Former students at the Center for Digital Technology and Management (CDTM), a joint study programme of two of Europe’s top universities in Munich known for its brutal 6% acceptance rate, have started a fund to invest in startups with at least one alum from the programme on the founding team.
The fund is backed by 316 CDTM alumni — a mixture of unicorn founders, researchers from Big Tech and academia and executives from various corporates — who’ve pooled together €8.2m to invest in 60 fledgling startups over the next four years.
That might seem small, but investors behind the CDTM Venture Fund say successful founders and operators investing back into the ecosystem is key to the success of European tech. The firm’s LPs include Julian Blessin, cofounder of mobility startup TIER, Hanno Renner, cofounder and CEO of HR tech Personio and Julia Bösch, founder and CEO of online personal shopping service Outfittery.
“I think the value [of the firm] is that you don’t have traditional investors as LPs. You have people who are successful in building their own business or working successfully in a company contributing knowledge and experience,” Dr. Sophie Ahrens-Gruber, member of the firm’s investment committee and a principal at Acton Capital, tells Sifted.
Launched in 1998, CDTM is a longstanding collaboration between LMU (Ludwig Maximilian University of Munich) and TMU (Technical University of Munich). It’s seen as a cornerstone of Munich’s ecosystem, which has boomed in the last few years; CDTM alumni have founded 280 startups, nine of which are unicorns, including digital freight-forwarder Forto and digital broker Trade Republic.
A German alumni-investor club
CDTM Venture Fund (VF) is structured as an alumni-investor club, a popular concept in the US at universities such as UC Berkeley, which allows small tickets from various alumni to be pooled into one vehicle.
This structure was important for CDTM VF’s management team. Typically, LPs wanting to invest in a fund in Germany need to invest €250k, but the firm’s lawyers were able to find a “legal loophole” allowing LPs to invest just €2,000.
The firm invests in very early-stage companies, with an average ticket size of €100k. It’s so far made six investments, including Rematiq, an AI-powered platform for regulatory automation in life sciences, and Crafthunt, a job site for construction professionals.
CDTM VF is paid a 2% management fee and receives 20% carry on its investments. It has one fund manager, Franz Waltenberger who is on CDTM’s management team and is the only person who works full-time at the fund and is paid a salary. It also has an investment committee consisting of Ahrens-Gruber, Leon Szeli, the founder of Presize — a startup that can take a user’s measurements based on a smartphone video of their body and which exited to Meta in 2022 — and Christian Deger, founder of payments startup Payworks which exited to Visa in 2019.
Three-quarters of the carry the firm collects is donated back to CDTM to fund the education of the next generation of students and help spawn more startups.
“CDTM is a model that can thrive anywhere. We’re currently replicating it in Valencia, Spain, and if CDTM can succeed globally, we believe the fund can too,” says Ahrens-Gruber.
She adds that CDTM VF has received “strong inbound interest” from large multi-stage VC firms as well as venture scouting teams that are interested in investing in the fund to get preferred access to startups founded by CDTM. But the firm hasn’t accepted investments from these entities to ensure it remains a “community-driven fund” backed solely by the CDTM network.
“I think if we can scale this in Germany or Europe, that would be very beneficial,” says Szeli “It’s not about, you know, making the select few startups very rich, but it’s helpful for everyone and the entire ecosystem.”
Read the orginal article: https://sifted.eu/articles/cdtm-alumni-venture-fund/
