Start-Ups & Investors

Speaker 1 [00:06]

I'm really happy to see so many of you here. It's a huge, you have a thousand seats, but this is a new, it's a new, it's a new track, because this is like something about building bridges and this community has always been around about cross-pollination, bringing new ideas and other perspectives. And so I'm super happy to have We have many different outside, or not from our world, perspectives here, so I would like to welcome first Ina Schlie. Ina was senior vice president at SAP. She left SAP, and she serves now at multiple supervisory boards, and the most impressive thing which really I think is she built Encourage Ventures which is an angel network, angel investors for females only. It's about female empowerment and I'm so happy she's here because she wants to encourage women to form more startups and also to invest in startups for innovation and for Germany. She's also in the advisory board of the Ministry of Economics for AI and I'm really happy to have her here. Thanks for coming, Nina. Thank you very much, Nina. And I would welcome Sarah Jordan. You're a startup founder, female founder. You're Forbes 30 under 30, so founder with Geno AI. and yeah and this is yeah your I don't read the funding number so it's you're an entrepreneur so your perspective is the entrepreneur side here I'm also very happy that Giovanna Walter joined us Giovanna is at the Futury from Venture Capitalist so and I think this perspective is very important because we can really see also what the perspective what does a virtual capitalist actually expect from a startup and of course she has an amazing track record at multiple banks and now she manages Futury Capital which is located in Frankfurt so please warm welcome to Ioana. And I'm also like for when the the panel will be moderated by Kalina Benison. She's part of Hash and AI. She's the co-lead of AI Startup Rising. And if you have probably noticed, we have many initiatives here since the last two years together with Hash and AI, and Kalina was always one of the driving forces. Let's try new things out, build bridges between startups and open source, because a lot of startups, especially in AI, use open source, and we just felt let's work on better connections enough about that let's start with the panel so please give a real welcome to all our panelists thank you

Speaker 2 [03:28]

Thank you so much Alexander and Yeah, welcome also from our side too. We would like to shed some light on the startup and investment world Here at the PyCon conference and before we start I would like to ask you the dear audience Who of you thinks it's a good time to found a startup? right now

Speaker 3 [03:56]

That's good. Great.

Speaker 2 [03:57]

So, we would like to talk about today about founding startups, but also investing in startups, how to get support as a startup, and of course, if you're just interested in this exciting topic, it's the right place to be here. And I would like to start with the spark.

Speaker 3 [04:18]

So

Speaker 2 [04:19]

When I talk to founders, I'm really interested in finding out what made them found a startup. And was it an enlightening moment, what Spark suggests, or a process? And I would like to ask you, Sarah, you were a successful PhD student at Technical University Darmstadt. So what made you found a startup?

Speaker 4 [04:45]

So you mentioned it could either be a process or a spark to get to that point. I would say for us it was pretty much both because we were working on the technology in the field of Gen AI, working on how to use the capabilities of these models to connect to your own data, like large databases. And this was a process, so it took some time until we realized, okay, with that technology we can actually solve a huge problem. We talked to many companies in between. So this product market fit gets some first insights. That was a process until we were really convinced that we can build something that is valuable to industry right now with what we are working on in research. And I think the spark moment then was once we had the problem and at least a road ahead to the solution when the team came together. Because relying on co-founders, having the perfect set of capabilities, having the trust within a founding team, I think that was most important. And there was this one day where we decided, or at least I decided from my perspective, yeah, I think now is the time if you want to do something like this to try it out. And that was pretty much the spark in the end, the founding team.

Speaker 2 [05:57]

And you also, it was also timing, right? Because you really served this Gen AI wave. You used the chat GPT moment, so to speak. Was it also timing?

Speaker 4 [06:10]

Yeah, for sure. There's some timing. It's the right timing for the technology to get to a stage where it can provide enough value, I would say, that it can solve an industry problem. In the past, between AI research and building an AI product, usually there were five to seven years in between of development. And I would say right now, at least in the past years in Gen AI, we reached that moment where we could pretty quickly take these new research insights and get to a product. So I think that was what made timing pretty good in that moment. But to be honest, we didn't think about, is it good investment-wise right now? Is the economy in a good place right now to found a startup? But from the technology perspective, yeah, we had the timing. Probably a timing bonus, I would say, or benefit in the beginning.

Speaker 2 [06:58]

the beginning so mainly the but the mainly the co-founders to meet the right people but also at the right time was for you the yeah the spark um you know you're an investor we heard but you also founded this it was a net it started as a network now you you say it's an ecosystem so um you were a leader for 20 years or so and a big company so what made you go this step i mean probably there were people saying, is this a good idea to leave the path of being in a big corporate and being a leader there?

Speaker 5 [07:34]

Mm-hmm.

Speaker 3 [07:35]

I worked for SAP for almost, for more than 23 years, and you all know it's an exciting company to work for. I started in 1997.

Speaker 5 [07:49]

I don't know.

Speaker 3 [07:50]

The most fascinating topic for me was the big cloud acquisitions. You probably know that SAP has acquired for more than 40 billion cloud companies in the US. And I was in the core team and had to structure all these acquisitions. So I was somehow in private equity, but never invested. I earned some kind of money, but never had the chance to invest. and then the first investment I made was actually in Tanzania and all people said that's not the best way to start but I was really fascinated because it was a health platform which was supposed to provide health information to the whole population and this is how it started then I invested in Tandemploy and other targets and I only experienced male investors at the cap table and I felt this is quite embarrassing. So, and at Town Employ, we invested in a series A round together with five ladies. And then we said it's a good starting point to make institution out of that. So during Corona, we met virtually and we had like four managed workshops and then we had more or less a minimum viable product. And we started, as Alexander indicated, as an investor network, but we had more or less a pivot after a few months because we identified that diverse-led startups or female founders also need a home because they only get 1% of the overall capital in Europe and diverse-led startups only 12%. So that's why we said we have a pivot here. We need to build an ecosystem comprising not only investors but also diverse, and it's all about diversity. So it's not only all female startups because we think the truth or the biggest value is if a startup has a diverse management. So it's a long story, actually. And today we have around about 1,000 registered investors. So it's really getting huge. And we have 1,500 startups, around about 3,000 founders in our community. So growing on a daily basis. And I have a big management team now. I will build a supervisory board around Encourage Ventures. but I'm happy to explain more details later in the Q&A.

