An interview with Berthold Baurek-Karlic, Managing Partner of Venionaire Capital, General-Secretary of the Business Angels Institute, President of the European Super Angels Club, associate member of Business Angels Europe.
Hi Berthold, so how did you become involved in angel investing?
I started my first company when I was in High-School. I started a classical finance or banking career, working at the Austrian Central Bank and at an investment firm during University, but I never stopped getting involved in developing business ideas or building businesses myself.
Roughly 9 years ago, when courseticket.com started to grow and I had the chance to support the launch of System7, I decided to dedicate my life 100% to ventures.
I felt the pull of a kickstart in venture development in Austria and Europe. With falling interest rates, equity became king. Lots of talent was freed up and people started to build companies and the startup world started escalating increasingly more. New programming languages, and the rise of smartphones made it easier to develop smart software and internet products people would love.
I co-founded and invested into an education platform, built an IOT company in stealth and supported some founders as an early business angel. I saw different aspects of the entrepreneurial journey and what it takes for an investor to be successful. I had a finance background and felt there was a lack of focussed venture investment companies.
I a saw a big opportunity to leverage on. On one hand I was lucky to be early in the field, on the other hand there was a market to educate and develop – the second part wasn’t easy. I built Venionaire Capital, an investment house for venture capital and private equity. We manage venture and private equity funds, support M&A transactions, structure mezzanine and debt-capital products. We co-invest with 3rd parties around the globe, committed to our funds as partners and are fairly industry agnostic.
Why did you start a club for Super Angels ?
The European Super Angels Club is a joint venture between partners from KPMG and Venionaire Capital. The aim was to build a pan-European investment network for high-net-worth individuals. We had a kind of private banking service in mind and this proved to be attractive. Larger investments, syndicated through a Luxemburg-based fund, enable rounds from EUR 1m to EUR 10m per deal. Our ventures gained roughly 3 times in value, over the last three years across the portfolio and proved to be stable during the pandemic.
What were some of the barriers you encountered creating this network?
We have exclusive ‘invest and pitch’ events – that are serving the interest and need of different target audiences: investors and startups alike - in many European countries (8-10 per year). Currently our network involves about 3,500 investors from all over Europe.
In the beginning everybody was investing locally, very close to where they operate. They did not look across borders and didn’t even think about exploring joint opportunities with co-investors from neighbouring countries. After a while they really appreciated the European view and the high-quality selection of opportunities. This was key.
We analyse around 2,500 companies a year. It is a tremendous effort in analysing new opportunities. We try to focus our events on specific topics, like reg tech, smart mobility or AI.
How can a normal investor apply?
We accept certified or professional investors according to European regulations (AIFM-D). Applications can be made online, but most memberships come through introductions I have to admit. We provide training and capacity building via the Business Angels Institute. We are open to everyone serious, who is in the space.
Talking about European regulations, what could the EU do to improve cross border (angel) investing in your opinion?
Very helpful would be a European company register, in English. Right now, when we compare all European countries, not even the structure of what is in the register is the same. They are in all the national languages. And, although there is already a work-around way available today - our portfolio company www.kompany.com offers online access to all registers, including translations -, a single standard would help a lot and increase cross-border business in Europe.
Furthermore, it would be helpful to have a standardized regulation on the tech side of things. Some countries have figured out how to tax cryptocurrency trades, offer incentives for investors, while others have not yet. From a European market perspective it would be very helpful if this would be harmonized as well (ideally including taxes).
For angel investing, European angel investors should certify and earn a fast track to governmental grants and support programs. Certified business angels – professionals – with a fast track access would enable faster and higher investments, ultimately, more jobs and even economic growth. Today bureaucracy is terrible for national and European programs.
You seem very positively engaged with Europe and the EU? Why is this?
I saw statistics of 2018 where, if you combine all angel investing in Europe, you came up to the same amount, invested in one year in New York, USA in early-stage venture.
Europe is a small market; we can’t afford to work in fragmented silos. I believe every company should work on a European scale, with investors and networks on the same European scale, in order to win the global race of innovation.
What worries me is that we use local and national grants to leverage startup ecosystems and development but exit our companies and talent to other parts of the world. This is structurally wrong. We are building companies in Europe and selling them to the rest of the world.
Everybody is raving about exits in US and China. I would love to see more IPO or trade-sale exits in Europe. We need to get stronger as a European market and more confident in our own tech.
Tell me about what you are doing with the Business Angels Institute.
