Munich-based investor Target Partners turns 20 this year. It's high time for Munich Startup to conduct an interview with the venture capitalist. With a fund volume of 300 million euros, the firm has invested in Munich-based startups such as IoT startup Tado, the superconductor company Theva or the indoor digitizers Navvis invested. The VC investor considers itself a partner on equal terms and doesn't place much value on short-term speculation. Kurt Müller, one of the partners, in our "Asked at" interview.
Please introduce yourselves briefly!
Target Partners is a tech-focused early-stage B2B investor from Munich with €300 million in capital under management. We have been active as a team for almost 20 years and are ourselves long-standing, successful entrepreneurs, technologists, managers, and investors from Europe and the US who have founded or managed companies, developed, or sold technology products.
Favorite industries: Software, Cloud, Optoelectronics and IoT
What do you prefer to invest in?
We focus on tech markets that are ready for innovation and radical change. These are typically companies in high-growth technology sectors such as enterprise software, Cloud-Infrastructure technologies, optoelectronics or Internet of ThingsWe primarily invest in young technology companies from German-speaking countries in their early stages and support the founders in the various phases of their life cycle.
Do you scout for promising companies yourself or do you have consultants for this?
Our deal flow has a passive and an active side. On average, we receive 120 inquiries per month—that's the passive part. The most productive source of new deals is our own network, which we have cultivated and built over decades. It consists of personal contacts with successful entrepreneurs and CTOs, as well as business angels, other VCs, and co-investors. They often provide the successful introductions because they usually know what's a good fit for us.
We also actively seek out new deals. We use outbound marketing, attend developer conferences, meetups, and workshops, and always keep an eye on the industries that interest us.
Help startups avoid mistakes
Do startups have to be afraid that you will interfere too much?
No. We see ourselves as partners and want to support founders in developing their company, for example, in terms of strategy, fundraising, or international expansion. Our experience benefits startups because we help them avoid mistakes and provide them with a large network. However, we also know that every entrepreneur has to make their own decisions and gain their own experiences—which is why we never get involved in operational matters.
At what stage do startups ideally approach you?
Target Partners invests in the early stages, initially providing between €0.5 million and €3 million. We are typically the first institutional investor and advise the founders from the very beginning. We typically hold a stake in a company for three to ten years. We don't believe in short-term speculation or rushing into difficult times. We only want to sell our stake when the company is a huge success!
Target Partners as the first institutional investor
To be successful, a startup must…
...have an outstanding team. We invest in people. The more mature the idea and the more concrete the product, the better. But in the early stages, business ideas are only as good as the members of the founding team who implement them. It's always good when team members come from different backgrounds—complementary interests and skill sets bring several advantages.
Tell us the knockout criteria for the pitch!
It's crucial for us that all team members have a voice during the pitch—we don't like hearing the CEO do 95 percent of the talking. Since we're investing in the team, we want to get to know all the founders. Without team spirit, investment rarely happens.
“We don’t give up easily”
What have you ever miscalculated?
Oh yes, over the last 20 years, we've often had to face reality. There are cases where the market doesn't develop as expected or competition is stronger.
But we don't give up easily. And many founders themselves notice when things aren't going as planned. Then a suggestion for changing the business model usually comes from them. We've successfully supported such "pivots" at several of our startups. It happens, and it's not always a cause for concern.
The trend of the year is…
… Deep Learning! That is, the massively parallelized machine learning that has led to the current boom in artificial intelligence.
Last but not least: Who do startups approach when they want to talk to you?
Contact us directly, or ideally even via a recommendation from our network. This increases the likelihood of getting to know each other better.
