insights! podcast episode #17: Start-ups and the search for investors

Joubin Rahimi:
Fantastic that you are joining us again for a new episode of insights! My name is Joubin Rahimi, and with me today: Ruth Cremer. Ruth has insights that none of us have, because they are typically closed off to us. But Ruth was so fantastic that she published them in her book. First of all, hello Ruth, great to have you here!

Ruth Cremer:
Hello, Joubin. Great to meet you.

Joubin Rahimi:
Would you like to say a couple of sentences about yourself, about your background, which is already totally exciting, and about how you came to write the book?

Ruth Cremer:
Well, two or three is always a bit difficult. I'll just give it a try, because my CV really isn't as linear as people used to like to see. I originally studied mathematics, then ended up in the start-up scene a bit even before my first job after university. I was totally hooked from the very beginning, but still somehow, maybe out of a need for security, started a different career path – only to quickly realize that it didn't suit me very well. I then went freelance, first with something else, with funding consultancy, but even then with a focus on start-ups. And yes, I then moved over to the investor side, where I learned an incredible amount about how you can finance small companies, tech companies above all, or rather what matters in the process, what prerequisites they need and so on. But I had to realize that I don't work as well with superiors and hierarchies as I do with my own structures, so I said goodbye again and went freelance once more. And then a huge number of start-ups, and a few investors as well, actually came to me and said, can't you help me? I have a meeting with investors next week, the financial plan and the pitch are coming up, they need to be reworked. On the other side sometimes also small private investors who asked, can you help us here, with the numbers basically, to value this, to do a bit of DD, that is, a due diligence process? So that's how my consultancy somehow repositioned itself a little. And then „Die Höhle der Löwen“ came along on top of that, and then a lot of new opportunities came up. And right now I'm in the middle of reinventing myself again. The book is the first step towards „I am trying to make my knowledge accessible to a larger number of founders and investors“.

Joubin Rahimi:
I've read quite a few books – people always smile about this, I don't print them out, but I like to buy them on paper. You sent me a copy, after all. I think it's really great. I've read a lot of books by e-commerce experts and the like, not so great as books in craft terms and rather thin in content too. And that isn't the case with yours at all, and I think that may also have something to do with the fact that you chose the subtitle so cleverly, namely from the pitch to the deal. Was that deliberate? Was it a coincidence?

Ruth Cremer:
It certainly wasn't a coincidence. First of all, many thanks for the praise, that means a lot to me, especially with a first book, when you're somehow unsure as well. Is it something that really adds value for people? Because that was closest to my heart. That is exactly the spot where I do most of my work, maybe even before the pitch, because I also do a lot of pitch training. But basically this process leading up to the investment, on both sides, quite a bit more on the founders' side actually. That is simply where, over the years, at DHDL but also with other clients, in my work as a university lecturer, I have gained the most experience and been able to condense the most knowledge.

Joubin Rahimi:
There really is a lot of knowledge in the book. I liked it because I was also able to take away quite a bit for my own business. I've prepared one passage for that. But should it only be read by those who say, I want to go on DHDL and want to prepare for it? Or is it for all start-ups, or also for large corporations or mid-sized companies, or for the fashion shop around the corner?

Ruth Cremer:
Just for the DHDL candidates would be a bit too narrow, I think. The concept of the book is in fact that it takes our investors, the so-called lions, and places them at the center. Because it is for them that I worked out the investor profiles. But that is only meant to be exemplary – and that is how the book is set up with everything around it – of how you prepare for investors, how investors tick and how you might approach them. The target group there is of course founders. On the other hand, it naturally also offers quite a bit of background knowledge and context for everyone who simply likes the show and is interested in start-ups. And I hope also for the odd person who is perhaps toying with the idea of investing in start-ups one day, as a private individual. Fortunately, that is spreading more and more. More and more private individuals are coming along who see it as risky, yes, but also as an investment opportunity. And of course I hope, and I'm always delighted, when I hear that someone is reading it or wants to read it who comes more from the corporate or mid-sized company world. Because I think there really are some impulses in there about how start-ups work and what you might be able to learn from them. Or about why it can make sense to look around for cooperations, for opportunities, for what else might be possible in the future. And with that I hope to give a small impression of how this world works.

