Recently, we sat down with Nicolas Wittenborn of Point Nine Capital in Berlin.
First joining the Team Europe Seed Fund as an intern in early 2011, Nicolas came back to work as a full-time associate for Point Nine Capital after graduating from the University of Mannheim in 2012.
Having lived in New York and Singapore and gathering first work experience in real estate management and marketing, he moved back to Berlin to be closer to the lively start-up scene and pursue his passion for young technology ventures.
Point Nine Capital is a €40m euro fund, with an average investment over the life of a deal around 1.0 million, with an anticipated portfolio of 40 deals. These are seed round investments between 100k-1m €, averaging around 500k and around half of the fund reserved for follow-on rounds.
Point Nine Capital Berlin Seed Investments
Where is the fund in the 40 investments?
I think we are at about half of the planned investments, so will be investing out of this fund for a while longer.
Does Point Nine take a board seat(s)?
In general we don’t insist on it, but do it if the entrepreneurs wants us to. In Europe the board is not as powerful as in the US. Therefore it is a lot less structured or relevant over here. In general the board here acts as advisers, not directors. Our hypothesis is that the founder should be in control and we are there to support him/her and give some direction. Therefore taking control with a board seat is secondary for us.
What sectors does Point Nine invest in?
Out of the current fund around 60-70% of our investment have gone into SaaS companies. While this is our focus, we also invest in marketplaces, networks and some mobile & eCommerce.
How often do you get unsolicited business plans, and is this the real way to capture your attention?
We receive between 150-200 inquiries per month. These come from all over the world but mainly from Europe and North America. It is important to us that we get back to all of them, so we do have a look and try to respond in a reasonable time.
Of course, we are a small team and have to prioritize, so leads coming through our network are generally screened first. We try to get back to everybody that sends us something that is not spam though.
What is the best way to get your startup company noticed by an investor?
Try to get an in through one of the entrepreneurs we have worked with before is always a good strategy. If you can convince one of them to vouch for you, it is a positive signal.
But we are also spending time on conferences and are approachable per email. What’s important to us is the context – So if you approach us, no matter which way, it is always good to see that you know who you are talking to and that you are not just distributing blind, generic emails.
In practice that means that you can refer to one of our blog posts, or recent investments and show us how what you are doing is relevant to our investment focus.
What makes a start-up are attractive to an investor?
What you will always hear is a strong founding team. Besides that I think momentum is really important. That doesn’t have to mean to insane traction or high revenues early on, but just a sense of urgency. You can tell the teams that are hustling to move their startup forward step-after-step to achieve their goal apart from those that are just trying to be part of the gold rush.
Start-ups get caught up in the game, what are the buzz words you are tired of hearing?
Good question. Going through a dozen business plans again today, some buzzwords I am tired off: Rockstar-This, Ninja-That & Inherent Virality (that’s not there).
Any deal killers?
A clear red flag is if you get the feeling that the founders aren’t trustworthy. That can take the form of severe overselling or working on other deals behind your back. If we get the feeling that the founders won’t be transparent in good and bad times, we chose not to work with them. After all we will be in a “relationship” for 5, maybe 10 years. We want to make sure that there is a foundation here that we can build on.
Silicon Allee is hot, there a lot of attention, money, incubators – how does this impact the start up scene and investments?
It’s really good for Berlin. The hype has been going on for a while and we yet have to see some significant exits. But really good US investors (Sequoia, Benchmark, USV) are starting to notice Berlin and that has a positive effect.
For start-ups that means more access to capital, but also more access to talent. Berlin is still relatively cheap to live in and because of its diversity it attracts a lot of international people. Start-ups can find very good coding talent for a fraction of what it costs in the US, but the platform they build on is still the same: The internet. So they can in theory achieve the same growth.
I’m a bit more skeptical about the incubators & accelerators popping up. Of course I’m happy about everything that boosts the ecosystem, but I am not sure there is enough substance yet to justify the amount of new players.
The exits are always the criticism when it comes to Berlin, how important are they to solidifying Berlin as a true start up hub?
I think they are very important. Hype can only carry it so far. One of the things missing in my opinion are the 2nd generation of entrepreneurs that come out of the first real success stories. Once we have a few of these, there will be tons of early employees that are (hopefully) rich. And these are people who know how to get it done.
I’m speaking about the ones that joined the companies early on and grew with it. They have the tools to get something going. And after an exit also the resources. I think this will spawn a new generation of start-ups with big potential. They might not have been the founders of the first tech company they worked for, but want to do it themselves after they have seen it happen once.
What is the best piece of advice you’ve ever received?
Do what you are passionate for. It’s a bit predictable, but true. If you really burn for your work, people around you will catch fire as well. And in most cases you need to convince somebody, be it an investor, partner, entrepreneur or an early adopter of your product.