Free Tickets for Women in Tech at Bits and Pretzels

Interested in drindls + networking + beer for free? Bits and Pretzels, my all time fav tech conference, which takes place at Oktoberfest is giving away 300 tickets to women in tech.

They write:

Anyone working in the startup world knows intuitively that women are not well represented in founder roles or technical positions. There are countless brilliant female founders in the international startup ecosystem but they are still underrepresented in the public awareness.

This is something we’d like to change! Despite our decision not to grow bigger and to once again limit the total number of tickets to 5,000, we didn’t want to reduce the number of tickets for our Women in Tech Special. It is extremely important to us to push awareness even further and are therefore happy to announce that…

You can apply for your ticket here. See you in the beer tent!

 

Bits and Pretzels 2015

Berlin Fintech By the Numbers

I am traveling in the US, which prompted several days of pondering on the German banking system.

Why?  First, my Deutsche Bank EC card will not work in America. While researching the many solutions for this inconvenience, I came across enough intriguing new data on the Berlin fintech scene that I had to write about it. There is plenty of reports on fintech in Germany has a whole(here is a good overview by EY), but less written about Berlin specific fintech investments, which accounts for only a fraction – 28% according to EY.

A note on my data: If you follow my blog, you know that I start with CB Insights, then cross-reference their reports with local news sources including Heureka, Gruenderszene, and Tech.eu. I also conducted fintech related searches based on this list by Let’s Talk Payments.

Berlin Fintech Funding Overview

Fintech is growing globally, and Berlin is no exception. According to Accenture, overall fintech ventures in Germany grew a staggering 843% between 2014 and 2015. In Berlin, the total amount invested over the same period grew 200%.

In 2014, ten Berlin fintech companies announced a total of 27.9M USD raised. (Three did not report exact figures.) In 2015, sixteen startups announced total funding of 83.8M USD with seven not reporting exact figures. Five months into 2016, eight startups have reported raising 103.4M USD with all disclosing the exact amounts. More exciting than the sheer numbers is the rapid rate at which the ecosystem is maturing.  

Total Amount of Berlin Fintech Investments

The proportion of seed rounds to overall investment decreased. In 2014, 70% of the funding rounds were seed rounds. In 2015, seed deals accounted for 62% of funding rounds, and so far in 2016, only 12.5% of deals are seed rounds. In fact, in 2016 we are seeing more fintech later stage rounds compared to other verticals. Over the last five months, fintech saw two A deals, three B, and one C and D round, respectively.

The average size of rounds is consistent with other verticals (for comparison, I used 2015 data). The one significant difference is that Fintech Series A rounds are 75% higher. B and C rounds across all verticals are slightly higher, but the number of fintech B and C rounds are limited (five and two).

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Top Five Funding Rounds

As in other verticals, Rocket Internet played a role in several of the top funded companies.

Spotcap, Rocket Internet’s online lending platform, appears on the the list twice. They raised a 34.4M USD series B round in February 2016. It was led by Russian private equity firm, Finstar Financial Group, with participation from previous investor Holtzbrinck Ventures. In October 2014, Spotcap announced a 14.8M USD Series A round.

Earlier this month Orderbird, the leading iPad point of sale (POS) solution in German-speaking markets, announced a 22.9M USD series C round, led by Digital+ Partners, with Metro Group and Concardis participating.

Lendico, Rocket Internet’s P2P Lending Service, raised a 22M USD Series A round from Rocket Internet, Access Industries, HV Holtzbrinck Ventures and a new investor in May of 2015.

Friendsurance, the peer to peer Insurtech platform, closed a $15.3M Series B round. The round was led by Hong Kong-based Horizons Ventures.

So just who is investing? Honestly, a little bit of everyone. I was surprised to see one or two fintech investments from almost all major Berlin funds. Point Nine has invested in Candis and Bitbond. Holtzbrinck Ventures invested in Payleven, Cookies, and Lendico. EarlyBird invested in the seed round of Number26 and Casboard. German Startups Group has made investments in Friendsurance, CRX Markets, and Simplesurance. There are large funds like Index

Notable Mergers and Acquisitions

Most recently the European Square clones SumUp (London based) and Rocket’s Payleven (registered in Berlin) announced that they are merging. According to TechCrunch, the companies did not disclose valuation details.

