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White Star Capital Germany Venture Capital Landscape 2020

We are pleased to publish the second edition of our German Venture Capital report and hope you will enjoy reading it. 2019 was a year where Germany has really played to its strengths and cemented its position as one of the European leaders in tech venture capital, and we are more excited than ever about the development of this ecosystem.
Our report unpacks the current progress and outlook for the German ecosystem using our ecosystem model to highlight Germany’s unique positioning in an increasingly global playing field for startups.
So what did we find?
- Germany had a record year in VC reaching $5.7bn in funding with 49% yoy growth, the second best funded country in Europe
- Germany leverages its global industrial leadership to retain its place as the top destination for European mobility VC investment in 2019, reaching $1.3bn in funding, representing 26% of total funding. Its corporate strengths also drive investments in fintech and B2B software, representing 23% and 20% of total funding, respectively.
- Corporate Venture Capital plays a key role and participates in 58% of the total funding, the highest level worldwide. Next47 (Siemens), IFB Hamburg, Bosch are some of the most active German CVCs. As LPs (investors in VCs), corporates represent 28% of total German VC funds raised, the highest level in Europe, further boosting the local ecosystem

In addition to sharing our excitement about Germany and expressing our belief that the ecosystem is stronger than ever we look at robust business networks, the continued government support via entities such as KfW and the vibrant founder community.

White Star Capital has made landmark investments in Germany and seen many of the findings play out with our portfolio companies. Tier has raised Series B in 2019 led by international investors such as Mubadala, Goodwater and ourselves, while Clark has benefited from a large domestic market for insurance.

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White Star Capital Germany Venture Capital Landscape 2020

  1. 1. German Venture Capital Landscape 2020 From the eyes of an International Investor
  2. 2. White Star Capital “Germany is very well positioned to become a global tech leader. I expect the VC activity to catch up as a % of GDP and see the German tech ecosystem reach new heights over the next few years.” “Germany’s maturing VC ecosystem has great support from its robust economy, thanks to strong corporate commitment with record high CVC activity in addition to well integrated and globally-minded SMEs.” “Germany benefits from unique characteristics such as the decentralized hub network, the public-private partnerships, world class technical skills, or access to the DACH region. This attracts many international investors boosting the growth of the ecosystem.” In this edition of our report, we aim to share our enthusiasm for and commitment to Germany’s tech and venture capital sector. We started investing in Germany in 2018 and have made landmark investments in Clark and Tier Mobility. Germany is a focal point of European venture capital with a stellar business environment. We strongly believe in its continued success, and intend to double down on our presence.“ There are a number of specific characteristics about the German ecosystem that has allowed it to become one of Europe’s leading technology hubs. Germany has long been the leading economic powerhouse in Europe, featuring vigorous export-oriented business networks with top global corporate leaders and a robust “Mittelstand“. It has a large and valuable English- speaking, tech-savvy population, extended by the DACH region and benefits from a deep and capable talent pool. Germany has established a strong leadership in mobility, fintech and enterprise software innovation and built many tech ecosystem champions, paving the way for others.“ Jean de Lencquesaing Senior Associate (London) Sanjay Zimmerman Senior Associate (Montreal) Nick Stocks General Partner (London) Eric Martineau-Fortin Managing Partner Matthieu Lattes General Partner (Paris) Pauline Studer Associate (Paris) 2019 was a record year for tech venture capital funding in Germany and reached the second place in European funding. The German ecosystem benefits from a broad coalition of key actors. CVCs, along with the government and a flourishing founder community have been playing a large role in supporting early stage companies. Furthermore, local VCs have been getting stronger and Germany keeps attracting a high level of foreign investors and buyers, fueling the recent mega-round trend. This unique combination has been helping to close late stage funding gaps and is offering great opportunity as Germany‘s venture capital tech ecosystem further matures and rises up to it‘s true potential.“ 2
  3. 3. White Star CapitalWhite Star Capital Contents German Venture Capital: An Overview Ecosystem Market Talent Government Capital Appendix 04 17 19 23 26 28 38 Section 1 Section 2 Section 3 3
  4. 4. White Star Capital German Venture Capital: An Overview 1
  5. 5. White Star Capital 2nd For Venture Capital funding in Europe1 3rd In Europe for number of exits1 In absolute growth of VC funding in Europe1 2nd Note: 2019 data (1) PitchBook. (2) Cash injection of $100 million or above into a company. (3) Most start-up ecosystems among the top 30–Global Startup Ecosystem Report 2019. 2nd In number of mega-rounds2 in Europe1 1st In number of companies in top 10 biggest deals in Europe1 3rd For country with most leading startup ecosystems globally3 German Venture Capital: An Overview 2nd Highest concentration of unicorns in Europe1 81% Of exits were made to international buyers1 German Venture Capital in the spotlight 5
  6. 6. White Star Capital $0bn $50bn $100bn $150bn US China Europe (without Germany) UK Germany Canada France Japan 2018 2019 2019 was a record year for the German VC landscape German Venture funding saw an all-time high in 2019, with a 49% increase over 2018. German companies received $5.7bn in funding across 785 deals. White Star Capital German Venture Capital: An Overview 6 Global funding comparison Funding and deals in Germany ($ in bn) Source: PitchBook 7% (55)% 34% 38% 49% 50% 19% 16% $0.4 $0.5 $1.3 $0.6 $1.5 $2.7 $3.1 $2.1 $2.4 $3.8 $5.7 189 237 313 375 547 643 735 831 892 862 785 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Capital invested Number of deals In absolute terms, Germany is still a relatively small ecosystem but shows great momentum.
