💡 Green Tech Startups: Investing in the DACH Region’s Climate Innovation Boom
- Jörn Menninger
- 6. Mai
- 33 Min. Lesezeit
🧠 Management Summary
This article dives deep into the evolving world of green tech startups in Germany, Austria, and Switzerland (the DACH region), spotlighting insights from Hi Inov’s 2025 Green Tech Software Mapping. Learn about the leading trends, investment strategies, the role of AI in climate tech, and what it takes to scale a green tech venture today. Whether you’re a startup founder, VC, or corporate innovation lead, this blog post offers a rare behind-the-scenes view into where smart money is heading in climate innovation.
📌 Table of Contents
🌱 What Are the Top Trends in DACH Green Tech Startups?
The green tech ecosystem in the DACH region has evolved from solution-specific verticals (e.g., recycling, digital twins) to more use-case-oriented categories like:
Carbon footprint tracking
Energy transition software
Circular economy enablement
Regulatory compliance platforms
✅ Featured Snippet Optimized Answer:
The top trends in DACH green tech startups include carbon tracking, energy transition tools, and circular economy platforms, all increasingly organized by use case rather than technology.
What surprised experts like Wolfgang Krause most in 2025 was how green tech software adoption is accelerating, driven by the need for real-world application and measurable impact.
🤖 How Is AI Shaping Green Tech Innovation? #aigreentech
AI is no longer a nice-to-have — it’s embedded in every modern green tech solution:
Automating compliance reporting
Predictive analytics for energy usage
Optimizing supply chain emissions
Yet, Krause warns: “AI is a tool, not a solution. Real value comes from knowing the industry’s data intricacies.”
🔍 Startups like DeepKey are using AI to manage ESG data at scale—especially in complex verticals like real estate and construction.
🏢 Why Vertical SaaS Is Winning in ESG Compliance #verticalsaas
Horizontal platforms like Salesforce or AWS can’t compete with vertical SaaS solutions built specifically for industries like:
Construction (e.g., DeepKey for building carbon tracking)
Fashion supply chains (e.g., Trace for Good)
Data center infrastructure (e.g., Celera)
“Real differentiation lies in deep industry knowledge,” Krause explains. “You can’t generalize ESG compliance.”
📎 Post: [DeepKey and the Rise of Vertical SaaS in ESG Compliance]📎 Cluster Post: [Top Green Tech VC Firms in Germany, Austria, and Switzerland]
🌍 What Role Does the DACH Region Play in Net-Zero Goals? #dachnetzero
Despite no single startup hub dominating (e.g., Berlin vs. Zurich), the DACH region contributes 20–30% to Europe’s green tech innovation volume.
Key strengths include:
Germany's early mover mindset
Switzerland’s hardware/software synergy
Austria’s regulatory responsiveness
“Green tech is distributed across cities, and that’s the DACH region’s advantage,” Krause emphasizes.
📎 Post: [Understanding the DACH Startup Ecosystem for Entrepreneurs]
💸 What Do VCs Look for in Green Tech Startups? #vcgreentech
Forget buzzwords. VCs like Hi Inov focus on ROI-driven innovation with scalable potential.
Criteria they prioritize:
At least €1M ARR or strong early traction
Clear industry-specific ROI
Scalable tech beyond AI hype
A team that understands market workflows
🧠 Tip: Avoid "spray and pray" pitch deck outreach. Instead, get warm intros and tailor your pitch.
📎 Post: [How to Secure Series A Investment for Your Green Tech Startup]
🎧 The Audio Podcast
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🎥 The Video Podcast
Will go live on Tuesday, May 6th, 2025.Available earlier for channel members on YouTube.
🧭 Conclusion
Green tech startups in the DACH region are stepping into the spotlight — not with just sustainability slogans but with measurable impact and business viability. If you're a founder or investor in the space, now’s the time to position yourself at the forefront of this transformation.
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About the Author:
Jörn “Joe” Menninger is the founder and host of Startuprad.io -- one of Europe’s top startup podcasts that scored as a global Top 20 Podcast in Entrepreneurship. He’s been featured in Forbes, Tech.eu, Geektime, and more for his insights into startups, venture capital, and innovation. With over 15 years of experience in management consulting, digital strategy, and startup scouting, Joe works at the intersection of tech, entrepreneurship, and business transformation—helping founders, investors, and corporates turn bold ideas into real-world impact.
Follow his work at Startuprad.io or connect with him on LinkedIn.
🧭 Automated Transcript
Narrator Dorsey Jackson [00:00:05]:
Welcome to startuprad.io. Your podcast and YouTube blog covering the German startup scene with news, interviews, and live events.
Wolfgang Krause | Managing Partner | Hi Inov [00:00:20]:
Hello, and welcome, everybody. This is Joe from startuprate.i0 bringing you another episode from the German speaking entrepreneurship scene. Today, I would like to welcome Wolfgang here with me. Hey, Wolfgang. How are you, Dean?
