Who are the best venture capitalists

WiWo founder

For start-ups, a lot depends on the decision for or against an investor. Four venture capitalists explain what founders should pay attention to from an inside perspective.

Strong growth needs strong investors: This is how so-called venture capital companies (VC) often argue. They collect money from investors for a joint fund and use it to finance mostly start-ups in the growth phase - according to studies, more than 2.1 billion euros flowed into the German scene in this way last year. If the selection of venture capitalists is successful, a lucrative business model emerges: In return for their investment, they receive a stake in the young company. If it makes a breakthrough thanks to the fresh capital, the fund's tills will ring when the company shares are sold.

However, before such a deal comes about, both sides spend a lot of time rapprochement. "Finding investors works like dating - it depends on the personal connection," said Jan Miczaika, partner at HV Holtzbrinck Ventures, last week at the Tech Open Air (TOA) digital conference at Funkhaus Berlin. In a panel discussion, four representatives of venture capital companies provided insights from an internal perspective on a crucial question: What should founders pay attention to before they decide on a venture capitalist? No matter how flattered some young entrepreneurs may feel when they inquire about a renowned VC: When choosing a financing partner, foresight is the order of the day.

1. Understand business processes

It is not worthwhile for all start-ups to raise money from VC funds, said Gavin Teo, General Partner at B Capital Group, with a view to their own business model. Financing through venture capital companies harbors risks if founders give up company shares too lightly and underestimate the investor's ability to intervene. In some cases it is better to keep control of the company in hand, says Teo. He advises founders to find out more about the internal processes and procedures of the VC.

This also includes asking to what extent the fund has already been invested elsewhere, i.e. how far it has already been exhausted. Accordingly, the way the start-up is dealt with can differ - for example, if the focus is too fast on profitability or overly rapid growth. Discussions with other start-ups from the VC's portfolio provided important impressions.

2. Align strategies

Before founders embark on a VC, they should carefully check whether the respective strategies harmonize - according to the tip from Ashley Lundström, the responsible investor at EQT Ventures. Their approach to investing was best suited to entrepreneurs aiming for rapid growth. On the other hand, she warned against joining forces with VCs too early: start-ups should try to grow organically on their own for as long as possible - and only get venture capital to help when the surge is ignited: "We only put fuel on the fire". When it comes to developing complex technology or winning large companies as cooperation partners, other venture capital companies can be a much better fit.

3. Get personal

Jan Miczaika, partner at HV Holtzbrinck Ventures, sees how much a motivating work atmosphere is important in a whole host of deals: Holtzbrinck Ventures reviews 4,000 business plans a year and concludes an average of one financing round per week. According to Miczaika, even if the contracts and conditions are fair, the cooperation depends very much on the individual personalities. He therefore recommends getting references from the other portfolio companies of the VC and getting an impression of the working atmosphere in a personal conversation.

After all, the donors often sit in strategy meetings or call with probing questions - it is important that open communication is possible. Uwe Horstmann, founding partner at Project A, made his demands on the cooperation very specific: He gets along best with founders who show a strong willingness to learn and who show ambitions - he likes to get involved in "nerdy" discussions, if the input from the founders too will be accepted.