Target Global Invests in Teams and Markets, Not Products, Says General Partner

After the dot-com bubble burst, there were very few internet companies in Germany, according to Lukasz Gadowski, co-founder of Berlin-headquartered food delivery company Delivery Hero SE. The country was hungry for new business models and new companies, he said.

Gadowski spoke Thursday at a panel discussion hosted by Nimrod Kozlovski, a partner at Israel-based law firm HFN and lecturer at Tel Aviv University. The panel took place as part of Calcalist's WeTech Berlin 2020 conference, held in collaboration with Israel's Bank Leumi and German real estate company Aroundtown Property Holdings PLC.

Delivery Hero's market was initially small, because in 2010, the smartphone revolution has yet to arrive and there were no dedicated apps, Shmuel Chafets, general partner and vice chairman at European investment fund Target Global, said at the panel. Fortunately, Target Global invested in one of Gadowski's companies in the past, and once we got in on Delivery Hero, it started to climb, he said.

Gadowski said he started the company with no funding because he was afraid of raising money and not living up to investors' expectations since the market was too small. Having a lot of money can sometimes be bad, he said.

Delivery is a very local sector and companies have to adjust themselves to every market they operate in, Gadowski said. However, Chafets said, a product that only has local appeal and lacks global potential will never be huge.

The interesting thing about Berlin's ecosystem, Chafets said, is that it does not have a lot of multinationals. Still, it is a city that people want to live in, and it is cheap, so it attracted teams from Poland and the Chech Republic, and that is how the local scene evolved.