in uncertain times.
in uncertain times.
... Axel Kalisch says, "and extremely so." He is the CEO of Ben Fleet Services in Berlin. The startup offers various shared mobility services and takes care of cleaning carsharing vehicles, for example. "It was most evident in our fundraising in 2022. At last, we were happy and lucky to have two strong investors already. Baloise among others believes in us. One can hear it in Berlins startup scene: young many companies struggle with the current situation: all hypergrowth startups have laid people off."
"Funds are keeping their money together," adds Nicola Büsse, co-founder of Mobiko in Munich, which offers employers a flexible mobility budget and management in one app. "For startups, it means stretching the runway so that the money lasts longer, the business figures are even more convincing. This is how you gain time and it increases the chances of a new investment."
«Especially in these times, we are glad to have strong investors like Baloise on our side who believe in us.»
When startup want to grow and reach a critical size, the debt route is often taken. Sure, it can be done without an investment, but it is highly challenging to grow quickly with limited funds. Therefore, the founders pitch to various investors, which means as much as: The startup has to sell itself and convincingly explain why capital providers should invest. "In recent years, it was possible to raise money even with a less solid business model. Money was "cheap", Patrick Wirth confirms. He’s Head of the Mobility Unit at Baloise. "Today, investors are taking a closer look.They are reluctant. So, it is difficult for startups to maintain the high valuations of recent years. At times corrections come along with more than 50% of devaluation. But it’s also true that the cooling of the investment climate does mean a normalization, too. Valuations of startups and scaleups were sometimes utopian high."
«It’s true that the cooling of the investment climate does mean a normalization, too. Valuations of startups and scaleups were utopian high in the last couple of years.»
"When valuations go down," Nicola Büsse explains, "it means that founder have to give up on a lot more shares for less money. That's painful, of course - with the risk increasing at the same time. Less money means cutting costs and slower growth, thus combined with the ever-present danger of running out of money altogether."
The Ukraine war and subsequent implications, such as rising inflation and the stock market turmoil, are creating a general uncertainty that is dampening startup momentum overall. While in Germany 3196 new companies were founded in 2021, the figure fell by 18 percent to 2618 startups in 2022. Nevertheless, start-up ecosystems as a whole are still proving to be quite resilient.
"Investors no longer want to invest in growth only," Axel Kalisch says, "but in sustainable business models - as Baloise does. For us it means to present a business case that is backed up with measures and that confirms we will become profitable soon. How do we do that? We have to focus on our existing competencies and products in the field of car care, especially in our core market Germany. Also, we have to save money wherever possible. Micro mobility or the B2C market as well as expansions abroad have been postponed due to market uncertainties. Fingers crossed it’s a matter of time until the market has recovered."