FAQ

Frequenly asked questions and our answeres

If any of the information on this page is unclear, or if you need more detailed information,
please contact us.

About Financing

• Cash investment from the founder?

  A cash investment from the founder is required. Non-cash investment, such as Intellectual Property Assignment or “sweat equity”, do not qualify. However, a 50% reduction in the required contribution is possible through the involvement of 3rd party investors.

• Does High-Tech Gründerfonds actively intervene in the management of the company?

  Entrepreneurs remain entrepreneurs.
  
  The High-Tech Gründerfonds becomes a shareholder of the company and its objective – to increase the value of the company – is identical to that of the founder.
  
  We will be happy to assist you and have the right of agreement on key strategic issues, although our control of the operational business of the company is neither sensible nor desirable.

• Does High-Tech Gründerfonds offer more than just capital?

  Next to our investment there is more that we offer: well established contacts to investors, sponsors and recruitment agencies, as well as good contacts to relevant industries and target markets, which are very essential to us and the founders. The portfolio companies of High-Tech Gründerfonds have already completed 130 follow-on investments.

• How does the High-Tech Gründerfonds vary from other venture capital companies?

  We regard ourselves as a technology fund that invests along the lines of a venture capital model. The fund’s investment is not purely return-orientated but aims to develop the market for the financing of young high-tech businesses in Germany.
  
  High-Tech Gründerfonds invests at the very inception of your company - even if not all of the issues relevant to the business have been fully clarified at this early stage.
  
  High-Tech Gründerfonds is prepared to take this heightened risk, minimising it by targeted support and the creation of strategic value added,  value,  ensuring that young companies can overcome start-up financing obstacles. (Mission Statement)

• How long does the investment process by High-Tech Gründerfonds take?

  The investment process is split into four steps and can be concluded in 2-3 months (from initial introduction to the agreement of our investment committee).

• Is it possible to combine your investment with other public funding initiatives, particularly subsidies?

  The use of public funding initiatives for start-up companies is available and is very welcome to supplement our investment. It can often improve the chance of achieving specific (finance-intensive) milestones, enabling further investors to be acquired for follow-on rounds.
  
  The High-Tech Gründerfonds’ investment is fundamentally corporate financing, that is to say it can in principle be used for the counter-financing of subsidies acquired.
  
  Follow the link to Funding Initiatives. This details a list of possible funding initiatives that is by no means exhaustive. Please ask our coaches about this as well.

• What are the aims of the High-Tech Gründerfonds?

  We aim to be jointly successful with the companies we finance so that we can give a boost to the market for seed financing in Germany, thereby helping to stimulate the market.
  
  We succeed in this by very consciously financing young technology companies with appropriate opportunity/risk profiles, that are still burdened with serious risks because of their early development phase. The High-Tech Gründerfonds therefore works in a very customer-orientated, efficient and professional manner based on business management criteria.

• What happens when a start up company files for bankruptcy?

  High-Tech Gründerfonds invests solely in German Limited Liability Companies, in the form of a GmbH, (although also rarely in AG companies). As such, these entities can become insolvent and bankrupt. Our investment - and that of potential other investors - would then be lost. Founders will not be held personally liable for the loss.

• What is a corporate presentation and what form does it take?

  We would like to gain a deeper understanding about your business concept and get to know you better in person and therefore invite you to present your business concept to us. The presentations generally last between 90 and 120 minutes, during which all of the issues relevant to the development of the company can be discussed.
  
  View a sample of the agenda of a corporate presentation to High-Tech Gründerfonds here.

• What is the liability of the founders?

  In short: High-Tech Gründerfonds invests Venture Capital solely in limited liability companies (predominantly GmbH). Liability is therefore limited to the company's assets and the founders do not have to provide security.

• What percentage of equity are the founders required to make and why?

