A Blazing Q1: Berlin Startups Raise Over $800M in 2015 Q1

Berlin is unstoppable.

Earlier this year, I reported that Berlin startups raised $1.1B in 2014. Of course, the actual amount is likely much higher as Germans aren’t particularly forthcoming about their numbers. Well, loyal readers, I’ve crunched the numbers and am pleased to report that in 2015 Q1 alone, Berlin startups reported raising over $800M, a stellar start to 2015. With several large deals only three weeks into Q2 (EyeEm $18M, Fintech companies Smava $16M and Number26 $10M, and MyLorry $10.7M), I’d predict that Berlin beats last year’s $1.1B raised by the end of this quarter.

A note about the data: I relied heavily on Mattermark, CB Insights, and Crunchbase, and cross-referenced their reports with local news sources including Venture Village, Gruenderszene, and the amazing newsletter TechBerlin. If you notice anything I’ve missed, shoot me an email at kalie@kaliemoore.com. All of the charts were prepared by my friends at datapine.

Now, let’s dive in.

Berlin Startup 2015 Funding Disclosure

The first quarter of 2015 saw nearly double the number of investments of Q1 2014. Last year, 27 Berlin based startups reported raising rounds, compared to 49 this year. More companies also disclosed their funding amounts (28).

Berlin Startups Getting Funded

As expected in Berlin, Ecommerce is the big winner among the different industry types. Last year, however, Ecommerce and Software funding were nearly tied. Of the companies that raised funds in Q1 2015, twenty were Ecommerce companies (including 9 or the top ten biggest rounds), ten were Software, Edtech accounted for five, Adtech and Fintech three each, Medtech and Mobile two each, and one each for Gaming, Green, Security, and one that I marked Other (PopUp Berlin – I love the concept!)

Berlin Funding Breakdown

24 companies received seed funding, 10 received Series A, and 7 received Series B. There was one company that received Series C, one more for Series D, three for Series E and above, and three that I listed as Unknown based upon conflicting or incomplete information.

Average Funding By Round Berlin Q1 2015

This data is not perfect, but we need to start somewhere. The Average Amount by Funding Round has increased significantly in the seed stage. The average seed round for all of 2014 was $970K; that amount increased to $1.2M in Q1 2015. (Note that only 10 out of 24 companies that raised a seed round disclosed numbers). Eight out of the ten companies that reported Series A released numbers, averaging $14.5M with one serious outlier – Glispa at $77M. Only four companies that raised Series B reported exact numbers, and there was one slight outlier – Helpling at $47M. Only one company, Auctionata, raised Series C, which cannot be considered a valid sample. All three D+ rounds were disclosed, bringing the average to $146.2M.

Berlin Startup Average Funding Amount

While the information is not definitive due to sample size and outliers, it is worth noting that the numbers in each category are significantly higher than in 2014. Let’s see if the trend continues.

Top Ten Funding Rounds Berlin Q1

Once again, Delivery Hero remains #1 on the Top 10 list. Rocket Internet acquired a 30% stake in Delivery Hero (a rival to #3, FoodPanda) as part of its new Global Online Takeaway Group. The Delivery Hero stake is valued at $586M. A disclaimer: I included Rocket Internet’s $568M investment in Delivery Hero in this calculation. Rocket paid $309M for new Delivery Hero shares, and another $259M for a stake sold by existing investors, according to CEO Niklas Oestberg, as reported by Bloomberg.

HelloFresh, another Rocket Internet company, comes in at Top Funding Round #2 with a $126M round.

Another food Ecommerce company from Rocket rounds out the #3 spot. Rocket invested $1.1M in Foodpanda. Essentially it is the same as Delivery Hero, but in emerging markets.

Glispa, an Adtech startup that has bootstrapped until this point secured a $77 million investment (75% stake) from Market Tech Holdings, a UK-based business.

Helpling, yet another Rocket Venture, closed a $45 million Series B round led by Lakestar, Kite Ventures, Lukasz Gadowski and Rocket Internet, only four months after raising a $17M Series A.