  7. 7. White Star Capital 2,500 862 1,137 462 485 334 327 2,097 785 739 379 346 254 249 UK Germany France Sweden Spain Switzerland Netherlands 2018 2019 $8.1 $3.8 $3.5 $0.8 $0.8 $1.0 $0.6 $11.2 $5.7 $4.1 $1.5 $1.2 $1.1 $0.9 UK Germany France Sweden Spain Switzerland Netherlands 2018 2019 Germany is one of the largest VC players in Europe and makes up 19% of the total funding. Due to an increase of 49% in Venture funding in 2019, Germany continues to be the 2nd best funded country in Europe. European Venture deals Source: PitchBook German Venture Capital: An Overview Germany has the second highest Venture Capital funding in Europe European Venture funding ($ in bn) Germany also has the 2nd highest number of deals in Europe, with the lowest decrease from 2018 to 2019. 38% 49% 19% 79% 55% 10% 44% (16)% (9)% (35)% (18)% (29)% (24)% (24)% 7
  8. 8. White Star Capital $0.2 $0.3 $1.0 114 129 148 0 50 100 150 200 250 0 200 400 600 800 1000 1200 2017 2018 2019 $0.3 $0.5 $1.2 70 49 48 0 10 20 30 40 50 60 70 80 0 200 400 600 800 1000 1200 1400 2017 2018 2019 $0.4 $0.6 $1.3 19 22 26 0 50 100 150 200 250 0 200 400 600 800 1000 1200 1400 2017 2018 2019 Mobility ($ in bn) B2B Software ($ in bn) Mobility, FinTech and B2B Software are leading the charge German Venture Capital: An Overview Germany‘s Venture funding and deals by sector (2019) ($ in bn) FinTech ($ in bn) White Star Capital Selected companies Selected companies Selected companies 9% 9% 20% 12% 12% 23% 18% 16% 26% Source: PitchBook 8 $1.3 $1.2 $1.0 $0.7 $0.1 27 48 148 17 16 50 100 150 200 250 0.00 200.00 400.00 600.00 800.00 1,000.00 1,200.00 1,400.00 Mobility FinTech B2B Software B2C Applications Retail Capital invested Number of deals Germany retained its place as the top destination for European mobility investment in 2019, reaching a new record of $1.3bn.
  9. 9. White Star Capital The share of Series A investing has been rising steadily since 2012 and we now see a rise in the share of later stage Series B to D deals since 2017. Germany has a maturing Venture ecosystem… White Star Capital Share of deals in Germany by stage The relatively stable split amongst investing stages and the decrease in the share of Seed/Angel deals indicate the maturing of the German Venture Capital ecosystem. German Venture Capital: An Overview Pre-money valuation and 5 year CAGR for major start-up hubs (‘14-’19 % CAGR) Germany has the highest valuations compared to the two other large ecosystems in Europe. Growth in popularity of Venture Capital as an asset class has tightened competition and increased valuations. Source: PitchBook US Germany France UK $8m $5m $4m $3m +9% +10% +15% +9% $23m $18m $15m $14m +15% +15% +21% +16% $70m $82m $68m $68m +18% +16% +23% +27% Seed Series A Series B 0% 20% 40% 60% 80% 100% 2012 2013 2014 2015 2016 2017 2018 2019 Seed/Angel Series A Series B Series C Series D Series E 9
  10. 10. White Star Capital UK France Germany US China Canada Japan 23% 6% 6% 10% 2% 11% 5% +39% (47)% +3% +11% (10)% +20% +47% 26% 22% 18% 20% 26% 23% 28% +35% +3% +7% +14% (9)% +19% +30% 23% 37% 38% 25% 23% 38% 31% +16% +98% +106% +20% (3)% +72% +38% 19% 35% 21% 18% 25% 9% 24% +35% +138% +82% +21% +29% +15% +40% 8% NA 18% 28% 24% 19% 12% +0% NA +2% +43% (9)% (13)% +50% Seed/Angel Series A Series B Series C Series D/E ...with a steady rise in later stage investing White Star Capital Share of funding volume by stage type (2019) Growth rate reflects ’17-’19 % CAGR The German start-up ecosystem now has a relatively proportionate distribution of funding across stages and is matching the more mature profile of the US and China. German Venture Capital: An Overview Source: PitchBook 10 Most of the funding activity over the last two years has been driven by the growth in Series B and Series C, at the fastest pace globally, along with France. Germany also features the largest Series D/E investment percentage in Europe, well above the UK and France. Germany has been leading the trend in European late stage mega rounds.
  11. 11. White Star Capital …driven in part by mega-rounds Source: PitchBook (1) Cash injection of $100 million or above into a company. Company Stage Deal size Country of origin Series F $564m Germany Series C $550m United Kingdom Series E $484m Germany Series D2 $470m Germany Growth Round $460m Sweden Venture Round $440m United Kingdom Growth Round $400m Germany Series C $284m Germany Series C $277m Netherlands Venture Round $270m United Kingdom German Venture Capital: An Overview Number of mega-rounds by country Together with the UK, Germany is leading the trend of mega-rounds. Largest European mega-rounds in 2019 11 9 58 3 14 811 4 6 3 3 5 12 84 6 4 55 484 40 22 19 15 20 1110 7 9 7 2019201820172016201520142013201220112010 Germany UK France Other European countries Of the 39 European companies that raised mega-rounds1 in 2019, 8 are headquartered in Germany. Five out of the ten largest rounds in 2019 were raised by German companies.
