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Fraunhofer Venture
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- Interview with Munich Venture Partners
- Spin-off Profile
- News
- Trainings and Workshops
Interview with Dr. Walter Grassl of Munich Venture Partners
Munich Venture Partners (MVP) - Partner for investors and Spin-offs: A pool of sharks or a real chance? Who benefits?
- Dr. Walter Grassl
Munich Venture Partners (MVP), a Munich venture capital enterprise, in cooperation with the Fraunhofer-Gesellschaft established a fund for financing innovative high-tech companies. One focus of Munich Venture Partners' investments is the support of spin-offs of the Fraunhofer-Gesellschaft.
Dr. Grassl, MVP is a venture capitalist. Would you briefly explain the relation between investor and start-up. Who is the shark and who is the fish in the ocean?
For start-up financing, a new class of investors has emerged - venture capitalists willing to take the risk. So with a financing agreement, venture capitalist and start-up enter into a close relationship. The fundamental base of this relationship is the mutual pursuit of value increase and successful exit. This means that both sides contribute to the success or failure of a company and are together either winners or losers. So neither of them is shark or fish.
What are the core requirements a team has to meet when submitting an application to MVP?
In addition to business competence and expert knowledge, it is very important that the team is absolutely determined to make the technology a worldwide success. This worldwide focus is a very important issue for MVP as well as it is actually for Fraunhofer. In the relevant business areas - Green Energy Technologies, Green Information and Communication Technologies - there are hardly any regional niches left. This is why we only accept solutions for our portfolio that are able to compete on a global market.
Who actually decides whether an idea will be funded or not?
The entire MVP team makes this decision. Before a decision is made, the business model is examined according to certain criteria such as technology, business model, market competition, and chances of success in a due diligence process. Furthermore, we talk to experts in our network or from the respective industry who know the market very well. All of this constitutes the basis for an objective team decision. Such extensive assessment is definitely necessary, because in the end it is us who manage the fund and who have to live with the consequences of the decision.
And what is the price you have to pay for the investment of a venture capitalist? How much of the pie will the start-up company have to share or, in other words, how much of the original idea, the vision of the team of founders will be left in the end?
There is no unambiguous answer to this question, because what the distribution of shares in the company will look like, is of course dependent on different factors. For example on how much money the company requires to develop its product solutions or on the estimated company value in case of an investment. We at MVP as a capital managing fund have a limit and may only invest in companies in which we hold less than 50%. Negotiations between investor, technology provider and entrepreneur can of course take a while and be a very intensive process, but at the point when an agreement is reached, everybody involved will for sure have the feeling to hold an adequate share of the company. A company can only be successful and pull in the same direction if everybody is satisfied with the situation.
How much gut feeling is in each decision about an investment or is the decision simply based on an easy cost-benefit analysis?
As I said before, a decision about an investment is based on due diligence. Additionally, in many cases we require an assessment of experts who are very familiar with the market. Nevertheless, the decision is up to us and it happens that we let our gut feeling decide. If the team is not able to agree and one of us has a really bad feeling with an investment, it means that all of us will deal with the situation again and maybe have a closer look. At the end of the day, however, we have always been able to agree.
Are you sometimes surprised when a start-up develops into another direction than was originally planned?
No, the other way round, I would be surprised if a start-up stuck to the business plan in all details. More than once I witnessed how a start-up sometimes developed much better or into a totally different direction than proposed by the business plan. E. g. with solutions that were not accepted on the market originally considered as the target market, but that were suddenly very successful in another application. One example is Vis-a-pix, a spin-off of the Fraunhofer Institute for Telecommunications (Heinrich-Hertz-Institut) in Berlin, that started out in security and today is one of the market leaders in software video analysis. Of course there are also companies that go through a poor development and break down. There are many reasons and factors for that, such as for example a wrong assessment of the market or the competition.
Can you spontaneously mention three things that should be changed in Germany so that start-ups have better chances for development?
There are actually several things. One keyword in this context would be that Germany needs innovations. But innovations alone are not sufficient. We also need courageous entrepreneurs who develop successful products and valuable and large companies out of these innovations. These entrepreneurs it is we need to support by concentrating more on the chances and less on the risks. Often, we find several reasons for not doing something before we start looking for reasons for doing something. Also the entrepreneurial courage and the resulting success should be better appreciated, rewarded and honored by society. Admiration instead of envy would be important. And of course we need more venture capital. Compared to the USA, we have less venture capital in absolute and relative figures.