Wolfgang Krause | Managing Partner | Hi Inov [00:00:33]:
Hi. Lovely to be at this podcast.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:00:37]:
Totally my pleasure. Before we dive into startups and investment philosophy, let's zoom out. DACH is becoming one of Europe's strongest engines for green tech innovation, and high enough screen tech mapping twenty twenty five gives us an inside look at what's coming next. So Wolfgang, let's get into the data, the deals, and the future. Maybe before we do that, could you tell us just a tiny bit about who you are and what you do, and what high enough is before we get into what you really did with the green text there.
Wolfgang Krause | Managing Partner | Hi Inov [00:01:14]:
Absolutely. So we are a a a German French, b to b venture fund. We mainly focus on series a investments. We are in the market now for more than ten years, just investing our third generation. We specialize on deep tech and true b to b technology, so everything which helps enterprises to become more digital, become more efficient. This is our investment themes. Basically, we invest in five main area. One, obviously, we are going to talk about that is screen tech.
Wolfgang Krause | Managing Partner | Hi Inov [00:01:50]:
We do what we call compliance, so leveraging all the European regulation and what kind of interesting business models, coming out of that. We traditionally, as a team, we have a deep expertise in everything, which is data, big data. You know, obviously, now with AI, things are moving quite quickly and and and really shaping the industry. We do cyber, also a little bit with a defense angle, and then we do something what we call new work. New work is basically, you know, technologies who reshape the workspace, like, you know, remote working, collaborative tools, but also HR developments because our thesis is that people, they just, you know, are looking for a sense in work, you know, probably a little bit different than twenty or thirty or forty years ago. And and so a lot of companies are also focusing on education and on on, you know, other, HR related topics. So these are our five, main investment themes.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:03:00]:
Mhmm. I was I was wondering when I first read the the the pitch for the content, I was wondering, what inspired you to do the screen tech, software mapping? I assume it was not that you were bored and you didn't have already more than enough work. How did you get started? What was the trigger to do the screen tech mapping?
Wolfgang Krause | Managing Partner | Hi Inov [00:03:24]:
Well, actually, this is not the first green tech mapping we are doing. We do it we did it two years ago, in 02/2023 as well. At that time, it wasn't green tech. It was more called DACH climate tech mapping, which kind of evolved. I think for us, it's very important to understand, the industries we would like to invest and to to understand the broader context, to understand the players, to understand the ecosystem. And we do that for all of our five investment areas. So green tech, obviously, is is is very important to us, and and therefore, we just would like to have a good view on the market. And to be very frank, it's also kind of a marketing tool, because we really want to tell the market, hey, we are there.
Wolfgang Krause | Managing Partner | Hi Inov [00:04:11]:
We are interested in that space, and and and we think there's a lot of interesting, investments to do in this space. Mhmm.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:04:20]:
I assume we will link down here in the show notes to the, QueenTek software mapping. Just having it here on the other screen. One of the big areas is carbon footprint monitoring with energy transition tools, with circular economy, raw materials optimization, and corporate initiatives. Given that and that it already had a different name in the past, can you can you tell us from your perspective what the three most surprising findings you had in 2025 versus 2023?
Wolfgang Krause | Managing Partner | Hi Inov [00:04:59]:
Well, I think and, you know, I really looked it up in '23 and looked at what really has changed. You know, obviously, is this a surprise? Probably, it's not a surprise. The map got richer. You know, many more logos on the map. The ecosystem is really evolving quite a bit. But what what's also interesting, you know, there's a reason why we did green tech software mapping, and at the time, we call it climate tech mapping. I think, it also becomes clearer and clearer what are really the trends and and and the investment topics software investors could be interested in. When I basically, you know, two years ago, we we had nine sectors, and they were called recycling, reporting, deep tech, digital twin, battery.
Wolfgang Krause | Managing Partner | Hi Inov [00:05:53]:
So it basically was more like a mapping, around specific solutions, specific technologies. But I think now, you know, the more, the ecosystem evolving, it is clear that it's not so much about specific technologies. It's more about there is different areas, people trying to find solutions, you know, whether it's with technology, whether it's with, you know, other business models. And so I think the surprising or kind of the new methodology is more looking it from a user perspective rather from a technology perspective because we see real usage of these technologies.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:06:37]:
Talking about the real usage, we already talked about the different categories here. Which of those categories do you believe is gaining the fastest traction in the DACH area?
Wolfgang Krause | Managing Partner | Hi Inov [00:06:49]:
Actually, that's kind of a tricky question, because I think and we even have real life example and maybe later, you know, on a few examples, I can elaborate on these real life examples. I think it all is kind of interwoven and and kind of linked together. Talking about carbon measurement, you you would think it's very easy and and very, very trivial to measure carbon the carbon footprint. It's not. You know, just ask AWS and ask, you know, what's basically, the carbon footprint of your data center. They don't know. They simply don't know. So and and when you don't have kind of the tools to measure impact, how, you know, can you achieve corporate sustainability? How can you really kind of achieve energy transition and circular economy? So I think what's happening right now is, you know, there's a underlying layer of measurements of technologies developed, you know, then obviously and then and then on top of that, you know, once they really understand the problem, new technologies emerge to solve these problems.
