Healthy growth with 5-HT

Born to grow and help others grow. This is exactly why the seed fund BORN2GROW (B2G) was launched in 2013. As a subsidiary of the venture capitalist "Zukunftsfonds Heilbronn" (ZFHN), B2G benefits from an extensive network of experienced professionals and institutions. B2G is committed to startups and supports them with entrepreneurial expertise and industry-specific know-how.

Startups, medium-sized industrial companies, educational institutions and life science companies from the dynamic Heilbronn region are part of the supporting network. Manuel Böhringer, investment manager, talks to 5-HT about the development of the B2G seed fund so far.

The Zukunftsfonds Heilbronn: Crucial for the B2G start-up

"Since its foundation in 2005, the ZFHN has been one of the major private venture capitalists in Germany. It primarily supports young, innovative high-tech companies that are located in the Heilbronn area or are willing to settle there in the short to medium term," explains Manuel Böhringer.  In order to be able to accompany particularly very young high-tech companies in their early stages, the seed fund BORN2GROW was founded in 2013 as a wholly-owned subsidiary of ZFHN. "We partner with early-stage companies, but our private funding allows us to build long-term relationships that can also involve ZFHN," adds Manuel. 

"We started at B2G with classic seed investments," Manuel continues. B2G's current investment focus for supporting business ideas is between EUR 500,000 and EUR 1 million. "Thus, we enable tech startups to further develop their ideas and concepts with early-stage financing. Our seed capital supports the first growth steps after founding and market entry," says Manuel.

Focus is on seed to pre-series A financings 

"By investing in different industries in the tech and life science sector, we can participate in a variety of growth opportunities and manage risks. We look for founders with breakthrough ideas for technologies of the future. Our focus is on industry, automation, life sciences and software. We have already made several investments in these exciting areas," Manuel explains the B2G investment strategy. 

The requirements that B2G places on young founders and their startups are, in particular, a deep-tech focus and a B2B business model. "We also make sure," adds Manuel, "that startups have already gained experience on the market and have already launched their first pilot projects. In general, we attach great importance to a diverse portfolio of companies at B2G: this includes startups that are active in different industries, in our region or even abroad." 

Represented from Heilbronn to Israel; Which startups can approach B2G?

"Basically, we want there to be a strong connection to our region and to our network," says Manuel. "Although the majority of our portfolio companies are based in Germany, because many deep-tech success stories originate in Israel, this country with its innovative and strong startup culture is just as interesting for us," he explains.

"Besides the focus on Israel, we are of course also open to European countries," Manuel adds.  In the midst of this diversity, all B2G companies have one important thing in common, he says: the founders and their teams have focused on technological innovation to create a product that has a clearly defined market.

The total picture has to be right

"Although we place a lot of value on the technology that a startup presents to us," Manuel continues, "this is not the only decisive factor. Rather, we focus on other aspects such as sales, marketing, business development and a stable corporate structure. This coherent overall picture is important to us," he emphasises. Manuel continues: "Generally, we don't like to receive pitch presentations that only contain technology. Rather, we want to see a holistic presentation of the company and the business idea. In the end, this also makes it easier for us to decide on an investment."

He succinctly sums up B2G's wishes: "We are looking for entrepreneurial people who are on fire for their startup!" In the first step, B2G can invest up to EUR 1 million. In later follow-up rounds or growth and expansion financing, B2G can invest up to EUR 2 million. The parent company ZFHN is then available for larger investments.

Knowing when to step on the brakes

"We love growth, but we also know when to step on the brakes. This attitude is due to our experience so far," says Manuel. Of course, fast growth is highly relevant for a startup, but it should be healthy growth at the same time. Manuel uses the following example to illustrate the problem described: "If, for example, the number of employees in a company grows by 200% a year, then they not only have to be trained, but also identify with the company. Such a situation must be dealt with appropriately so that friction losses are avoided," says Manuel.

The B2G team believes that such a period allows a company to reposition itself and prepare for the coming growth phase. "It makes sense to have three to four years of growth, but then you also need a period of consolidation," Manuel adds.

How does the first contact with B2G go?

"The first contact comes either via our website, from the network or through events," he explains. In the following, we select in the team according to three steps: "First, we look to see whether there is a fundamentally convincing business idea. Then we have initial talks with the founders, who present their company and the business model. If we have a positive feeling up to this point, the startup ultimately presents itself to our entire investment team."

Manuel describes this appointment as intensive and decisive for the decision. "Here we want to get to know the startup in depth. Following this, we then get an expert assessment, start the due diligence and go through the review process," Manuel adds.

5-HT as a strong partner 

"The 5-HT events in particular help us to identify potential startups. Because with these, we not only know that the focus here is on the chemical and healthcare industry, but also that all participants have been thoroughly vetted in advance," says Manuel. 5-HT is valuable and useful as a platform for both startups and investors. "This way, we as investors know that the quality is right. At events in the past, the startups' presentations were convincingly prepared. At an X-Linker, we noticed particularly positively that a reference to corporates was always made. For us as investors, this is helpful and therefore a big plus point," Manuel continues.

For this reason, B2G will continue to participate regularly in the 5-HT events to help future innovations grow.

"Because after all, that's what we were born to do at B2G," Manuel concludes.