Investor Talk #5
with Björn Lang from TechVision Fonds
In our next investor talk, we sat down with Björn Lang from TechVision Fonds, a well-established seed stage VC investor based in Aachen. With their focus on technology startups, the firm has already funded numerous regional ventures.
Niklas: Björn, since when have you been working for TechVision Fonds (TVF), and why are you still happy with this decision?
Björn: After my studies of Mechanical Engineering and Business Administration in Aachen (RWTH) and Seoul, South Korea, I have founded and run a start-up as CEO for about 3 years. After leaving the company, I joined S-UBG with their TechVision VC-fund in early 2018 and there are at least three particularly cool things about this firm:
With a team of 15, we do both, PE and VC “under one roof”. So both worlds can learn from and interact with each other. One thing we emphasize is collaboration and super early between start-ups and SMEs which, in many cases, are their first customers.
We are a regional investor. That means you know most of the teams and the network personally. This leads to a very strong bond between investors and start-ups, as well as the overall network, which I like pretty much.
We have a great team spirit and open-mindedness towards new ideas and change. That means, with an intrinsic motivation given, you can accomplish a lot here.
Niklas: Please tell us a bit more about TechVision (TVF) and the special relation to S-UBG. What differentiates your company from other VCs?
Björn: S-UBG is more or less the mothership. It has been in the private equity business for many years (32, to be precise). We have started dedicated VC-funds, such as TVF today, in 2007. The first two funds were named “Seedfonds Aachen”. The third and current generation is called “TechVision” because today we are no longer solely focusing on seed rounds.
As already mentioned when we talked about the things I like about TVF, our firm and fund are a bit different from most of the vehicles you see out there.
First, by investing in start-ups as well as in “German Mittelstand”, we can make up great connections between new and mature companies. Both worlds can learn a lot from each other. Second, as a regional investor, you have to take proper care of your ecosystem, because there is no other. I am not saying that other VCs act careless at all but we cannot afford treating a team unfairly and then just move on to a different city or country. So we put a lot of effort into fostering our regional start-up ecosystem instead of just harvesting the low hanging fruits. That is a very sustainable approach, I believe. Lastly, since we have a strong regional focus, we are open to pretty much everything technology- or business-wise. Of course, we have more expertise in one field than in another but as you can check out, our portfolio is pretty much diversified. We have invested in company software, mobility, Medtech, Biotech, educational start-ups, and so on. That makes it very interesting and colorful for us but also interesting for the teams who meet people with very different backgrounds.
Niklas: Please share with us some insights of your investment career, both an extraordinarily success and a real fuck-up story?
Björn: Our portfolio is a composition of success stories, of course ;).
I think a story that we always love to tell is the one about Adhesys Medical or “MAR” as it was originally named. Not because it has brought us the highest multiple in history but because it is a great example of taking chances where no one else saw them. By the way, it was founded by some of your former colleagues from RWTH Gründerzentrum. A team of business professionals, rather than chemists or physicians, bought patents from a large DAX-company to develop a medical glue to treat wounds and surgery scars. They managed to bring together the right operational team and investors, to found a company, buy the patents, develop an early product and then sell the company to a well-known pharma company that is also located in the region. To me, this is a great example to many people who would love to found a company but “lack the right idea”. So you do not necessarily have to be a genius-inventor to found and run a company. It is more about seeing something, others don’t see and then take the chance.
So far, I have not seen and experienced a real fuck-up as an investor. What I see sometimes are teams that are too reluctant in terms of their funding and the acceleration they could gain from a proper investment. Today, it is more than ever about speed. It is quite unrealistic to believe in one particular technology that can save you an advance forever. So you have to take advantage and move fast to be the winner. Founders should not think about preventing dilution too much but rather do anything to accelerate their companies and therefore create value for everyone.
Niklas: As a local investor based in Aachen, how do you assess the development of investment opportunities, as well as the quantity and quality of startups in our region?
Björn: With our new generation fund, we can invest in the Rhineland region with the major cities of Aachen, Bonn, Cologne, Düsseldorf, and the front Ruhr area. Being based in Aachen, we have strong bonds with the local start-up ecosystem, universities, and so on. We are very happy with the development the region has made within the last years. When I founded my own company five or six years ago, the landscape was different. Start-ups played a minor role and were much more something from another galaxy. Today, start-ups are in the spotlight of politics, universities, and so on and that is, where they belong. The ecosystem in and around Aachen has become much more professional. Many institutions have developed and the support start-ups get today is great. Of course, that has a lot to do with something like the digitalHUB and the great work of RWTH Innovation and the Gründerzentrum. The Aachen area still has a focus on tech founders and start-ups. We see many teams coming directly out of university. Typically, they have a strong tech background and therefore are very good at developing. Even if it sounds like a cliché, tech founders could still gain a lot by complementing their teams with the right business or salespeople in an early stage.
Niklas: With your experience, how can tech-focused startups prevent common mistakes in the funding process? What is often underestimated and leads to rejections?
Björn: First of all, tech founders have to strike a balance between being confident in their abilities and at the same time not relying too much on being in the lead forever. Most important is to have a look at the team. Is it complementary? Are the founders 100% committed? Do we need someone who brings more of a business perspective?
A startup failure is mostly not caused by a lack of technology but a lack in the team. So try to have the best possible team around you. And then know who your customer could be. Of course, that is something that can change over time but you must know whom to sell your product to, perspectively. Talk to these people as early as possible. That is irreplaceable knowledge you get for free!
Niklas: Lastly, how do you perceive the implications of the COVID-19 crisis in terms of startup funding so far?
Björn: Briefly, not too much at all. Similar to house prices that didn’t fall, I didn’t see VC end their investments. Sure, if it comes to investors that invest from a company's balance sheet, that is something that can get more difficult. But on the other hand, start-ups have to wonder if that is the right type of investor. So after all, I still see funding opportunities for start-ups that are better than ever. Good teams get the funding they need, at least when it comes to seed rounds. Germany and Europe are still lacking investors who can write the very big cheques, that is why so many companies are sold too early to the US.
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