Wolfgang Krause | Managing Partner | Hi Inov [00:08:06]:
So, I I wouldn't really make a bet, you know, what of these four areas are growing the fastest. Put it like this. When you look at market volume, you know, obviously, energy transition is a huge market. You know, it's a multibillion, euro market, and it's huge investment volume. When it comes about carbon measurement, you know, these are kind of softwares, you know, which are used. But so when when you look at diff I I would wouldn't call that as big as a market as carbon, as energy transition. So I think when it comes to volume, you know, obviously, there's a difference. But what's going to be most active and picking up? Hard to say.
Wolfgang Krause | Managing Partner | Hi Inov [00:08:50]:
Mhmm.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:08:53]:
Mhmm. I see. I was wondering for our audience if you're building green tech start up in the DACH region or want to invest in one, drop your thoughts in the comment. What trends do you believe will dominate by 2026? Going a little bit into transit technologies. What role is generative AI already play in green tech software, and how do you see it evolving? I
Wolfgang Krause | Managing Partner | Hi Inov [00:09:27]:
think that's a broader question, because AI is just changing the way how to develop, how to propose, and how to, the software, how to propose software, how to structure software, and how to go to market. That's a general trend. That entire layer of of of engineers of software engineers and programmer which aren't used, you know, aren't necessary anymore. With AI, you can create wow effects to customers, even to investors. And when when you really go under the cover, you understand, well, you know, it's basically a very smart application of an AI technology, you know, of an AI model in order to come up with with answers, which are probably very nice to have, but probably not very, kind of sustainable when it comes to a clear differentiator. So I think the market, especially when it comes to software investment, is is changing dramatically right now. And, obviously, that that in in in Impact ScreenTech software because, you know, it's it's so much easier on the one side to visualize, to get answers, to gather data, to really try to make sense, out of what you're gathering, what you're trying to achieve. But on the other way the other side, it's it's also a little bit tricky because you really have to think very hard, you know, what is really the value add you're offering to customers, you know, to to to to to the landscape, which goes beyond AI.
Wolfgang Krause | Managing Partner | Hi Inov [00:11:09]:
Because AI at the end of the day, I think it's more a tool. It's not a solution per se. So I think it's it's getting a little bit more complex when you think, you know, what's really the value proposition you wanna invest. And and that's true for green tech, you know, as well as for a lot of other, kind of sectors.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:11:30]:
Mhmm. Mhmm. I I have been observing the space for quite some time. And for example, what was one of the things that happened in the past was, for example, cloud, cloud took over and at one moment, everybody was a cloud first startup. I do believe that's now so essential nobody talks about that anymore. All start ups are more or less cloud based. Do you think, it will be the same way with AI that almost every start up in one way or another, especially software, will include AI?
Wolfgang Krause | Managing Partner | Hi Inov [00:12:07]:
Absolutely. I think it's it's always, like, obviously, now when you have a pitch, when you when you get business plans, the first the headline is always AI. Yeah. It it seems like, you know, nobody even dares to ask for money or really build a business model if AI isn't isn't in the headline. And but at the end of the day, you know, it's a technology. It's basically a technology which which makes a lot of things easier, faster, which basically creates new opportunity. But at the end of of the day, it's a tool and it will become a standard. It will become a standard, you know, in developing software.
Wolfgang Krause | Managing Partner | Hi Inov [00:12:50]:
It will be a a a a standard when you request information, when you create a user interface, a look and feel interface. And I'm pretty sure that in two or three years, the pitches won't have AI in the headline, but it will be deeply interwoven into any solutions startups offer.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:13:15]:
Mhmm. Talking about solutions here, you're also tracking start ups using vertical software tools like, it's called DeepKai or DeepKey DeepKey to meet ESG and CRD requirements more effectively than horizontal platforms? Well,
Wolfgang Krause | Managing Partner | Hi Inov [00:13:35]:
I think that's that's just, you know, how how it is. I think if you really wanna be successful, you have to be an expert in the domain you're doing, especially when it comes to data plays. And by the way, that's also the the big opportunity start up have, you know, compared to all these horizontal players, the big Silicon Valley giants, and the guys who develop the LLMs. Really having a specific industry expertise and really understanding the data sets and data requirements of that specific industry. In the case of DeepKey, that's really an investment we are very proud of, because, you know, it it's it's we we call it we don't call it startup anymore. It's a real scale up. They are now the European wide leader when it comes to measuring the carbon footprint in in the building industry and then, you know, or the management of of buildings. And that requires not only the ability to know how to measure a carbon footprint, how to display, how to organize it, but it also requires an in-depth, knowledge of the industry.
Wolfgang Krause | Managing Partner | Hi Inov [00:14:54]:
And typically, horizontal platforms simply don't do that, because that's not what they are built for. They are general purpose platforms, and people probably would use it as a tool to build their own solution, but they really don't address a very, very specific industry. Actually, I've rarely seen that. So, there there, you know, there is a premium for industry knowledge, sector knowledge, and and you can build true market leaders when you when you have that knowledge.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:15:28]:
So your mapping is not only graphics, it's also a document. And when I went through it, you mentioned 216,000 tons of CO2 savings impact. How did you calculate that and what does it signal about the market maturity?
