With the Argo Venture Studio, entrepreneur, founder and investor Stefan Beiten restructures his entrepreneurial activities. In this interview, he uncovers the components of this new platform and explains why he is bringing a breath of fresh air into his company.
Sailing only during sunshine doesn’t make you a skilled sailor.
Mr Beiten, you are a lawyer, entrepreneur, investor and founder. Is that why you founded the Argo Venture Studio – as a platform for your entrepreneurial activities?
It’s been 20 years since I founded Argo – its foundation marks the starting point of my life as an entrepreneur and investor. Over the years, the initially private company has grown into Argo Ventures. New areas have been added; others have been expanded. If you like, the company has matured with my experience as an entrepreneur. Argo Ventures was not founded as a platform for my entrepreneurial activities; it evolved into this platform over the years. The birth of Argo Venture Studio is the next logical step in this evolution, as venture building is not the only thing we dedicate our time to. Last year, we created an entirely new structure, turning Argo Ventures into an ecosystem for entrepreneurial solutions. We focus on specific business areas and underline their importance by bundling all our activities into this new structure.
Can you explain the new structure and focus in more detail?
The Argo Venture Studio consists of our faithful Argo Ventures, complemented by Argo Capital and Argo Advisory. We decided to set up three independent companies to emphasize the importance of venture building, investing and advising within the group.
Argo Ventures compounds our activities as an angel investor and venture builder. It is essential for us to work with the startups on a partnership basis and to accompany them actively from the start. Our own entrepreneurial experience is, of course, one of our most important assets.
Argo Advisory is our vessel for advising entrepreneurs from an entrepreneurial perspective. Its service spectrum is a synthesis of the “best practices” of our own entrepreneurial experience and modern innovation systems, structures, and processes. We want to accompany processes on the advisory level actively, and this requires close and trusting cooperation. Here, too, we place special value on treating our clients as partners on eye level.
And then there is our capital market vehicle Argo Capital, through which we manage all structured financing and capital market transactions.
Do you speak in the plural form because you also have two young partners on board for Argo Ventures and Argo Advisory?
That’s right. Sascha Grumbach and Stefan Soellner, managing partners of Argo Ventures and Argo Advisory, significantly contribute to the success of the Argo Venture Studio. Both are experienced in management consulting and founded their own companies during their time at university, resulting in them being able to draw on a wealth of knowledge at an early age. I also believe that this combination is what makes Argo Venture Studio so successful – my top-down view, based on many years of experience as an entrepreneur, and the bottom-up approach of Sascha Grumbach and Stefan Soellner. Because anyone who not only wants to survive in today’s disruptive world but also wants to shape the future actively must be prepared to reinvent himself again and again – and to question things from time to time. And sometimes, at least in my experience, a young and innovative view of things turns out to be very helpful with that.
Success is a good cue: In the past 20 years as an investor and entrepreneur, you also had to deal with failures. When thinking about your past decisions and steps, is there anything that you would do differently today?
Naturally, one is always wiser in hindsight. Some mistakes only become visible once you have made them. Per definition, investors and entrepreneurs are always taking risks. And it is quite normal that ideas, projects or companies sometimes do not develop as hoped and planned. All the more so when entire markets suddenly collapse, like in 2008. For me, however, it is much more important how these so-called failures are dealt with. Sometimes the timing is simply bad. I experienced this with Greenlight Media, one of our venture companies. In 2001, a fund we set up to structure the media activities of Dresdner Bank and Greenlight Media began to wobble due to the dotcom bubble. Eventually, the fund was sold at a profit to Dresdner Bank, and we decided to continue by ourselves. Just two years after this alleged failure, we achieved global success: Greenlight Media went on to work with BBC and Disney, co-producing Deep Blue and Planet Earth, two of the most successful nature documentaries in history. Around US$ 150 million at the box office and over 200 episodes of TV animation produced and distributed worldwide speak for themselves. Ultimately, Greenlight Media succeeded in opening up the entirely new field of large screen nature documentaries for the BBC, and we were able to break box office records with Planet Earth. In 2005 and 2008, our productions each generated more than 50% of the export revenues of all German film productions. Despite initial challenges, we cannot speak of failure here – it is rather a special challenge that needs to be mastered.
You were also active as a company builder with the Berlin Atlantic Capital Group. Would you describe the BAC as one of these challenges?
Absolutely! From today’s perspective, the BAC is an entrepreneurial success. Despite immense adversities after the financial crisis of 2008, we succeeded in winding up the company cleanly and restructuring the assets. While the partner bank Wachovia, the fourth largest bank in the USA, had to be absorbed by Wells Fargo, we were able to overcome the crisis on our own. This required a great deal of personal commitment on my part. I even spent a few years in the USA with my family and had to fight off several hostile takeover attempts during the restructuring process. But this commitment has paid off. In 2015, our institutional investors in the USA were able to achieve a profit of around US$ 90 million through an IPO of our subsidiary CIG. Last year, we were able to reach a profit of 135 percent for the Infratrust investors in Germany with almost US$ 30 million in returns. These are results that no one would have thought possible a few years ago. And that’s exactly what I think makes a successful entrepreneur and investor. Sailing only during sunshine is no big challenge.
Such challenges make you stronger?
They are a part of the life that I chose to lead. The two decisive factors are stamina and the ability to learn from past mistakes. That is what ultimately makes you stronger. Over the past 15 years in the field of structured finance alone, we have handled deal volumes running into the billions –from small private placements to IPOs in the USA, a whole portfolio of various international financial services. Services that we have now bundled in Argo Capital. I believe that our experience is an essential factor contributing to the success of the Argo Venture Studio today.
In the end, there is only one thing that counts: Anyone who supports entrepreneurs as a partner – whether in an advisory capacity or as an active investor – is better equipped to actually solve the challenge if he knows what he is talking about. Most consultants are hired guns. They do not take responsibility for the effect their consulting has on the market. In contrast, us being entrepreneurs ourselves, we know what corporate responsibility and focusing on results mean.
When you start a new business or decide to engage as an investor, do you necessarily know where the journey will ultimately take you?
Naturally, you have a vision when you first start a company or believe in the idea of the entrepreneur whom you support as an investor or company builder. How straightforward the implementation of the vision or idea turns out to be, however, is written on another page. There are numerous examples of this in Argo’s history. Sometimes a takeover offer is so attractive that the investor decides on an early exit. For example, look at our investment in Gate 5. In 2006, the company was sold to Nokia for around €150 million, one of the first major exits of the Berlin start-up scene. Today, under the name HERE, it is not only a company worth billions but also one of the major players in shaping the future of autonomous driving for the German automotive industry. Sometimes, however, it becomes apparent during implementation that hurdles or competition are too big and that the plug needs to be pulled. We have already experienced this at Argo over the years, for example with Txtr.
Do you have a clear vision for the future of Argo Ventures?
The new structure and our focus on the three business areas are strategic, of course. For all three areas, we have many exciting projects in the pipeline, in very different industries. Over the past 20 years, we have built a unique ecosystem for entrepreneurs and organizations, and now we need to expand this further. We have a clear vision for this, and due to our experience of all ups and downs, we know exactly how to ensure that entrepreneurs and their ideas can build on the most solid processes and the right partners right from the start. This will enable us to survive external events such as the 2008 financial crisis.
In addition: Due to the increasing dynamics of disruptive innovations, the life cycle of many products and ideas will become shorter and shorter. This makes it all the more important to keep one’s finger on the pulse of the times, identify trends and position oneself clearly as the leading ecosystem for innovative entrepreneurs. This is our goal for the Argo Venture Studio.