The Application Center Oberpfaffenhofen GmbH (AZO) aims to identify and advance space-related innovations. Founded in 2004 as an incubator of the German Aerospace Center (DLR) together with the Bavarian Ministry of Economic Affairs, the institution has since supported young companies in establishing their business ideas in the market.
How AZO can help startups, we spoke with Stefanie Herrmann, CFO at AZO, spoke.
What does the market have to offer?
The first question that arises is: Are there many business ideas related to space travel? Much more than you think, says Herrmann. The target group isn't as narrow as it seems; the industries are diverse.
"This could, for example, be a service that involves the use of satellite images or signals. Or materials from space travel are integrated into a product. We're talking about a robotic gripper arm or software that was originally developed in space research and is now to be used in the automotive industry,"
explains Herrmann further.
One important component is technology scouting, another is the Europe-wide innovation network. To find out which innovative ideas the market currently has to offer, the AZO coordinates innovation competitions such as the European Satellite Navigation Competition (for satellite navigation), the Copernicus Masters (for Earth observation) or the Service Robotic Masters. There are also Europe-wide hackathons like the Space App Camps.
Access to industry, experts and funding
In recent years, there have been over 10,000 participants in the idea competitions. The best ideas are evaluated by partners and experts from the network. Those who succeed can either ESA BIC Incubator or, specifically on the subject of Earth observation, also in the Copernicus AcceleratorThis gives the startup access to industrial customers as well as to Europe's largest innovation network on this topic, with more than 25 partner regions and over 200 experts for mentoring. AZO also supports the acquisition of funding, such as Horizon 2020.
What the ESA BIC Incubator offers
At the ESA Business Incubation Centre (BIC) Bavaria, startups stay for a minimum of one year and a maximum of two. The goal is to make the company "market-ready." The incubator helps further develop the technology, generate intellectual property rights, build the prototype, and ultimately bring the product to market.
For this purpose, the Free State and the European Space Agency (ESA) are providing Grant totaling 50,000 euros without taking shares in the company. These funds can also be used to address general issues such as website creation and marketing materials.
The AZO also provides support when exceptional premises Although the center itself only has standard office space and no laboratory infrastructure, startups can use testing facilities at the DLR.
„Lilium, the electric aircraft, has set up a laboratory down here, a workshop, and several 3D printers to produce the individual components. And Vectoflow has a wind tunnel just around the corner."
Herrmann mentions some special features.
The treasure hunters of the ESA BIC Bavaria
The startups from the ESA BIC Bavaria have very different backgrounds: The Founders are a fairly international group, apply from Spain, England, France. And some come from outside via competitions (their own or the Baystartup Business Plan Competition) or through recommendations, for example directly from the university or from professional life, the others come from research centers such as DLR or Fraunhofer, which are also partners of the AZO. "There are treasures here that must be unearthed,” says Herrmann. And the ESA BIC Bavaria helps to bring the ideas to market maturity so that they meet commercial standards.
Startups can apply to the incubator four times a year. Herrmann’s tip: Simply contact the AZO directly:
"We're happy to conduct preliminary discussions, because an application is very similar to a business plan and requires a lot of effort—it should be meaningful. The sooner someone contacts us, the better we are."
This is important so that the application center understands the business model, the space relevance of the business idea becomes clear and the AZO team can support the application process if necessary.
The door opener for startups
And once the startup has mastered the two-stage application process and the evaluators have given the go-ahead, it's time to move into the ESA BIC Bavaria Incubator.
In addition to the aforementioned €50,000 grant, the founders also receive support from network partners in the technical development of the product. In addition, there are regular meetings, assistance with financing issues, and market and customer development, including one-on-one matchmaking opportunities..
"Our large international network helps us here. We have various industry partners in this network – for example, DHL, Telekom, or SAP. The industry is now much more open to startups than before. We serve as a door opener here."
Herrmann continued. In addition to individual mentoring by experts, there is also coaching on topics such as intellectual property rights, certification, raising debt capital, and pitching training.
Main reasons for success and failure
Stefanie Herrmann has seen many founders and business ideas in her job. She has identified three success factors:
- Team structureAfter all, it's not enough to have a brilliant idea if there's no one to sell it.
- Problem and customer orientation: Because I only sell when I have a customer whose problem I solve and who is willing to spend money for it.
- 90% are sufficientWhat use is the greatest technology that can do much more than desired – and is therefore too expensive.
And the main reason for failure?Lack of focus and at the same time too much perfectionism," says Herrmann. She's referring to startups that go out and hear from customers, 'Couldn't you develop these features so it works for me?' Here, AZO's job is to recapture these startups.
“Then we tell the founders: the customer either has to pay for adaptations or he’s out of luck,”
adds Herrmann.
Cooperation between small and large
Even after the startups leave the incubator, AZO maintains contact. Many stay nearby and look for new offices in the surrounding area. Why? Industry often approaches AZO in search of solutions, where the application center then connects them with suitable startups.
Over 115 startups participated in the ESA BIC Bavaria Incubator, and more than 400 participated in the European network. The survival rate of 89 startups after five years demonstrates that the incubator's startups are largely successful. More than 1,600 high-tech jobs have been created here, and the startups have generated more than €140 million in annual revenue.
The startup spirit survives the exit
According to Herrmann, this is what makes her work so exciting:
"We have many companies that have simply taken off. The startups are flying! Some founders have sold their companies and are now working as business angels after their exit. This also shows that once you have that spirit, you never lose it."
At the same time, this gives AZO, among other things, a very strong Business Angels Network in addition to the good contacts to other financing networks such as BayStartUP, dem Business Angels Network Germany eV (BAND), the European Angel Network EBAN and many more.
The AZO and the ESA BIC Bavaria Incubator offer many good reasons to consider whether your own startup might have some connection to space travel…
Photo credits: AZO / ESA BIC Bavaria
