VC: “2013 will be make or break for Berlin startup scene”

Thomas Grota, senior investment manager at T-Venture, wrote a blog about what he sees as major changes in the European VC landscape next year. 2013, he says, will be a year of new rules. Here are the rules that he sees:

1. More money for fewer players

First indications of new deals at the end of last year showed massive injections of new cash in successful startup stories. There will be more of this. Why? Investors will select targets from a whole bunch of startups in a certain trend area. After selecting their target they will go for “All In”.

Remember GetYourGuide, which recently announced a massive funding round, but also sizable financing rounds for Rocket Venture’s Paymill. The reason for this “picking” behaviour in investors is easy, says Grota: “the bloodbath is around the corner”.

Startups that are doing “sort of okay” might be forced by investors into mergers, acquisitions and takeovers because their investors need the money to fund big marketing and product development pushes for the winners, says Grota. One of our commenters recently suggested that this is what happened to Massive Media, the Belgian startup that recently sold its online dating platform Twoo to Meetic for $ 25 million at a very low price per user.

2. More money, but lower valuations

Investors will take a larger cut of the company in return for their investments in 2013, predicts Grota – it’s the price of entering the race to become a big winner:

We have seen high cash injections when the lead investor took a low percentage in the company. Two-digit million dollars for single-digit percentages in a winner company. Those days are over in 2013.

Again, Grota stresses the importance of M&A and takeover deals. He advises angel investors to also look closely at opportunities to exit – or else: “angel investors from 2011 and 2012 will only see good times if they sign those secondary deals”.

3. Look for new players (corporates) to start investing alongside VC’s

Grota thinks the smaller VC funds – the ones that are struggling to raise new funds – will be forced to the exit in 2013, leaving the European VC stage to bigger players with bigger war chests. Alongside those will come the corporates (as we wrote earlier, corporate VC is one of the emerging trends in Europe) who  will make strategic investments in startups, he says:

Those corporates will not seek majorities in startups, nor is this preventing exits in the future. Those strategic investments will help to build the winners. They will bring cash through orders, product integration and marketing activities.

Remember that Grota is a corporate VC himself: he knows what he’s talking about.

4. 2013 will be make or break for Berlin

Also, Berlin needs to start showing what it’s worth, says Grota. It enjoyed good press in recent years, and there have been some interesting developments in the local scene like the ‘Factory’ tech hub. But, says Grota, “promises need to be kept and the ecosystem needs to mature”.

Read more. Photo: Campus Party Berlin, Flickr

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Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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