One sce­na­rio ari­sing from this innate dif­fe­rence that we peri­odi­cally encoun­ter in Ger­many, where smal­ler early-stage tickets for strong ideas are rea­dily available but lar­ger growth tickets are toug­her to attract, is the tempt­a­tion for foun­ders to play ›not to lose‹ as oppo­sed to ›play­ing to win‹. Play­ing not to lose can take many forms but it is essen­ti­ally focu­sing on stay­ing alive as oppo­sed to focu­sing on crea­ting large suc­cess. This approach is often cha­rac­te­ri­zed by pro­lon­ging the cash run­way by saving costs and wai­ting before pushing the com­pany through to the next stage of its deve­lo­p­ment until inves­tors have com­mit­ted to a large investment.

Alt­hough we under­stand this men­ta­lity behind a more cau­tious approach to growth and cor­po­rate deve­lo­p­ment, we believe that in many cases, espe­ci­ally with high-tech, highly-sca­lable ven­tures, cau­tion is ulti­m­ately the much hig­her-risk stra­tegy, as valuable win­dows of oppor­tu­nity can be missed. In fact, bold­ness in gro­wing a com­pany and demons­t­ra­ting strong busi­ness momen­tum at an early stage is pro­ba­bly the sin­gle most important fac­tor for crea­ting inte­rest with ven­ture investors.

The opti­mal way for foun­ders to break through this dyna­mic, and to deve­lop the trust that when they build a thri­ving com­pany that inves­tors will come with capi­tal, is to engage with many inves­tors from an early stage and to main­tain an open dia­lo­gue with inte­res­ted inves­tors about the company´s pro­gress. Foun­ders and inves­tors should openly dis­cuss what mile­sto­nes the com­pany needs to achieve for the inves­tor to invest in the com­pany. In this way, foun­ders can build an under­stan­ding of the variety of inves­tors from whom they could attract capi­tal and bet­ter esti­mate which ele­ments of the com­pany are important to those investors.

Pro­fes­sio­nal ven­ture inves­tors have a strong app­re­cia­tion that buil­ding a com­pany is an extre­mely chal­len­ging endea­vor and that it is impos­si­ble to deter­mine the ideal path ahead of time. Thus, most insti­tu­tio­nal ven­ture inves­tors pre­fer to invest with foun­ders who are wil­ling to test the foot­print of their com­pany by expe­ri­men­ting with various growth and deve­lo­p­ment initia­ti­ves, fully under­stan­ding that some efforts will not work. In early stage ven­tures there should be no fear of fai­led attempts rather a deep com­mit­ment to fin­ding what works most effec­tively and with open com­mu­ni­ca­ti­ons throug­hout the process.

One key deve­lo­p­ment which should make it easier for foun­ders to adopt an expe­ri­men­ta­tion and growth mind­set is the mas­sive increase in the amount of ven­ture capi­tal loo­king for com­pa­nies that are crea­ting strong busi­ness momen­tum, even at very early stages. This explo­sive growth in ven­ture capi­tal and the num­ber of ven­ture capi­tal inves­tors may make it some­what more com­pli­ca­ted to know where to start with fund rai­sing, but it should greatly increase foun­ders’ belief that good per­for­mance will be reco­gni­zed and will attract invest­ment. Build it and they will come!

bm|t’s Thü­rin­gen Startup Fund (TSF) is spe­ci­fi­cally desi­gned to act at an early stage and to enable foun­ders to deve­lop the busi­ness momen­tum that will lead to fur­ther, lar­ger-scale invest­ment. So far 33 of the 35 Inves­tee-Part­ners in which we have inves­ted with the TSF fund have recei­ved addi­tio­nal invest­ment, and the majo­rity have rai­sed lar­ger sub­se­quent rounds with addi­tio­nal insti­tu­tio­nal inves­tors. We are proud that seve­ral of these com­pa­nies and lar­ger invest­ment rounds are high­ligh­ted in our Q3 Fol­low-on Investments.

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