  12. 12. White Star Capital Germany now features many ecosystem champions… Source: PitchBook (1) Excludes companies founded before 2009, companies that have gone public and undisclosed deals (e.g. FlixMobility). German Venture Capital: An Overview Best funded VC-backed companies in Germany1 ($ in bn) Germany’s best funded companies received much of their funding in 2019. Sectors of companies with more than $100m in funding The three most prominent sectors for well-funded companies are B2B Software, B2C Applications and FinTech. 12 B2B Software: 10% B2C Applications: 10% FinTech: 8% Mobility: 8% Consumer Finance: 4% Electrical Equipment: 4% Internet Retail: 4% Social/Platform Software: 4% Other: 46% $1.3 $0.7 $0.2 $0.2 $0.4 $0.3 $0.3 $0.4 $0.5 $0.5 $0.6 $0.3 $0.2 $1.3 $1.1 $0.7 $0.7 $0.6 $0.4 $0.4 $0.4 $0.3 $0.3 Raised before 2019 Raised in 2019
  13. 13. 4Number of new German unicorns in 2019 $4.7bnCapital raised by German unicorns German Venture Capital: An Overview $3.5bn …and is home to 9 unicorns1… White Star Capital Hamburg $1.0bn2 $3.5bn BerlinMunich $2.3bn $2.6bn Source: PitchBook (1) Unicorn defined as a private venture-backed company raising a round of financing at a valuation of at least US$1bn. (2) Last known valuation (as of Jan 2020), according to PitchBook. $1.1bn $1.9bn $1.0bn $1.0bn New unicorns in 2019 13
  14. 14. France Germany United Kingdom Germany is also home to a number of potential unicorns2 …with the second highest concentration of unicorns in Europe 7 3 $3.5bn $3.5bn $2.6bn $2.3bn $1.9bn$1.0bn Spain 1 $3.0bn Switzerland 1 $1.0bn $1.6bn $1.3bn $1.0bn 17 German Venture Capital: An OverviewWhite Star Capital Sweden $5.5bn 1 Estonia $1.0bn 1 Lithuania $1.1bn 1 $0.7bn $0.7bn $0.6bn Source: PitchBook (1) Last known valuation (as of Jan 2020), according to PitchBook. (2) Companies with a valuation between $0.5 and $1bn. $4.0bn1 $3.5bn $2.8bn $2.1bn $2.0bn $2.0bn … $1.1bn $1.0bn $1.0bn 14
  15. 15. White Star Capital 117 62 56 38 21 UK France Germany Sweden Spain Germany has the third most VC backed exits in Europe… Source: PitchBook (1) Exits include M&A, PE, and IPO exits. German Venture Capital: An Overview …thanks in part to international appetite Percentage of exits by origin of acquirer VC-backed exits1 in Europe in 2019 Exits to international acquirers have significantly increased over the years. In 2019, Germany ranked 3rd for the number of VC-backed exits. 19% 17% 12% 22% 29% 81% 83% 88% 78% 71% 2019 2018 2017 2016 2015 German acquirer International acquirer 15
  16. 16. White Star CapitalWhite Star Capital German Venture Capital: An Overview …providing great outcomes for entrepreneurs and investors Date Company Valuation Oct 2014 $6.8bn Oct 2014 $8.4bn May 2015 $0.6bn Dec 2016 $2.6bn Jun 2017 $4.9bn Nov 2017 $1.9bn May 2018 $0.2bn Jun 2018 $0.7bn Oct 2018 $0.6bn Sep 2019 $5.8bn Selected VC-backed IPO exits Selected VC-backed M&A exits Date Target Acquirer Valuation May 2010 $0.1bn Jan 2011 $0.2bn Sep 2011 $0.1bn Dec 2012 $1.0bn Oct 2014 $0.2bn Mar 2015 $0.2bn Jun 2017 $0.1bn Dec 2017 $0.3bn Aug 2018 $0.3bn Jan 2019 $0.1bn 461 M&A exits 29 VC-backed IPOs 15% Germany’s share of European exits VC-backed exits in Germany since 2009 Despite a recent decrease over the last 2 years, Germany maintains a high number of exits. Source: PitchBook 11 28 29 36 45 63 55 48 57 41 48 7 5 8 10 9 9 19 6 5 6 5 12 38 35 40 51 76 68 59 72 65 56 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 M&A PE IPO 16
  17. 17. White Star Capital Ecosystem 2
  18. 18. White Star Capital 4 Capital Financing available in themarket Key Characteristics • Angel investors • Presence of funds across sectors and stages • Access tointernational funding Government Controllable, human-ledaspects of the landscape Key Characteristics • Tax incentives • Government led incubators and hubs • Regulation Talent The abundance of strong founders and employees and the underlyinginitiatives supporting them Key Characteristics • Education • Major corporates Market Naturally occurring, uncontrollable aspects of the landscape Key Characteristics • Technological adoption • Digital penetration • Size and growth • Tailwinds or headwinds White Star Capital model for a Venture Capital ecosystem Ecosystem: Market At White Star Capital, we believe there are 4 key constituents to the VC ecosystem. 1 3 2 18
  19. 19. White Star Capital The German market features outstanding characteristics… Ecosystem: Market (1) IMF (as of Oct 2019). (2) European Commission, Eurostat (as of Jun 2018). (3) Newzoo–Global Mobile Market Report 2019. (4) European Commission, Eurobarometer 386 (as of 2012). (5) OECD Statistics–ten year per capita exports (2009-2018). (6) Human Development Report 2019. (7) Our World in Data (as of 2017). (8) World Atlas (Jul 2018). Great potential 4th Highest Human Development Index in Europe6 83mGermany is the most populous country in the EU2 Large number of customers 1st In per capita exports volume globally5 Expansion opportunities 5th For productivity per hour worked in Europe7 Capable workforce 2nd Most spoken language in Europe8 International 1st In GDP in Europe1 Huge market 1st Non-native English speaking population in Europe4 Accessibility 1st In number of smartphone users in Europe Many tech consumers White Star Capital 19
