GERMAN VENTURE CAPITAL

LANDSCAPE
 A WORD FROM OUR GERMAN COVERAGE TEAM
Authors/ Contributors

NICK STOCKS Sanjay Zimmermann

Partner Associate
“Germany’s unique and mature ecosystem is
froth with opportunities for those willing to
take the time to understand it ”

MATTHIEU LATTES Karolina Mrozkova

Partner Analyst
“Undisputedly a nation with the largest
economy in Europe, Germany is also one of
the World leaders in machinery, automotive,
energy, aviation, and healthcare."
In this report, we aim to share our enthusiasm on the German tech and
Venture Capital ecosystem from the perspective of an international VC
fund. Allen Duoji
Analyst
We aim to share our excitement about Germany and express our belief
that the ecosystem is gaining momentum. We also look at a few “ Germany is a magnet for founders and
particularities that make the German market unique such as its investors, and the ecosystem has reached a
decentralization, the impact of Rocket Internet on talent, differences in high degree of visibility.’’
deal terms and media for equity. Finally, we end with a deep dive on
VC’s and other investors making up the ecosystem.

At White Star Capital, we made our first major investment in Germany by

co-leading Clark’s Series B round earlier this year. We are proud of the External Data Sources
progress of the company so far and are looking forward backing many
more.

We hope you enjoy reading this report!

2
 TABLE OF CONTENTS

1. Overview: Why We Are Excited About Germany Page 4

2. The Germany ecosystem is gaining momentum Page 13

3. Particularities of the German ecosystem Page 18

4. Deep Dive on Germany VCs Page 23

5. Glossary of German VC funds Page 27

3
OVERVIEW: WHY WE ARE
EXCITED ABOUT GERMANY
 GERMAN MARKET IN EUROPE
Germany is the second largest market in terms of capital invested & number of exits

Over the past five years, Germany had a total of $14.9B Germany also has the second highest number for IPOs,
invested into its startup ecosystem, making it the second and M&A exits from VC-backed and non-VC-backed
largest in Europe in terms of capital invested. companies in the EU.

Capital invested in ($B) from the past five years Number of IPOs and M&A since 2014

22.0 5.1 98

11.8 3.1 62

9.1 2.8 53

5.5 0.8 31

3.2 1.1 22
2014-2017 2018 YTD

Source: Dealroom.co
Source: CBInsights 5
 VC FUNDING GROWTH IN GERMANY
Steadily growing in deal volume and Number

In total over the past five years, c.2000 deals have been Since 2013, Berlin remains the central hub in terms of
closed by VCs in Germany. Top financed industries total VC-backed funding with 63% of the share, followed
include enterprise software, media, fintech, and by Munich, Hamburg, and Frankfurt respectively.
marketing.
German VC-Backed deals % of deals per city since 2013
4.8
597

4.2
451
371
400 12%
3.6 270 303 3%

3.0

8%
2.4

-100 14%
1.8

3.6 63%
3.3 3.4
1.2

2.0 2.2
0.6

0.0

-600
2014 2015 2016 2017 2018 YTD
Berlin Munich Hamburg Frankfurt Other
Funding amount in ($)Bn Number of deals

Source: Dealroom.co
Source: CBInsights 6
 DEAL ACTIVITY PER STAGE
Maturing ecosystem with steady rise in exits

The stable split amongst startups represents the In 2018, a record of 16 companies entered the public
relative maturity of the German VC ecosystem at market. While over the last decade, broader M&A
various stages over the last decade. activity has also risen to record high levels for VC-backed
and non VC-backed companies

% of German deal volume per stage, per year The number of German exits has been steadily
100% rising year-over-year since 2009
600

16 16

90% 540
14

80%
517
500

70% 12

400

60% 360 10

50% 300

271 8

40% 239
7 6

200
6
30% 160
145 5 4

118 4
20% 100

10% 30 40 2
0 1 1 0
0 0

0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YTD
M&A IPO
Seed Series A Series B Series C Series D+

Source: CBInsights
7
 SIZING UP GERMANY IN A GLOBAL CONTEXT
Undoubtedly one of the largest ecosystems in Europe

CAGR Deal Volume

Region Total Deal Amount (H1 18) Total Deal Volume (H1 18) (H1 16 – H1 18)

