APX generated €1.5M for its portfolio in 18 months through value creation. Here’s how — and what we learned.
VCs today must look for new ways to give founders the resources they need to succeed. At APX we focus on sales readiness, valuable connections and strategic partnerships.
Just a few years ago, early-stage founders often had to accept whatever deal they got from a VC. This has changed. During the first three quarters of 2021 alone, German startups raised a record of EUR 11.3 billion in venture capital funding in the first three quarters of 2021, up over 70% from last year’s overall total, according to PitchBook data. With so many VCs out there with a lot of money to invest, great founders should now look for VCs that can be value-creating partners beyond the initial funding.
With great money comes great responsibility
The VCs who understand that naturally ask themselves (I) what they should be doing to attract the best startups and (II) how they can best support their current portfolio companies with value-creating. At APX, we have also asked ourselves these questions and concluded that for our companies to scale commercially and achieve product-market-fit as early in their journeys as possible, we must establish direct connections to potential clients and industry experts on top of the cash investment. This commercial value is just the tip of the iceberg, which belies the hundreds of introductions that led to paying clients, pilots, client feedback, advisors, corporate programs and more.
So how did we approach it?
In general, the three main pain points of a startup (during its life cycle) are 1) sales and business development, 2) access to investors/ funding, and 3), hiring talents. This article focuses on the first point, which relates more specifically to how a VC can support its founders in increasing their traction and connecting them with the right stakeholders.
With so many VCs out there with a lot of money to invest, great founders should now look for VCs that can be value-creating partners beyond the initial funding.
Our data-driven, structured approach to supporting our portfolio companies’ sales and business development at APX far exceeded our expectations. We are happy to share with you our core elements on how we create value for our portfolio companies via the following three approaches:
- B2B Sales Masterclass: At APX, we believe in a customer-centric approach and in teams that can listen to customer feedback to offer solutions that these customers need. We invest in great teams with a customer-centric mindset that’s deeply rooted in creating value and building relationships with their customers and see their feedback as a way to foster continual improvement and growth. Our approach is driven by the understanding that many startups fail because of a lack of demand from the market. Hence, from the get-go, early-stage startups should collect data points on the pain point of their potential customers and constantly iterate their product based on market needs. Together with Patrick Brienen-Lucius, the founder of OrderBird, we designed a B2B sales masterclass to help our startups become “sales-ready”. Check out our article on the five questions B2B startups should ask themselves about sales to find out what it means here.
- We create value by connecting companies to networks of potential clients: One of our core strengths at APX is our network’s accumulated power. Our portfolio companies are closely linked to our investors Axel Springer and Porsche (more than 15% of our portfolio companies work with them), as well as the vast network of corporations, technology companies and Mittelstand (the German word for small and medium-sized enterprises (SMEs)). We help our portfolio companies find the clients they need to grow. Connecting those decision-makers with our founders and C-suite executives allows us to make those connections. Through our strategy of reverse engineering, we reach out to relevant corporations to understand their needs and challenges and identify APX portfolio companies that are tackling the same problem. Our goal: diversification. We enable our portfolio companies to work with a wide range of companies, from startups to large corporations, as well as SMEs (Mittelstand).
- We create value by developing strategic partnerships: We believe in collaboration; therefore, we created a joint venture with Deutschland Land der Ideen (the umbrella organization of the German Mittelstand), called “MittelStart”. With the aim to create curated engagement between startups and Mittelstand companies on a specific topic. More than 100 SMEs met APX portfolio companies in different industries: industrial solutions, HR & new work and artificial intelligence. We created a format that brings together industry experts, politicians, founders, and researchers to discuss the opportunities and challenges that digitalization can bring. Several business collaborations such as Sharpist and Maximago, MinQi and Fraunhofer IAO have started, and others are on the way, so stay tuned.
Our results so far have exceeded our expectations. Over the past 18 months, we have generated more than EUR 1,5 Million of commercial value for our portfolio companies.
The future? VC BizDev at scale!
Digital products are replacing manual processes, which can produce successful results. One of the biggest challenges of scaling our value to portfolio companies is eliminating the bottlenecks that are created due to manual processes and take a lot of time and resources. APX Business Warehouse aims to eliminate these bottlenecks. The idea is to provide our portfolio with the ability to browse our network independently, while only being exposed to relevant (and non-confidential) data. The APX Business Warehouse provides visibility into our extensive network and allows our portfolio companies to independently request introductions to potential customers and business partners.
Our aim at APX is to provide extra value to our portfolio companies. Thus, we are continually looking for new ways to support our founders and give them the resources they need to make something of value and succeed. We hope you found this article helpful, and if you would like to find out more about APX or are looking for funding, please get in touch: https://apx.vc/looking-for-funding.