The aim of the Morning Talks series of interviews is to present the impact of Dealflow.eu partnerships on the EU innovation and investment ecosystem. For this interview, we met with Alexander Pass, Investment Manager at Freigeist Capital, who participated as a jury member during the Innovation Radar Prize 2022 co-organised by the European Commission and Dealflow.eu.
Can you describe your role in your organisation and tell us a bit about your background?
My name is Alexander Pass and I work as an Investment Manager at Freigeist Capital, a privately-owned investment firm based in Germany, specializing in identifying and backing 2-3 founder teams per year at an early stage. We have a hands-on mentality and work closely together with the founders, offering our expertise in the different areas of company building. Since the focus of my studies lay on engineering disciplines, such as Chemical Engineering and Production Engineering, as well as economics, I have a strong inclination and enthusiasm for technological innovation.
What is unique about Freigeist Capital and what is the ambition behind it?
Freigeist Capital is extremely mission-driven: if an investment is made, the primary objective is to scale up meaningful enterprises that have a large impact and can positively affect many lives. What distinguishes Freigeist Capital from other VC firms is our hands-on approach. Limiting our investments to two or three firms a year allows us to fully commit to these portfolio companies, which entails assistance with every area of a company’s growth.
What key areas/markets are you currently looking into, and which funding stages do you aim for?
Our primary focus is technology. Regarding the various markets or regions, we are fairly neutral: we invest in deep tech companies with a product that shows strong technical defensibility. In terms of areas, we are not limited by an industrial focus, but rather look for companies that can make a difference in an entire industry. Currently, we are investigating the entire field of clean technology in depth, from industrial biotechnology, such as alternative proteins, to carbon-based processes, such as carbon to value. We invest early, and we are willing to take a high risk to create meaningful companies that can have a long-term impact on our planet.
What are the main challenges you face when looking to invest in EU startups or scaleups?
The main challenge when looking to invest in EU startups is finding them. Because we invest in tech-driven startups very early, we frequently look at university spinoffs. But as they often have minimal digital footprints at this stage, it is very difficult to notice and discover the two, three, or four brilliant technical individuals who will form the foundation of the next disruptive tech startup.
As an investor, what strengths and skills do you look for in companies when assessing a potential investment?
As we only invest in very tech-heavy firms, we look for founders with a strong technical DNA. Additionally, we require this type of expansive perspective and technological approach to be extended to all the team members. Lastly, both the founders and their team should be cooperative and flexible when it comes to realigning, iterating the company and the market strategy, discovering the product market fit, and developing the technology.
Can you think of important investment achievements for you, so far? Is there a success story that you can share with us?
Lillium is a vertical take-off and landing jet that is now publicly traded. It was one of our most successful stories in the deep technology industry. Another example that comes to mind is our most recent investment, Prosion Therapeutics, which was also supported by the EU. Being part of a company that develops and distributes anti-cancer drugs is meaningful and rewarding for me.
What is the biggest challenge/problem with European investors?
In my opinion, European investors are too risk-averse, especially when it comes to hardware investments. Indeed, many investors are unwilling to invest in hardware startups due to their exit cycles and product unpredictability. Nevertheless, I believe that the world cannot rely solely on software and that investors should also consider the hardware sector.
What motivated you to join forces with Dealflow.eu in search of an investment match?
As previously said, it can be challenging to identify technical enterprises in their early stages. Personally, I believe, those early grants provided by the EU are substantial to support very innovative companies. These businesses are then included in the Dealflow.eu database. Consequently, I believe we must have this visibility.
Dealflow.eu is all about supporting innovation and providing a unique matchmaking platform. Can you tell us how you have leveraged its high-potential portfolio to increase visibility and scaling opportunities?
Firstly, there are companies in which we invested before they received EU grants. In that case, we assist our portfolio companies in acquiring such awards. Secondly, we are always seeking out new investment opportunities and Dealflow.eu represents a good source to scout new companies. For example, I recently served as a jury member at one of the events held by Dealflow.eu, and I discovered that the new university-based innovations are also intriguing.
What do you see as the main advantages of companies that have been funded by the EU?
I believe there is a valley of death: bringing a company from a university R&D spinoff to the market. There exists a valley in which a firm must develop a product without earning any money and with extremely high risks, and many investors are unwilling or unable to assume these risks. Consequently, I believe it is of the utmost importance to have public funding that propels these enterprises from the R&D phase to the MVP product stage when they are more appealing.
Read our last Morning Talks issue with Saurabh Kumar: Investing in early-stage Climate Tech
More about Dealflow.eu
Supported by the European Commission, Dealflow.eu discovers and supports the most promising EU-funded innovators and connects them with relevant investors and corporates. The initiative was launched to help groundbreaking innovations secure the funding needed for their future commercialisation by offering them tailored support and matchmaking services.
To learn more about Dealflow.eu, visit https://dealflow.eu/
Disclaimer: Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the Directorate-General for Communications Networks, Content and Technology. Neither the European Union nor the granting authority can be held responsible for them