Wolfgang Krause | Managing Partner | Hi Inov [00:15:47]:
Well, I have to say when I read that, I was asking the question to myself, and then I really ask also my team. It's what DeepKey, basically, has on its website. So, they track it very closely. They are together with another company we have in our portfolio, PlatformSH, one of our b corp companies, and they are a first mover, obviously, because it's their solution to really track and to really kind of find a way how to measure, c c, you know, carbon carbon reductions. They have created a tool around that, and and now, obviously, they, publicly communicate about it. I think it's quite massive, and, and I I think it's also a trusted number. You know, often a set, you know, ask AWS what's their carbon footprint, you know, how much how much gigabyte of data request really admits in in carbon and c o two. It's pretty hard and pretty tough for them to say, at least a deep key that was a focus early on.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:16:57]:
Mhmm. Mhmm. Let's talk a little bit about the DAX specific context. Usually, when you look into something like that, you see strength and weaknesses in the DACH startup ecosystem. Where do you see that, especially when it comes to scaling innovations?
Wolfgang Krause | Managing Partner | Hi Inov [00:17:19]:
I think what what's specific and, obviously, I can compare a little bit because we are equally investing in Germany and in France. I think in Germany, there's kind of this first mover mindset, and and and people, you know, embrace have always embraced that very early on. For example, when I compare the DACH mapping in 02/2023 to the French mapping, I think I I see a little bit more logos on on on the DACH side, you know, just, you know, a pure number game. So I think it's this mindset and really, you know, wanting to change something and really building technology solutions around that. So that's a very positive thing. You know, obviously, it's all across Europe, but somehow I have a feeling there's this special touch, you know, to the DACH market when it comes to to this, to this thing. In in terms of scaling climate, innovation, and I think we are also going to talk about that a little bit bit further down the road. It's at the end of the day, it's great to reduce carbon footprint.
Wolfgang Krause | Managing Partner | Hi Inov [00:18:40]:
It's great, you know, to create a circular economy. It's great, you know, that corporates, get, you know, more responsible and and take care, you know, a few things probably they haven't done, like, fifty years ago. But at the end of the day, it it really is, after all, it's business. Right? It's how to make money. And I think that's the biggest challenge, you know, and and probably even even in in in Germany. Like, people tend to think about the solution per se rather than is it really something which is sustainable, but not sustainable in terms of ecology, but economy. Because at the end of the day, you know, all of this all the solutions have to make money, have to create a return. Otherwise, it's not sustainable.
Wolfgang Krause | Managing Partner | Hi Inov [00:19:31]:
It's simply a lie to think that you can do stuff, you know, just for doing stuff. It needs to be economic viable, and I think that's the biggest challenge.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:19:42]:
Mhmm. You talked about challenges here. There's always regulation. Do you see the regulation currently as an opportunity or as a burden to green tech founders?
Wolfgang Krause | Managing Partner | Hi Inov [00:19:57]:
I think that's neutral. That that really is neutral. See, you I I think regulation is grossly overrated when when it comes comes to to these things. You know, obviously, it can initiate thinking. You know, maybe there can be a little bit of a wave, and create opportunities. But at the end of the day, I'm a deep believer that, you know, people should act freely, and any regulation is a overlay. And when the overlay really, you know, just creates additional cost and complexity, that's probably not a good thing. So I would say it's neutral.
Wolfgang Krause | Managing Partner | Hi Inov [00:20:40]:
There there for certain companies, that probably creates opportunities, but at the end of the day, well, we all know it. We do have a bureaucracy problem, and that doesn't stop in green tech.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:20:57]:
Yes. Nicely said. We need the the specific mapping. I was wondering within the DACH region, when when I was thinking this through, I didn't have a specific hub in mind, something like Berlin, Munich, or Zurich. Do do do you see any of them or another one seen emerging as a green tech leader in software innovation?
Wolfgang Krause | Managing Partner | Hi Inov [00:21:23]:
No. No. I think that's a nice thing about Germany. I'm investing in Germany now for twenty years. Good start ups are all over the place. Obviously, there are clusters. There's a Munich cluster. There's a Berlin cluster.
Wolfgang Krause | Managing Partner | Hi Inov [00:21:37]:
There's a Zurich cluster. Maybe there's kind of a Cologne cluster as well. But you can find great play companies even, like, in small places. It's pretty it's pretty what I put it like this, having a little bit also in Switzerland at a few conferences where they present solutions, it seems like Swiss people, they really do a lot when it comes to hardware related solutions. Munich is an engineering spot. We all know it, you know, has a great infrastructure, and and a big kind of non software plays are played out in Munich as well. Berlin, it's it's clearly software centric. But is there a specific hap you know, really never happened.
