The sample frame of the survey

The present research study is concerned with Germany’s PE and VC market during the post- crisis phase between 2010 and 2012. The focus of this dissertation is on early-stage and on smaller volume financing, as these areas due to their declining proportions since the millennium change were regarded as incomplete and support-worthy (Zimmermann and Fischer 2003; Achleitner et al. 2006; Achleitner et al. 2010). In addition, this thesis is also concerned with public funding initiatives for equity financing purposes (see section 4.6.4) and therefore a research focus is also on the public and on the semi-public investors.

Initial reviews showed that detailed directories neither for the entire market nor regarding venture capitalists and public investors were available. Moreover, these reviews showed that a clear differentiation of venture capitalists which are exclusively concerned with early-stage financing in comparison to the entire market seems difficult. In the majority of cases, independent investors are concerned with early-stage investments and also with additional types of financing, for example expansion financing in order to compensate the higher default risk of early-stage investments. As a consequence, distortions with regard to the selection of venture capitalists were taken into account. The group of public and of semi-public investors on the other hand are concerned with rather every type of financing purpose due to their status as supporters. Therefore, the separation of public investors which are solely concerned with seed and start-up financing from the remaining public investors was neither reasonable nor desirable in order to avoid a too detailed picture of their investment behaviour, investment strategy and investment

process. Hence, this sample selection considered independent and corporate venture capitalists in the field of early-stage financing on the one hand and public and semi-public investors on the other hand. Semi-public investors in that respect are investors whose shareholder background is not necessarily composed of public authorities alone but regardless of their shareholders do not exclusively follow the aim of profit maximization. This applies for example for the so-called Mittelständische Beteiligungsgesellschaften which classify themselves as a self-helping institution for small and medium-sized enterprises (see section 4.2) or for public-private partnerships as in the case of the High-Tech Gründerfund in Bonn. In order to receive a comprehensive picture of these investors which were investment active in Germany during the post-crisis phase, the sample frame was based on a purposive selection.

With regard to public and semi-public investors, initial reviews showed that the public investment activities are realised on the federal level, the federal states level and on the local district level. The federal level in Germany coordinates the PE and VC investments on the level of the state-owned Kreditanstalt für Wiederaufbau, which does not directly participate in Germany’s equity market but rather supports the entire market with several types of co- and refinancing measures (see section 4.5.1). As a consequence, the KfW has neither a specific internal division nor a daughter company for direct equity investment purposes. Nevertheless, the KfW is a co-investor of the so-called High-Tech Gründerfund (see glossary), which was launched after the millennium change to stimulate seed and start-up investments in Germany. The HTGF is part of the sample frame. The second state-owned bank on the federal level, the so- called Landwirtschaftliche Rentenbank, which is overall busy with agriculture investments (see section 4.5.1), is not involved in any kind of equity investments in Germany. With regard to the federal states level in Germany, the review showed that PE and VC investments are carried out and organised within the public investment bank (see glossary) sector too. In some cases, the public investment banks bundle their equity business in daughter companies, in some cases commission independent firms with the fund management or coordinate their equity investments over the respective MBG. In other cases, they coordinate their equity business over savings bank daughter companies in their respective homeland area. Moreover, public PE and VC investments on the federal states level are also realised over the so-called Landesbanken (see glossary). The review in that respect showed that four of the eight so-called Landesbanken were not involved in PE and VC investments at the moment of the sample selection in 2013. The remaining four federal state banks coordinate their equity investments in daughter companies, commission third

parties with the fund management or cooperate with the savings bank sector in their respective homeland area.

