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“The path to profit must be shorter.”

TECHSCALE! Yoni Goldwasser is the Director of Venture Development at APX, an early-stage startup investor and accelerator in Berlin. As he told Jewell Sparks, the coronavirus has already triggered major changes for his field.

Berlin’s startup ecosystem of is one of the world’s most intriguing communities. According to Dealroom, of Europe’s 29 $1 billion+ VC-backed tech companies, 11 are in Berlin. The city’s strength comes from it’s diverse talent, resources and accelerator business models. According to the Founder Institute, there are more than 10 active accelerators operating in Berlin. One of the earliest and most impactful accelerators was founded in 2013 by Axel Springer in collaboration with Plug and Play. The accelerator prided itself on its global network and international opportunities that it was able to offer to it’s 100+ accelerated companies. Companies such as N26, Zenmate, and ShareTheMeal were accelerated through the program.  

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Yoni Goldwasser of APX. (Photo by Dominik Tryba.)

In 2018, Axel Springer teamed up with Porsche to form an early-stage investor and accelerator known as APX.  APX was founded by Henric Hungerhoff and Joerg Rheinboldt. By cultivating new business models centered around scalable, digital ideas by founders who aspire to establish a global footprint. APX was the first to position itself as an industry agnostic accelerator strictly focused on digital. Given the rapid change in business transformation Covid-19 brought about, their calculated approach has paid off. Since 2018, APX has invested in more than 50 companies, spanning across 20 different countries together with 100+ co-investors. 

Dr. Yoni Goldwasser is the Director of Venture Development at APX, one of the most prominent early-stage startup investors and accelerators across the globe. He heads up APXs Digital Health Initiative (DHI). DHI’s goal is to help bridge the gap between innovation and commercialization around digital health in Berlin, and more broadly, Germany. As he told Jewell Sparks, the accelerator is still industry agnostic, and they still look for digital business models that are expandable beyond the current crisis in order to build companies that are able to scale and endure.

What is your investment focus?  

At APX, we’re glad to have Axel Springer and Porsche as shareholders, as they both understand the value of supporting great European startups. Both organizations value exceptional customer experiences and innovative technology solutions. Similar to our predecessor Axel Springer Plug & Play (a joint venture of Axel Springer and Plug and Play), APX’s investment focus is on financial return and great impact. APX is not a strategic investor. We invest in digital, user-centric business models across industries. We’re looking for the best teams, with ambitions to make a positive impact and create a healthier, more sustainable future – whether that’s within mobility, media, fashion, lifestyle, health, etc.

You have a medical degree and a business degree. You were born in Israel, have lived and worked in the states and now live in Germany.  How important is it for organizations to seek out multi-dimensional staff in the future? 

Having a diverse team in terms of backgrounds and experiences at APX makes us better at what we do. Having a non-monolithic view of the world helps us understand our founders better and hopefully lets us understand their markets more fully. Just as variety in a species makes it more resilient and adaptable to new challenges, so goes it in business. As an example, hiring someone with my rich medical / digital health background may have been non-obvious in an accelerator that is industry-agnostic. But now we are positioned to provide unique value to digital health startups in a world that will very much be focused on these solutions in the decade to come.

What exactly is your investment model?

We invest in very early-stage startups across Europe, often as their first investor. We support each team with an investment of €50,000 for a five-percent stake, access to our large network of mentors, experts and investors, and a tailor-made growth program addressing the exact needs and challenges of each team to win their first paying customers. We help them become investor-ready and close a follow-on financing round. We are very transparent with our terms and deal, and we see that almost all startups who apply with us are happy to take it. 

Given the current state of the world, can you comment on the investment shift you foresee in the immediate future? 

These are uncertain times and no one can predict how everything will develop. In general, we see very diverse reactions in our network. Some investors installed a moratorium for two or three months to see where things are going, others focus on their portfolio and others see this as an opportunity. It depends on how long the current “normal” lasts, I think 

How many startups did you invest in during 2019? 

In 2019, APX invested in 26 startups. Since APX started in March 2018, we have invested in more than 50 companies with founders from over 20 countries. As we are industry-agnostic, our investments span across PropTech, MediaTech, Mobility, e-Sports, FashionTech, Digital Health, HRTech, and more, and we will continue to do so.

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A discussion at APX, an early-stage investor in Berlin. (Photo supplied by APX.)

For years, your program has mentioned that you have a great network. Can you elaborate on those networks and share examples of how those networks have aided your founders?

