3
Financing in the start-up phase – so far:The enthusiastic founder is often knocked back by the capital market
Too many ideas, not enough start-up capital?
...
Fantastic idea! Unfortunately we’ve
just provided financing for a similar firm
Interesting, but not our focus...
Great, but still no revenue?
A loan? What collateral do
you have then?
A lot of potential, but unfortunately too early
for us...
4
VC maturity fostered by HTGF investment
Founder(s)
Venture-capital firms
& Corporate investors Banks
IPO,
acquisition
Maturity
Expansion
Rapid growth
Market
entryPrototype
Launch
Cash flow
Time
5
Development of the seed market in Germany according to BVK*HTGF serves as a key pillar of the seed business, with approx. 40% market share
*Source: BVK = German Private Equity and Venture Capital Association
*Reference: BVK = Bundesverband deutscher Kapitalbeteiligungsgesellschaften
94
272
10395
28 26 20
6174
111
71
96
75 73 7561
77
0 0 0 0 0 0 4 52 40 42 34 46 44 43 38 46 40 320
50
100
150
200
250
300
19 9 9 2 0 0 0 2 0 01 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 07 2 0 0 8 2 0 0 9 2 010 2 011 2 012 2 013 2 014 2 015 2 016
Seed-Investments Total Thereof HTGF-Investments
Number of Seedinvestments
Year
As of: 01/03/2017
6
High-Tech Gründerfonds I and IIKey Facts
Founded
2005
Volume
€272 million
Investors
Founded
2011
Volume
€304 million
Investors
Term 6-year investment phase, 7-year divestment phase
Focus Innovative high-tech companies in the seed phase (operative start < 1 year)
Investment type Up to €2.0 million per company, thereof €0.6 million in the seed round
Value added Hands-on operational support provided by experts and networks,
as well as strategic support from investment managers
7
HTGF’s flexible financing models
• Up to €0.6 million in seed financing
• 15% company shares plus shareholder loan with subordination agreement and conversion right (as dilution protection) and deferred interest
• Reflection of the conditions of a co-lead investor
= Σ €0.8m = Σ €1.26m
Founders’ own funds in both scenarios is at least 10% based on HTGF investment
600 60 600 60 6000-200
High-Tech Gründerfonds
Founder(s) Side investor /seed fund
High-Tech Gründerfonds
Founder(s)Side investor/
seed fund
Standard model Pari-passu model
8
ResultsPortfolio - Follow-up financing & exits
75Exits (15 in Fund II)
Partial exits
(including two in Fund II)
Real
millionairesMillionaires
on paper
464 1,112technology firms
financed
Rounds of follow-up financing with an external
total volume of € 1.405 bn, comprising
€ 486,6 millionfrom foreign investors
in 126 firms
79%
Private capital
of capital invested
through HTGF (I & II)
€311million 51 104€ €
477%
HTGF as lead for exit
As of: 01/04/2017
9
19,5 35 22,9 22,5 36,7 32 30,7 12,521,9
14,3 23,451,5
69,149,7
128,7
30,511,415,4 25
40,9
33,640,5
56,7
15,8
614,7 10,8
26,318,7
16,5
74
3
13,114,9 9,9
7,75,7
5,4
5
1,816,7
15,9 16,4
2414,8
17,4
55,7
8,411,413,9 12,4
14,5 11,215,8
19,6
4,3100124,1 120,8
187,4 189,8177,3
370,4
76,3
0
50
100
150
200
250
300
350
400
2010 2011 2012 2013 2014 2015 2016 Mrz 17
M €
Year
Investmentvolume in € mil.
German VC foreign VC Business Angel Corporates KfW other public HTGF
Since 2012, private investors have been spending more in the HTGF portfolio than German VCs
As of: 01/03/2017
In 1,112 follow-up financing rounds, a total of approx. € 1.405 billion was raised from third-party
sources (without HTGF funds) for the portfolio companies.
10
1
2
1
6
7
6 6
14
13 13
0
2
4
6
8
10
12
14
16
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
75 exits successfully accomplished, including 17 from Fund IIaverage 2.5x – highest 7x
Yield Solutions
Swet Optics GmbH
As of: 01/01/2017
11
Transactions with private fund investors
(Exit)
(Exit)
(Exit)
12
Successful events for all network partners
1,400 pre-arranged one-on-one meetings with network partners
Over 700 arranged one-on-one meetings designed to facilitate business relations
Of these, 199 private investors have invested€188 million in the HTGF portfolio
239 industry decision-makers meet 90 portfolio companies
Exclusive HTGF network comprising 400 wealthy private investors
Family Day is Germany’s leading start-up conference, with
over 1,000 participants
14
VC model from various perspectives
• Venture capital for tech development, market
launch and growth
• Networking (e.g. experts, other portfolio firms,
customers and possibly strategists)
• Partners to bounce ideas off & advisers
• Improved access to follow-up investments
Technology company
• Stakes in companies with above-average market
prospects and high implementation risk
• Information rights & guarantees
• Co-determination and control rights
• Portfolio effects (diversification and synergies)
Investor
• Successful company
• Value of stakes increase
• Exit proceeds!