Speaker 2 [10:39]

So very purpose-driven.

Speaker 3 [10:42]

exactly it's by the way it's an NGO I have to say that yes encouragement yeah it's an NGO yeah

Speaker 2 [10:48]

Yes, it is. And, yeah, Giovanna, what made you invest in startup? What was the spark or the process?

Speaker 5 [10:57]

Yes, speaking for me, it was a process, it wasn't a spark, frankly speaking, I never thought of actually, I kind of...

Speaker 3 [11:10]

Mm-hmm.

Speaker 5 [11:11]

slitted into investing in venture capital Through my own startup experience. So I used to work for a bank. I was eight years in investment banking I got pregnant twice went back to the bank and I figured okay This is not what I want to do for my life. I want to create more impact and want to create something that is valuable for my children and that supports the future of my children and I was very clear that investment banking my job in investment banking wasn't that so I decided to found my own startup and I did this and I was a solo entrepreneur to that point in time which is difficult especially if you have a startup that needs a bunch of capital and two months later corona hit so and everything was shut down and I didn't have a clue where to ago, and to that point in time, networks like Encouraged Ventures didn't exist, but one year later they did. So I was struggling with the own startup and decided, okay, I will work together with other more technical startups and support them with my financial and commercial and economical expertise. And so I ended up working together with three quantum physicists, one female quantum physicist and two male. And we were working for a year on a quantum startup. So we wanted to build a full-stack quantum computer and we were applying for subsidies and we were talking to investors, we were talking to Ina who did a great job in sparing with us as we were a diverse team. And then eventually one of the founders who was one of the main founders because the subsidies went through him and basically his professorship, he pulled back and we weren't able to basically bring it to the street. And so I decided after a few very rollercoaster years that I would switch sides with the experience I have from the bank and the experience I have now from founding basically two startups to the investor side. And this is how I ended up to be an investor.

Speaker 2 [13:35]

exciting and yeah valuable for the startups and yes you said you have this spark moment you already had the spot a spark moment to invest in a startup so it was really yeah I got feeling a bit so probably did it change how you invest in startup after having this time with encourage ventures over the years

Speaker 3 [14:01]

It changes over time. I mean, now I have my own holding company, so to say my own family offices. I've invested myself in around about 25 companies and some VC funds. And I always say I'm a Harikiri investor because I do not only want to invest in deep tech or AI, but I also want to invest in all kinds of other stuff. But as you know, AI is influencing all industries, so it's really hard to walk away from that. And this is also not my intention. But all life science investments I've made, they are also all using AI technology in their business model. So to say, UBMaster, for example, is a great Munich company that just went for a Series A. so I'm really interested in all industries so to say and for me it's always about finding out about the next world market innovation and you know world market innovations are rare we are only talking about 5% of all startups which are being found are actually dealing with world market innovation So it's difficult to identify them. But I'm open. I mean, it's always about scalability. It's about a great team. But I'm fascinated. Honestly, I've done so many things during my career during the last 30 years. But the best thing is really dealing with startups, investing in startups. I've just had the idea to somehow found Encourage Ventures. but I always missed the magic business idea and I was too busy at SAP. We worked like, you know, 16 hours per day in the 90s and in the early 2000s. So I was really, you know, I didn't know how to invest my money and I didn't have time. But now I have money and time and it's such a great feeling and luxury to support the great ideas and innovations in Germany and throughout Europe.

Speaker 2 [16:26]

Yes, indeed. So Sarah, you have a really inspirational founder story. So you came, to get back to you, you were coming from research, you met the right people, you had a network kind of, it's really so fabulous. and now in the next section here on the panel we would like to shed some light on reality versus what it's really like.

Speaker 3 [16:56]

Like,

Speaker 2 [16:57]

to start a business because there are also a lot of challenges. So, Sarah, what did surprise you? What did you not expect?

Speaker 4 [17:05]

I think the variety of tasks you do in a single day, because you usually probably join a startup team and you have some vision of what you bring to the table, what you will focus on. Maybe some of you are thinking about becoming a tech founder, building the coolest product, getting the most innovative feature into your product over time. but then you're going to do recruiting, legal, finance, investor relationships on the same day basically while you deep dive and read research papers and try to get ahead of time. So how many different things you need to keep in mind to learn actually because you cannot bring the experience in many of these tasks or sales for example was something that was totally new for me and which I'm responsible now at the startup so I think you can grow into many tasks And I think the outward experience you oftentimes see the marketing side. You see a lot of successes. It seems like the speed is Sainly fast over time But there are these long periods where a lot of very hard work is Being performed to build this product and there will be times when it's going to be very tough We bootstrap the first years until securing first funding or designing to to raise race our first round and there were times where you did not feel like a speedboat and where there was a lot to do until getting to a new customer or going into rollout and yeah I think that's something you probably don't see on LinkedIn or on all the press releases that you usually read about startups.

Speaker 2 [18:48]

Does this sound familiar to the investors?

Speaker 5 [18:52]

Yeah, 100%. I mean, I can say that from the investor's side. I can say that also from the founder's side. I think what comes with founding is the surprises all of the time and the rollercoaster that you just go through. And this is also why, and I think I'm 100% with you, I think investing and working together with entrepreneurs is the most fascinating thing because the personalities are just incredible. They're very strong. They're very resilient. they fall and they get up again, they fall and they get up again and again and again and again and then at some point they may fly and it's amazing to see them fly and how they handle really difficult situations and difficult team setups sometimes and difficult investor setups sometimes. It's incredible to see how people can handle this and how they can achieve this and how in parallel and basically their core they can build something incredible which brings Germany, Europe, everything forward. And I think this is what we just need more here. And we need to encourage everybody. Encourage Ventures is a great name. Encourage everybody to do that. So I found it lovely to see all the hands up here at the beginning. Do it. We need you.