Joubin Rahimi:
And I think that is exactly the right point, because a traditionally managed company or a mid-sized company – which is also typical for our clients, 100 to 500 million euros in revenue in retail for example – is shaped by its structures. They have weathered many storms and say, we'll just carry on going through them the same way. But that is changing now. Companies notice that too and say, we have to move into digitality. They keep having these iterations where they try things out, fail, try again, fail. But I think the book gives a great impression of how you build business models, how you can also scale them. That's why a company owner and managing director should simply read it, because it is not exactly the same as in traditional business. But it isn't as fancy either, it's somewhere in between, and I think that's very good.

Ruth Cremer:
Yes, absolutely. And I think that through the portraits of the investors I was able to show a little of the possibilities for working together. If you look, for example, at how someone who is involved in retail or in certain industries can also cooperate with start-ups as a strategic investor through investments. There is a great deal of potential in that, in shaping your own business model as a mid-sized or larger company a little, or positioning yourself a bit more innovatively and trying out more.

Joubin Rahimi:
And also, what is it worth? You wrote that female founders should definitely keep in mind that valuation expectations should always be strictly based on economic benchmarks. And we come across that now and then with the topic of M&A ourselves. I always say, we don't pay for emotion. Not very nice, but by the way I got that line from the car salesman who once bought our Mini: we don't pay for emotions, this is the market value. You often quickly get the impression from start-ups that they are worth an incredible amount. The unicorns, where you might really start believing in fairy tales. But I suspect those are the exceptions, aren't they? Out of the hundreds of start-ups and deals you have seen.

Ruth Cremer:
The thing is, there is an incredible amount of money in the market at the moment. A great many new investors have been founded and formed in recent years. As I just said, there are also more and more private investors, which is really important for the funding landscape, that a bit more is happening there. And I have genuinely watched that with pleasure in recent years. On the other hand, institutional investors in particular are under a certain pressure to invest, because they have the so-called limited partners who fill the pot of money they invest from. And of course those want to see that the money is actually being put to work. Incidentally, there are more and more mid-sized companies among them who take stakes in the various funds. Those aren't just DAX corporations and huge companies any more. That's quite exciting to watch, but that's just an aside. And as a result there is a certain pressure to invest, to get this money out of the door. On the other hand, people have of course also heard about a few very successful sales, M&A stories, IPOs, and because of that valuations climbed very steeply for a long time. There were of course a few industries where everyone somehow wanted to get in on the act, hype markets I like to call them. That's where valuations explode, where you get the feeling that investors are paying just to be part of it, so they don't have to say, we aren't in any of these start-ups. A very strange effect, too. And then it became more and more and more. And unfortunately founders overlook the fact that this often isn't at all favorable for them, because it can badly backfire through various things, usually tighter milestones, that is, more demanding milestones and so on. So it doesn't always have to be good for the founders. Quite a bit has happened, but that seems to have stalled a little at the moment. Many are already talking about the bubble bursting. I don't know, in any case I'm very curious to see what else comes in the next few years.

Joubin Rahimi:
They are exciting trends, too. On the one hand you say investors are under pressure to invest. We were also partly bought, by the company Strategischer Partner, into which institutional investors also invest. And they want us to grow through M&A. We do that too, it's totally exciting, but not the fancy stuff, always solid IT service business. That's why I was always able to draw such nice parallels. But back to what you said. You would also like to see more private investors going into that instead of into shares. Did I understand that correctly?

Ruth Cremer:
That is already happening. That I observe it, that I see more and more private investors and that I very, very much welcome it, because it isn't only about the money – some of these people have incredibly valuable experience in particular industries, sectors, with particular business models. And if they look for an investment that suits them, they can also pass on an incredible amount, simply as a mentor, as a sparring partner. And especially in these early phases, where it is also about sharpening the business model and taking it to the next level so that it can become scalable – because everyone always talks about scalability – private investors like that with the corresponding experience can render incredibly good service and enter into great partnerships.

Joubin Rahimi:
Because they may have already gone through the scaling in their own company. That's where the pain is, you have to get through it now. You have to invest, otherwise things won't move forward. Sometimes those are such simple tips, now you just have to hire a sales team. At synaigy we believe per se in diversity when it comes to companies and businesses. That is why German and European start-ups are so important to us and worth supporting, because we believe it is not good when a player like Amazon has more than 50 percent of online revenue and more than 50 percent of online payment revenue. And that is why we think it's great when good start-ups come onto the market and create their own market with their own ideas. I'm making this big detour because in the profile of Dagmar Wöhrl I realized that I effectively knew nothing about her, and certainly not about everything she has done. And that is what is special, I think. And I have a question about that. She really has held many roles – member of the German Bundestag, she was parliamentary state secretary, those are all big topics. And you wrote that with her what stuck above all was that she was once Miss Germany. I knew neither the one nor the other. That may be what sticks more, but it is totally stupid, because it is probably irrelevant to the selection in that context.

