The Swiss financier Kingstone Schweizer Ventures (KSV). The young financier, backed by Umut Ertan, Philipp Schomberg and Tim Schomberg, wants to “promote those radical strategies through investments within the impact universe that are particularly characterized by a pioneering spirit and disruptive approaches”. The financier is managed by Alexander Hoffmann, formerly M Ventures.
In the VC interview with deutsche-startups.de, KSV-maker Hoffmann talks about oxygen, guidelines and flexibility.
Let's talk about money. What excites you about investing money in companies?
Capital is ultimately the necessary oxygen for companies that are at the beginning of their journey and have to reach certain milestones. In particular, companies that are built on the basis of scientific knowledge usually require capital in order to be able to further develop these findings into marketable products. Building this bridge and being part of a future product is what attracts me to invest money in companies.
How does one actually become a venture capitalist – how did you become a venture capitalist?
In my eyes, this is generally a process that has developed rather accidentally for me. After several years of experience in operational roles in venture capital-financed start-ups, as well as experience in the innovation area of the science and technology group Merck, I switched to M Ventures, Merck's corporate VC, in 2016. Since then I have remained loyal to the venture capital scene and believe that I can make a valuable contribution through the mix of operational, strategic and investment experience.
In the VC world, sums in the millions are often handled, don't you sometimes feel queasy – with these sums?
Sure, the decision to invest millions in companies is never an easy one, but if you stick to your own investment strategy guidelines and rely on your experience, the risk is usually minimized to the point that explains the decision very well.
What should every founder know about you – as a VC – how do you differentiate yourself from other investors?
On the one hand, we see our constellation as unique, with family office values but institutional aspirations, and on the other hand, the fact that we want to invest very broadly in our investment scope, from deep-tech hardware topics to software-based solutions. Impact is paramount in everything.
What support do you offer – besides money?
Through our unique mix of family office and institutional investor, we offer startups access to our broad network of co-investors, industry partners and real estate partners. In addition, we live the principle of family values and think in terms of generations, true to our motto: By Families. For generations.
How do you organize the exchange with your portfolio companies, which tools do you use?
First and foremost, the direct exchange with the management of the portfolio companies is important to me; the tools required for this are only a means to an end. Therefore, I am happy to make myself available as soon as there are questions on which I can give my opinion, and that at any time.
What is more important: the team or the idea?
I usually see the idea as a fuse that only keeps burning with the right team. The implementation, the necessary flexibility to implement the idea correctly, is a basic requirement for the success of an idea.
What does the ideal founding team look like or does the ideal founding team even exist?
Ideally, there should be a founding team of at least one founder and several co-founders. The composition should be as complementary as possible. Since we also want to invest in startups that are based on scientific knowledge, the appropriate scientific expertise should be represented in the founding team. In my opinion, together with business management / commercial competence, it often forms a good founding team.
How do you decide whether to invest in a startup: gut feeling, data, both or something completely different?
We follow a fairly stringent framework to come to an investment decision. First and foremost, we try to measure the potential positive impact of a company and use this as the first filter criterion. All companies in our portfolio should have a significant positive impact. In addition, we very carefully examine the basic scientific and technological hypotheses, the market, the business model, and of course the team. After these more “checkbox”-like tests, I also try to let my gut feeling decide. Ultimately, you always end up working together for a long time, so the chemistry should be right and gut feeling plays an equally important role.
Not every startup runs smoothly, not every one is a success. What do you do if one of your holdings gets into trouble?
Every investor should know that sometimes things don't go as they should. We also absolutely understand our role as an investor with the understanding and the necessary support to straighten out the imbalance. In such cases, you should first try to analyze together with the management what exactly is going wrong and why. In most cases, such problems can also be solved in the long term. We've all had that experience in the past, it prepares you.
And how do you know that you have to pull the final ripcord in a startup?
If the analysis of an imbalance shows that the problem is more systemic in nature, i.e. outside of the control of the management team, then it is actually one of the possibilities that lie ahead. However, before the ripcord is finally pulled, all other steps should be considered, from further financing to a possible sale. It's never an easy decision, but in some cases it's the wiser one.
How important and binding is a business plan?
In my eyes, a business plan is a guide and not an exact predictor. There will always be variances as reality is always different from the plan. However, the closer you are to reality, the better – in my opinion, this is also what characterizes the founders, who develop correspondingly realistic scenarios.
As a founder, what is the best way to address an investor?
There are now so many platforms available as possible contact options, from LinkedIn to conferences. Nevertheless, it is certainly still the case that warm intros achieve the greatest effect, but are only available to founders who have the appropriate network. In order to counteract this phenomenon, I founded the "Rising Tide Collective" platform together with other European impact VC investors in 2019, a collective of now more than 70 impact investors who want to enable founders to ask questions to VCs in an informal setting , without being in a pitch situation. The feedback we have received so far is very positive and we hope this will provide some transparency in the VC decision-making process.
What should founders never say or do in front of investors?
Difficult question, in my opinion there is no clear answer and everyone ticks differently. For me personally, integrity is important.
Finally, would you give us an insight into your or your anti-portfolio – which companies, which are now successful, have you unfortunately not joined?
I had the opportunity to invest in Infarm's Series A while at M Ventures. Unfortunately, we decided against it for various reasons. I was also in conversation with Huma – at that time still Medopad – a digital health platform, for their Series A round. Here, too, we had decided against an investment.
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