  20. 20. White Star Capital 116 109 85 82 69 52 52 49 48 China Japan Russia Indo- nesia Mexico Ger- many France Turkey Iran South Korea …and above else features a large tech-savvy population Ecosystem: Market 2nd Globally for smartphone penetration3 6th Globally for internet users (in millions)2 4th Globally for internet penetration1 4th Globally for e-commerce penetration4 (1) Global Digital Report 2019. (2) Our World in Data (as of 2017). (3) Global Mobile Market Report 2019. Based on the 20 countries that have the highest absolute smartphone users globally. (4) Shopify Global Ecommerce Playbook 2019. 765 83% 80% 79% 78% 74% 70% 66% 61% 60% 57% U.K. Ger- many U.S. France Spain South Korea Russia Italy China Japan 83% 83% 82% 81% 79% 77% 77% 76% 75% 74% China South Korea U.K. Ger- many Indo- nesia India U.S. Taiwan Poland Thai- land 99% 98% 96% 96% 96% 95% 95% 95% 95% 94% U.A.E. Den- mark Sweden Ger- many Nether- lands U.S.A. South Korea Switzer- land U.K. Belgium 20
  21. 21. White Star Capital 2 2 3 12 Canada Germany China USA % of total funded startups in given hub Germany has a geographically decentralized ecosystem… VC funds by city Germany has the 3rd most top 30 startup ecosystems globally1 White Star Capital Ecosystem: Market Berlin 34% Munich 16% Hamburg 6% Frankfurt 3% Other 41% Berlin 29% Munich 20%Hamburg 5% Frankfurt 4% Other 42% % of deals per city in 2019 Source: PitchBook (1) Global Startup Ecosystem Report 2019. While Berlin is a core hub, Germany is far less centralized than the UK and France. Active regional hubs strengthen the ecosystem • Germany is home to specialized and complementary hubs • These hubs cover expansive ground and form a well connected city network • The geographical decentralisation enables cheaper cost of living, attracting striving entrepreneurs Berlin Munich Hamburg Frankfurt 57% 52% 34% London Paris Berlin Size of hubs by funding 21
  22. 22. White Star Capital Germany Austria Switzerland …extended by the DACH region Ecosystem: Market …enabling a thriving economy • $5.0 trillion GDP total, adding 30% to Germany‘s GDP4 • Some of the most advanced economies in the world with $53.0k GDP per capita across DACH compared to $36.6k in the EU5 • $7.0bn in tech VC funding in 2019, representing 23% of Europe‘s total funding6 Homogenous, integrated market… • People share a common language with 92% of Germans, 90% of Austrians and 63% of Swiss people speaking German as their first language1 • Closely associated geographically, historically and culturally • Long standing tradition in regional trade • Leading Logistics Performance Index2 (Germany 1st, Austria 4th, Switzerland 13th globally) • Highly educated population with top-class engineering and business universities …with a wealthy population • High standard of living across the region with twice the European purchasing power3 • Internet and smartphone penetration is 2 and 15 percentage points higher than the European average respectively3 DACH refers to the core German-speaking European region, consisting of Deutschland, Austria, and Confederatio Helvetica (Switzerland). The DACH region is not a completely unified market but proves to be a great launch pad for German start-ups who plan to grow across Europe. Companies benefit from a privileged access to a large high quality market which helps them prepare for broader expansion. (1) World Population Review (as of 2019) | (as of 2019). (2) World Bank (as of 2019). (3) Speedinvest–Startup & Venture Capital Landscape In DACH 2018. (4) IMF (as of Oct 2019). (5) World Bank (as of 2018). (6) PichBook (as of Jan 2020). 22
  23. 23. White Star Capital Source: PitchBook (1) Statista (as of 2019). (2) QS World University Rankings (as of 2019). White Star Capital Ecosystem: Talent Number of professional developers1 (in thousands) Number of graduates who became unicorn founders 58% of German unicorn founders attended German universities Top universities in Germany2 #1 Technical University of Munich #2 Ludwig Maximilian University of Munich #3 Heidelberg University #4 Karlsruhe Institute of Technology #5 Humboldt University of Berlin Germany is powered by a deep talent pool… 901 850 533 413 323 321 314 295 192 179 Germany U.K. France Russia Spain Nether- lands Italy Poland Ukraine Sweden 5 3 1 1 1 1 1 1 1 1 1 1 23 Germany is the country of science, technology, engineering and mathematics. It has the highest percentage of graduates in these fields in Europe and the highest number of professional developers.
  24. 24. White Star Capital Source: PitchBook, Crunchbase …spread across the country White Star Capital Ecosystem: Talent 24 Technical University of Munich Ludwig Maximilian University of Munich Humboldt University of Berlin Heidelberg University Karlsruhe Institute of Technology Mannheim University Freie University of Berlin
  25. 25. White Star Capital Germany is still lacking in founder diversity White Star Capital Female founder support in Germany VC deal count and deal % of start-ups with a female founder or co-founder Ecosystem: Talent Total early entrepreneurship activity gender gap1 Select countries, % point difference between male and female TEA rates Germany’s female start-up activity gender gap is relatively low but has room to improve. 1.7 2.1 2.7 3.3 3.4 4.1 5.7 France China Japan Germany Canada US UK Source: PitchBook (1) Global Entrepreneurship Monitor 2019. The TEA rate is the proportion of working aged people owning or running any business that is less than 3.5 years old. In Germany, the TEA rate is 6.6% for men and 3.3% for women. 25 German female founder activity has made material gains over the last decade but has been slightly decreasing over the last 5 years. 8% 12% 14% 16% 16% 21% 19% 17% 18% 18% 16 32 47 79 91 137 141 138 139 127 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 % of total deals Number of deals Germany’s 3.3%-point start-up activity gender gap is lower than the 4.1 European median and is well below the US and UK.
