3 questions to smart minds

International VCs have German startups in their sights

For this 3 questions to Marc René Spitz

LLM, Green­Gate Partners
Photo: Marc René Spitz
27. April 2023

In German-spea­king count­ries, it is often the case that seed rounds are finan­ced by German inves­tors, but in the growth phase, inter­na­tio­nal VCs quickly make them­sel­ves very present and step in. German rese­arch & deve­lo­p­ment remains among the best in the world and is in high demand.

For this 3 ques­ti­ons to Marc René Spitz, LLM, Part­ner at Green­Gate Partners.

1. : You recently closed a seed round for deep tech startup QDRANT with inter­na­tio­nal inves­tors inclu­ding Unsual Ventures (Cali­for­nia). Is it common for seed rounds to be over­sub­scri­bed multi­ple times?

Normally this does not happen. In the pre-seed or seed rounds, there is regu­larly one main inves­tor and the remai­ning parts of the funding are usually reple­nis­hed by a variety of busi­ness angels and/or invest­ment clubs.

In this parti­cu­lar case, it was special circum­s­tances that led to an immensely successful round: Qdrant Solu­ti­ons GmbH was foun­ded only 1.5 years ago, but deals with an incre­di­bly exci­ting and rele­vant busi­ness field. The company’s soft­ware is an open source vector data­base and vector search engine. In the curr­ently highly sought-after field of arti­fi­cial intel­li­gence, vectors help to find and make available unstruc­tu­red content such as texts, images or videos. OpenAI, the company behind ChatGPT, recom­mends Qdrant, among others, for sear­ching via vectors. — Another reason may be the main inves­tor, which has a successful track record for tech­no­logy invest­ments. This led to a pull effect, as other outside inves­tors had also seen a factual vali­da­tion of the idea and the busi­ness case.

The finan­cing round was imple­men­ted within six weeks from term sheet to signing. This spoke to the desire of all parties to spend rela­tively little time on legal details and more time on econo­mic deve­lo­p­ment. Another weighty indi­ca­tion of a great deve­lo­p­ment of the company. If the arti­fi­cial intel­li­gence market deve­lops anywhere near as predic­ted, we’re talking about a company that could be a unicorn in two to four years.

This round of funding also high­lights a trend that began with the end of cheap money in Q3 2022, namely that VC inves­tors are, on the whole, even more careful about the nature of the invest­ment. Ther­e­fore, the broad mass of start­ups will have a harder time getting funding, but the promi­sing start­ups will be cour­ted even more in return. The start-ups that we at Green­Gate expe­ri­ence from our daily work, espe­ci­ally from the start-up strong­holds of Munich and Berlin, have extre­mely inte­res­t­ing tech­no­logy products and busi­ness models that will be good for the German economy in the medium to long term.

2. How is it that German angel inves­tors get invol­ved in start­ups, but in the early growth phases, well-known inter­na­tio­nal VCs are alre­ady at the door?

The world has become smal­ler and solu­ti­ons from tech­no­logy compa­nies that work in Germany can work all over the world. In this area, there are neither language barriers nor obsta­cles due to natio­nal borders. In this respect, inter­na­tio­nal money can be attrac­ted more easily. Why there are no German VC funds that enter the later finan­cing rounds with “deep pockets” can hardly be answe­red unequivocally.

In my opinion, it is also due to the diffi­culty of the exit via IPO. If you listen to older market parti­ci­pants, the expe­ri­ence of the bank­ruptcy of the Neuer Markt at the turn of the mill­en­nium was proba­bly forma­tive and signi­fi­cantly redu­ced the willing­ness to set up a German tech­no­logy exch­ange (simi­lar to Nasdaq). Fort­u­na­tely, poli­ti­ci­ans have seen this gap and, among other things, have set up the DeepT­ech & Climate Fund with a volume of one billion euros. While this provi­des hope, it does not replace the need for private funds. The fact that there are compa­nies for such a tech­no­logy exch­ange is suffi­ci­ently well known and is also conti­nuously vali­da­ted; for exam­ple, the recent stra­te­gic license agree­ment between Tubu­lis GmbH from Martins­ried and Bris­tol Myers Squibb with a volume of up to one billion US dollars speaks for itself.

3. Her other focus is on health­care. What trends are you obser­ving in this sector?

The Health­Care sector in Germany is incre­di­bly exci­ting. Howe­ver, start-ups in this area are being made unneces­s­a­rily diffi­cult. Flag­ship compa­nies such as Wells­ter Health­tech Group, Virto­nomy, Perfood, Sanity Group, and even Mushlabs have extre­mely good busi­ness models, but cannot focus exclu­si­vely on pati­ents and must expend considera­ble effort to comply with regu­la­tory requi­re­ments. It’s perfectly clear that diffe­rent rules must apply in the health tech sector than for a strea­ming service, for exam­ple, and no one doubts that.

But in order to really improve people’s health and make Germany a beacon of medi­cal care in the future, various basic elements of the health­care system would have to change. As an outsi­der, I see little willing­ness to do this. One or two phar­maceu­ti­cal compa­nies would rather see a signi­fi­cant move­ment toward more rese­arch and deve­lo­p­ment and less administration.

Subscribe newsletter

Here you can read about the latest transactions, IPOs, private equity deals and venture capital investments, who has raised a new fund, how Buy & Build activities are going.

Get in touch

Contact us!
fyb [at]