From the Netherlands to Germany discussing cross-border investment

Published on 18/09/2019

From 12-13 September, business angels from all over the world joined a Study Visit that crossed two countries – starting out in the Dutch innovation capital of Eindhoven, and finishing in the German industrial hub of Essen.

The possibilities of cross-border investment was a key theme that ran throughout the entire event, as longtime investors and would-be business angels discussed the pros and cons of investing overseas, and shared stories of their personal experiences of investing in countries that were not their own.

Rene Reijtenbagh, the #ESIL local leader for the Netherlands, said that his first investment was in Iceland.

“At one point, it was my job to present companies [from my region] to angel investors and deliver angel network services in the Netherlands. But I couldn’t invest in any of the companies that I presented, of course. Then, one of the investors approached me with a company from Iceland and asked me if I was interested to co-invest with him in it. And because it was a company not in the region and quite far away, I could invest in the company. And that was my first real participation in an investment,” he said.

Alain Pujol presented the EIT Health Investor Network as a new opportunity for angels to invest cross-border in the health space. The Network is described as the first pan-European network to bring equity funding to innovative health start-ups. Investors can join the network to gain access to vetted deal flow, comprising the best quality health start-ups from around Europe.

Annegien Blokpoel and Bernd Mintjes shared their individual experiences as cross-border investors with the gathered angels, speaking about the pros and cons of co-investment and different strategies used for angel investment.

“Kill your darlings early,” advised Bernd, a university lecturer turned business angel who gives companies just one year to prove their worth. “And when the VC comes in, get out!”

His strategy involves investing alone, and requiring companies to provide weekly reports on their progress towards defined quarterly goals.

Annegien Blokpoel on the other hand, a highly experienced business strategy advisor and business angel, advocated for investing in a group when starting out. “Coinvesting with more experienced angels is a great way to learn,” she told the angels in the Study Visit. “You can follow the lead angel and see what they do, how they handle the investment.”

Annegien’s international investments include companies in Israel and Spain. “Israel is ten years ahead of us, easily,” she told the angel investors. When investing abroad, it helps if you can speak the language, she noted.

The Dutch portion of the visit included insights from Philips Health Tech and their High Tech campus, and pitches from several innovative companies based in the tech hub. Next, it was on to Germany, where the Study Visit opened with a tour around the Zollverein Coal Mine Industrial Complex, a UNESCO World Heritage Centre that pays tribute to the coal industry workers of the nineteenth and twentieth centuries. The Zollverein mine was founded by Franz Haniel in 1847 and mined coal until 1986. Some coking activities continued onsite until 1993.

The coal mine symbolises the industrial transformation of Germany, which made it a fitting spot to kick-off the German portion of the Study Visit. A total of 600,000 people were employed at the mine and coal was extracted to a depth of 1000 metres.

After visiting the grounds of the site, the participants were welcomed into a long dining hall, where they were presented with some information about the angel investment activities of the Ruhr region. They heard about the Materna company, which has branches all over the world and provides IT services related to a wide variety of activities, from airport security checkpoints to virtual reality to chatbots.

Next a presentation from Gruenderfonds Ruhr, a venture capital fund that operates solely in the Ruhr region, opened the angels’ eyes to the fact that the Ruhr valley is full of innovative start-ups that are investment-ready.

The following morning, the angels headed to Ruhr Hub. Here they heard presentations from Ute Günther on the business angel investment ecosystem in Germany, including the results of a survey carried out on BAND (Business Angels Netzwerk Deutschland) members to help further understanding of trends in angel investments. Some key findings were: the majority of the members were active and investment friendly, there was an increasing focus on sector-specific investing, and syndication is not the standard or usual way that BAND members invest.

As Ute pointed out, these results only represent a proportion of German business angels, only the ones who are members of BAND. Still, the results can be used to gauge the German angel investment market – and the results were surprising.

“We expected there to be a trend towards syndication, but in fact the majority of our members tend to invest alone,” Ute said.

The German BAND then presented a new initiative put forward by the German government to incentivise angel investing. This incentive was available to any angel investor, provided that the company which was being invested in had at least one branch in Germany.

Up next there was a technical presentation on the legal rules surrounding equity investment in Germany, and a presentation from the Morrocan Business Angels Network on their activities. The Morroccan Business Angels Network are currently focused on impact investing, and strive to fund new solutions that are in line with the UN’s Sustainable Development Goals.

For the Morroccan angels, the Study Visit helped to give a glimpse of the angel investing landscape in the Netherlands and Germany, and brought some new insights.

“I think this two day visit was very fruitful, we learned a lot about business angel networks in Germany and the Netherlands. For me it’s all the new ways of partnering with the government and business angels and maybe it will give us some idea on how to work with business angels in Morocco,” said Samir Indrissi Kassimy, President of the Moroccan Business Angels Network.

Moulay El Mehdi Aloui Hassani, who represents Angels for Africa, said “I think that there were a lot of take-aways, practical and inspirational, and lot of connections in the meetings.”

Then it was off to Startport, an accelerator for innovative start-ups in the logistics and supply chain space, where the group was welcomed by Peter Trapp, the managing director. The group then heard from two different startups, one with a mobile charging point for electric vehicles and the other a smart drone device.

Next, the angels heard from a panel of experienced business angels on how to spot and nurture a great company. Samuel Gerlach, a venture development manager at E:ON Essen, said that to find promising businesses, you need to be searching through a variety of channels. “You have to be present at typical events and it’s very important to have a network of contacts,” he said. Ute Günther asked whether business plans were a good place to start looking, and the angels said in principle yes, but that usually such competitions showed companies that were a bit too early. Willem Bulthuis, CEO of WBX Ventures, said that angel investors should always be looking beyond their home borders for new and interesting companies.

“You have to find the best start-ups in Europe. If you think about it, these start-ups probably work with customers that are based abroad. You have to be international,” he said.

Finally, the angels headed for the Impact Factory in Duisberg. This accelerator for social entrepreneurs focuses solely on companies that are actively trying to “do good” with their new ideas. The angels heard pitches from businesses that had built an interactive online map system to guide blind people around, and a company that applied ratings to products according to how eco-friendly they were.

As the Study Visit drew to a close, we asked the business angels what their final impressions of the event were.

Jessica Bolanos, an angel investor from Esade said, “I’m very impressed by… the issues we are speaking about and the people who are here. Now we have [learned about] the experience from the Netherlands and from Germany and this really helps you to have a broad perspective on what other business angel networks are doing.”

Radouane Stoti, the treasurer of the Moroccan Business Angels Network, said: “We gained very valuable insights from all the speakers. There’s a lot of potential to work together between Morrocco and Europe, share good deal flow, share best practices.”