Difficult times and the outlook doesn’t look good
How is the startup community and investors doing in the midst of the Covid-19 crisis? It’s been a rather stormy ride for many over the last half-a-year and it’s far from calming down. In the following you can read Berthold Baurek-Karlic’s opinion, CEO of Venionare Capital, from an investor’s perspective. He shares insights on what the outlook is for the community amid the Coronavirus crisis, how the Venionaire-Portfoio is currently performing and what the current investment strategy is. The original interview appeared on der Brutkasten in German in the lead up to the release of the Q3 report of the European Venture Sentiment Index.
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What is your current status? Are you looking for new investments or are you waiting?
Regarding new investments, the investors in the European Super Angels Club are becoming more cautious again. However, the climate in other countries, such as Germany, is currently much better. We have just invested in Sponsoo ourselves, the City of Hamburg is putting additionally more than the same amount of this investment on top – that is super attractive.
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“With the discontinuation of the Covid-19 relief fund, we are feeling very strongly in the domestic market that it is becoming increasingly difficult to talk to investors.
Berthold Baurek-Karlic, CEO Venionaire Capital Ges.m.b.H.
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Our investment in carfellows.de via motec ventures is in good discussions with investors for a follow-up round – we are optimistic about this. The situation in Austria is difficult. With the discontinuation of the Covid-19 relief fund, we feel very strongly in the domestic market that it is becoming increasingly difficult to talk to investors. But we are not let it go and are active and optimistic that we will soon have a great finTech in our portfolio.
Which industries are particularly interesting for you at the moment?
Currently we are looking into regTech, finTech and digital health with increased interest. Especially kompany, Blockpit and myBioma have developed fantastically, we are very happy about that. HR-Tech is also a super exciting topic, because (tragic as it is) many talents are being released and are looking for new challenges – while companies are desperately looking for IT specialists.
Firstbird has been able to grow strongly here despite the crisis and has shown good figures internationally, and with Workhero.co Firstbird has also presented an extremely valuable solution as an answer to the crisis that will help many people back into employment.
How will the situation develop in the coming months?
In principle we try to look for the chances in the crisis and we also direct our activities towards it. We are in very close contact with our portfolio companies and help wherever we can. Having said that, I would like to stress that we are anything but overly optimistic. The European Venture Sentiment Index, which is compiled quarterly by Venionaire, will show in its next report that startups are currently going through difficult times, and the outlook is not good.
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“The war chest has been used up and I can only appeal to the government to strengthen the location much more with equity support measures”.
Berthold Baurek-Karlic, CEO Venionaire Capital Ges.m.b.H.
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In Europe, the crisis was addressed in very different ways. In Austria, the initial reaction was quick, aid measures were quickly presented and everyone tried to overcome the low point. However, too little happened over the Summer and many companies are now hanging on the ropes. The war chest has been used up and I can only emphasize and advise it to the government to strengthen the market much more with measures supporting equity capital – otherwise, we will suffer lasting damage here.
What do startups need most urgently now?
Equity capital. The announced Covid-19 aid fund has still not been made available. The Covid-19 relief fund is empty, because it was much too small. The fixed cost subsidy is in negotiations with the EU. Why don’t we increase the AWS Startup Fund? Why do we not provide a guarantee for the fund of funds required by AVCO? Where are the voices calling for deregulation for pension funds, insurance companies and banks so that they can invest more in equity capital? Where else should they earn returns now? Pension funds are currently burning our future in negative interest bonds (because they are forced to do so by law) – do we care?
Berthold Baurek-Karlic is Founder and CEO of Venionaire Capital, with many years of experience as a serial entrepreneur, corporate finance expert and early-stage investor. He supports the startup ecosystem in various roles such as President of the European Super Angels Club, Board of Austrian Private Equity and Venture Capital Association and General Secretary of Business Angel Institute.