Ralf Dümmel is not only a veteran of the founding show "Die Höhle der Löwen" (DHDL), he is also one of the most active investors. In the interview, the entrepreneur takes stock. He explains how the pandemic, war and rising interest rates affect the chances of success for founders and how the "lions" are changing.
The twelfth season of "The Lion's Den" has started on television. You've been there since season three and are therefore a veteran of the show. This time you have to share a couch with your business partner Georg Kofler for the first time. How did that make you feel?
Ralf Dümmel: First of all it was of course unusual, I have to say that honestly. It was still fun because Georg and I always agreed on the deals. Many might have expected it differently, but that's how it was.
Were there any deals during the shoot that you would have made without Georg Kofler?
No, definitely not. We always quickly agreed which pitch was for us and which wasn't.
Were there any prior agreements as to which sectors you would like to invest in and which not?
Actually not at all. Actually, it was only clear that we wanted products that we could sell omni-channel, i.e. on as many sales channels as possible. That was always the model, nothing has changed.
Do you sit on a couch together for the entire season?
No, it's just a one-time thing on the first show. After that, only one of us takes part.
How did that work? Did you have a dedicated line to your business partner Georg Kofler, who is the chairman of the supervisory board of your joint company?
No, actually everyone made their own decisions because voting in between was hardly possible. But why should we? We've done well with our own deals in recent years - not all of them, of course, but most of them.
You've been there for ten seasons: do you still experience any surprises?
Yes, in any case. The founders surprise me every season and of course this one too. Actually, I always say that it was the best season now - and I know that sounds boring - but I mean it with conviction.
Why? Isn't the format told at some point after twelve seasons?
No, on the contrary. I believe that the format will improve as a result, because the founders now know very well what is important in the pitch. In this respect, the presentations are getting better and better.
Other venture capitalists like Olaf Jacobi take a very critical view of the format and believe that the very best startups don't go to "The Lion's Den" at all, but rather to professional early-stage investors or top business angels. How do you feel about this?
We can be very satisfied, but it's also true that not only the very best founders come. You don't have to talk around it. But that's also completely legitimate, because some don't want to be on television at all, for example.
Another allegation is that the completion rate for the lions is unusually high. With 135 deals, you are considered one of the most active lions. A typical venture capitalist typically closes five to ten deals a year. Why are you so much more active?
To be fair, you can't compare that. Other investors look across the entire market and pick their raisins there. We pick the raisins from a well-presorted market - and we don't take everyone for a long time.
A deal on the show does not necessarily result in a deal. How about you?
Our actual closing rate, i.e. a deal after an offer on the show, was actually very high in the past and was around 90 percent. We have the very sporting goal that it doesn't get any worse. This is a rate that is unlikely to be repeated anywhere in the world in any of the 26 DHDL formats.
To what extent does the format correspond to reality? It looks like a tribunal: here the lions, there the founders who depend on the benevolence of the lions.
All I can say is that the show is totally honest. What's different from being outside is that we don't know anything beforehand. Of course that makes things a little more difficult when we have to make a decision in 90 minutes. In practice, it's certainly a bit different: You meet once, then two weeks later, scan the market in the meantime and consult. That is not possible here. And yet: We all take the matter very seriously - "The Lion's Den" is not a fundraising gala and a commitment is also made with the clear goal of closing the deal later. Our success proves that it works.
The credit platform Creditsafe recently determined that the default risk of DHDL startups is 2.5 percent, twice as high as in the entire market. Why is that, if the format is so successful?
I was surprised and a little puzzled by the numbers. The DHDL startups were only compared with all German companies instead of with all startups. A rate of 20 percent that fail is actually very low. It is not for nothing that we speak of venture capital in the startup scene. There are many surveys according to which only one in ten German startups survives the first year. After nine seasons I can say: Our rate is brutally much higher. The "lion's den" is no guarantee of success, but more than half of the deals also work in the long term. The fact is that we have only had one insolvency out of 135 deals so far. And with things that we've done, at least the founders have walked away with profits from the initial sales. At some point nothing was reordered.
War, pandemic, rising interest rates: The environment for investors has recently deteriorated significantly, which is why many investors are more cautious about investments. How about you?
A general and a specific answer: I've been in the business for 35 years now and have experienced all of the above. What I have not yet experienced is that all things arrive at the same time. Of course that changes the market when people have less money to spend. This runs through all areas. For us too, especially in retail. And of course that also complicates the situation for startups that are not yet profitable. The company valuations will probably go down a bit. In fact, nothing will change for our role at DHDL. When we see a good idea, we invest.
Did the founders at DHDL come up with lower demands?
No, that wasn't my impression anyway. But it has to be said that the shooting took place between January and May - i.e. before and at the beginning of the war.
And what about the investors? Were there any more reserved?
No, not at all. I felt more like there were more surprises. For example, it used to be said that Judith Williams invests in everything to do with beauty. Or Carsten Maschmeyer in everything to do with tech. That has changed, the lions have become more unpredictable. In this respect, the competition between them has also become tougher. That makes it more exciting for viewers.
Jannik Tillar spoke to Ralf Dümmel
The interview first appeared on Capital.de
