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Patricia Müller

Xpect: "The requirements in terms of traction have become much stricter recently."

Seven of our incubator startups have applied for an initial investment from the CISPA Venture Capital Fund and are currently undergoing due diligence by Sustainable & Invest. In our interview series, they tell us about the challenges of due diligence and how the startups are overcoming them. Part 3: Xpect, Mathias Bauer

Mathias, you have already founded several startups and had contact with a number of investors. How does this experience help you in the current due diligence process at Sustainable & Invest?

Mathias Bauer: In previous discussions we have of course seen what investors value and what questions they ask. This definitely helps us to be prepared for certain reactions and, if necessary, to provide appropriate arguments. In particular, the requirements in terms of traction have become much stricter recently.

What thoughts do you bring to the process? How do you decide if an investor is a good fit for the company?

Mathias Bauer: First of all, I have to know what I'm looking for. Is it "just" money, or do I also need access to a network of customers and/or application experts? Do I need strategic support for market access or structuring my company, etc.? Depending on the products I am working on, the decision can be completely different in each case. The situation is very different for a very generic technology than for a specific application in a specific domain. And finally, of course, the chemistry has to be right. If you have the feeling that the other side is not playing with open cards or does not really value your performance, you should probably stay away. On the other hand, you should not lose sight of the fact that the investors are also doing their job. And negotiating a good price is part of that. You shouldn't take that personally either.

"And finally, of course, the chemistry has to be right."

Dr.-Ing. Mathias Bauer
Chairman of the Management Board, Xpect AG

Do you have any advice for other startups that are still doing their due diligence?

Mathias Bauer: From my point of view, the most important thing is not to put yourself under pressure by inflating your company unnecessarily before the financing round and then having considerable fixed costs. Or by looking for an investor too late. There are always investors who are surprised that you are looking for another round six months before the end of the runway, but you should definitely take this time - if only to avoid having to agree to an unfavorable deal due to time pressure. That's why it's important to always have a Plan B - talks with more than one investor, alternative financing options and a backup plan in case nothing really works out.