Moving From Accelerator to very-early-stage VC: How APX Invests in Startups as of 2021
On our vision for APX, the journey from accelerator to Long-Term Venture Partner, and the goal to support even more of the best startups from Europe and beyond.
At APX, our dream is systemically investing in the best founder teams.
We launched APX in 2018 as a tailor-made accelerator program succeeding the Axel Springer Plug and Play Accelerator (AS PnP), which from 2013 to 2017 was the first investor in more than 100 startups, including fintech unicorn N26. With a small team that included my colleague Melanie and backed by our investors Axel Springer and Porsche, we had the ambition to do quite a few things differently: a rolling program, stronger networks, and more individual support for the companies. The first “new” person to join before we even started was Henric, my co-Managing Director, whom I have been happy and lucky to work with every day since we launched APX.
We started talking to early-stage founders, made our first investments, and built our programmatic offerings with the first teams we invested in. Simultaneously, we built our own team. A part of our hiring strategy was not to require German language skills. This had way more impact than we ever expected: Being in Berlin, where fortunately many people want to live, could attract great colleagues and build an amazing team at APX. Today we are a group of 15 full-time colleagues and between 6 and 10 temporary team members with multiple academic backgrounds, countries, cultures, and previous work experience. I’m convinced having a diverse team is crucial — both for ourselves and the founder teams we invest into.
This also led to a lot of non-German-speaking founders wanting to talk to us about investing. The number of teams we discuss investment with any given week has steadily increased from around ten in the early days to mid to high double digits in 2020 and today.
This has allowed us to invest in more than 70 startups across more than 20 industries, together with more than 100 co-investors to date.
Close collaboration with our investors
With Axel Springer and Porsche as investors, we have continuously worked on figuring out our extraordinary relationship. This is very important to me — we are not a strategic investment arm but free to invest in the best teams from all industries we believe in. At the same time, both companies are exciting sources for business and learning opportunities and great people to work with. We have had daily contact with both investors since day one and established several initiatives that are working well for the startups and us:
- Each company is assigned a “champion” at both Porsche and Axel Springer, providing first-hand contacts and opportunities with each of our investors. This ranges from learning, exploring, best practices, sales and business development opportunities, investment, and one early acquisition.
- As for APX, colleagues from both companies join us regularly: we offer a secondment program where their employees (from apprentices or dual students to leadership team members) can spend weeks to months with either us or with one of our startups.
Going from accelerator to VC
To work with the startups in our Berlin office, we had created a 100-day tailor-made program for each startup and worked with them on their journey towards raising their next financing round. We were focused on traction and their ability to pitch their company to investors. We organized one Investor Day every quarter so that each startup would get the chance to pitch to investors as a conclusive part of their 100-day program. This worked quite well as the majority of them were able to raise their next financing round. We participated in all of them with an anti-dilution investment.
We liked what we did, but we also thought: there is more. We might be able to do even more for and with our portfolio companies, to find more teams to invest in, and to invest smarter in our portfolio companies because of working so closely with each other. We might also be able to make our strong network of companies and partners even more useful to all stakeholders by growing and making a few changes.
It also always felt weird for the startups (and us) that we would only be there for them during the first 100 intense days and then turn into a relatively hands-off co-investor for the remainder of their financing process.
Since starting APX, we have always considered our investing process unique because we learn a lot about our portfolio companies during our close cooperation. When we partnered with Facebook in 2019 and hosted a later-stage growth program together, we learned that we could add some value to our programmatic offerings without the teams being with us in Berlin physically. Most of our formats and interactions can be virtualized — although we still love meeting in person and cannot wait to do “real world events” again. Some of our formats worked so well digitally that both the startups and mentors in our first virtual mentoring day gave us the feedback that we shall do alternating in-person and virtual mentoring days.
It also always felt weird for the startups (and us) that we would only be there for them during the first 100 intense days and then turn into a relatively hands-off co-investor for the remainder of their financing process.
Our new investment strategy
So in 2020 (and despite the global pandemic), these learnings led us to pitch the idea to our investors of doubling down on being a long-term partner for the companies we invest in while investing in more and even better companies.
We now have funding of 55 million Euros, more than doubling the money we have for investments.
Fortunately, Axel Springer and Porsche strongly believe in our work, the results we achieved so far, and therefore committed more capital to us, meaning we now have funding of 55 million Euros, more than doubling the money we have for investments. Our fund size stays open and dynamic thanks to their commitment to APX.
This allows us to implement our new investment strategy: We invest in three to six companies every month and kick-start our journey together with an intense month of venture development tailored to their needs and challenges. While we do this, we learn how well they are doing and leverage the opportunities we might be able to create for them.
While we are keeping the initial 50,000€ deal, we are also pledging to join follow-on investment rounds. That means we will invest in their next round and keep our initial stake as long as the round has market standard terms.
Unique Data-Based Insights
On top of this, we can now do something we have not done before: after our initial investment, when teams demonstrate momentum, we can now commit up to 500,000€ as lead/co-investor for the founders to raise an extended pre-seed and seed round faster and more effectively.
We can make these decisions through our hands-on approach to Venture Development and systematic data collection within our team, data sharing by the startups, and our network of mentors and experts. That’s how we gain better insights into our portfolio startups than any other next investor, especially with regards to team or execution skills. Rather than singular observations in time, APX team members can observe the teams continuously and identify trends and reinforced patterns in their behavior. This effect is amplified due to our growing portfolio size, as we can benchmark performance across our large portfolio. This information is extremely valuable for the founders in their daily and strategic work.
After our initial investment, when teams demonstrate momentum, we will commit up to 500,000€ as co-investor.
We have started to do this in the last weeks already, and the response so far has been very positive.
APX 2021 — a VC, not an accelerator
In addition to our ability to invest more capital, we also changed how we work with the startups: we continue to work with them as long as they (and we ;-)) want. We made some changes to our internal organization to deliver this goal and introduced a process that allows us to allocate the right resources to the right startup at the right time.
This also means we do not have an accelerator program anymore.
Rather, we work with our portfolio companies continuously and offer ongoing formats of experience exchange, learning opportunities, sustainability support, growth support, and financing (cash and contacts 🙂) through our team and our great network of over 10,000 mentors, experts, investors, corporate connections, and portfolio founders who we are super proud of.
This also means we do not have an accelerator program anymore.
All this will hopefully allow us to be a leader within the European startup ecosystem and will establish our new, climate-neutral office — as a hub for some of the best startups in Europe and a launchpad for some of Europe’s next tech unicorns.
I am super happy and grateful to be a part of APX, having the perspective to invest in more than 200 startups until the end of 2022, and getting the opportunity to do all this with all involved people.
If you want to get in touch with us: check out our website at APX.vc and join us for one of our virtual events that you will find on our LinkedIn Page.
