On the heels of Microsofts acquisition of the Berlin startup darling 6Wunderkinder for a price between $100 and $200 million, the debate rages on about whether Berlin startups should be bolder and wait longer for an exit. <\/p>\n
The consensus in the Berlin startup ecosystem is that we are still missing one extraordinarily big success. Several recent exits hovered in the hundreds of millions of dollars range, including Sociomantics $200 million exit to dunnhumby Ltd., the OpenTable clone Quandoos$219 million acquisition by Japans Recruit and the aforementioned 6Wunderkinders sale to Microsoft. Progress has been made. <\/p>\n
Berlin is home to several of the tech worlds mythical unicorns, such as SoundCloud, Delivery Hero and a handful of Rocket Internet companies. However, while both Rocket Internet and Zalando went public on the Frankfurt Stock Exchange last year quite successfully, I might add there is little fanfare for German startups in the international community. So what comes next? <\/p>\n
The next big thing is an Initial Public Offering (IPO) in the United States (U.S.). We may not have long to wait. Earlier this week, Delivery Hero announced a $110 Million investment from pre-IPO investors valuing the company at $3.1 billion USD. While Rocket Internet owns more than 30 percentof Delivery Hero, and Rocket Internet portfolio companies have thus far gone public on the Frankfurt Stock Exchange, comparable companies are receiving higher valuations in the U.S. <\/p>\n
Markus Bauman, a lawyer with King & Spalding,has taken a number of German companies public in both Germany and the U.S. As he explains, The current macroeconomic conditions, together with recent legislation like the JOBS Act, is making it easier for emerging-growth companies to go public in the United States. <\/p>\n
In the past, German companies often listed their shares in the U.S. From 1994-2001, around 25 of the largest German companies went public in the U.S. (Daimler, Deutsche Telekom, Siemens, Deutsche Bank, etc.), which was the gold standard of the time. In 2002, the trend came to a halt with the introduction of The SarbanesOxley Act, which tightened regulations and created a compliance nightmare. For anyone who has filed taxes in Germany, you know that when Germans complain about compliance, it is time to amend the Act. <\/p>\n
Cost was also an issue. Spiegel reported that, German firms cross-listed in the United States spent between 10 and 15 million annually on SEC compliance, a survey conducted by Stadtmann and his colleagues found. Most companies would not disclose the exact amount of money they spent on SEC compliance, but a Deutsche Telekom spokesperson told SPIEGEL ONLINE costs were in the low double-digits of millions of euros and another at Daimler said they did not exceed 10 million. <\/p>\n
Most German companies decided to bail on the U.S. stock exchange and move to Frankfurt. The German companies that remain include Deutsche Bank, Affimed, Aixtron, Elster Group, Fresenius, Orion Engineered Carbons, Rofin-Sinar, SAP and Voxeljet. But with the emergence of high-growth technology and biotech companies in Germany reaching valuations in the several hundred million dollar\/euro range, combined with recent legislation that has made governance and disclosure obligations less stringent for foreign private issuers in the U.S., it is time for German companies to reconsider. <\/p>\n
Bauman notes, The JOBS Act gives emerging growth companies a number of important accommodations, from exemptions to internal controls audits under Sarbanes Oxley, to testing the waters to confidential SEC review and scaled financial disclosure. Those accommodations are in addition to the exemptions and accommodations given to foreign private issuers as compared to the requirements that are imposed upon U.S. domestic issuers by the SEC. <\/p>\n
Lets start with the basics: Money. In January, I wrote a post raving about how Berlin startups raised 1.1 billion USD in 2014. While that was amazing growth, during the same year U.S. startups raised $47.3 billion. When it comes to capital markets, we see the same discrepancy in volume. <\/p>\n
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The Berlin Startup Ecosystem Needs An IPO In The U.S ...<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" On the heels of Microsofts acquisition of the Berlin startup darling 6Wunderkinder for a price between $100 and $200 million, the debate rages on about whether Berlin startups should be bolder and wait longer for an exit. The consensus in the Berlin startup ecosystem is that we are still missing one extraordinarily big success. Several recent exits hovered in the hundreds of millions of dollars range, including Sociomantics $200 million exit to dunnhumby Ltd., the OpenTable clone Quandoos$219 million acquisition by Japans Recruit and the aforementioned 6Wunderkinders sale to Microsoft. Continue reading