FROM IDEA TO BUSINESS MODEL: SELF-STARTERS

Why it’s the right timing – and not the right idea – that investors look for and how Merck KGaA, Darmstadt, Germany is helping accelerate startups worldwide.

The Perfect Wave

What do venture capitalists really look for in a startup and what makes the healthcare sector so attractive to entrepreneurs? We talked to Min-Sung Sean Kim, a venture capitalist with digital health investors XLHEALTH in Berlin.

First-hand experience

In 2010, while still a student, Kim founded and then sold his own startup. This means he has first-hand experience of what it is like on the other side of the fence – and a lot of respect for anyone starting their own company. In the last three years, he has assessed some 2,500 startups in the digital health sector, giving him an excellent understanding of the European startup environment.

Since 2013 until 2016 Min-Sung Sean Kim worked as a venture capitalist for the digital health investor XLHEALTH in Berlin. Since 2013 until 2016 Min-Sung Sean Kim worked as a venture capitalist for the digital health investor XLHEALTH in Berlin.

Since 2013 until 2016 Min-Sung Sean Kim worked as a venture capitalist for the digital health investor XLHEALTH in Berlin and currently he is conducting later stage investments for Allianz Group.

Gut feeling or hard facts – how do you judge a startup?

The chemistry has to be right, of course, but facts and figures come first for me. At XLHEALTH we use a detailed catalog of criteria. For example, we only invest in startups aimed at consumers. We also like to know if someone else has already invested in the startup, about the turnover, and if there has been growth.

What is the single most important factor when you decide to invest?

The timing. I speak to a variety of entrepreneurs on a daily basis and their in-depth market knowledge gives me valuable insights. We also carry out market analysis. Then we try to identify trends before they happen. The moment we spot a wave, we look for a suitable surfer. No matter how good an idea is, I only ever invest if the timing and market dynamics are right.

As soon as we spot a wave, we look for a suitable surfer. For us, the decisive factor is the timing, not the idea.

Min-Sung Sean Kim

Venture Capitalist

ALLIANZ X

What are the rewards of healthcare startups for entrepreneurs?

Our healthcare system lacks transparency and is slow to change, plus it has lost touch with the end consumer. This creates an opportunity for startups – to bridge the gap. For a long time, patients had little say in healthcare, but now smartphones have given them the means to a more informed opinion and with it the right to self-determination.

Now everyone has easy access to information about symptoms and about how an illness might affect them. You could say patients were once like children but now they’ve grown up. It follows that their interests carry more weight with health policymakers.

Private investors are often particularly reluctant to invest in the health sector. What advice would you give startups here?

Investors are always looking to make money from imbalanced information. The more information they have, the more comfortable they feel about making an investment. The health sector is very complex, which is why so many ‘Business Angels’ are put off. That’s what makes professional coaching programs like the Accelerator an ideal kick-start for young entrepreneurs in the early stages.

In addition to the mentoring component, the program also helps them build up their networks, which eventually brings them into contact with investors and/or healthcare stakeholders. Over the years I’ve seen a lot of startups that had really excellent ideas but hadn’t matured to a point that would satisfy my criteria as an investor. In those cases, I always advised them to take part in an Accelerator program.

My job gives me the chance to support entrepreneurs who want to improve the health of society. That’s my mission – what drives me on day to day.

Min-Sung Sean Kim

Venture Capitalist

ALLIANZ X

A HIGHLY DIVERSIFIED ECOSYSTEM

When the subject turns to startups, if it’s not Silicon Valley, it’s cities like London and Berlin that usually spring to mind. But there are rewards to be found looking further afield, for example, to Germany’s Rhine-Main region, or to African cities like Nairobi, Lagos, and Cape Town.

Each of these ecosystems in Africa is unique in its own. For example, Nairobi representing East Africa ─ the most financially inclusive region in Africa is birthing outstanding innovations, especially in fintech. The market potential that Lagos represents for startups is unparalleled. Investments in these startups is ripe and international businesses, the diaspora and investors are flocking to West Africa with countries like Nigeria reporting an increase of the average raise per startup of 48.7 percent in 2016. Cape Town, with a great industry reputation is enabling an environment that provides better regulations and less red tape which makes South Africa attract the most VC funding in Africa in addition to a lot of instances of startup acquisitions by multinational companies in fields like biotechnology.

As we aim to create real change in the world and believe that partnering with high potential international startups will help us to achieve this, our partnership with outstanding startup hubs within these ecosystems offers a promising opportunity.

Creating synergies across generations

“I am always excited to see young and talented founders from across the globe who are dedicated to using technology to find solutions to the world’s most pressing challenges”, says Hervé Kubwimana, Head of Accelerator Africa at Merck KGaA, Darmstadt, Germany’s Innovation Center. “My role is to facilitate connections and knowledge-sharing between these startups. And bringing their own pioneering ideas to fruition, is incredibly rewarding.”  For Hervé, this synergy across generations, as well as the individual passion he sees in in each of these innovators across the world, is unparalleled.

