Tl:dr We decided to double our pre-seed deal: companies we invest in now get EUR 50,000 at a EUR 1 million post-money valuation. This means we become a 5% shareholder.
Towards the end of 2018, my co-managing director Henric and I were in the US for a few weeks meeting with industry leaders. The objective was to understand key trends in America, investigate the state of investing and get an even better understanding of the competition that European startups are up against.
American (and Chinese startups) have become pioneers and leaders in many technologies and businesses, while Europe is still playing catch up. For financing, this is facilitated by higher amounts of cash that these companies are able to raise early on. “Seed is the new series A” is something we have heard many times. For pre-seed, investors told us that the average pre-seed deal in Silicon Valley is now around $2 Million. And this is an ongoing trend if you look at the numbers in recent years.
“Seed is the new series A” is something we have heard many times. For pre-seed, investors told us that the average pre-seed deal in Silicon Valley is now around $2 Million.
When we came back we discussed this with our shareholders, Axel Springer and Porsche. We all agreed that in order to give startups a fighting chance in a global market, we should double our pre-seed cash investment per startup. And that’s what we did at the beginning of 2019. From now on, startups get EUR 50,000 plus our Tailormade venture development program in return for 5% of equity.
There are 3 main reasons why we started the new deal for 50k EUR:
- We want to offer the best founders the most competitive pre-seed deal in the market. It’s as simple as that.
- A EUR 50,000 pre-seed investment will help the companies even better to execute their plans and prove even more that they are building something great. The biggest value of what we offer to pre-seed startups typically lies not in cash, but in our tailormade venture development. This is a high energy 100 days for founders within their 6 months at our Berlin office in which our venture development team supports the founders to gain traction on the investor readiness dimensions. It includes weekly strategic check-ins and personalized mentoring, pitch coaching, as well as numerous practical workshops. The majority of support comes from the APX team. We don’t outsource this. In combination with our new EUR 50,000 pre-seed cash investment, startups can benefit from our tailormade venture development even more effectively.
- Our new deal — and the increased valuation — will offer the founders a bigger stepping stone for follow-on financing. Business angels (at least the ones we like to work with) optimize the balance between the valuation of the company, the capital the company needs to get to the next level, and the number of shares they will own.
What we don’t intend to change is our pre-seed investment process: every investment we make is highly individual: we select the company and they select us. We do our best to make the selection processes as diligent, fair and as fast as possible. At the pre-seed stage, we mainly look at the founders and their ability to turn their dream/ ambition into their hypothesis, into goals, into a strategy and finally execute and create traction.
And if you are a great team with an excellent idea and want to find out quickly if we shall be your investor: apply here!