  The founders are required to put up equity amounting to 10% of our investment if the company is based in the former East German states, including Berlin, and 20% if the company is located in the former West Germany, although this contribution can be reduced by up to 50%, with the involvement of a side investor.
  The equity stake should be made in the form of a cash contribution. The inclusion of protected Intellectual Property Rights does not fundamentally reduce the equity stake required.

• Where should I send my Business Plan?

  Please send your business plan to High-Tech Gründerfonds. If you like to you can contact one of our Investment Managers in advance. Should you need assistance in finalising your business plan, you can also contact one of our coaches, who will then submit the completed business plan to us with a reference.

• Who is responsible for paying for contracts/legal fees?

  The contract can be drafted and notarised by chambers attorneys who regularly work with us, thereby reducing the time involved and associated costs. The costs become due on completion of the investment contract and are paid by the company out of our investment.

• Why is no company valuation made?

  As start-up companies do not have a long history, it is impossible to make a useful company valuation and so we therefore offer all technology companies attractive standard conditions, acquiring a 15% nominal share of the company and making available a subordinated convertible loan.
  
  Should follow-on financing possibly be needed, we can then convert the loan into equity capital for valuation by the new investor and thus do not increase our 15% share in the company.

• You require investment of more than 500,000 Euro. Is it still worth submitting a business plan?

  In short: Yes – we would still like to meet you in this case.
  
  Very often we are able to meet a much higher capital requirement, either by: founders’ own capital, side investors (business angels, seed funds, other investors) and acquired funding.
  The aim of financing by the High-Tech Gründerfonds is the achievement of specific milestones so that a company then becomes attractive to further investors. We will assist you in acquiring further Venture Capital. High-Tech Gründerfonds also reserves a further 500,000 Euro in follow-on financing for your company.
  A further key factor in favour of stage-wise acquisition of capital is the fact that founders generally have to relinquish the majority of their shares with a large initial financing round.

About Coaching

• How are coaches compensated?

  Coaches are compensated directly by the founder and this is regulated by a bilateral contract between the founder and the coach. In the interest of its start-up company, High-Tech Gründerfonds ensures that the terms are favourable to the founder and are documented in the accreditation agreement between the coach and High-Tech Gründerfonds. This agreement provides, among other things, for a maximum daily fee of 1,000 Euro net, success-related one-off payments and a maximum budget for the various phases. More information on this can be requested from Relationship Management.

• How are the coaches evaluated?

  Founders and High-Tech Gründerfonds investment manager jointly evaluate the quality of the coaches’ services.

  The basis for this is based on the milestones between the company and the coach. After reaching a certain milestone, the coach bills the company. High-Tech Gründerfonds receives a copy of the bill and in addition, an evaluation note of the coach on the company’s management. The lead in this evaluation procedure is our Relationship Management. They serve as the main contact for the coaches in all general aspects of the coaching, while as our investment managers are responsible in dealing with the coach with regards to company-specific questions.

• How does High-Tech Gründerfonds ensure the high quality of its coaches?

  High-Tech Gründerfonds undertakes a continuous appraisal of its coaching services (especially taking into account evaluations of the coach by the founders of the company and the Investment Managers).  The evaluation is always adapted to meet current requirements. More information on this can be requested from Relationship Management.
  
  Coaches are always accredited for one year. Should a coach repeatedly fail to meet the requirements of companies and the High-Tech Gründerfonds, then accreditation can be terminated very quickly.

• How will I be accredited as a High-Tech Gründerfonds’ coach?

  The structured accreditation process consists of the following stages:

  1. The qualified examination of key documentation demonstrating the person’s suitability as a coach
  2. Taking up of references
  3. A one-to-one discussion
  4. The successful joint advising of a technology company that the coach has ideally introduced to the High-Tech Gründerfonds and is also financed by the High-Tech Gründerfonds.

• What are objectives of the coach?

  The foundation for the cooperation between the coach and the start up company is customized and based on the precise needs of the individual company. This is jointly determined by the company, the coach and the responsible investment manager of High-Tech Gründerfonds. This happens at two key stages: in the Initial Investment Phase at the signing of the term sheet, and in the Mentoring Phase at closing of the investment. Below are some examples and your individual situation can be adjusted in these terms.
  
