Cédric Köhler, Managing Partner at Creathor Venture, a pan-European fund currently managing more than EUR 220 million, talks about their most successful investment so far and explains why Artificial Intelligence is 2017′s buzzword.
How would you describe Creathor Venture in a few words?
Creathor is a pan-European venture fund based in Germany, Switzerland, and Sweden. We have been successfully investing in early-stage technology-oriented companies and entrepreneurs for more than 30 years. We invest up to EUR 10 million per startup over several rounds. We currently manage funds of more than EUR 220 million.
You mention on your website, that you’re “excited about disruptive trends but never gets carried away by the hype”. How do you differentiate those two? What are they key factors for a trend that’s here to stay?
We follow a simple rule: We don’t invest in mere hypes that are not backed by current sales figures, reliable turnover forecasts or any other kind of severe reference points. At least, we need to know where earnings could come from in the future. It’s nothing wrong with chasing hypes because you might hit a unicorn if you are super-lucky, but chances are pretty good that you severely burn your fingers.
For a trend to stay you need more than just a certain number of users, downloads etc. You need an economically viable business model. To be interesting to us, it must be a business model that is scalable.
Creathor Ventures focuses on tech, life sciences, and the intersection of the two (e.g. digital health). Why did you decide to go with these industries? Why are the more attracting than logistics or media for example?
We use a rather broad definition of “tech”, from SaaS models (e.g. our portfolio company Shopgate) to die-hard deep-tech companies (e.g. our latest family members R3 Coms and Adaptive Simulations). That means that we would definitively consider an exciting media startup if it makes clever use of technology.
Our second focus is on life sciences where we have developed really deep knowledge over the years as well. Even though we usually focus on precision medicine, enabling and diagnostic platforms, MedTech and digital health in this sector, one of our best exits of the recent past was in drug development (Phoenix Pharmaceuticals).
You’re active in the DACH region, the Nordics, and France. In some of these, it’s rather difficult to get follow-up financing – how do you see this situation? What can you tell us about the funding process in these countries?
Compared to the US there are fewer growth investors available to address in Europe. Later financing stages are often covered by a conglomerate of like-minded investors who already invested in the Series A. Nonetheless, we see an increasing inflow of growth investments from the US and Asia.
What can you tell us about your most successful investment so far?
In tech, we recently sold News Republic, a French news aggregator, which gave us a very nice multiple return on investment. On the life science side, the same happened with our former portfolio company Sividon, a German personalized diagnostics company.
Talking about investments, what’s more important: the idea or the people behind it?
One does not work without the other. But if I was forced to choose one over the other, I would rank an excellent team higher than an excellent idea. Here’s why: The best idea is worth nothing if you do not have the right team for it. But a fantastic team can make a lot out of an average idea – which does not mean that we would invest in average ideas.
Working with this mindset means that we usually examine the team behind a startup very thoroughly before investing. If the chemistry is not good, we do not invest. We also take into consideration what kind of impression the founders make on others because, in order to become big and successful, a startup needs to hire a lot of very talented people.
You currently hold a portfolio of 30 disruptive young companies. What does it take for a startup and its idea to impress you? What do you look for in potential partners?
We are looking for startups that can bring the following three criteria to the table:
- a truly unique technology or solution (this can also imply making clever use of an existing technology)
- a scalable business model (already now or in the future)
- the potential to become a market leader in their segment or niche
What trends would you bet your money on? And how will they influence everyday life?
First of all, the term Artificial Intelligence is the buzzword of the year 2017. Every second business concept claims to make use of artificial intelligence, deep learning, or machine learning. It doesn’t take much effort to find out how much substance really lies behind those concepts.
Despite the inflationary usage of those terms we still evaluate business concepts which collect vast amounts of unstructured data and transform them into monetizable information. In other words: We like business concepts which drill and collect the oil (data). The engines (artificial intelligence) which need this oil (data) are usually built by big engine manufacturers (corporates) who are willing to pay good prices for oil (data) with good quality.
What do you offer your partners except supporting them with monetary investment?
We offer experience and contacts from more than 30 years in VC. And a lot of passion for the topics, technologies and business segments of our portfolio companies. What’s more, since we ourselves are our biggest fund investor, we also have a lot of commitment to not lose the money we invest
If there was one thing, you could wish for in improving the European startup community, what would it be?
I’d like to have more growth funds specializing on series B stage (10-15m) with a risk profile and mindset of a VC rather than a private equity fund. This would enable the European startup ecosystem to compete against US startups, where “moon shots” are financed more often, perhaps…
Lastly – because we’ve heard you’re a huge soccer fan – what is the best football club in Europe?
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