The German Venture Capital Scene – league tables of most active German VCs – part of my European VC blog series

The German Venture Capital Scene – league tables of most active German VCs – part of my European VC blog series

Germany is the third largest market for venture capital in Europe after the UK and France. If you accept Scandinavia as one unified market then Germany comes in fourth place. Germany is the most populous and richest country in Europe and has the potential to move into number two or even number one position in Europe. Bolt on the German language speakers in Austria and Switzerland and you’ve got the workhorse of Europe with a solid GDP per capita. Germans are obsessed with education and advanced degrees. The result is more registered patents per capita than any other country in Europe. The concentration of patents per German in the Munich area is 7x the national average. Traditionally, Germans are risk averse, not a perfect fit for entrepreneurship, but that accurate stereotype is fading quickly.

Peter Thiel is one of my heroes, founder of PayPal, VC at The Founders Fund, early investor and board member of Facebook. Speaking at the German Silicon Valley Accelerator launch, he asserted that, historically, German companies sell early rather than stay the course to build a big stand-alone business. Any good company will receive offers to sell from time to time. Germans tend to take the money and move on, where American counterparts soldier on and sell later. Peter’s point is such early selling is inconsistent with the investment thesis of venture capital. He states that his fund, The Founders Fund, wants to invest in companies that can achieve a $500m or $1bn+ exit. Such exits pay venture returns and make up for the failures. Germans often sell at $10m, $30m or $85m.

When discussing Germany Pitch Johnson from Asset Management Ventures commented, “I don’t know if this is true anymore, but the price of failure was very high in Germany. If you start a company in Germany and fail, you may not go to jail, but you’re an outcast.”

SAP is a company that has bucked this trend. Peter closed his Accelerator launch remarks by noting that the Mittelstand that emerged in Germany in the early 1900’s never sold out, building what many historians credit for the Wirtschaftswunder, the miracle of economic recovery in post-WW II Germany. I think that German VCs will not match their non-German counterparts until successful German entrepreneurs become VCs. By that I mean that before German VCs will become more successful we need to see successful entrepreneurs start or join VC funds and move to the dark side. We are already seeing such entrepreneurs evolve with the Samwer Brothers’ European Entrepreneurs Fund, a Facebook investor, as well as Christian Saller moving from VC fund Target Partners to becoming an entrepreneur founding and selling Swoodoo to Kayak and then joining Holtzbrinck Ventures as a partner. But there is still a long way to go before the population of German VCs have entrepreneurial experience to match their American counterparts.

Burckhardt Bonello, cofounder of Smeet, a member of The Founders Club, told me that when he first went to see German VCs to raise money for Smeet the German VCs asked him, “So who is doing this in the US or the UK?” Burckhardt replied, “No one is doing this. We are unique.” The German VCs replied that they don’t back innovation. They were literally looking to back 100% copycats. Burckhardt managed to raise his series A from Partech International, a VC in Paris, and Hasso Plattner Venturs, the Potsdam venture arm of SAP’s founder, Hasso Plattner. Eran Davidson, who represented Hasso Plattner, is based in Potsdam, but is an Israeli.

All of Germany is highly industrialized, but the original high tech corridor of Germany has long been the beautiful Bavarian countryside surrounding lovingly restored Munich. Think Bayerische Motoren Werke AG (BMW), Siemens, Audi and many tech companies that sprang up around their supply chains. At a time in history when many of the world’s children want to be reality TV stars and no one is studying hard science in school, Germans are still pumping out engineers. So there are two things to know: Munich is a killer technology corridor that has traditionally been captured by big companies and can be harvested by VCs and startups; and Berlin has developed into a vibrant, cool cultural scene and a great low cost place to launch a mediatech startup, with armies of free interns willing to work for beer. Berlin is red hot, but most of the money is still in Munich. Earlybird VC has a presence Hamburg, but most of the VCs are clustered in Munich while trying to open offices in Berlin.


