As an early stage VC inves­tor, we invest in line with long-term trends and chal­lenges. The three most important chal­lenges or trends for Euro­pean indus­try and any value crea­tion asso­cia­ted with physi­cal indus­trial goods are, firstly, the need to respond to climate change, secondly, to rebuild a mini­mum level of econo­mic “sove­reig­nty”, i.e. to ensure access to funda­men­tal inno­va­tions and the resi­li­ence of supply chains, and thirdly, to respond to demo­gra­phic change while main­tai­ning suffi­ci­ent compe­ti­ti­ve­ness in global markets, i.e. compre­hen­sive digi­ta­liza­tion and auto­ma­tion across the entire indus­trial value chain.

Our task is to iden­tify tech­no­lo­gi­cal inno­va­tions that are usually cate­go­ri­zed by other inves­tors as Clima­te­Tech, DeepT­ech or Indus­tri­al­Tech in line with these trends. In our view, howe­ver, the divi­ding lines between these terms are rather blur­red; many inno­va­tions can be assi­gned to more than one of these three areas, so our invest­ment stra­tegy only focu­ses on ensu­ring that there is a suffi­ci­ently strong tech­no­lo­gi­cal diffe­ren­tia­tion and a funda­men­tal connec­tion to the indus­trial sector trends descri­bed above. Speci­fic examp­les include the reduc­tion of CO2 emis­si­ons from speci­fic produc­tion proces­ses through the use of AI-based process opti­miza­tion, soft­ware for the design of more powerful micro­pro­ces­sors and robo­tics solu­ti­ons for SMEs.

With the help of a very diverse team — not only from diffe­rent Euro­pean regi­ons but also with very diffe­rent acade­mic and profes­sio­nal back­grounds, for exam­ple — we try to build the broa­dest possi­ble basis for the detailed assess­ment of tech­no­logy and market poten­tial. Instead of just asking what would be econo­mic­ally conceiva­ble in prin­ci­ple if a tech­no­lo­gi­cal inno­va­tion works — i.e. a strong focus on the maxi­mum market poten­tial — we try, for exam­ple, to estab­lish at least stable hypo­the­ses on the remai­ning risks of tech­no­logy deve­lo­p­ment and to reali­sti­cally esti­mate the neces­sary time peri­ods as well as the capi­tal requi­re­ments still to come.

Based on this, we try to opti­mize the rela­ti­onship between econo­mic poten­tial and capi­tal requi­re­ments, i.e. In the inte­rests of our inves­tors, we ther­e­fore aim to maxi­mize the multi­ple that can ulti­m­ately be reali­zed on the capi­tal inves­ted rather than the abso­lute (inte­rim) valua­tion of the invest­ments in the largest possi­ble follow-up finan­cing rounds. To put it bluntly, we are less inte­res­ted in the “unicorn poten­tial” on which the head­lines of recent years have focu­sed, but rather in the actual possi­ble and reali­stic return of capi­tal to our inves­tors. This approach enables us to build up a much broa­der port­fo­lio of diffe­rent tech­no­lo­gies and busi­ness models and allows inves­tors to include a more diver­si­fied range of indus­trial tech­no­lo­gies in their asset struc­ture. — In short, a real port­fo­lio approach, less hype!

I am neither an econo­mist, poli­ti­cian nor clair­voy­ant, just a Euro­pean engi­neer who has ended up in the venture capi­tal indus­try. From this perspec­tive, I see incre­di­bly strong resour­ces in Europe and Germany, both in the form of univer­si­ties and rese­arch insti­tu­ti­ons, entre­pre­neu­rial mission state­ments, produc­tion effi­ci­ency and quality, a strong private capi­tal base and an excel­lent repu­ta­tion in the global busi­ness world for indus­trial goods. It is unde­ni­ably important to point out grie­van­ces at certain points in the cycli­cal poli­ti­cal and econo­mic world, to call for reforms and to initiate trans­for­ma­ti­ons. It seems to me that we in Germany in parti­cu­lar have almost too much talent for iden­ti­fy­ing defi­cits and loudly placing them at the center of atten­tion. We are very slow to far too bad at publicly reflec­ting on our many strengths, cele­bra­ting succes­ses and using them as an incentive.

Unfort­u­na­tely, this leads to a situa­tion where we would rather invest our private capi­tal in the inno­va­tive strength of other conti­nents than in the future of our own conti­nent. For us venture capi­tal inves­tors, this is an incom­pre­hen­si­ble process, as we have the privi­lege of exchan­ging ideas with highly moti­va­ted foun­ders on a daily basis, seeing the tech­no­lo­gi­cal strengths of the loca­tion and evalua­ting future-orien­ted poten­tial. Of course, our picture of reality is anything but neutral and balan­ced, but it shows many reasons to be opti­mi­stic — and to further improve our continent’s chan­ces of success by using the capi­tal that was origi­nally mostly gene­ra­ted here!

Purely anec­do­tally (of course, the macroe­co­no­mic compa­ri­son is not accu­rate), I recal­led my first thoughts on career choices in 1991/92/93 and sear­ched Google for a few of the head­lines in the busi­ness press about the predic­ted demise of mecha­ni­cal engi­nee­ring, auto­mo­tive engi­nee­ring, auto­mo­tive suppli­ers, etc. A large number of them read 1:1 like today’s press. A brief look at the DAX deve­lo­p­ment after 1993 shows what was possi­ble after all! Howe­ver, this is certainly not auto­ma­tic, so it is time to look to the future again and urgen­tly refo­cus on the poten­tial of inno­va­tion and perso­nal commit­ment. Our port­fo­lio compa­nies show what is abso­lut­ely possi­ble today!

About Robert Gallenberger

Robert Gallen­ber­ger is a Foun­ding Part­ner at Matter­wave Ventures. Prior to Matter­wave, he was one of the part­ners in the btov Indus­trial Tech­no­lo­gies team. After start­ing his career in produc­tion at the BMW Group, he disco­vered the world of venture capi­tal invest­ments during his MBA studies at the London Busi­ness School. Robert gained his first prac­ti­cal expe­ri­ence during intern­ships and project work with the VC teams at 3i and DFJ Esprit. After working as a manage­ment consul­tant at the Boston Consul­ting Group in London, he moved to the Belgian invest­ment company Gimv. During his six years at Gimv, Robert helped build the organization’s new Munich office from two to 12 full-time employees and expand invest­ment acti­vity in the smart indus­tries sector from early stage ventures to small cap buyouts. He super­vi­ses DyeM­an­sion, Cybus, Head­made Mate­ri­als, Threedy, DessIA and Fruit­core Robo­tics. Robert is a trai­ned mecha­ni­cal engi­neer with a double master’s degree from the Tech­ni­cal Univer­sity of Munich and the Ecole Centrale Paris.
www.matterwave.vc