Speaker 2 [20:22]

You know, what is the harsh reality of founding a startup from your point of view and why it's still worth it Maybe to add to Giovanna and Sarah

Speaker 3 [20:32]

I think the biggest hurdle is missing capital in Germany and Europe and probably most of you are aware of that, that only 7 billion euro are invested in Germany per year and that is nothing. So I've actually, I'm currently preparing a speech or presentation on AI and research the latest numbers. So worldwide, almost 300 billion US dollars were invested in venture capital only for AI investors. Maybe you have read this number, 300 in the first quarter of this year. And 83% of that is invested in the US. And then you can see this relation. I mean, it's a huge number. It's a record, a record high or whatever. But the biggest hurdle I see, besides some regulatory topics, and GDPR, and you all know this. I mean, you are all the AI specialists more than I am. But the missing capital, and Tubulis, it's an AI-based startup from Munich. They were just sold, imagine, for 3.5 billion to the US, to Gilead. And this is crazy. All the defense startups like Helsing, what's the name, Spark, I think they are all financed through U.S. entities, but these are critical infrastructures. So what are we doing? What the hell are we doing here in Germany and Europe that we allow in a sense of that we are not giving institutional money from Europe or Germany to those startups. And you know Black Forest Lab, they had an amazing financing round of 300 million. And I'm sure that we will see a headline in the upcoming weeks that this company is also sold to the US. And this is a brain drain, it's an IP drain. And that's also the reason why, and it's not, how can I say that? It's not a government effort to finance all startups. It's a fact that our entrepreneurs in Germany and Europe are not investing in European or German startups. This is the situation we face. We have lots of people with billions in their companies or in family office, but they're not investing in startups. And this is also our mission and vision from Encourage Ventures. We go to family offices days, to entrepreneur days, and we always claim it's your responsibility as entrepreneurs, as people with a fortune, to invest in our startups. Because it's also supporting our wealth in Europe, and this will also support our democracy. We should not forget that. The situation we face at the moment in Germany and Europe is because our prosperity is not increasing anymore.

Speaker 2 [23:56]

And even less for female founders.

Speaker 3 [23:59]

Exactly.

Speaker 2 [24:00]

Excellent. So, well, we talked about challenges and also, I mean, there are successful startups. There are also a lot of startups failing. So it's depending on the source, 70 to 90 tech startups who fail, actually. So how do you deal with the topic of failure or fear of failure? Because obviously you are very successful. Yeah, but Sarah, let's start with you.

Speaker 4 [24:30]

I think if you found a startup, you will always have that along the way. There's never going to be that phase where you know, okay, right now everything's perfect, you have a clear path, no competitors in your way, nothing surprising coming up specifically in this AI market. And we had this in our bootstrapping phase, if I think a year back, all the time. So every decision you take, you have to keep that in mind that it's a risky decision, that your forecasting has a lot of uncertainties associated with it. But then you see, I think what gives you some confidence is that you experience a lot of these situations where you don't have a clear solution at hand, where there's a lot of risk of failing, and once you've overcome the first one and you've seen how the team has worked together during tough times, I think you get resilient, as you mentioned before, to be prepared for the next time because it's definitely going to come in a startup that's just part of everyday life and probably you'll accommodate a bit more to it than in any other environment, I would say.

Speaker 2 [25:38]

What's your perspective on that, Giovanna?

Speaker 5 [25:41]

Well, something, I believe that Germany has an incredibly bad failure culture. This being said, I personally believe failure is great because you learn nothing more. There's no, you learn from each failure. And I mean, I personally failed basically twice. I shut down both companies. And now I'm a managing partner of a venture capital fund. And they hired me because I was a founder. That was one criteria. I mean, also because of a few other things, but it was one of the core criteria is that I'm a founder as well and that I went through this. So yes, it was a failure twice. And it was hard. It was no good feeling. And this is also where I learned that failure culture here is horrible and that also the people standing there looking at you saying, ah, it didn't work out, huh? There are many, but they are just not the people you want yourself to be surrounded with. There are other incredible people that continue to encourage you and that will bring you forward and you just keep going and you will succeed at one point.

Speaker 3 [27:05]

I think failure is relative and it's also the perspective of people whether you fail or not. When I first started for the software company, I mentioned already several times, lots of people said, how can you start working for this company? And nobody did know it, more or less. Why don't you start working for Siemens? So that was the first time I failed. The second time I failed was when I left this company because everybody said, how can you do that? You cannot give up your senior vice president status. You should stay on and work even harder. So as you see, it's a question of the perspective you take. And I think from an investor perspective, so I have to write off all the money I've invested. I mean that's my instinct that you really do not depend on this money and it's sure that out of 100 startups we all know 7-80% will die but there's also a statistic if you diversify your investments and go beyond 20 there is a great chance that you will generate a very interesting return on investment so failure is always relative I would say and I think to take a risk also for the founders and that's why I feel and this was Juana you said that the courage the self-confidence the business models for me the founders are really so convincing because I feel these are the best people we have. Because given the circumstances we face in Germany and Europe, who really have the courage and go for it are the best people and we need to support them.

Speaker 2 [29:13]

And yeah, talking about images of a founder that we have in mind. So we think many times probably of a born founder or the tough investor. So did you experience this before?