  26. 26. White Star Capital Federal German Government through KfW Capital, the Federal Ministery for Economic Affairs and Energy (BMWi) and the Ministery for Finance State governments and municipalities such as Hamburg Innovation Foundation, HannoverImpuls, the State of Berlin and the State of Brandenburg. International entities like the European Investment Fund (EIF), European Recovery Program (ERP) and European Regional Development Fund (ERDF) Ecosystem: Government • (HGTF) Germany’s largest, most active seed fund ($1bn AUM across three funds), includes both private and public LPs • Finances follow-on and expansion stages via VC funds and deployed €265m across 18 VC funds since its launch in 2015 • A $250m co-investment fund launched in 2016 by KfW and BMWi to leverage expertise in the VC market ERP Venture Capital Fund …through public-private partnerships The government is actively supporting the ecosystem… (1) Invest Europe EDC (2014-2018 data) | Atomico–State of the European Tech 2019. (2) Lutz | Abel–Der Staat als Venture Capital Investor 2018. Funds are backed by… 1 2 3 26 31% of VC funds raised over the last 4 years are from government agency LPs, well above the UK at 14% and the European average at 24%.1 Public funds directly co-financed 45% of all early-stage VC deals in Germany.2
  27. 27. White Star Capital …as well as through fiscal and administrative initiatives The 2018 coalition agreement of the current federal government determined several initiatives3 INVEST – Venture Capital Grant: the German government’s tax incentive scheme for business angels1 • Private investors receive an acquisition grant for seed investments into start-ups • The grant amounts to 20% of the investment • Condition: investor holds shares for at least three years • There is a tax exemption on the grant Certificate of eligibility for companies by INVEST Ecosystem: Government EXIST-Business Start-up Grant2 • Scholarship funding initiative that supports start-ups from universities and other research institutions during the early phase of development • The program funds the development of a product or service idea and the creation of a business plan through to the business launch • Sales tax exemption in the first two years after founding • De-bureaucratisation of process for founders • Continue to develop government finance instruments (EIF, INVEST-Zuschuss Wagniskapital, EXIST, KfW, Hightech-Gründerfonds) There are around 2,000 different grants provided by the German government, the EU and regional governments. (1) Bundesanzeiger (as of 2014). (2) Bundesministerium für Wirtschaft und Energie (as of 2019). (3) Koalitionsvertrag zwischen CDU, CSU und SPD 2018. 27
  28. 28. Source: PitchBook, Crunchbase (1) Based on most recent fund size. Germany is home to many Venture Capital firms… White Star Capital $300m + < $300m $200m–$300m $100m–$200m Legend Fund sizes1 Munich Project A Berlin Leipzig Bad Homburg Cologne Bonn Ecosystem: Capital 28
  29. 29. White Star Capital …which are raising increasingly large funds German VC and Growth Equity fund sizes have steadily increased over the last decade, as the ecosystem has continued to mature, reaching a $154m average over the past three years and a $175m median in 2019. Ecosystem: Capital VC/Growth Equity fund sizes1 ($ in m; 3 year rolling average) 2019 German tech VC funds2 $1.4bn+ in new capital raised by German Tech VCs over the past year $215m Stage: Series A to Growth Date: Nov 2019 $199m Stage: Seed, Series A Date: Sep 2019 $196m Stage: Seed, Series A Date: Jun 2019 $175m Stage: Seed, Series A Date: Jul 2019 $134m Stage: Series A to Series C Date: Jul 2019 $127m Stage: Seed, Series A Date: Jan 2019 $54m Stage: Seed, Series A Date: Aug 2019 $90m3 Stage: Seed, Growth Date: Jul 2019 Source: PitchBook (1) Excludes Rocket Internet Capital Partners / GFC funds. (2) Based on announcement; excludes CVCs. (3) Two separate $45m funds closed in Jul 2019. White Star Capital $154 $136 $107$98 $76 $98$98$94 $62$54$54 20192018201720162015201420132012201120102009 29
  30. 30. White Star Capital German founders are helping create the next generation of success stories Ecosystem: Capital Founder Previously Founded Venture Sample German Investment Felix Haas Lukasz Gadowski Martin Sinner Felix Jahn Philipp Kreibohm Frank Thelen Hakan Koc Jochen Engert Andre Schwammlein Dominik Richter Sebastian Pollok Lea-Sophie Cramer Lukas Brosseder David Khalil Jan Beckers Robert Gentz David Schneider Lars Hinrichs Rolf Schromgens Peter Vinnemeir Germany’s ecosystem can rely on many successful founders to invest as angels, fund managers, or LPs and to provide valuable advisory to entrepreneurs. Source: PitchBook, Crunchbase 30 Selected German Angel investors
  31. 31. White Star Capital The robust business landscape benefits German startups White Star Capital Fortune Global 500 top countries Germany ranks 5th for the number of global corporate leaders globally. It has 29 companies among the top 500 global corporations1 . Germany has a large number of SMEs, led by the “Mittelstand”. • 3.5m SMEs total, which account for 99.5% of German companies and represent 58% of Germany‘s GDP2 • The average SME in Germany is 1.5 - 4x larger than in other EU countries3 121 119 52 31 29 US China Japan France Germany Global corporate leaders provide great opportunity for start-ups: • Attract and nurture world class talent • Provide large contract and partnership opportunities for start-ups • Finance R&D costs through pilots and CVC funding Top German corporations Mittelstand typically refers to mid-sized family owned/managed private businesses, often global companies in niche markets. They feature strong resilience and considered the backbone of the German economy. The Mittelstand represents a large and diverse supply of potential clients for start-ups but also established niche markets prime for disruption. Germany has only a 56% share of digitalized SMEs, the lowest in Europe4 . • There are 2.7k succesful mid-sized “hidden champions“ globally3, with close to 50% of them based in Germany, driving the country‘s export success (1) Based on revenue. Fortune Global 500 (as of 2019). (2) IfM Bonn (as of 2017). Includes companies with up to €50m in revenue and less than 500 FTE. (3) Simon Kucher & Partners (as of 2014). Hidden champions defined as SMEs with global leadership (top three in its global market or number one on its continent). (4) KfW–European SME Survey 2019. Ecosystem: Capital 31