  Initial Investment Phase
  · Explanation of the different requirements during the different stages of business proposal evaluation by High-Tech Gründerfonds
  · Initial analysis of the business concept and business plan
  · Help with theExecutive Summary drafting
  · Letter of recommendation (if necessary, from coach)
  · Support with business plan writing
  · Calculation of the capital needs (ie, different scenarios)
  · Help in setting up of the organisation
  · R&D planning
  · securing and advancing the IP Position
  · Team-Building: may also include recruitment of additional management
  · Counseling during negotiations and founding process
  · Mentoring the team through the investment closing process.
  · Identification of, and strategic support for, short and medium term company goals
  · Development of a Strategic Roadmap
  · Sparring with founders with regards to all relevant questions /technical, economical, financial, legal issues)
  
  Mentoring Phase
  · Operational and strategic support within the agreed range of activities
  · Follow up on Road Map activities
  · Identifying possible friction in management, and helping setup a moderation/solution process if the need arises
  · Monitoring of the company’s development and implementation of early warning systems
  · Help with monthly reporting
  · On Advisory Board
  
  Preparation for follow up investments
  At Early planning of fund raising activities with founders and investment manager (by at least 6 months)
  · Updating both the business plan and investor presentation
  · Establishing contacts with potential investors (in close cooperation with founders and investment manager)
  
  Payment
  The coach invoices the company directly for his services, in accordance with the milestones and schedule. A copy of the agreed amount of services is shared among coach, company and the investment manager. 

• What are the benefits of accreditation as a High-Tech Gründerfonds coach?

  The High-Tech Gründerfonds works very closely with its accredited coaches and they obtain (insider) information on various platforms, the opportunity to make new contacts and have access to promising company founders in need of coaching.
  Moreover, coaches can also advertise their profile and range of services on the High-Tech Gründerfonds website under Coach Finder, a resources actively used above all by interested company founders as a source of information.

• What are the different coaching phases?

  The High-Tech Gründerfonds differentiates between two phases, in which coaches assume different roles: the acquisition phase and the support phase.
  
  a.    Initial Investment phase
  The role of a coach in the acquisition phase is to identify young companies / possible start-up companies, support the founders during  High-Tech Gründerfonds’ Due Diligence process, and provide operational assistance in developing the company. The acquisition phase ends when investment by the High-Tech Gründerfonds has been successfully finalised (closing).
  
  b.    Mentoring phase
  The objective of the support phase is to provide operational support and further development to the companies in discussion with the management of the company and the High-Tech Gründerfonds Investment Manager. The support phase begins with ″closing″ and ends with the completion of the seed phase, i.e. when the company secures follow-on financing and achieves break-even.

• What expertise should a coach bring to the table?

  A coach, who would like to be accredited by the High-Tech Gründerfonds, should have, above all, very good contacts in the sector and excellent knowledge of the sector and its technology; the coach should also be well-versed in the High-Tech Gründerfonds investment processes and, last but not least, should have solid financial management and general entrepreneurial knowledge and expertise. In order to be able to talk on a par with the founders of start-up companies, some experience in setting up a company is also helpful.

• What is a Coach at High-Tech Gründerfonds?

  The coach assists the founders in all strategic and entrepreneurial aspects. He regards himself as a partner to the management team and acts accordingly, and with respect to the High-Tech Gründerfonds guidelines. His skill set, business experience and industry contacts together form a support base and network for the management in setting up and developing the company. An investment by the coach in form of a side investment is most welcome.

• What is a “Side Investment” from the Coach?

  A direct financial investment from a coach into the start up company is welcomed by High-Tech Gründerfonds. It also complements the necessary financial contribution of the founders. The founders’ contribution varies between 10% and 20% of the High-Tech Gründerfonds investment, depending on the location of the start up. The coach may comprise up to 50% of the founders’ contribution. In addition, he is free to act as a side investor with no investment limits.