Auctionata, a startup that streams online live auctions for fine art and collectibles, announced that it raised $45 million in a Series C round.

Mister Spex, an eyewear Ecommerce shop, has picked up a new $40 million round in funding led by U.S. investment bank Goldman Sachs.

Carmudi, a Rocket car classifieds company, raised $25M to strengthen its operations in Asia and Latin America.

Outfittery, the fashion for men startup, has raised a $20M financing round. The investment was lead by Spotify investor Northzone.

Lamudi, Rocket Internet’s real estate network, has raised $18M in investment to grow operations in Asia and Latin America.

Takeaways? Should have invested in food delivery startups and Rocket is killing it.

There were several acquisitions, which I will write about next week, but there is one I should mention now since it is biggest exit I’ve heard of since Sociomantic’s exit almost exactly a year ago. Quandoo, an OpenTable clone, was acquired by Japan’s Recruit in a deal worth $219M.

Capital attracts more capital and more talent and the cycle shows every sign of continuing. Along with money, Berlin companies are raising interest as their impact is felt everywhere, in Europe and beyond.

 

2014 Berlin Startup Funding Infographic

Berlin Startup Funding Infographic

It should come as no surprise that this blog is a labor of love, rather than revenue.

I support my lifestyle by managing data-driven marketing and international PR for some of the coolest Berlin startups around. In partnership with datapine, a data visualization SaaS startup, I produced a 2014 Q1-Q4 Funding Analysis of the Berlin Startup Scene. For a comprehensive look at which industries and startups received the most funding, and a list of all Berlin acquisitions, check out the original post. All graphs were created instantly using the datapine tool – I highly recommend it.

The data from that post (which was sourced from CB Insights and cross referenced with press releases, and publications including TechCrunch, Gruenderszene, etc.) was used to create this killer 2014 Berlin Startup Funding Infographic designed by the amazing Irene Ramirez. The below commentary on the Berlin Startup Scene in 2014, and where I think we are headed, is strictly my own opinion.

It was almost exactly a year ago that I attended the Hy! Summit where Peter Thiel, when asked about the Berlin ecosystem, noted that Berlin is missing one extraordinarily big success. In February of 2014 Berlin still needed a couple of unicorns and a serious exit or two to be taken seriously.

In 2014, Berlin startups raised a combined $1.1 billion in 2014, a 140% increase compared with 2013. We got our unicorn (Delivery Hero was valued at $1B in August 2014, and that number doubled to $2B last week as Rocket Internet paid $568 million for a 30% holding) and saw the two largest IPOs in Germany in the last seven years with Rocket Internet and Zalando.

This $1.1B is an extremely conservative number, I believe the actual amount raised by Berlin startups is much, much higher. Of the 134 startups that announced funding, only 77 disclosed the amount. Of the seven Series D rounds only five reported on actual numbers. When you look at the five reporting the median Series D+ was $85,000,000 and the mean was $126,600,000, so it is safe to assume we are missing some pretty big numbers.

Also, only 134 Berlin startups even reported funding. In my personal network I can name dozens of startups I know received funding last year and never issued a press release. Germans seem to be much more secretive than their entrepreneur counterparts in California (a topic I could write a novel about).

Instead of providing commentary on the different funding announcements by industry or type, I’m going to offer a few highlights that I found to be interesting in 2014.

A Straight Up Fairy Tale

There’s nothing I love more than a good bootstrapping story. Sociomantic seemingly came out of nowhere and secured a $200M exit without raising a dime from venture capitalists.

Female Founders Raised Some Serious Cash

A 2012 report called The Startup Revolution: The Global Rise of Startup Ecosystems and How They Compare used data collected from more than 50,000 startups and, with its proprietary benchmarking method, ranked ecosystems based on numerous factors. Of the European cities ranked, Berlin had the lowest percentage of female entrepreneurs with a mere 3%, compared to 7%  in Paris and 9% in London. In contrast, Santiago, New York City and Toronto had the highest percentage of female entrepreneur with 20%, 18%, and 18% respectively. While Berlin, like everywhere else in the world, isn’t even close to being equal, 3% still didn’t feel accurate. It was really great to see companies with women founders raise serious cash like Outfittery’s €13M funding round. Other startups that raised rounds in 2014 with a female founder include Amorelie, Career Foundry, Clue App, Kisura, Bloomy Days, Edition F, Junique, and RetentionGrid, among others. On a side note, they are currently collecting data for the 2015 Startup Ecosystem Report. If you are a founder of a Berlin startup, please fill out the survey here.