I have a personal connection to Berlin. When the Berlin Wall fell down in the autumn of 1989 I decided to move there as an exchange student and enrolled in a summer course to learn German and tested into an all German speaking program where I spent 10 months living in East and West Berlin studying at the Humboldt University and the Free University of West Berlin. I remember buying the U2 album “Achtung Baby” at Zoo Station and played the song in my lawn mower-powered East German Trabi car on a boom box with friends in the car as we pulled out of Zoo Station listening to the song “Zoo Station”. Berlin has changed more than any other city since then. More than other transformational cities Austin or Vegas over the same timeframe, but the new Berlin of today is as ultra-hip as the Berlin of 1991 and 1992 was one-moment-in-time Brigadoon cool. I am still good friends with my German then student roommates and have gotten to know most of the active VCs, super angles and many of the startups. The vibe for startups near Alexander Platz in Berlin is contagious to the point that each time I am there I have delusions of moving back to Berlin. A dollar or Euro spent in Berlin also seems to go 5 times further than the same dollar spent in San Francisco, New York or London; so Berlin has a killer advantage that the runway of funding goes much further. Given a choice of a night out on the town from SF, NYC, London or Berlin, I would choose Berlin every time. It’s just cooler and genuinely hip.

Let me introduce Jörg Sperling.

Jörg is a partner at WHEB Partners, member of The Founders Club advisory board and has closed five German cleantech investments during the past 18 months, takes a look what makes the German market so difficult for outsiders to penetrate.

MITTELSTAND:  Handle with Care – Jörg “George” Sperling, partner, WHEB Partners

Many private equity firms have tried and failed to crack the German market. Its bedrock of privately-owned regional manufacturing companies, the Mittelstand, has provided steady growth over the decades and even now – miraculously, some would say – is repatriating business from their low-cost Chinese rivals. A relentless increase in productivity, efficiency and quality has been driven not only by the need for exporters to keep up with a historically-strong currency but by ‘green’ legislation that has the effect of improving industrial efficiency (the German chemicals sector, for example, has become the envy of the world).

Good products, stable working conditions and a healthy domestic market should provide the perfect conditions for such companies to partner with private equity houses equipped with international networks. This is not least the case as the very presence of a large and well-stimulated domestic market can mean international opportunities have been passed over by such firms. And yet such partnerships are rarely seen – to the extent that Munich, Germany’s VC hub, has seen the withdrawal of some international private equity firms’ offices. Why is this?

The answer lies in the strengths and sensitivities of a typical Mittelstand company. Such a company is profitable and has a great product, a fact, which can only be confirmed by me knocking on their door. It has probably been cheaply banked for generations by the local Sparkasse (savings bank). The owner is likely to want to pass it on to their children much as they received it from their parents. For the owners of such a company, the risks of selling equity simply outweigh the rewards.

The implications are that Germany is a seller’s market for late-stage venture-capital deals – a ‘reverse dragon’s den’. The moment you lose sight of this fact, you are out of step with the market and destined to fail. It must go beyond merely opening an office – and doing so in a state capital rather than just Berlin or Frankfurt – but being ready to leave that office. Cold-calling or emailing will not only fail to yield results, it may even cause damage to your future prospects.

Instead, you must be willing to pack your bags for a week or more and tour the provinces in person. You must be prepared to arrive in a town knowing no one and respectfully ask for meetings with respected local intermediaries. Having built trust at that level, you may be onwardly introduced to possible investee companies – of the sort that are invisible to those sitting in Frankfurt skyscrapers. Indeed, to generate respect you should be able to demonstrate personal experience that extends beyond service industries or financial engineering into the hands-on running of a business. When leaving town – whether having found a target acquisition or not – you must aim to leave behind trusted, and signed, introducer relationships. WHEB’s single greatest asset in Germany is a network of over 70 such referral relationships in various remote localities.

