🤝Building an Internet Holding Co. focused on the Founder & Investor Space - Maximilian Fleitmann, Co-Founder of Wizard Ventures

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Alex Pattis & Zachary Ginsburg
September 08, 2023

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🤝Building an Internet Holding Co. focused on the Founder & Investor Space - Maximilian Fleitmann, Co-Founder of Wizard Ventures

Who are the leading Founders and how do they think about early-stage investing in startups, SPVs, and microfunds?

Today, we are excited to present an awesome interview with Maximilian Fleitmann.

Founder Profile:

Maximilian Fleitmann is an active angel investor and Co-Founder of Wizard Ventures - an internet holding company that buys, builds and operates profitable online businesses with a unique focus on the founder & investor space. Wizard Ventures’ main purpose is to build unique companies alongside incredible founders that really have value for founders and users.

The companies that Wizard Ventures operates includes:

Maximilian is also actively creating content on startups, VC, and fundraising. He invests as an angel in early-stage tech startups and is active in taking on a hands on approach to helping them grow.

Our interview with Maximilian below:

 

  1. Why did you start StudyHelp?

Back in my school years, I was studying industrial engineering and there were a lot of exams that were really hard. Some of them even had pass rates of just 10% This seemed like a common struggle – a lot of students weren’t performing well on these exams because the professors’ teaching styles weren’t really engaging and results oriented. A lot of the university staff were extremely knowledgeable, but there weren’t many that were explaining the concepts in a digestible manner.

Most students just wanted to have the recipe on how to get to the result without the need of knowing all the derivations. I started asking myself: how cool and useful would it be if there was a combination of online and offline learning, led by people who understood how to convey these topics to students learning it for the first time? And ultimately, I wanted to pass the exams myself.

That’s how we got started with StudyHelp. By recognizing this huge pain point and putting our unique twist on education, we fortunately went viral! We managed to scale StudyHelp to over 200 cities in Germany, and we had over a million students learning with our educational content every month. At the core of our entire work, we had one clear objective: to create a learning environment that really suits every student out there, whether you like to learn with videos, books, or personalized tutoring.

  1. Did you raise VC money?

To be very honest, my co-founders and I weren’t really aware of the whole venture capital world when we started. Back then, we didn’t have any network of investors or experienced founders to talk to.

So, as we were still students, we minimized our costs as much as possible and decided to operate as a bootstrapped company for the first 3 years. We were essentially just recycling all the money we made from day one back into the company, which also meant we were pretty profitable from the beginning with such little costs. Once we reached around a million dollars in revenue, we got our first acquisition offer from one of the leading companies in that space. We ended up declining the offer because we thought, hey, we will be the market leader one day.

Instead, we turned to VC investors and decided to raise money. There were many upsides to this decision, but also some downsides.

3. What would you want to change about VC?

Like I mentioned, I didn’t really know how venture capital works when we first raised money. I wasn’t aware of what investors expected or how to properly raise money from VCs. I simply thought that we would raise money once and then just become profitable again. This lack of awareness is exactly what I would like to change about VC – the industry needs more transparency.

There should be a clear understanding from both the founders and investors of what venture capital truly is and the types of companies that are suited for VC funding. In my eyes, many companies (and even a lot of those who raise VC money) are not really VC Cases”. A VC case means you need to grow as big as possible and as quickly as possible

A mediocre outcome is not an option for a VC fund, as the math works in a way that the small number of winners in a portfolio need to cover all the losses and returns of the fund.

And for founders, one of the worst situations to be in is when you have investors onboard, but your company isn’t built for VC scale. So I always give advice to founders to make sure they know exactly what VCs expect and what it means to take their money. And although the media just hypes VC funded companies, I believe the real stars are the bootstrapped companies.

4. What is Wizard Ventures?

Wizard Ventures is an internet holding company, meaning we buy, build, and operate profitable online businesses. Our main purpose is to work alongside amazing people to build unique companies that really have value for founders and users.