Wolfgang Krause | Managing Partner | Hi Inov [00:22:32]:
You know? I'm also, when I look at my personal, you know, local investment, it's it's it's completely random. Great teams are all over the place, which, by the way, is the beauty about the Dutch region. Ask the French. Ask the French. It's pretty clear.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:22:52]:
Lot concentrated in Paris. We'll be back after a short ad break with investment strategies and portfolio insights. Hey guys welcome back to my interview with Wolfgang from High Enough on the green tech DACH software mapping. We get exclusive insights from him, and we are now talking about investment strategy and portfolio insights. Wolfgang, how does the Greentech mapping inform your deal flow and investment priorities at high enough? Well,
Wolfgang Krause | Managing Partner | Hi Inov [00:23:30]:
that's also a very generic question, which probably isn't a % on green type mapping, but it's basically it shapes your way of thinking. It it's always different to discuss or kind of to think you've understood something and to really bring it on paper. This is, by the way, also why, like, when we do investments, people, you know, submit investment proposals in written form, you know, like, really plain plain English, you know, not kind of paste and copy of of some PowerPoint slides. Because the very moment you you really have to bring down something written, you have to think. You know? And by the way, best example is that that green tech mapping, which was called climate tech mapping, two years ago, now really we had to think, you know, how the market is evolving. Are there new categories? Do we have new classifications? So so that it really is it's an exercise which kind of disciplines you and really makes you look, you know, very carefully in what you're really looking for, what are really kind of the major trends, and, what what really makes a difference and of what possibly could do a difference. You know, and then, obviously, it's a it's a great tool because then you have a very concentrated period in in in really getting it right. You know, not not forgetting pieces, you know, trying to have a full coverage.
Wolfgang Krause | Managing Partner | Hi Inov [00:24:58]:
You probably you know, obviously, you know, on our mapping, there isn't any, you know, a % of of possible green tech companies in the dark region. But at least, you know, it it it it it it kind of disciplines you what's really important, what could be potential winners, or what are kind of people or companies who are really setting trends. So I I think it's it's it's it's very useful, especially when you work in a team and when you wanna start a conversation and then when you wanna, basically discuss business plans and and really also, you know, what kind of direction you should look at. Yeah. We really we really like it. And as said, to be very frank, I pointed that out at the beginning of that podcast. It's also, you know, making us known a little bit more in the market and, you know, just a little bit ex a little exclamation mark. Hey.
Wolfgang Krause | Managing Partner | Hi Inov [00:25:49]:
We are there, and we are interested in this space.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:25:55]:
Mhmm. Mhmm. I see. Talk about investments. Can you walk us through the decision to invest in Trace for Good and how it aligns with your thesis?
Wolfgang Krause | Managing Partner | Hi Inov [00:26:08]:
That comes a little bit back to what we were discussing, previously. You know, what what do you think about horizontal solutions versus verticalized solutions? We we deeply believe that, you know, when you when you wanna do a start up, going horizontal is is tricky. You know, you don't have the means, you know, obviously, and then you're competing against big guys. So you really have to choose your vertical. But we also believe there will be always a leader in a specific vertical. And, you know, we've seen that with DeepKey. We've seen that, you know, with a few others of our investments where basically, really, companies have chosen a vertical, became very good in it, and then become the market leader. And in in in in the case of Trace for Good, obviously, you know, just to give a very brief explanation, what they do, basically, they track the supply chain in the textile industry.
Wolfgang Krause | Managing Partner | Hi Inov [00:27:08]:
So, basically, when you wanna buy a t shirt, you probably wanna know, you know, from from the very beginning, you know, what what happened, you know, it it you know, from the raw materials, you know, where it was done, etcetera, etcetera. It's a little bit it it actually, it is a supply chain issue, And, and supply chain is a big issue, you know, obviously, now, a little bit watered down with the latest twists in The US. But I think at the end of the day, that that's a key question to be answered. And being good, you know, in a in a in a in a very in a very specific niche, in a very good vertical, this is this is this is a key thing. And then for us, it's a very early investment. We thought it's it's a great team, two young ladies who have a lot of experience in the space. And, obviously, it's a French company. So textile fashion, that's probably a French thing as well.
Wolfgang Krause | Managing Partner | Hi Inov [00:28:08]:
So I think they are also very good positioned when it comes to that.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:28:13]:
Mhmm. How do you assess impact end commercial viability simultaneously than when you're evaluating those green tech software startups?
Wolfgang Krause | Managing Partner | Hi Inov [00:28:25]:
We don't. We only, evaluate commercial viability. To be crystal clear, and that's maybe also a misunderstanding. We don't do impact because we wanna do impact. We think impact is a great way of making money. And and that's, you know, what we are for because, obviously, you know, we manage the funds of our investors, and and we really wanna make sure that they get a nice return. We think impact is a trend theme. I think there are a lot of good opportunities to make money.
Wolfgang Krause | Managing Partner | Hi Inov [00:29:07]:
But when we look at a company, it really must be ROI driven. It really must be part of a value chain. It really must solve a true economic problem. And, you know, if that economic problem also solves an impact problem, even better. I just give an example. I did an investment just just a couple of weeks ago, in a in a Germany based company, South Of Frankfurt called Xeliera. You know, with a little bit in a twinkle in an eye, I say they are an NVIDIA competitor. But, actually, they really are.