Ruth Cremer:
I'd say the same, yes.

Joubin Rahimi:
You are also mega successful and keep reinventing yourself. Are there tips you could simply pass on to women about how you can help shape your own image?

Ruth Cremer:
That is a totally exciting question, because I actually talk to women about it quite often. Now, I'm nowhere near as beautiful as Dagmar, but I simply believe that every woman who isn't somehow unattractive will sooner or later be confronted with the fact that she is also somehow reduced very strongly to that. I still see that with many younger female founders as well. That is changing in part, Generation Z is a bit further along than we millennials, which I find really lovely to observe. But even so, it is always the case that women generally have their appearance more in the foreground, or rather that society imposes it on them. In the profiles I took the approach of first looking at what you can research together from the outside, what the view from the outside is. What would I find if, as a founder, I wanted to prepare for Dagmar Wöhrl? I would have the meeting with her, and I would now start the classic research. And there I actually noticed that the Miss Germany topic came up again and again in the media, but relatively little was said about other things that I found far more relevant and far more exciting. Of course that isn't uninteresting, but it is somehow something that many women would later say about: I did that once and it was somehow fun and it was quite nice, but it doesn't define me and I don't want to be defined by it either. And getting out of that isn't at all easy, neither as a woman nor as a society. I'll turn 40 next year, which means the times when that was all too important are over. You change, after all, and find more self-confidence in other things. Sometimes too late, but at least. And I have actually got into the habit that when it's about the professional side and then compliments about appearance come along, I say, thank you, but that isn't my strongest feature. And I believe it is also up to society to finally stop equating the quality or the worth of women largely with their looks. On the other hand, I think it is also up to us women to appear a little more assertively perhaps and to say, hey, it's meant kindly, but quite honestly, my value, also for myself, lies elsewhere and I have so much more to offer. So do listen to what I have to say. I think that is incredibly important. Fortunately there are more and more strong women who do that too, and small changes that are noticeable.

Joubin Rahimi:
I also have the impression that in politics the people who are more eloquent – not necessarily better looking, but more eloquent, better able to handle the media, not necessarily good in terms of content – get very good results. And in this topic of presentation I find that quite remarkable as well. Quite apart from men/women, but then it happens in no time. Annalena Baerbock is, I think, simply doing a fantastic job right now, from what one hears. And a year ago the question was whether she was doing any job at all. Because of all the little things that were there before. I think it's great that she had such staying power.

Ruth Cremer:
Absolutely, for me that is also the best example of where Germany stands. No man ever had to justify beforehand what he does with his children when he ran for federal chancellor. Without going into the political discussion of whether she would have been the right one or not, I find that completely irrelevant at this point. But what was simply below the belt was some discussion about whether she could do it with small children. That would never have been up for debate with a man. And that is something where I think, poor Germany, where do you actually still stand?

Joubin Rahimi:
Ursula von der Leyen has, I believe, seven children.

Ruth Cremer:
There were similar remarks. I simply find it very, very sad. Dealing with the media is another topic entirely, because I find – and I see this on a small scale too, so to speak, when I look around at conferences, in the tech sector perhaps not quite as blatantly, but certainly in the start-up environment, especially when it goes in the direction of personal development or branding or marketing – I do have the feeling that there are a great many people on stage with very little message who can sell themselves very well. Sometimes I find it a bit sad, too, that content isn't given more room.

Joubin Rahimi:
From my view, tends to be more men than women.

Ruth Cremer:
Yes, mine too.

Joubin Rahimi:
And that leads to a hypothesis – I'll come back round to the book in a moment, then it gets exciting again ...

Ruth Cremer:
... Go on then!

