www.frontline.

vc

www.pointnine.vc

Startups & Venture Capital in Germany

Opportunity in Europe's Largest Economy

A PAN EUROPEAN PERSPECTIVE BROUGHT TO YOU BY:

Whats happening in Deutschland?

Introduction
Notable Players
Growing Pains
Opportunities
Sectors
Valuations
Conclusion
Appendix
2

Many new venture funds have been raised in Germany

1,800

1Cash

FUNDS RAISED IN THE LAST 12 MONTHS

1,350

182

180

150

120

110

100

65

40

Cherry

Blue Yard

Point Nine

Speedinvest

Paua

Capnamic

200

Creathor

225

B-to-V

240

Coparion

300

Project A

310

Target Partners

385

BMP

420

Lakestar

470

Rocket ECP

500

Acton

Holtzbrink

EarlyBird

450

576

Global Founders

635

HTGF

700

IBB

900

Rocket Internet

Total Funds Raised or Similar (1,000s)

1,700

on Hand and Bank Balance, RKET Annual Report, Rocket ECP, Earlybird, Creathor, bmp, Target Partners, Lakestar, Coparion, Crunchbase: Global Founders Capital,
Holtzbrinck, HTGF, Cherry Ventures, Dow Jones Venture Source, CBInsights, Estimates may sometimes include realisations, does not include funds HQd outside of Germany

Which has led to better upstream funding options for startups

Incubators

Pre-Seed/ Seed

Series A - B

Late Stage

Note: approximation, many investors participate across different stages

4

And a lot of international participation

Funding rounds of over 10m are usually led by foreign investors1
Increasing trend of corporate VCs participating in rounds
Few German funds are able to make investments greater than 5m1
Large funds like Lakestar, DN Capital invest early to secure pro-rata
Alternative funding includes private equity or family offices
Global funds are allocating time and resources to German startups

Venture Capital and Startups in Germany, E&Y

Which is giving birth to the German startup ecosystem!!

European 1b+ internet companies

Germany

GP Bullhound 2015 Unicorn Report, GP Bullhound 2016 Unicorn Report, Proprietary

Potential new 1b+

German startups

Who are the notable players?

The Samwer brothers control 3 separate vehicles with billions in combined

Rocket participated in 16 out of 20 of Germanys largest funding
Rocket is largely an emerging markets eCommerce

1,2
assets

1
rounds

1
investor

Global Founders Capital invests in non-rocket companies

500m Global
Founders Cap2

1See

1.7b Cash Balance

Rocket Internet1

Appendix & FY 2015 Financial Statements and Rocket Internet Financial Statements and Capital Markets Day, 2Crunchbase, 3Rocket ECP

420m Capital
Partners Fund3

Founded in 2000 as part of German publishing house Holtzbrinck

Track record of investment success: 150+ investments1, 16 acquisitions2 and 3 IPOs3
LPs include US based HarbourVest Partners and Georg Von Holtzbrinck4
Strong focus on consumer internet, eCommerce, transactional business models

Fund VI
285m5

AUM
635m

1Holtzbrinck-Ventures.com, 2Crunchbase, 3Proprietary, 4Holtzbrinck Ventures etabliert 177 Mio. Early-Stage-Fonds mit
HarbourVest Partners, 5Holtzbrinck Ventures Closes $331M Fund To Back More Consumer And E-Commerce Startups

Consumer Internet
in EU

SaaS and marketplace focused, Seed and early Series A

Created out of Team Europe, a network of Berlin-based entrepreneurs
One of the most active Tech Investors in

1
EU

with strong foothold in Berlin

American style VC, with international LPs (US, Israel, EU)

40m Fund 2

1Tech.eu:

Most Active Tech Investors In Europe (H1 2015)

55m Fund 3

SaaS
Marketplaces

10

Founded in 1997, with 700m invested across 5 funds, over 100

1
startups

Earlybird is one of the oldest and most established funds in Germany

Invests 250k-10m across all

1
stages

Recently merged with Heilemann

Healthcare

1earlybird.com, 2Heilemann

Ventures and Earlybird VC Join Forces

Technology

2
Ventures

Eastern Europe

11

Who to know:
Marc Samwer
Oliver Samwer
Alexander Samwer

Pawel Chudzinski
Christoph Janz

Hendrik Brandis
Christian Nagel
Fabian Heilemann

rocket-internet.com
@RocketInternet

pointnine.vc
@PointNineCap

earlybird.com
@EarlybirdVC

Daniel Glasner
Christian Meerman
Filip Dames

Ciaran OLeary
Jason Whitemire

Uwe Horstmann
Dr. Florian Heinemann

cherry.vc
@CherryVentures

berlinvc.com
@BlueYard

project-a.com
@ProjectAcom

Jan Beckers

Klaus Hommels
Mark Schmitz
Nicolas Brand

Shay Garvey
Will Prendergast

@FinLeap
@HitFoxGroup

lakestar.com

frontline.vc
@frontline
12

Growing pains

13

Challenges
Difficult to retain top talent with lower salaries vs other EU cities
1

