The perennial problem of how to exit for European startups has long been a challenge. However, a new German private equity fund, FLEX Capital, aims to change this by providing a potential new exit opportunity for medium-sized software companies in the DACH region (Germany, Austria, and Switzerland).
A New Approach to Private Equity
FLEX Capital’s second fund of €300 million is an unusual use of private equity funds. The fund will focus on rolling up medium-sized German-speaking tech companies, giving them greater global scale through mergers. This approach is different from the traditional private equity model, where investors typically acquire a majority stake in a company and then seek to sell it for a profit.
A Growing Need for Exits
In recent years, many European startups have struggled to find suitable exit opportunities. The US market has historically been one of the few places where startups can achieve decent scale and potentially exit through a sale to a global tech platform or by going public. However, this has not always been an attractive option for European founders, who may prefer to stay in Europe.
A Growing Market
The DACH region is home to an estimated 11,000 medium-sized internet and software companies that generate between €5-30 million in sales per year. This provides a significant opportunity for FLEX Capital’s fund to invest in and scale these companies.
Investors Backing the Fund
FLEX Capital’s second fund has attracted investors from around the world, including fund of funds, institutional investors from Europe and the US, and successful European entrepreneurs. Some notable investors include Christoph Jost, Peter Waleczek, Felix Haas, Jan Becker, Andreas Etten, and Dr. Robert Wuttke.
A Clear Strategy
FLEX Capital’s managing partner, Christoph Jost, outlined the fund’s strategy in a statement: "In order to achieve the necessary strengthening of our own software sector in the DACH region through innovation and growth, more capital and know-how must flow into successful software and tech companies that are already category leaders… The new fund will enable us to do just that once again: to invest in outstanding entrepreneurs and management teams who are looking for a competent partner for the further development of their software companies."
A Successful Track Record
Since its foundation in 2019, FLEX Capital has acquired 13 medium-sized software companies, including Nitrado (multiplayer game hosting), ComX (B2B sales enablement platform), EVEX group (hearing care professionals and audiology services), and others.
A New Era for European Startups
FLEX Capital’s €300 million fund provides a significant boost to the European startup ecosystem. With its focus on scaling medium-sized software companies, the fund offers a new exit opportunity for founders who may not have considered traditional private equity or venture capital options. As the European startup scene continues to grow and mature, FLEX Capital’s fund is well-positioned to play a key role in supporting the development of successful software companies.
Conclusion
The challenge of finding suitable exit opportunities has long been a hurdle for European startups. However, with FLEX Capital’s €300 million fund, there is now a new option available for medium-sized software companies in the DACH region. By providing a potential exit opportunity through mergers and acquisitions, FLEX Capital’s fund offers a unique solution to this long-standing problem.
About FLEX Capital
FLEX Capital is a German private equity fund that focuses on investing in medium-sized software companies in the DACH region. The fund was founded in 2019 and has since acquired several successful companies in the sector.
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