Wolfgang Krause | Managing Partner | Hi Inov [00:29:48]:
Basically, what they do, they do, kind of a compiler for a chip for an FPGA chip. FPGA chips are programmable chips, which help basically to dramatically, increase the capacity of data centers. So, basically, you know, since there's so so much traffic now hitting data centers, you know, with with all this AI traffic, data centers are desperately looking for solutions how to mitigate this traffic, offload traffic, you know, still keep security. And Celera is is helping data centers doing that. So it's it's a really ROI case because basically, data center traffic consumption goes down by 60% by using that technology. But in addition, obviously, you know, when traffic for the same, you know, traffic hitting a data center goes down by 50%, the CPU usage, you're suddenly saving 60% of energy, you know, in a data center. So it has a huge impact as well. So would I call Exelara an impact investment? Probably not.
Wolfgang Krause | Managing Partner | Hi Inov [00:30:57]:
It's more like a semiconductor investment, but it has a huge impact. It has a clear ROI case, and this is why we also call it an impact investment.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:31:08]:
Mhmm. Mhmm. I see. For our audience, I would be wondering, what do you think, guys, which matters more when investing in green tech, measurable c o two impact or scalable business models? Let us know how you decide. It's a hot debate. You are obviously an investor, and I do hope you do have some advice for founders. What's the mistake you see most often, not necessarily only in green tech founders, but pitches you get and how do you fix them? Is it that they spray and pray and send their, pitch deck everywhere and it it's not necessarily a fit with most of the investors?
Wolfgang Krause | Managing Partner | Hi Inov [00:31:52]:
Okay. So just go maybe go first green tech and then a little bit more general. So but then, you know, this green tech comment is already a general complaint. Don't think that a product or a solution, you know, is is fixing anything. It simply doesn't. It's it's also don't don't think that, you know, there that you have developed something which solves a solution which really doesn't exist because that shockingly often is often the the case. You know, people, you know, basically have kind of the theoretical idea that something needs to be solved, and then they develop a product or kind of a solution around it. And then in reality, nobody needs it because it simply is only a theoretical problem, not a real life problem.
Wolfgang Krause | Managing Partner | Hi Inov [00:32:50]:
So I think, you know, obviously, the key thing is when when it really comes to kind of starting your your startup or or really get industry expertise and really try to solve a problem which exists and which creates ROI, which really at least in b two b investing, which really, you know, you you you know, as simple as that, you put out a piece of paper, you can go to a customer, and you say, look. When you take my product, when you take my solution, you can save x in cost or you can get, you know, so much more nimble or you can gain so much more customers. And that really requires an in-depth knowledge of an industry and the workflows within that industry. And I think that's just my my advice, you know, to a green tech founder, but also to any technology founder. First of all, try to sort that out. And And then when it comes to pitching, I think that's a classical thing. You can do spray and pray, but what are the chances that that, you know, you are the one who's picked out of that inbox, you know, deal flow we are getting every day. I think carefully think, you know, what could be a good investor for you.
Wolfgang Krause | Managing Partner | Hi Inov [00:34:11]:
And when you've identified people you think are good fits, try to find people who know them, and try to get a personal introduction of some sort. I think we've never not taken a call with a company when we got a personal introduction, unless it would be completely out of our scope. So I think that's a golden rule. Don't rely on well, obviously, you have to do your test copy first. You really have to be knowledge about the market. But the next step is really even in the world of AI technology, Zoom, and everything, try to get the first personal contact, the first personal touch, and that takes you very long.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:35:00]:
Interestingly, you talked about Celera. Something rang in the back of my mind. I interviewed them five years ago. Oh, oh, almost exactly to the day. That's pretty interesting. You talked about, like, you're mostly around series a. Hootle of thumb is, like, a hundred million revenue. I, few few months ago, I talked to an investor and I asked him, yeah.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:35:26]:
You you looking for startups like 1,000,000 or €1,000,000 revenue? And he said, if I get the chance, I always say €2. So, at this stage, they're getting really serious with their startup. What traction metrics or early points of proof are most persuasive to you when you evaluate such a company?
Wolfgang Krause | Managing Partner | Hi Inov [00:35:49]:
Wait. Just, you know, to speak clear, series a is not a hundred million. It's a million. 1 million in in revenue. And is it a random number? Yes and no. You know, could it be 800? Could it or does it need to be 2 or 3,000,000? Probably. I think when it I always I think venture capital is about, the willingness of taking four risks. There's a team risk.
Wolfgang Krause | Managing Partner | Hi Inov [00:36:21]:
There's a product risk, there's a market risk, and there's a scaling risk. Right? And as a series a investor, you probably wanna take one risk, which is a scaling risk. And because and all the other three risks should have been more or less validated. You know, obviously, the team, you don't know. Obviously, there are a few things where you can, you know, other than, obviously, the personal interaction with the team, which is super important, there are a few things you you can you can get an idea whether it's a really good team. For example, it's the simplest stuff, cap tables. Like, people who who are already 70% diluted in this in the seed investment are probably not great guys, because they kind of didn't understand a seed round, and and and then, obviously, you know, when you've spent already 5,000,000 to get into your first hundred thousand in in revenue, that's probably not a stellar performance. So, you know, you can get that.