From a poor student to being a millionaire - how often does this happen?
It is actually not that rare. I would assume at least two to three dozens. If you had asked: "From a poor student to being a billionaire" this is of course much more rare; but definitely something to be observed lately both in the USA and in Europe. When looking at the company values of the portfolios, almost all entrepreneurs range in the millions with their company shares. But it is clear, that a successful exit has to happen at one point or another. This is why I say that the chances are not too bad. You just have to pull it through.
Dr. Grassl, thank you very much for the interview.
Spin-off Profile
Audanika GmbH
Successful Harmonies
Using the iPhone, iPad or iPod as a musical instrument? An App called SoundPrism makes it now possible that also musical laymen are able to create nice sounds. And it is all perfectly easy by just moving your fingers on the touchscreen. A dynamic interface and very easy usability complement the solution. "The easiest way to explain the technology is to try it out and look at the App interface - then you understand how it works", explains Sebastian Dittmann, founding partner of the Fraunhofer spin-off Audanika GmbH, a young company developing innovative, digital musical instruments.
SoundPrism is not a melody instrument such as a piano but a harmony instrument. The schematic arrangement of notes in SoundPrism enables the user to play up to three chords simultaneously and also to access the broad range of tone pitches. In addition, a scroll bar is provided to the user for changing to other color sequences representing a key. Most exciting: With SoundPrism, everybody - even if you never played an instrument before - is very quickly able to create own harmonies. This way, complex musical concepts may be used to vamp wonderful pieces of music - everybody intuitively creates new compositions with SoundPrism. A mere touch of the screen allows all SoundPrism users to immerse in their own world of music, to express themselves and to relax. The tonal and color composition, which is a very personal and in any case harmonic creation "of one's own hands", has a very relaxing effect.
More than 20 years ago, the father of David and Gabriel Gatzsche, a pastor, already laid the theoretic ground for SoundPrism. "He tried to convince his sons' teachers of how much easier and lovelier it would be to learn the theory of music that way. However, he was totally ignored. His sons in contrast benefited from the method and aced all music theory tests", says start-up entrepreneur Sebastian Dittmann. In the scope of his dissertation, Gabriel Gatzsche developed the HarmonyPad (the SoundPrism predecessor) at the Fraunhofer Institue for Digital Media Technology IDMT in Illmenau. At a colloquium about music in computer games, he met Sebastian Dittmann. Mr. Dittmann, son of two opera singers and a musician himself, understood the vast possibilities at once. Together with the software engineers Felix Hirzel and Benjamin Hudarew, the musicians developed SoundPrism, which is now available as an App for iPhone and iPad.
News
Fraunhofer World of Ideas: Fraunhofer Venture is looking for inspiration!
All Fraunhofer employees, no matter whether student, postgraduate or scientist, are encouraged to submit exciting, creative, and extraordinary ideas to Fraunhofer Venture until March 31, 2011. Together with High-Tech Gründerfonds and Munich Venture Partners, Fraunhofer Venture started the "Fraunhofer World of Ideas" initiative. The aim is to gather ideas for innovations, company foundations, products or services throughout the Fraunhofer world. All ideas - independent of the state they are in - are welcome. So don't hesitate and submit your idea. Of course your idea will remain your own property. Participation is open to Fraunhofer employees only.
The best team (max. 3 persons) will win a trip to the home country of start-ups - the USA. For one week, the creative minds will have the possibility to visit the hot spots of the world of ideas and high-tech start-ups and to be inspired. The second group will be able to gather information about any world of ideas on the internet with their new iPads. For the third team, the foundation for long nights will be laid - with a year's supply of coffee.
- For further information and an online form for submitting your idea (www.ideenwelt.fraunhoferventure.de)
Fraunhofer Investment Forum, February 3, 2011
On February 3, 2011, the next Fraunhofer Investment Forum will take place. The event's aim is to build a bridge between start-up entrepreneurs and investors.
