This Month in German Startups – April 2020

 

If you are new to our podcast(s), we are wrapping up the startup news of the German-speaking area in a monthly recording from Frankfurt and New York. Have a look at our website www.startuprad.io or www.startup.radio and you will find all the links to our recordings and the articles we are quoting from there. Some of the source articles are in English, some are in German.

 

Reach out to us, here is our audience survey, to give us feedback, suggest topics, interview partners or just to say “Hallo!” https://forms.gle/mLV6mVKwGwKuut8BA 

 

Find the hosts here:

 

Enabler

This recording was made possible by (Hessen Trade and Invest). Learn more about our enabler here: https://www.invest-in-hessen.com/

 

Together with our enabler we are running a podcast called “Tech Startups Germany”, which will focus on startups at a Serie A stage or even more mature. You will also find all the videos we produce for this podcast on our YouTube channel www.youtube.com/startupradio. This podcast is available directly on our device as audio and video podcast, yes, Startuprad.io makes the first downloadable video podcast. Find all options to subscribe here: 

 

 

Housekeeping – Time to brag

A tiny bit of hope is back, so we do a bit of bragging again:

Wow, the days around Easter have been AMAZING for Startuprad.io. We retained our position in Chartable‘s Global Top 100 Technology and Global Top 100 Science Charts, but we also entered the iTunes Technology Charts in Vietnam for the first time. Again in the US and UK welcomed us to their Apple Technology Podcast Charts again in the Top 200 https://twitter.com/startuprad_io/status/1252523750123352066

 

You can subscribe to Startuprad.io here:

Our Sub-Podcasts:

 

Housekeeping – tracking startups we interviewed

 

InvestSuite snaps up €2 million to grow its investment tools for banks and brokers https://buff.ly/3dQLGoy
Learn more about them in the Startuprad.io interview here: https://buff.ly/2X960cG  (the interview was published on 18th of December 2018)

 

The video will go live on Thursday, April 30th, 19.00 CET

Here is the Audio Podcast

Coronavirus / Covid19

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We are working with Startup Genome to quantify the impact of the crisis on startups and push for adapted policy action now. They’re doing it all over the world so they’ll be able to prove how good policy action is saving startups—and lack of policy is disastrous.

If you had an ongoing startup before the crisis, please take 5 min. to contribute right now: 

  • If you since had to close it click here
  • Otherwise, if your startup is ongoing and even if you paused operations, click here

We need hundreds of founders to do so–and you know it’s not easy.  

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#Funding in times of Corona

#Government aid and direct loans

Related:

  • Germany’s $2.2 Billion Bailout for Startups Stuck by Who Pays Up – Bloomberg https://buff.ly/2RRNOTP 
  • Corona aid for companies in #Hessen (German only) | Hessisches Ministerium für Wirtschaft, Energie, Verkehr und Wohnen https://buff.ly/2WQY8P4
  • KfW emergency credit application volume reaches 7.4 bn Euros according to @FAZ exclusive coverage https://buff.ly/2Jg52FP  

30 applications with a total volume of 6 mn Euros filed by startups and “young companies”

 

As you may know we try to expose you to different angles of the same story. Here is another interesting point talking about challenger banks

 

    • N26 Says Bank Closures May Drive Mobile Banking Adoption https://buff.ly/3bDdsTO writes Bloomberg on March 23rd
      • “We assume that many people will open an online account because more and more bank branches are closing due to the corona crisis. Online banking will become much more important,” Chief Financial Officer Maximilian Tayenthal said in a telephone interview on Monday.
    • “Digital bank signups dive in lockdown” https://buff.ly/2VEcdOU writes Sifted on the other hand, but on April 27th.

 

  • “Europe’s top challenger banks saw a drop in digital downloads last month in a sign that the coronavirus lockdown may be negatively impacting business. 
  • Monzo, Revolut, Starling and N26 saw their growth rate drop by between 18% and 36% in their native markets*, according to an analysis by Priori Data commissioned by Sifted.”

 

 

#Additional resources, related to funding in times of corona

 

  • “Investors then–and now–quickly turned inward to assess their existing portfolio companies’ health to create strategies for those who have shorter runways and would need to cut back. Today, as then, companies are advised to plan for two years without raising new funding. All startups have to throw out previous business plans, reassess expenses, sales projections and risks.”
  • We found this article since we screen the blog on a regular basis. But it is also mentioned in the post above:
    What Could the Venture Market Look Like in the Coronavirus Era https://buff.ly/2W6EgqP “Let’s break down the trends by series. The earlier the stage the company, the less it was impacted.”

 

    • Useful: How (not) to pitch to an investor over video call | Siftedeu https://buff.ly/33N5nsQ 
      • … “re-read: Don’t jump on the call without sending the presentation in advance. …
      • Questions in advance: One primarily for the investors. Help the founders set the agenda by taking the time to go through the deck and tell them the areas you want to focus on and key questions you want to cover in the meeting. …
      • Agenda: Don’t wing it! Always set an agenda and manage the time allocated for the meeting (the previous tip really helps on this front). 
      • …”
    • Investor wisdom for startups to get through coronavirus | Sifted https://buff.ly/2QURRhG

 

  • “Tip number 3: Rule of three
    Axa Venture Partners is advising founders to think of coronavirus as a three-part crisis: first, confinement; second, when people are allowed to leave their homes again; and third, the mid to long run.”

