In our 0100 DACH first speaker interview, Roland Dennert of Cipio Partners offers insights into the evolving private equity landscape, highlighting the unique growth-stage opportunities arising in Germany’s vibrant tech scene and examining the macroeconomic and ESG factors increasingly influencing investment strategies. As Europe strives to close the gap with the US in growth investing, Cipio’s disciplined, forward-thinking approach positions it as a key player in advancing sustainable growth and unlocking potential within the software and deep-tech sectors.
Roland will also be featured as a speaker at the closing panel “Future Perspective of DACH Private Equity. What Forces Will Shape the Industry in 2025?” on the second day of the conference held from February 18th-20th in Vienna. He will be joined by Jörg Mugrauer, Managing Partner at Quadriga Capital; Andreas Klab, Partner at Rivean Capital; and Marko Maschek, Partner at Marondo Capital.
Europe and Germany have made strides to build a reasonable (early-stage) venture capital industry over the last 15 years and are getting close to the US in some metrics. However, when it comes to growth investing Europe is still way behind the US: in 2023 European growth investments accounted for approximately 0.1% of GDP or only 1/7 of the level in the US.
Even compared to this relatively modest benchmark, Germany is a laggard. Growth investing accounts for only 0.02% of GDP or only 1/37 of the level in the US relative to GDP. The reasons for this remarkable gap are manyfold, but the lack of investment opportunity is certainly not one. Germany has a vibrant technology scene, but companies that reach the growth stage must often raise capital from the UK or France, or even the US, Asia or the GCC region.
This creates a clear market opportunity for a DACH-based growth fund. While Cipio pursues a truly pan-European strategy the DACH region is core for us.
The particular growth and cash-flow profile of technology companies means that most of the companies’ value lies in their future, rather than their present, cash-flows. This makes the valuation of technology companies highly sensitive to macroeconomic conditions, in particular to interest rates.
Private Equity works best when one invests through the cycle. However, doing so may mean paying excessive valuations in low-interest rate periods, such as in 2020-22.
Cipio’s approach here is to keep pricing discipline and to value companies at long-term averages even in periods of high valuations. The drawback of this approach is that it can be hard at times to close deals at the usual pace. We accept this and may slow investment pace when markets overheat.
However, we believe that more consistent in-prices enable us to manage our portfolio better according to the companies’ needs and situation rather than according to macro-economic cycles. In particular, it allows us to pursue exits when the time is right for the business and not only when the macroeconomic cycle is favorable.
This approach has paid off handsomely for us. We slowed investment pace in 2021-2023, instead sold companies and realized more proceeds than ever before in our corporate history. Recently, we accelerated our investment pace and encounter both more reasonable valuations and less competition.
Our investment focus is in software and science based deeptech. In other words, by nature all of our investments enable sustainable growth and have a positive environmental impact. Further, the vast majority of management teams and employees of technology companies are from a younger generation and personally stand for ESG compliant values regarding social and governance aspects.
We at Cipio believe ESG is a powerful tool for humanity, but equally to drive superior returns in the long-term. We help our businesses measure where they stand in ESG terms and advise them on implementing best ESG practices.
In technology “doing well” almost requires “doing good.” Technology and ESG go together naturally. Therefore, ESG compliance is no limitation in finding and selecting growth-stage technology companies.
When we invest, we are looking for a substantial value appreciation over a 3–5-year time period before exiting the business. Therefore, it is important to us that companies we invest in have such potential. Management and shareholders must be aligned around such a 3-5 years growth ambition.
For early investors this can be a challenge. Angel and early venture investors have typically already been with the business for several years and have achieved meaningful value appreciation. They may legitimately seek a near-term exit.
In order to align all parties of the cap-table, we believe that early investors should be given the opportunity to exit at least in part when we invest. We also believe that a small secondary sale by the founders can align the parties to go for a significant rather than a timely exit.
We see growth investing in software and deeptech in two very different stages of maturity and pursue both sectors for slightly different reasons:
Software is becoming a major, if not the major, industry focus of the European buy-out industry. This creates a tremendous investment opportunity for growth funds like Cipio: Growth funds can apply a “venture-to-private-equity” investment model. They can back compelling growth-stage software companies, provide further funding and accompany the businesses in their transformation from “growth at all cost” to “efficient growth” and position them for a sale to private equity. This creates a powerful flywheel for software investing in the growth stage where more investment will help build future consolidators owned by private equity and such consolidators will in turn justify yet more software investment.
Deep-tech investments are still a relatively nascent category in Europe. While Europe’s strength in research and innovation is well known, only a limited number of deep-tech companies get started. Most of the companies that succeed get acquired, often by non-European corporates, in the early stages. Very few European deep-tech businesses become scale-ups and experienced European deep-tech growth funds can be counted on your hands. We believe this is a tremendous opportunity, even if it will not materialize overnight.
At our latest 0100 Conference Mediterranean, we gathered experts from Lombardy’s investment ecosystem, including Andrea Beretta of Cariplo Factory, Gessyca Golia from the Lombardy Region, and moderator Fiorenza Lipparini of Milano & Partners, to discuss the unique appeal of Milan for venture capital (VC) and private equity (PE) investments.
The 0100 Conference Mediterranean Fireside Chat: VC Secondaries – the Market Opportunity and Ways to Select the Right Fund highlighted its unique potential for investors seeking more liquidity and quicker returns. This session featured Nick Hendra from AAF Management, Matt Russell from Vencap, and Luca Mannucci from Sella Venture Partners, who shared insights on the market dynamics of VC secondaries, effective fund selection, and key strategies for mitigating risk while maximizing returns.
LP panels are essential at every conference, especially as fundraising becomes increasingly competitive and challenging. One of the highlights at the 0100 Conference Mediterranean was the panel titled “Attracting LP Investors Outside the Region: Interest in the Regional PE/VC Market from Global Institutional Investors.” In this session, key investors shared insights into the growing global interest in private equity and venture capital markets within the Mediterranean and Southern Europe. Moderated by Francesco Cerruti, Director General of the Italian Tech Alliance, the panel brought together leading figures in the industry, including Emre Karabekirogullari, Director of Investments at Sarona AM; Patrick Aisher, Chairman of Kinled Holding; Benno Tieke, Director of Portfolio Management at Philips Ventures; and Veera Somersalmi, Director of Investor Relations at Bpifrance.