Zencap, a Rocket venture in the lending space, was acquired by UK marketplace lender Funding Circle in October 2015. The terms of the deal weren’t disclosed, but it is worth mentioning that in the months prior to the acquisition, Zencap announced that Victoria Park Capital will invest up to €230M in loans originated by Zencap over a three year period under an exclusive agreement.

How are the banks responding?

According to Deutsche Bank, 56% of German banks cooperate with fintechs for their digital strategy. To be entirely candid: I don’t have any trust in Deutsche Bank. Their definition of “fintechs” includes startups and – “established (non-bank) firms with large network (e.g. internet platform, telecom company, large retailer)” – whatever that means.

Regardless, the banks are getting involved in different ways. Let’s start with the positive.

BNP Paribas is shaking up the hackathon format, and will host events in Berlin and seven other European cities this June. This doesn’t feel like standard corporate PR bullshit. The winning startup will be invited to participate in a Digital Bootcamp, where the team’s prototype will be nurtured with financial support and BNP Paribas’ international network of experts and mentors. In Stage 3, the team will be flown to Paris to present at a Demo day, flanked by BNP Paribas top brass and international fintech experts. If they love it, the prototype will become a reality used by 100 million clients of a top global bank. If interested, you can sign up here.

Apparently, Deutsche Bank is also trying to collaborate with startups. Last month, they announced the opening of a new innovation lab in Silicon Valley, following last year’s successful launch of innovation hubs in Berlin and London. Hmm… does anyone know what is going on at the Innovation Lab in Berlin?

The Financial Times reported that Commerzbank, Germany’s second-largest, which invests in startups through its Main Incubator and CommerzVentures entities, has so far made five fintech investments with applications for either private or corporate clients.

As in other industries, the German corporates are starting to pay attention (sometimes years late) and very few are adding value. Luckily, investors and accelerators like Finleap are filling in the gaps.

Where does this lead us?  Fintech is hot, investors are not shy about later stage rounds, and venerable large institutions are making splashes on the Berlin scene.

2016 Q1 Berlin Startup Funding Report: Record Number of Investments, but Lowest Amount of Capital

Kalie Moore Berlin Startup Girl 2016 Q1

Is there a bubble? It depends who you ask. Will it burst? Opinions differ. Speculative bubble posts are as common as articles saying that Berlin is over.

The data is in and Q1 is tied for the highest number of investments (54 for Q1, which is exactly the same as Q4 2015). In terms of amount invested, however, it was the lowest quarter out of the previous five. Surprisingly, this might not be cause for concern. Let’s take a deeper look in this 2016 Q1 Berlin Startup Funding Report.

2016 Q1 Berlin Start Up Announced Funding Chart

The number of rounds continues to increase quarter over quarter. Q1 2016 saw exactly double the number of funding announcements of Q1 2014. The breakdown by stage has remained fairly constant. In Q1 2016, half of all rounds were seed rounds, compared with 54% in all of 2015. Series A rounds accounted for 18.5% this quarter, compared to 23.2% last year. We saw slightly more Series B rounds: 13% compared to 9% last year. Series D+ rounds dropped to 3%, though they accounted for 5.7% last year.  

Berlin Startups Q1 2016 Total Amount of Funding and Number of Investments By Quarter

 

While the amount of startups announcing investment continues to rise, the total amount of funding is declining. Out of the 54 startups who announced funding, 53% of them disclosed how much funding they received. This is consistent with previous quarters. The total amount raised in Q1 2016 was $222M.

So wtf is going on?

