Normally you’d expect news of a company that has made 38 investments and four acquisitions in under four years, in what is fast becoming Europe’s tech capital, to be spreading like wildfire. Yet Project A Ventures, Berlin’s fast-growing VC upstart, has managed to fly below most radars – at least, most operating outside Germany.
The company’s rise to fame has not, however, eluded some of Silicon Valley’s top funds: Accel, Balderton, Bessemer Ventures, Index and Google Ventures have all co-invested with Project A recently. The result is a firm with two feet firmly in the European early-stage sphere, that has thus far managed to eschew the publicity of a bigger and much-lauded neighbor.
But Rocket Internet’s days as Berlin’s only headline-grabbing VC are numbered. And in Project A’s management team, they’ve a very familiar rival. Three of the latter’s five-man board came directly from Rocket. But as one of those, founding partner Uwe Horstmann, told me, his company does not see Rocket as a direct competitor.
“The ecosystem in Berlin is still relatively nascent and there is definitely a shortage of venture capital and investors,” he told Red Herring. “A lot of people working here have worked at Rocket Internet before and we share a passion for execution. However, we mainly invest in founder-led companies, whereas Rocket still focuses on incubation. And we tend to be a lot more open for innovative, technology-based and B2B-focused models, e.g. all our investments in the field of digital infrastructure.”
The first thing you notice when entering Project A’s inconspicuous headquarters, in row upon row of staff and entrepreneur mugshots. It is an instant reminder of the company’s focus on people rather than platforms. And in a city that is outperforming on almost every level, those people are doing plenty right.
Berlin recently eclipsed London as Europe’s premier venture capital destination: last year its firms put €3.1 billion ($3.4 billion) into local startups, a five-fold increase on 2013 figures. 70% of that investment was on companies in the Hauptstadt, which, with its cheap overheads and wealth of technical talent, has fast become the continent’s go-to spot for ambitious startups.
Project A has become a leading light in that digital revolution. The firm will soon announce a €120 million ($137 million) fund, making it one of Germany’s largest VCs. And rather than target the market with sweeping acquisitions and the ‘copycat’ startups with which Rocket has drawn occasional ire, Project A has poured cash into a wide range of early-stage opportunities that include e-commerce, digital infrastructure and SaaS platforms.
“We always intended to have a clear value-add to our ventures from start,” Horstmann added. “This appears to be working operationally and appears to be recognized by entrepreneurs, who see a true value in what we do.”
A fellow Rocket transplant is Christian Weiss, Project A’s portfolio management, HR and venture coaching czar. He told me that it is that operational approach is what sets his charges aside from the competition. “We can master the product in a way that really helps,” he said.
Two recent deals that have exemplified Project A’s diverse portfolio are Junomedical and PETS DELi. The former is a medical travel platform, while the latter is a Berlin-based provider of fresh and healthy cat and dog food. Catawiki is an collectibles auction site, while Wine In Black is a fast-growing online wine club.
Wine In Black is part of a recent move by Project A into Latin America, based in Brazilian capital city Sao Paulo and spearheaded by regional managing director Olivier Raussin. It has already invested in five firms. While most European VCs quickly eye an office in Silicon Valley, London or New York, Horstmann argues that Brazil is the perfect launchpad given Project A’s specialities.
“We wanted to build a bridge to an important emerging market, because we still believe that this can be a value driver for our portfolio companies. That’s why we also have five investments in Latam,” he said. “We certainly also want to build a bridge to the US market, where several of our portfolio companies are already acting, e.g. Tictail and Eyeota. However, there are no plans for a physical office in the US right now.”
Neither is Project A focussed on quick expansions out of Germany for its portfolio. “We will not break the model to a global scale,” Weiss told me. “We will not scale until we really know how to attract the customer. I think that makes the thing much healthier.”
And besides, why rush when everything points to Berlin as a growing and fearsome tech powerhouse? “We think that there is going to be another wave of companies focusing more on the digitalization of the industrial sector and we think that Germany and Berlin definitely have all the ingredients to play a major role in that way,” said Horstmann. “But it’s too early to say yet to what extend this role will emerge. This will not be a challenging of Silicon Valley’s position, more a coexistence with a different focus and setup.”
That’s not to say Project A’s approach is totally unique: there’s certainly a whiff of the Andreessen Horowitzes about Horstmann, Weiss and co. But it’s a plan that is working, and with some brio at that. As Horstmann says, there is no great ambition to change things just yet: “We think that we can bring in our expertise at a very early stage, to secure the ideal configuration of a company. The breath and the depth of Berlin’s startup scene has developed rapidly over the last few years,” he added. “Therefore we see more than enough attractive opportunities.”