FinTech Comes Out of Left Field

While London is known as the FinTech capital, ten Berlin FinTech startups raised money in 2014. Let’s hope this trend continues since banking in Germany is a constant nightmare. There is reason to hope that it will: HitFox recently announced a “FinLeap” project and plans to start four to six FinTech companies every year.

We Had Our IPO’s and our Unicorn, Let’s Move On

Rocket and Zalando IPO’d to much fanfare, saw their numbers drop about 30%, and have currently recovered (which doesn’t seem to get any media attention). We have our unicorn with Delivery Hero. Can Berlin be taken seriously now?

A Look at 2015

Despite all the doom and gloom bubble predictions, I’m excited for 2015. We are starting to see the dividends from successful companies pay off in terms of angel investments (for example see Delivery Hero’s Claude Ritters investments on AngelList and Thilo Tom Hardt of Mister Spex’s early stage investment site). I also see more cross-industry collaboration than ever before – stay tuned for a future post.

Are you interested in data driven analyses as part of your content marketing strategy? I’m available for new projects. Check out my CV on the About Kalie page of this site and shoot me an email at kalie@kaliemoore.com.

 

Berlin Fashion + Tech and FOMO

I am never leaving Berlin in January again. I am never leaving Berlin in January again. I am never leaving Berlin in January again.

This is my new mantra. This is the second year in a row I thought sunny California would be better than snowy Berlin, until I received dozens of messages about Fashion Week parties and realized that no matter the weather conditions, I’d rather be in Germany than eating gluten-free scones in yoga attire.

Enough with the rant. I’ve been asked a lot recently about what I see happening in the Berlin Startup Scene in 2015. If you read my Q1, Q2, or Q3 funding analysis (FYI – a 2014 Funding Recap will be published February 3rd) you know that when it comes to the Berlin Startup Scene, Ecommerce is king. According to the Verband der deutschen Internetwirtschaft (Association of the German Internet Industry), 53% of German GDP generated in 2017 will be e-commerce related, compared to 37% in 2012. This, combined with the fact that Berlin is still cheap enough to house designers and artists, makes me think that this year we will see the wearable market explode. We also finally have someone pulling the scene together. Lisa Lang, founder of ElektroCouture, is doing a smash up job pulling makers, designers, and techies together. If you are looking to partner with technology brands and fashion designers or bring your vision to life, she is the woman to contact.

Fashion Week is in full swing. As I’m writing this Berlin It Girl (and fellow Californian) Carrie Wick is at the Tommy Hilfiger opening for Fashion Week where, apparently, they are handing out beautiful custom perfume oil. The Decoded Fashion Meetup just wrapped up. If you missed it, keep an eye on their site, as they have several meetups a year in Berlin, London, and New York.

Anna Rose Videopath

Also this week, the Hundert released their fourth issue. They brought together 100 of the most significant fashion labels and dressed up 100 Berlin Founders. The results are gorgeous. Here is a list of Berlin Fashion startups and the photo of my favorite founder featured, Anna Rose from Videopath. Check out the 99 other founders and a list of all the fashion startups in Berlin by  downloading the entire issue here.

In 2015, I’d like to write more about fashion and tech, specifically well-designed wearables. If you are working on a project in this space please contact me at kalie@kaliemoore.com.

FOMO is a very real thing.

Berlin Startup Exits: How Equity Will Fuel The Ecosystem

The topic du jour of the Berlin startup scene has changed from 2013’s “Is Berlin all hype?” to 2014’s “When is Berlin’s big exit?”