Wolfgang Krause | Managing Partner | Hi Inov [00:37:31]:
But then the team is very important. And then, obviously, a market and product goes a little bit along. You know, when you have a critical mass of customers, there probably is a market because people are buying. And, you know, when people are buying and aren't churning, then you probably have a product, because it's working and people seem to be be happy. So and and I think I think as a series a investor, you want to have these three things validated. And that can be, like, also depends on the product. That can be maybe you have a company who who does does does a product which really instantly gets, like, huge contracts. And then you made like, you have a few couple of big brands, using that, and then it's already a series a.
Wolfgang Krause | Managing Partner | Hi Inov [00:38:18]:
And then you have probably, kind of a more like a small ticket b to b play, you know, which even resembles to a certain extent to b to c play. And then you wanna have a thousand customers. You wanna have, like, two years of solid KPIs, and you really wanna see the growth curve. So I think it's where where kind of you you position yourself. And then so that's a series a. To me, that's a series a. And when it comes to pre series a, I think, you know, out of the three risks, probably one of the risks isn't really sorted out a %. So you're willing to say, well, the guys probably they have a product.
Wolfgang Krause | Managing Partner | Hi Inov [00:39:07]:
They have a few customers. They've kind of got a good job in product development. But you clearly sense they really haven't found their go to market yet. Probably they have to do a little few twists. You know, 80% seems to be okay, but they have still you know, like, they need a year or eighteen months to really go very solidly that really then is used you know, kind of makes sense to put in four, five, six, or seven, or eight, or 10,000,000 and really deploy it for scaling the company. I think that's the difference between kind of a extremely early pre series a, pre series a, and kind of a solid series a where you really wanna deploy money for getting by the way, also very important, what's the difference between a series a and a series b? I think a series a should take you with the money you raise, you know, from a CEO led sales model to kind of a broader scalable model. So, basically, it's a transition, you know, from transition transitioning from a founders led team to a team which is mainly driven by the second layer where you have hired a VP sales, where you probably hired VP product, and everything isn't relying on on founders anymore.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:40:31]:
That's a pretty nice definition. I was I was also wondering because the space we talk about right now is pretty full of buzzwords like sustainability. How can founders there stand out with some substance? Because I do believe you do get a hell lot of buzzwords on this, pitch decks.
Wolfgang Krause | Managing Partner | Hi Inov [00:40:51]:
Yeah. And probably it's also that I'm a little bit longer in the market. Don't care. As I said, ours, ROI counts. Understand the workflow. Understand the industry you're working in. Are you really solving a problem? Are you going to make money? Forget about the buzzwords. And by the way, I think sustainable is a great word.
Wolfgang Krause | Managing Partner | Hi Inov [00:41:17]:
It's a great word. You are sustainable when you're probably going to be around in ten years from now. I've never seen a money losing company being around in ten years. Other, I don't know, Do you?
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:41:33]:
I I have to smile here in the background because, before we started, I told you I'm now in the eleventh year here with StartUp Radio, officially sustainable. Let's talk a little bit about future trends and strategic foresight. The role of the dark based screen tech, what will they play in Europe towards a product push for zero net zero emissions?
Wolfgang Krause | Managing Partner | Hi Inov [00:42:04]:
I think they will play a 20 to 30% role. The German market in Europe is 20 to 30%. And, you know, at least when it comes to start ups, you have France. You have a little bit of other areas. So, well, it's probably 30%. Yeah. I it's it's yeah. I I think there will be a few leaders.
Wolfgang Krause | Managing Partner | Hi Inov [00:42:24]:
There will be some groundbreaking technologies coming up. But it's a European ecosystem. Even so, we invest pretty nationally, and I think the contribution will be it it's a percentage game. It's a numbers game. It will be 20 to 30%. That's my personal guess.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:42:46]:
Personal guess is also totally fine here. I do understand a lot of what VC is doing is gut feeling, and it's always good when you get a little bit of this gut feeling here teased out. Do you see foresee the green tech software becoming a default layer across all industries similar to something like how cloud computing computing has evolved?
Wolfgang Krause | Managing Partner | Hi Inov [00:43:09]:
No. Nope? No. Definitely not. Because, a default layer means you're really part of the value chain. And and being kind of and and really be becoming part of the production value chain of a specific solution. So, you know, obviously, will green tech be very important for for, running businesses? Yes. Absolutely. Yes.
Wolfgang Krause | Managing Partner | Hi Inov [00:43:48]:
Because you have reporting requirements. You know, you basically also wanna become more competitive to a certain extent. It really also probably helps you reducing cost in in in in any sort, especially when when when it comes to carbon pricing, etcetera, etcetera. But being a default layer, so kind of being absolutely required to run a business. Well, maybe I have too little of a imagination, but for the moment being, no. No. Everything which I'm seeing even on that mapping wouldn't wouldn't wouldn't let me that it's going to be a a sort player like like a cloud infrastructure. That's not going to happen.