In Q1 and Q2 of 2015, the majority went to food-related startups. For instance, in Q1 last year, Rocket paid $309M for new Delivery Hero shares, and another $259M for a stake sold by existing investors. That same quarter HelloFresh, another Rocket Internet company, raised a $126M round. In Q2, Delivery Hero saw another $100+M round, as did FoodPanda. This year we are not seeing similar mega-rounds. This is consistent with global trends. As valuations are slashed by mutual funds, investors are finally starting to come to terms with the fact that these valuations might just be… bullshit.

Also, each mega-round last year involved Rocket Internet, which has its own troubles with several large investment in negative territory. In December, they posted an operating loss of €1B, €400M more than the previous year, while revenue rose nearly 70% to €2.4B over the same period. Chief Executive Oliver Samwer vowed to limit losses, pointing to large cash reserves and better conditions ahead, but their stock continues to slide.

When it comes to the size of seed rounds, the average amount raised is on the rise. In 2015 the average seed round was $1.06M, and in Q1 2016 the average went up to $1.48M. Average Series A took a slight dip from $6.52M to 4.71M, average Series B went up, and there wasn’t enough data to make an accurate comparison when it came to Series C and D, as there were only two companies that announced those funding rounds, respectively.

2016 Q1 Berlin Startups Average Size of Round

Top Ten Funding Rounds

Berlin Q1 2016 Top Ten Funding Rounds

Rocket Internet’s Spotcap, an online credit lending platform for small businesses, announced a $34.4M Series B round. It was led by Finstar Financial Group from Russia, in participation with existing investor Holtzbrinck Ventures.

Rocket Internet’s Lamudi, the real estate classifieds in emerging markets, raised an $18M round from Rocket’s usual suspects: Asia Pacific Internet Group, Holtzbrinck Ventures and Tengelmann Ventures.

Movinga, another moving startup secured a $25M Series B funding. Led by Index Ventures,  previous investors including Earlybird VC, Heilemann Ventures, and Global Founders Capital participated.

Rocket Internet’s Home24 announced a $22.8M addition to their Series D round. The round consists of funding from new and previous investors, but further details were not disclosed.

Marley Spoon, the cook-at-home food delivery service closed a $17M Series B round. The round comes from new investors including QD Ventures, Kreos Capital, and existing investors, including Lakestar.

Friendsurance, the peer to peer Insurtech platform, closed a $15.3M Series B round. The round was led by Hong Kong-based Horizons Ventures.

Payleven, a fintech startup similar to Square, announced a $10M Series D round from a new investor, Seventure Partners, and several existing investors including Holtzbrinck Ventures, ru-Net, B Cinque, New Enterprise Associates (NEA) and MePay.

Mambu, a SaaS banking platform, raised an $8.6M Series B round  led by Acton Capital Partners and CommerzVentures, with participation from existing investors.

Watchmaster, a platform for secondhand luxury watches raised an $8M Series B round. Cherry Ventures led the round with participation from other investors including Piton Capital. Angel investors Robert Gentz and David Schneider also joined this round.

B2B travel startup, Distribusion Technologies raised a $6.77M Series A round from Northzone, Creandum, HR Ventures and returning investor Frühphasenfonds Brandenburg.

What is up with SoundCloud?

Startup darling SoundCloud is having a roller coaster of a year. The $222M that they raised in Q1 does not include a debt round of $35M, which was reported in Q1 2016. First, I do not think debt funding should count in a report about the state of venture capital, and second, the debt round actually took place in 2015. I’ve included it in the total number of rounds, but left it out  when reviewing the sheer volume of money invested here. Their ups and downs have included numerous layoffs, rumors of a sale to Twitter, the aforementioned round of debt financing, a landmark deal with Universal, and the announcement of a $44M loss. The latest news seems more promising. Earlier this week SoundCloud announced a licensing deal with Sony, and previously announced the hiring of Alison Moore as its chief revenue officer. Fingers crossed that she gets things under control.

Funding Trends That Should End

Food delivery services. Just fucking stop. Oddly, Berlin VCs don’t agree with me. Marley Spoon and Gegessenwirdimmer.de, another artisanal food delivery site, announced rounds this quarter. In fact, well-respected serial entrepreneur Christophe Maire decided to put all of the startups he has invested in into one holding: The Atlantic Food Labs. Maire started the holding in July of last year, but Gruenderszene reported on it in Q1 of this year.

