Venture Capital in Bavaria: A Conversation with Roman Huber from Bayern Kapital
Roman Huber has been the Managing Director of Bayern Kapital GmbH, the venture capital company of the State of Bavaria headquartered in Landshut, since 2006. In a conversation with Munich Startup, he answered some of our questions.
Mr. Huber, please give us a short introduction to Bayern Kapital GmbH!
As the venture capital company for the State of Bavaria, we support young, innovative high-tech companies in Bavaria by providing equity capital. We were founded in 1995, and we are a fully-owned subsidiary of LfA Förderbank Bayern. To date, we have invested more than 210 million euros of equity capital in about 235 innovative, technology-oriented companies. That has created more than 5000 additional jobs in Bavaria.
What do you consider classic success factors for startup founders?
Founders need technical competence, strong motivation and endurance. They also need a market and sales focus as well as team spirit and a collaborative approach.
“The focus is always on the customer”
What factors determine whether you will invest in a startup or preferably stay away from it?
In general, we are interested in technology-based startups. The founders should ask themselves why, and at what price, someone should be interested in buying the product. The focus of a successful company is always on the customer. What do the customers want, and what benefits them? There needs to be fundamental market demand for a new technology or service. In addition to the business idea, we look at the personalities and skills of the startup team.
Which industries do you think have the best prospects for the future?
We specialize in financing future technologies. For us, that includes life sciences, software & IT, medical technology, existing and new materials, nanotechnology and environmental technology.
In your opinion, what are the most common mistakes that founders make? Is there a very simple mistake that could be easy to avoid, but that many people make?
One common mistake is that a young entrepreneur forgets to translate a very good business plan into detailed project management. Or only focuses his or her innovative activities on specific customer benefits at a very late stage. We help people avoid mistakes right from the start by asking important questions. For instance: “Is the ‘freedom to operate’ study underway? Do the interim results show any problems with foreign patents? Is there a conclusive price-benefit argument for customer acquisition? And so on.
What does the perfect pitch look like to you, and how can founders catapult themselves right into the abyss?
In addition to having an innovative business idea, it is good if you can explain it clearly. The customer benefit should be a big part of it. Also, a clear and logical distribution of responsibilities within the startup team is always helpful. People who explain technical details at length and don’t seem to have any concept of the target customer are definitely not there yet.
Innovation and startup centers have a positive effect
How has Bavaria’s startup landscape changed in the last 20 years?
Across Bavaria, the startup scene has become much more lively and has grown significantly. In addition, it is much more professional, for instance thanks to business plan competitions, founder consulting services, and investor networks.
Why do you have a positive opinion of the current situation for startups in Munich and Bavaria? Where do you think there is still room for action or improvement?
The long-term state initiatives in the regions – I’m thinking of the innovation and startup centers and cluster policies – have an impressive positive impact, as shown by increased startup activities and network formation. But even Bavaria has its downsides sometimes, for instance compared to the United States. In particular, small and medium-sized enterprises could put their innovations on the market more quickly if the capital markets for those companies were more effective. In the United States, investors are still more open to innovative business approaches.
Have you worked with any startups that you particularly remember, and if so, why?
With 16 IPOs and 24 trade sales, it’s hard to choose. What they all had in common was a long-term, trusting collaboration, even during the inevitable difficult phases.
Thank you for the interview!