Hervé Kubwimana

Merck KGaA, Darmstadt, Germany Accelerator Africa

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Finding the startups with potential

Having spent over 5 years working with a collection of business incubators, accelerators, and investment funds supporting startups and SMEs across East-Africa, Herve joined our company to support the accelerator in scouting and facilitating the connections between Merck KGaA, Darmstadt, Germany, with startups, as well as in other external ideation and innovation activities. He holds a Master’s degree Business Strategy and Entrepreneurship from Cardiff University and a Bachelor's degree in Agricultural Economics and Agribusiness from the University of Rwanda.

What is the accelerator?

As the name implies, the Accelerator program speeds things up.

The program focuses on connection and collaboration of the startups, the business sectors and innovation projects at Merck KGaA, Darmstadt, Germany and offers entrepreneurs the opportunity to further develop and get their first deals.

Startups work together at the Merck KGaA, Darmstadt, Germany Nairobi Accelerator. Startups work together at the Merck KGaA, Darmstadt, Germany Nairobi Accelerator.

Digital solutions for day-to-day needs

The lack of job opportunities in Nairobi is a big incentive for talented entrepreneurs to develop their own ideas, particularly if they are young. 

In the health sector, startups look to develop digital solutions for basic problems: ensuring access to healthcare for all as well as making drugs both safe and affordable.

Bashful but successful

However, when it comes to developing new ideas, young entrepreneurs aren’t confined to the hustle and bustle of big cities. The idyllic Rhine-Main region in Germany is well known for its vineyards and banks, but it’s also home to countless startups. This is no coincidence.

It boasts the highest density of graduates in mathematics, IT, the natural sciences, and technology in Germany. But the German mentality is very different from the East African capital. “Young entrepreneurs here are very cautious and modest,” says Munya Chivasa, head of the Accelerator program of Merck KGaA, Darmstadt, Germany. But they’re no less creative. It’s just a different approach.“ The ideas and business plans you see here are mostly very sophisticated,” he says, “so what we can offer is above all knowledge of the industry – experts who can help startups perfect their business models. We also help them build up their networks and find collaborations at our company.”

Home to numerous DAX companies, the region gives startups a great chance of finding investors – the Rhine-Main Business Angels are one of the largest investor networks in Germany. Other advantages are the central location and good infrastructure, including access to Europe’s third biggest airport in Frankfurt.

Munya Chivasa

head of Merck KGaA, Darmstadt, Germany Accelerator

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Helping Acceleration Happen

Born in Zimbabwe, educated in England and Germany, at home in Darmstadt. Munya Chivasa, 31, has run the whole Accelerator program from the company’s German HQ since June 2015. With a BSc in Biochemistry and Pharmacology as well as a master’s degree in Management, he is ideally qualified for the job. Munya helped conceive the Accelerator and is now responsible for its development, expansion, and smooth running. He also helps startups establish networks of external experts and investors.

At the HQ Accelerator Program in Darmstadt, ten startups at a time learn how to develop their businesses and make connections every day. At the HQ Accelerator Program in Darmstadt, ten startups at a time learn how to develop their businesses and make connections every day.

At the HQ Accelerator Program in Darmstadt, ten startups at a time learn how to develop their businesses and make connections every day.

FUNDING

Startup life isn’t easy, especially early on. To convince an investor, you need to have a really good business idea and the ability to get it across – which is exactly what fresh startups learn in our Accelerator program This year, already ten startups had the opportunity toexchange ideas with experts, to benefit from mentoring, and to connect with important investors.

The Merck KGaA, Darmstadt, Germany’s Innovation Center in Darmstadt offers a platform where anyone who is interested can exchange ideas aside from their daily business. The Merck KGaA, Darmstadt, Germany’s Innovation Center in Darmstadt offers a platform where anyone who is interested can exchange ideas aside from their daily business.

The Merck KGaA, Darmstadt, Germany’s Innovation Center in Darmstadt offers a platform where anyone who is interested can exchange ideas aside from their daily business. Innovation Center

Acceleration Happening at the Innovation Center

How do we best contact our target group and sustain that contact long-term? How do we develop a prototype? What financing options are available? In a variety of workshops over the course of the three-month Accelerator program of Merck KGaA, Darmstadt, Germany, startups look for answers to these questions. Indeed, they benefit from rapid prototyping Labs at the Makerspace. The Accelerator is the brainchild of the company's Innovation Center in Darmstadt.

The Center offers a platform for exchange across different professions and business sectors.

The Innovation Center is designed for anyone who is curious and wants to shape the future with their ideas. In addition to startups, we encourage our own employees to pursue their projects here and, in this way, to contribute to the future of our company.

Michael Gamber

Head of the Innovation Center in Darmstadt

We assign mentors and coaches to teams, organizes events, offers startups mentoring from senior management as well as employees support to face day-to-day challenges. We assign mentors and coaches to teams, organizes events, offers startups mentoring from senior management as well as employees support to face day-to-day challenges.

Merck KGaA, Darmstadt, Germany assigns mentors and coaches to teams, organizes events, offers startups mentoring from senior management as well as employees support to face day-to-day challenges.

For the company, the Innovation Center isn’t just about supporting individual projects, but also about developing new methods, approaches, and processes that could help all of its employees in their daily work.

Partner With Us

To foster innovation and to keep providing cutting-edge science and technology for our customers, we collaborate closely with partners all over the world. We’re always seeking new opportunities to incorporate external ideas into our development portfolio.

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