 

 

Positive news

Global VC Partech closes €92.3M funding to invest in post-COVID trends in health, finance, mobility & more | @SiliconCanals https://buff.ly/2zyHIRP

 

Ecosystem 

 

On a more general note, from April 6th: “Startup funding during the crisis: What’s really going on?” https://buff.ly/39LcWlh 

  • Investors are still investing 
  • Valuations are likely to be lower, reflecting the new market conditions
  • No sectors are ‘off-limits’ 
  • Some investors will disappear for a while
  • It’s worth looking into government funding schemes 
  • It’s important for startups to keep developing, even if they’ve become incredibly lean

 

If you want to keep up to date, there is a free “Weekly global economic update” https://buff.ly/2Jfkku9

 

Fintech could be hit especially hard. We found two articles on the topic

 

Hubs

#Frankfurt / Rhine-Main

 

#Mainz / Rhine-Main

  • Mainz-based BioNTech, Pfizer To Begin COVID-19 Clinical Trial In Germany https://buff.ly/3bvPYAr
    Related:
  • BioNTech: has been approached “several times” to sell the whole company outright, but is not interested https://buff.ly/3aCbQss

RhineMain.vc 

  • Startups and tech companies in the greater Rhine-Main-Area raised more than 310 mn Euros in funding for Q1 2020. Four large deals have been driving the numbers (Volocopter additional 32 mn Euros for their Series C, Scoutbee 54 mn Euros, BionNTech (from above) got 135 mn US$ for the Covid19 research and Iwoca got 100 mn Euros to lent from their German Headquarter in Frankfurt to German SMEs and startups) learn more here: https://buff.ly/39PRuvm

Kassel 

Information company Schufa and fintech Fino set up a joint company, to help fight money laundry https://buff.ly/2VtV35j 

Hamburg

German Fintech NAGA Turns Profitable | Finance Magnates https://buff.ly/2xs6xyh

Munich

  • Abracar, the professional car broker – backed by Allianz with 11.5 mn Euros – will be liquidated. Reasons are a strategy shift at AllianzX (turning their unit from a company builder to a later stage investor) and the coronavirus, which makes the business almost going flat. Even Auto1 has many of its employees in Kurzarbeit https://buff.ly/3eS6GvL 
  • Wirecard AG: KPMG delivers a report on special investigation “Incriminating evidence for the public allegations of balance sheet forgery has not been identified.”
  • https://buff.ly/2SbVb8A 
  • Note our special blog post on the whole story here:

 

Companies

#Insolvencies

  • Berlin-based #startup Tausendkind has to file for #insolvency, due to #coronavirus https://buff.ly/3dDgOb6 they have been an online shop for children’s apparel

#mattresses (remember from above?)

  • Three months after their IPO Casper retreats from Europe and cuts more than 20% of its workforce to save more than 10 mn US$ annually. CFO and COO to leave May 15th! This also means shutting down their office in Berlin https://buff.ly/2RYiYZy 

 

#Online groceries getting real boos with Covid19

  • Picnic opens a second fulfillment center in Germany https://buff.ly/2UFKXPJ

 

#There are still some fundraisings and exits:

  • Germany’s Xpension pension platform raises €25M in a Series C growth round – TechCrunch https://buff.ly/34a5uPe
  • German security firm Avira has been acquired by Investcorp at a $180M valuation – TechCrunch https://techcrunch.com/2020/04/08/german-security-firm-avira-has-been-acquired-by-investcorp-at-a-180m-valuation/

# There is life next to Amazon

  • Otto ( #Germany’s No 2 in #ecommerce) sees sales grow 9 percent to 3.5 billion euros in 2019 https://buff.ly/2ULHFum the company has it’s origins in catalog mailing business and is the only one, which made a transformation in Germany. Both former competitors Neckermann and Quelle have gone out of business (https://en.wikipedia.org/wiki/Arcandor). Sad note, at one point they belonged to – what is now part of Galeria Karstadt Kaufhof – which also had to file for insolvency during Corona. We see the retail transformation in Germany in real-time. 

 

Stay Ahead of the Curve

There is a survey of the impact of Covid19 on UK startups: https://public.flourish.studio/story/279152/

Few startups have significantly cut headcount, but 80% have stopped or slowed hiring, in view of a meaningful revenue drop and negative projections.

Revenue implications:

 

  • 40% have seen March revenues drop by over 25%
  • 68% expect full-year revenues to drop more than 25% below plans

 

Staff cost implications:

 

  • 49% have frozen hiring, another 32% have slowed hiring
  • 16% have committed to laying off at least 10% of staff
  • 26% have committed to furloughing at least 10% of staff
  • 30% have cut salaries across the company by at least 15%

 

Many startups have sought to reduce non-staff costs, in view of a more challenging funding environment.

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