Joubin Rahimi:
Ten years ago, at a trade fair of the Institut für Handelsforschung (IFH), we predicted that in 2020 or 2030 the person, the human being, the individual, would be the brand and no longer a large corporation. And for a very simple reason: you trust a person more than you trust a company. Everyone will sign up to that. And because we now have the internet and platforms everywhere, a single person can also reach everyone. Very simply thought through. And now I would claim, without having any figures to hand, that female influencers are more successful than male influencers. And I have two hypotheses about that. I prefer watching people who are less about self-presentation and more well positioned in terms of content. Where it isn't about look how great I am, but where it really is about the matter at hand. And women do that better than men. If I simply look at who I follow on certain topics, especially in the tech sector there are far more men who tell you things. But the good influencers are, from my point of view, rather female, that is, in terms of content, not necessarily in terms of follower numbers. That is always my hypothesis on that.

Ruth Cremer:
I'm actually not that deep into it. I think it always depends on what kind of influencers you're talking about. I find it totally exciting, for example, that people love working with the so-called mummy influencers. So women who have families, who simply report on their everyday lives, give tips and also present products there. They have an incredibly good conversion, especially compared with all the IT girls. That isn't meant disparagingly. They may have an incredible number of followers, but very often not such a good conversion when they present something. As I said, I know a few start-ups with suitable products that had incredibly good results with these mummy influencers. And that shows that if I don't put myself in the foreground but my lifestyle and solutions and tips for others – so I try a little to help others and focus on solving problems – then that does appeal to people more. In cosmetics, too, there are incredibly successful female influencers who publish make-up videos and so on. They show other people how certain things are done, they give tips and in the end put themselves at the service of others. And I also believe that in the long term it will generally go that way, because there are more and more of them. And the individual name or the individual as a brand will have an ever harder time establishing themselves. That's why, I believe, you will only be able to build a larger following by simply putting yourself at the service of people in some form and offering them something, showing them solutions they need. And with that we are actually back at start-ups, because that is exactly the principle – finding a solution to a problem.

Joubin Rahimi:
That is what I was getting at, finding this sweet spot. Some influencers have found it for themselves and for their community. I believe that women can be start-up founders far better in today's world and have many opportunities in today's world. A lot of it comes from direct communication, from the communication of a single person, and not from going through a press department again. And that is something where I would attribute many of the qualities to women rather than men.

Ruth Cremer:
And what I find super important, and what many women are also very good at, is empathy for the customer. Really feeling your way into it: what problem does the customer have? What do they want? Where can I help? What is he or she really looking for? So this feeling your way into others. I don't want to say that men can do that so much worse, but I do observe that there are many female founders who are simply incredibly good at it. There is a rising trend, I think, that there are more and more men who are good at it too. It is also one of the mistakes of our society to attribute empathy only to women – what nonsense! As if men couldn't be empathetic. But that is sometimes even seen as negative, and that is changing too. And then we will see many more such solutions from men again.

Joubin Rahimi:
It's always individual.

Ruth Cremer:
Sure, we're generalising heavily here.

Joubin Rahimi:
Exactly, but I don't always think pigeonholing is a bad thing – I see it with my own children, they do have their characteristics, and some are already fairly clear. Our son benefits from the fact that his older sister talks a lot and very happily. That's why, as a boy, he talks relatively a lot, but still far less than his sister. And she taught him that, because she enjoys doing it. You recognize certain things there. And I believe that is then partly cultural or also genetic. But I do think a certain basis is simply quite good and worth encouraging. And that brings me to my question: where can start-ups find information? Through your book, of course, but in the end there are surely also communities for it. Maybe you can name two or three where you would say they are super helpful. Or other anchor points for start-up founders, but also specifically ones where you would say they're great for women too.

Ruth Cremer:
I'd rather not make any direct recommendations, because I have found for myself that you have to try things out a bit and see where you fit in well yourself.

Joubin Rahimi:
Bang, first recommendation: try it, dip in.