Lower levels of entrepreneurship vs rest of Europe

Relatively small talent pool of software developers in some sectors

Culture of risk aversion and slower adoption of new products
Victim of its own success? Rent and cost of living are increasing
Language barriers: While German is a difficult language to learn,
the use of English is widespread
1Think

We're the Most Entrepreneurial Country In the World? Not So Fast

14

Management equity participation

Exemplified Incubator Cap Table at
the Seed Stage

Incubated companies allocate a relatively small

equity stake to management teams

In some cases, part of the 2nd round of funding is

used to pay for services provided by the incubator

Management
20%

Incubator
50%

New Investors
30%

A Letter to German Entrepreneurs, Index Ventures

15

Opportunities

16

Strengths
Very entrepreneurial education at business schools such as WHU, HHL Leipzig, Mannheim
Strong engineering talent from top universities such as KIT Karlsruhe, RWTH Aachen, TUM Munich
35-45k p/a and single digit equity incentives are enough to retain young talent
Optimism surrounding Berlin and the prospects of the ecosystem
Low level of fraud and corruption. Easier immigration policies vs UK
Berlin is an attractive place to live for a lot of young talented people
Culture that values hard work, long hours
Highly educated population
17

Berlin
Berlin named most 'fun' city in the world - telegraph.co.uk

1Berlin

Population

3.5m

1 Bedroom Flat

500-1,0001

Beer

31

Avg Salary

40,0002

Avg Software
Engineer Salary

50,0003

named most 'fun' city in the world - telegraph.co.uk, 2Salary Survey in Berlin, 3Berlin Software Engineer Average Salary

18

Winning sectors

19

Four sectors where German startups have succeeded

FinTech

AdTech

Credit related and consumer business

Big data, data analytics, data mgmt, SEO

Large market for consumer finance

E-commerce companies as customers

Population which travels a great deal

High small- & mid-cap M&A-activity

eCommerce

Leisure

Fashion, auctions, and food delivery

E-sports, gaming, travel, and music

Largest market for fashion in Europe

Travel culturally important

Lean and cost competitive, low margin biz

Large number of consumers

20

FinTech

Founder
Alexander Graubner-Mller
Formerly Groupon, Rocket Internet
University of St. Gallen

rds
a
ns
a
C
o
t
i
L
k
Cred
Ban

s
n
a
o
nL

Paw

Linkedin Information, Crunchbase

ay
d
y
a
P

Founder
Valentin Stalf
Formerly Paymill, Rocket Internet
University of St. Gallen

The mobile bank

Better credit for

customers with
no or poor
access to credit

21

AdTech

Founder
Andreas Bodczek
Formerly Telefonica, Bertelsmann
Ludwig-Maximilians Universitt

Founder
Thomas Hessler
Formerly Deutsche Reichsbahn,
Computacenter, & Landesbank
Display ads

Mobile in-app ad monetisation platform, incl.

ad mediation & marketplace.

Acquired
for $190m

Linkedin Information, Crunchbase

400 employees, 12 offices around the world

300m in revenue, 2000+ advertisers

Acquired
for 215m

22

eCommerce

Founder
Alexander Zacke
Formerly eBay, Zacke Auctions
French Lyce of Vienna

Founder
Hakan Ko
Formerly Home24, Rocket
Internet, Zalando, DailyDeal

Germanys largest auction house

130m in marketplace turnover in 2015

B2B marketplace
for used car
dealers

Record for a work of art sold in an online auction

Trouble Selling Grandmas Cars Led to $1 Billion Startup, LinkedIn Information, Crunchbase

23

Leisure

Alexander Ljung
Formerly Trustmojo.com, Jung
Studios, SF Anytime
Stockholm University

Rolf Schroemgens
Formerly ciao.com
Leipzig Graduate School of
Management

Online travel
booking

Social Music

Dr. Florian
Heinemann
Samwer
brothers
Trivago, auf leisen Sohlen, LinkedIn Information, Crunchbase

