Interview With Dr. Michael Brandkamp, High-Tech Gründerfonds
The German venture capital industry has already made worse pictures than it currently does. In addition to success stories such as successful exits and the conclusion of rounds of financing in the double-digit millions, the industry is also growing in terms of the number of active investment companies. At the same time, wealthy individuals – probably also under the influence of the persistently low-interest environment – are discovering investments in innovative start-up companies.
What about the German venture capital scene in terms of the number of investors?
Brandkamp:How many active venture capital companies currently exist in Germany is hard to say. Fortunately, however, it can be stated that the bottom has passed. In 2015, the fund-raising of venture capital funds was about the same as their investments. In the years before, more money was regularly invested than new ones collected. In addition, you can currently see some new players on the market. In addition, the climate for entrepreneurship in Germany is significantly better than it was just a few years ago – the biggest driver of this change is, of course, the boom surrounding the Berlin start-up scene. All of this means that we expect a clear surplus in fundraising for the current year compared to the investments.
How do the business angels and venture capital companies spread across Germany? Where are concentrations?
Brandkamp:Due to the booming start-up scene, many venture capital investors are currently settling in Berlin. The second important location is still Munich. The situation is similar in the case of business angels: there are a large number of young private investors in Berlin who are now investing in start-ups after one or two successful exits. And also in and around Munich sits a lot of entrepreneurial capital, which is, however, mostly “older” than that in Berlin. Added to this are the family offices from the Hamburg area, which are also investing more and more in innovative start-ups. Good news: Recently we also noticed increasing activities of business angels from Baden-Württemberg and the region around Stuttgart.
How is it possible to get foreign investors to Germany?
Brandkamp: Germany – with Berlin at the top – has developed an enormous international appeal in recent months. In addition, ecosystems are increasingly interconnected. Through this exchange, the investors are also aware of German start-ups and want to participate in them. With our own portfolio company, we try to accelerate this development and go on roadshows with them to Paris or London. The most important countries of origin of venture capital for German technology companies are Great Britain, the USA, France and the Netherlands – the latter especially in the field of life sciences.
You have recently started fundraising for the HTGF III. How is the interest of the industry in start-ups ordered?
Brandkamp: Especially those companies that feel a high pressure to innovate are very interested in start-ups. This is also because the dynamics of the digital transformation is increasing. This in turn means that large companies are overwhelmed internally with the speed at which business models evolve and change and are looking for innovation from outside. We are therefore attracting a great deal of interest from large and medium-sized companies.