Berlinspiration

While we are still seeing investments in non-disruptive industries like food or moving, Q1 showed a greater diversity among companies securing funding. Software and ecommerce companies still dominate, naturally, but Fintech, Medtech, Hardware, and Mobility startups are seeing more action.

2016 Berlin Startups By Vertical

Among the recent trends that I find the most exciting:

  • VR:  Berliners, famous for creativity, are claiming territory in the burgeoning VR landscape.  Metaphysics VR, which focuses on VR for fine art, raised a small seed round. Another Berlin-based VR startup, Splash captures a 360 degree videos on your mobile in seconds, and enables you to share it to any social network & view it in VR. Last quarter, they pitched and won at the SXSW accelerator.
  • Chinese VC’s: I’ve previously written about the influx of American VCs, but this quarter, I spotted two investments led by Chinese firms. Medigo announced a $3.5M round led by CL Ventures, a prominent venture capital firm in China. Horizons Ventures, a private investment arm of Hong Kong business magnate Li Ka-Shing, pumped $15 million into its second investment round in German insurance technology startup Friendsurance. It will be interesting to see how investors from Asia engage with the Berlin ecosystem. 

Don’t Panic

The investment landscape is changing, but that is not an automatic cause for alarm. VCs are raising more money than ever before, both in the US and Europe (more on that next week). Investors seek sustainable startups with a clear path to revenue, which Berlin founders have always emphasized more than their American counterparts. Berlin is still capturing interest from VCs around the globe and a broad array of new startups are still being funded. Even without mega-rounds from Rocket, the Berlin ecosystem is strong and continually discovering new strengths.

Berlin Startup Funding Report Q3 2015

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I’m back with my Berlin Startup Funding Q3 Report, and I’m super excited to debut a new report format! I partnered with the wonderful Videopath team to create the above interactive video. If you are looking to improve your engagement and up the ante on content marketing – check them out.

Berlin Startup Funding Announcements

In Q3, 40 startups announced funding rounds and only half disclosed actual numbers. Total funding was significantly lower than the previous two quarters at $232M raised, compared to $461M in Q2 and a staggering $869M in Q1.

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The primary reason is a single mega-round (HelloFresh) rather than the multiple mega-rounds of previous quarters. Investment by funding stages has remained consistent. 52% of Q3 funding rounds were seed rounds, in line with 48% for Q1 and 53% in Q2.  This trend differs from the pattern in the rest of the world, where seed funding deals have steadily declined. The average seed round amount has also remained constant. In Q1/Q2 the average Berlin seed round was $1M  and in Q3 we saw that number increase slightly.

Series A deals have held steady over the last three quarters, at 25% of total funding, but the average amount declined. In Q1/Q2 of this year, the average Series A round was $10.8M. This quarter, 70% of startups that reported raising a Series A round disclosed a figure, for an average of $6.5M. Later stage deals declined in both Q2 and Q3, as have average later stage funding amounts. The average D+ size round in Q1 and Q2 was $132M, whereas in Q3 we only saw one D+ round for $84.7M.

There are two other rounds worth noting that I did not include. In early July, Bloomberg reported that Berlin-based Auto1Group raised a $100M round earlier in the year, for a $1B valuation. This will be included in my 2015 year-end report, but was not cited in the Q3 numbers, since the round took place in the previous quarter. Zencap, a fintech company, announced that Victoria Park Capital will invest up to €230M in loans originated by Zencap over a three year period under an exclusive agreement. This figure was also left out since it is a partnership, rather than a traditional investment, but kudos to Zencap. Following this announcement, Zencap was acquired by Funding Circle in October.

top ten chart

Top Funding Rounds

The only startup to raise a mega-round was Rocket Internet’s HelloFresh which reported a $84.7M Series F round in September in preparation for their IPO. At the end of October HelloFresh announced plans to go public on the Frankfurt Stock Exchange. A week later, the IPO was pulled. The Financial Times cited investor scepticism over the company’s €2.6B valuation. For an in-depth look at HelloFresh’s operating metrics, check out this post.