  32. 32. White Star Capital 32% 23% 30% 6% 9%12%17% 58% 40% 34% 26%25% 21%19% GermanyJapanUSUKCanadaFranceChina Local CVCs Corporate Venture Capital firms play a key role… Ecosystem: Capital CVCs mainly invest across Seed to Series B rounds and focus on FinTech, Mobility and B2B Software. Germany Globally (2019) 2019 CVC Deals by stage Funding of deals with CVCs as co-investors by sector ($ in m) Share of funding where CVCs were co-investors Series Deal Share Seed 25% Series A 37% Series B 20% Series C 13% Series D 3% Series F 2% Source: PitchBook (1) Invest Europe EDC (2014-2018 data) | Atomico–State of the European Tech 2019. 32 $1,121 $948 $478 $72 $66 Mobility FinTech B2BSoftware Aerospaceand Defense InsurTech As LPs, corporate investors represent 28% of total VC funds raised in Germany, featuring the highest level in Europe, above the 16% European average1 . CVCs participated in 27% of all German VC deals representing 58% of the total funding. 32% 19% 9%9%8% 58% 38% 30% 39% 17% 20192018201720162015 German CVCs
  33. 33. White Star Capital CVC Parent Headquarters Invest- ments1 Selected Investments Munich 64 Hamburg 45 Stuttgart- Weilimdorf 42 Essen 32 Unterföhring 30 Munich 24 Ludwigshafen 24 Essen 16 Hannau 16 Frankfurt 14 …with activity concentrated among a few players… Ecosystem: Capital Source: PitchBook (1) Based on number of unique company investments since 2015. The top 10 most active CVCs made 42% of the German CVC investments over the last 5 years. 33 BASF Venture Capital E.ON Strategic Co-Investments Evonik Venture Capital
  34. 34. White Star Capital CVCs founded over the last 3 years …and new CVCs emerging Ecosystem: Capital Source: PitchBook 34 Number of German CVCs 5252 4845 39 33302825 201920182017201620152014201320122011 During the past 10 years, the number of German CVCs has more than doubled. CVC Parent Year Founded Stages Sectors Selected Investments 2018 Seed to Later Stage AI, Blockchain, Biometrics, Data Privacy 2018 Seed to Series B Energy (Storage), E- Mobility 2018 Seed Smart Cleaning, Robotics & Automation 2018 Seed Consumer/ Entertainment 2017 Seed FinTech 2017 Seed Smart Factory, E-Mobility, AI, New Materials 2017 Seed to Series A Generalists (tech-driven) Kärcher New Venture Ceravis Ventures Heinen-Verlag Woov
  35. 35. White Star Capital Foreign VCs further strengthen the market… Ecosystem: Capital VC-backed companies with an international investor Source: PitchBook Funding volume of VC deals in Germany that had an international investor Compared to the U.K. and France, German companies attract international investors more often. The funding volume of international investors into Germany has increased drastically over the last years. 42% 50% 62% 77% 77% 88% 2014 2015 2016 2017 2018 2019 50% 46% 32% Germany U.K. France 49 36 22 21 21 17 15 15 14 14 14 14 12 12 11 b-to-vPartners Idinvest Speedinvest DNCapital MountainPartners RedalpineVenture Lakestar Wayra IndexVentures IrisCapital FJLabs Ventech DraperEsprit Creandum This is thanks to very active funds from Europe, the DACH region and North America. Top international VC investors 2015-2019 unique German company investments 2015-2019 German deals from International investors White Star Capital 48% 17% 29% 4% 2% Europe DACH North America APAC Other 35
  36. 36. White Star Capital France UK Most active investors from Europe1 Most active investors from the DACH region1 Switzerland Most active investors from the US1 …and originate from various regions $5.5m (2016) $62.9m (2019) $227m (2019) S A E $118m (2015) $22m(2015) $6.7m (2015) D B A $22m (2015) $11.1m (2016) $40m (2019) B D B $2.5m (2015) $24.9m (2017) A D $118m (2015) $8m (2015) D A $12.2m (2017) $37m (2019) A A $15.9m (2017) $22m (2016) $45.4m (2015) B D C $5.5m (2016) $37m (2019) $3.7m (2016) S A S $70m (2016) $69.8m (2018) $70m (2017) C B C $10.6m (2015) $1.4m (2017) A S $28m (2016) $9.3m (2017) A C $6.5m (2017) $5.6m (2015) A A $7.1m (2016) $9.2m (2016) A A $20m (2016) $31.8m (2017) B C $27.5m (2016) $30m (2019) A B UK UK France UK Switzerland Austria Switzerland Switzerland Switzerland San Francisco New York Palo Alto Source: PitchBook, Crunchbase (1) Stage and size of investment correspond to initial rounds, Seed (S), Series A, B, C and D. +$50m rounds are highlighted in blue. Illustrative and non-exhaustive list of investments and international funds investing in Germany. White Star Capital Ecosystem: Capital 36
  37. 37. White Star Capital 17% 19% 36% 34% 8% 6% 17% 23% 4% 3% 9% 18% Germany Europe US China Raised > $15m Raised > $50m Raised > $100m 54 41 33 28 16 15 15 10 US UK China Sweden Switzer- land Germany France Nether- lands Funding volume as a % of GDP1 (in bps) These developments are driving an increase in the role of Venture Capital… Conversion rate to later stage rounds2 % of seed start-ups that raise $15m+, $50m+ and $100m+ …and leaving Europe’s biggest economy with significant potential Germany’s funding volume as a % of GDP1 (in bps) Germany’s late-stage funding is strong compared to Europe but is still lacking globally. Germany’s VC market share of GDP increased by 5 bps in 2019. ...helping Germany close its late stage funding gap… Source: PitchBook (1) GDP as of IMF‘s 2019 estimate. (2) Based on median share of companies that raised a seed round from Jan 2009 to Dec 2014 and went on to raise a total funding amount of $15m+, $50m+ and $100m. Ecosystem: CapitalWhite Star Capital 37 1 1 4 2 4 7 9 6 7 10 15 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
