Innovative Approaches to Investing

Technology can radically improve the chances of success for startup founders and investors alike, as this DLD Munich session with Eva-Valérie Gfrerer (Morphais), Michele Romanow (Clearco), Joshua Browder (DoNotPay) and Andreas Liebl (appliedAI) shows.

Access to capital is the main hurdle entrepreneurs need to clear when starting a company. Typically, venture investors will take a stake in each company they finance – but Michele Romanow had a different idea.

She proposed a temporary partnership instead, telling founders, “I just want 5 to 10 percent of your revenue until you pay me back my capital plus 6 percent.”

The concept is different from a loan, as she makes clear, and it has turned her investment firm Clearco into a global giant, which has invested nearly $4 billion in over 9,000 different founders around the world.

“We really believe that no matter who you are, if your data shows that you have a great business, you should be able to get access to capital”, Romanow says.

A similar idea drives Eva-Valérie Gfrerer, who observes that “in Europe, we have so much talent and entrepreneurial talent, but 90 percent of the deals that are being made by VCs are being made within their network.”

This is bad for investors and founders alike, she believes, because capital is allocated “in a gut-driven way”.

Her goal with Morphais is to make better investment decisions with the help of data and artificial intelligence. “The question is, how can we use technology to help us gain visibility”, she explains, “and find the right right entrepreneurs to invest into?”

Joshua Browder, meanwhile, wants to use AI “to replace all lawyers one day, starting with consumer rights” – and he knows from experience what it feels like to be turned down by potential investors.

“They said, ‘You’re crazy, it would never work’”, he recalls. But he proved them wrong. His company DoNotPay – the “world’s first robot lawyer” – is now automating a range of different legal claims, from parking tickets to refunds from landlords to canceling subscriptions.

“All of the areas that a lawyer wouldn’t want to get out of bed for”, Browder says.

The entrepreneur is also active as an angel investor. “I specialize in investing in high school and college dropouts”, he says. “As an angel investor, and I help them tell the right story, get some revenue, so they can go down other paths as well.”