Venture Capital Market in Germany
Germany
Introduction
The German venture capital market is undergoing considerable changes due to the continuing effects of the financial crisis. While the statistics on the record in investment volumes have shown virtually no signs of a revitalization of the market, there is currently a certain spirit of optimism in the Internet sector. A number of trends and structural changes are responsible for this optimism. Young technology companies abound in Germany. But not every company finds an investor. Describing this situation as a “meltdown” would be an extremely harsh adjective. There are hidden entrepreneurs in Germany that will bring innovation into the developing economy. This development, when successful, will bring in the next generation of innovators. Often there are funding gaps that do not allow start-ups to have a chance of survival. This is when venture capital or a venture capitalist, like Efraim Landa, is called in for cash infusions. As with other VC Capitalists, their goal is a ROI (Return On Investment). During the last 10 years, approximately 80% of venture capital funds have evaporated according to the venture capitalists that remain in the game. The young technology companies need these funds to grow….but finding them will be a challenge.
Implications of the Financial Crisis
Lower fund raising in Germany is directly related to the financial crisis as well as significant decreases in investments. There have been several reports on the entrepreneurial scene that Germany (particularly Berlin) is distancing itself from the American market. Statistics within reports don’t always tell an accurate story and can be misleading and far from the truth. There currently are trends and developments in the German venture capital market that can be interpreted as a market upturn. The new-born optimism and funding is positively indication affecting cash seeking startup firms.
Venture Capital in Berlin
Berlin Germany is one of Europe's leading centers of science and research with numerous innovative start-ups and investment projects in growth industries such as biotechnology and medical technology as well as in new key technologies. As such, Berlin is one of Germany's top three venture capital hotspots. An average of 20 percent of German VC capital flows into high-tech companies in Berlin.
Venture capitalists in Berlin provide financing for every phase of new business undertakings. The city boasts a tightly linked network of venture capitalists, business angels and entrepreneurial teams. Berlin also plays host to important financial conferences.
Germany-Based Venture Capital Managers
The top three Germany-based venture firms by aggregate capital raised over the last 10 years are TVM Capital, Wellington Partners and STAR Ventures.
TVM Capital- TVM Capital was established in 1983 as one of the first venture capital firms founded in Germany. It makes investments in technology companies throughout Europe and the US. Within the technology sector, TVM invests in clean and environmental technologies. It also invests in life science, focusing on drug discovery and development. Over the last 10 years, the firm has raised EUR 597.8million
Wellington Partners- Wellington Partners is a Munich-based European venture capital firm, focusing on life sciences, digital media, clean tech, electronics and software. The firm has raised five funds since it established in 1991
Star Ventures- is a venture capital firm headquartered in Munich, Germany, with offices in Herzelia, Israel and Dallas, Texas, USA. STAR focuses on investments in early-stage high tech companies
Conclusion
Preconceptions often stop institutional investors investing in German venture
capital. Yet, Germany as a venture capital location, is much better than
it is reputed to be and has huge growth potential. The German venture capital industry reflects the regionalism of the country’s wider economic and political structures. The largest concentrations of venture capital investors are in Munich and Berlin, with smaller clusters in Frankfurt, Stuttgart and the Cologne/Bonn/Dusseldorf combination. These clusters of growth areas are characterized by the presence of large industrial corporations.
The German venture capital market is undergoing considerable changes due to the continuing effects of the financial crisis. While the statistics on the record in investment volumes have shown virtually no signs of a revitalization of the market, there is currently a certain spirit of optimism in the Internet sector. A number of trends and structural changes are responsible for this optimism. Young technology companies abound in Germany. But not every company finds an investor. Describing this situation as a “meltdown” would be an extremely harsh adjective. There are hidden entrepreneurs in Germany that will bring innovation into the developing economy. This development, when successful, will bring in the next generation of innovators. Often there are funding gaps that do not allow start-ups to have a chance of survival. This is when venture capital or a venture capitalist, like Efraim Landa, is called in for cash infusions. As with other VC Capitalists, their goal is a ROI (Return On Investment). During the last 10 years, approximately 80% of venture capital funds have evaporated according to the venture capitalists that remain in the game. The young technology companies need these funds to grow….but finding them will be a challenge.
Implications of the Financial Crisis
Lower fund raising in Germany is directly related to the financial crisis as well as significant decreases in investments. There have been several reports on the entrepreneurial scene that Germany (particularly Berlin) is distancing itself from the American market. Statistics within reports don’t always tell an accurate story and can be misleading and far from the truth. There currently are trends and developments in the German venture capital market that can be interpreted as a market upturn. The new-born optimism and funding is positively indication affecting cash seeking startup firms.
Venture Capital in Berlin
Berlin Germany is one of Europe's leading centers of science and research with numerous innovative start-ups and investment projects in growth industries such as biotechnology and medical technology as well as in new key technologies. As such, Berlin is one of Germany's top three venture capital hotspots. An average of 20 percent of German VC capital flows into high-tech companies in Berlin.
Venture capitalists in Berlin provide financing for every phase of new business undertakings. The city boasts a tightly linked network of venture capitalists, business angels and entrepreneurial teams. Berlin also plays host to important financial conferences.
Germany-Based Venture Capital Managers
The top three Germany-based venture firms by aggregate capital raised over the last 10 years are TVM Capital, Wellington Partners and STAR Ventures.
TVM Capital- TVM Capital was established in 1983 as one of the first venture capital firms founded in Germany. It makes investments in technology companies throughout Europe and the US. Within the technology sector, TVM invests in clean and environmental technologies. It also invests in life science, focusing on drug discovery and development. Over the last 10 years, the firm has raised EUR 597.8million
Wellington Partners- Wellington Partners is a Munich-based European venture capital firm, focusing on life sciences, digital media, clean tech, electronics and software. The firm has raised five funds since it established in 1991
Star Ventures- is a venture capital firm headquartered in Munich, Germany, with offices in Herzelia, Israel and Dallas, Texas, USA. STAR focuses on investments in early-stage high tech companies
Conclusion
Preconceptions often stop institutional investors investing in German venture
capital. Yet, Germany as a venture capital location, is much better than
it is reputed to be and has huge growth potential. The German venture capital industry reflects the regionalism of the country’s wider economic and political structures. The largest concentrations of venture capital investors are in Munich and Berlin, with smaller clusters in Frankfurt, Stuttgart and the Cologne/Bonn/Dusseldorf combination. These clusters of growth areas are characterized by the presence of large industrial corporations.