SavingGlobal, the fintech company, raised at $22M Series B round led led by Palo Alto-based Ribbit Capital and London’s Index Ventures.

Babbel, the language learning app, announced a $22M Series C round led by Scottish Equity Partners (SEP) and supported by existing investors Reed Elsevier Ventures, Nokia Growth Partners (NGP), and VC Fonds Technology Berlin managed by IBB Bet.

Lesara, an ecommerce company raised a $16.73M Series B round led by Northzone. Vorwerk Ventures is on board as co-investor, while existing investor Mangrove Capital also participated in this round.

Moviepilot, an entertainment-focused website built around reader contributions, announced a $16M Series B round led by French publishing group Webedia.

Vaniday, Rocket Internet’s beauty e-commerce company, raised a $15.97M Series A from Rocket and others.

GoButler, an SMS concierge service, raised a $8M Series A round led byGeneral Catalyst Partners. Lakestar, Rocket Internet’s Global Founders Capital, Slow Ventures, BoxGroup, Ashton Kutcher and Guy Oseary’s Sound Ventures, and Cherry Ventures also joined.  *A note about GoButler – company was started in Berlin by former Rocket guys. According to their website they have offices in Berlin and NY. They are listed in Crunchbase as NY, but I included them.

Conichi, a travel startup, secured a $7.9M seed round from Hotel portal HRS.

HomeToGo, a travel ecommerce company, raised a $6.7M Series A led by DN Capital, and Acton Capital Partners.

Zeotap, the self described world’s most trusted platform for actionable premium data from telecom operators, announced a $6.4M Series A from Capnamic Ventures, Iris Capital, and angels.

Other rounds that did not make the list due to withholding the actual amount include Book A Tiger, the cleaning service. They announced a seven-digit round from current investor Avala Capital. Ekomi, the feedback company, announced an undisclosed investment from Goldman Sachs prompting IPO speculation. Goldman has also invested in FoodPanda and Mister Spex this year.

Now for the fun stuff… Other standouts included a seed round for UnderCovers, an app for couples who like to try out new things in bed. Crowd favorite, Dubsmash, the messaging and lip syncing app made popular by Jimmy Fallon raised a $5.5M Series A led by Index Ventures. Other investors to join the round include Lowercase Capital, ENIAC Ventures, Sunstone Capital, Raine Ventures and King Digital Entertainment CEO Riccardo Zacconi.

Exciting VC News

In Q3, several VCs, including a few Berlin based firms, also made fundraising announcements.

Gruenderszene reported in July that Earlybird Capital announced plans to raise a sixth round of at least €150M.

WirtschaftsWoche reported that Rocket Internet has plans to raise a $1.1B round for late-stage startups creatively called the Rocket Internet Growth Fund.

Q3 also saw interesting international investments. Fred Wilson of Union Square Ventures published a blog post about European Startups. He notes that over the last six years, roughly 25% of Union Square Ventures investments have been in Europe, but this year his team has made nine investments to date (a few have not yet been announced) and four of them have been in Europe (45%).

Despite the lackluster quarter in terms of sheer numbers, 2015 has been an insanely good year. We have less than one month left of Q4, but the figures already look promising. Thus far, we have Get Your Guide with 50M in a Series C round, Adjust with a Series D of 17M, Reyaler and Nestpick raising a $11M series A, respectively, and crowd fav Clue picking up a $7M Series A round.
For more about which startups raised rounds in Q3 and a look ahead (as we are two months into Q4), check out the video above.

Berlin Startup Funding: First Half of 2015 Sees Higher Investment Than All Of 2014

At the end of Q2 Berlin startups reported over $460M USD in funding, bringing the total capital raised in the first half of the year to $1.33B, easily surpassing the $1.1B raised in 2014.

