Frankfurt Anyone who invests in start-ups needs good nerves. When an investor referred him to the American company Marqeta in 2015, CommerzVentures co-boss Stefan Tirtey wrestled with himself for a long time. At the time, it was extremely uncertain whether the payment service provider would be successful. After many sleepless nights, Tirtey and his colleagues decide “to take a risk and invest in Marqeta”.
This courage paid off. Marqeta did well and was valued at $ 16 billion when it went public earlier this summer. CommerzVentures also benefited from this thanks to its stake in the low single-digit percentage range.
The venture capital subsidiary with just eleven employees has brought its parent company profits of several hundred million euros in recent years. This makes it the most successful division of Germany’s second largest private bank, which is currently being fundamentally restructured and will cut 10,000 jobs.
In addition to Marqeta, CommerzVentures has also invested in the Israeli trading platform eToro, the British animal insurer Bought by Many and the Berlin financial technology company Mambu – all of them start-ups that are now worth several billion euros.
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The venture capital financier has numerous attractive companies in its portfolio and its profits provide “a welcome tailwind during the restructuring of Commerzbank”, praise the Deutsche Bank analysts.
Tirtey, 52, and his co-boss Patrick Meisberger, 50, have not developed starry air despite their success – on the contrary. Meisberger welcomes you to the sparsely furnished office space in downtown Frankfurt that CommerzVentures moved into a year ago. “Max Mustermann” is still on the doorbell. Meisberger makes the cappuccino for the guests himself in the kitchen. Tirtey is connected via video from the Munich area.
When asked about their recipe for success, the first thing they say is the company’s direction. In contrast to the venture capital departments of other German financial groups, they can act independently and do not have to pay attention to whether their commitments are strategically sensible for the parent company. “Our aim is to make money with our investments,” emphasizes Tirtey.
“Anyone who invested in companies at such an early stage as we did and never had a full write-off may have taken too little risk,” says the Co-Head of CommerzVentures.
This approach is well received by fintechs and other investors. Venture capital departments of other companies have the stigma of switching back and forth between strategic and financial interests. In addition, they usually lack continuity because managers within a group often move to the next department after three years. However, this does not fit in with the support of start-ups, where success often only occurs after five to ten years.
Total failures are part of the business model
CommerzVentures was founded in 2014 by the then Commerzbank boss Martin Blessing. With the help of his daughter, he wanted to stay up to date on new developments and business models in the financial sector.
When the managers at CommerzVentures deal with companies, they often speak to Commerzbank employees who are familiar with the respective area. They often also arrange direct discussions with the start-ups.
“We kill several birds with one stone,” explains Meisberger. The start-ups are happy to have access to the contact persons at Commerzbank. The bank’s employees got to know new technologies and business models. “And we get valuable feedback from them, which helps us decide whether or not to invest in the start-up,” emphasizes Meisberger.
CommerzVentures is looking for disruptive technologies and products that have the potential to be ten times better than what has been around so far. In start-ups from the finance and insurance sector, between three and eight million euros are invested in the first two financing rounds with institutional investors.
At this stage, the companies usually already have a finished product and initial sales, albeit on a manageable scale. Most of them are in the red. The risk that they will go bankrupt sooner or later is correspondingly high. This has already happened to CommerzVentures with one investment, and things are not going well with a second either.
Co-boss Tirtey, however, is not upset. “Anyone who invested in companies at such an early stage as we did and never had a full write-off may have taken too little risk,” he says. In a typical venture portfolio of 15 companies, usually only one or two companies achieve the breakthrough – and they are ultimately responsible for a positive return.
The corks only pop after a sale
At CommerzVentures, the success rate with four billion dollar start-ups is currently significantly higher than the industry average. In total, the Frankfurt-based company has so far invested in 25 companies – and three of them have already been sold again: Payworks, a provider of payment software, went to the credit card company Visa in 2019. Curv, a technology provider for digital assets, was swallowed up by the US group PayPal in spring 2021. In addition, CommerzVentures sold its shares in Marqeta at the end of the year.
The next exit is already in sight: The eToro trading platform is aiming for the US stock exchange and could be valued at around ten billion dollars.
After an IPO, there is usually a six-month period in which old investors are not allowed to sell their shares. However, CommerzVentures then tries to sell its positions quickly and in a way that is gentle on the share price. “Valuation gains are nice, but fleeting,” emphasizes Meisberger. “We only open the champagne when we have successfully sold a company and have the money in our pockets.”
CommerzVentures consists of a management company that belongs to the partners themselves and that participates in all investments to a small extent via a vehicle. The remaining funds have so far come exclusively from Commerzbank.
“We only open the champagne when we have successfully sold a company and have the money in our pockets,” emphasizes the Co-boss of CommerzVentures (Photo: Commerzbank)
But that should change in the future. “It is envisaged that external donors will also be able to participate in the future,” announced Meisberger. “That makes sense and would be the natural next step in our evolution.” Whether this will be the case with the next fund, which is already being planned, is currently being discussed.
Many founders now want to make the world a better place
CommerzVentures intends to invest more in the area of climate fintech, i.e. in companies at the interface between financial services and sustainability. “There are many experienced founders in this area who have already built and sold companies – and who now want to do something to make the world a better place,” reports Meisberger.
CommerzVentures has already invested in two Swedish companies in the sustainability sector this year – Doconomy and ClimateView – and wants to “invest even more in the future”.
The venture capital company also sees opportunities in the cryptocurrency business, which is becoming increasingly popular with banks and professional investors. CommerzVentures is therefore interested, among other things, in companies that have developed offers for institutional investors – for example in the area of regulation or customer identification, says Tirtey.
He sees great potential in payment transactions for companies that offer industry-specific solutions. “With the help of technology, payment processes can be simplified in many industries, for example in the health sector or in the construction industry.”
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