From Peter Thiel’s talk at Hy Berlin, to Bloomberg predicting four possible Berlin IPO’s in 2014 (two of which happened), exit expectations are everywhere. It is no longer if, but when. Along with the anticipation, a consensus is growing that exit events are a necessary step for Berlin to prove itself as a legitimate ecosystem.

Why do big exits matter? There are several reasons. First, international investors will pay more attention. The lure of high returns will get American VC’s on planes, and just maybe AirBerlin will bring back the non-stop Tegel to SFO flight (fingers crossed for all of us).

The other critical reason? Equity. While this does not receive nearly as much attention as the presumed inflow of new American investment, the truth is that – assuming that employees have equity – exits flood money into the ecosystem.

In that scenario, IPO’s can mean dozens, if not hundreds of new millionaires eager to invest in both new startups and real estate. According to Bloomberg, Facebook’s IPO created 850 new millionaires, many of whom “decided to invest their wealth in emerging technology companies such as Instagram Inc., Spotify Ltd. and Flipboard Inc.”  Twitter’s initial public offering created some 1,600 millionaires, or two-thirds of the company.

Did the same happen when Zalando and Rocket Internet went public? Not that we’ve seen yet. I sat down with Kevin Dykes, an American who built his latest company, RetentionGrid, in Berlin. Kevin explained that, in the US, it is an expected practice for a company to have a stock option program from day one, available to everyone. In key markets like San Francisco, New York or Austin, options are a must-have for recruiting purposes. Upon exit, those options create a new generation of angels that start their own companies or use that money to invest. And why not?  As Kevin says, “This shit is hard and skin in the game is important.”

American exits mean loyal employees and more money feeding the ecosystem. Sounds great, right? So why hasn’t it taken off in Berlin?  Kevin speculates that, culturally, equity just isn’t as desired in Germany. “It hasn’t been a requirement of any hiring conversation so far.” He views this as a limiting factor in Berlin, where most of the angels you meet were founders, not former employees.

This was seconded recently by Dominik S. Richter Founder & Global CEO of HelloFresh. After raising a $50 million round, he told Venture Village, “Here, high performing employees often do not appreciate and value stock and stock options correctly, thus making it hard for early stage startups to win over great talent from more established industries or players who can pay better salaries. I think this due to the fact that not a lot of wealth has been created through stock in Berlin so far, i.e. lack of role models, but I hope this will change if we have a couple of good exits in Berlin.”  The situation now looks like the chicken and the egg – Berlin needs exits to demonstrate how much Berlin stands to gain from exits.

Equity in Berlin also has challenging tax regulations that have not yet been tested (surprise, surprise). Instead of a traditional option pool like you would find in the US, Germany uses a virtual equity model which has implications for payout and reinvestment.

In Berlin, Equity Is Virtual

I met with serious experts Rainer Weichhaus and Konstantin Maretis of RoeverBroennerSusat, one of Germany’s leading independent audit and tax consultancy firms. And let me say that, as someone who has dealt with my fair share of questionable lawyers and tax accountants in Germany, these guys know their shit.

Konstantin explained that the typical American option pool program is not usually offered in Germany due to differing legal regulations. In Germany, most startups work with virtual stock programs, rather than direct equity. Employees are granted virtual shares of the company, at a fixed price at a certain point in time. Upon exit, the shareholder sells their shares and the employee is treated as if he would have sold real shares.

Rainer explained that this is quite an easy way to handle participation because, while employees are, in a way, shareholders, they do not receive shareholders rights. For instance, they will never sit in shareholders meetings. They become actual shareholders only when an exit occurs.

Both Rainer and Konstantin say that they see most German startups implementing similar programs, especially for early employees, such as the first twenty-five to join the company. “At the end of the day you only have one cake and you can only share it once.”

There are also tax considerations: American stock options are subject to wage tax immediately. In Germany, the tax is only levied if there is a payment. There are different tax rates for wages and for shareholder positions. The list goes on.

The American Equity Model

In the beginning, equity is more art than a science.