If you do find an interesting company, you – as the investor – must create and sustain the rationale for an equity sale. Having done so, you need to demonstrate a second rationale that you are the right partner for that sale – indeed, it is more likely to be this that wins you the deal than the price or the terms. If others start competing on price, you must be willing to stick truthfully to a valuation that prices in your firm’s expertise and, in doing so, represents your LPs interests. I write from personal experience when I say that all deals are not won on price in this market. Reputation and credibility when presenting these rationales counts hugely. You need to be ready for an owner-manager to call up your entire German portfolio – unannounced – to get a confidential reference. One unhappy investee could spell the end of the deal.

In terms of structuring – if you get to that stage – you must demonstrably and credibly respond to your counterparty’s sensitivities. One concern is usually that the equity buyer may flip the investment onto an unknown secondary buyer in the medium term. Another is that the investor will expect unilateral control over appointing management, including removing longstanding or family management. There are plenty of examples from other markets to justify such concerns. An eventual area for real skill might be to find a successor that can help the original owner internationalize the business with confidence. Your deal structure needs to do a lot more than just pay lip service here – it needs to find concrete win-win solutions that are acceptable to both parties, which in turn can require a lot of original creativity in structuring. In many cases the US-UK style standard boilerplate deal structures simply won’t work and will be off-putting.

This can be a long process taking months if not years of patience, which many investors simply do not have. But it is worth it. This year we have already seen another chapter in the maturing of German business-friendly environmentalism with the election of the Green Party to the state governments of Rhineland-Palatinate and the great automotive heartland of Baden-Württemberg. Behind giants such as Daimler Benz, Bosch and Continental lay increasingly efficient and low-emission supply chains, served by newly-positioned Mittelstand companies. The same applies to the e-mobility and de-carbonization projects in its capital, Stuttgart. Indeed, it is no overstatement to say that what in the US is becoming a rustbelt, in Germany is becoming a greenbelt. And private equity needs to be there. – End Jörg Sperling

Please see the League Table of Most Active VCs in Germany. Here again, the search is for investors that participated in an investment round into a company in 2010 or 2011 that raised a minimum of $3m in Germany. High-Tech Gruenderfonds (HTGF) comes out on top, but is a government initiative that typically puts 500k euro into early stage companies with the same cookie cutter deal terms. Last time I looked they take 15% for the 500k, but get you going and will fund almost anyone. The top VCs in Germany that I include for IT are European Founders Fund (the Samwer Brothers), Wellington Partners (one of their former general partners is on The Founders Club advisory board), Earlybird (one of the founders also on The Founders Club advisory board), T-Venture, TVM Capital, Target Partners and WHEB Ventures (one of the partners also on The Founders Club board of advisors). GIMV is also active in Germany with life science VC Karl Nagler based in Munich and also on the advisory board of The Founders Club. I believe German entrepreneurs would be wise to reach out to British, French, Swiss and American VCs as alternatives to German VCs. More info at

European VC Roundtable & Book Tour Events

I am planning a series of VC Roundtable & Book Tour events in Europe in May and June of 2014. I am planning events in London, Paris, Berlin, Stockholm, Copenhagen and Amsterdam. If you are a VC and want to participate on one of my VC panels please get in touch. If you are a law firm or accelerator / shared startup work space and host events or if you want to sponsor an event please get in touch. In each city I also organize a VIP dinner the night before or after with a max of 20 people, typically sponsored by wealth managers. Get in touch if appropriate.

 German League Table – Most Active VCs in Germany

These league tables like the other ones I have posted are a bit out of date. These represent research for VCs that invested in German domiciled startups in rounds of at least $5m in 2009 and 2010.