  38. 38. White Star Capital Appendix 3
  39. 39. White Star CapitalWhite Star Capital Appendix Germany hosts world class tech and VC events June 4-5 2020 Berlin Attendees: 5,000+ senior executives December 11-12 2019 Berlin Attendees: 3,000 Start-ups presented: 250 June 23-26 2020 Berlin Attendees: 20,000 Founders/CEOs: 4,600 September 27-29 2020 Munich Attendees: 5,000 June 24-26 2020 Cologne Attendees: 1,200 invitation-only February 11-13 2020 Berlin Attendees: 1,200+ 39
  40. 40. White Star Capital German deal structure and processes There are notable differences between North American and German deal terms and processes. Appendix America Germany Preferred legal form Delaware Corporation (Inc.) GmbH (German: Gesellschaft mit beschränkter Haftung – limited liability company) Authorization process for new shares to be issued Approved by the corporation’s board of directors Requires a shareholders’ resolution to be adopted by at least 75% of the votes cast Officialising of significant measures: company formation, investment, and exit Done via e-signing of final legal docs • All significant measures require notarization and registration in the local public commercial register • 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 Board structure CEO, other founders and employees can be represented along with investors and independent board members Only investors and independent board members can be represented Source: Daily Journal 40
  41. 41. White Star Capital What is Media for equity? 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 • VCs benefit from minimized risk of media inefficiencies • While a creative alternative, this may not always be an optimal or relevant solution in every scenario Media for equity programs A common fundraising alternative for German B2C start-ups requiring large media campaigns. White Star Capital Fund Name Companies ProSieben Sat.1 Accelerator GMPVC – German Media Pool Seven Ventures Investors/Media Groups1 Successful Cases1 Appendix (1) Media Digital Ventures–Media Landscape 2016. • Jim Drave • Cashboard • Clark • • Foodist • Mossify • Meine SpielzeugKiste • Valendo • 123Makler • SpringTab • tripRebelK • UKUMI • • Layouttfabrik • Asanayoga • Pablo & Paul • Jaimie Jacobs • HelloCare • Eurosender • Ekoio • Myonbelle • SecureBeam • Little Postman • Media4XCare • Flairelle • Veeplay • Photocircle • MyRadioDay • Kinemattics GmbH • Tvib • Videostream360 • EYEGLASS24 • Jurato • Get2play • Talentry • Tickethelden • • Ampido • JobToday • Book A Tiger • About You • Clark • Twago • • Marley Spoon • Urbanar • ePetWorld • Danat • Momox • JustBook • • Tab Ticketbroker • MyBestBrands • Toptarif • Pauldirekt • Medikompass • 9flats • Centralway • About You • Ayondo • Jawbone • PippaJean • Fineartmultiple • JutFab • Asgoodasnew • Kiveda • Zalando • Shiopkick • HoldidayInsider • Lieferando • Lottohelden • Mawaku • Tirendo • Babymarkt • Kuchen Quelle 41
  42. 42. White Star Capital Glossary of DACH VC fundsPage 1 of 4 Investor Founded Min. check size (€) Max. check size (€) Invest- ments 2018/ 2019 Region Stage Sectors 2005 N/A 1m 96 DACH Pre- Seed to Seed Seed investments 2000 50k 40m 44 World Pre- Seed to Series A Internet, Technology 1997 250k 1m 31 Germany Pre- Seed to Series A Software, Digital, Consumer Internet, Life Sciences, Industrial Technologies 2000 250k 3.5m 25 Europe Seed to Series A Digital and industrial topics: FinTech, Marketplaces, Software, Industry 4.0, IoT 2016 500k 5m 24 Germany Series A to Series B Sector-agnostic 2013 200k 10m 21 World Pre-Seed B2C and B2B-Tech: Marketplaces, Subscription, SaaS 2012 500k 3m 20 Europe Pre- Seed to Seed Sector-agnostic, focus: Consumer-Tech, scalable B2B models 2012 300k 10m 20 World Seed to Series A Currently focuses on Digital Health, Mobility, Education, Industry 4.0, E-Sports 1997 250k 5m 18 Europe Seed to Series B FinTech, InsurTech, Mobility & Logistics, Blockchain & Crypto, industry 4.0 & IoT 2011 500k 3m 18 DACH Seed to Series B B2B Start-ups, Enterprise Software, Industrial Technologies and Mobility, Software and Hardware 2012 500k 3m 14 Europe Seed to Series B Enterprise Software, B2B SaaS, Enabling Technologies, IoT, IT Security 1999 1m 20m 11 World Series A to Series B Sector-agnostic Investments in Internet companies, especially in B2C start-ups 2013 500k 3m 11 n/a Pre- Seed to Later Stage Enterprise B2B, IoT, Property Tech 1998 500k 30m 11 World Seed to Later Stage Sector-agnostic, primarily consumer-internet & software area 1999 500k 6m 11 Europe Seed to Later Stage CleanTech, Software and IT, Industry 4.0 and new materials Appendix Source: Berlin Valley–Startup-Investoren in Deutschland (as of 2018); PitchBook for number of investments HV Holtzbrinck Ventures Global Founders Capital 42