Fred Wilson writes: “Once you have assembled a core team that is operating the business, you need to move from art to science in terms of granting employee equity. And most importantly you need to move away from points of equity to the dollar value of equity… The key thing is to communicate the equity grant in dollar values, not in percentage of the company… Talking about grants in dollar values emphasizes that equity aligns interests around increasing the value of the company and makes it tangible to the employees.”

Typically, between 10-15% is distributed to employees in the seed round. Once you hit Series A,  20%-25% of the company is allotted for employees. This may seem like a lot, but it encourages even more in good will. What does the breakdown look like? Tony Karrer included this option shuffle breakdown on his blog:

The American Equity Model Option Shuffle Breakdown How Common is Equity in Berlin?

While my friends at RoeverBroennerSusat saw the startups they worked with offering equity in Berlin more often than not, I thought that I would verify independently. I spoke with dozens of founders, employees, recruiters and lawyers, many of whom provided information as long as it was off the record.

I met with Jeremy Del-Guidici, CEO at VonChurch Berlin GmbH, a leading recruiting firm that specializes in helping digitally focused companies evolve. The company was originally started in San Francisco in 2008 and arrived in Berlin last year. Jeremy deals with startups of all sizes and agrees that startup equity models in Berlin are dramatically different than those in the States or the UK.

Out of all VonChurch’s Berlin startup clients, Jeremy estimates that less than 5% offer equity across the board to early employees, and less than 10% offer equity when hiring senior positions. With virtual stock, the number is closer to 0.1%.

None of the founders I interviewed, who had raised a seed round, had implemented a virtual equity model, though many were interested or actively working with tax advisors to set one up. Across the board, founders expressed confusion on what percentages to offer.

I spoke to three startups which had raised over one million euros. One was in the process of implementing traditional stock options. Though they are based in Berlin, they are a limited UK company, and their American and UK investors had required it. The second company was a Gmbh that used the virtual equity model, but as an incentive for senior hires rather that first employees.  “Our first employees were an intern, a junior developer and then a intermediate frontend developer. So, it wouldn’t make sense to give them stock options. Besides we had enough financial resources to motivate them by their salary and didn’t need the “extra” motivation through stock options.” The third company is a thriving B2C company. They give options to most of their employees, not just first employees. The initial pool was 5%, but they’ve topped that up with every funding round since.

While German startups are starting to think about equity, there is no standard model yet, and company policies vary widely.

The Times They Are A’ Changing

Everyone agreed that, as time goes on, equity will become the norm here in Berlin. Jeremy of VonChurch predicts that the market will naturally push in that direction. If recruiters are calling with offers for the same salary plus equity, you will be more willing to talk to your current employer about options.

The influx of international workers and American and UK investment will speed things up. More startups will have to compete with companies abroad for quality talent, and that means offering stock. US investors expect, and oftentimes require, early employee stock options. Several of the companies I spoke to were implementing programs at the encouragement of their investors.

It’s also the right thing to do. 6Wunderkinder CEO Christian Reber writes about this in his popular blog. He recommends giving away 10-20 percent for employees. “Be generous with shares to your employees, they are your capital and most important resource. But never give away shares without clear vesting rules. When it comes to equity, be fair. Everyone should invest the same energy and the same amount of time.”

Berlin’s big exits are coming. They could make a few people very rich, or jump start the next generation of hot companies. More millionaires with startup experience are one key to continuing the growth in Berlin.

This article was originally published on Hack&Craft News.

Berlin Startup Girl’s Gift Guide for Women in Tech

 

Kalie Moore Gift Guide for Women in Tech

It is officially the holiday season, and I had to come up with some items to ask for at the family gift exchange. After putting together my list, I realized that almost everything was pretty damn girly and techie, so I thought I’d share my wishlist here, and maybe help out some fellow women in tech.

