Every day there is bad news for the German economy. With the US there is currently a trade dispute about car taxes, which would hit the economy hard in this country. At the same time, new good news is coming out of the German startup scene every week: the sale of a German startup to Alibaba, the young N26 bank is joining the Einhorn – and digital companies are regularly announcing new major financing rounds. Recently, for example, there were 100 million euros for the interest rate platform Weltsparen.
But will this continue? Christian Saller, general partner of the well-known venture capitalist Holtzbrinck Ventures, is assuming at least a correction. In an interview with Gründerszene he talks about whether companies will soon find it difficult to collect money. In addition, the expert for travel startups reveals which companies could next go public and in which travel platform he would like to have invested.
Christian, the world economy is nervous: Brexit, trade conflicts with China, crisis of tech companies. What impact does that have on startup funding?
I would say the mood is a bit more nervous than it was four months ago. The big tech stocks have lost about 30 percent in value and the startups that went public in Germany last year are sometimes up to 50 percent below the issue price. There is a lot of talk in our scene that it might be harder for some companies to raise money. But we have not really seen that yet. Large rounds continue to take place.
Are the worries justified?
We had a so-called bull market for a long time, it went up and up. That’s why it’s normal for there to be a correction at some point. The other topics, such as Brexit and a slowdown in the economy, also play their part. Maybe everything has normalized again in three months.
To what extent are the stock exchanges ever connected with the startup scene? These are two relatively independent systems.
Of course, companies and lenders always have the issue of exit in mind and they compare the valuations of similar companies on the stock market. This is especially the case in later financing rounds, when the IPO or a sale for the startups is pending. The early-stage investments will affect this negative development less, because the lenders assume that they will remain involved in the company for five to ten years. In that time, the markets will go through different phases anyway.
Soon Uber, Airbnb and Slack want to go public. What role will these IPOs play?
Above all, the Uber IPO is important for the startup scene. The company plans to go public with a valuation of about $ 100 billion. The Spotify IPO was already big, but Uber will surely become the biggest tech IPO in the US in years. It will be seen how the public markets react to such a big company. In addition, Uber has been financed for a long time by venture capitalists. So the company is testing the hypothesis that even with a very late IPO, investors can make money.
If the value of Uber on the stock market goes up to 120 billion dollars, then it worked. But if the company goes public with $ 80 billion and the value goes down, that would be a failure. If the value is below the valuation of the last round of financing, investors’ money was destroyed by this financing. The IPO will therefore show how the market responds to the approach of Uber, but also of Airbnb to remain privately financed for a very long time.
It is also an important test for the Japanese investor Softbank, which entered the late stages of startups like Uber or Auto1.