• What is the advantage of a side investment by the coach?

  High-Tech Gründerfonds hopes that the coach will be interested in making an investment from his own finances or from finances entrusted to him (seed funds). The coach or seed fund can, in principle, negotiate this “side investment” freely with the company itself and should assist the start-up team to obtain the requisite level of equity capital.

• Which information are needed from someone who wants to become a Coach at High-Tech Gründerfonds?

  · CV / Resume (and additional information if a coaching team is involved)
  · References and access to networks (former projects, science, peer network, financial institutions
  · Regional focus
  · Key competences
  · Ability to contribute financially to start up investments

• Which skill sets are necessary for coaches?

  · Economic and entrepreneurial know-how
  · Desired: experience in starting up companies successfully
  · Experience in strategic positioning and development of high tech start ups
  · Practice in team due diligence
  · Ability to communicate all issues with the founders, including constructive criticism
  · Willingness and ability to co invest into the company 

  In addition to the general requirements for coaches, other competences are very important as well:
  · Broad network to potential deal flow sources
  · Knowledge about High-Tech Gründerfonds and our investment focus and process
  · Understanding of investment terms of High-Tech Gründerfonds
  · Understanding of the strategic tasks and risk approach of High-Tech Gründerfonds
  · Excellent network with investors (VC’s, seed funds, public investors, Business angels) 

• Who is suitable as a Coach?

  1. Seed investors, such as business angels
  2. Public institutions that work with start-up companies from research institutions
  3. Consultancy companies with relevant expertise in advising technology-based start-ups
  4. Individual consultants, experts, experienced managers with relevant expertise in advising technology-based start-ups

• Who needs management support?

  Start up companies in the high tech sector always face multiple, simultaneous challenges. R&D, finance, organizational challenges, and customer centric thinking, just to name a few, are example what the entrepreneur most constantly keep in mind even with limited time and resources, in order to compete successfully. Limited experience in dealing with non-scientific issues very often magnifies this problem, such that in many cases advice from outside the management team can be very helpful.
  
  If so, we do recommend working with our coaches, always closely monitored by our investment managers.

• Who qualifies as a reference?

  In brief: coaches and external experts or peers
  
  If a coach is involved, he will serve as a reference. If no coaching is required, other experts (e.g. incubator management, tech-transfer officers) can take over the role as a reference. A reference is very helpful and important, but not mandatory. If successful in approaching High-Tech Gründerfonds, the reference does qualify for a bonus paid for by the company. A full reference includes the executive summary of the Business Plan and a letter of recommendation by the coach.

• Why differentiate between the Seed Investment and the Mentoring Coaches?

  In most cases the Seed Investment coach will also coach the company through the Mentoring Phase. The final decision will be made by the founder, assisted by High-Tech Gründerfonds. We also decide on coaching milestones, set prior to the signing of the coaching contract.
  
  Coaching focus during A phase 
  · Support of the founders during Due Dilligence process, including the assembly of all necessary paperwork and the drafting of the Business Plan
  · Hands on assistance during the development phase of the company
  · The Initial Investment phase starts with a company introduction, and ends with closing of the investment between founders and High-Tech Gründerfonds
  
  Coaching focus during the Mentoring phase
  · Operational and Strategic support from the coach for the management team, in close interaction with the responsible investment manager from High-Tech Gründerfonds. This may also include recruitment assistance.
  · Set up of controlling and governance
  · Support of (pre) marketing and sales activities
  · Assistance through of second round financing
  · The Mentoring Phase starts during the initial investment closing process and ends with the termination of the Seedphase (successful closing of follow on investment, or reading Break Even. The companies monthly reporting is available to the coach as well.

• Why use milestones?

  Milestones describe certain key steps in the development of a company, and help both investors and founders to evaluate the progress of the company over time.