It's all about the money

Start-ups often don't have the necessary funds or securities, it is becoming increasingly difficult to obtain traditional bank financing. A big investor or a swarm of small investors can help – such as in the case of Tyroler Glückspilze, Organoid Technologies and Blue Code.

Many business ideas may fall from the sky, their implementation less so, their financing most definitely does not. Three years' work by three people and a million euros were invested in the development phase of the scented decorative coatings, Martin Jehart, the Organoid Technologies founder, says. The world of fungi had always fascinated him, even as a child. Mark Stüttler, the creator of Tyroler Glückspilze, looks back – he started learning more and more about fungi and fungal culture at the end of the 90s before he founded the Mushroom Production Center in 2012 to manufacture high-quality organic fungi products. And Michael Suitner invested a year and 350,000 euros to bring his concept, an app for cashless payments via a smartphone, to market. The three start-ups from Tirol not only have their energy in common, which they mobilised to fulfil their business dreams, but also their – successful – search for funding so they could make these dreams become reality.

About 37,000 companies are founded in Austria every year, financing is a constant issue. They often don't have the necessary funds or securities, it is becoming increasingly difficult to obtain traditional bank financing. "The banks didn't give us a chance," Mark Stüttler remembers. But the search for private venture capital is not an easy one. "You need to talk to about 100 potential investors in order to find one investor," Michael Suitner estimates. When you then find one and you get on well, then an investor can indeed become more than just a financial or strategic partner – as in the case of Organoid Technologies and Georg Ackermann GmbH. At the beginning they drew on a lot of expertise and learnt about current trends from the cabinet maker's in Wiesenbronn in Germany. Now, according to Martin Jehart, they have developed "practically a personal friendship – for example, we spur each other on when we exhibit at trade fairs together."

After the company started – in a garage in 2013 – and a stopover in a barn, Organoid Technologies now trade on 1200 square metres in Fließ near Landeck. Jehart came into contact with the mayor of the small municipality via Standortagentur Tirol. When viewing what are now Organoid's premises, "there were 60 centimetres of snow on the floor because the roof had collapsed." A core team of seven employees produces panels here, sales – in 45 countries – has been outsourced. The natural raw materials– rose buds, lavender

stems, cornflower blossoms, etc. – for the scented decorative coatings are sourced, as founder Martin Jehart emphasises, "from local producers as much as possible, the alpine hay is cut by hand." In addition to Ackermann, Organoid has a second private investor on board, FSP Ventures – a venture capital fund from Vienna – who they found with the help of investor network Tirol. The innovative Organoid platform technology also fit the portfolio of FSP Ventures, who focuses on innovative, technological companies in the area of cleantech.

"Our aim is to find an investor in our network who best suits the start-up idea or the company," Marcus Hofer, who is responsible for the investor network at Standortagentur Tirol, describes his job. Nine deals were made in the first two years. In July 2015 at the first Business Angel Summit in Austria, in Kitzbühel, they tried to bring together investors and high-tech start-ups who needed capital. "There were 81 business angels there, mainly from Austria, Germany and northern Italy, and 15 Austrian start-ups, five of which were from Tirol," Hofer explains. Kitzbühel was chosen deliberately and it proved to be successful, according to Hofer, "a lot of German investors lived in Kitzbühel, potential investors." The idea for the Business Angel Summit came from Jürgen Popp who had moved to Kitzbühel and was the CEO and founder of CaPaNi Capital AG. He saw attractive investment opportunities for business angels here away from the core start-up regions such as London and Berlin. "There are a number of interesting start-ups emerging from university and university of applied sciences in Tirol, which are worth taking a closer look at." They were very pleased with the first summit, Hofer says, evaluating the situation. The preparations for the next summit in July 2016 were also under way as were in-depth discussions between start-ups and investors.

Michael Suitner, who studied law and business, also had an investor. His start-up – just like Organoid's – was financed by equity and aws, Austrian Wirtschaftsservice GmbH. "You have to put yourself in an investor's position," he is convinced. "They want to see the first steps." In Suitner's case, this first step was the getting the paid app programmed. He came up with the idea when he was working in payment systems, in the MasterCard environment: a payment method for smartphones that doesn't save sensitive data. The solution was the Blue Code app, which provides barcodes that can only be used once and are deleted after four minutes. According to Suitner, "this means that the customer remains practically anonymous." Suitner managed

to attract the first investors. Blue Code started in Tirol in 2012 with a grocery chain and a partner bank. A Swiss investor came on board in 2013 – "Interestingly, it was easy for us to work with Swiss investors from the very beginning," – you can now use the Blue Code app to make cashless payments at MPreis, Merkur, Billa, Sutterlyti, Hartlauer, BIPA, Tirolia bookshops, at Gutmann petrol stations as well as e.g. cinemas. The next step, according to Suitner, is Germany, which is planned for 2016 and is being funded again by the Swiss investor. When looking for an investor it's important, Suitner recalls, that your "euphoria about your own business idea is put to paper with a cool mind" and you try to, "take the first step with your own money, money from friends or crowdfunding."

Mark Stüttler is going down this route of crowdfunding, along with private investors, for the second time. In the first round, he collected 14,500 euros for his start-up Tyroler Glückspilze via the online crowdfunding platform Money that was also used to specify the broad range of use of in-house funghi expertise. "Mushrooms," Stüttler explains, "could be used as insulating material, as a substitute for polystyrene and in recycling." Or in agriculture where they, compared to potatoes, would bring a much higher yield per hectare, namely 800 tonnes per year. In their in-house lab in Innsbruck, covering 800 square metres, Stüttler and his three-person team successfully cultivate various  organic fungi substrates for e.g. mushrooms or shiitake. In his incubators, glossy ganodermas (reishi/lingzhi), caterpillar fungi (cordyceps sinensis) or rainbow turkeytails

(trametes versicolor) flourish. They also produce organic medicinal mushroom powder and extracts as food supplements as well as mycorrhiza plant fertilizer for gardens and farming. They are now increasingly focusing on food supplement products and were able to continue expanding their distribution network in the last few months – more than 150 sales outlets in Austria such as health food stores, pharmacies, chemist shops and garden centres. Their aim now is to create a counterbalance to imports from Asia with food supplements made in Tirol, the equity for the steps they need to take will be coming from a second round of crowdfunding. "We waited for autumn on purpose." Stüttler is referring to the new crowdfunding law in Austria that will make some aspects easier for start-ups as well as provide protection for small investors. Austria is responding to the recent crowdfunding trend that gives start-ups some initial support – because business ideas may fall from the sky, but their financing most definitely does not.

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