Venture Capital funding for AI Start-ups: Challenges & Opportunities in Germany and the US

by Oliver Gottfried

Funding is one of the most crucial criteria for AI-driven start-ups to realize their business ideas. Nevertheless, the German Venture Capital market is in contrast to the US and China still developing. Therefore, it is rather difficult to receive Venture Capital funding for German AI start-ups.

The second Transatlantic AI eXchange event on June 22nd 2021 covered this topic by analysing & debating the challenges and opportunities of Venture Capital funding for AI start-ups in the US and Germany. Renowned experts from the VC industry (i.e. Robert Bosch Venture Capital, M12, B Capital) as well as successful entrepreneurs joined the webinar session to shed light on this topic.

Yvonne Lutsch, Investment Principal from Robert Bosch Venture Capital (RBVC) stated that RBVC has about 50 investments in their active portfolio, with in total 700 million USD AUM and furthermore is currently raising another fund with a target size of about 300 million USD. When it comes to investing in start-ups, Yvonne suggested that German entrepreneurs should be more bullish and think big as founders in the US do.
Samir Kumar, GM and Managing Director from M12 mentioned that the core of M12 is enterprise SAAS and close to half of their portfolio companies have a strong AI component. He also pointed out that M12 is looking to do more deals in Germany with particular focus on AI driven companies. In terms of investment criteria Samir emphasized that the team is crucial and that the best founders demonstrate a level of self-awareness where they can complement their team.
Rashmi Gopinath, General Partner at B Capital highlighted that AI has been one of the underlying pinnings of B Capitals Enterprise Investment. In regard to investment criteria Rashmi emphasized that growth margins are very important.
Mark Maloney, Consul at the US Consulate General in Hamburg argued that the US State Department is paying a lot of attention to the AI market and that currently German AI companies are undervalued compared to US AI companies. These dynamics illustrate that there is opportunity in the AI field in Europe and particularly in Germany.
Cyriac Roeding, CEO & Co-Founder of Earli inc., is convinced that exclusive access to data is only a short-term advantage and is not the future of AI. According to Cyriac, the right way to build an AI driven company is to create a concept that generates more and more data with an increasing amount of users. Finally, building a complementary team is of major importance to ensure the success of the company.
Ragnar Kruse, the co-founder of AI.HAMBURG and AI.FUND complemented this by clearly outlining the importance for German AI startups to go international to achieve a reasonable growth rate.

German AI start-ups should take these suggestions into consideration in order to increase their chances to secure sufficient funding for their business operations. The discussion outlined that there are great chances for German AI startups to obtain funding and become global players when they keep certain factors in mind.

View the entire event here: Transatlantic AI eXchange Event Video Archive

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