Common Goals
15
Maturity stages of high-tech start-ups and financing options
Stage
Duration 0.5-2 years1-2 years 3-5 years. 5-X years0.5-2 years
Start-upFounding
phase (seed)
Preparing for founding
phaseGrowth
Establishing
firm on the
market
Funding
sources (e.g.)
Goals Brainstorming
Concept
R&D
Patents
Business plan
(First draft)
Shaping company
structure
Staff
Business plan
Tech development
Proof of concept
Tech optimisation
Market preparation
Production stage
Studies
Key clients
Production
Sales
Market share
Cooperation
Licensing
Studies
Internationalisation
Consolidation
Diversification
Portfolio expansion
Acquisitions
Spin-offs
Bank loans
Stock market: IPO, capital increase, bonds, etc.
Strategic investors, cooperation partners
ERP programmes (e.g. start-up fund, fund of funds)
Venture capital (conventional VC, PIPE)
R&D subsidy programmes
High-Tech Gründerfonds
Regional seed funds
Business angels
Equity capital
Funding programmes offered by German
ministry for education and research, e.g.
EXIST founder grant & research transfer, GO-
Bio
17
Focus: Innovative, disruptive technology start-ups
“Small company” as defined by the EU with its
HQ or an independent unit in Germany
Start-up financing ideally suffices for proof of concept or
prototype phase
R&D-based start-up company with “incubated
technology”
Business activity: less than 1 year
Founders own technological expertise that is tapped by
the company
18
Transparent and efficient selection process
Submission of business plan /
pitch deck
Committee presentation
Approx. every 2 months
1. Pitch 2. Term sheet 3. Due diligence +
expert report 4. Pitch
4-6 weeks
Document review process
1 week
19
Search for capital (I)Who is the right investor?
• Commitment (financial & advisory)
• Risk-adjusted framework
• Trust
• Understanding of the industry
• Network
• Side and follow-up investors
• Customers & cooperation partners
• Experts & advisers
• Experts
• Track record & reputation
• Decision-making speed
• Availability (time & geographically)
20
Capital search (II) The path to the investor
• If possible, be WELL prepared:
• Formal criteria fulfilled (industry, maturity, HQ, etc.)?
• Internet research, press releases
• Take a look at portfolio companies
• Take note of fund duration
• Business plan up to date?
• Presentation ready?
• Talk to investment managers at start-up forums, specialist conferences, VC meetings, pitch events
• Business plan competition
• Submit documents (referees?)
• Be brave!
21
The business plan from the investor’s point of view
DOs
• Clearly structured (Exec Sum)
• Complete business plan
• Competitive analysis that is in line with market outlook, evidence for assumptions made (!)
• Realistic planning & scenario calculations
• Self-critical analysis of weaknesses
• Summarising images & tables
DON‘Ts
• Rudimentary / incomplete business plan
• Prose-focussed
• Language mix (by chapter)
• Preliminary versions (unrequested)
22
Criteria for a positive investment decision
Negative Positive
• Rudimentary / incomplete business plan • Realistic planning & scenario calculations:
High level of innovation and strategic competitive
edge
• Competitive advantage not protected by IP nor a
development edge
• Sustainable USPs (IP!)
• Solutions in search of problems • Clearly visibly customer benefits
• Resistance to advice / Feelings of omnipotence
• No or very little financial commitment on the part
of the founders
• Founder personality/-ies with commitment
• Self-critical analysis of weaknesses
• Utopian revenue & earnings planning
• “Viral” marketing assumption, “Good products will
prevail”
• High-growth market with entry barriers for
competitors
23
“Red flags”: Early indicators of risk for existing investments
Ability to deliver/performance
• Key milestones are missed, orders considered secure are lost, agreed revenue targets are missed
• Reporting too late, incomplete
• Investor information requirements are not fulfilled (keeping quiet about difficulties, “differential” communication)
Harmony within the team
• Fluctuation or dispute among company management
• Continuously failing to fill key positions
Mindset/start-up mentality
• Side-project attitude
• Focus on external image & status symbols (premises, company cars, press appearances)
• Early attempt to push through complex corporate structures and/or high valuations
• Reluctance to share control of the company
24
A few general rules (not only) for founders
Rule 1: Self-employment involves you and a lot of hard work, all the time
Rule 2: “Fail to prepare, prepare to fail”
Rule 3: Don’t let greed dominate your thinking
Rule 4: “Keep your chin up!”