For comparison, 2014 investment was 140% over 2013, and the numbers just keep growing. This has cemented Berlin’s status as a top tech hub outside of the US. In fact, during Q1, Berlin outraised London by $184M. I have not yet seen a London Q2 funding analysis.

Berlin Startup Funding 2014 vs 2015

In the last quarter, we saw slightly fewer reported rounds than Q1 (43 vs 49), and slightly smaller rounds across seed and venture deals, though still significantly higher totals than 2014. On the other hand, Q2 also brought interesting international investors, plus a highly publicized acquisition of 6wunderkinder, an IPO announcement, and a great deal of future IPO speculation. Let’s recap the highlights of Q2 Berlin startup funding and look at companies to watch during the second half of the year:

Q2 Berlin Funding Roundup

As in previous quarters, Ecommerce (37%), followed by software startups (18.6%), are receiving the most funding. Fintech, which I predicted would grow this year, accounted for 11% of all investments, as did Mobile. Edtech and Green/Energy companies accounts for 4.7% each. We saw one investment in biotech and one in gaming.

Average Funding Round Berlin Startup
Average funding for Q2 2015, dropped slightly (less mega-rounds than in Q1) but 2015 average funding for every size of round continues to be higher than 2014, with the exception of seed rounds which are neck and neck at about $1M.

 Berlin Startups Top Ten Funding Rounds Q2

The ten startups that raised the most funding in Q2 include some of the usual suspects: Home24, Rocket Internet’s answer to Ikea, announced Series D funding of $131M. UK investment firm Baillie Gifford led the round with an investment of $98.5M, securing about 9.55% of the shares in Home24. $32.8M were invested by existing shareholders including Rocket Internet SE.

In June, Delivery Hero announced a $110M investment from pre-IPO investors which valued the company at $3.1B. I wrote about this extensively, and why they should IPO in the US on TechCrunch last month.

Foodpanda, Rocket Internet’s food delivery marketplace, announced a $100M funding round  led by Goldman Sachs. Existing investors, including Rocket Internet, also participated. Foodpanda has raised over $310M since its launch in 2012.

Lendico, Rocket Internet’s P2P Lending Service, raised $21.9M from Rocket Internet, Access Industries, HV Holtzbrinck Ventures and a new investor.

Berlin’s photo marketplace EyeEm announced an $18M investment led by Thiel’s New York-based Valar Ventures. EyeEm’s previous investors Earlybird Ventures, Passion Capital, Wellington Partners, Atlantic Labs and Open Ocean Capital, also participated in the round.

Smava, a peer-to-peer lending platform, raised $16M led by Phenomen Ventures, along with current investors Earlybird and Neuhaus Partners.

Atheneum Partners reported a $10.8M round led by Vogel Business Media, who paid approximately $7M for one-third of the company. They were joined by Jens Odewald who acquired  2% of the outstanding shares.

Number26, the third Fintech company to make the top ten list this quarter raised a $10.6M Series A round led by Peter Thiel’s Valar Ventures, Swiss entrepreneur Daniel S. Aegerter, and previous investors Earlybird and Redalpine.

Omeicos Therapeutics, a biopharmaceutical company developing first-in-class small molecule therapeutics, announced a $6.57M Series A round. Participating in the round were Vesalius Biocapital, VC Fonds Technologie Berlin, Hightech Gruenderfonds, and KfW Group.

Thermondo, which sells heaters and has developed software that displays every step in the installation process, announced a $6.4M Series B round. Rocket Internet and Holtzbrinck Venture are joining as new investors, together with previous investors Grey Crop, IBB Beteiligungsgesellschaft, and the power company E.ON.

US Investors of Interest

With higher rounds, we are seeing more American investors entering the Berlin startup scene.

