Marie Asano | High-Tech Gründerfonds
The early investor in personalised nutrition start-up Loewi is keen to continue supporting businesses with biotechnology applications to produce the food of the future
A portfolio manager at the German public-private fund High-Tech Gründerfonds (HTGF), Marie Asano invested in personalised nutrition start-up Loewi, making it her first investment in the foodtech space. With a background in chemistry and a PhD in material science, she has a sharp eye for “deep tech” and admits that technology-driven companies with the potential to disrupt the food and drink space are on her radar. Asano is Japanese and food is a big part of her culture. “Since cooking is chemistry, I guess it’s almost predestined that I like food,” she says.
HTGF focuses on investments in early-stage high-tech companies. “We’re tech-agnostic, meaning we invest in the whole spectrum of high-tech,” says Asano, noting the assets under management are a 60%-to-40% split between those owned by the German state and private corporations.
The public funds come from KfW, the German state-owned development bank, and Germany’s Federal Ministry for Economic Affairs and Energy.
“We have 33 industrial fund investors, and that’s where the private part of our structure comes from,” says Asano. “BASF, Evonik, and Bosch, for example, are among them, as well as technology and mid-sized companies that have decided to invest in innovation.”
HTGF has launched three funds since its inception in 2005, and today it has €900 million under management.
The first fund in 2005 launched with €272 million, the second fund went live in 2011 with €304 million, and the current fund, established in 2017, is €320 million.
As its name suggests, HTGF is laser-focused on technology. “The fund was created as a joint initiative between the German government and the industry to foster high-tech potential,” says Asano. “They saw that early-stage companies in this space don’t get all the venture capital funding they need because of the technology and market risk is very high.”
Asano explains that it made sense to have a vehicle that’s not a grant, to finance these companies until they mature enough to attract traditional venture capital later on.
Food technology on the radar
Asano joined HTGF three years ago after completing an MBA. “I wanted to do something between science and business,” she says, noting the German fund gave her the opportunity to invest in start-ups, enabling “deep tech” to take off. “It has been like being in a sweet shop as a child and getting to see the coolest and newest innovation every day.”
She manages a portfolio of eight companies, six of which are investments completed with her signature. She explains: “My portfolio companies are active in all kinds of areas, everything from gas monitoring to 3D printing of plastics for implants, to Loewi, the personalised nutrition platform. Another interesting investment with potential applications in the food industry is Plasmion, a company developing sensors based on ionisation sources for mass spectrometry. The sensor has applications in food quality control and food safety.”
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When it comes to investing, Asano names the team, the innovation and scalability of the business as crucial factors to consider, which is a standard for all investors. However, her approach is particular in recognising what makes a company worthy of the title ‘high-tech’.
“The company has to have a unique selling point that its founders can easily communicate, very simply, on point, so that anyone can understand,” says Asano.
She also argues that intellectual property (IP) protection is paramount, whether that is the business model know-how, an algorithm for a digital solution, the know-how of the team, or a patent. “The company’s IP has to be protected, and the company has to be the only one in the world that can do what they do.”
For Asano, innovation relates to the technology a company has, but also to the business model. And when it comes to scalability, the idea has to be successful beyond the lab bench.
“Of course, there are other factors in consideration, like growth and realistic financial planning, for example. Obviously, as an investor, we want to have an exit strategy, either through an acquisition or via an IPO,” says Asano, adding that HTGF had a portfolio company that went through the IPO path. She recognises, however, that “as a seed investor, that’s really far away”.
Loewi: High-tech nutrition
HTGF invested in Loewi in February along with a private angel investor. The start-up spun-out from the University of Munich financed by Exist, a government-backed grant.
“When I met the team of Loewi, the business had a proof of concept platform and not many clients, but in six months it managed to tap into the business-to-consumer market with a pricing strategy, a fully operating website, and is starting to generate revenue,” says Asano.
The high-tech quality of Loewi is in an algorithm that calculates macronutrients that are optimal to each person based on blood diagnostic values in combination with a personalised profile built with the input from a questionnaire about the person’s lifestyle.
Asano says she was interested in Loewi’s solution because it can track, evaluate, and monitor data, following scientific best practice from the beginning. “In the future, Loewi will have the capacity to correlate different types of data, stacking this data sets from one another.”
She also recognised that the team was another decisive factor for investing in Loewi. “We felt that the team is capable of executing the business – they have grit,” she says. “There might be failures along the way, but they get on with the work, motivated and believing in the project.”
Asano explains that investments at HTGF go through a six-year cycle, meaning that since a fund’s inception, assets are invested within six years. “We participate in the seed and follow-on investment rounds. Something has to go wrong to only participate in the seed round unless the company doesn’t need more capital or is sold,” she adds. The divestment phase takes seven years.
“Fund II is still active, and that shows that we concluded that high-tech investments take a lot of time and companies that are developing and have a lot of potential need time,” says Asano. “We’re not going to rush a sale when the company has only started to blossom. We’re not going to force an exit if it’s not going to benefit the founders, and it’s not for a fair value.”
To the point
How do you define disruptive innovation?
We have three different teams that invest in everything from hardware, automation, energy, life sciences, and so on. We look for technologies that have a completely new value proposition for its customers that don’t exist yet – that’s the innovative part – only the start-up is capable of doing. Here is where IP protection comes to play. The technology has the potential to change the market. That’s my definition of disruptive technology.
What technology trends do you see today?
Sustainability is a big trend across the life sciences industry. The Covid-19 crisis made us realise how fragile the supply chain is, and things that we take for granted, like shopping in the supermarket, can be turned upside down. Sustainable technology is now applied to packaging, changes in production to reduce carbon emissions, and on the consumer side, it means eating sustainably.
Digitalisation is a big trend, too. Many digital companies like Google and Amazon have done it and know it, but many companies in different industries, including food manufacturing, have only started the process to digitalise the business, and that means changing the infrastructure, optimising operations to keep up with demand and keeping the business afloat.
HTGF takes on high-risk investments, how do you manage risk and measure success?
Managing risks is a matter of mindset. Failure is a possibility. We have seen roughly 150 companies fail in a pool of 580 companies in which we have invested so far, but there are different degrees of success. The absolute failure, the moderate success to the point of getting our money back, the average success, and then there’s the huge success.
I think this is something that any venture capital is looking at. You know you are investing in a project that is high risk in early-stage. Risk is part of the business. But the execution and capability of the founders, their personality – do they take feedback or are they downright stubborn? – sufficient investment and good partners, in the case of a syndicate, are all part of the equation.
Having enough money, as bad as it sounds, is one way to minimise risk because it gives you a bit of a buffer when things go wrong before companies run out of capital.
Deal value in European foodtech has reached €1 billion in the first half of this year, how keen are you on this space?
Foodtech is on my radar. We would consider investing in food and drink-related start-ups, but with a twist. If the innovation is on the consumer level, that might not be 100% for us, because there are other investors on the market that target business-to-consumer food and drink that are experts and only invest in this very specialised space.
We would like to leverage our know-how in science and high-tech and would most likely invest in a biotechnology application to produce alternative proteins as a substitute for meat or dairy, for example. We invest in food but based on the market potential of scientific innovation.
When Asano becomes a company’s shareholder, she meets with the team at least once a year and says she likes to keep up regular communication with the founders to assess their progress and check if there are any requirements she can help sort out through her network.
Asano knows that foodtech is an attractive market for investing, and tells NutritionInvestor she will give it a try in the coming months. “I can tell you later whether I feel comfortable [in this space] and how it goes,” she concludes.