For the lady geek in your life who cares about style as much as technology:

ElektroCouture Artdeco Necklace

Art Deco NecklaceElektroCouture is a collaboration of artists, designers and technologists working together to create electronic jewelry and fashion pieces. The group was founded by Berliner and fellow Geekette Lisa Lang. Last month, over coffee, she told me about all of their amazing projects, and I fell in love with her Artdeco necklace. Not only is the design gorgeous, but the necklace lights up (in a non-rave-y way) making it the perfect statement piece. There are several different versions. The first is the gorgeous laser cut necklace with batteries and LED lights (approx 129 euro). The second version will light up based on your body heat (approx 249 euro). Though they will not be out in time for Xmas, you’ll be able to preorder from the ElektroCouture website.

RinglyRingly

I’m well aware that Ringly has been covered by every tech publication and women’s fashion blog, but I want it. Crafted with an 18K matte gold 3 micron plated setting, and precious and semi-precious stones, Ringly alerts you when you get an email/call/tweet from someone who matters. I’m not sure who that person would be in my life, but the pink sapphire ring looks exactly like a piece I declined to buy five years ago, on a trip to India, that I still think about. Ringly is the best example out there of a company focusing on style just as much as tech.

Tory Burch for FitBit (the Bracelet, not the ugly necklace)

tory burchI have a FitBit. Or, at least, I did. It was an impulse purchase when buying a new laptop last year. I wanted to prove (to whom I’m not sure) that I walked more in Europe than in the US. Duh – I have a car in California, and in Berlin my metro stop was closed for the last year. Anyway, once I confirmed that I walked an average of five miles per day in Germany, I put it in a drawer, never to be seen again. Now that I’m considering another marathon, busting out the FitBit makes sense, and part of me thinks that if it were more attractive, I’d be more inclined to charge it. Enter the Tory Burch for FitBit’s gold band. Worth a shot.

 

 

Ricky bag from Ralph LaurenRicky Bag

At $5,000 this bag definitely goes on the wish list.  The New York Times recently reported that Ralph Lauren has introduced an improved “Ricky bag with light” for the holiday season. The new version of the bag is  equipped with a USB charger and four discreet LED lights that come on when you open the bag. While the bag is a work of art – each one  is handmade in Italy out of calf skin and takes 12 hours to create – I’m more excited about having a light and a charger in a big purse.

For the health nut or anyone who lives in Berlin:

 

VessylVessyl: A Smart Cup That Counts Liquid Calories

I’m a typical Californian health nut. Although I eat a healthy, mostly veg diet, and workout 5 to 7 times a week, I always lose 5 lbs when I visit California and gain it immediately when back in Europe. Why? Wine. In a city with no last call, it is easy to rack up five or six drinks in a night. In San Francisco, where bars start shutting down at 1:30am, there is only so much damage you can do.

Enter Vessyl, a smart cup that doesn’t allow for complacency. Vessyl is a cup designed to automatically assess what’s been poured into it and track what you’re drinking in real-time. Put any type of liquid into the cup, whether it be soda or juice or coffee, and the Vessyl’s advanced sensing technology breaks down the fluid to a molecular level in order to identify the beverage. It can even differentiate brands like Pepsi versus Coke, plus, it gives caloric make up including total grams of sugar, fat, protein, sodium and caffeine.

6SensorLabs Gluten Testing Device (available in 2015)

California seems more hip to food allergies then elsewhere. While Berlin isn’t as bad as parts of Eastern Europe where chicken bits floating in a vegetable broth still counts as vegetarian, I have been told that items are gluten free when they aren’t. 6SensorLabs is creating a device (available in 2015) that uses chemistry-based technology to determine when a food sample contains the protein gluten.

You place a tiny morsel of food into a pocket-sized sensor, wait a few minutes or less, and the device will inform you whether it the verdict is g-free or not.

For the transient techie with a lover or two abroad:  The Luxurious Remote-Controlled Bullet Vibrator

Lyla 2In our supposed hookup culture, remote control vibrators seem to be all the rage. As someone who bores of Skype sex and long distant relationships in general, I’ve never felt the need. Then my favorite Swedish sex toy shop, Lelo, created the LYLA  2,  the premium bullet-style vibe with a wireless remote featuring revolutionary SenseMotion™ (movement-activated controls). If past Lelo gifts have taught me anything, this is definitely worth a shot.