Why Munich? Interview with Chris Hitchen, Investor
While Munich may be the city in Germany best known for beer-drinking (think Oktoberfest) and being the true heart of Bavaria, it also has a burgeoning startup scene, with major founder festivals like Bits & Pretezels, attracting startup enthusiasts from around Europe.
We recently had the chance to talk to an Aussie who made the move to Munich, investor Chris Hitchen, taking the leap from Melbourne to Munich seven years ago.
Chris has been an active angel investor since 2007, was a venture partner with Australian VC Square Peg Capital until 2015, and is now a venture partner with European VC EQT Ventures, one of Europe’s largest VC platforms with approx. $600m that supports ambitious founders on their journeys to global success.
Chris has been co-founded, lead or invested in several major businesses and influential businesses over the years, namely co-founding Hynt, a native advertising platform for brands and retailers, which he sold to German ecommerce business Zalando in 2017.
Here’s what he had to say:
What made you decide to move your business to Munich?
The truth is that my wife “made” me move to Munich, where she’s from. That said, I love Munich as a city given it’s central location in Europe, moderate climate with four distinct seasons, access to mountains and lakes, great infrastructure and quality of life. From a business perspective, travel is much easier for me now as I can cover key markets like Berlin, London, Scandinavia and Tel Aviv with shorter trips. That helps with trying to balance family life.
How important has your Australian network been to get started over here?
Actually it wasn’t critical, but I think we can make it easier for newcomers. When I first came to Germany in 2002 I was a corporate employee, learning German and how to do business in Europe. When I returned in 2013 after almost eight years in Australia, I knew very few Australians here, so I built my own network the old fashioned way. At that point I wish I’d had faster access to the founders, companies and co-investors I was seeking. Perhaps I can now provide that sort of support to other Australians coming here to set-up.
Have you raised money in Europe and how did you find it compared to Australia?
Yes I’ve supported several companies in raising money in Europe and of course I’ve invested in quite a few as well. It’s ten years since I raised money for my first start-up in Australia (Getprice), so VC and tech. Investing in general have changed substantially in most mature markets since then. Documents tend to be more standardised and good investors are both more open to direct approaches and more willing to work hard for their “customers”, the startups. Australia has a much larger pool of venture capital now and there are many good angel investors who have built and/or exited successful companies and who are reinvesting in new founders.
Europe is still a collection of markets that can be quite different, although in recent years there has been an increasing amount of cross-border investments as VCs look outside their home markets. There are some sectors in which focused capital has been slower to emerge, i.e. Industry 4.0 and Internet of Things, but this is changing and Munich in particular is well-placed to take a leading role given it’s heritage in manufacturing and industry. The first funds focused on this space are now emerging.
What is it like to do business in Munich?
Obviously German is the spoken language, but not speaking German is rarely a barrier as the Germans tend to speak great English. In general I’ve found that it can take a little longer to build strong personal relationships through business and perhaps the formal Sie vs. informal Du system is partly responsible, although in start-ups it’s rare to use the Sie form.
Whilst it’s not really a cultural issue, coming to terms with the German tax system was a challenge, particularly as it relates to investment structures. This is an area that could be simplified for new arrivals (although not by me!).
Are you working as a remote team or did the team move over with you?
I had a remote team for a while, but the tyranny of distance catches up with you at some point and once I understood the cost advantages of (particularly engineering) resources in Europe, it was a no-brainer to focus here.
You can hire great international talent in Berlin, although there is a lot of competition from larger tech businesses now and many are looking to markets like Barcelona and Lisbon for a steady supply of quality, affordable talent. Munich is OK with top universities like LMU and TUM (and their combined technology management program CDTM), but also competitive and more expensive than other European markets as the cost of living is a little higher.
In the more mature start-ups I’m involved with, I’ve seen that there is no quick-fix to hiring consistently great talent. It’s hard work and you need to put a lot of effort into employer branding, culture and remuneration structures.
What do you love about living in Munich?
I love the proximity to other countries and cultures. I love the rich green landscape, mountains, lakes and the sport those afford. I love the relatively small size of the city, it’s architecture and the fact that you can get almost everywhere on a bike. The Bavarian culture (it’s more than what you see at Oktoberfest, though that’s fun too!) is wonderful and so rich in tradition, including the world’s best beer.
Top 3 tips:
- Don’t decide where to live based on hype alone. Think about what’s important for your work/life balance.
- Find the right advisors for personal and business planning so you make smart decisions about structures.
- Make an effort to learn the language. You may not need it to get by, but that’s exactly why Germans will appreciate it when you try.
Thank you to Chris Hitchen for this interview. You can contact him via LinkedIn.