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Tag Archive Point Nine Capital

Talking Startups with Point Nine Capital

We haven’t chatted with Point Nine Capital, so we decided to catch up with Mathias Ockenfels.

Mathias joined Point Nine as an Investment Associate in the summer of 2013 and is currenty a principal at the firm. He comes from Naspers, where he worked as an M&A Manager for the ricardo Group in Zurich. Previously Mathias was an Investment Manager at Mountain Partners.

Talking Startups with Point Nine Capital

Point Nine Capital recently won Best Angel/Seed Investor of the Year (2015) at the Europas, what is unique about its approach?

Our investment thesis is centered around 2 business models: SaaS and (digital) marketplaces. Having such a focus allows us to offer value-add to our portfolio companies independently of their geographic presence. We are based in Berlin but we are investing everywhere in Europe and North America. Some companies appreciate the fact that we are active on 2 continents and can help to cross the pond in both directions.

What is an Angel VC?

We call ourselves “The Angel VC” because we strive to unite the best of both worlds: Business Angels and Venture Capitalists. We try to be as hands-on as an Angel while having the financial “firepower” of VC-fund. In that sense, you may also call us a “Micro VC”.

In terms of stage we are often the first “institutional” investor coming in or, we even invest in the first seed round together with other angels.

How many deals are in your portfolio? What are some exciting prospects from that field?

We now have a portfolio of roughly 55 companies across 3 funds.

We are excited about every company that we are invested in but, by the nature of things, some are obviously a bit older and at a more mature stage which makes it easier to predict promising outcomes. Among the companies that have recently raised larger follow-on fundings are startups such as Delivery Hero, Algolia, docplanner, Shiftplanning/Humanity, brainly, Vend, Kreditech, Helpling or Westwing.

How many cold call presentations do you get? And do you respond to unsolicited pitch decks?

In total we see around 2,500 to 3.000 opportunities per year which includes all kind of different sources of deal flow. We try to send an answer to everyone who submits a serious funding request. In general, we follow the following principle: if you (as a founder or startup) spend time on trying to understand what we do and what we look for and subsequently submit your business plan because you think there is a fit, we will spend time on trying to understand what you are up to and send you our feedback in due time.

What’s the best way to be introduced to Point Nine?

The best way to get in touch is through another founder preferably from the Point Nine Family (i.e. our portfolio). This means an additional layer of “vetting” for us and makes it easier to filter considering that someone else that we know and trust is willing to put in a good word for you.

What advice would you offer an entrepreneur trying to raise capital?

Spend time on understanding the investment focus and approach of prospective investors and make sure whether there is a potential fit with the angel or fund in terms of stage, theme and investment size! Otherwise you might risk to burn a lot of relationships early on and you will waste your own, precious time.

What do you look for in an entrepreneur?

First and foremost an entrepreneur needs to be a good salesperson:

  1. He needs to know how to sell the product to customers.
  2. He needs to know how to “sell” the company as an attractive place to work to potential employees.
  3. He needs to know how to sell the company and its vision to potential investors.

Besides, persistence is an important character trait.

We also tend to prefer teams over single founders where the team members have a complimentary skill-set.

Do you co-invest with other angels?

Yes, we often invest together with angels or bring in other angel-investors alongside ourselves as part of the same round.

Berlin Startup Scene – hot or hype?

The hype in Berlin has definitely solidified over the last 2-3 years so that it has become a real movement and is not just a “trend” anymore. The startup scene is an integral part of the Berlin economy as the city never had any economic basis like e.g. Southern Germany with all the car manufacturers and their suppliers.

What are your thoughts on Crowdfunding as a source of equity?

For a startup, it’s a valid alternative to regular VC or Angel funding. It is highly regulated in Germany as well as in the rest of Europe which makes it hard to raise straight forward equity in a crowdfunding campaign. Also, we as Point Nine would probably not invest into a startup as a part of a crowdfunding campaign. Of course, that does not mean that we would not invest afterwards. The industry is still very immature and it has yet to be seen how the performance of crowd-funded startups will pan out.

Point Nine Capital Berlin Seed Investments

Recently, we sat down with Nicolas Wittenborn of Point Nine Capital in Berlin.

First joining the Team Europe Seed Fund as an intern in early 2011, Nicolas came back to work as a full-time associate for Point Nine Capital after graduating from the University of Mannheim in 2012.

Having lived in New York and Singapore and gathering first work experience in real estate management and marketing, he moved back to Berlin to be closer to the lively start-up scene and pursue his passion for young technology ventures.