Wolfgang Krause | Managing Partner | Hi Inov [00:44:28]:
Maybe in five to ten years. I don't know. But from from what I see now, I'd be skeptical.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:44:35]:
Mhmm. Mhmm. The EU is is always, pretty forward in regulations, taxations. What impact do you see on this EU level carbon taxes or green subsidies they could have on startup formation and funding?
Wolfgang Krause | Managing Partner | Hi Inov [00:44:56]:
Tell you. Subsidies, always bad, really bad. I think there are far too much subsidies already in the market, which are completely distorting the market. You know, a lot of stuff is going to subsidized, which doesn't make sense, which doesn't have a sustainable value proposition. I really am a big fan in carbon taxes. That's probably the most elegant and, and and most comprehensive solution, you know, to solve problems because, you know, it it really gives a price to something which hasn't had a price. And the very moment something has a price, you can do marginal trade offs. And I think that's a wonderful thing.
Wolfgang Krause | Managing Partner | Hi Inov [00:45:43]:
And, you know, hopefully will it ever work? Let's see over the next ten years, but at least from a concept that's brilliant. Because, you know, the very moment you give you you you oblige people to think in marginable in in margin gains, you know, technology really really gets rolling. First, low hanging fruits are fixed, and then, you know, the the the the more the price increase, you know, more tough problems get solved. And and there's and and then also it's kind of, to a certain extent, you can plan with it. Probably, you couldn't you can't really plan for the exact price, but you can plan with a long term trend. And that's always a very good thing when you can plan.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:46:37]:
Mhmm. That that's, that's totally true. Talk about long term. Let's talk about your positioning as a VC high enough. You've raised fund three, and you have a partnership with, Anka Ventures. How will this amplify your ability to support the green tech innovations in the DACH region?
Wolfgang Krause | Managing Partner | Hi Inov [00:47:05]:
Just a very brief comment on Anchor Ventures. Anchor Ventures, we know them very, very long. Actually, they used to work with us, for well, actually, they they were part of our team, at least most of them, within Anchor Venture. It's a little investment boutique who specialized in in impact investing, but also in in in seed investments. And, basically, they really help us to source deals and to or even kind of structure deals in the seed phase. We see them kind of as a feeder. It it's kind of a a feeder initiative for us. About 10% of our fund will deploy in kind of seed opportunities in partnership with Anker Venture, you know, just to have a foot into great, teams and great performing seed startups at a very early stage.
Wolfgang Krause | Managing Partner | Hi Inov [00:47:57]:
Also what they bring on the table, like, when they found it, they they had this vision early on. So and at least in France, but now also starting in Germany, they do have a name in impact investing, early stage seed impact investment. They they do have quite some knowledge. And it's always great, you know, to have knowledge in the team.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:48:20]:
I see. If you had to bet one under the radar green tab subsector right now, what would it be and why?
Wolfgang Krause | Managing Partner | Hi Inov [00:48:33]:
It's infrastructure. Nobody really talks about infrastructure. It's about telecommunication. Well, especially when it comes to software. I remember, like, all these ideas when it came to b to c commerce, when it came to b to b, they always all these ideas have been out for thirty years. I remember in the nineteens nineties, like, being in in in in the Silicon Valley, we talked about ecommerce. We talked about SaaS. Obviously, it wouldn't be called like that, but there simply was the underlying infrastructure missing.
Wolfgang Krause | Managing Partner | Hi Inov [00:49:15]:
And and I think now, especially when it comes to software, when it comes to AI, but when it also comes to kind of greed tech solution, which basically requires the analysis of huge amounts of data, you need to have the underlying infrastructure, and and and people really, really need to go into this direction. This is also a reason why we did our investment in Celera, where we are looking in other, you know, sectors. I think the sad news one more time is when it comes to infrastructure, It's mainly a Silicon Valley Israel play, but there are always a few hidden gems in Europe as well, and and we are actively looking.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:50:00]:
Mhmm. I see. Wozka, thank you very much for your time. We will link down here in the show notes your LinkedIn profile. You obviously have a lot of contacts. Before before this interview, I realized that we have more than a a 20 contacts in common, but it needed an international PR agency to get us in touch. By the way, they did a good work. And, secondly, we will be, providing a link to the company website you so you can do some digging, some research, and, of course, there's a place where you can pitch as well.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:50:36]:
And you'll be back for our premium subscribers for for a few more q and a's. Thank you very much.
Wolfgang Krause | Managing Partner | Hi Inov [00:50:42]:
Perfect. Thank you very much. Great interview.
Jörn 'Joe' Menninger | Founder and Editor in Chief | Startuprad.io [00:50:46]:
Thank you.
Narrator Dorsey Jackson [00:50:52]:
That's all, folks. Find more news, streams, events, and interviews at www.startuprad.io. Remember, sharing is caring.
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