How to Pitch a VC

Today I found a very interesting as well as funny presentation. It’s explaining how a pitch in front of a Venture Capital investor should be. Maybe it is in some parts slightly exaggerated but at the end it’s really getting to the point. I hope that a lot founders will read this presentation and will change their approach and their pitch.

We would have much more fun…

Investments in 2009

During the last 12 months I was responsible for three investments. The start-ups are active in three different markets but all of them have some of their roots in Munich. All three start-ups have a very strong technology which gives them a competitive edge compared to their competitors and most importantly all founders of the three start-ups are serial and successful entrepreneurs. This shows somehow that Munich is still a very active start-up cluster in German – especially when it comes down to technology and not pure Web 2.0 and consumer Internet cases.

www.scoreloop.com

Mobile social gaming technology provider

Located in Munich (Germany)

Scoreloop develops the infrastructure technologies to help their partners improve the gaming experience with global high scores, player challenges, and by connecting friends by leveraging social networks. They expressly do not create own games, but instead focus on providing solutions for game developers, publishers, and operators who want to build their communities and drive game discovery. Scoreloop was founded in 2008 and is headquartered in Munich, Germany with offices in the US and Asia. Its seasoned management team builds on a successful track record in large-scale payment and security systems for Fortune 500 corporations. They combine the unique skill set of expertise in high-volume server infrastructures with a passion for improving the end-user experience.

www.hetras.com

Hotel management software (SaaS)

Located in Zell am See (Austria) and Munich (Germany)

hetras is a privately owned company, founded in 2007 by Michael Heinze in the traditional Austrian resort town of Zell am See. The hetras team members come from around the world and bring a wide range of hospitality experience – from small, privately owned hotels through to large hotel chains and major CRS providers. This knowledge is intrinsically incorporated in the architectural and functional uniqueness of the hetras product. So it’s no wonder that we are said to have hotel business in our blood. A team of high-ranking industry experts includes Keith Gruen, co-founder of Fidelio Software, and Johannes Steszgal founder of Austria’s leading Spa Software.

www.greenology-solutions.com

Green IT – Software to reduce the power consumption of IT infrastructures

Located in Boston (USA) and Munich (Germany)

Greenology helps companies to significantly reduce their energy costs. Their products visualize, monitor and actively control power consumption in corporate networks across all connected devices. They believe that the future is about efficient networks, smart buildings and responsible companies. Behind Greenology is a team of seasoned entrepreneurs with a strong background in enterprise software, security and networking infrastructure. They have worked across the globe for great companies like IBM, HP, CA, Internet Security Systems, Enterasys and others.

2009 from a German VC’s perspective

The German Internet start-up battle

There is lots of noise in Berlin. Numerous Internet start-ups have been founded and seed-funded in the last years. 2009 was dominated by new (mainly copied) ecommerce cases. As an early stage VC investor (Target Partners) who sees the majority of the investment cases in Germany it was quite astonishing to see the “rat-race” which is currently taking place. The German Internet and ecommerce incubator scene was ruled from the European Founders for some years. Due to the fact that this concept seems to work others tried to copy this approach. The result is that three or even more incubator organizations are often competing with their start-ups today. A good example is the battle of the German copy-cats Sponsorpay, Gratispay and Deal United. Every start-up is supported from a different incubator an is doing more or less the same.

I highly respect the power and the experience of all involved people – in the supported start-ups as well as in the incubator organizations. But I am honestly asking myself if it is a good thing or a waste of resources that such kind of competition looks sometimes like an end in itself. Well, time will tell and in the meantime we all have some interesting things to observe.

The deal flow in 2009

This year was really an interesting one. We’ve seen more deals than ever before. Statistically the ratio of pure Internet case has decreased and the percentage of technology cases has increased. Which is a good tendency because we believe that technology can make the difference. If I compare the deal flow in 2009 with the deal flow some years ago it is more than obvious that the German start-up market is growing. There is no proof but I think this is the result of various causes, e.g.:

• Public stories about successful entrepreneurs are motivating other people
• Active business angels are supporting entrepreneurs and their ideas
• Social media are connecting and inspiring entrepreneurs
• Seed investments are possible again because of the establishment of the High-Tech-Gruenderfonds and some business angel networks

I hope that this trend will continue.

The investments in 2009

Will be posted in some days…

A day in the Internet

No words are necessary. Just have a look and think about how a day without the Internet would be…

German Seed and Early Stage Investors’ Meeting

The ‘Hightech-Gründerfonds’ (HTGF), a German public-private Seed investor located in Bonn, organized a conference with almost all active German Seed and Early Stage investors today in Bonn. We discussed the situation of Seed cases, potential follow-on investments and how the public investors can work together with the private VCs.

