VC Meeting Frankfurt

Yesterday I attended the VC Meeting Frankfurt, a regular lunch event hosted by Aurelia Private Equity. I didn't have any expectations because it was my first time attending one these events. It turned out to be one of the larger and more valuable lunch events I've been to in Frankfurt. A very efficient program and solid networking opportunities. Of course my limited (none) understanding of German hampered my participation in asking questions of the presentations. 

The event gives me further hope there is a growing community of resources to help startups in the Frankfurt area, although many could have attended just for the free lunch. Most importantly I wanted to share with you the informative presentation E&Y gave on The Journey from Zero to IPO.  IPO as an exit route is at an all time high for European PE companies. That being said, public companies in Germany have suffered with after market performance relative to other exchanges, especially for technology companies. In addition transparency concerns along with performance force German companies to stay private or look elsewhere. Valuations are lofty and entrepreneurs should continue to use this to their advantage while they last.

Full deck here

The Pitch Club

One guarantee about startup pitch events is there will be excitement and passion as hopeful entrepreneurs give their elevator pitch over and over again. I got to see this first hand at the Pitch Club event held in Frankfurt recently. The contest brought selected inspiring startups from the local Rhein-Main region to 'pitch' to a crowd of investors. Entrepreneurs had 10 minutes to shine and then field questions from the audience. The quality of the presentations and business ideas were solid, on par with similar events in other regions. 

Notwithstanding the enthusiasm, a gap exists between the needs of the companies vs the investor funding and support in this region. Technology and talent are strong, but productizing to create commercial solutions is weak. In addition entrepreneurism means risk, and as Thomas Schulz wrote in his Spiegel article with Ben Horowitz - ‘Business failure is stigmatized in this country’. This is reflected in how startups are funded. They get enough capital to survive but not enough to attack opportunities. Startups become the 'living dead' by satisfying a niche as competitors gobble up the market share. As the article also points out, SAP is still the only German software company with international status. There is a reason for this, and it isn’t talent or technology.

@jogebauer drilled into the subject with a blog Why VC is Failing in Germany. His premise is that VCs "don't have the funds necessary to take risks". Seed and early stage investing is high risk, high reward and small cap VCs can't create a true portfolio to spread the risk across several startups. While there some merit to this premise, the root cause and fundamental issue is the engrained nature of not taking risks. 

The mentality needs to change. Do you agree?