  43. 43. White Star Capital Glossary of DACH VC fundsPage 2 of 4 Appendix Investor Founded Min. check size (€) Max. check size (€) Invest- ments 2018/ 2019 Region Stage Sectors 2013 1m 50m 11 World Series A to Later Stage Consumer, B2B, FinTech, Mobility, Blockchain 1997 200k 10m 10 Germany Pre- Seed to Later Stage Internet/Softw./ Mobile, Consumer Products, Industry- Tech, CleanTech, Lifescience 1998 250k 40m 10 World Pre-Seed to Later Stage DeepTech 2011 200k 1.5m 10 Europe Pre- Seed to Series A SaaS, Marketplaces 2003 500k 30m 9 Europe Pre- Seed to Series B Industry 4.0, DLT, Digital Health 2016 50k 200k 9 Europe Pre- Seed to Seed B2B/Enterprise Software with strong technology reference 2011 50k 4m 9 Europe Pre- Seed to Later Stage Marketplaces, PropTech, InsurTech, Digital Health 2009 5m 50m 9 World Series A to Later Stage Travel, Health, Home & Living, Beauty & Acc., E- Com., Retail and Lead Generation 2007 1m 10m 9 World Series A to Later Stage Direct-to- consumer/transactions- oriented business models, enabling technologies 2018 25k 100k 8 Europe Pre- Seed to Seed Mobility, Media, Travel, Lifestyle, FinTech 2016 250k 1m 8 Europe Pre- Seed to Seed AI/ML, Enterprise Software 2015 500k 1.5m 8 Europe Seed to Series A Industrial IoT, Machine Intelligence, Frontier Hardware, New-Age Ent. Software, Cyber Security 2015 250k 1m 7 World Pre- Seed to Seed PropTech, SaaS, Marketplaces, InsurTech, FinTech, DeepTech 2014 250k 2m 7 Europe Seed to Series A FinTech, InsurTech, Digital Health, E-Learning, PropTech Source: Berlin Valley–Startup-Investoren in Deutschland (as of 2018); PitchBook for number of investments 43
  44. 44. White Star Capital Glossary of DACH VC fundsPage 3 of 4 Appendix Investor Founded Min. check size (€) Max. check size (€) Invest- ments 2018/ 2019 Region Stage Sectors 2014 500k 5m 7 Europe Pre- Seed to Series A FinTech, InsurTech, Asset Management 2010 200k 2.5m 7 Europe Seed to Series A B2B-Software, Enterprise, SaaS, AI, IoT/Industry 4.0, Robotics, Security 2016 500k 5m 5 World Pre- Seed to Series A Decentralization of markets, empowerment of individuals, data liberation. Thesis yes, sectors no. 2014 500k 5m 5 DACH Pre- Seed to Series A FinTech, RegTech, InsurTech, LegalTech 2011 100k N/A 5 Europe Seed Deep-Tech, Food 2016 50k 500k 5 World Pre- Seed to Seed Opportunity-driven: open to all areas 1999 1m 3m 5 DACH Seed to Later Stage Fast-growing tech sectors: mobile communications, software, green IT, e- commerce 2009 500k 30m 5 World Seed to Later Stage Consumer Internet, Digital Services, Software & Technology 2013 50k 250k 5 DACH Pre- Seed to Seed B2B SaaS, Enterprise Software, Developer Tools 2013 300k 20m 4 Europe Series A B2B SaaS 1986 500k 30m 4 World Series A to Later Stage IoT, 5G, AI, Data, Cloud, Industry 4.0, SW, Security 2012 N/A N/A 4 Germany Pre- Seed to Series A Meta-platforms, E- Commerce, SaaS, B2B 2006 50k 500k 3 Europe Pre- Seed to Series A Smart City, Future Commerce, Prop/Construction-Tech, FinTech, IoT 2015 100k 500k 3 Germany Pre- Seed to Seed B2B, Marketplaces, SaaS, Deep-Tech, Digital Services 2016 500k 3m 3 DACH Pre- Seed to Series B Internet, FinTech/InsurTech, LegalTech, Comparison, Marketplaces Source: Berlin Valley–Startup-Investoren in Deutschland (as of 2018); PitchBook for number of investments 44
  45. 45. White Star Capital Glossary of DACH VC fundsPage 4 of 4 Appendix Investor Founded Min. check size (€) Max. check size (€) Invest- ments 2018/ 2019 Region Stage Sectors 2012 50k 5m 3 DACH Pre- Seed to Later Stage Secondary shares, E-Com. and Market-places, FinTech, Adtech, Blockchain-Infrastructure 2008 500k 1m 3 DACH Seed Education Technology, Health Digital Services, Financial Services 2015 300k 1m 3 Europe Series A B2C Internet and Mobile (focus on marketplaces) 2014 100k 1.5m 2 Europe Pre- Seed to Series A E-Commerce 2015 5m 25m 2 Europe Series B to Later Stage Content-driven models E- Commerce, Marketplaces, Digital Networks 2009 250k 2.5m 2 DACH Seed to Later Stage Media-related start-ups 1998 500k 6m 1 Europe Seed to Series A Sector-agnostic, products and services should be scalable and future-oriented 2010 100k 500k 1 DACH Pre- Seed to Series A Attractive market segments, not yet unlocked by the efficiencies of the internet 2015 500k 2.5m 1 Europe Seed to Series A B2B Enterprise Software, Industrial Technologies, N/A N/A N/A 1 World Seed to Later Stage Network, Infrastructure- technology, Marketplaces, Decentralized Protocol, open software Source: Berlin Valley–Startup-Investoren in Deutschland (as of 2018); PitchBook for number of investments 45
  46. 46. White Star Capital White Star Capital’s Ecosystem
  47. 47. White Star Capital Introduction to White Star Capital White Star Capital White Star Capital is an international fund investing across Series A and B. Our footprint is global: we have 6 offices in the world in New York, Montreal, London, Paris, Tokyo and Hong Kong. We partner with exceptional entrepreneurs with global ambitions and leverage our extensive experience and international networks to help them scale their business internationally. Our investments in Germany include Clark and Tier Mobility. 3 Continents I18N1 Team Track Record With a presence in North America, Western Europe and East and South East Asia, we invest in early stage companies with global ambitions. Our current funds have close to $300m under management and a portfolio of 30+ core companies which have raised over $1bn+. Global Presence and Portfolio France, Germany, ROE United Kingdom & Nordics United States East and South East Canada Physical Hubs Core Hubs 47 We leverage our experience founding and scaling businesses to support the internationalization of our start-ups. We are a well- balanced investment team with strong entrepreneurial and operational expertise and financial and M&A experience. Undisclosed (1) i18n is a technology industry term to signify “internationalization” in shorthand form. It stands for I and N and the 18 letters in between.
  48. 48. White Star Capital Other White Star Capital Country Deep Dives We actively publish detailed reports on different VC Ecosystems. For more information, please refer to Eastern US Venture Capital Landscape 2019 Canadian Venture Capital Landscape 2019 French Venture Capital Landscape 2019 UK Venture Capital Landscape 2019 South Korean Venture Capital Landscape 2018 Japanese Venture Capital Landscape 2018 48