Q+A with Uwe Horstmann about the European and UK VC ecosystems
Here at Business Leader, we recently spoke to Uwe Horstmann, General Partner and Co-founder of Project A Ventures, a venture capital firm headquartered in Berlin. In this piece, Uwe discusses his background, the current VC ecosystem, and what is it that US VCs find attractive about European fintech firms.
What is your background and what were you doing before Project A Ventures?
I started out at Rocket Internet, Germany’s largest incubator at the time, which brought up a lot of big tech companies here, including Zalando.
My partners and I, all of whom previously worked at Rocket, founded Project A in 2012. At Rocket, we had worked on the incubation model, where you simply build startups on your own from scratch, and we wanted to take a different approach. We came up with what we call the “operational VC”, combining financial capital with operational support, so that founders are able to access exactly what they need.
What is Project A Ventures and what kind of sectors do you invest in?
Project A Ventures is a venture capital company with an attached operational unit of 100+ experts. Our experts focus on all areas of startup operations, from marketing to development, sales to branding, and data science to product management.
That means that apart from investing in early-stage companies, we also help these companies grow, and to overcome the challenges they face as they scale. Project A is a generalist investor with selected focus industries such as Digital Health, Enterprise Software, Developer & Data Tools, FinTech, Education, Real Estate & Construction, e-Commerce, Media and Mobility.
How is the current VC ecosystem looking in Germany? Are there any trends you are currently seeing?
The VC ecosystem in Germany is constantly maturing. A large portion of venture capital still focuses on the early stage, and that is where we are strongest.
A positive trend is that Europe and Germany are ready for more complex business models. We are moving away from trivial models and mere copycats of existing ideas, to tech-driven solutions. There is a lot to do in the B2B software sector, and we see a great demand for cloud infrastructure, cybersecurity and digital sovereignty.
Have you noticed any differences between the UK and German markets?
The UK has always been one of the world’s major technology hubs and commands a significant portion of both capital and talent. We fully expect to see this trend continue. That’s why we recently opened an office in London and are investing in UK startups.
Apart from more capital available, we don’t see major differences between countries. The VC scene in Europe is connecting more and more across borders and investors all over Europe jointly invest in innovative startups. Our portfolio companies are also active in all of these markets and besides some regional regulatory differences, the markets are similar.
What is it that US VCs find attractive about European fintech firms?
European Tech firms are thriving at the moment, and the ecosystem is growing. Both the quantity and quality of European companies is increasing, and the most innovative are rising quickly to unicorn status. European startups are not as overvalued as in the US, and tech talent are ever-increasingly keen to live and work in Europe, and the cost of living is cheaper here.
Also, the VC scene has professionalised a lot across the continent and is better connected now. US VCs are currently leading at later-stage investments, and they are becoming increasingly more active in the European market. US VCs investing is testament to the market potential on the continent, and it speaks for the quality and innovation potential of European startups.
Are there any sectors that aren’t seeing a lot of investment right now but you anticipate that they will in the near future?
In Germany, for example, we still have a strong manufacturing sector which is, to a big part, not yet fully digitized. VC investments are low here and will definitely rise, especially in AI and data startups that connect well with manufacturing businesses.
Also, complex and research-intensive biotech companies were struggling with getting VC money as it takes up to 10 years until a product is ready. The success of BioNTech has changed this trajectory, and venture capitalists have begun to invest more in Biotech companies.
Have you seen a concerted effort towards becoming more sustainable in the companies that you invest in?
Sustainability is a very important topic. In general, our portfolio companies abide by sustainability standards as we do. I think digitizing processes that used to be analog is a good way to drive sustainability.
Many business models that we invest in indirectly influence the use of resources, whether it is to make trucking logistics more efficient, like our portfolio company sennder does, for example, or to reduce the use of paperwork during transactions, or to make remote collaboration more exciting so that it requires less business travel.
What are the future plans for Project A Ventures, especially as you’ve recently launched in the UK?
We will be raising our next generation of funds soon to further invest in early-stage tech startups that are reshaping the way their industries work. We have seen in 2021 alone how European startups mature, with many more unicorns being created here. This is where we want to be.
We are planning increased investments into European and UK tech startups with our dedicated team on the ground. At Project A, we look into all kinds of game-changing data-driven innovation, and we believe there is a lot to come in DeepTech, B2B marketplaces, AI and Robotics, as well as the manufacturing sector.