to adjust to the challenges of post-COVID-19 working environments. This really gives me hope: For us as a team, working remote may have even helped us to focus on a lot of key topics better. We are currently partly remote, partly in the office. Of course, we are in our own bubble of investments and tech and many other industries are or have been struggling. However, a lot of those other industries appear to be very innovative, even inventive on how to cope with the situation. So, in general, we are hopeful that all the amazing companies out there will come through, and we are looking forward to working with more amazing people.
Any other thoughts you want to share with TechCrunch readers?
Given the situation right now, I just want to encourage everybody to take matters in their own hands and use digital solutions like video calls to reach out to people, experts, investors, etc. and get something off the ground. I firmly believe that innovation will help us get through the pandemic.
Joerg Rheinboldt, APX Axel Springer Porsche GmbH & Co. KG
Which trends are you most excited about investing in, generally?
We invest in very early startups with digital, user-centric business models across industries, and we are looking for the best teams with ambitions of making a positive impact and creating a healthier, more sustainable future — whether that’s within mobility, media, fashion, lifestyle, health, etc. Last year, we started a digital health initiative to help bridge the gap between innovation and commercialization around digital health in Berlin, and more broadly, Germany — thus, digital health startups are highly welcome at APX.
What’s your latest, most exciting investment?
This month we invested in five companies, and of course, as an investor, we find all our investments extremely exciting!
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We think that the reorganization of work and life will bring a lot of opportunities for founders. A lot of companies will work (even) more virtual, distributed and digital, offering potential for new tools and services. Also, in our private lives, we will use more digital services to organize our lives, stay in touch and buy or get access to the things we need. The development of new infrastructures like faster network connections and devices with stronger computing power will allow new applications and services as well.
What are you looking for in your next investment, in general?
To us, investing is mainly about the people. As we are investing so early we usually work with the founders and an idea. Of course we are looking for scalable digital ideas and business models but our focus is on people who truly believe in their idea. This is why we don’t believe in the power of an elevator pitch but rather look for in-depth conversations with the founding teams to truly get to know them.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
This differs in every market, but in general we believe that you can start a great and successful company in any industry if you are the right team with the right idea at the right time.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We look at “regional” focus in another way: Our goal is to provide meaningful support to the teams we invest in. Our tailor-made program and support for the startup has multiple dimensions — only one of them is office space in Berlin, another very important one is our network, which is extremely strong in all over Europe and Israel. Therefore, we don’t focus on investing only in Berlin-based startups.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Berlin is characterized by a fast-growing startup scene and a successful infrastructure for promotion and financing. Last year, 59% of the venture capital invested in Germany went to Berlin. The Berlin ecosystem also stands out in the national comparison through a high level of entrepreneurial experience: The share of serial founders is 47.3% and thus significantly above the national average (39.8%) (Berlin Startup Monitor 2020). But besides all the numbers, we also think that Berlin is one of the best places to live on this planet despite having no mountains or ocean. ;-)
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Even before the pandemic, the startup ecosystem has become more diverse and inclusive: More and more startups are also founded in rural areas, metropolises are not the only hot spots anymore. The startups landscape broadens across Germany. We want to support founders no matter where they are located as they can easily join our program remotely.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
We expect to see innovation that emanates from the fields of public health and epidemiology and also increased interest in technological solutions in the fields of medicine, virology and immunology, of course. We also see changes in how people use digital technologies: more people are buying online, the silver surfers are finally using digital technologies, people want to get reliable and trustworthy information and news. And people spend more time online because the way we spend our time has shifted.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We have, so far, invested in over 20 companies this year. Every month, we are looking at a three-digit number of teams and invest in one to five of them. As an investor, it is as relevant as ever for us to be meeting founders and to be signing term sheets — only now fully virtual. We are continuously looking for strong founding teams with incredible ideas and sustainable, digital business models.
So far, we experience that the follow-on rounds (seed stage and A rounds) are a bit harder to organize since some business angels in Europe have stopped investing and some VCs have slowed their investments in new companies as they are waiting to figure out how things will develop. In general, there’s still capital around and we hope that the ecosystem will recover soon. But still, these are very difficult times and the impact on the startup scene is dependent on the scale of the economic damage. If our economies are severely damaged with lots of companies going out of business and lots of people losing their jobs, this might also have a more severe impact on the startup ecosystem.
Our advice to our startups has been to have a good financing strategy, not waste money but rather focus on sustainable growth, show relevant traction as fast as they can, manage their cost structure responsibly and do financing rounds that help them to grow their business. To be honest: This has been our advice ever since.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
After we had our first fully virtual all-hand meetings with the startups and the APX team, I received feedback from both founders and colleagues that we have never been “so close” before in a professional and human way. I think there are a lot of chances in combining real-world and digital connection formats to create well-performing and sustainable organizations.
Christian O. Edler, Christianedler.com
Which trends are you most excited about investing in, generally?
Longevity, impact investments, biotech, esports, igaming, fintech.
What’s your latest, most exciting investment?
Epic Games, Choco, Mission Barns.
What are you looking for in your next investment, in general?
Companies with a unique selling point and unfair advantage.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Less than 50%.
Which industries in your city and region seem well-positioned to thrive, or not, long-term? What are companies you are excited about (your portfolio or not)? Which founders?
Founders of Airbnb, founder of Revolut, founder of Mission Barns, founder of Novo Nutrients.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Highly possible.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
My advice was always to have a run-rate of 18 months. Cash management is important now.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The really good companies still grow. That is a positive outlook. COVID-19 helped us to in four months be in 2030.