Ruth Cremer:
Yes, really, get a taste of them, go there and have a look. There are so many and you come across them relatively easily. I travel a lot, I more or less only have a base in Cologne and am out and about in the world a great deal. A good first port of call for me, when I'm somewhere new and perhaps want to stay for one, two, three months, are coworking spaces. That's where I meet other people, and there may also be a few events. Sometimes I then offer to give a short talk or a short Q&A session. I say, I do this and that, is there any interest in it? Usually they are delighted. For people who aren't mega extroverted that works quite well, because then a lot of people come up to you and you're already in conversation and get to know people a bit. But every community has its own style, its own drive, whatever. And the kind of people is a bit different, so you have to see where you fit in. I have experienced very spiritual start-up scenes. I have experienced quite strongly right-leaning start-up scenes. I have experienced very strongly apolitical start-up scenes that are geared purely towards we-want-to-get-ahead. And it is exactly the same with the corresponding women's networks or women's communities. I find it a bit difficult, for example, because I think my definition or my understanding of feminism is often a different one from that of many women's networks. And I have the feeling there that somehow I don't quite fit in. Some I think are amazing, but with some I have the feeling something isn't right here. And I think it's the same for every founder with one network community or another. That's why you can only try things out, meet people, listen, get a taste, talk and then see what feels right, and then get involved.

Joubin Rahimi:
And that is actually totally simple – WeWork or Stadtplatz or ruhrHUB, there are loads of options.

Ruth Cremer:
It costs almost nothing and there are so many events that are simply free. Getting started is actually very, very easy. The difficult part is then working out what suits me? Where can I really take something away? What might steer me in the wrong direction? That is always a bit dangerous too, because there really are some communities or some self-appointed experts who push you very strongly in what may be the wrong direction, even though at first it sounds and feels as if it is all completely sound. And then you have to realize that you've gone the wrong way. You have to approach that, I think, with a great deal of attention and sensitivity.

Joubin Rahimi:
That was the second tip: be attentive, look closely and also question things. What are others saying? Does that make sense? Does that make sense for me?

Ruth Cremer:
Absolutely. Absolutely.

Joubin Rahimi:
We are already well over time, which isn't a problem, it has brought many insights after all. To close I would like to ask you one question: which question did I not ask that I should have asked?

Ruth Cremer:
Oh goodness, there's so much. There are so many things we haven't talked about yet. Perhaps somewhere in the area of cooperation, corporate start-ups or mid-sized company start-ups. What can mid-sized companies learn from start-ups? Because that is a bit more your topic.

Joubin Rahimi:
Then let me ask a question about it: when I walk into our office – we are basically the burger patty between the start-ups, because they are above and below us. And I keep seeing signs that large corporations have offices or an event there. You just said they can learn from it – a corporate start-up. What is their intention and what can they do? We talked about the spirit or a kind of DNA. But is it that they say, I'll send five people into a start-up office and afterwards they come back and dye us unicorn?

Ruth Cremer:
No, I don't think so. What they want is usually innovation. Either they really want tangible innovation, then also buy into a start-up pool straight away, enter into a cooperation with it, become a customer. That is all legitimate. What would benefit them far more would actually be to take a bit of the spirit with them, the culture of failure, how you build flat hierarchies that nevertheless work. Stronger communication among each other perhaps, stronger diversity and perhaps also valuing this diversity better all the way up to the highest levels, and finally understanding that diverse teams really are more innovative and more productive. There are countless studies on that. So this HOW of working, there I think they could take a lot away if they were perhaps a notch more open. And once more on the HOW: I find it quite exciting, for example – I have met founders who had remote companies long before Corona, who had 40, 50 or more than 100 employees spread completely across the world. All remote. It worked, it was scalable, they earned millions, and then Corona breaks out in Germany and everyone asks themselves how you are supposed to do this if people don't come into the office. I could only laugh, because that has somehow been my life for years and I have simply been seeing founders like that, small and large, for years. I just found that funny. And you saw that it did work. This getting stuck in and just doing it, perhaps also controlling people less, so this whole HOW – larger companies could take an incredible amount away from that. Of course you can't implement everything one to one, of course you have to look at transformation and how do I make the transition, or what of it works at all? But I think much, much more would work than they believe, and work really well. And I think the WHAT, these innovations and the cooperation and so on, would then come along more or less on the side.

Joubin Rahimi:
Interesting, the „Start with the WHY“ – they probably manage that somehow. But the HOW is a very big topic in a corporation. I always call it the clay layer, but I'd like to leave that as it is. Not the clay layer, but your closing words, and thank you for your time, thank you for the insights today, and thank you as well for the book, which we will of course link to. It is simply exciting to talk with you about it. And perhaps there will be another opportunity to pick up on a specific topic. That would make me very happy, dear Ruth.

Ruth Cremer:
Yes, me too. Thanks for having me!

Joubin Rahimi:
You're welcome. That's it, dear listeners, we look forward to comments and remarks, feel free to leave them in the comment field below.