After project completion, we received permission from our client to publish an excerpt at a very high “altitude.” The attached document contains some exciting perspectives on the topic of drones and sensor technology.

We found the following insights particularly interesting:

1) There are virtually no start-ups specifically focused on defence sensor technology in Europe

2) RGB cameras, as essential sensor technology, are an off-the-shelf mass product

3) Sensor technology outside of RGB cameras (radar, LiDAR, thermal) could find a new mass market in the drone sector if economies-of-scale lead to cost reductions

The reality for many founders is a 70-hour week, no weekends, no real breaks, and a feeling of never having enough time for all the tasks.

Starting a business is no walk in the park. Anyone who has built a start-up knows the appeal: the freedom, the responsibility, and the opportunity to create something of your own. But often, the initial euphoria turns into constant stress – with long working days (we’re not talking about 4-day weeks and 30 hours), sleepless nights, and constant inner turmoil. And typically, family additions enlarge the overall load…

Our top 3 reasons for this state of mind:

1. Everything (feels like) depends on you
In the early stages, the founder is often the developer, product manager, salesperson, HR manager, accountant, and CEO all rolled into one. There are no clear structures, no routines, but high expectations from customers, investors, and the team

2. Psychological pressure
You = your company. Success and failure feel very personal. In addition, many founders idealize overtime as a sign of dedication. But constant stress is not a sign of quality, it’s a risk!

3. Unclear boundaries in work-life balance
Home office, flexible working hours, digital tools: the line between work and private life is blurred. Your cell phone is always on – and unfortunately, so is your mind

Chronic stress (sleep problems, concentration problems/exhaustion, depression/burnout) can quickly affect the team in addition to posing a health risk. Stress and exhaustion rapidly lead to irritability and a short fuse. Over time, it jeopardizes long-term success, and you lose sight of what is essential: vision, strategy, focus, and team.

Special situations should not become a permanent state! Even if you believe that you draw strength and positive energy from constantly performing at 120%, it is an exhausting struggle. A good indicator: you go on vacation feeling fit and well, and after 1-2 days you get sick. Your body shuts down and needs a restart – goodbye vacation.

1. Structures reduce stress:
Start-ups love flexibility. However, structures also create clarity and responsibilities; processes define procedures and responsibilities

2. Distinguish between important, urgent, and important & urgent
Not every opportunity is a chance. Therefore, following General Eisenhower’s advice, work on what is important and urgent

3. From DIY to delegating
Delegating is not a sign of weakness, but of trust and appreciation for the expertise of team members

4. Take recovery seriously
An empty battery does not recharge itself: breaks, exercise, sleep, and social contact are not luxuries, but basic needs

5. Say “no”
Hustle does not equal success. It is okay to say “no,” and it helps keep the company on track

Starting a business is a marathon, not a sprint!

TCO (Total Cost of Ownership) is used to record the total costs of a product, service, or investment over its entire life cycle, making it a crucial parameter.

Founders often forget that, in addition to their own offering, customers factor many other costs into their decision. It is therefore important to take the customer’s perspective in order to understand how to influence the purchase decision and push your own offering into pole position.

Typical components of a TCO calculation:

1.      Acquisition costs

2.      Operating costs

3.      Maintenance/servicing

4.      Training/implementation costs

5.      Disposal costs

6.      Financing costs (e.g. interest)

In our projects, this is often a key focus in order to validate the business idea from the customer’s perspective and sharpen the USPs (unique selling proposition). Here are two examples from our project work over the last few months:

1) Volume and weight play a decisive role in aerospace. In addition to the cost of the product, it was therefore important to consider whether the innovation also offered an advantage in these two dimensions, as this is a significant factor in the overall cost.

2) Virtual reality is used for factory planning, shipbuilding, real estate, and complex industrial products and systems. Additionally, to the cost of the VR equipment, the customer incurs further costs such as ongoing operation (electricity, air conditioning, rent, personnel costs, etc.) and content preparation.

Many start-ups (and investors) often focus on building an XaaS (Everything as a Service) business model from their business perspective, but forget the customer perspective. In sales, the topic of TCO is therefore an essential component in the chain of arguments and helps to accelerate the purchase decision.

Of course, if sales are not coming in or project development milestones are not being reached, it is obvious that the controlling lights will switch from green to yellow or even straight to red.

But what are the first subtle signs of autumn depression from start-ups to business angels or VCs?

We have learned to look particularly closely at two situations:

1.    The monthly reports are coming in later and later, and sometimes content is missing.

2.    Suddenly, communication with the founders breaks down.

Why are these alarm signals for us? When the standard reports suddenly stop coming in on time, it often means that the founders are pondering how to explain them in a meaningful way or, if necessary, sell them in a more euphemistic manner. That wouldn’t be necessary if the news were good.