Speaker 5 [29:31]

There are stereotypes, and I mean, but I think this is also a reason why there is so little money invested in female founders because we have too few role models. And there are these alpha, cocky guys, you know, standing on stage and a lot of investors. I know some investors who have a tendency to invest in these kind of personalities, but if you work, and, you know, you will agree if you work with I don't know how many firms In startups, you will get to know such a huge variety of personalities, and there is such a diverse set of entrepreneurs, which is great to see, and I think not all of them like to stay on stage and speak out loudly, so maybe there is a bias. And also from the investor side, I think it's also the same, and this is why I would recommend to everybody, there is not this one investor type, type and it's not the investor wants to see that and that it always depends on the investor and it always depends on the individual who's behind is he or she a founder has he gone through that as well and what is the background what are the values he bases his investment decision on you know it's so much human there is so much humanity in venture capital and founding a business and investing in business there's so much more emotion than i ever experienced in any other job especially in the bank it's very rational and this is what I love about it and this is what makes this variety so great

Speaker 2 [31:05]

Sarah, did you consider yourself a techie founder?

Speaker 4 [31:12]

I mean, I did a PhD here at the Technical University of Darmstadt and studied industrial engineering beforehand. Right now I'm doing sales and marketing actually in the startup itself. Yeah, probably I have a background where you could say that's a techie founder and in the beginning also worked in other fields within our company. Now we have more people, we have more departments. So, of course, I focus more on sales and marketing and investor relation topics now. But still, I would say my background is rather technical in doing my studies. I also worked in software development, was really fascinated by the aviation industry until today. So probably from the background, I would say yes. But the tasks that I do today could have also a different background.

Speaker 2 [32:03]

Yeah, actually, all of you are tech founders, so now you already mentioned marketing and sales, so you had to start with marketing and sales. How was that for you?

Speaker 4 [32:04]

Yeah, actually, To be honest, sales is still quite technical. If you have a product where you need to explain where your decision makers might be, a head of IT, for example, or AI leads, but you also need to talk maybe to CEOs of smaller and medium companies. So having that tech background can come as an advantage in many different tasks, I would say, or functionalities. But yeah, marketing was something totally new for me. Also, there are some tech aspects like this performance marketing, for example. It's very statistical, and it's creative at the same time, but it was something totally new. But, I mean, you can use tech tools, for example, to address these challenges. I talked a lot to large language models about marketing in the past week. So, yeah, I think it's a lot of intersections. Yeah, you found your...

Speaker 2 [33:11]

Yeah, you found your very technical approach to marketing and sales.

Speaker 4 [33:13]

Because he didn't say it. Probably, yeah.

Speaker 2 [33:14]

sales and also marketing is sometimes really the stuff you don't want to do actually but you found your way to adapt and to get the new skills. How important is it in your point of view to have a diverse team also in terms of skills? I mean you meet a lot of probably also technical founders founders coming from research.

Speaker 5 [33:42]

You know, do you want or?

Speaker 3 [33:44]

I mean, it's decisive. Yeah, I mean, I'm also supporting single founders, actually, but I really feel that this should be an exception in your portfolio. You always have to make exceptions, I say, because that's not one way to invest. There are always several ways. I feel that the team is one of the most important factors for me, because it has to be, as I said, I'm only investing in diverse teams, so that's for me a prerequisite, and besides that, the team has to be convincing, I always meet all team members in my first years, you know, we couldn't meet in person, so Zoom sessions were also sufficient, and typically, I always say you need a techie on board right from the beginning I've seen some startups making this mistake really buying in technology that's too expensive in the beginning actually and as I said scalable business model and market potential is important and also people and in the beginning actually we see that sales and marketing expertise is sometimes missing so and you need to build on that maybe after the first six months but Typically, the CEO is doing everything. You said this already. You need to do everything at the same time. You invest in people, more or less. And I've experienced some interviews where founders try to interview me and ask me about my portfolio and they really switch the coin. And I liked it because the founders also need to make a choice, right? It's not only about that I'm making the choice where to invest, but they also should be convinced that I'm the right person to give them money and knowledge.

Speaker 2 [35:52]

I tell you a little story about a founder that I know. And he's really kind, really smart, and also very supportive of other startups. And he told me that in an early phase, he met a mentor. And the mentor said, don't focus too much on technology and product. You need a business person on your team. And he very honestly told me that he thought, people are stupid. why should I do that so it was I like the story because it's so honest and he he had this also blind spot or really had to um yeah experience himself that sales is so important so when he did a successful exit and looking back he said well this was really important to focus on sale and we have done it much earlier. So do you sometimes see also blind spots?

Speaker 5 [36:51]

Yeah, a hundred percent. I mean, Sarah, what you've gone through, the transformation from a technical founder to a sales and marketing founder, basically, is what we see very often.

Speaker 2 [36:52]

Yeah.

Speaker 5 [37:04]

But I think your team is very privileged to have you who's actually able to do that transformation because we do look at diversity in two regards. First of all, the team, if the team is diverse in its setup, in general, not only female, male, but especially from the background. So we look if they have different strengths. If one is more outgoing, more, I don't know, can easy, there are people, technical people, who have huge difficulties to explain their product to a non-technical person like me. And there are others in the team who are incredibly strong. And you need somebody to explain it to somebody who doesn't have a clue or to a kid. So, and we kind of look, you know, if they have a diverse skill set or if it's only a person and yeah, I'm very hesitant in investing in a single founder but it's not a red flag. So also there, it's possible but I always look, is this person able to kind of transform or accept other skills to come into the company? Is it open for others and other views and other perspective? I think this is incredibly important, and what I experienced investing in industrial tech mainly over the last four years and now having a focus on science-based and deeper tech companies is that most of the teams actually I meet are technical teams. So we have three technical founders, mostly men, very seldom also women. And they are very alike, frankly speaking. They are between, I don't know, 25 and 35, and they're all men, and they have basically the same background, physicists, engineers, whatsoever. And they're incredibly strong in what they pursue, but also sometimes they have challenges to accept that their technology is not going to be sold just because it's a great technology. And this is something that I think is a huge problem of German engineers, frankly speaking, working with a lot of them over the last years, that we always believe we make our technology perfect and then people, customers will come to us because it's so great, they will purchase it. And it's just not going to happen. You can have the best technology on earth if you are not able to sell it and explain it as simple as possible. You will not sell a piece. And this is something that is just very, very... I just observed it very, very often and we try to prepare the founders and give advice and try to tell them, hey, maybe a business person in your team would fit well. but at the end you need to realize it you need to experience it and you need to understand that otherwise it's not going to work and the faster you understand the less costly it gets

Speaker 2 [40:15]

Jovenna, talking about advice, I would like to give you, Sarah, the question, more generally, where did you get support when you started off? Where did you find a network that helped you kind of?