APX maintains a comprehensive and ever-growing network of partners, including investors, mentors, experts, and corporate workers. Through this network, our team aims to facilitate specific and meaningful connections for every startup we invest in. This can be for access to suppliers, access to customers, strategic partnerships or future investments. Experience has shown us just how sustainable the relationships that evolve from these conversations, negotiations or agreements can be.

The pandemic has changed the way we work and interact with others. How will the global pandemic influence your model?

The pandemic hasn’t changed our current accelerator business model. As an investor, it’s as relevant as ever to meet founders and sign term sheets — only now fully virtual. We are still looking for strong founding teams with incredible ideas and sustainable digital business models. Having said that, we’re certainly expecting to see more founders looking at solutions that solve the new problem of the Covid / post-Covid era (I authored a medium post and longer POV piece about this recently), but the models behind them should be expandable beyond the current crisis to create profitable businesses that scale and endure. We are here to help these founders figure out how to reach a product-market fit faster and with fewer errors, leading them on a success path to further investment and growth.

What are some of the challenges across the globe as it relates to identifying, containing and tracing those with the coronavirus?

In my opinion, tracing and tracking capabilities will be part and parcel of the strategies we must develop in preparation for future bio-disasters (natural or man-made). The challenge with the systems we have today is that they are too labour intensive and sacrifice privacy for the sake of security, and thus subject to abuse by whoever controls them. We need to challenge founders and innovators to create technologies that don’t force us to make these tradeoffs — or at least mitigate them.

What are your thoughts on Germany deciding to forfeit a German-made tracking solution and deciding to utilize Google and Apple’s decentralized solution instead? 

The jury is out! We will have to see what kind of applications materialize around this and whether sufficient safeguards have been put in, including potential sunsetting provisions.

Due to regulatory issues, patient confidentiality, etc, health solutions are not cheap. Do you think accelerators will need to adjust their investment models in the future, based upon market entry barriers?

The cost of getting to market already figures into our investment strategy. It’s part of the reason why we invest in digital-only models, and why, in healthcare, we have stuck to digital health (as opposed to biotech, devices, or pharmaceuticals). I think the work that Jens Spahn is doing right now, in collaboration with the HIH around the  Digital Health Care Act (DVG) / digital health application (DiGA) regulation, is a beacon to innovators that Germany is ready to transform into a world-leading market for digital health solutions. Other countries in the EU should follow this example and make it easier for innovators to reach the market. This is a key way to reduce the risk / reward ratio facing early-stage investors, including APX.

Beyond the coronavirus, how will business operations look in 2020?

I think Covid-19 will be a catalyst for changes we were observing already. As one of our corporate parents is a global mobility leader, we have long been thinking about whether we will see people moving around differently in the future. I personally believe that the future of mobility is immobility. This creates a slew of opportunities for everyone who is currently in mobility and for those outside this industry to create the new future.

It’s amazing how the current market conditions have forced organizations to truly shift to a business-to-consumer model (remote health monitoring, contact tracing, etc).  The middleman needs to add value in order to be part of the transaction process. Do you agree? 

I don’t see this as being forced, but rather seizing upon a tectonic change in attitudes in the general public towards digital health. In Israel, for example, where digital health was already on an upswing, the largest private hospital chain reported an increase in teleconsultations of over 800% in one week as the crisis broke. I think clever innovators are grasping this is a dawn of a new age for digital health, as attitudes change to how healthcare is provided, especially during crises.

This is a dawn of a new age for digital health.

Public safety and health is on the minds of every organization, not only health professionals. How will APX ensure that you are part of the solution?

I think we are uniquely positioned to help early-stage founders make a real impact by connecting them to the right resources, helping them reach product-market fit and prevent them from making some critical mistakes early on. Creating digital health solutions will remain complex. As an innovator, you should generally be thinking about your impact on patients, doctors and nurses, hospitals, insurers and regulators. Some of these have competing interests, and nailing down how to create the right service or product will remain elusive. We want to help founders have their best shot at cracking this.

As it relates to your future investments, what types of companies do you see taking a front seat?

Again, our basic thesis remains the same: we want to invest in great founders who are busy creating world-class digital products. Their business models must be rapidly scalable and enduring. Revenue growth remains important, but a path to profitability needs to be shorter than it was prior to the crisis. That being said, we see much more opportunity for innovation in digital health and we encourage any founders who think they match the criteria above to reach out to us for a discussion, both as part of the DHI community and for an investment. We are also excited to see other innovators who can tell us how their product will match a vision of the post-Covid era.