This month Capital magazine ranked the ProSiebenSat.1 Accelerator #1 in the Digital Lab Award 2020 for the category "innovation beyond the core business", the top ranking position for the third time in a row. Dr. Fabian Heuschele, Vice President ProSiebenSat.1 Accelerator, explains their exciting business model and what it takes to push promising young start-ups to the top.
Welcome Fabian. Please tell us a little about the ProSiebenSat.1 Accelerator and how you support start-ups.
The ProSiebenSat.1 Accelerator is the early-phase investment unit of ProSiebenSat.1. We accelerate start-ups with advertising volume media (either €1.5 million or €2.5 million gross media volume, depending on the stage of the start-up) and offer them access to the extensive ProSiebenSat.1 network, provide constant mentoring (particularly at our bi-yearly bootcamp week in Berlin), and office space in Berlin. The media is offered on the basis of a convertible loan which is an ideal construct for early-phase start-ups: the companies can use the media and boost their revenues and value first before the Accelerator converts its receivable into equity after airing. It brings the benefits of TV to companies at an early stage for a very fair price.
What kind of start-ups do you invest in and what conditions must start-ups meet to qualify for a deal with the Accelerator?
We invest in mass market B2C start-ups but we are sector-agnostic. Our current portfolio of approximately 20 start-ups is wide-ranging, from Fintech and food to beauty and e-commerce. We are always looking for new trending sectors and we invest in companies which are independent as we don’t aim to get too involved on the operational side. In a nutshell: we look for a top team, a great product or service with a clear USP with the potential and readiness to scale. Our main goal is to build new media partners who can then go on to work with SevenVentures or even the Nucom Group but of course we are also happy to profit from successful exits.
In your opinion, what distinguishes the Accelerator from other corporate VCs?
We are not a classic corporate VC. Other corporate VCs tend to invest more in specific sectors and provide financing rather than media to accelerate their start-ups. We use a different approach. With our media conversion model we have a unique product. We have the backing, support and possibilities of the strong ProSiebenSat.1 brand and network which offers huge value to our portfolio companies, e.g. in the form of 360 degree marketing campaigns. We are fast, agile and have a very clever product and deal construct.
What have been your most successful deal examples and what was the recipe of their success?
An example of a really successful exit was Asana Rebel. When we started working with the company they used to sell yoga mats online, but our investment helped them to develop into one of the most successful yoga apps in the world. A successful case from our current portfolio is vegan food brand Veganz, a rather established food start-up. They develop and offer great products and the company is led by a very experienced founder who came to us at just the right time. With our media deal at hand Veganz successfully approached retailers with the aim of increasing their listings. New trading partners and our media campaign pushed sales and strengthened the brand. With our media power and support they made another huge step towards becoming the leading Vegan food brand in Germany.
The online mental health support platform Instahelp represents a very interesting growth area we believe in – eHealth. They help customers access psychologists quickly and conveniently online and are aiming to conquer the German market. Our media campaign is still running, but this company will emerge from the current corona crisis stronger as it represents the priorities of the future consumer – digital, sustainable and conscious.
Investments are our main business, but for just over a year we have also been working to develop promising incubations. An example of this is the creation of a food brand together with Jochen Schweizer. Jochen Schweizer came to us with the idea and we formed a partnership with EDEKA as retail partner and the P7S1 Accelerator as media partner. It is a really smart concept since it brings together strong players with a clear USP in a synergetic partnership.
How has the Corona crisis affected the Accelerator? Have you continued to invest?
We have continued to invest during the crisis and we recently signed two new deals. We were looking for companies which will emerge even stronger from the crisis. Nevertheless, some discussions with potential start-ups of course got postponed since they had to focus on their daily business and come up with a strategy to survive this uncertain time in the best way possible. Also some of our portfolio companies have been suffering through the crisis – our job was here to mentor as well as possible and to use our network for support.
In your view, what kind of start-ups will emerge stronger from this crisis and why?
Naturally there are winners in every crisis. So there will also be start-ups which will emerge stronger from the corona crisis than others. I predict that will be the case with modern food brands but also digital, subscription and delivery services will profit from the current situation and build up a strong consumer base because their products have a high demand due to Corona. In part also Fintech companies, especially investment and trading platforms will do well. Luxury items like high-end fashions and cosmetics, travel and anything around physical events on the other hand are struggling these days. Besides that I personally believe that every company can use the crisis to consider and develop their business model and product and maybe Corona can even have some sort of positive impact on companies that were hit hard.
What plans does the Accelerator have for the future?
Of course we always strive to further develop our portfolio of early and later-phase investments. We already offer 360 degree services, but we aim to develop our offer constantly in order to continue offering a top notch product. Furthermore we want to push the number of follow-on investments we carry out with our assets in order to strengthen our partnership with very successful partners. Lastly we intend to develop the incubation topic further and aim to lever further synergies with our strong network of in-house partners.
What will corporate venture capital look like in the future?
I think we have seen a peak in recent years with many companies experimenting. Many CVCs have invested and have experienced that it is not easy to make their investments go through the roof. They have learned that they need a clear investment strategy, synergies with their parent companies, agility, patience and commitment from the management to succeed. I think if all these factors are in place, they will have a promising future. The Corona crisis will affect the industry and we will see the big CVCs being more selective about their investments as they channel more money into the operational business. That being said, there are still substantial opportunities out there and the sector should recover in the upcoming years.