Speaker 4 [40:30]

many different people, I would say, in the beginning. We've spinned off from the university. So, of course, there is support, Gründungszentrum, like founding hubs, that can connect you easily to other founders. I think that's a good approach to ask your first questions and get some insights. We had some contacts to industry, which was super important, specifically for this bootstrapping phase. So to build the trust to the first customers that have already interacted with the university for product market fit, that was most important, I would say. And then it took some time to get contacts to the VC world, to business angels and so on that came later, to be honest. And there we found, or at least I found mentors where I could learn that we need to focus on sales and marketing and many other things along the way. and some insights, what might work, what does not, where we as founders need to improve ourselves, where we might need to transform in certain ways. So having these ecosystems, I think, is most important. Even nowadays, I experience that you might meet someone at a trade fair and this person is not going to become a customer one day, but there might be some leads that are going to be generated from this person. And it's the same with finding investors. They make warm intros, even though maybe you're not the best fit for their fund at the moment. And going to events like this was also something we realized is super important.

Speaker 2 [42:07]

Ina, you were also talking about being an ecosystem who not only invests but supports. So maybe you can also give us some insights what you think is important to meet the right people to get resources and support as a startup.

Speaker 3 [42:26]

There are various ecosystems and networks, and we have the startup factories now in the major cities, which I feel are very valuable because they are all founder-supporting hubs. So the infrastructure, I feel, is really great, so that you get the advice, and we also see that the number of startups is growing. We have an increase of 30% to 3,700 last year. So there is a movement. There is an improvement. But I feel that we really need to have very personalized programs for the startups. So in a sense of that you really need to match mentors and investors very accurately to the startups in order to really achieve the best thing. And it's not about bringing only in one discipline the people together, but to foster interdisciplinary thinking. So this is why we said we do not concentrate on deep tech and AI only. We really make it very broad because then the ecosystem can really have the biggest outcome, more or less. And this is also the feedback we get because we have this open ecosystem. Typically, you have an AI garage, you have a deep tech accelerator, you have a life science accelerator, but it's a new time. It's a new time. We're talking about meta technologies and we need to bring these people all together. And this is what we try, actually. With all conferences we do, it's not depending on industries. it's really depending on investing and founding and then you have an impact round table, an AI round table but at the end it's the biggest challenge to bring all the big brains together in one room and then I feel we have a great chance and to meet as a founder to meet investors is difficult, we know that it's very network related and 80% of the money is really generated out of personal contacts and this is what we need to improve and we all do that.

Speaker 5 [44:51]

Yeah, 100%. So, I mean, this is what basically formed the venture capital industry over the past, I would say, 10, 15 years, that most money was, you know, kind of given through these boys clubs, you know, where successful founders or other successful guys on the market had these WhatsApp chats and they were like, hey, do you know that one? Do you know that one? and so money was distributed. But to the vast majority of startups, basically they lacked the access point to get in there and to get into these circles. And I think, as Ina said, we have since last year the startup factories all over Germany. They're amazing. They're great. They have sometimes even office space for you guys so you can rent a space there and they spare with you in all kind of regards. And they also have the touch points to the university incubation centers and to all the other ecosystem players in the startup world and know where to send you, you know, because you will face challenges every single day and they will just be there for you and help you find the right solution for it. so I think this is great and I also believe but I also believe and this is incredibly important and I think something to for entrepreneurs at least this was my experience and this is what I look for when I invest as an entrepreneur I often see entrepreneurs pitching to us and they come and they're like okay this is my product and with that product we're going to be a unicorn and I'm like yeah yeah you're not so this product is probably not going to be the product that you go on the market with Sarah, maybe you can give a few insights on what your product turned out to be. But typically, you have a hypothesis that this is the product and then you have to iterate and iterate and iterate because you just realize nobody's buying it. So you kind of need to change it and adjust and adjust and adjust. And this trial and error phase needs to be very, very, very quickly, as I said before. And you will be quicker if you have a better network. If you are faster with contacts in the industry, so you have sparring partners in the industry, if you are faster with expert sparring, if you are faster with politics, you also need contacts to politics most of the time. So you just need to have access to these networks. And you need to be open to get the support and just ask for help. and I think just for you to be quicker in learning because you will learn, you have to learn all the time.

Speaker 2 [47:37]

Yes, so it's there's a huge support Yeah ecosystem and and it's gonna be really helpful which brings us back to the question in the beginning if It is a good time to found a startup and maybe here are some founders with us or some prospect founders Thinking about founding a startup so to close the session. I would like to ask you. What is your advice for? For founders or future founders. Maybe we start with you. What's your advice as a founder to? founders or prospect founders

Speaker 3 [48:13]

Mm-hmm.

Speaker 4 [48:16]

I don't think it can be a fully rational decision to found a startup, honestly, if you think about all the outcome probability. So I think if you're convinced of the problem that you see, the solution that you have, and if you have a good team, I think it's always a great moment to test it out. A lot of very successful startups were founded when the economy was not at its best or founded during even, not catastrophes, but during very tough times. I think that should not be the reason to stop you. I think if you have a great team and you've found a problem that you want to solve and you see that you're quite resilient, then I would go for it. Go for it, okay.

Speaker 2 [48:56]

for it. Okay, great. What's your yeah, hint?

Speaker 5 [49:03]

founders? Dare it. Just try it out. If you have a team, if you're ready for it, if you really want to generate impact and create something big, you will not be able to do that in an employment. Not in the same way. That's what I personally believe. Just try it out. And if you fail, it doesn't matter. It's okay. You fail, you go on. You are smart people. You will find your way and it'll be great.

