3 questions to smart minds
Photo: Dr. Christoph Klink

Very early stage investments — what are the opportunities?

For this 3 questions to Dr. Christoph Klink

ANTLER, Europe
Photo: Dr. Chris­toph Klink
13. Febru­ary 2024

The inter­na­tio­nal VC ANTLER invests directly in start-ups when they are foun­ded, so it supports start-ups in buil­ding up their busi­ness right from the start — often before the first product is on the market. The foun­ders are at the center of the invest­ment decis­i­ons. This pres­ents great oppor­tu­ni­ties but also many challenges.

For this 3 ques­ti­ons to Dr. Chris­toph Klink, Part­ner at ANTLER, Europe

1. Invest­ments in a company in the very early stage phase — what are the oppor­tu­ni­ties here? How does ANTLER work? What crite­ria do you use?

From an investor’s point of view, the early entry and the broad diver­si­fi­ca­tion in the port­fo­lio offer the poten­tial for very attrac­tive increa­ses in value. We typi­cally get in before all other inves­tors. — We invest very syste­ma­ti­cally in young compa­nies as soon as they are foun­ded — we talk about “day zero”. This phase is other­wise not syste­ma­ti­cally addres­sed by insti­tu­tio­nal inves­tors. Early-stage inves­tors typi­cally only start when the first product is on the market and the first custo­mers have been found.

At Antler, we deli­bera­tely start working with exci­ting foun­ders even before they set up their next company. We now receive more than 120,000 appli­ca­ti­ons a year from foun­ders who want to work with us. This includes complete foun­ding teams that are alre­ady working on their first product as well as indi­vi­dual foun­ders who are looking for comple­men­tary co-foun­ders — i.e. part­ners with diffe­rent back­grounds who comple­ment their strengths.

We gene­rally work with foun­ders for a few months in one of our offices — only then do we decide on initial invest­ments. We now have 30 offices around the world so that we can work as closely as possi­ble with these foun­ders during the start-up phase. In Europe alone, we inves­ted in 130 new compa­nies last year and supported over 120 follow-up finan­cing rounds in our portfolio.

We are available as a finan­cing part­ner for our port­fo­lio compa­nies up to their Series C stage and can invest tens of milli­ons over seve­ral rounds along­side other strong inves­tors. In order to make the best decis­i­ons on day zero, we usually invest in teams that are extre­mely strong, tackle big problems and take a tech­no­lo­gi­cally inno­va­tive approach.

For us, the largest sectors in Europe include clima­te­tech, fintech and health­tech. Howe­ver, we look very speci­fi­cally for foun­ders who have in-depth know­ledge and strong hypo­the­ses in an important problem area — we are often surpri­sed by the ideas oursel­ves. The port­fo­lio includes both hard­ware and soft­ware compa­nies, with the majo­rity of the port­fo­lio consis­ting of B2B compa­nies from a wide range of sectors.

2. What crite­ria are used to select the foun­ders? What should they bring with them?

Drive, Grit and Spike! — We are looking for teams that address large and typi­cally fast-growing markets and deve­lop scalable products and busi­ness models based on tech­no­logy. The key ques­tion is always whether the oppor­tu­nity is big enough to build one or poten­ti­ally seve­ral very large compa­nies in this area.

Drive descri­bes the moti­va­tion and, in a posi­tive sense, the drive of foun­ders. Buil­ding a company from scratch is a big task — espe­ci­ally when it comes to deve­lo­ping new tech­no­lo­gies and serving global markets. Strong teams think big, they tackle unsol­ved problems and are often more moti­va­ted by this than by the pure enthu­si­asm to build a large company. They often have a deep passion for solving the problem they are tackling.

Grit descri­bes the ability to grit your teeth and carry on in diffi­cult times. The jour­ney of a foun­ding team is always rocky, you are confron­ted with many rejec­tions — it often takes dozens of conver­sa­ti­ons before the first custo­mer or inves­tor is converted.

Spike descri­bes both the indi­vi­dual strength of each member of the foun­ding team and the coll­ec­tive strength — being better than the compe­ti­tion. The ques­tion we ask oursel­ves is whether the foun­ding team can be one of the best teams in this field. Only if there is a convic­tion that a team can prevail against the (future) compe­ti­tion are there high chan­ces of success.

3. How do you secure follow-up finan­cing? Have you noti­ced that this has become more diffi­cult in the current environment?

We can initi­ally conti­nue to invest in our port­fo­lio oursel­ves from two fund stra­te­gies up to a Series C, i.e. over the first approx. 5 finan­cing rounds. In our expe­ri­ence, this is a very strong value propo­si­tion for both our inves­tors and foun­ding teams. We also work closely with the strong VC inves­tors in the ecosys­tem. These are VCs as well as busi­ness angels, family offices and, in later phases, corpo­rate investors.

As we gene­rally do not lead the follo­wing finan­cing rounds, we are comple­men­tary to the co-inves­tors in the ecosys­tem. A close part­ner­ship leads to more attrac­tive deal flow.

The finan­cing envi­ron­ment in the early stages — such as pre-seed, seed and in some cases Series A — remains intact in the current market envi­ron­ment. Further new invest­ments are being made in tech­no­logy, espe­ci­ally as the exit hori­zon for early-stage inves­tors is usually >7 years. Howe­ver, the market is acting much more prudently today than 2 years ago. Due dili­gence proces­ses are carried out properly and decis­i­ons are based more on facts. The round sizes and valua­tions here are quite stable and show a strong belief that inno­va­tive tech compa­nies are no less important today than they were 2 years ago.

In the later phase, parti­cu­larly from Series B onwards, the play­ers conti­nue to be very cautious. Howe­ver, most of our port­fo­lio, parti­cu­larly in Europe, is still well ahead of this phase, so we and our port­fo­lio are much less affec­ted here.

About Chris­toph Klink

Chris­toph Klink is a part­ner at Antler, based in Germany. Antler is the world’s leading day-zero inves­tor and one of the most active early-stage VC firms in Europe. He is respon­si­ble for Antler’s invest­ments throug­hout Central Europe. Since the launch of the first resi­dency for foun­ders in Berlin in 2021, Antler has made more than 50 invest­ments in tech start­ups cove­ring multi­ple sectors such as climate, finance and health­care tech­no­logy. Many of these start-ups are now regarded as the most promi­sing start-ups in the DACH region, inclu­ding NeoCar­bon, clare&me and Tapline.

In the last two years, Chris­toph has held resi­den­cies for more than 500 foun­ders in Berlin, Amster­dam and Munich. Antler is speci­fi­cally desi­gned to remove the barriers to entre­pre­neur­ship and support a new gene­ra­tion of tech foun­ders. The foun­ders who took part in the resi­den­cies came from 53 diffe­rent count­ries, and 35% of the start­ups had at least one female founder.

Chris­toph is conside­red one of the leading experts on early-stage invest­ment trends in Germany and recently co-autho­red a report on the demo­gra­phics of unicorn foun­ders in the DACH region.

Before joining Antler, Chris­toph was a part­ner at McKin­sey. For more than ten years, he held leader­ship posi­ti­ons in McKinsey’s Stra­tegy and Corpo­rate Finance Prac­tice & the Advan­ced Indus­tries as well as in its Logi­stics and Infra­struc­ture Sector Practices.

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