The idea was always to provide more standardized and profound education for angel investing and give startup founders security that certified investors know what they are doing.
We wrote a syllabus for angel investing together with 6 universities and created a professional ISO-standardized test for angel investing for “Certified Business Angels (CBA)”. We basically adopted what CFA Institute did in finance for angel investing.
We felt this would help in the business angel space and save a lot of money (usually lost in the learning curve of angel investors in the first couple years). Personally, I learned this the hard way. In my own companies I had good business angels, but also business ‘devils’. Certified investors would have been more transparent and helpful.
The Kaufmann Institute was our role model – they support angel and venture finance research on a broad scale and offer trainings for investors and startups. They are supporting a lot of important aspects a healthy ecosystem needs.
No wonder most angel research publications were based on US and UK market data. The rest of Europe didn’t provide data or support academic research. This is a pity,
because at the policy level you need the academic research findings. Data and research are important for the regulators to understand market dynamics. Therefore, we built this NPO and started investing in this kind of European research.
We are turning this into a foundation in 2020: The ‘European Entrepreneurship and Innovation Foundation’ – we aim to grow our network of academic researchers and look for supporters as well as sponsors to take this to the next level.
The idea of this whole thing is to develop European (if not global) standards. Certified professionals that could work on a fast track and empower the ecosystem in its war of talent in a global race of innovation would be more important for Europe than ever – if we want to stay future proof.
I know most investors are taking angel investing seriously. They want to be educated and perform the best they can.
We see that other non-European countries like our model. Our Partners in KSA, work with the government and will introduce the CBA program later this year as a standard. We have trained the first business angels club in the kingdom in Bahrain last year and look forward to further trainings in this region.
In fact, we were ‘exploding’ in operations. We are converting our program into a digital platform over the course of this summer and will make the content to the available in 40 languages (by adding subtitles).
As to researchers, why is there no academic journal on Angel investing?
It is quite hard to conduct a journal on angel investing. The publishers say the field is too small. You need at least 4 published editions per year for the impact factor to be high enough to attract publishing academics.
What do you think are Europe’s biggest assets?
We believe one of the biggest assets of Europe is the fundamental research done on universities. There is a lot of potential for technology transfer – if we only explore those raw diamonds in archives of universities. Until now we failed to build a bridge between research and innovation – one that helps bring academic findings into reality and to the market.
We have good TTO’s in Europe. But there is a treasure of innovation built by taxpayer money which is unused, waiting to get a chance on the market.
Improving this I believe is something that would make the EU more future proof.
What about your initiative “Tech made in Europe” – why did you start this?
At the beginning of the COVID-19 crisis, I saw that everybody went into remote work.
The governments, the schools, they all reacted. But what software did they choose, all of them? Zoom and Microsoft Teams. I was shocked.
They completely missed out that the global leading school software is actually made in Austria - they didn’t realize Grape.io was a EU alternative to Slack or Microsoft Teams, or courseticket to gotowebinar, or Eyeson to Zoom. Even the Austrian government opted for MS Teams.
In a space of two weeks, the MS Teams gained access to all schools and Microsoft ultimately had access to all school kids and parents in Austria. There was not even a question, a choice - no tender, no chance for European tech to prove that it is great.
When you look at the U.S., European companies would not even be included in a government tender for such topics – understandable, but why does Europe ignore EU tech as well?
Our own governments have the impression European tech is not good enough. Are you serious? This makes zero sense.
If our talent was that bad, why would w see those exits by US companies all the time. Therefore, I really kindly ask everyone to sign up its companies on our very simple web app.
The idea is to build this database of European software companies and make them transparent as alternatives to US or Chinese tech. We need to make people aware there are European competitors - raised by your tax money – which are great and worth working with.
What are your sources of knowledge and insight? What should we read and who should we follow on angel investing/entrepreneurship?
We have a public list of academic researchers and a list of good books to read at www.businessangelinstitute.org. This is probably a good source to start – if you feel a name is missing, please tell us.
Finally, which of your startups in your portfolio is ready to scale in Europe (which one would you like to put in the spotlight)?
At the European Super Angels Club we invest almost always in companies which are ready to scale in Europe,but let me point out 5 which are the most advanced and hopefully interesting for everyone at BAE: www.firstbird.com (Recruiting - HR Tech), www.kompany.com (Global Company Register – Top 5 Global Reg-Tech), www.sponsoo.de (Europes leading Marketplace for Sports Sponsoring) and grape.io (GDPR compliant, AI driven, EU competitor of SLACK or MS Teams).
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