Should VCs Have Morals or Is It Ultimately Just About Money? – Daniel Keiper-Knorr, Speedinvest

About this episode

From a 10 million euro fund in 2011 to a recently announced 500 million euro fund – Daniel Keiper-Knorr of Speedinvest definitely belongs to the elite of European seed stage VCs. But this impressive growth raises fundamental questions: How much morality should a VC actually have? How much morality can they even afford? And how dramatically is the market really changing for founders?

Humble Beginnings at Speedinvest

As often happens in the startup world, even the biggest success stories started small. Speedinvest's first steps were anything but glamorous – a reminder that even established VCs once had to start from zero. This perspective is particularly valuable for founders who sometimes feel intimidated by the apparent dominance of established investors.

Failures as Learning: The VC Perspective on Failed Investments

One of the most intriguing questions in the VC business: Is investing in a company that later goes bankrupt a mistake or a learning experience? Keiper-Knorr brings a nuanced perspective to this. For VCs, the failure of portfolio companies is part of the business model – after all, they invest in high-risk startups in early stages.

The art lies in properly evaluating failed investments: Was the approach fundamentally right but the execution poor? Or was the investment decision itself flawed? This reflection is crucial for development as an investor.

The Moral Dilemma: Klarna as an Example

The discussion becomes particularly explosive when it comes to morality in the VC business. Using Klarna as an example, it becomes clear how complex this question is: Should you invest in business models that allegedly lead people into debt if they deliver the returns necessary for a VC fund?

Two worlds collide here: fiduciary responsibility toward Limited Partners who expect maximum returns, and social responsibility. Keiper-Knorr shows that this decision isn't black and white – VCs must perform a balancing act between commercial interests and ethical considerations.

Changed Framework Conditions in Fundraising

Times are changing – even for VCs. Negotiations when fundraising for new VC funds have changed significantly in recent years. What might have been taken for granted before now has to be hard-earned. Limited Partners have become more selective and place higher demands on track record and performance.

These changes have direct effects on the entire startup scene. When VCs have a harder time accessing capital, it inevitably affects their investment strategy – and thus the financing opportunities for startups.

Challenges for Founders in 2023

For founders, the shifting market means concrete adjustments. The golden years of "easy money" are over. Startups need to bring more substance again: convincing unit economics, clear paths to profitability, and realistic growth plans.

Key points for founders:

• –Plan for longer fundraising cycles: What used to take weeks can now take months
• –Higher due diligence standards: VCs scrutinize more closely and ask more critical questions
• –Focus on sustainability: Pure growth-at-all-costs strategies no longer work
• –Realistic valuation expectations: The days of overheated valuations are over for now

The Future of the VC Business

Speedinvest's development from 10 to 500 million euros shows that successful VC business is possible – but the rules are becoming more complex. The question of morality won't disappear but will likely gain importance. ESG criteria and impact investing are becoming more important even in the seed stage area.

For the German and European startup scene, this means: maturity and professionalization. This may be painful in the short term, but will lead to more sustainable and valuable companies in the long run.