Kai Malkwitz is an entrepreneur, a business angel and a startup mentor. He successfully founded and exited two startups in the past. Since 2016, he focuses on helping entrepreneurs in founding and growing their businesses. His focus is on Energy, Mobility and Smart City solutions, mainly B2B.
Kai is just starting a new European Venture Capital Fund, the “Ecosummit Ventures Fund I”. Find out how he entered the startup world, what’s his advice for founders and what he predicts for the German startup ecosystem.
1. Hi Kai, thank you for agreeing to do the interview. Could you tell us a bit about your background and how you entered the startup world?
I see my career development through three steps: first I had to find out what I don’t want to do, then what I wanted to do and finally I had to figure out what I’m best at. Already at a young age, I knew I didn’t want to do something useless or to work for a corporation and have the same job for ten years or more. So, I started as a freelancer in IT-consulting when, in the mid-90s, there was something really big starting: the internet. I was working as a consultant for companies in Berlin, but it was quite tough to keep up with the speed of electronic business development as a “one-man band”.
There was a crucial moment in my career which put me on the right track: I pursued the most complicated corporate hiring process when I applied for the position of the Benelux Online Marketing Manager at SAP in the year 2000. I got rejected for being too entrepreneurial and figured they were right. So I started being an entrepreneur and implemented ideas myself rather than telling people how to do that.
My first startup idea failed really fast, for reasons that can be looked up in any startup guidebook. But there is no such thing as failing yourself to speed up your learning curve! After this, I understood what I wanted better, and through being a long-term founder and a CEO myself, I discovered I’m best at creating and growing organizations, as well as growing teams. That’s how I entered the startup world and found my place in it.
2. You’re a General Partner at Ecosummit Ventures, the first smart green VC in Berlin for the best smart green startups in Europe. What is it about smart green energy and mobility that particularly attracts you?
We’re on the verge of a new era: not only are these industries being disrupted thoroughly, but they are also becoming one. We are not looking at new products, we are looking at solutions that have the capacity to transform whole markets and even society. Energy, Mobility, Living & Working (Cities) are the main infrastructures of our society. They are being transformed, and so is society. It’s our task to make it beneficial and sustainable. We’re currently in the pre-marketing of the fund, which will start in 2019.
Being a VC gives us the opportunity to actively shape the future. I also strongly believe in economic sustainability. A green future will not be achieved by subsidies, we need the right framework, the best ideas and people, as well as visionary risk-taking investors. They will succeed and also make a profit in the long run.
Creating the fund together within our core team of high network individuals and industry experts is essential: they give know-how, network and trust. The partners that have committed so far include entrepreneurs, CEOs and founders. It is extremely rewarding to see that we tapped into something that people see as a need.
3. You’re a startup mentor/business coach as well. Could you share the top 3 lessons for founders you learned over the years in the startup world?
1. It’s a marathon, not a sprint: prepare for all of the stages and do it as a team. If the founders are not aligned, they will fail, regardless of the great idea or product. This learning made me choose organizational development as my latest study.
2. Get your models right and find the right KPI to steer your business. Startup financials are cash oriented, period. Don’t care about EBIT too much. The user is always right. Empirical data is what you need. And finally, don’t ever stop to adjust your business model: use loops/sprints to develop in a structured iteration process.
3. Operations are king, the idea and product come second. For example, there is a lot of ‘me too’ startups, which are just copying successful business models and adapting it to a new market. Being the first mover is just one success factor, what is more, important for sustainable success is that you know how to operate, grow and stay in the business. You also need to know how to manage a team and how to get the best out of the people that you hire because, in the end, it’s the founders’ spirit that makes the culture and the success of a startup. If the spirit of the founders is operational, they have a bigger chance of succeeding in the long run.
4. You’re also a business angel. Could you please tell us about running an investor ‘gang’ in Germany?
I love my startups, I love my gang. It’s a lot of fun, and I am happy to help founders on their way. People have a tendency to trust me, and it’s nice to have the trust of other business angels. Basically, I am the one keeping the family together and helping everyone to get better.
In a way, there is still a missing link if you’re a business angel without a professional structure. The dilemma of creating a lot of value in early startup stages but not having a budget to monetize this keeps a lot of startups from making the most of their possibilities. In the early stages, hubs and networks such as Leapfunder can help angels and startups to overcome this. In the long run, only funds can provide long-term backing.
I have a special relationship with Leapfunder because they help startups in finding early-stage investors, exchanging ideas and even resources because startups get to know each other as well as the business angels. Within the network, which is valuable, big and well organised, there are also interesting partners for our fund as long as they are oriented towards sustainability.
5. What do you predict for the German startup ecosystem in the near future? What are your plans, what will you focus on?
The ecosystem is still young and chaotic. In good German tradition, we might see a more methodical approach to funding and growth. It might be slower compared to Anglo-Saxon countries and the U.S., but it might end up with a very solid and sustainable position for Germany.
Corporates are in urgent need of innovation. I’d like and expect them to grow and innovate through acquisitions. I am a bit sceptical towards the CVCs that are created everywhere: an independent multi LP VC will always be more flexible, have a wider scope and more innovation spirit.
I’ll focus on getting the best deals into Ecosummit and helping them overcome the startup challenges ahead. We’ll help the startups we are investing in to get the right strategy, to carry out the right steps and to grow sustainable. My personal mission is to grow people and teams.
Thank you for your insights, Kai. We wish you the best of luck in your future endeavours!