HHL SpinLab Investors Day: Startups Whyapply and Motionscloud Won
The Investors Day, with a long tradition at HHL Leipzig Graduate School of Management, has spawned a new event format for the corporate venture capital (VC) scene, which arose from its predecessors; the HHL International Investors Day and the SpinLab Demo Day. On April 18, 2018, the two hosts, Professor Stephan Stubner, Dean of HHL Leipzig Graduate School of Management, and Dr. Eric Weber, founder and CEO of SpinLab – The HHL Accelerator, jointly welcomed representatives from businesses and VC companies as well as teams of founders from central Germany to the Leipzig Zoo Gondwanaland. The event offers start-ups from the region in their early-stage phase the opportunity to present themselves and their innovations to potential VC providers and campaign for their financing.
In his opening speech, Stephan Stubner emphasized, "We are not just well-represented in the start-up scene but also the investors' scene. This makes HHL and SpinLab the perfect platform and solicitor to bring into contact venture capital funds and the central German start-up scene."
Additionally, Eric Weber underlined the importance of the two institutions, HHL and SpinLab, for the region by providing up-to-date figures: 35 HHL alumni work for nationally and internationally operating funds; a total of EUR 21.5 million in capital was invested in 40 start-ups which were supported by SpinLab alone over the last three years, creating more than 200 new jobs. The young companies from the SpinLab classes show an impressive 90 percent chance of survival.
Central Germany's best start-up comes from Leipzig
In addition to keynote speeches and panel discussions on specific VC-related topics, the participating start-ups competed in two pitch rounds and the winners were determined using an online voting system. In the category "Top 5 Start-ups in Central Germany", whose participants had been previously nominated by the respective network of founders, the Leipzig-based company whyapply — nominated by SMILE — beat out fierce competition. The online application offers data-based recruiting without job ads and cover letters and wants to bring together companies and individuals through special user-generated content. Other participants included Senorics, Ligenium, OVI-LUX and Sciflow. The award is sponsored by the Karl Kolle Foundation and comes with EUR 1,500 in prize money.
The start-up Motionscloud was crowned the winner of the second pitch contest titled "10 Start-ups SpinLab Demo Day". It offers insurance companies mobile, modular claim management based on artificial intelligence. Just like Motionscloud, all nine other start-ups are currently participating in the six-month support program of SpinLab. The award comes with an additional EUR 5,000 in prize money sponsored by the City of Leipzig.
Keynote speeches and panel discussions on blockchain and corporate VCs
Dr. Stefan Schneider from KPMG presented the latest VC market data in his keynote address kicking off the event and explained that the positive trend for VC investments was mainly characterized by major individual transactions and later-stage investments. According to Schneider, there is still considerable potential for early-stage investments, which are the focal point of events such as the HHL SpinLab Investors Day. While eight to nine percent of all German start-ups come from central Germany, only six percent of the investments flow into this region.
The panel discussion "Cryptocurrencies and VC" dealt with a hot topic in the industry
Fabian Westerheide (Asgard, VC for artificial intelligence), Jan Miczaika (Holtzbrinck Ventures), Agnieszka Sarnecka (Neufund) as well as Dr. Sebastian von Allwoerden (CMS) provided exciting insight into ICO (initial coin offering), a means of blockchain-based crowdfunding, in a discussion moderated by Eric Weber. They talked about the opportunities and of the simplicity and the idea of raising capital globally, but also the accompanying risks of the new technology, such as the uncertain legal situation and the potential for fraud.
Next, Ulrich Schmitz described the role of start-ups in corporate digitalization in his keynote address, using the developments at Axel Springer Digital Ventures — his employer — as an example and stated, "Without investing in start-ups, we would not have been able to achieve our high level of digitalization. However, people should also be aware of the fact that they enter a special relationship by making early-stage investments — they are a part of the success but also the failure."
The pros and cons of corporate VC were explained during the subsequent panel discussion with Alexander Küppers (Statkraft Ventures), Holger Wagner (EnBW Ventures), Nikolas Samios (Cooperativa/Proptech1) and Jan Borgstädt (JOIN Capital). The different interest of all parties involved regarding goals and requirements play a deciding role which should not be underestimated. While companies hope to access to innovation, to outsource their R&D departments or to create a more innovative image, start-ups want fast decisions, the access to knowledge and new markets or would like to build up references and trust through an established partner.
Therefore, Holger Wagner pleaded for "investors' due diligence", not only on the corporate side but also among the start-ups themselves, and emphasized the benefits for both parties — growth potential, capital, knowledge transfer. At the same time, he warned about unreasonably high expectations regarding corporate venture capital and considers the companies to be more like door openers.
Jan Borgstädt played the devil's advocate in this discussion round and stated he was missing an appropriate culture of error and patience which companies should have when taking on such a venture. In slightly extreme terms, he stated, "If a fund has not generated any major IPO after two years, it gets canned." His recommendation is that it would be "better to invest broadly in three to five external early-stage funds."
The program was rounded off in the evening with the chance for an exclusive visit to the Leipzig Zoo Gondwanaland. Afterwards, the dinner and the awards ceremony took place in the adjoining restaurant.
About SpinLab – The HHL Accelerator
SpinLab – The HHL Accelerator supports innovative start-up projects with the implementation and growth of their ventures. In addition to intensive coaching, the founding teams will also benefit from a high-caliber mentoring program as well as numerous contacts to investors, established companies and other founders. They can use a co-working office with state-of-the art equipment on the premises of Spinnerei, an old cotton mill now serving as a center for creativity, and will gain access to various technologies offered by partners.
Even after completing the program, the start-up teams are supported in their recruiting efforts, can plan their expansion through an international exchange program and receive the opportunity to rent office space next to SpinLab. The founders will be able to use all offers free of charge when they are accepted into the six-month program.
The accelerator is funded through contributions from investors and established companies such as VNG Gruppe, AOK PLUS, Leipziger Gruppe, Digital Insurance Lab, EEX European Energy Exchange, enviaM, con|energy, DELL, Porsche, PYUR, arvato systems, Deutsche Postbank, CMS Hasche Sigle, Dell, Deutsche Bank, DZ Bank, Grazia Equity, KPMG, Madsack Mediengruppe, Mittelständische Beteiligungsgesellschaft Sachsen, Quarton International, Stadt Leipzig, taskforce ¬ Management on Demand, universa Versicherung und Technologiegründerfonds Sachsen. Each team receives up to EUR 15,000 in start-up funding.
In Germany, Leipzig is a hub for the digitalization of the energy and health care supply for the smart city of the future. This digital hub is managed by the founders' initiative SpinLab – The HHL Accelerator.
HHL Leipzig Graduate School of Management has developed into a very successful incubator for company creation with over 250 start-ups established by HHL alumni. The founders' entrepreneurial commitment has created more than 10,000 jobs already. In 2013, 2014 and 2017, HHL reached one out of the three first places for the best entrepreneurial universities in Germany cited in the Start-Up Radar ranking published by Stifterverband für die Deutsche Wissenschaft (Founders' Association of German Science) and the German Federal Ministry for Economic Affairs and Energy (BWMi). According to the Financial Times, HHL ranks first in Germany and fifth globally for its entrepreneurship focus within the M.Sc. and EMBA programs.