I’m most excited about the interest from Peter Thiel and Goldman Sachs. If you’ve read this blog before, you know that I cite Mr. Thiel’s talks in Berlin as insightful observations of our ecosystem needs. In 2013, he shared that Berlin needed some big exits to establish itself as viable on the international stage. A year later Rocket and Zalando lived up to that prediction by successfully going public on the Frankfurt Stock Exchange. In 2014, on a book tour, he told the Financial Times  that investors prefer to invest in London companies because people “just work harder . . . They just work less hard in Berlin.” Europe, he said, was a “slacker with low expectations”. Thiel has invested in two London startups (Transferwise and Deepmind) and  appears to have changed his mind about underachieving Berlin. In Q2, his Valar Ventures invested $10M into EyeEm’s $18M round and led a $10.6M investment round for Berlin’s Number26.

Goldman Sachs has been heavily investing in startups for years. Between 2009 and 2013, Goldman participated in 63 disclosed investment deals worth nearly $4B, Inc.com reports. Goldman Sachs is interesting for Berlin because the bank prefers late-stage (large) investments, which everyone can agree are difficult to find here. So far this year, Goldman Sachs led a $40M funding round for Mister Spex and also FoodPanda’s $110M round in Q2. These higher, later stage rounds just might be a game changer for the Berlin ecosystem. I look forward to reporting still more Berlin investments from them in future posts.

The Acquisition of 6Wunderkinder

While there were several acquisitions in Q2, Microsoft’s purchase of 6Wunderkinder was definitely the most exciting from a press standpoint. The Wall Street Journal reported the deal in the range between $100M and $200M.

Why is this one so special? This is neither the largest nor the most surprising acquisition we’ve seen. Several recent exits hovered in the hundreds of millions of dollars territory, including Sociomantic’s $200M exit to dunnhumby Ltd. and Quandoo’s $219M acquisition by Japan’s Recruit Holdings. 6Wunderkinder was one of the first Berlin startups to attract US press, talent, and investor attention. It was Sequoia Capital’s first (and as far as I know only) Berlin investment, and was picked up by the NYT, the WSJ, and Bloomberg. They acquisition helps to discredit Thiel’s slacker portrayal of Berlin and install our city on the radar of even more serious international players.

Other acquisitions worth noting include ProSiebenSat.1’s purchase of Adtech startup RapidApe and Rocket Internet’s acquisition of Classpass clone Somuchmore. The terms of both deals remain undisclosed.

An Announced IPO and then a No Go

One positive effect of finishing this quarter’s report a bit late: Yesterday, Berlin’s sole pending startup IPO was cancelled.

In June, German Startups Group began pre-marketing a $79M Frankfurt Entry Standard IPO. The main comparison was Rocket Internet, although German Startups is considerably smaller. The company aimed for $79M in primary proceeds, which would be used to purchase equity in start-ups. There was a greenshoe provision, size yet to be decided, which will be a combination of primary and secondary from shareholders. The deal is Reg S and was expected to follow a two-plus-two schedule, with the lack of a US roadshow offering greater flexibility for accelerating. A two-plus-two approach would have put the beginning of roadshows at around July 1 and pricing at around July 15.

Reuters reports that GSG places the blame on market volatility. “In light of this environment, the management sees no chance of listing the company on the stock exchange at a fair price and generating the desired oversubscription.”

Stay tuned for an entire post on the topic tomorrow.

Where to Watch in Q3

In addition to Delivery Hero’s announcement of a pre-IPO round, Bloomberg reported that HelloFresh, a food delivery startup backed by Rocket Internet SE and Insight Venture Partners, is considering an initial public offering this year.

Investments, companies, funders, volatility. All are growing including the forecast for even bigger deals and strong investment winds blowing toward the other side of the Atlantic.

We’ve already set records in the first half of the year. Look for the next two quarters to quicken the pace.

 

Berlin Startup Girl in Forbes!

Berlin Startup Girl in Forbes! Earlier this month I sat down with Amy Guttman of Forbes to talk about the status of the Berlin startup ecosystem. We spoke a lot about how the funding has grown, how exits like Microsoft’s acquisition of 6Wunderkinder is a game changer, and why Berlin is an attractive city to build your own startup (other than just being cheap).

Check out the full article: Why Investors Are Keeping A Close Eye On Berlin For Startup Success

Kalie Moore Forbes

 

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.