Austria is more than just Germany’s smaller neighbour. When it comes to start-ups and innovation, big things are happening here and nowhere more so than at SevenVentures. We spoke to Dr Daniel Zech, Head of SevenVentures Austria, about exciting deals, supporting Austrian start-ups in their expansion into the DACH region and why judging start-ups on TV reality show "2 Minuten, 2 Millionen” is really paying off.
In 2019 SevenVentures Austria partnered with online marketplace Shöpping. What was so special about this deal?
Our strategic aim is to use Media for Equity to support the growth of subsidiaries of large corporates. Shöpping is a subsidiary of the Austrian Post (Österreichische Post AG) and provides a platform where Austrian businesses can sell their products. It ensures that any value created stays in Austria and offers a local alternative to Amazon. Since our Media for Equity deal in 2019, the company has multiplied its revenues and with over 1000 sellers it is on its way to becoming the third biggest marketplace in Austria. In 2018 the company was turning over around €5 million, this year their turnover will be around €60 million. But we are not just looking for subsidiaries of large corporations. We are acquiring stakes in companies that are looking for a strong partner to help them emerge from the crisis and this, of course, applies to SMEs too.
You help many Austrian start-ups expand into the entire DACH region. When are Austrian start-ups ready to take this step?
Start-ups are ready when they are able to deliver their product or service to the mass market. Processes like production and distribution must be ready to fulfil demand that TV creates. There also needs to have been a certain proof of concept. The best thing about going into the entire DACH region from Austria is that you can launch essentially the same TV advertising campaign in three different markets simultaneously. This results in a massive growth potential within a very short time. We are particularly proud of our majority shareholding Marktguru, which we exported from Austria to Germany and which has since become a leading player in the digital pamphlet market.
You are one of the investors on 2 Minuten, 2 Millionen, Austria's Höhle der Löwen TV show. What have proven your best investments on the show so far?
Certainly, Instahelp which is now one of the market leaders in the DACH region for online psychological consultations and boasts Runtastic cofounder Florian Gschwandtner and Formula 1 Mercedes Boss Toto Wolff as prominent shareholders. Low carb protein bar Neoh is now the fastest growing FMCG brand in Austria and this year online tutoring platform GoStudent successfully closed an approximately €13 million Series A round during which we also sold our exit participation. We also have rising stars that we hope will develop such as Hakuma, a matcha ice tea, Dr Owl which offers a performance drink to improve concentration and increase energy and online presentation tool Presono.
How do start-ups grab your attention on the show?
Of course, I look for B2C products suitable for TV advertising but I also look at the founder team, the business model and the market. Also, the timing is vital – Instahelp, for example, received a huge push through Corona because people were suddenly suffering extreme hardships like job loss and lack of social contact. Then there was a solution on the market where people could access psychological help online without the need to wait for a physical appointment. Another example is Neoh. Our culture now is focused on health awareness and aesthetics but this wasn’t always the case. It is the right product for our times.
A nice-to-have is also if another investor offers a cash investment. This can be a huge help for a SevenVentures investment because, in addition to the company growing through TV advertising, it means the company’s liquidity is secured.
In your view, what are the most exciting companies in Austria at the moment?
The Niceshops group is an ecommerce fulfilment provider and operates 25 ecommerce niche verticals across Europe. In the last three to five years they have grown every year between 50 and 80%. In my view they are the most exciting online and digital company in Austria with the best chances of success. The founder Roland Fink is in my opinion one of the best online founders in Austria who has a real understanding of online and performance marketing. Of course he also made the great decision to work with us on TV advertising and this year we are set to generate an annual turnover of around 100 million!
In our last interview in 2018, you said that many German start-ups use Austria as a test market before they go international. Is this still the case?
Yes it is, and I think this will always be the case because of Austria’s relatively small size. In Austria you can test the product with a small campaign and then if it works out roll it out further in other countries. It is limited risk. A TV campaign in Austria can be used as a business intelligence tool: intelligence gathered from campaigns here can be used to implement campaigns more efficiently in future markets.
How does the Austrian start-up market compare to Germany and Switzerland?
Austria compares really strongly. In Speedinvest we have a VC which has €200 million available to invest. We have a great quality of life which makes Austria a great place to grow a business and attract talent, and we are also well positioned in the centre of Europe which is a really great starting point for new companies. We also have the international 4Gamechangers festival and this is a sign that Vienna is really at the forefront of innovation.