upCAT #3 – Teams pitch successfully on Demo Day

On March 10, 2015, the accelerator program “upCAT” of the KIT Founders Forge ended in applause on the final Demo Day. After twelve weeks of intensive work, the six participating teams presented their business model to an expert audience consisting of business angels, venture capitalists, and Karlsruhe network partners. Six entirely different teams participated in the upCAT #3:

  • ChromX: Software for chromatography modeling for process development and robustness studies for the biopharmaceutical industry
  • LehrWerk: Construction kits as teaching materials for prospective engineers and technicians
  • Paralution: Software and consulting to accelerate the calculation of computer-supported simulation
  • Softtop: Weatherproof covering for bicycles and e-bikes
  • Storrays: Technology for manufacturing ultra-high density peptide arrays
  • tego energy: Energy supply modules for energy harvesting

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KIT Entrepreneurship Talks – Mikro Holzer of BrandMaker shares his lessons learned

BrandMaker_Holzer_220x220On February 12, 2015, Mirko Holzer of BrandMaker GmbH was welcomed as a guest at the KIT Entrepreneurship Talks. Holzer began a first attempt at founding while still at school. During his studies at the KIT (the University of Karlsruhe at the time), he was encouraged in his startup plans. He experimented with different ideas and is a successful entrepreneur and provider of a management system for the marketing industry today. Although Holzer “grew up” in the IT industry, his lessons learned are interesting for all founders:

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STEP NY – Program for ICT startups in Germany

The German American Chamber of Commerce New York (GACC NY) will once again carry out its successful “Startup and Entrepreneur Program” (STEP NYC) from March 1 to 6, 2015. 

The 5-day travel program to New York City is directed toward ICT startups from around Germany. The goal of STEP NYC is to open the door to the US market for internationalizing German startups. Among others, the following program components will be offered:

  • Pitches to American VC investors and angel investors, ideally to raise capital
  • Networking with suitable potential customers on the US market through the large company network of the GACC New York
  • Theoretical foundations on US market entry through intensive expert workshops
  • Legal & intercultural issues, company startup, pitching and sales training

To participate in the STEP NYC, you should meet these requirements by having:

  • a concrete business idea
  • a scalable business model
  • identifiable international orientation (medium-term interest in US market entry)
  • previous successful customer acquisition in Germany and contention on the German market
  • previous successful investor acquisition in Germany

STEP NYC costs EUR 3,000.00 per person. The participants bear the flight and accommodation costs.

The trip is designed for up to 15 participating startups. There are currently a few free spaces available. Apply before January 23, 2015 and explore the American market!

You can find more information and the application forms at STEP NYC.

Challenges for academic and research centered founder support

With the German Startup Monitor 2014 and the Gründungsradar (foundings radar) 2013, two elementary and informative reviews about the German startup scene in general and academic support in particular, have been published in the last few days. It turns out that the subject founding is gaining momentum and the framework is continually improved. New public subsidies are introduced, existing ones developed and expanded – the structures in and around the universities are increasingly shaped professionally. Especially the foundings radar shows that a large number of universities and colleges were able to progress greatly compared to the previous year and are going to take the next steps. Yet, for all rising euphoria and the successes, there are also words of warning and developments to which one should actively and jointly respond. In the following, we outline three examples from the publications and at the same time present our ideas for the solution.

63.3% of the founders estimate the tolerance of society towards failure as (rather) low. (Source: DSM 2014)

That failure in general and failed founders in particular are viewed critically in German society is unfortunately still a big issue. It seems to be a flaw in Germany – the assumption that one does not possess the skills to successfully build and manage a business. Meanwhile, in the USA, falling down (failure) and getting up is not only well received but almost a quality criterion for a successful entrepreneur. With new formats such as the so-called FuckUp Nights, founders are encouraged to talk about their own mistakes and disappointments. At the same time they draw courage from the talks. We are actively working on offering such formats at the KIT in 2015 and to get a positive exchange going.