U.S $52.1B 2,224 +9.8%

U.K. $3.4B 262 +23.7%

France $2.0B 175 +75.4%

Germany $1.8B 145 +27.1%

Canada $1.7B 125 +35.9%

Israel $1.1B 97 +20.7%

Source: CBInsights 8
Source: Western Hemisphere only, VC deals Angel round through Series E+
 DEAL SHARE BY INVESTMENT STAGE; PAST 3 YEARS
Relatively mature ecosystem, with disproportionate share of Series A and B rounds

A lower % of investments in the seed stages compared see quite a lot of activity at the seed stage, Germany
to other countries indicates Germany as having one of has a disproportionate share of deals at the Series A
the more mature ecosystems. While the UK and France and B stage.

Seed/Angel
share of deals 49% 49% 49% 62% 69% 71%

Series A
share of deals 24% 24% 28% 22% 18% 19%

Series B
13% 13% 11% 10% 8% 6%
share of deals

Series C
7% 7% 6% 4% 3% 2%
share of deals

Series D
share of deals 3% 3% 3% 1% 1% 1%

Series E
share of deals 3% 3% 2% 1% 1% 1%

Source: CBInsights
9
 LATEST GERMAN VC FUND CLOSINGS*
White Star Capital plans on playing an active role in investing in German Series A and B rounds

$1000M $180M
Stage: Stage:

Sector: Sector:

$545M $180M
Stage:
Stage:

Sector:
Sector:

$350M $174M
Stage:
Stage:

Sector:
Sector:

$336M
Stage: Legend
Stage Sector
Sector: Seed Fintech AI
Series A Software Ecommerce

$261M Series B Automotive

Stage:
Series C

Sector: Growth Fund

10
*Based on German domiciled funds (with the exception of White Star Capital)
CLOSER LOOK AT THRIVING SECTORS IN GERMANY
Strong alignment with White Star Capital’s investment areas of focus

Disruptive Digitalization of Deep and Frontier

Commerce Finance Tech

• Fashion • Peer to peer lending • Cybersecurity

• E-commerce • Credit and consumer • Autonomous Vehicles
• Foodtech focused business • Robotics
• Travel • Consumer finance • Genomics
• Mobility • Insurance • VR & AR
• Loyalty • Quantum Computing

Examples Examples Examples

11
 GERMANY’S DEEP TALENT POOL
One of the strongest pools for deep tech, technical and entrepreneurial talent in Europe

In 2017, Germany overtook the UK and is now home to the TU Munich is ranked as one of the top-rated European
largest number of professional developers. computer science institutions and as an entrepreneur
school along with Karlsruhe Institute of Technology.

837K Number of professional developers by country

814K

745K
708K

Other Top Universities in Germany

467K

368K
310K
293K
268K 255K

176K 172K

2017 2016
12
Source: Stack Overflow
GERMAN ECOSYSTEM IS
GAINING MOMENTUM
 VC-BACKED TECH ACQUISITIONS
Largest acquisitions in 2017 and 2018

2017 2018
Concardis Finanzcheck.de
Founded in 2003 Founded in 2010
$738M Retail Enterprise Application Fintech
$332M
$332M
Hesse Hamburg

proALPHA Relayr
Founded in 1992 Founded in 2013
$472M $300M
Cloud-based ERP Software IoT Platforms
Weilerbach Berlin

Qundis Navabi
Founded in 2009
$436M Founded in 2007
Energy Enterprise Application $45M*
Fashion
Erfurt Aachen

SQS Lendico
Founded in 1982 Founded in 2013
$373M Fintech
$22M*
Software testing services
Berlin
Cologne

*Total funding received at time of acquisition – acquisition value undisclosed

14
Source: Tracxn
 UNUSUALLY HIGH NUMBER OF IPOS IN 2018
German based companies that IPOed in 2018 (IPO proceeds- $M)
5,200

434
420

208
174

115 106
88 83
62 55 50
19 13 12 7

Source: CBInsights
Note – Companies are combination of VC-backed & non-VC backed
15
 TOP FUNDED GERMAN TECH COMPANIES
Companies which received funding in excess of $100m over the last ten years

Total funding in $M
New additions
1,856 in 2018

1,060

497 468
370
300
237 215 198 191 171 156 146 113

Source: CBInsights
Note: Excludes funds raised during an IPO 16
 FOREIGN VC INVESTMENT
High levels of foreign VC investment & exits to foreign Investors