Basically, the selection of sample members was based on the membership data base of Germany’s PE and VC association in Berlin. At the end of 2012, 187 PE and VC firms were full members of the BVK which supposed that additional 40 to 50 investors would be operating outside a BVK membership (see section 4.2). Therefore, additional directories were considered in order to receive a quite comprehensive picture of the market in accordance with the selection criteria. This was in particular required regarding venture capitalists in Germany. Hence, the directories of the Venture Capital Club in Munich, the chamber of commerce in Hamburg, the Munich Network e. V. as well as the directories on Gründungskatalog.de and Kontaktmakler.de were reviewed in greater detail. With regard to the public investors, the review considered every homepage of the public investment banks and of the federal state banks, the so-called Landesbanken. Detailed information regarding the PE and VC business on the level of the savings banks in Germany on the other hand could not be obtained from Germany’s savings bank association. This part of the sample selection was therefore based on a directory in the dissertation of Kammlott (2004). This directory was reviewed in greater detail regarding its completeness and finally updated. The review showed that a major proportion of savings banks equity business was exclusively concerned with mezzanine financing. Savings banks divisions or savings bank daughter companies which were solely concerned with mezzanine financing or whose investment activities were comparatively small were not considered in the sample frame. On the other hand, the cooperative bank sector coordinates the PE and VC business over two daughter companies, which operate nationwide. One of these cooperative bank daughters was solely concerned with mezzanine financing and therefore not considered in the sample frame either. The 16 so-called Mittelständische Beteiligungsgesellschaften (see section 4.2) were considered in their entirety. The latter type of investor, the savings bank sector and the cooperative bank sector were classified as semi-public investors. In that context, it is specified that the cooperative bank sector is not solely concerned with profit realisation but also with the support of their cooperative members and small and medium-sized enterprises. Irrespective of their completely different shareholder structure, they follow comparatively similar objectives as the savings banks and are also regionally focused (see glossary). Thus, the cooperative bank sector in that research study was regarded as semi-public which corresponds with earlier research studies for example Achleitner et al. (2008).

PE and VC investors which were not investment active during 2010 to 2012, and hence were either concerned with the management of their portfolio, or which were founded after 2012, or whose investment activities were comparatively small, were not considered in the sample frame. Moreover, equity investors which were solely concerned with mezzanine financing were not considered either.

This selection procedure finally resulted in the purposive selection of both independent and corporate venture capitalists in the field of early-stage financing on the one hand and public and semi-public investors on the other hand. Hence, this sample frame composition depicted the market in the incomplete segment of early-stage financing on the one hand but at the same time considered public and semi-public investors' involvement on the other hand. Even though the selection process was carried out in greater detail and in several runs, it could not be ensured that this sample frame was a full representation of early-stage and of public investors in Germany. Therefore, this sample frame did not allow for inferences regarding the entire PE and VC market nor regarding early-stage or public investors.

The sample frame is detailed in the subsequent table 22 and an overview of the sample members is enclosed in appendix L.1 (see table 23).

The sample frame classification

_{Type of investor Number} Proportion

Independent investor 39 37%

Corporate Venture Capitalist 8 7%

Mittelständische Beteiligungsgesellschaft 15 14%

Savings/Cooperative/Public bank daughter 39 36%

Public investor 6 6%

Total sample 107 100%

Table 22 The sample frame classification (own development)

Regardless of the purposive sample selection and the overrepresentation of the public and semi- public investors in the sample frame, this sample frame composition seemed suitable to describe market developments in the areas of early-stage financing and of public equity investors. Moreover, this sample frame composition allowed for separate and detailed descriptions regarding the so-called Mittelständische Beteiligungsgesellschaften and for comparison analyses

between the group of public and semi-public investors on the one hand and the more strategic and profit-oriented investors on the other hand.

Overall, this sample frame represented 57% of the BVK members in 2012 and 46% of the estimated market in Germany respectively. The number of public and semi-public investors on the other hand represented a proportion of 32% from the BVK memberships in 2012 and a proportion of 26% from the estimated market in Germany respectively. These proportions seemed to represent the vast majority of both public and of semi-public investors in Germany, at least on the federal level and on the federal states level. In comparison, Schilder (2006), who was earlier research active with regard to public investors in Germany too, classified 45 investors from 187 BVK members as public investors in 2005. This represented a proportion of 24% from the entire BVK memberships.