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How Makers builds up profitable startups

An incubator and accelerator from Berlin, Germany helps young companies grow. With one central goal: profitability.

01 Dec. 2016

At first Friedrich Neuman and Marius Schulze had no intention of creating a company builder – they wanted to implement their own ideas. "We mainly wanted to start our own business", says Neuman, looking back. Former Rocket employee Neuman and Schulze had a few different business models in mind, and their startup Run a Shop was the first that came to fruition. Together they worked on campaigns, brought designers on board and hired out staff from other startups.

But Run a Shop was not their only idea. While working on this company that promised user acquisition, they had a new thought: a mobile advertising company that would place ads in apps intelligently. Together with the later founders Felipe Ogibowski and Gunnar Kämpgen, Neuman and Schulze developed their next startup, Iconpeak – this time as investors. "We started something new from the Run a Shop business", says Neuman. They financed it using their own capital, in the six figures.

A superstructure was needed to manage both projects. When Neuman and Schulze decided not to focus on individual startups, but on supporting and building up several at once – the idea for Makers was born.

With Makers , Friedrich Neuman and cofounder Marius Schulze have formed a company that helps other businesses get off the ground. Like Rocket Internet, Makers invests in its startups – albeit significantly lower sums. The seed round generally does not exceed €500,000.

After that, the company builders support these startups through whatever difficulties might befall, for example making experts such as designers available if they cannot afford to hire for themselves. They help shape the product, if the founders want them to, give feedback when required and join forces to find investors if more money is needed. But the overarching and clearly stated goal is for the startups to make a profit from the start, making it a kind of anti-Rocket.

Makers: One startup led to many others

The small Berlin-based company builder's business applies two models: incubation and acceleration. In the former case, Neuman and Schulze help create the startup. Iconpeak is once example. Makers formulates the idea or helps shape it, sometimes also looks for a founding team, and sets it up with starting capital.

Under the acceleration model, founders come to Makers with an existing idea, sometimes even a GmbH. The work then is more to scale up the idea and support their growth. For incubation, Neuman and Schulze's company typically holds at least 25.1 percent of shares. This share is generally lower in an acceleration scenario. But Neuman stresses that these rates can definitely vary. "Within Makers we're now focused more on the acceleration model", he says.

Makers' core is a team of experts: The company builder employs 15 people, including PR experts, marketers, designers, developers and HR staff, who are there solely to give startups help where they need it. "Recruiting in particular is something startups often have no time for in the beginning," explains Neuman. "We make people with various areas of expertise available to them. The founders just need to tell us what they want." The startups pay for this service. And Makers also helps them find investors. When a young company needs capital, Neuman and Schulze connect the entrepreneurs to business angels and venture capitalists.

But the company builder sets a high bar. Startups and founders must meet four key conditions before Makers will invest: The founders need to bring expertise or industry contacts in the startup's sector. Second, one of them must have technical expertise. Third, the business model must be able to survive for a certain time without investments. And lastly, the founders need to begin under Makers' roof.

"We're not the kind of investor who gives money and just demands a monthly report," says Neuman. "We're very hands-on in codeveloping the business." His explanation of why the business model has to manage initially without a big financing round: "First we want to prove on a small scale that a business model will work." That has to be done without money – a key difference compared to startup incubator Rocket Internet, which focuses on strong sales growth instead of being in the black in the initial phases of a new company.

Makers currently hosts eight startups, of which six are housed with Makers under the same roof. The company builder is not focused on any one industry: Among the fields represented are mobile marketing, robo-advisors, SaaS solutions, home fashion, influencer marketing and games. "We're agnostic when it comes to the choice of sector," says Neuman. However, most of the startups are not consumer-focused, but instead on business with companies. Why? "We can make money relatively quickly that way."

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