VC-backed with an international investor Exits to international investors have

significantly increased over the years
48%

German Investors International Investors

40%
37%
35%
2014 61% 39%

24% 61% 39%

2015
20%

2016 43% 57%

2017 46% 54%

Percentage of exits by origin of investor from 2014-2017

Source: Crunchbase Pro (2013-2016) 17

Source: Thomson One, Mergermarket, Crunchbase, press releases
PARTICULARITIES OF THE
GERMAN ECOSYSTEM
 GEOGRAPHICALLY DECENTRALIZED
While Berlin is a core hub, Germany is far less centralized than the UK and France

% of nationwide active
% of total funded startups Germany’s economy and population density is far more
members in tech related
in given hub dispersed than that of the France and the UK
meetup group

58%
54% 51%
49%

42%

34%

London Paris Berlin London Paris Berlin

Source: Traxcn Source: Meetup

After Berlin: Munich,

VC funds are
Hamburg and Frankfurt are
important hubs
decentralized as well

% of total Startups in Germany

14%
21%
43%
8%

36%
3%

Munich Hamburg Frankfurt Berlin Munich Other

Source: Traxcn Source: Pitchbook

Source:Eupedia
19
 ROCKET INTERNET’S IMPACT ON TALENT
Talent flowing out of Rocket Internet backed startups has fueled a new generation of successful founders

10 out of Germany’s largest 22 recent startups which are not currently Rocket Internet-backed
were founded by entrepreneurs who used to work for a Rocket Internet-backed startup*
$250m
Total funding to date (logos of ex Rocket Internet start-ups)

$200m

$150m

$100m

$50m

$0m

Source: Traxcn
20
*Based on total funding, Startups founded in last 5 years, excluding Rocket Internet Backed startups
 DEAL STRUCTURE & PROCESSES
A few notable differences between North American and German deal terms and processes
Preferred legal form
Authorization process for
new shares to be issued
Officializing of significant
measures: company
formation, investment,
and exit
CEO, other founders and employees can be
Board structure
Source: Daily Journal
North America Germany
GmbH (German: Gesellshaft mit beschrankter
Delaware Corporation (Inc.)
Haftung – limited liability company)
Approved by the corporation’s board of Requires a shareholders’ resolution to be
directors adopted by at least 75% of the votes cast
• All significant measures require notarization
and registration in the local public
commercial register
Done via e-signing of final legal docs
• Representatives of the shareholders and
company must be physically present in front
of a German civil notary for the reading of
the entire notarial deed
Only investors and independent board
represented along with investors and
members can be represented
independent board members
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 MEDIA FOR EQUITY PROGRAMS
A common fundraising alternative for German B2C startups requiring large media campaigns

What is Media for equity? Overview of investors and successful cases

In exchange for company shares or convertible notes in a
Startup, Media firms offer advertising space at a steep
discount over a period of 6 to 24 months to the Startup

Why use Media for equity?

• Startups benefit from avoiding hefty cash outlays for media
• Advertisers benefit from diversifying their revenue base
• VC’s benefit from minimized risk of media inefficiencies
• While a creative alternative, this may not always be an
optimal or relevant solution in every scenario

Top 3 – European Media for Equity players are German

Source: Dealroom
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DEEP DIVE ON GERMAN VCS
 A SNAPSHOT OF GERMAN VC FUNDS
Based on most recent fund size
Berlin
Cologne

Bonn

Munich

LEGEND Fund Size ($M)

300+
200-300
100-200
< 100

Source: CBInsights 24
Note: Rankings are per fund, not total AUM per firm
 MOST ACTIVE CVCS IN GERMANY
Media for equity players are amongst the most active corporate VCs

Direct Investment Select German

CVC Top Sectors Investment in VC fund Investments

1 E-commerce, IoT, AI

2 ICT

3 Digital Media & IT

4 Life Sciences & ICT

Media Partnerships & ICT

5
Media Partnerships & ICT
6
Medical Device, Diagnostics,
7 & Digital Health

E-commerce, Art & Fashion

8
Online Video, Media &Pub Tech
9

10 Mobility, Energy & AI

25
Source: CBInsights
 MOST ACTIVE FOREIGN VCS
VCs with Foreign Head Quarters which participated in the most VC deals in Germany since 2011
# of portfolio
Investors
companies

