Join Capital is an early-stage fund based in Berlin, with offices in London and Milan. The firm specializes in investing in deeptech companies with applications in the enterprise, industrial, and defense sectors. Preferring to lead or co-lead rounds, its investments range from €1 million to €5 million. Currently, Join Capital is deploying capital from its second fund, which totals €112 million, and plans to make 8-10 new investments over the next two years.
Fund strategy overview
Geography: Europe
Preferred industries: deepech: industrial, enterprise, defence applications
Investment ticket: €1-5M
Company stage: seed-Series A
Product type: software, hardware
Product stage: product market fit
Revenues: not a requirement
Q&A with Tobias Schirmer, Founding Partner at Join Capital
What are the 5 main things you look for in a startup?
We focus on identifying outliers — startups that significantly differ from their competition. We need at least one anchor point to evaluate or get excited. The key factors we consider include:
- Intellectual property: Does the startup possess robust IP that offers a competitive advantage and establishes barriers for competitors?
- Technology: is the solution innovative and capable of effectively addressing genuine problems?
- Founder: is this the right founder or founding team to tackle the identified problem?
- Execution: is the team capable of effectively executing their business plan?
- Presence: is the team successful in generating momentum within the market?
If a startup excels in one or two of these areas, they can enhance other aspects with our funding.
What disqualifies a startup as your potential investment target?
A startup may be disqualified if:
- There is no significant advantage in any of the key areas mentioned above.
- There is a misalignment of interests; it is essential for both investors and founders to share a common understanding to navigate both challenges and successes effectively.
- The time horizon does not align; we assess whether a commercial business model fits within the fund's lifetime.
What in your opinion differentiates the best founders from the rest?
The best founders typically exhibit:
- Extraordinary focus; allowing them to hone in on their objectives and tackle challenges effectively.
- Resilience; they can recover from setbacks and maintain their momentum
- Coachability; showing a willingness to accept feedback and adjust their strategies accordingly.
- Self-awareness of their competencies and deficiencies.
What startups should take into account before making a deal with a VC fund?
Startups should consider:
- Whether the VC fund’s lifetime aligns with their business timeline.
- An understanding of how success looks for the VC, including short, mid, and long-term interpretations, and aligning these with the company's capabilities.
- What the VC can bring to the table beyond capital.
- The long-term commitment involved; are visions aligned and can they see themselves working with the team?
- The ability to balance their personal life and responsibilities as a founder.
- The personal fit with partners/principals/associates; trust is essential.
What is your approach to startup valuation and preferable share in the company?
As the lead investor, we generally target an ownership stake of 10% to 20%. To establish a potential valuation range, we consider two key factors:
- the funding needs of the company and
- the founders' shareholding post-funding round, which reflects dilution.
To arrive at a valuation, we analyze relevant market multiples, along with the startup's growth potential and the competitive landscape, to evaluate the long-term value of our investment and the theoretical return to the fund upon successful follow-on investments.
How do you support your portfolio companies?
We primarily support our portfolio companies in commercial aspects by:
- Facilitating introductions via our Join Ambassador Network: offering validation and go-to-market support through our network within the industrial sector.
- Assistance with follow-on funding: providing support for follow-on funding and guidance during exits.
- Active board participation: serving as engaged board members to assist with strategic initiatives.
What are the best-performing companies in your portfolio?
Some of our current best-performing portfolio companies include:
- Germany-based Modelwise, an automated safety analysis for critical hardware systems,
- UK-based Opteran, a neuromorphic software for autonomous machines,
- Germany-based QOJ, the entanglement-based Quantum Key Distribution systems.
What are your notable lessons learned from investments that didn’t work out as expected?
- Risks of premature scaling: Understanding the pitfalls of scaling sales and marketing efforts too quickly before establishing product-market fit.
- Need for a clear ROI: Recognising the importance of presenting a well-defined ROI case for customers.
What are the hottest markets you currently look at as VC and where do you see the biggest hype?
We believe that European competitiveness and sovereignty depend on deep tech innovation in areas such as:
- The future of computing / AI,
- The future of communication / security,
- The future of sensing,
- Defence.
Our main task is to differentiate between hype and genuine solutions that can deliver on their promises.
In your view, what are the key trends that will shape the European VC scene in the coming years?
- An increased focus on deep tech and hardware,
- Unlocking LP funding from institutions like pension funds,
- Planning for longer holding periods, providing more late stage capital and aiming for bigger outcomes.
