A Berlin VC Explains How To Construct A “Free And Open” Startup Ecosystem

vol.07Cavalry Ventures , Founding and Managing Partner

Rouven Dresselhaus


PROFILERouven Dresselhaus
Founding and Managing Partner
Contributes his expertise in strategic decision making, e.g. investment strategies, portfolio management as well as fundraising support to back the growth of portfolio companies. At Cavalry, Rouven is responsible for the portfolio companies McMakler and FreightHub.

When the Berlin startup “Rocket Internet” went public in 2014, it was the highest-priced IPO in all of Europe. Since then, Berlin has become known as a European startup hub, drawing in scores of young creators. According to the Startup Genome “2017 Global Startup Ecosystem Ranking,” Berlin’s startup ecosystem ranks 7th globally and 2nd in Europe behind London.

And it’s in Berlin that “Cavalry Ventures” has supported many early-stage startups. Since 2008, they’ve invested in and founded more than 70 companies, exiting 9 and going public with 1, generating a market value of more than $10 billion in the process.

But how did Berlin’s attractive startup ecosystem develop, and how does it view “TOKYO”? We’ve asked this question to Rouven Dresselhaus of “Cavalry Ventures.”

It’s been said that more than 500 startups are created every year in Berlin. How and when did Berlin become Europe’s leading startup hub?
People have been creating startups in Berlin since the late 1990s, but its startup ecosystem suddenly matured in the last 10 years thanks to companies like the food delivery service “Delivery Hero” or the e-commerce business “Zalando” etc. They were among the first Berlin startups with a market value of billions of dollars.

Because they’ve achieved success early now, they can now support a new generation of startups by sharing valuable knowledge with them or introducing them to VCs. As Berlin continues to prosper as a startup hub, entrepreneurs continue to support each other behind the scenes in many different ways.
What does Berlin’s or Germany’s other startup ecosystems have that other places don’t?
Berlin’s free and open culture is what’s always drawn creators there. Rock musicians like David Bowie and Iggy Pop lived in Berlin during the ‘70s and produced some of their best works there. That must be somehow connected to Berlin’s unique atmosphere. And that DNA is still very much alive there.

The entrepreneurial spirit has taken root across Germany a long time ago and is here to stay. Older industries like automotive manufacturing and newer businesses like IT interact and exist in close proximity there, which is another one of Berlin’s advantages. Going forward, you can also expect Berlin to excel in cutting-edge fields like blockchain.
What kind of work is “Cavalry Ventures” engaged in?/dt>
We’re primarily focused on working with enterprises we’ve invested in and businesses we plan to invest in. When choosing an entrepreneur to support, we first ask ourselves “Are they taking the bull by the horns and trying to make bold ideas a reality?” We live together with daring entrepreneurs so no two days are the same. Every day is full of change. We also like to play Nintendo games for fun.
Supporting startups is not just about investments. You also need to foster the right ecosystem. How does “Cavalry Ventures” go about that?
We attach a lot of importance to maintaining relationships with entrepreneurs who have achieved success in the past. We do it because startup ecosystems are cyclical, and they won’t mature unless the previous, successful generation passes on their knowledge to the next group of entrepreneurs.

Above all else, though, we just try to be entrepreneurs. As long as we can be that, we don’t mind doing any kind of work.

What do you think about Japan’s startup ecosystem?/dt>
It’s still developing but I get the feeling that it’s hiding a lot of potential. I think that the level of maturity of any given startup ecosystem is proportional to the number of companies within it with successful exits. A lot of people forget this but it took Silicon Valley more than 40 years to get to where they are today. Now, every city is trying to follow in their footsteps and replicate their success, but at the same time, as I understand it, they’re also exploring new kinds of ecosystems.
In what area do you think Japan has the most potential?
One of them is blockchain. Blockchain has really thrived in Japan from an early stage, and I get the impression that a system to support the technology is already in place there. Next, we have robotics. When it comes to industry and technology, Japan boasts many superior researchers and an enterprise infrastructure. By using those strengths to their advantage, Japan could and should lead the world in innovation in the field of robotics.
You said that Japan’s startup ecosystem is still developing. What is necessary to help with that process?
I know I’m repeating myself but I think it’s important to support and spread the idea that experienced entrepreneurs are the backbone of a functioning startup ecosystem. Right now, Japan needs to foster that kind of culture as well. For example, at Cavalry Ventures we have plenty of entrepreneurs who have succeeded in the past, and their job is to support the next generation of startups.

Just like with X-HUB TOKYO, it’s not just about the money. What Japan needs to do right now is establish an ecosystem that can guarantee a steady circulation of knowledge and necessary know-how.