You can read the first part of the interview with Picus Capital here.
Munich Startup: Why is entrepreneurial sparring so beneficial for founders and investors?
Robin Godenrath, Picus Capital: Let's assume a potential founder finds the mobility market interesting. At the same time, there's an investor who has been active in the mobility tech sector for a long time and has seen many models. This means they know what companies have done well strategically and have also seen where there might have been difficulties. The exchange between the investor, as an expert, and the potential founder is very valuable because the startup receives input from the investment side. This allows the startup to receive early feedback on the initial model, find out which product it can bring to market and what needs to be considered – all of this much more efficiently, as they can draw on a broad wealth of experience.
This is equally true if someone wants to start a company in the finance or insurance sector: They want to talk to people from the banking or insurance industry. These are all contacts we, as a VC, can establish, so that the founder receives the right information at the right time and can start a well-founded business. We recently launched our Picus Expert Program, through which founders can interact with top experts at the VP and C-level of the most exciting companies in Europe and the US and leverage their expertise.
Picus Capital: “Growing with cautious optimism”
Munich Startup: What impact do crises like the Corona crisis have on your business?
Robin Godenrath: The coronavirus crisis had a short-term but significant impact, particularly on the fundraising environment, last year. Initially, there was considerable uncertainty in the market, and investors were initially more cautious, which made fundraising significantly more difficult at the beginning of the pandemic. However, the whole process also had a strong catalytic effect and accelerated many developments. The setback in fundraising quickly recovered and even gained significant momentum. Both investment amounts and valuations are either at pre-pandemic levels or have increased significantly. Similar developments can be seen in the stock market.
While we see all sectors recovering in the long term, there have nevertheless been significant impacts on certain industries and models. For some companies, such as those in the travel tech sector, things remain challenging, while others, such as those in remote health, are experiencing an exciting phase due to COVID-19. But in general, the success of individual startups will depend heavily on economic developments over the next few years. That's why we're big fans of growing with cautious optimism. The most important thing is that companies build sustainable and successful businesses over the next ten years and don't move too quickly in the short term and risk losing their business model.
Important trends are remote work and remote medicine
Munich Startup: Do you see any new trends for the startup scene this year?
Robin Godenrath: Remote work is a big issue for us. I see the problem here being that people are getting a bit frustrated at home, and the team culture is being lost—that corporate spirit that's so important for many startups. At the same time, the fact that so many employees are working from home has intensified the "global war for talent." Many founders are now looking for talent even more internationally. That's why we recently invested in a company, Workmotion, that helps companies easily hire employees in many different countries.
We're seeing a similar trend in the remote medicine sector. People have spent more time at home due to the coronavirus pandemic, but many important aspects of life, such as doctor's visits, still had to be managed. That's why we invested in a company that Avi Medical, which includes both its own practices and all digital tools that can be used: from digital anamnesis to the question of whether the treatment has helped.
“The DiGA will change a lot”
And with the DiGA (Editor's note: Digital health applications) there is now, for the first time, the possibility of monetizing digital solutions through insurance companies in the healthcare sector. This used to be a real struggle: The software developer Kaia Health, for example, had to discuss the advantages of digital technology with the insurance companies themselves, such as saving money for the insurance company. End users themselves have a relatively low willingness to pay for digital solutions – this is due to the fact that patients in this country are not used to paying for healthcare services out of their own pockets. Now, however, there is a structured way to offer digital solutions – and this will lead to many exciting business models.
Munich Startup: How does Picus Capital assess the startup scene here in Munich?
Robin Godenrath: I think the startup scene in Munich has done a lot of things right in recent years, especially when it comes to supporting potential founders in the early stages. There are many collaborations and engagements between universities and venture capital funds. And there are dedicated university programs that focus on entrepreneurship, such as the CDTM or Manage & More at LMU. These are exciting programs that introduce students to the world of entrepreneurship. This is important so that they have the courage to take the step into founding a company.
“In Munich we are pioneers”
What I find very exciting about the Munich scene becomes clear when you compare it to the US: There are many more product founders there than in Germany – founders who really understand how to build products and who also have the necessary business acumen to start a company. Such founders are still in the minority here in Germany and Europe. The top universities in the US even have programs for this, whereas here it is still very rare. But compared to Germany, we in Munich are a pioneer in this regard. If you look at the companies that have emerged from the CDTM, for example, you can see that they have deep value propositions that also have a certain level of complexity. That is something we need more of in Germany.
Munich Startup: And what else could go better?
Robin Godenrath: There are many companies in the US and Asia that think bigger, while many companies here are still too nationally focused. In Europe, with countries like France and Italy, we have different languages, different regulatory conditions, and different mindsets. Against this backdrop, anyone who wants to build a large company needs to think outside the box and not just about a German solution. This also means that, right from the start, when building a team, a much more diverse approach is necessary. With an international team, startups are better able to consider European or even global solutions.
“Munich startups are too hesitant about internationalization”
I always find it fascinating to look at companies from Lithuania, Latvia, Estonia, or Scandinavia. These countries are sometimes too small to build a truly large company, which in turn often leads founders to think European from the very beginning. This is also the case with companies like Klarna or Spotify: Their models are scalable. For some models, it's not quite so easy, but we in Germany still need to get better and faster when it comes to scalability and internationalization.
Munich Startup: Who can startups contact to get in touch with you?
Robin Godenrath: Basically, anyone can contact us, either via our general email address on the Website as well as with the various people in charge at Picus Capital. If you spend a little more time with us, you can quickly find out who's responsible for which topic, and if you've done some research beforehand, you'll naturally leave an even better impression. Especially if we don't know the person yet. The best way, though, is when we get an introduction from someone. Our comfort level is higher, and so is our trust, especially if we have a positive relationship with the person who introduced us to the conversation. In any case, we're always happy to start the conversation.
