Bio
Sebastian Pötzsch is Chief Operating Officer (COO) of the PATENTPOOL Group and is responsible for strategic issues, corporate development and refinancing strategies among all ventures.
Sebastian has many years of experience in management consulting and banking, including at Accenture Strategy and Deloitte Consulting. Furthermore, he is founding partner of Praetorius Capital GmbH.
Sebastian holds a bachelor’s degree in Business Law as well as a Master of Science in General Management from the EBS-University (former European Business School) in Oestrich-Winkel (Germany).
Venture Capital Companies / Venture Capital Firms Series Overview
Our VC interview focus on interviewing top GPs from the top Venture Capital Companies / Venture Capital Firms, from the heart of SV to Europe and other geographies, with different investment stages, philosophies and value-adding focuses as board members. We discuss topics such as fundraising from LPs, adding value as a board member, level of support to portfolio companies, among other important everyday topics for a GP.
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Interview
With so many different portfolio companies in different stages of growth and success, how do you balance how much effort and persistence to put into each one?
PATENPOOL Group primarily identifies and then, if proven valuable, carefully incubates disruptive innovations. This process obviously involves, to build gradually a support ecology around game-changing ideas, which support the end-goal that they also become commercially valuable companies. Clearly, it is also true, that at different growth-stages of these organizations, different skillsets are required, and therefore different members of our core team become more active at our portfolio of ventures.
The fact is, that we focus on similar key periods across the managed company landscape, where the same skillsets are needed across very comparable innovation periods within the development cycle and growth spectrum. That’s the time where we prioritize and streamline innovation tasks and specialized teams, which align complimentary or essential external resources, apply experience and knowledge transfer, and optimize and foster these skillsets within the permanent staff our ventures. Especially after break-even, we transfer responsibilities from our core team towards these optimized human resources, which working for the respective venture, exclusively. We therefore foster the skills of highly adaptive learning organizations, which are complimentary to the disruptive technology incubation processes.
How do you balance your time between (1) sourcing quality prospect ventures (2) doing due diligence for prospective investments and (3) helping current entrepreneurs? Which of these are you comfortable outsourcing to principals/analysts and which do you absolutely have to do yourself?
(1) After our 22 years of history within the German market, we are very well-connected and, thus, in the comfortable position of having a really great deal-flow. We hardly spend some time into active sourcing. Innovators find us. They heard about us at some stage, and they come usually well prepared.
(2) After initial prescreening, to eliminate all the undefined ‘dreams of schemes,’ we engage professional analysts and external experts that conduct technical due diligence. We always include one dedicated member of our management team, to oversee the Due Diligence process. The final investment decisions are always made together as a team. A positive investment decision has to be made unanimous, to archive strong consensus and team support, when a decision is finally made.
(3) Unlike conventional venture capital companies, we usually take over the operational management when implementing our projects. In this way, a clear allocation of tasks is always ensured: Our experts take on all business functions so that the innovators can concentrate exclusively on the technical development. We allocate the biggest share of our efforts to create value through actively building the business operation infrastructures of our ventures, which is complimentary to the innovation itself. It’s a win-win approach.
Many GPs are good investors but don’t master one of the core skills – adding value as a board member. What do you think are some tricks to a productive relationship with founders? What should the culture be for the board and CEO for a quality relationship?
The simple answer would be the one we gave in the last question. However, the subject is in reality much more sophisticated. When Mr. Gottlieb Daimler and Carl Benz innovated the automobile, there were no highways, no gas stations, no auto repair shops and no supporting automotive part supply industry, nor car dealerships to sell these vehicles. But all of this did not stop them, to turn this invention into a big and lasting success, because their financial backers could see the bigger picture, in how it emerged over time, and what problems it would solve along the way, including new professions it would create.
Good Investors must be able to see the world with the eyes and visions of the inventor to fully understand the scope of invention, and the impact it has. Only in this way investor and inventor can interact in a productive and successful way. The important lesson to take away is, not to focus only on the financial return, but to first create real value, and financial success will come in many and greater ways as expected.
Nowadays, mental health is more present than ever, with things like burnout, stress, depression, among others. What do you think of external intervenients like executive coaches, both for a founder and for a VC partner? Do they usually add value?
There is no sustainable success without health. Our job is more like a marathon than a sprint. Subsequently, we encourage our team and ourselves to stay healthy.
Personally, I try to get a proper mix between work and quality time with my family. Sport, healthy food and meditation do the rest…
When it comes to external intervenients, their value add highly depends on their performance as well as the fit between their approach and the client. Not everything works with everyone.
How do you solve important conflicts with CEOs, such as lack of alignment on exits, strategy, or just the CEO being in denial about things like performance? Does the resolution begin with a private conversation or with involving other board members in a decision?
We are living a very collaborative corporate culture aiming for a joint understanding of problems and their solutions. I would always seek the private conversation prior to involving other board members.
When raising money from LPs, what is the thing you emphasize the most when “selling” the fund? Past returns? Team expertise (domain and/or entrepreneurial expertise)? Unique angle?
In order to sell we always try to differentiate ourselves from others. It’s a combination of multiple arguments that are all interconnected:
- Unique fund setup with an open seed fund
- Unique investment approach with disruptive tech-stories
- Unique team combining the right skills and experiences for the respective portfolio
- How do you add value together with your partners? And how do you monetarize that value for your partners and investors?
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