The number of start-ups has recently increased again in Germany. This is a good sign and fuels the hope that the investment situation could improve in autumn and winter. So says Romy Schnelle, a member of the management board of High-Tech Gründerfonds (HTGF) since May 2023. A contribution that gives hope for the second half of the year.
In terms of figures, 2023 has been a rather mixed year for the German and international start-up scene so far. Until Q2 2023, the research portal Pitchbook records a sharp decline in global VC investments - Germany is also affected. Overall, we at HTGF assume that the current year will settle at roughly the same level as the pre-pandemic years 2019/2020.
The boom years are over for now, the market is consolidating. Some young companies will not make it, but many will emerge stronger. Because our experience since 2005 shows: crises can also be a great opportunity for many start-ups. They just have to face the challenges of the time with determination.
Especially for the second half of the year, we hope for more movement, more deals. Initial indicators suggest that the trend is clearly pointing upwards.
Seed investments hold up
This is especially true for the early phase. After all, the seed business has suffered the least from the current lull compared to the later rounds. According to Pitchbook, the median transaction value in the early stage has increased more than in the late stage. Investors are even more cautious there. This is also true for the big rounds, investors place a greater emphasis on profitability and cash efficiency.
As a seed investor, we are staying tuned. We only launched HTGF IV at the beginning of the year. With around 500 million euros, it is the largest fund in the history of HTGF. The main themes we are financing with it: BioTech, ClimateTech, AI, Digital Health, IT Infrastructure and DeepTech.
In addition, with the closing of the new fund, we have adjusted our investment requirements in favour of start-ups. Start-ups that want to work with us now only have to be less than three years old and have their headquarters in Germany or a German operating facility if the company is based in another European country.
Seeing challenges as opportunities
Our dedicated investment teams are deep in expertise. We see very clearly which innovations and trends can change markets and how they move our scene. We invest for the long term and have 18 years of deep experience in the various stages of a company's development and life. We see particular growth opportunities in the area of climate tech - a significant opportunity to meet the challenges of the century.
Or, of course, in the area of artificial intelligence. Even if the big pacesetters are in the USA and China, we have good opportunities here in Europe and especially in Germany to play an important role. We can use the experience of the last decades and combine our strong industrial base with the achievements of AI. Start-ups help to facilitate the industry's leap into the next technology era.
Using the strengths of your own region
Start-ups in the south - especially in Bavaria - have excellent opportunities here. The industry is there. The standard at the universities is high. Strong hubs and networks such as TUM have formed over the last two decades. The international interest of the tech giants is also high.
The potential for a strong innovation ecosystem in this region is enormous. We see this, for example, in our investments in Bavaria. For example, one of our portfolio companies EGYM from Munich recently closed a record international financing. And will continue to grow.
As investors, we observe these developments very closely. We are open to investments and look forward to further developing our high-tech location. So that the start-ups are not only well positioned this autumn and winter, but can also achieve sustainable success in the coming years and navigate resiliently through possible crises.
Romy Schnelle has been part of the startup ecosystem for 20 years and brings with her a great enthusiasm for innovation. She has been working for HTGF since 2008, most recently as a partner in the Digital Tech department. Together with her team, she is currently responsible for around 30 investments with a focus on climate tech, digital health, fintech, AI and SaaS. She has already successfully sold ten companies from her own portfolio, including Stocard to Klarna and Kiwigrid to Innogy, LG Electronics and Aqton. With her extensive startup experience, Schnelle has contributed significantly to the development of HTGF's Industrial and Digital Tech portfolio. She is also an advisory board member in startups and was chair of the investment committee of TX Group, one of the leading media houses in Switzerland.