# of portfolio
Investors
companies
# of portfolio
Investors
companies
# of portfolio
Investor
companies

Investors # of portfolio
companies
# of portfolio
Investor
companies

LEGEND # of German portfolio companies

15+
8-14
1-7

Source: Tracxn
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 GLOSSARY OF GERMAN VC FUNDS
Page 1 of 4

Min Max
Funded Investments
Investor check check 2017/2018* Region Stage Sectors
year
size (€) size (€)

2005 N/A 1M 233 DACH Pre-Seed to Seed Seed investments

2013 200K 10M 78 World Pre-Seed B2C and B2B-Tech: Marketplaces, Subscription, SaaS

1997 250K 1M 62 Germany Pre-Seed to Series A Software, Digital, Consumer Internet, Life Sciences, Industrial Technologies

2011 200K 1.5M 42 Europe Pre-Seed to Series A SaaS, Marketplaces

Digital and industrial topics: Fintech, Marketplaces, Software, Industry 4.0,

2000 250K 3.5M 39 Europe Seed to Series A
IoT

Currently focuses on Digital Health, Mobility, Education, Industry 4.0, E-

2012 300K 10M 37 World Seed to Series A
Sports

Internet/Software/Mobile, Consumer Products, Industry Technologies,

1997 200K 10M 35 Germany Pre-Seed to Later Stage
Cleantech, Lifescience

2000 50K 40M 30 World Pre-Seed to Series A Internet, Technology

Sector-agnostic, products and services should be scalable and future-

1998 500K 6M 29 Europe Seed to Series A
oriented

2011 50K 4M 25 Europe Pre-Seed to Later Stage Marketplaces, Proptech, Insurtech, Digital Health

2012 500K 3M 23 Europe Pre-Seed to Seed Sector-agnostic, Focus: Consumer-Tech, scalable B2B models

1999 500K 6M 23 Europe Seed to Later Stage Cleantech, Software and IT, Industry 4.0 and new materials

2015 300K 1M 23 Europe Series A B2C Internet and Mobile (focus on marketplaces)

2012 500K 3M 22 Europe Seed to Series B Enterprise Software, B2B SaaS, Enabling Technologies, IoT, IT Security

2016 50K 500K 21 World Pre-Seed to Seed Opportunity-driven: open to all areas

*Includes investments outside of Germany

Source: BerlinValley
27
 GLOSSARY OF GERMAN VC FUNDS
Page 2 of 4

Min Max
Funded Investments
Investor check check 2017/2018* Region Stage Sectors
year
size (€) size (€)

2009 500K 30M 20 World Seed to Later Stage Consumer Internet, Digital Services, Software & Technology

2006 50K 500K 19 Europe Pre-Seed to Series A Smart City, Future Commerce, Prop/Construction-Tech, Fintech, IoT

2016 500K 5M 15 Germany Series A to Series B Sector-agnostic

1998 500K 30M 15 World Seed to Later Stage Sector-agnostic, primarily consumer-internet & software area

Pre-Seed to Later Secondary shares, E-Commerce and Marketplaces, Fintech, Adtech, Blockchain-
2012 50K 5M 15 DACH Stage Infrastructure

Network, Infrastructure-technology, Marketplaces, Decentralized protocol, open

n/a n/a n/a 15 World Seed to Later Stage
software

2003 500K 30M 15 Europe Pre-Seed to Series B Industry 4.0, DLT, Digital Health

2013 300K 20M 15 Europe Series A B2B SaaS

2016 250K 1M 15 Europe Pre-Seed to Seed AI/ML, Enterprise Software

2013 50K 250K 15 DACH Pre-Seed to Seed B2B SaaS, Enterprise Software, Developer Tools

2014 250K 2M 13 Europe Seed to Series A Fintech, Insurtech, Digital Health, E-Learning, Proptech

1997 250K 5M 12 Europe Seed to Series B Fintech, Insurtech, Mobility & Logistics, Blockchain & Crypto, industry 4.0 & IoT

2009 250K 2.5M 12 DACH Seed to Later Stage Media-related startups

Decentralization of markets, empowerment of individuals, liberation of data.

2016 500K 5M 12 World Pre-Seed to Series A
Thesis yes, sectors no.