Speaker 3 [49:40]

choose co-founder carefully so in my portfolio I actually see that some teams got disrupted over time I mean you know it's probably more stressful time you have and also choose investors carefully I think that's the second thing and to have good contracts in place yeah so if you have struggled with your co-founder you should have a good bed lever close or good lever close in your contracts. So because at the beginning, typically founders are very enthusiastic and they would never think that they would separate from their founders. But it really happens more often actually than I thought of. And this makes it really difficult also for investors if teams get disrupted or if you have micromanager investors on board, we discussed it. So there are really investors out there who are more or less looking for a role to play the co-CEO of the company. And this is really difficult because we as investors, we are just there for giving advice, but we are not around for managing the companies as co-CEOs.

Speaker 2 [51:04]

Thank you so much for being here today at our panel. I hand over to you, Alexander, for questions from the audience.

Speaker 1 [51:13]

First, thanks for this amazing panel. And before we start with Q&A, we would like to point to an initiative from Encourage Ventures. So I would need the second, yes, here. You see Encourage Ventures, there's for sustainable future, female founders challenge. There's a QR code. You can just like, or you want to say something about it?

Speaker 3 [51:45]

No, I'm just saying it's a challenge for diverse led startups.

Speaker 1 [51:45]

Yeah.

Speaker 3 [51:51]

That's important.

Speaker 1 [51:52]

Sorry, I thought it was obvious in this context. Thanks for pointing that out. So, yeah, just

Speaker 3 [51:52]

Oh, yeah.

Speaker 1 [51:58]

get your phone, check it out. I think it's a great initiative. Yeah. And we also take a picture of that. So, we have quite a few questions. So, and if you have more questions, can still ask on talkspython.com. First question is, would you say that the network is a huge factor when building a startup and any suggestions how to get into the right circles?

Speaker 5 [52:33]

Yes. It's crucial. It's really crucial. Yeah, go to the startup hubs. Go to the factories. And if you found an AI startup, go to Hush and AI. It's a great point to be. Kalina and the team will help you to get to the next right people. I mean, there is, and this is something which hasn't been there five years ago or six years. Ina, when did you found five years ago, right? So I found it six years ago. I mean, that was shortly before Corona, but these hubs weren't there. So it was incredibly difficult if you weren't in the middle of Berlin and in some kind of sort of ecosystem and found a network to get in. But today it's not anymore. Just go to these places, talk to them, be open, say this is my idea and I need support. Where can I go? And they will help you.

Speaker 1 [53:35]

Yeah, so question to the group.

Speaker 4 [53:38]

Maybe as an encouragement, I fully agree on that one, that you need to join these networks. I found them quite welcoming. So it's not that tough if you go to an event to meet someone who you can easily talk to. And I feel then getting these warm intros to other networks, meeting investors who might not invest in you, but who will introduce you to five more investors, that's something that's working really nicely in these ecosystems. so always

Speaker 1 [54:08]

Do you sometimes just stand yourself in the way because you're afraid to ask and people are warm? You said they were very welcoming.

Speaker 4 [54:16]

Yeah, I think in the beginning you're going to these events, you're standing there, you're like, okay, I know not a single person, where do I go, how do I start, yeah, talking with the first one, and I had a lot of very positive experiences along the way, and so I would encourage, yeah, to just try it out, and there are many very, very helpful people in these ecosystems.

Speaker 3 [54:38]

And increase visibility. I mean, as you just mentioned, the founder challenge we are implementing, but also go to the conferences and apply as speakers. Because you typically not only bring a great business model on the table, you also bring a specific knowledge on the table. I can mention Annika Moutzius. She not only founded Ampion, but she's also an AI specialist. And if you have this visibility, sometimes it helps to support that your product is self-selling because you really get to the public, you get to the newspapers, and it's difficult sometimes because you're so concentrated on what you're doing and building technology, but increasing visibility is really important. Not overengineering it, but it's part of the game.

Speaker 1 [55:38]

Next question. If German investors do not invest in German startups, where do they invest? Does the government have any plan to step in and take action to channel small investments into startups?

Speaker 3 [55:53]

I mean, the public funds are really huge already. So this is interestingly what private investors claim for, that our federal government invests more, but they have founded the high-tech Gründerfonds. So they already have more or less one billion under management now being combined with the deep tech and climate fund, also bringing a billion on the table. But we have a huge fortune in private hands. So you can tell I'm a lady of numbers. So we have 9,000 billions in life insurances and in our accounts. 9,000 billion. And we are investing 7 billion per year in startups. So this is so, I mean, it's embarrassing. It's not only sad. I would say it's embarrassing. And this does not comprise all the money which is invested in buildings, in premises. And this number is probably even higher. So it's really crazy. And what I feel is the most craziest thing, that these people do not feel responsible for investing in our future. I mean, it's maybe a little bit harsh. It's all our responsibility to change that. Because, I mean, the government, you know, we have a big issue with financing all our social insurances, so there's no money left at the moment. So we are at a tipping point. And I feel, given the fact that the people, I mean, now Dubai is not really very sexy anymore, so the people come back, I really meet investors who do not have a residency because then they don't have to pay taxes. But this is not my goal, yeah, as an investor, not to have a residency. Honestly, sure, I take care about return on investments, but I feel it's also a responsibility to strengthen entrepreneurship in Germany. And this is wherever you go. And if you talk to the people, they really feel affected. And I said, yeah, you're right. but nobody told me so far to invest in startups.