1 High-Tech Gruenderfonds Management GmbH Bonn, Germany Venture Capital US$ 327 16
2 KfW Mittelstandsbank Bonn, Germany Government US$ 1,483 11
3 KfW Bankengruppe Frankfurt, Germany Government 8
4 Earlybird Venture Capital GmbH & Co. Berlin, Germany Venture Capital US$ 514 7
5 MIG Fonds Munich, Germany Venture Capital US$ 481 7
6 Bayern Kapital GmbH Landshut, Germany Venture Capital US$ 228 5
7 DuMont Venture Cologne, Germany Venture Capital 5
8 Life Sciences Partners BV Amsterdam, Netherlands Venture Capital US$ 601 5
9 T-Venture Holding GmbH Bonn, Germany Corporate Venture Capital US$ 748 5
10 BayBG Bayerische Beteiligungsgesellschaf Munich, Germany US$ 361 4
11 Creathor Venture Management GmbH Bad Homburg, Germany Venture Capital US$ 163 4
12 Edmond de Rothschild Investment Partners Paris, France US$ 580 4
13 IBB Beteiligungsgesellschaft mbH Berlin, Germany Venture Capital US$ 99 4
14 NRW.BANK Dusseldorf, Germany Venture Capital 4
15 Wellington Partners Munich, Germany Venture Capital US$ 962 4
16 BioMedPartners AG Basel, Switzerland Venture Capital US$ 151 3
17 CD Ventures Berwyn, PA 3
18 HV Holtzbrinck Ventures Adviser GmbH Munich, Germany Corporate Venture Capital US$ 213 3
19 LBBW Venture Capital Stuttgart, Germany Investment Bank US$ 38 3
20 Neuhaus Partners GmbH Hamburg, Germany Venture Capital US$ 151 3
21 Team Europe Ventures Berlin, Germany 3
22 TVM Capital GmbH Munich, Germany Venture Capital US$ 1,563 3
23 Ventegis Capital Berlin, Germany Venture Capital US$ 14 3
24 Aeris Capital Karlsruhe, Germany Venture Capital US$ 415 2
25 BankInvest Biotech Ventures A/S Copenhagen, Denmark Inactive VC US$ 143 2
26 BB Biotech Ventures Schaffhausen, Switzerland Venture Capital US$ 396 2
27 BC Brandenburg Capital Potsdam, Germany Venture Capital US$ 6 2
28 Bertelsmann Digital Media Investments New York, NY Corporate Venture Capital US$ 60 2
29 Capital-E Antwerp, Belgium Venture Capital US$ 58 2
30 Credit Agricole Private Equity Paris, France US$ 4,456 2
31 dievini Hopp BioTech holding GmbH & Co Germany Corporation 2
32 DN Capital London, United Kingdom Venture Capital US$ 117 2
33 Emerald Technology Ventures AG Zurich, Switzerland Venture Capital US$ 361 2
34 eVenture Capital Partners GmbH Hamburg, Germany Corporate Venture Capital 2
35 GoodVent Beteiligungsmanagement GmbH & C Magdeburg, Germany Venture Capital US$ 327 2
36 Kleiner Perkins Caufield & Byers Menlo Park, CA Venture Capital US$ 3,305 2
37 Mountain Super Angel St. Gallen , Switzerland 2
38 Munich Venture Partners Munich, Germany Venture Capital US$ 72 2
39 Partech International San Francisco, CA Venture Capital US$ 800 2
40 Rocket Internet GmbH Berlin, Germany 2
41 Seventure Partners SA Paris, France Venture Capital US$ 601 2
42 SHS Ges. f. Beteiligungsmanagement mbH Tübingen, Germany US$ 115 2
43 Target Partners GmbH Munich, Germany Venture Capital US$ 270 2
44 VC Fonds Technologie Berlin Berlin , Germany 2
45 VI Partners Zug, Switzerland Venture Capital US$ 78 2
46 WHEB Partners London, United Kingdom US$ 201 2
47 Acton Capital Partners Munich, Germany Venture Capital US$ 198 1
48 Adinvest AG Zumikon, Switzerland Venture Capital 1
49 Advent Venture Partners LLP London, United Kingdom US$ 882 1
50 Aescap Venture Amsterdam, Netherlands Venture Capital US$ 125 1


If you want to come to Europe this summer there is no better place to be in June than Stockholm and London. Join us!

Stockholm – The Future of Raising Angel & Venture Capital Funding – June 3

Stockholm – The Future of Angel & Venture Capital Investing – June 4

London – The Future of Angel & Venture Capital Investing – June 9

London – The Future of Raising Angel & Venture Capital Funding – June 11

Twitter: @RomansVentures



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