25
Hardware, Automation, Optical Technologies, Energy,
Ind. Software
Life Science, Materials Science, Healthcare, Chemical
Telecommunications,Software, Media,
Internet, e-CommerceControlling
Relationship Management, Marketing/Communication,
Office
Managing Directors
• Fund controlling: 6 employees
• Relationship management, PR:
4 employees
• Office: 5 employees
• Management: 2
Investment team 31 employees, 32% of whom are women
Experience: 45% founders | 183 years of investment experience | 317 years of professional experience
Professional background:
• 52% have a scientific background
• 41% have a commercial background
• 7% have a legal background
• 17 different degrees (incl. science, engineering, economics, law, humanities and many more)
A strong team – one goal – great potential
26
Illumination| Projection |
Audio
Virtual & Augmented Reality
Software TelCoIndustrial Softwarecloudplan
EcoIntense3/4
WeSustain3/4
CevotecCuciniale
SCHAD
4tiitoo
Gestigon
ImmerSight
Inreal
Enscape
Fodjan4
Sablono3
SimScale
Mobility
AutoaidComodule
FAZUAParkTAG3
T Dispatch3
CommSolid
Cubical
Eyefactive3
VIOSOAutomation Logistics
AccessBaimos | Cliqloc | FIDLOCK | Jenetric
Recycling
Additive Manufacturing
Robotics
Energy Management
Production
akvola Technologies | Saperatec4
ALL3DP3 | IQ evolution4 | Limata4 | Notion Systems4 | Print2Taste
ALS | Cevotec | Revobotic | Synapticon | Adlatus Robotics
Cuculus3 | enercast | Enexion3| NEXT Kraftwerke3 | NOVUM | Oneshore* | Permundo |
Solandeo*
ALS | Böhner-EH | Cevotec | Compositence | eGym3 | Limata4 | Multiph. Optics |
Notion Systems | PicoLAS | Pulsar Photonics
SensornetworksSemiconductor Energy Generation| Storage
Optical MetrologyMetrology
Security
Micronet AutomationViamon
Extoll
Interposers4
Custom Cells Itzehoe2/4
Heliatek4
Smart Hydro Power
Subitec2/4
Luceo Technologies
Somonic4
ComnovoJenetric SciEngines
Multiph.Opt.4
SciEngines
Limata4
Cycle
Enoware
Fos4x
HiperScan
Italic Type = Double Entries; 2 = Life Sciences; 3 = Software; 4=Chemistry Seed - Early Start-up - Later Start-up = new in 2015/16
Soley SE.M.LABS
SOTA Solutions4
Yatta
Ap
plic
ati
on
sTe
ch /
Infr
ast
ruct
ure
Hardware | Automation | Optical Technologies |Energy | Industrial Software
27
* = new in since 2015
Energy & Cleantech
Bio-based
Economy
Agriculture
Processes &
Software
UrbanizationNew Materials related
Technologies
Energy-Generation / -Storage
Custom Cells Itzehoe | Heliatek
Enzymes-Plattforms & Specialtiesc-LEcta | evoxx
Waterakvola Technologies |
Dust Biosolutions*
EnablerEcoIntense | Hapila |
SOTA Solutions
Feed & NutritionCysal | Fodjan* |
PerformaNat*
Recyclingsaperatec | subitec
Surface-TechnologiesBubbles & beyond |
i3 Membranes |Notion Systems
Composite materials & fibers
compositence | Jenacell |WPX
Breeding- and Protection-SolutionsComputomics* | multiBIND | Oaklabs
3D-Printing / Lithography-Technologies
interposers | IQ evolution |Limata | MeCuris*| Multiphoton Optics
Sensors & SimulationBentekk* | somonic solutions | We Sustain
Animal healthPerformaNat*
Chemistry-related Portfolio
28
Ther
ap
yD
iagn
ost
ics
Too
ls/
Pla
tfo
rms
* = new since 2015
Cardiac DevicesCoramaze technologies | CryoTherapeutics | Middle Peak |
NovaPump
AestheticsGME | Natural Dental
Implants
NeuromodulationCorTec | EBS Technologies |
WISE
OrthopedicsMeCuris* |
Synoste
Emergency CarePentracor |
ReActive Robotics | Seiratherm
Patient MonitoringCapical | Dolosys | Humedics | Implandata |
Photonics Healthcare
Imaging & NavigationAmedo | Eyesight&Vision | Fiagon | medineering | micro-
dimensions | Scopis | SurgicEye | whitesonic
New MaterialsBubbles&Beyond | Heppe Medical | JeNaCell Medovent |
multiBIND
Personal Health & e-HealthAdvanova | Bomedus| connected-health| Desino |
Exelonix | HRTBT | Newsenselab* |
perora | PMS | Preventicus | Sonormed