Speaker 5 [58:22]

And maybe to add something, and also for the understanding, because I don't know how familiar with the venture capital market, and it's not so that the German investors who have the wealth and the money are investing abroad. They just don't invest in real estate. They have it on the deposits, on the bank deposits. So what we face, and this is a huge issue, and Ina has addressed this at the beginning, we actually have okayish money on the seed, pre-seed stage, but we have huge, huge, huge issues once we hit the Series B stage because we have just a limited amount of larger funds. And the moment you are a larger venture capital fund, we have huge regulations coming up, Europe, Germany, as you can imagine. And so a lot of the money or a lot of startups face the issue that they have the possibility to either or the opportunity to either build a consortium to, for instance, raise a 50 million round or 100 million rounds to either create a consortium of 10 venture capital investors, family offices or whatsoever, who each give 10 million. or they have a U.S. investor or an investor from the Emirates or wherever and he says to them, yeah, my minimum ticket is $50 million. How much do you want? $100. Okay, then I'll give you $100. So you have one investor versus a consortium of 10 investors and you can imagine if you're a busy entrepreneur, what is easier for you to handle. And especially in these deep technologies and the technologies that make us sovereign in an international context, this is where the international investors, you know... jump on and say, okay, this is in particular interesting. And this is where we have a huge, huge, huge, huge, huge financing gap that we need and can only address if we find ways to mobilize this capital that Ina just mentioned. So we need to educate a lot. And we need success stories in Germany so people dare to invest.

Speaker 1 [60:49]

Next question is, in your experience, are startups coming from science more or less successful than startups in other areas as tech, marketing, and so on?

Speaker 3 [61:06]

Less successful, you said.

Speaker 1 [61:09]

More or less. So are startups coming from science more or less successful than startups in other areas? I think I would rephrase it. Are they more successful or less successful? Or is that you can also know there's no data on that.

Speaker 3 [61:28]

No, I think 50% out of the startups coming from science. And as you mentioned, you are supported by the university, but I've never said, I've never seen a study on that. So I think the more or less overall regulatory framework and financial framework we discussed is the same. But the spin-offs from the institutions and university, I would say definitely have more support in the beginning that maybe at the first instance so I experienced a great startup they're now working on a microchip at a capsule basis it's a Munich startup so they didn't have access to the university because they were in the spin off so I mean that's where we probably need to improve for the future

Speaker 5 [62:24]

Maybe they're also just something. Success here, I think, is also relative again. And I would rephrase the question, what is fundable at the moment? And this is something that you should probably think of once you've found a business. What are investors looking for at the moment? And what we saw over the last 10 years, over 10, 15 years, until basically the Ukraine war started, was that venture capital investors only invested, mainly only invested in SaaS, so software as a service. So also, us at the point where we had the quantum technology startup, we faced discussions with so many investors because we were building a full-stack quantum computer with hardware, and they were like, no, that's not good. No, we don't invest in hardware. We just invest in quantum software. that was like, who's going to run the quantum software at one point in time? You need the hardware. And so German investors just didn't like hardware and they didn't like deep tech because it was capital heavy and capital intense. And this, I personally believe, is amazing because this changed over the last three to four years. They're still not very good, I would say. And we're all in the learning process, I would say, because it's new. investing in hardware and deep tech, but we see a lot more funds dedicated on hardware and deep tech firms, and they are more related to science than the SaaS, I don't know, building another application for whatever. And I think this has turned out positive over the last years. So there's an openness for a larger variety of technologies.

Speaker 1 [64:21]

I would like to combine two questions because they lead in the same direction. What are recommendations for founders with small kids which cannot afford to work full-time on their startup yet to get a full point where they can work full-time on their startup and also balance family life? And the second question is, what do you think about part-time founding one, two days per week?

Speaker 5 [64:50]

Yeah, as a mother of three, I have a very clear opinion on that. It's incredibly hard, and part-time is not fundable. That's my personal opinion. You can be an incredible entrepreneur, but it's going to be heavy, heavy, heavy to get venture capital just because it's so difficult to build a successful business. And if you do it two days a week, it's just incredibly... it just reduces the probability even more to become successful. But it's possible to combine it. Not in part-time, you just need to be creative so you can handle family and your job. And as an entrepreneur, and this is amazing, you are incredibly flexible. When you work where you work, you have huge flexibility. So I would rather think of, if you really want to do it and if you want to be successful how can you find creative ways you know to combine both but don't phrase it as part-time yeah

Speaker 3 [65:57]

Maybe to build on that, because I'm also a mother of three, so a proud mother of three, as you are. And I feel this part-time working discussion is a very German-speaking one. So what you actually see, all the legislation around working part-time only exists in Germany, Switzerland, and Austria. Nowhere else in the world it's a topic. you always, in the US you never ask as a lady about these topics and I feel we should really change and this is a change of how we work in Germany, if we take Scandinavia for example, so we had a CEO, Jim Snabe at the company I mentioned before, he's from Denmark and we couldn't reach him after 5 p.m. because he was, I said, he disappeared at 5. Does he have a, you know, typically he was saying, oh, you're leaving at 5. Do you have a half-time job or what's going on? Yeah. So you see, he played a role model. It was amazing. You couldn't reach him after 5 p.m. And this is also a question of our society and how we deal with that. If we only, how we want to work together and it's also about choosing the right partner at the end. In Germany, the fact is if a man gets married, he works more than before because he's typically then the only person responsible for being the hopfadiner or whatsoever. So it's just crazy. So it's crazy. We all have to work in the same way and then you can do everything as a couple. I feel you can also found a company. I'm currently investing in EatEPI. It's a fantastic app for girls and boys with eating disorders. There are three. The founders are raising three kids, and they're doing fantastic jobs, but they have great partners also, taking responsibility. And I feel we need to change the discussion in these countries about working part-time, always turn red. Because it's all shifted to the women, how you manage it and so on. It's all our responsibility. And the whole regulation in Germany after the Second World War allocated the women being at home, ear-gutting, splitting, one insurance payment for the whole company half time, schools and we are really the oldest fashioned society in the world and this is what we need to change all together you know I'm getting here very emotional but there's so many great men here in the audience so really take this with you because it's up to all of us to change that. Sorry for that.

