The Munich investment firm Target Partners is turning twenty this year. That makes it high time for Munich Startup to conduct an interview with the venture capitalists. With a volume of funds amounting to 300 million euros, the company has invested in Munich startups such as Tado, the superconductor company Theva and the indoor digitizer Navvis. The VC investment company sees itself as an equal partner and is not very impressed by short-term speculation. Kurt Müller, one of the partners, in our “A talk with” interview.
Please introduce yourself!
Target Partners is a tech-focused, early stage B2B investor in Munich that manages 300 million euros worth of capital. We’ve been active as a team for nearly twenty years. The team is made up of successful entrepreneurs, technologists, managers and investors from Europe and the US who have founded or managed companies and developed or sold tech products.
Favorite sectors: software, the Cloud, optoelectronics and IoT
What are your preferred areas of investment?
We focus on tech markets that are ready for innovations and radical change. That usually means companies in tech sectors that are growing significantly, such as in enterprise software, cloud infrastructure technologies, optoelectronics or the Internet of Things. We predominantly invest in young tech companies in the German speaking realm in early stages and support the founders in the various stages of their life cycle.
Do you scout out promising companies yourself or do you have consultants do it?
Our deal flow has a passive and an active aspect. We receive an average of 120 inquiries every month — that’s the passive part. The richest source for new deals is our own network, which we’ve maintained and established for several decades. It is composed of personal contacts to successful businesspeople and CTOs as well as business angels, other VCs and co-investors. They’re the ones who often make successful introductions, because they generally know what’s a good fit for us.
We also actively look for new deals. We use outbound marketing or go to developer conferences, meetings and workshops. We also always have an eye on the sectors that interest us.
“We help startups avoid mistakes”
Do startups need to be worried about you getting too involved?
No. We see ourselves as a partner and want to support founders in developing their companies, for instance when it comes to strategy, fundraising or international expansion. Startups can benefit from our experience because we help them avoid mistakes and have a large network to offer. We also know that every entrepreneur has to make their own decisions and gain their own experience — which is why we’re never active on an operational level.
Which stage is the best time for startups to contact you?
Target Partners invests in the early stage, and we initially invest between 0.5 and 3 million euros. We’re usually the first institutional investor and advise founders from the very beginning. We’re generally shareholders in a company for three to ten years. We’re not very impressed by short term speculation or hectic reactions in difficult times. We only want to sell our shares after the company has become a major success!
Target Partners as the first institutional investor
To be successful, a startup needs to…
…have an outstanding team. We invest in people. The more mature the idea, the more concrete the product, the better. But in early stages, business ideas are only as good as the members of the founding team that will implement them. It’s also always good for the members of the team to come from different backgrounds — complementary interests and skill sets have quite a few advantages to offer.
Tell us about a no-go factor in a pitch!
One of our decisive factors is for every team member to have a chance to speak during a pitch — we don’t like hearing 95 percent of it from the CEO. Because we invest in the team, we want to get to know all of the founders. We rarely make in investment if there’s no team spirit.
“We don’t give up that easily”
When have you seriously miscalculated a situation?
We’ve often had to face reality over the last twenty years. There are situations in which the market doesn’t develop as expected or the competition is stronger.
But we don’t give up that easily. And lots of founders realize on their own when things aren’t going as planned. A suggestion to change the business model then usually comes from them. We’ve successfully supported several of our startups in that kind of pivot. It happens and is not always a cause for concern.
The trend of the year is…
…deep learning! That’s massively parallelized machine learning, which is what has led to the current boom in artificial intelligence.
Last but not least: Whom should startups contact if they would like to meet with you?
Contact us directly, and the best way would be through a recommendation from our network. That increases the likelihood that we’ll get to know one another.