3 questions to smart minds
Photo: J. Binnenbrücker | Capnamic Ventures

Multi Corporate & Multi Entrepreneur — Private Equity Funds

For this 3 questions to J. Binnenbrücker

Capna­mic Ventures
Photo: J. Binnen­brü­cker | Capna­mic Ventures
1. April 2014

Some compa­nies consider setting up their own corpo­rate venture unit and then decide against it. Instead, they are looking for an exter­nal enabler into new, digi­tal busi­ness worlds. For exam­ple, Capna­mic Ventures, the new multi-corpo­rate / multi-entre­pre­­neur PE fund laun­ched around 12 months ago by invest­ment experts Jörg Binnen­brü­cker and Chris­tian Siegele. In addi­tion to well-known compa­nies such as Univer­sal Music, successful family offices such as Wecken & Cie. as inves­tors for the first closing. — How can the stra­te­gies and goals of the various corpo­rate inves­tors be reconciled?

For this 3 ques­ti­ons to Lawyer, econo­mist and Foun­ding Part­ner of Capna­mic Ventures in Colo­gne, Germany

1. How did you come up with the idea of laun­ching a multi-corpo­rate / multi-entre­pre­neur fund? Have you met with much interest?

I joined the DuMont Schau­berg media group in 2007 to set up a fund for parti­ci­pa­tion in digi­tal media with DuMont Venture. At that time, it was prima­rily media compa­nies that domi­na­ted the venture capi­tal scene in this coun­try. In the years before, many compa­nies strug­g­led with the digi­tiza­tion of the indus­try. Start­ups had adapted more quickly to the new market condi­ti­ons and custo­mer needs, taking signi­fi­cant market share from the estab­lished play­ers. After the attempt at incu­ba­tion, i.e. the estab­lish­ment of new busi­ness units from within the company, had not paid off for many, more and more corpo­rate venture capi­tal units estab­lished them­sel­ves on the market. This was mostly based on the same moti­va­tion: parti­ci­pa­tion in the rapid growth of the indus­try, leverage of own reach and resour­ces and of course risk management.

Two expe­ri­en­ces from my time at DuMont Venture had a signi­fi­cant influence on the decis­ion to launch Capna­mic Ventures as a new fund: the realiza­tion that start­ups and corpo­ra­tes can bene­fit from each other and the obser­va­tion that more and more indus­tries are affec­ted by the incre­asing inter­con­nec­ted­ness of our society. Mean­while, digi­tiza­tion is not only affec­ting the busi­ness models of publishers and media houses. The music and enter­tain­ment indus­try, the retail sector, the finan­cial world and the health­care sector are expe­ri­en­cing simi­lar struc­tu­ral chan­ges. Capna­mic Ventures’ approach is ther­e­fore to bring many parties to the table. Our fund inves­tors are medium-sized and large compa­nies that can provide not only money but also network, know-how, reach and other resour­ces. In this way, we create a network with unique added value for our port­fo­lio and can syste­ma­ti­cally increase the chan­ces of success.

With this approach, we have fallen on the ears of many inves­tors. Nevert­hel­ess, it was a rocky road to the fund’s first closing. One reason for this is certainly our special inves­tor base. On the one hand, we are not looking for the expe­ri­en­ced finan­cial inves­tor, and on the other hand, the majo­rity of our LPs invest their own money and are accor­din­gly criti­cal when selec­ting invest­ments. Ther­e­fore, we are very proud of our part­ners from the first closing. After that, it was then easier to attract other part­ners to the fund and we are curr­ently in talks to further expand our network.

2. What is your invest­ment stra­tegy at Capna­mic Ventures? Do you focus on the busi­ness areas of your inves­tors? Has Capna­mic Ventures made any invest­ments yet? On what scale?

We invest in young growth compa­nies along the digi­tal value chain. We are exci­ted by start­ups that use digi­tal media to shor­ten clas­sic value chains or break down indus­try boun­da­ries. The range of topics is diverse and growing conti­nuously due to incre­asing digitization.

As an early-stage inves­tor, we focus on typi­cal A rounds. Sweet spot are compa­nies that can alre­ady prove trac­tion and are looking for EUR 0.5 — 2.5M. As a fund, Capna­mic Ventures is comple­tely inde­pen­dent and makes its invest­ment decis­i­ons auto­no­mously. Nevert­hel­ess, there are always thema­tic over­laps between port­fo­lio compa­nies and fund inves­tors. We then try to use these inter­faces and play out our added value. In the first active year, we made three invest­ments: adeven, glam­loop and trava­dor. All compa­nies alre­ady have direct coope­ra­ti­ons with our investors.

3. Should inves­tors also serve as the primary exit chan­nel for your invest­ments? Or is this just one imagi­nable exit scena­rio among several?

Since the fund is inde­pen­dent and we are measu­red by our return, the exit chan­nel is comple­tely open. We never seek a majo­rity stake and accor­din­gly always hold mino­rity inte­rests. In this respect, prefe­ren­tial condi­ti­ons for our fund inves­tors vis-à-vis the co-share­hol­ders would also not be enforceable at port­fo­lio level. Nevert­hel­ess, our fund inves­tors build up a rela­ti­onship of trust with the port­fo­lio compa­nies over the term of the invest­ment and can thus mini­mize their risk if they do act as buyers of an invest­ment. Howe­ver, the price and condi­ti­ons are then deter­mi­ned on the market.

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