The topics are already set: Prof. Wolfgang Benecke, Managing Director of the Fraunhofer Institute for Silicon Technology (ISIT) will inform about "energy storage" and present the latest research developments to the participants. As already known from previous events, spin-offs of the Fraunhofer Gesellschaft will present themselves, including the start-up DISPATCH ENERGY dealing with storage systems in the power network. Managing Director Dietmar Gruidl will explain the advantages of Lithium accumulators.
Further information will follow shortly on our website. If you are interested in participating in this event, just send us a message. We will be happy to send you an invitation flyer.
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Trainings and Workshops
bwcon: Business Plan Competition CyberOne: Register with Your Business Plan by January 07, 2011
The bwcon: Hightech Award CyberOne is the most important business plan contest of the high-tech industry in Baden-Württemberg. More than 680 innovative business concepts have been assessed by the expert CyberOne jury since its founding 13 years ago. The bwcon: Hightech Award alone is responsible for the mobilization of 225 million euros of venture capital since it has been introduced.
Invited to participate are start-ups and medium-sized technology enterprises in Baden-Württemberg with innovative concepts and strategies related to the technology industries of software/hardware, multimedia, online and mobile business, mechatronics, micro system technology, photonics/optical technologies, environmental/power engineering, or medical technology/life science.
All participants receive feedback on their business plan by the experts of the CyberOne jury. Additionally, prizes in cash and kind totaling more than 100,000 euros, a free bwcon network membership as well as a mentoring by an experienced entrepreneur or manager await the participants.
Submissions to the competition in the form of a complete business plan are accepted until January 07, 2011.
Netzwerk Nordbayern: Workshops - The Basics of Business Plan Development
The first step is always the hardest. The workshop wants to help young entrepreneurs getting started with the development of their business plan. In addition to basic explanations and an overview of all elements, the focus is on the description of the product/the service and the customer benefit. All relevant aspects of a business plan will be discussed.
Dates:
Nuremberg: December 01, 2010
Regensburg: December 02, 2010
Bayreuth: December 14, 2010
Participation is free of charge. Please register three days prior to the event the latest. Each workshop will start at 3 p.m. and finish at 5:30 p.m.
bwcon: VC Round Table "VC Financing at the Stock Exchange - Impossible After the End of the New Market?" in Stuttgart, December 13, 2010
With the end of the New Market it has become more difficult for smaller high-growth companies to go public. Since then, the structure of investors has become more and more international and also considerably more institutional.
IPO investors set the focus on other sectors. Besides, the IPO market has become considerably more volatile. But still the stock market is open to candidates from the technology sector as long as they have the necessary maturity to go public. Everybody interested may discuss this topic with Prof. Dr. Wolfgang Blättchen, managing director of BLÄTTCHEN FINANCIAL ADVISORY GmbH.
Munich Network: 4th Munich Cleantech Conference 'eMobility Moves us all', December 02, 2010, 9 a.m. to 6 p.m.
The conference offers solutions and answers to the challenges faced by the entire automotive pre-stage, infrastructure, and finance and addresses clean-tech companies, investors, and scientists as well as everybody interested in the topic.
The 4th Munich Cleantech Conference offers the possibility for all participants and presenters to inform themselves about and exchange experiences with current developments of the markets and technologies relating to electro mobility. This will give the participants the chance to develop ideas and perspectives with respect to new services and business models and to establish cooperations. The conference serves as a platform for entrepreneurs, industry representatives, start-ups, investors, scientists as well as everybody interested in the topic.
Business Angels Netzwerk Deutschland e.V.: German Business Angels Day in Stuttgart, December 12 and 13, 2010
The largest meeting of the German business angels community is the highlight of the business angels year 2010: On December 12 and 13, 2010, the German Business Angels Day will take place in Stuttgart. Approximately 500 participants will exchange experiences, discuss trends, and establish contacts. Again this year, many promising start-ups will present themselves. Suspense will peak when the jury announces the decision for "Business Angel of the Year 2010" and awards the "Golden Nose".
The congress invites business angels and young entrepreneurs looking for venture capital to enter into a dialogue and cultivate their network. It also addresses decision makers in politics and the industry, representatives of science and research, intermediaries, venture capitalists and other financial service providers. The event sees itself as a competitive exhibition of German business angels networks and the entire informal venture capital market.
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