*Includes investments outside of Germany

Source: BerlinValley
28
 GLOSSARY OF GERMAN VC FUNDS
Page 3 of 4

Funded Min check Max check Investments

Investor 2017/2018* Region Stage Sectors
year size (€) size (€)

2010 200K 2.5M 12 Europe Seed to Series A B2B-Software, Enterprise, SaaS, AI, IoT/Industry 4.0, Robotics, Security

2014 500K 5M 11 Europe Pre-Seed to Series A Fintech, Insurtech, Asset Management

2017 50K n/a 10+ Europe Seed B2B, Europa

2013 1M 50M 10 World Series A to Later Stage Consumer, B2B, Fintech, Mobility, Blockchain

Industrial IoT, Machine Intelligence, Frontier Hardware, New-Age Enterprise

2015 500K 1.5M 10 Europe Seed to Series A
Software, Cyber Security

2015 5M 25M 10 Europe Series B to Later Stage Content-driven models e-commerce, marketplaces, digital networks

Personal Mobility, Logistics, B2B, Fintech, Insurtech, Regtech, Proptech,

2014 250K 5M 10 World Seed to Series B
Construction Tech, & B2B SaaS

2012 N/A N/A 10 Germany Pre-Seed to Series A Meta-platforms, E-Commerce, SaaS, B2B

Pre-Seed to Later
2013 500K 3M 10 n/a
Stage
Enterprise B2B, IoT, Property Tech

1999 1M 20M 9 World Series A to Series B Sector-agnostic Investments in Internet companies, especially in B2C startups

2011 100K n/a 9 Europe Seed Deep-Tech, Food

Attractive market segments, not yet unlocked by the efficiencies of the

2010 100K 500K 9 DACH Pre-Seed to Series A
internet

2015 500K 2.5M 9 Europe Seed to Series A B2B Enterprise Software, Industrial Technologies,

Fast-growing tech sectors such as mobile communications, software, green IT,

1999 1M 3M 9 DACH Seed to Later Stage
e-commerce and the Internet

*Includes investments outside of Germany

Source: BerlinValley
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 GLOSSARY OF GERMAN VC FUNDS
Page 4 of 4

Min Max
Funded Investments
Investor check check 2017/2018* Region Stage Sectors
year
size (€) size (€)

2016 50K 200K 8 Europe Pre-Seed to Seed B2B/Enterprise Software with strong technology reference

2007 1M 10M 8 World Series A to Later Stage Direct-to-consumer/transactions-oriented business models, enabling technologies

2015 100K 500K 7 Germany Pre-Seed to Seed B2B, Marketplaces, SaaS, Deep-Tech, Digital Services

2008 500K 1M 7 DACH Seed Education Technology, Health Digital Services, Financial Services

2010 250K 2.5M 7 Europe Seed to Later Stage Digital Health, Healthtech, Medical Devices, Life-Science-Platform-Technologies

B2B Startups, Enterprise Software, Industrial Technologies and mobility, software

2011 500K 3M 7 DACH Seed to Series B
and hardware

2018 25K 100K 6 Europe Pre-Seed to Seed Mobility, Media, Travel, Lifestyle, Fintech

2015 250K 1M 6 World Pre-Seed to Seed Proptech, SaaS, Marketplaces, Insurtech, Fintech, Deeptech

2014 500K 5M 6 DACH Pre-Seed to Series A Fintech, Regtech, Insurtech, Legaltech

Travel, Health, Home & Living, Beauty & Accessories, Tech, E-Commerce, Retail and
2009 5M 50M 6 World Series A to Later Stage
Lead Generation

2012 50K 500K 6 DACH Seed to Series A Technology, Media, Industrials, Life Sciences, Education

2016 500K 3M 5 DACH Pre-Seed to Series B Internet, Fintech/Insurtech, Legaltech, Comparison, Marketplaces

2016 25K 750K 4 World Seed to Series A Consumer Internet, SaaS, B2B Solutions, Digital SMB’s

2014 100K 1.5M 3 Europe Pre-Seed to Series A E-Commerce

*Includes investments outside of Germany 30

Source: BerlinValley
 INTRODUCTION TO WHITE STAR CAPITAL

White Star Capital

We invest in ambitious entrepreneurs on both sides of the Atlantic. Between us, we have founded,
scaled and sold many successful technology businesses. We leverage our collective experience, expertise
and global network to help our startups succeed.

GLOBAL PRESENCE AND PORTFOLIO

www.whitestarvc.com 31