The HTGF has generated an impressive deal flow and is really reinforcing the Seed investments in start-ups in Germany since its foundation in 2005. I think it is a much better situation for young start-ups today.

Thank you Michael, Alexander and the entire team in Bonn.

Ten Technologies You Can’t Afford to Ignore in 2010

Gartner analyst David Cearley gave some advices how to deal with the  top trends coming in 2010 that companies should incorporate into their strategic planning, if not necessarily their own computer systems.

The full list of 10:

1. cloud computing
2. advanced analytics
3. client computing
4. IT for green
5. reshaping the data center
6. social computing
7. security–activity monitoring
8. flash memory
9. virtualization for availability
10. mobile applications.

If I compare these technologies and trends with the potential investment cases we are working on or even with the entire deal flow we are receiving I can see similarities.

Digital trends 2010 – 10 things that’ll become prevalent

Pete Cashmore (founder of Mashable.com and definitely a guy who knows what he’s talking about) and presents his view of the top trends in the web for 2010:

1. Real time web: the web experience (consumption & production) will become more and more instant
2. Localization: Information in the web will be linked to local data and thereby open a whole new level for the internet
3. Augmented reality: a layer between the real and the digital world will become platform for untold experiences
4. Content curation: Be it your social graph or professional curators, filtering information is and becomes more and more crucial
5. Cloud computing: data and even applications won’t stay on your computer much longer
6. Internet TV & movies: this area of entertainment will more and more migrate to the web
7. Convergence: why carry more than one device with you?
8. Social gaming
9. Mobile payments: as everything becomes digital and real time a proper solution for payments on the go will break through
10. Fame abundance & privacy scarcity: What you wanna do when they come for you?

Complete article on CNN here: http://bit.ly/7QSGfl

Interesting video with facts and figures about the mobile convergence

long story short: the paradigm shift is still going on

2, 6, 18 – the Magic Numbers in a startup’s business plan

After we’ve screened hundreds of business plans and after we’ve discussed countless cases I would like to share some interesting as well as astonishing key findings of one of my partners Berthold von Freyberg.

There are Magic Numbers in the business plans of startups, numbers that are chasing us, numbers that are always there. Sometimes we are waiting or even expecting to run into these numbers when we are reading a business plan. When a management team is presenting the business case we are getting thrilled if they come up with these numbers.

After Berthold recognized these patterns and told us about it I checked my own old business plans and I amazingly found some of these numbers.

• Are these numbers a sign for successful startups or just an accidentally calculated pattern?
• Should every startup have these numbers in their business plan?
• Are these numbers important for a VC?
• And most importantly are these numbers stable?

Ok – enough with the foreplay! Here is the pattern of the Magic Numbers. This pattern is not scientifically generated; it’s just based on experience.

• 2 million (EUR) investment is needed in the A-round
• 6 months sales-cycle
• 18 months competitive edge

2 million (EUR) investment is needed in the A-round

Why is a majority of the start-ups seeking for EUR 2m in the A round? Maybe because it is common knowledge that a VC likes to invest EUR 1 – 3m in the first round. Double-check your cash requirements. If you need more – ask for more. If you need less – talk to your potential investor.

6 months sales-cycle

Whether enterprise software or clean tech technology – most often the business plan shows a sales-cycle of 3 to 9 months and the sales-pipe calculation is based on an average sales-cycle of 6 months. To be honest, I made this mistake in one of my start-ups; I took 6 months into account. At the end we were facing 9 up to 10 months and we ran into cash-flow problems. Here comes my advice: try to be honest, not only because of the potential investor. It is even more important for your financial planning. Talk to experienced sales executives in your industry and find the correct number.

18 months competitive edge

Sure – it is sometimes complicated to estimate the head start of the own company in relation to its competitors. But why is it so often 18 months. Because it is not generally understandable we will ask for the reasons. So, be prepared and try to evaluate the correct competitive edge.

Entrepreneur – a rather new career path in Germany

When I finished my studies in 1992 I can’t remember a single fellow student who was planning to become an entrepreneur after the exam. Even in the classes nobody was focusing on this potential career path. The tutors were always talking about careers at the big enterprises.

Fast forward to today – 17 years!

Today, the entrepreneurship centers and classes of the important universities are established and overcrowded. New additional business schools have opened the doors; students are joining start-ups for an internship and are not only interested in the big brands and enterprises. More and more students aren’t just joining start-ups after they finished their studies or – even better – they’re creating start-ups.

But there is still much to accomplish if we compare this positive trend with the business schools and universities in the US. In order to positively infect the students with the idea to become an entrepreneur the students have to see and to listen to more successful entrepreneurs during their studies. The professors can teach the theory but sharing the entrepreneurial experiences is crucial and important to motivate even more students to neglect offers from the big consultancies and investment banks (well, these offers are blessedly not that much interesting anymore).