Three months into the year, Germany-based public-private fund High-Tech Gründerfonds (HTGF) has already made several new investments – including Swiss vaccine developer Amal Therapeutics, which, it is claimed, has huge potential “not only economically but also for mankind”.
Bonn-headquartered HTGF was established in 2005 to provide equity financing for technology start-ups in Germany. It now invests annually in around 40 early-stage companies globally.
“We receive around 1,300 business plans a year,” says Alexander von Frankenberg, managing director of HTGF. “The vast majority are seed-stage tech companies.’
Around 10% of HTGF’s deal flow originates from outside Germany. Last year, the fund closed five non-German deals, out of a total of 38 new investments.
HTGF’s second fund, totalling €301.5m, is mostly provided by the German government through its Department of Economics and Energy, and the government-owned banking group KfW. A total of €41.5m ($57m) is contributed by 17 industrial companies across Germany.
Von Frankenberg explains: “HTGF is set up as an independent fund in a venture capital (VC) structure. All limited partners [LPs – investors] have equal rights and there are no preferred distribution mechanisms among the investors.”
Investments are decided by three investment committees, consisting of representatives from the LPs. The management company, which is owned by the investors, supports the portfolio companies and drives the exit processes.
“HTGF starts out as the largest investor and takes on the lead role. Once a VC provides a significant follow-on investment, we hand over the lead,” says von Frankenberg.
HTGF’s most successful investment was Corimmun, a Munich-based company that develops preclinical medicaments. It was sold to Johnson & Johnson’s subsidiary Janssen in 2012 for a price in excess of €100m – a multiple-digit return on HTGF’s investment. Von Frankenberg expects to replicate that success with around 10 to 20 other companies over the next few years.
Latest deals
In the first quarter of 2014, HTGF cut deals across a range of sectors. Von Frankenberg describes one, VM Ray, as “very high-tech and complex”, while Amal Therapeutics is “likewise very high-tech, with of course huge potential – not only economically but also for mankind”. Investments and exits include:
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VM Ray – malware detection and cyber-security.
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Rebelle – website for second-hand designer fashion –follow-on investment from HTGF and Hanse Ventures.
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MicroDimension – microscopic image processing, backed by HTGF, Bayern Kapital and private investor Adriaan de Ruijters.
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Desino, – dynamic seat construction for wheelchairs – backed by HTGF and business angel Dieter Lorenzen.
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FTAPI – encrypting data exchanges between business customers – acquired by audio and hardware developer QSC.
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Amal Therapeutics – cancer vaccines – backed by HTGF and Boehringer Ingelheim Venture Fund.
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Fazua – drive systems for electric bikes – backed by HTGF, Bayern Kapital and a private business angel.
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Entelios – energy management – acquired by Enernoc, a US-based energy intelligence software developer.
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Outfittery – curated shopping service – follow-on investment from Highland Capital Partners Europe.
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Coramaze Technologies – treatment of heart valve diseases – backed by HTGF and SeedCapital Dortmund.
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PreisAnalytics – tools for price monitoring, market analysis and product range management in e-commerce – backed by HTGF, Bayern Kapital and Tengelmann Ventures.
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WPX Faserkeramik – energy efficiency in metal refining.
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Whiteout Networks – email encryption technology – backed by HTGF and Bayern Kapital.
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Ice Gateway – intelligent LED-lighting.
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Plista – digital advertising – acquired by marketing firm GroupM.
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Snow & Alps – reservation system for ski extras and outdoor activities in the Alps.
HTGF’s Investors
Gründerfonds 1 (€272m) Public and government investors are the Department of Economics and Energy and KfW. Private sector investors are BASF, Siemens, Deutsche Telekom, Daimler, Bosch and Zeiss.
Gründerfonds 2 (€301.5m) Public and government investors are the Department of Economics and Energy (€220m) and KfW (€40m). Private sector investors (€41.5m) are BASF, Siemens, Deutsche Telekom, Daimler, Bosch, Zeiss, Atlanta, Braun, Cewe, Deutsche Post DHL, Evonic industries, Lanxess, Media&More Venture, Metro Group, Qiagen, SAP, RWE and Tengelmann Ventures.