Point Nine Capital is a €40m euro fund, with an average investment over the life of a deal around 1.0 million, with an anticipated portfolio of 40 deals.  These are seed round investments between 100k-1m €,  averaging around 500k and around half of the fund reserved for follow-on rounds.

Point Nine Capital Berlin Seed Investments

Where is the fund in the 40 investments?

I think we are at about half of the planned investments, so will be investing out of this fund for a while longer.

Does Point Nine take a board seat(s)?

In general we don’t insist on it, but do it if the entrepreneurs wants us to. In Europe the board is not as powerful as in the US. Therefore it is a lot less structured or relevant over here. In general the board here acts as advisers, not directors.  Our hypothesis is that the founder should be in control and we are there to support him/her and give some direction. Therefore taking control with a board seat is secondary for us.

What sectors does Point Nine invest in?

Out of the current fund around 60-70% of our investment have gone into SaaS companies. While this is our focus, we also invest in marketplaces, networks and some mobile & eCommerce.

How often do you get unsolicited business plans, and is this the real way to capture your attention?

We receive between 150-200 inquiries per month. These come from all over the world but mainly from Europe and North America. It is important to us that we get back to all of them, so we do have a look and try to respond in a reasonable time.

Of course, we are a small team and have to prioritize, so leads coming through our network are generally screened first. We try to get back to everybody that sends us something that is not spam though.

What is the best way to get your startup company noticed by an investor? 

Try to get an in through one of the entrepreneurs we have worked with before is always a good strategy. If you can convince one of them to vouch for you, it is a positive signal.

But we are also spending time on conferences and are approachable per email. What’s important to us is the context – So if you approach us, no matter which way, it is always good to see that you know who you are talking to and that you are not just distributing blind, generic emails.

In practice that means that you can refer to one of our blog posts, or recent investments and show us how what you are doing is relevant to our investment focus.

What makes a start-up are attractive to an investor?

What you will always hear is a strong founding team. Besides that I think momentum is really important. That doesn’t have to mean to insane traction or high revenues early on, but just a sense of urgency. You can tell the teams that are hustling to move their startup forward step-after-step to achieve their goal apart from those that are just trying to be part of the gold rush.

Start-ups get caught up in the game, what are the buzz words you are tired of hearing?

Good question. Going through a dozen business plans again today, some buzzwords I am tired off: Rockstar-This, Ninja-That & Inherent Virality (that’s not there).

Any deal killers?

A clear red flag is if you get the feeling that the founders aren’t trustworthy. That can take the form of severe overselling or working on other deals behind your back. If we get the feeling that the founders won’t be transparent in good and bad times, we chose not to work with them. After all we will be in a “relationship” for 5, maybe 10 years. We want to make sure that there is a foundation here that we can build on.

Silicon Allee is hot, there a lot of attention, money, incubators – how does this impact the start up scene and investments?

It’s really good for Berlin. The hype has been going on for a while and we yet have to see some significant exits. But really good US investors (Sequoia, Benchmark, USV) are starting to notice Berlin and that has a positive effect.

For start-ups that means more access to capital, but also more access to talent. Berlin is still relatively cheap to live in and because of its diversity it attracts a lot of international people. Start-ups can find very good coding talent for a fraction of what it costs in the US, but the platform they build on is still the same: The internet. So they can in theory achieve the same growth.

I’m a bit more skeptical about the incubators & accelerators popping up. Of course I’m happy about everything that boosts the ecosystem, but I am not sure there is enough substance yet to justify the amount of new players.

The exits are always the criticism when it comes to Berlin, how important are they to solidifying Berlin as a true start up hub?

I think they are very important. Hype can only carry it so far. One of the things missing in my opinion are the 2nd generation of entrepreneurs that come out of the first real success stories. Once we have a few of these, there will be tons of early employees that are (hopefully) rich. And these are people who know how to get it done.

I’m speaking about the ones that joined the companies early on and grew with it. They have the tools to get something going. And after an exit also the resources. I think this will spawn a new generation of start-ups with big potential.  They might not have been the founders of the first tech company they worked for, but want to do it themselves after they have seen it happen once.

What is the best piece of advice you’ve ever received?

Do what you are passionate for.  It’s a bit predictable, but true. If you really burn for your work, people around you will catch fire as well.  And in most cases you need to convince somebody, be it an investor, partner, entrepreneur or an early adopter of your product.

Point Nine Capital Berlin Seed Investments

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