Give us a little bit of insight into who you are and your history as founder and business angel.
All my life, I’ve been pretty entrepreneurial: From the quintessential lemonade booth as a kid, to learning to code and coding and selling my first pieces of software as a teenager, I have always loved to do business. In 1996, I left my home town for Freiburg to study business at the University of Cologne. In the month of my last exam, we started the domain market place Sedo.com, which I ran as the CEO for over ten years. That was an exciting time, I moved to the U.S. for a few years, came back, took the company public, and eventually sold it to the United Internet.
During my final year at Sedo in 2011, but even more after leaving Sedo, I started co-founding and investing in new startups. Some just as business angel, but others, like Eyeo.com, pretty hands-on. So since 2011, I pretty much divide my time between all my various ventures.
Why did you become a business angel?
After our exit with Sedo, I wanted to give something back to the startup community. To put Sedo on the necessary growth path, we had received a little venture capital ourselves which allowed me to build the company with the right resources and the right talent, but especially profit from great mentors. Therefore, it was a natural next step for me after my exit to start investing in startups and support the founding teams not only with money but also with guidance, contacts and mentorship.
What stage and industry do you invest in?
Due to my own personal background, I slightly prefer marketplaces, ad tech and green tech ideas. In terms of stage, I invest from pre-seed to series A.
Team, market, business model, tech, …? What do you look for in an early stage investment opportunity?
All of the above! But first and foremost, my investment thesis is that I look for a committed and passionate founder team, who really loves what they are doing. Team and business model are probably the two things I take the closest look at. It’s pretty much a commonplace in the startup industry to “invest in teams, not in ideas”. Another important thing to me is, that I want to see a personal connection between the founders and the presented business ideas. If the idea is somehow connected to the background of the team, it helps startups to better sustain bad times, that will happen in every startup. That’s what I mean by “passion”. Teams that only professionally analyze markets and business models usually quit faster once things don’t develop as planned.
In order to best evaluate the teams and ideas, it helps me a lot to discuss things from different angles. Therefore, I partnered up with my investment partner Stephan Jacquemot, who built the German startup programs at Microsoft. We’ve know each other for many years, since our common times at the University of Cologne. Being able to have a trusted business angel partner to discuss offered projects with, helps me to make better investment decisions. And after we’ve made an investment, it helps a lot to have a partner to coach and support the startups.
From where do you source your dealflow?
There are various sources: Inbound mails, conferences and social media. But my preferred source are referrals from my portfolio companies or other business angels. Being introduced through my network is certainly one of the best ways to get in contact with me.
What were your last three investments?
My last three investments were UserCentrics.com (GDPR compliance), SevenLanes.com (digital headhunter) and Zolar.com (a platform for solar systems).
How many of your investments are from the region (Cologne area)?
Quite a few, e.g. Eyeo.com, Storrito.com, Fitogram.de.
What investment are you most proud of?
Eyeo.com would be quite high on that list. From our home town Cologne, we’ve built a company with a global user base, with over 100 million users of our flagship product “Adblock Plus”. We have over 140 employees from over 25 countries. And 90% of our revenues are from outside of Germany.
I’m also very proud and happy about Ecosia.org, a green search engine. It’s essentially a non-profit, but we run it like any other tech business… and use all profits to plant trees around the world to save the climate. So far, we’ve planted over 40,000,000 (yes, 40 million!) trees. Want to help? Go to Ecosia.org and start using it!
What were your biggest stumbling blocks when you started investing?
Definitely dealflow! As a new business angel, you have to find a way to be attractive for the best teams out there in the market. Creating a brand and a reputation as a good business angel takes time and certainly doesn’t come overnight.
You are also operationally involved in Eyeo. What do you like more: Investing in startups or founding one? Are you planning to be a fulltime founder again?
If I had to choose, I would always prefer founding and/or running a company over the pure investment. It’s simply very fulfilling to build something together with your co-founders and your team. So even with some investing on the side, I always consider myself a fulltime founder.
What advice would you give young founders who are just starting out?
Follow your heart! Find something that is close to you. Something authentic. If you are personally connected to your idea, you will survive the ups and downs far better.
Also, founding a startup requires acquiring the right skill-set. As a founder, you need to know so many things. Some of you learn on the fly, while some need to know in advance. So, I strongly encourage all future founders to soak up as much startup knowledge in advance as possible. Start with a job at a successful startup, find a mentor, do online courses and visit dedicated entrepreneurship lectures and conferences.
Is Cologne a great location for business angels? What could improve?
Yes and no.
Yes, because unlike Berlin based startups, the startups here focus more on the business and are not so easily distracted from the overwhelming startup industry. Don’t be the type of founder that just wants to be part of the startup cult. You will fail! It’s 100% guaranteed! As an angel investor, I want to see startups and founders that focus on the things that are crucial for the success of every startup: customer feedback and business model.
And no, because the quality of the startups from the Cologne area could still be better. We have a lot of potentially talented startup founders in this area, but still, working for a large corporate seems more compelling to these young talents than founding and running their own startups. We are maybe missing out the role models. Also, the education at universities is not addressing the startup sector in an adequate manner. Too often, a career path towards traditional jobs is far more better propagated than educating people for a career as a startup founder or manager. This needs to be changed rather sooner than later. The digital transformation is real, and it is happening fast, and Cologne still needs to catch-up here.
Cologne is for Startups…
… a very attractive city! Despite my critical remarks above, Cologne has some unique features that give startups a very attractive head-start in comparison to other regions. First, there is the access to talent. Unlike Berlin, where it becomes harder and harder to find good tech talent for your early stage startup, Cologne has a great pool of tech and business talent to choose from.
Also, the number of former founders that now became potent business angels is increasing significantly. Those smart angels are the best partners for any startup in the starting phase. And then there’s strong traditional industry in the entire area, desperately looking for smart startups to partner with. So, for B2B startups, Cologne can be a good location for finding your first customers and partners.
And finally, Cologne is a very attractive city to live in, which even helps to attract talents from other areas to move to Cologne. I have founded all my startups in Cologne and have personally been very successful with that. And that is for a reason! So, if I can do it, others can do it as well! I would be more than happy to support others that want to follow my example.
(All pictures (c) to Nicole Zimmermann)