To find out what matters to investors when it comes to startups and how to attract more venture capital to Germany, we spoke with Daniel Vukovic from Munich Venture Partners. He also let us know about an absolute no-go when starting a company.
Please introduce yourself. Who are you, and what do you do at Munich Venture Partners?
As an investment associate, I am involved in many processes on both an investment and fund level. One of my tasks is to support companies such as Electrochaea GmbH and Prolupin GmbH. I am also a scout for deal flow sourcing and, like my colleagues, I visit events in Germany and Europe to meet new startups and discover new trends.
Always be flexible!
Which factors are decisive for you when investing in a startup?
The team is most important, and different factors play a role in the team. In addition to professional and entrepreneurial skills, operative excellence is also necessary. Defined structures and processes are also essential. They make it possible to quickly turn visions into reality, while also allowing a company to grow and make lean adaptations on the fly if necessary. The idea itself must be supported by exceptional technology, scalable, and have the right timing. With all these factors in place, a startup can control their own development and make in-house adjustments to ensure continuous and steady evolution. If the envisaged solution then also manages to sustainably break up existing value chains, then we at Munich Venture Partners consider that to be a transformative technology and see potential for possible investment.
What is the biggest general mistake a startup can make?
Not being flexible enough — nothing can be considered sacred when it comes to company development, and you need to constantly question yourself. A key to success is your willingness to develop or even reinvent yourself and your solution. For example, the market might not accept the business model as you anticipated, or market requirements might change during the development cycle. And even if a concept is well accepted, it is imperative for a startup to constantly adapt in order to keep up with the market and continue to build on its lead.
To be successful, a startup needs to…
have these three characteristics:
- fiercely believe in yourself and your idea,
- be able to sell well and
- persevere — both with regard to the product and during rounds of financing
“We need major exits in Germany and across Europe”
Which current trends do you find promising in the startup world?
The hottest trends are without a doubt the Internet of Things (IoT) in terms of different verticals. That being said, subjects such as artificial intelligence, blockchain and robotics are also very interesting at the moment.
What needs to change to attract more venture capital to Germany?
We definitely need major exits in Germany and across Europe. That is the only way to make sure the VC ecosystem will flourish and continue to grow. Exits free up more expertise and capital, which additionally improves the quality of the startup landscape and strengthens everyone in the ecosystem as a result. Experiencing that kind of achievement is important. It is a cycle that needs input. We need to be braver about developing startups into major players. In the future, those startups will remember how they achieved their success and know the startup ecosystem has even more promising solutions to offer. Moreover, the German economy also needs to be braver when it comes to “trade sales,” otherwise the selling out of promising technology in Europe will continue.
Munich offers everything a startup could wish for
Why and for whom are startups so important these days?
Startups are the engine for tomorrow’s society: they are a key factor for Germany maintaining its innovative strength.
Why is Munich fertile ground for startups? What do you value in particular?
Munich offers startups everything they could wish for — a large VC network, an array of incubators and accelerators, a good infrastructure (e.g. universities) and many blue chip corporations. Munich also has as a multitude of talented individuals and founders along with a culture that promotes hard work and a down-to-earth attitude.
Which of your current investments shows the greatest potential?
Our portfolio company relayr is one of the rock stars in the world of IoT platforms. Their solutions for the industry are causing a major stir. Another one of our investment highlights is the Allgäu-based company sonnen. The team has quite a few established companies worried since they are redefining the value chain in the energy market and currently turning the market upside down. In addition to other fantastic companies in our portfolio, Electrochaea from Planegg should also be mentioned. With their power-to-gas solutions, they are one of the market leaders in the field of biological methanation and offer answers for large-scale energy storage and CO2 recycling. I am certain we will be hearing a lot more positive news about them.
Thank you for the interview!