Interview with Carsten Maschmeyer: "Fewer startup births and more deaths"

Interest rates, inflation, the risk of recession: The crisis is not going away for startups either, says Carsten Maschmeyer.

Interview with Carsten Maschmeyer: "Fewer startup births and more deaths"

Interest rates, inflation, the risk of recession: The crisis is not going away for startups either, says Carsten Maschmeyer. The air is getting thinner for many young companies. It is now particularly important to become profitable, the investor said in an interview with Rising interest rates, high inflation, weak economy, falling share prices, geopolitical tensions. That's not a good environment for startups, is it?

Carsten Maschmeyer: Yes, the challenges are great! Financing costs have increased. More and more of the big companies are only investing their money in young companies that are already profitable - especially since they themselves are suffering from inflation. Because some of their customers are holding back, and workers are increasingly demanding higher wages to compensate for inflation. In addition, there are hardly any exits, i.e. investors or founders getting out and selling their shares, or IPOs. This is particularly felt by those startups whose business model is aimed at private end users. But this crisis has also left its mark on start-ups that have their sights set on corporate customers. Companies pay close attention to their costs and think twice about using the services of a startup now or later. Nevertheless, in every crisis there is also an opportunity. Many entrepreneurs have fought their way out of crises with new ideas. For example, Microsoft, SAP and Apple emerged from the oil crisis in the 1970s.

For years, money was literally thrown after tech startups in particular. Is the startup ecosystem currently experiencing a turning point?

That certainly applies to would-be founders with questionable business ideas. You don't get any money for the start-up and you can't even get started. And start-ups that are already on the market but have loss-making business models that only focus on expansion and where profitability is not within reach hardly ever get follow-up financing. So there are fewer startup births and more deaths.

You are involved in more than 140 startups. Do you have to go to crisis meetings more often now?

That is very limited. Essentially, the Maschmeyer Group with its funds MGV, seed

What is your advice to the founders of the companies in which you have a stake?

It is now especially important to reduce expenses and become profitable. So: No more nice-to-have projects. Now it's all about the must-haves! Business relationships that don't pay off must be ended. Instead of expanding into new countries with high start-up losses, those markets in which one is already active must be penetrated more deeply. As investors, we raise awareness of this and give tips on how this can be implemented.

There is increasing pressure on startups to become profitable faster and get their costs under control. Are you also increasing this pressure?

Printing is not my working style at all. I would like to provide assistance on the way to becoming profitable - and convey the insight of how important this is. One advantage is that the Maschmeyer Group is invested in many start-ups and we initiate an intensive exchange with each other so that founders can get help from more experienced colleagues who have already experienced the situation. And as a founder and entrepreneur, I have experienced and survived a number of crises myself. My founders can benefit from this experience.

The environment has become tougher not only for start-ups, traditional companies are also in trouble. Galeria Karstadt Kaufhof has filed for bankruptcy. Do department stores have a future at all?

I can't judge that well enough. What is clear, however, is that owner René Benko wanted to grab the prime pieces like Berlin's KaDeWe or resell them at high prices. Galeria Karstadt Kaufhof has received state aid of almost 700 million euros in an irresponsible way. In contrast to Lufthansa, the group has not yet repaid them. With the leverage of insolvency under self-administration, the aim is to get even more money, but still lay people off and sell branches. That's almost blackmail, and the overall behavior is reminiscent of locust capitalism.

Jan ganger spoke to Carsten Maschmeyer