Judith Dada

is one of the most renowned German tech investors. She is general partner at the European seed investment fund La Famiglia. In 2024, La Famiglia wants to merge with the US venture capital firm General Catalyst. As a partner, Judith Dada will be responsible for European seed investments.

As a columnist for the manager magazine newsletter “Tech Update”, she regularly analyzes the background to the most important developments in the tech industry.

What happened:

Financing for start-ups has cooled down significantly. The boom years of cheap money are over and with them the times in which e-scooter companies or fast delivery services were financed, where the main aim was to drive sales to the highest heights at lightning speed - no matter the cost. European start-up financing fell from 110 billion euros in funding in the record year of 2021 to 57 billion euros in 2023. In Germany the sum fell even more sharply: from 17.4 billion euros (2021) to 6 billion euros (2023).

And what really happened is that

not only has funding for start-ups collapsed, the money is now flowing into other sectors - and that is also an opportunity. Last year, more and more scene heads on social networks critically questioned which technically sustainable European innovations the years of cheap money brought about. In the meantime, founders are actually increasingly turning to the hard problems of our time. In 2023, it has already become clear that climate tech and healthcare are among the most popular markets and have attracted significantly more talent and venture capital financing compared to previous years. Companies in the industrial, defense and robotics sectors, which many venture capitalists (VCs) have struggled with in the past due to the perceived lack of scalability of their business models, are now back in vogue. These include start-ups like Robco in Munich, whose founders want to advance industrial automation through cost-effective robotics, or Helsing, based in the same city, which develops AI for the defense industry.

(Helsing is a holding of La Famiglia, editor's note)

Why real problems are now in focus: The

fact that start-ups that want to tackle hard problems are now given preferential financing is also because these products are needed more urgently than ever and therefore money can be made with them. The current economic crisis, which, for example, particularly affects energy-intensive industries, is contributing to this. Established companies in this area will not be able to avoid using new solutions that save energy and make their own value chains more efficient.

Why change in start-up financing is overdue:

Europe needs a focus on solving real problems more than ever to make the continent more resilient. OpenAI co-founder Sam Altman in the USA shows how important this is. He is trying to raise capital for several factories that will produce computer chips specifically designed for AI. Given the importance of AI for the transformation of the economy, this is fundamental for national sovereignty. Only if the best minds in Europe pooled their strengths would we have a chance of keeping up internationally in AI development. A corresponding rethink among investors could support such a focus.

Why investors also have to change:

In order to raise the potential of founders, investors also need to take a new seriousness. We can no longer just rely on what has already been proven over many years. It's a buzzword, but: We have to invest more sustainably! Large problems often cannot be scaled up and sold profitably in a flash; instead, they require patience and courage to explore new paths. True to the motto: more risk in venture capital.

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