A VC partner at a large fund explained the other case—the breakdown in communication — to me as follows: “When students get great grades, they burst with pride and tell their parents before they even walk in the door; when they get bad grades, the picture changes.” There are definitely similarities here with founders.

One thing at a time: What are the basic tasks of an advisory board? Contrary to some preconceptions, it is not simply a matter of securing investments via controlling figures or voting on transactions requiring approval. Rather, good boards are strategic sparring partners for the founders, who also have specialist expertise and networks and have already experienced many start-up situations themselves.

What makes this so valuable? Boards are protected spaces where people can argue (with dignity) and have different opinions, if not here – where? In addition, advice is usually provided free of charge, at least in the case of advisory boards that are also investors.

Another very important function should not be underestimated. Especially in times of crisis, when many fair-weather friends suddenly ‘ghost’ you, good advisory boards stay on board, help to find solutions and very often build bridges to shareholders and new investors.

There are three basic ingredients for founders to maximize the value of their boards:

1) Taking time to select the few but the right advisory board members. This also means only accepting those Advisory Board members who want to actively participate and not just perform controlling tasks.

2) Taking time to prepare the discussions with the Advisory Board members and also for the meetings themselves – preferably accompanied by a meal so that the meetings are on-site

3) Taking time to really listen to their Advisory Board members!

There are usually only winners from an open and trustful collaboration. On the one hand, it’s fun and on the other hand, the chances of increasing the value of the start-up increase significantly.

The buyer wanted to pay for the takeover partly with its own shares. However, the last valuation was some time ago – which made intensive negotiations on the subject of valuation necessary. On the one hand, the valuation of ‘our’ start-up had to be moderated and, on the other hand, a current valuation of the buyer had to be carried out.

At the same time, an extensive carve-out had to be orchestrated, as the ties between the start-up and the parent company were more severe than initially thought. In particular, the employees had to be transferred in compliance with German law – which sometimes led to intensive discussions with the Anglo-Saxon buyer. The transfer of the IP from the corporate to the buyer was not without emotion – which took considerably more time, as some parties within the seller organization were worried about strategically closing doors for the market.

After a good 4 months of intensive work, signing was accomplished and a few weeks later the deal was closed.

Conclusion: Even corporations can sell internal start-ups at a fair value if they are prepared to accept part of the sale price in form of shares to another start-up.

👉 In recent months, we have observed two patterns in numerous projects:

Example 1: Cash burn trap
A tech start-up onboarded customer services that had nothing to do with the strategic vision – just to reduce cash burn. Result: The start-up and the founders were preoccupied for 6 months – with zero strategic added value.

Example 2: Growth illusion
A SaaS start-up was delighted to have many new customers. The problem? Most of them came via random inbound enquiries with no real strategic scaling opportunities. The team lost half a year on the way to their growth target.

💡 Conclusion:
Focus is an absolute game changer, especially for start-ups. Management capacities are extremely limited. Successful founders are “focussed like a laser” and regularly ask themselves: would this decision contribute to our vision or is it distracting us?

As an advisory board member and investor, you are also well advised to support your founders by consistently demanding and exemplifying a focussed approach.

Three camps emerged:
1) “All-in” for maximum scaling & 10x return
2) Quick exit
3) Asset deal & orderly wind-up

👉 The founding team was caught between multiple divergent positions- and time was running out.
Our task: find a strategic solution with a clear, financially viable implementation plan.

Our findings:
🔹 Ready for exit? Unfortunately not  – neither as an asset deal nor as a distress sale
🔹 Best option: realigned development of the company but with a sharpened focus to transform a currently illiquid asset into a liquid asset
🔹 A fact-based approach helped to objectify the debate & find a consensus.

Result:
Joint decision by the founders and investors on the way forward. A funding round was concluded on the basis of a new business plan with clear implementation steps.

Conclusion:
No decision is the worst decision. Neutral moderation often helps to reconcile divergent investor interests – and to make a stranded asset attractive again.

In our specific case, the buyer wanted to leverage its own USPs (market access, brand, supply chain) and was looking for a complementary portfolio.

The company, based in Germany and with a global distribution network, was open to acquisitions worldwide as long as the business case was attractive and represented a strategically sensible expansion.

We found what we were looking for in the UK with a strong local player that had built up both a retail and distribution business and was even a competitor in certain portfolio areas; the company was on the verge of profitability.

The acquisition target was very interesting as several value levers could be realised:
1) Cost synergies in sourcing
2) Cost synergies in the indirect area (people, systems, processes)
3) Strengthening market share in the UK; market access in EU retail
4) Portfolio expansion for a global rollout, especially USA & Europe

After approx. 9 months of exploratory talks, intensive due diligence, strategy and financing, the time had come: the takeover was perfect!

Not to forget: work begins really after the acquisition! Post-merger integration requires intensive preparation. Many M&As do not achieve their goals because they are sloppy in this regard, which is extremely painful, especially for start-ups.

And after the acquisition is before the acquisition in a buy & build strategy!