Start-ups Need Networks: Life Science Funding in Berlin

Ute Mercker and Mike Schüßl have been promoting life science start-ups in Berlin for many years – one as Investment Director at IBB Ventures, the other as Key Account Manager Health at IBB. IBB is the investment bank of the State of Berlin and awards state subsidies. Its sister company, IBB Ventures, on the other hand, invest like und always together with private investors and venture capital firms. It provides equity, becomes a shareholder and supports them, but has to find private investors for each project who will match their investment amount.

In the bio:cap newsletter, they talk about support for start-ups in Berlin in general and the criteria IBB Ventures uses to select start-ups for funding, about where Berlin already has a campus atmosphere for life sciences and AI, and why bio:cap is launching at exactly the right time.

bio:cap: Ms Mercker, can you briefly tell us which start-ups you invest into at IBB Ventures?

Ute Mercker: It is important to note that we do not operate like a subsidy business, but like a venture capital fund. We invest in start-ups that are in the early stages and need to have their headquarters in Berlin. We have a very broad technology and market focus, ranging from healthcare, industrial technologies, creative consumer & digital up to software & IT. For the past three years, we have also been financing impact-oriented start-ups and, more recently, scientific spin-offs in deep tech.

What criteria do you use to select start-ups?

Ute Mercker: We currently have altogether around 95 portfolio companies in these various sectors. Not all of these companies will succeed in bringing their products to market or selling at a high valuation, but every company we invest in must have great potential to become very successful. At IBB Ventures, we receive around 500 enquiries a year, of which we finance around 15 start-ups – because only a few companies meet our requirements.

What do you pay particular attention to?

Ute Mercker: On technologies and products that need to have the potential to create or be unique selling points for the customer. And we are a strongly founder-focused fund, because the success of the company stands and falls with its founders. They are the ones who hold the business together in difficult times. We also look at the team, but teams can be developed. And that's exactly what founders need to understand: that in periods of strong growth, they should expand their management team very quickly and delegate responsibility in these areas.

Mr. Schüßl, IBB supports companies in all phases of their development, including start-ups, through funding programmes. What is important for these founders beyond financing in the beginning?

Mike Schüßl: It is important to help start-ups to find their way into networks where they can share their experiences with others and where everyone can benefit from each other. After all, there is no need to reinvent the wheel every time. In Berlin-Buch, there is such a location with numerous companies from the fields of life sciences, biotechnology and AI, all of which are naturally working on their own success – and yet it has a campus-like character because everyone is really there for each other. Even if your mass spectrometer breaks down one day, you can go to your neighbour and ask, ‘Can I use your device?’

Why is it worthwhile for IBB to support start-ups in the life sciences and AI sectors?

Mike Schüßl: Berlin actually offers an incredible number of opportunities in this area. If someone has an idea for a technology and is looking for a suitable partner, they will most likely find one in Berlin. Not only because of the sheer size of the city, but also because an incredible amount of expertise is concentrated here.

Ute Mercker: Over the past 20 years, Berlin has worked its way to the top of Europe's leading cities for start-ups. After the fall of the Berlin Wall, the city's economic situation remained difficult until the end of the 1990s. Because there were no local venture capital funds at the time, IBB Ventures was founded in 1997. The city also positioned itself as a centre for innovative start-ups in the biotechnology field. Our university landscape, research institutes and all the highly intelligent people who are educated here and want to stay in the city have since become a strong factor in attracting new businesses and investors. And we have enormous location advantages, particularly in the field of health and biotechnology: Charité, with its cutting-edge research, is one of the top ten most innovative hospitals in the world, and then there is the very strong municipal hospital network Vivantes and the many research institutions.

To what extent can bio:cap further promote this development not only for Berlin, but for Europe as a whole?

Ute Mercker: Berlin has also long been a strong IT location. This understanding of bringing together digital technology, data and artificial intelligence with medical applications and life sciences makes Berlin unique in Europe – which is why bio:cap has this focus. The pharmaceutical industry is interested in this combination, but so are other industries such as cloud providers. bio:cap is about bringing everyone to the table: start-ups, investors, incubators, large companies, the AI sector and life sciences. Everyone can benefit from this conference.

Mike Schüßl: If Europe acts together, we are the largest economic area in the world. In recent years, we have left the field too much to others. But if we join forces, we can do it too – that is, make start-ups with AI and life sciences big. Or Deep Tech, which requires a lot of capital. For Deep Tech, a few support programmes will not do; we need people who are serious about financing it. And that is the opportunity at bio:cap – that people who previously had no contact with each other can connect. Those scientific start-ups see: look, there is a market here that will finance our ideas, and conversely, investors see: it is not only in the USA that there are promising ideas.

Ute Mercker: I agree. We need to think European, and we need our own companies with products that meet our standards, for example in terms of data protection. In some areas, small-scale thinking no longer makes any sense. The capital market, for example, is far too fragmented. A European capital market for technology companies like the NASDAQ in the US would take us a long way forward.

Mike Schüßl: I would also say that ten years ago, the time was not yet ripe for bio:cap, as we did not yet have the necessary structures and ecosystem in place. But now is exactly the right time.