Small Molecules, Peptides & ProteinsAdvanceCOR | Algiax | Atriva* | AudioCure | Immunic |
MYR | Omeicos | Zedira | HepaRegeniX*
Immuno- and Gene Therapy4 Animal Alsterscience | Amal Therapeutics | GeneQuine | Immunservice |
Protectimmun | Rigontec | SciMab* | TolerogenixX*
In-vitro DxAbviris* | KSK-Diagnostics* | Lophius | onCGnostics |
Predemtec | SeNostic*
R&D Tools, Biomarker Discovery, BiosensorsAyoxxa | Biametrics | Chromotek | CuneSoft | cytena |
PEPperPRINT | PreOmics* | Sierra Sensors | Venneos |
Signatope*
Enzymes & Manufacturingc-LEcta | Cysal | evoxx |
Hapila |m2p-labs
Green BiotechOaklabs | Subitec |
Computomics*
Drug DeliveryLipocalyx | Rodos |
Sirion| Thermosome*
BiotechnologyMedical Technology
Life Sciences | Healthcare
29
UrgeIO (Versus) | SEMKNOX | everybag
99chairs
JUNIQE
Makerist
Codetrails | coModule
Fruux | Graylog
Iplytics
ParkTag | pidoco
Skive
Veodin
virtualQ | Yatta | userlane
| Filestage Incapptic
Connect
Casavi | Conceptboard
Coredinate | cubical
EcoIntense | make.tv
propertybase |flowtify
Bookingkit
Customer Alliance
eWings
HQ Plus
Travel
ALL3DP
3D Printing
Bitwala
FundFlow
Figo
Payever
Mobilversichert
Fintec
Bettzeit
Inventorum
Mister Spex
Outfittery
StyleRemains
Yorxs
Shops
Grandcentrix
gravit
Locr
Pressmatrix
Pylba
PublishingHuman Resources
Recruiting
Jobleads
MoBerries
MobileJobs
Altruja
FamPlus
Social
MarketplacesSupport
Clickworker
Loopline
Maxment
Mobile InteractionAsanayoga | FooBoo | Opentabs
Skoove | Yeti Learning | evalu
AdTec
Search
Marketing
Communication
Simplaex| linkbird | Mbaas (Applanga, embraase) | Semasio | AdTriba
Crossvertise | Stocard| Trackscale | uberMetrics
CommSolid1 | NFON | Smoope
ToolsIT-Security
baimos
Hornetsecurity
ondeso
Protected Networks
SciEngines
SSP Europe | VMRay
CloudIT-Infrastructure
cloudplan1
Collinor | eddyson
Gridscale | Quobyte
Sablono | T Dispatch
Tixel | tocario
tracekey | WeSustain
RAIDBOXES
Big DataAltusInsight
ConWeaver
Datavirtuality
enercast
Analytics
metoda | itembase
minubo | POSpulse|
Implisense | wetransform
Italic Type = Double Entries; 1 = Hardware; 3 = Software Seed - Early Start-up - Later Start-up = new in 2015/16
Ap
plic
ati
on
sTe
ch /
Infr
ast
ruct
ure
Software | Media | Internet |E-commerce
30
Over 1,000 stakeholders invested in HTGF portfolio
As of: 01/04/2017
0
200
400
600
800
1000
1200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
NUMBER OF INVES TORS
Business Angels, Private Inv. Venture Capitalists Corporates & Corp. VC Public Investors
31
Deal flow
38143499
315
315 0 0 268
47
0
50
100
150
200
250
300
0
500
1000
1500
2000
2500
3000
3500
Total Deal
Flow
Rejected /on-
hold
Active Deals Filtered
Proposals
Evaluation
ongoing / DD
Contracts Closing failed
Filtered deal flowTotal deal flow
32
Commitments by technology field
As of: 01/04/2017
0,8%
2,4%
2,8%
2,8%
3,2%
3,6%
3,6%
4,0%
4,8%
5,6%
6,0%
6,4%
6,8%
8,8%
11,2%
12,4%
14,5%
communication technology
energy
media
diagnostics
chemistry/ material Science
Healthcare & Services
optical technology
biotechnology
plant construction
e-commerce
electrical engineering
industrial software
pharmacy
internet solutions
medical technology
application software
Software as a Service (SaaS)
Commitments in %
33
HTGF plans to launch €300 million Fund III in March 2017
Investors
Public-private partnership, with 30% private share from target group:
> 50% BMWi
> 15% KFW
> 30% large and medium-sized innovative firms
Founding
2017
Planned target volume
€300 million
Operating time 6-year investment phase, 7-year divestment phase
Focus Innovative high-tech firms in the seed stage (< 1-3 years old)
Investment type Up to €3-5 million per company, comprising €0.2-1.0 million in the seed round
Value added Hands-on operational support provided by experts and networks and strategic
support from investment managers