For the further development of the company, 38% of startup founders see difficult access to venture capital as a “severe” or “very severe” obstacle. (Source: DSM 2014)

The venture capital market in Germany is only slowly gaining steam again. While in recent years the investments of classic VC firms have fallen sharply, this gap was in part filled by other groups such as business angels and family offices. Although international VC companies are now increasingly moving into the German market, it is still difficult, especially for companies in the life sciences sector, to attract sufficient funds in their early stages. Through approaches such as Accelerator and mentoring programs, we at the KIT want to coach especially capital-intensive startups early on and make them fit for an investment. At the same time, we are developing more financing channels, e. g., through crowdfunding approaches and prototype funds.

Incentive systems at German universities still have development potential (Source: Gründungsradar (foundings radar) 2013)

The results of the foundings radars have shown that the number of startups from the university environment continues to rise and more and more people venture into self-employment. However, these are usually only students and graduates while graduate students and employees have less freedom because of their work tasks. Research projects, teaching activities, and ongoing assurance of (own) externally-funded positions often result in little time remaining to develop an exciting technology and a matching business idea into a business model. Again, other countries can serve as an example in which freedom and incentives for employees to think outside of the system and thereby to pursue exciting and personal projects are consciously created. The structure of these incentives is varied and can go from the granting of “founding semesters” on exemptions from teaching assignments and special compensation options to re-employment after a failed founding. At the KIT, we are in constant exchange with universities and research institutes, nationally and internationally, to evaluate new incentive systems and transfer them to our system.

Conclusion: As far as we are concerned, challenges should be the drive to repeat our present successes and to take further steps. We want to further and better help people who dare to do something. The two reports show that overall we are very well positioned in Germany and our experiences lead to the fact that foundings from Germany are met with growing interest internationally.

The basics of financing

Sooner or later, every startup project faces the question of financing. Financial means are necessary in order to put the idea into practice and develop products and services out of a concept that are ready for the market. But what options for financing actually exist for founders building up a business? We have compiled a list of the most important financial sources.

Equity

When founders let their own savings, material assets, and personal contributions flow into the business startup, we call this equity. One’s own starting capital can additionally be increased through financial support from a familiar environment (family, friends & fools).

Funds

In Germany, there is a number of funding programs for startup projects and the development of a business. Through these, founders receive supporting financial means from public institutions for a start to independence. Usually, the funding program decides on the purpose for which the funds may be used, such as for equipment and staff. You can search for suitable funds in the state’s funding database.

Business Angels

Wealthy private individuals who contribute to a business idea or a business through active support (know-how, business contacts) and/or with capital are called business angels. Usually, they support young startup projects during the buildup and beginning stage. In return, the business angel generally receives shares in the business. You can establish contact with business angels, for instance, in the business angel network of the CyberForum e.V.

Venture Capitalists

Risk financers who invest in a business during or after the startup stage are known as venture capitalists (VC). Through equity financing, the founders receive borrowed capital and, in return, the financer receives shares and possibly rights in the business. Often, this form of financing is organized through investment companies or venture capital companies. For example, the KIZOO Technology Ventures is located directly in Karlsruhe.

Crowdfunding /Crowdinvesting

In crowdfunding/crowdinvesting, projects and business startups present themselves on online platforms in order to gather outside capital from a crowd. The necessary capital is thus made available through a multitude of smaller investors. A difference is made between “reward-based crowdfunding” through donations, benefits, and counterperformances by the projects and “crowdinvesting” through participation models in businesses. Among the well-known German platforms are Startnext and Seedmatch.

Family Offices

Family offices refer to societies or special departments of banks, where the assets of mostly wealthy families are bundled and used for financing projects and shares. In addition to financial support, family offices can usually also use their business contacts to the advantage of a company.

Bank Loan

Through bank loans, business founders can request a loan or funding credit from banks in particular for their startup plans. The banks decide whether to grant a loan according to their own criteria. The duration and amount of the loan is appropriated in relation to necessity. For example, the L-Bank (Baden-Württemberg) and the KfW (Germany) are active in the area of founder financing.

Are you asking yourself what financing option is the best!? There is no stock response to this question. The choice of financing means depends on many factors and should be looked at in detail and individually for every startup project. The founder consultants of the KIT Founders Forge help you in searching for the financial means that are suitable for your startup project.