German Venture Capital: Better Than Its Reputation

By Earlybird Target Partners And Wellington Partners, PRNE
Sunday, January 23, 2011

New figures highlight potential of German Venture Capital market

MUNICH , Germany, January 24, 2011 - German Venture Capital Funds have generated comparable or better returns
than their US counterparts, as new data presented by three of Germany's
largest venture capital firms Earlybird, Target Partners and Wellington
Partners shows.

The three VC firms analysed today's most recent data provided by the
"Private Equity Analyzer online database" that is hosted by the Munich based
independent benchmarking specialist CEPRES. As part of a recently completed
survey, the Database now gives an unprecedented overview of the international
VC industry. The analysis shows that venture capital investments in German
portfolio companies with investments dated between 1998 and 2010 generated an
average gross return of 11.4 percent. In the same time period, US companies
achieved an average gross return of 7.7 percent. The analysis was based on
data from 496 VC investments in Germany as well as profiles of 6940 venture
investments in the US.

Excellent growth prospects for German VC industry

"Contrary to general perception, Germany has been a fertile ground for
very successful VC investments over the past 12 years, even when compared to
the USA", commented Rolf Dienst, General Partner at Wellington. "The German
VC industry might not be big, but it is in excellent shape."

Good reason to invite investors to the founding event of the "German
Venture Capital Day". The event in Munich attracted 70 participants from
countries such as France, UK or the Unites States and was dominated by a
strong and positive sentiment. The investors' positive outlook results from a
favourable investment climate, excellent growth prospects and an upswing in
M&A activity supported by more robust capital markets.

German "cherry picking" explains better return

After the bursting of the dotcom bubble in 2000, the sector in Germany
was subject to severe consolidation. Between 1999 and 2009 the number of
funds operating in Germany fell from 125 to less than 30. This is a decrease
of 77 percent compared to only 15 percent in the US, leading to a significant
imbalance of supply and demand in Germany. Against this background, Hendrik
, Managing Partner of Earlybird believes that Germany has become one
of the most attractive countries for VC investments worldwide: "The remaining
funds encounter an unparalleled favourable environment for VC investments and
can cherry pick the most promising among numerous investment opportunities."

And whilst the German market is set to prosper, a consolidation in the US
market cannot be ruled out.

The industry leaders' optimism is supported by positive feedback from
foreign investors attending the "German Venture Capital Day": "Investors
across the globe recognize Germany for its tradition of innovation and
technological leadership. In combination with strong VC support and the right
funding, this lays the groundwork for a much larger number of innovative
companies in the future," Kurt Mueller, Partner at Target Partners added.

German VC industry welcomes more competition

Whilst the small VC market in Germany allows Venture Capital firms to
pick the best deals, the current undercapitalization of the market has severe
consequences for general economic development: For example, while in Germany
only 2.7 registered patents actually lead to a start-up this figure amounts
to 7.8 in the US. "We are still not reaping the benefit of Germany's
outstanding innovation capacity", said Rolf Dienst, General Partner at
Wellington. "German research is among the best globally, not least because
research funding in the country is outstanding", confirmed Mueller.

From a general economic perspective, it is therefore desirable that the
German VC industry grows, in order to compensate for the undercapitalization
of the start-up market. This would not only boost the development of the
innovative SME sector. "It would also help create additional employment and
economic growth", said Brandis. "Today a small group shares a small cake.
Given the general positive economic outlook, there are prospects for a bigger
VC industry to share this cake. This is why we welcome more competition."

About Cepres:

CEPRES GmbH, the Center of Private Equity Research, is a pioneer in the
areas of private equity information-, portfolio structuring- and
funding-services. The chair of banking and finance at the Johann Wolfgang
of Frankfurt am Main as well as the chair of the Department
of Finance at the Technical University of Munich belong to its shareholder

In that context, CEPRES is running a global network on funds aggregating
one of the most valuable datasets in the private equity world. This community
combines return data on more than 1,300 funds and 30,000 private equity
financed companies from Europe, the US and Asia. Also most German VC-firms
cooperate with CEPRES to generate a VC industry benchmark. Pension-funds,
insurances, family-offices, and private equity/VC funds are community members
and get exclusive access to the unique benchmarking tool "The Private Equity
Analyzer" and to funding or portfolio structuring services.

For more information about Earlybird, Target Partners or Wellington
Partners, see:

    Press Contact:
    Sophie Buning
    Director Munich
    fischerAppelt, ziegler GmbH
    Financial Communications
    Infanteriestrasse 11a
    80797 Munich, Germany
    Phone: 0049-89-747 466 - 216

Press Contact : Sophie Buning, Director Munich, fischerAppelt,ziegler GmbH, ph: +49(0)89-747-466-216, mail: sob at

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