Christian
Vollmann
24

Internet Exits
eCommerce

Trivago
477m

Gaming
Software

(60%)

AdTech
Travel
Social

Zalando
5.3b

Rocket Internet
6.5b

DailyDeal
82m

(at IPO)

(at IPO)
Wunderlist
150

TeamViewer
830m
windeln.de
210m

Xing
150m
(at IPO)

Fyber
$190m

Quandoo
210m

Brands4Friends
150m

Feratum
100m

Turtle ESL
100m

BigPoint
272m
Zanox
215m

Scout24
3.2b

HelloFresh

2004 Onward: 16 Biggest German Exits So Far, Tech.eu: Scout24, Windeln Successfully Completes IPO, Das denkt die Szene ber den 6Wunderkinder-Exit

Delivery Hero
3b+

25

What to expect when you close a deal in Germany

Rocket Internet Companies or similar

First Time Founders

Raising at above market valuations

Raising 350k Seed at 1.5-2m valuation

Series A, Raising at a 30m valuation or more

Business with some traction, first customers

Able to attract some reputable investors

Can include companies from accelerator

Incubator Deals

Typical Accelerator

Project A, Rheingau, FinLeap & Hitfox

Accelerator takes 5-7% for 15-25k

Seed Round, Raising at a 4m valuation

Techstars has option to follow-on with 100k

Part of the capital raised may go to the incubator

*Most traditional databases do not contain accurate valuation information

26

Conclusion

27

Takeaways

Largest economy in EU in terms of GDP and population. Highly educated,

hard working, easy immigration, low corruption and low cost of living

Most German funds invest with a pan-European focus and most startups
target many European end-markets. Many new entrants in German VC.

A culture of low career risk leads to investor dominated cap tables. Lower
salaries and rising cost of living could create headwinds.

Most substantial exits have been B2C or eCommerce companies. A large

portion of exits to date have been rocket companies.

28

Thomas Olszewski

Mathias Ockenfels

@TROlszewski

@ockenrock

thomas@frontline.vc

mathias@pointnine.vc

29

Appendix

30

Germany & Ireland potential beneficiaries in Brexit vote

Ireland and Germany are seen as favorites for new business locations, due to their
favorable regulatory framework, EU membership and existing tech communities.

34% of software developers working in the UK are from outside of the UK and 24% are
from the European Union. Skilled labor has a lot of options and it will go where its easiest
to work.

Reshma Sohoni, Seedcamp Partner & Co-Founder. MoneyConf 2016 Panel Discussion

31

Corporate VCs in Germay

Venture Capital and Startups in Germany 2015, E&Y

32

FinTech in Germany

Germanys FinTech Ecosystem: A Wheel in the European Innovation Machine

33

Rocket Participates in 80% of larger funding rounds

Rocket participates in 16 out of 20 of the largest rounds since 2012

FY 2015 Financial Statements and Rocket Internet Financial Statements and Capital Markets Day

34

Source Links
Online Content:
Rocket Internet Financial Statements
Germanys FinTech Ecosystem: A Wheel in the European Innovation Machine
Venture Capital and Startups in Germany 2015, E&Y
16 Biggest German Exits So Far
Trouble Selling Grandmas Cars Led to $1 Billion Startup
Salary Survey in Berlin & Berlin Software Engineer Average Salary
Berlin named most 'fun' city in the world - telegraph.co.uk
A Letter to German Entrprenuers, Index Ventures
Think We're the Most Entrepreneurial Country In the World? Not So Fast
Heilemann Ventures and Earlybird VC Join Forces
GP Bullhound 2015 Unicorn Report, GP Bullhound 2016 Unicorn Report
Data Services:
CBInsights
Dow Jones Venture Source
Crunchbase
LinkedIn

35

Methodology
Slide 3 - Venture funds in Germany
Funds domiciled in Germany or that primarily do business there
Does not include corporates, funds without official funds raised, or non-internet funds
Slide 4 - Fund participation by stage
Notable participants by stage, discretionary selection
Slide 5 - Billion dollar companies in Germany
Internet companies with a valuation of ~1b+
Slides 8-11 - Notable players
Discretionary selection of well known investors
Slides 20-23 - Successful startups
Non-rocket companies notable in various sectors
Many startups have multiple co-founders that are not included here
Slide 24 - Valuations
Estimates based on experience
Slide 25 - Exits
Notable internet exits since 2004

36