The Munich investment firm MIG has invested some 500 million euros in startups like Konux, Navvis and Kewazo, as well as in medtech companies like Amsilk. In 2018, MIG accompanied the cloud telephone company NFON when it went public. What is important to the investors? We asked Michael Motschmann, General Partner and Member of the Executive Board at MIG.
What are your preferred areas of investment?
The MIG funds managed by MIG have been invested in roughly forty high-tech startups since 2004. In the past, our main areas of focus were biotechnology and medical technology. Our latest investments concentrate heavily on digitization. Our shareholdings cover a relatively broad range. In addition to the business idea, however, we also always have to be impressed by the executive team.
Do you scout out promising companies yourself or do you have consultants do it?
We naturally have our own network. Our partner team includes several knowledgeable experts who keep an eye on the scene and markets and also take part in the larger startup competitions as guests or also sometimes as jury members. Occasionally, of course, external professionals let us know about interesting startups. As one of the leading German VC investors, many young companies also contact us directly. We receive several hundred business plans every year, which we systematically analyze.
Investments with close contact to management
Do startups need to be worried about you getting too involved?
Our investment approach aims to be in very close contact with management. That’s why we closely check not only the business model, but also our compatibility with the company. We offer advice and assistance, but it is always given in a cooperative manner.
Which stage is the best time for startups to contact you?
We generally invest between one to ten million euros in new portfolio companies. That means we are on board both during the seed stage and as an early stage investor.
To be successful, a startup needs to…
…have an outstanding idea, to start. Like most VC investors, we also look for groundbreaking innovations that have the power to change markets. Entrepreneurial success, however, is more complex. Having a great kind of technology — meaning a product or service, without having any idea about how to get it to customers through sales and marketing — is not enough. At the same time, we also look from the very beginning to see if the companies we’re investing in already have an idea of how our exit might look.
Tell us about a no-go factor in a pitch!
There are a lot. We often see highly motivated founders overestimate what they can do, which means they underestimate the complexity of the road that lies ahead of them. Confidence is good – overconfidence, in contrast, doesn’t really help you tackle the diverse challenges presented by successful entrepreneurship.
Developments take longer than anticipated — that costs time and money
When have you seriously miscalculated a situation?
VC investors’ business models account for the fact that not every investment matures into a successful company. Developments often take longer than originally anticipated, and that costs not only time, but also money. Moreover, markets change and companies need to keep on top of them. That’s something we’ve experienced as well, but we always came to certain conclusions that have hopefully made us better. Despite thorough analysis, those kinds of risks will always exist.
Last but not least: Whom should startups contact if they would like to meet with you?
A pretty simple process on our website explains how interested young companies can contact us.