It’s been a long road from starting a school newspaper to becoming a business angel. That’s something Martin Giese knows only too well, as a negotiation coach, investor, lecturer by trade and a startup-enthusiast in general. We spoke with him to find out what is important to him as a business angel, the tips he has to share with young entrepreneurs and how he assesses the local startup landscape.
Martin, please introduce yourself briefly and tell us a little about your background!
I’m a business angel and have been a self-employed negotiation coach and consultant for a year now with a focus on startups and innovation.
I gained initial entrepreneurial experience when I was fourteen years old by starting a school newspaper that I financed with ad sales for five years. I became more enthusiastic about startups and negotiation topics in the late 90s after my time in the US where I spent three years studying at Harvard and MIT and was involved with a startup (Frictionless Commerce – later purchased by SAP).
I then worked full-time in the telecommunications industry for 15 years where I was involved in shaping Kabel Deutschland’s success story. We developed the new business segments digital pay TV and broadband coverage through cable TV from the first pilot projects to more than 1 billion euros in annual sales. On that basis, we were able to successfully list the company on the stock market in 2010 despite the financial crisis. Acquisition by Vodafone followed in 2013 with successive integration into the Vodafone Group.
My role began in the summer of 2002 as a consultant to the private equity buyers for the purchase of the cable network from Telekom. After my involvement in product development in digital TV, I then switched to management in 2004 with management functions in marketing, sales reporting, business intelligence, controlling. Then for five years until the summer of 2017, I worked as the managing director of the rapidly growing cable call center subsidiary with 1,700 of my own employees. During that same time, I also held management functions involving integration in Vodafone’s call center for several years.
I always maintained my connections with startups on the side. I’ve been teaching at the Center for Digital Technology and Management (CDTM) of Ludwig Maximilian University of Munich (LMU) and the Technical University of Munich (TU) since 2000, which is also where I found my first angel investment in 2003 (Primo Espresso).
Up to 100 pitches each month
What does your daily routine look like now?
That’s the nice part about being self-employed: Every day is different. I spend about half my time working on concrete projects or teaching. For example, I’m currently coordinating a German SME’s preparation for their IPO, and am heading a series of negotiation workshops in Berlin, Vienna, Zurich, Frankfurt and Munich for startups in the European Climate-KIC initiative.
I spend the rest of the week tending to my investments as needed and give myself a lot of time to research the startup scene as a participant, speaker, juror, moderator, potential investor or mentor/coach in the most varied scenarios. I now see about 50-100 pitches from fresh startups every month.
What motivates you to be a business angel?
The opportunity to contribute to exciting projects at an early stage. I’m fascinated by the ideas and the drive to pursue them. When you test out an idea that seems plausible on real customers for the first time, you can learn an incredible amount very quickly — it’s better than any kind of executive training. And then if there’s suddenly a demand, a phase of growth begins that involves exciting hands-on, organizational and analytic challenges.
Tired of “hot air”
What’s important to you when working with a startup? What kind of companies do you find interesting?
Because I invest my own money, I don’t have any set formal prerequisites and look at a diverse range of teams and projects. Some core elements, however, are:
- I have to understand the product and the added value for customers. The team also has to be able to prove this point has been validated by many discussions with potential customers.
• I have to understand how you can earn money with it at some point. In essence, it’s a matter of whether a unit of the product can be developed and sold in the medium term for far less than a realistic price point.
• The team needs to be competent and likeable — after all, we’re going to be spending a few years together “in good times and in bad.” An important dimension of that is how the team deals with feedback.
• A major bonus point is also if I have a clear picture in my head of how I can be useful beyond providing capital.
What is an absolute no-go for you for startups?
“Hot air.” And unfortunately, there’s a lot of it. It starts with products without sufficient customer feedback and continues with unrealistic time schedules, imaginary business plans and bizarre concepts of valuation.
Another important aspect for me is for startups not to think that my lack of interest in making an investment is a negative assessment. I invest in less than 1 out of 100 startups that I get to know. That means I have to quickly prioritize where I invest my time in really getting to know a startup, in due diligence and in negotiations.
Don’t underestimate the impact made by role models
Several successful companies have emerged from the Center for Digital Technology and Management (CDTM) where you’ve taught for a number of years. What’s the secret to success?
The quality of the students who apply to the program from TU and LMU is a very important basic ingredient. From the several hundred who apply each semester, approximately 25 students are selected who learn the important basics. That includes:
- Working in teams, especially economists working with engineers/computer scientists
• Trend and market analysis, product development, negotiation training, product management
Something that shouldn’t be underestimated is the impact made by the examples set by former graduates. On top of that, many of the successful founders from previous years are extremely active at CDTM as mentors/investors.
An ecosystem needs to develop — it’s going in the right direction
A common complaint is that there are not enough investors in Germany. Why do you think that not as much money is invested in companies here than in the US, for example?
I think it’s necessary to take a closer look when comparing Germany with the US. If you talk about ideal conditions in the US, then you’re actually thinking about a handful of successful clusters, in particular Silicon Valley and the area around MIT & Harvard in Boston.
But projects like CDTM, UnternehmerTUM and the LMU Entrepreneurship Center show that the same kind of ecosystem can also be deliberately promoted, especially when key success factors like top universities and a strong industrial base already exist. Developing an ecosystem is a process that takes years and decades until it’s fully effective – but it’s going in the right direction.
From a business angel’s perspective: Do you have demands/wishes for the political realm?
There’s a lot to do, especially in the area of digitization of schools and administration and in promoting a positive corporate culture. But I also think a lot of great progress has been made, for example EXIST grants for young founders, or the INVEST program for promoting business angels.
Diverse support programs in Munich
As a mentor, you have a good handle on the Munich startup scene: How would you assess the scene, and what is still missing or what is the location lacking to become even more attractive and suitable for startups?
After a year of intensive field research in the Munich ecosystem, I’m impressed by the breadth and quality of support programs and also by the positive and cooperative basic attitude of everyone involved. What perhaps is missing is a clear overview of the different programs – I’m constantly discovering new things and experience time and again that founders often are not even aware of relevant programs that are a good match for them. I would be happy to answer inquiries here about my impressions of the different programs.
Thank you for the interview!