Hendrik Brandis has been shipwrecked one time or another. As a sailing athlete and four-time world champion, but also as an entrepreneur. There are few startup investors in Germany who can look back on such a long and eventful career. The 56-year-old co-founder and partner of the renowned venture capital firm Earlybird (assets under management: 1.5 billion euros) has been in business since 1997 and has withstood both the Dotcom bankruptcy in 2000 and the global financial crisis of 2008.
Brandis has learned one lesson from all the years: recessions hit the startup scene in the long term and usually have a delayed effect. This also applies to the corona pandemic, he says in an interview with NewsABC.net: “The crisis will not be over in the startup scene, even if we are allowed to travel again and there is a vaccine. We have not yet bottomed out. ”
Financing boom in recent years is dragging the crisis away
In fact, there are no significant bankruptcies yet, at least not in the league of late-stage startups. The industry has had a financing boom. According to an analysis by the consulting firm Ernst & Young, German startups were able to collect more fresh capital in 2019 than ever before. They received a total of 6.2 billion euros, 36 percent more than in the previous year.
Brandis therefore expects one
Delay in the liquidity crisis. “Many startups and funds are full
Money pots and will spend them gradually over the next two years.
With decreasing liquidity, the funds must then gradually make their investments
adjust, at the same time large exits or IPOs become more difficult. The
means that the markets won’t dry out for two to three years. “
The majority of the founders are much more pessimistic about the future. The bankruptcy wave awaits you earlier. According to a survey by the German Startups Association at the end of March, seven out of ten startups fear an “acute threat” to their existence in the next six months. Chief lobbyist Christian Miele from the German Startups Association even warned of a “shard of broken glass” if it were not acted quickly. In the meantime, the federal government has given in to the demands and set up a rescue fund in the amount of two billion euros.
Crisis as a catalyst for innovations
Although there is likely to be a startup death, Brandis could not confirm the bleak result of the survey in his area. Of the approximately 60 portfolio companies of Earlybird, about two to three are currently at risk.
“One thing is fundamentally different this time: There were only losers in the Dotcom bankruptcy and the financial crisis. However, we also see winning industries in the corona crisis, since consumer behavior is changing permanently, ”said the investor. In his view, health tech, for example, receives completely different attention, but also collaboration tools, individual transport and delivery services.
Experience from the Dotcom bankruptcy and the financial crisis would have shown that recessions can also be a catalyst for new, innovative billion-dollar companies. “The quality of the startups will go high, and the quantity may decrease,” Brandis predicts.