Speaker 5 [69:12]

No, 100%. And really, the thing is, you know, when you are in, you will face, Sarah will know, you will face liquidity squeezes. Venture capital is very short-term oriented in terms of liquidity management. So investors will give you money for maximum 24 months. And it's typically on a good business plan. So if the business plan is not realizing or not materializing in the top line, you will run out of money within 18 months. And then you will have to fundraise. And fundraising is tough. You will have to approach probably 50 investors to get maybe one out of it. So it's just a tough process. If you talk to an investor and you tell them, I do part-time 20 hours, in these in these weeks you work 60 hours minimum yeah um this is normal and this is typical and i see you nodding which so um so try to rephrase it as an entrepreneur you have you have flexibility you can define your own culture and this is a huge privilege yeah um and but when you talk to an investor if you want to fundraise you say i have kids i combine it i i work flexible i work flexibly but when the company needs me i am there yeah and i think this is and there may be intensive phases but there may be also phases you know where you can recover a bit and then you can be with your kids or you can pick them up or you can go to a birthday party or whatsoever so you know you can do all these different things you are not stuck in an office and have face time and i think you we all in germany need to to think more you can even take your kid to um to the office nobody's going to say a word because you're the boss um so it's great yeah um so if i would have brought my kids to the bank they would have looked at me like no we're not going to do that so um you know this This is amazing, this is a huge opportunity you have, so you can handle it, but you have to be really, really flexible and creative. I think this is what is important.

Speaker 1 [71:35]

We're almost out of time. Two more questions. Two last questions. No, I think it's awesome because for me, there's many questions here and I say, hey, this really worked. So one question, is there a way to build and found without the money capital shark tank mess?

Speaker 5 [71:56]

Percent of what?

Speaker 1 [71:58]

Shark tank, yes. I think it's interesting, a cliché, like we very often see a Höhle der Löwen and stuff like that. I mean, real-world Czech. Tasking from a technical person.

Speaker 5 [72:14]

Do it like Sarah, find customers, and I always say when you find customers, investors will come. So it's incredibly difficult to find customers if you nail a huge enterprise customer by bootstrapping your firm, investors will talk to you. They will certainly listen to what you say and what you offer.

Speaker 1 [72:40]

Sorry, did you ever have the feeling to be in this shark tank mess or is it just like a cliche or is it just like for different products or specific products where you need like a consumer marketing or something like that?

Speaker 4 [72:54]

Mean fundraising is tough. That's for sure. I would have never called a meeting a shark tank meeting to be honest afterwards I mean, there are some stereotypes. Maybe you keep them in mind more dominantly than others, but You need to have certain or you need to reach certain KPIs probably you present certain numbers to Confidently sell your product not only to customers but to to investors as well. So for us us when we were at the end of our bootstrapping phase and we decided to fundraise, for example. And we luckily had paying customers at that point, but still increasing the license revenues with existing enterprise customers, for example, at that point was super important. And once we get to those KPIs, you see that interest arises pretty fast, and then you might even get that FOMO moment everyone's talking about, and suddenly they might be interested in you. But yeah, I think the Shark Tank, I wouldn't fully agree on that picture, to be honest. Many of them are super helpful and we got warm intros to other investors through ones we couldn't convince at that point or where we weren't a perfect fit. So it could be an opportunity to get to your perfect investor.

Speaker 1 [74:12]

this brings us to the last question we have time for in which stage of a startup can one start talking to investors based on the idea and the business model or later when you already have a prototype for example

Speaker 3 [74:28]

I mean, for the investor, it's better when we get at the table very early, because these are interesting opportunities. But the business model needs to be clear. So I would say most of mine, I mean, let's say 50% was really very early, but where I felt the business model is really unique and I want to invest. I feel to go to these challenges, also to the digital gipfel of the federal government, to the public, apply for, let's say, Falling Walls is a great initiative. So they have challenges for labs, ideas, for startups, for scale-ups. So there's so many opportunities nowadays to really apply. And I would say, if you're really convinced of your idea and you feel there's nothing else in the market already, you should go for it right away. Because for all stages, for idea, startup and skill, you will find the right instruments, the right audiences to really rock it.

Speaker 1 [75:45]

sky's the limit I heard it more thoughts?

Speaker 2 [75:53]

Rocket for a nice final... Sorry, you wanted to add something the other way.

Speaker 4 [75:57]

so I can agree from our perspective we are in a very competitive market so for us I think it was really good to demonstrate this product market fit first and to have paying customers and then ask or approach the first investors so I think in that case this bootstrapping phase was very valuable for us But at the same time, I think there are many business models where just the idea, if it's unique, if you have a very good vision and a very good plan to get there, being earlier can also be an advantage because for us, we were really dependent on the first customers. They might not always steer you directly to your vision. Sometimes it's good to gain some independency along the way. So finding that perfect time to approach investors is, I think, critical.

Speaker 5 [76:46]

Yeah, I just want to add that there are different investor types and just, you know, be clear who you talk to. So business angels for very early stages, then there are pre-seed investors for pre-revenue startups, and then there are seed investors for early startups like Sarah who have first customer attraction, and then there are gross investors who need you to really scale top line already. And I think it's always important to kind of understand who to address and which stage of your firm. And what I wouldn't recommend is just having an idea and pitching it to an investor without a plan. If you just say, I think I have a great idea. I have a spark. I have a spark. Tomorrow I go to an investor and I will... I don't know. this is we just get so many not only ideas we get so many ideas with structured plans that are ready to get executed that you know we are just do not have unfortunately do not have the capacity not that we believe that you haven't a great idea we just need you to have a plan already set up just because we don't have the capacity to talk to each one of you in each stage so So I would recommend, you know, and business angel may be a bit earlier in, but for a venture capital investor, you really need a plan. And it's also great to have some proof point that the plan is working.

Speaker 1 [78:22]

Thank you so much, Tatjana, Sana, Ina, Kalina, for joining us on this panel. Thank you a lot for joining and your questions. And yeah, so let's wrap this panel up. I think we're probably around a bit if somebody wants to talk to you directly with a question. And yeah, thanks a lot for the huge applause to our panelists. Thank you.