Venture capital and success factors
Speaker
Steinbeis
Christian, you and your team are meeting a lot of young fast growing companies during the year. What do you pay attention to?
Christian
For us there are basically three main aspects we are looking at: team, technology and scalability. The more experienced and stress resistant the team, the better. Also we want to understand the teams' vision and goals and how aligned the single team members are. This is an important topic, that can not be simply marked off at a checklist.
Steinbeis
How do you do it?
Christian
Well, basically you need to get to know the team, the founders as well as the management team to get a clear view. One of the main reasons why companies fail at this stage is because of the team. This is the reason why it is paramount to invest enough time in this area.
Steinbeis
You also mentioned scalability?
Christian
Yes, we evaluate the scalability of the firms' products and/or services. Companies like Kreditech, Crowdfox and Mapudo are good examples for scalable business models.
Steinbeis
And these are also exciting products and services
Christian
You are right. We are often enthusiastic about the products and services that are offered by the companies. More important is the question: Does the product really add value time or money wise from the customers' standpoint. If the answer is yes and is backed by relevant customers' feedback there is a good chance for scalability with the help of the right sales strategy and a good execution.
Steinbeis
Venture Capital is often sufficiently available in the seed phase but later on it gets more difficult for companies to acquire growth capital.
Christian
We also observe that it is often difficult for young fast growing companies to finance their growth after the seed phase. This also has to do with the amounts needed to finance the expansion of the business model. Companies need a lot of time to obtain new funds from new investors. And it is quite challenging for them because it is more about identifying the right potential investors then spreading a termsheet among all the potential investors. This can be very time consuming and frustrating for the young company.