5. Why did you start Wizard Ventures? (i.e. why go from venture backed to bootstrapped style growth?)

We started Wizard Ventures around mid-2022 because we realized there are so many amazing ideas out there that might not be suitable for VC, but still great business with potential. We thought it would be really cool to build a portfolio of these businesses because the likelihood of creating a company that generates a couple million in revenue is much higher than a company reaching unicorn status after going through VC funding. We also just enjoy building out new ideas and learning new stuff, so we thought creating this portfolio style company would be the best fit for how we operate. And ultimately, we believe that through the portfolio approach we have more shots on being successful.

We decided to operate bootstrapped (for now) rather than venture backed because it gives us more freedom. Being bootstrapped means I can test out my ideas on my own timeline and scale. Through Wizard Ventures, I just focus on having fun and building profitable businesses because I believe that your customer’s revenue is always the best form of funding.

6. How do you think about buying vs incubating companies within the Wizard Ventures portfolio?

Honestly, I love both buying and incubating companies within the Wizard Ventures portfolio. The first portfolio company of Wizard Ventures existed before I even knew the word internet holding.

I was working on this micro private equity experiment in 2019 where I bought a company because I thought it’s way easier to grow a company that already has traffic and a working product instead of starting from scratch. I bought BaseTemplates, and the results exceeded my expectations – I’d even say it’s one of the best investments I’ve ever made. My reason to acquiring the company back then was mainly because I saw there’s organic traffic coming in every single day, people are willing to buy the product, and people are clearly satisfied with the product. At this stage, it’s about increasing the distribution of this product. Buying a company is essentially buying a quick pass to product-market fit, but you need to have the financial resources, a clear target, and proper deal flow.

In terms of incubating businesses, getting a company from zero to one is always the hardest part because there are so many things that you just don’t know. When I think about companies, I recognize that the product itself usually isn’t the problem, but it’s the distribution. For companies, we’re incubating right now, we’re obviously doing thorough research and building customer profiles to determine if the product is viable, but we’re thinking about how we’ll distribute our product and how to grow our reach.

The most recent incubation projects we’re working on are Magic Design and tona.

Because we didn’t want to raise money while still refining our internet holding model and defining our success metrics, we decided to build Magic Design as our internal “cash cow”, that helps finance a lot of our other projects.

7. Any specific types of companies that you are most excited about within wizard Ventures?

There are two companies that I’m really excited about right now, and they couldn’t be more different.

On one hand, we have our productized design service Magic Design, which helps startups scale all of their design work. It’s a really people-heavy business because we’re hiring designers all around the world and helping founders address their design needs through a subscription based model. From all the companies that I’ve built, Magic Design probably had the strongest product-market fit right away, and we’re scaling rapidly. It’s cool because it’s not a software business, but a service business, so we can continue to grow rapidly and scale organically through founder-led sales.

On the other side, we have tona, a competitor monitoring SaaS company. SaaS is such a different project because you need a lot of time to actually build the product and then go out and find your target customers. For tona, the average customer pays between 30 and 100 dollars. Because of that, it would take probably 3x the time or more to scale tona to the same stage that Magic Design is at.

The good thing is in our portfolio approach that we can now use Magic Designs profits to invest them into tona as a long-term bet.

8. What types of deals do you look at as an angel investor?

I mostly look at pre-seed and seed deals globally that are focused in SaaS, EdTech, and community-based products. But, I’m also interested in everything that relates to the private market FinTech space (giving more people the opportunity to invest into startups). Ultimately, I just want to be excited about the product and the founding team.

9. What are your favorite types of founders to invest in? Any traits that stick out?

In the earliest days, you’ll always have limited resources but unlimited ideas. The really good founders will focus on what’s relevant at that exact time and just get it done. Starting a company will always have its ups and downs, but a good founder will always keep pushing through every moment.

10. Where do you see Wizard Ventures in 5 to 10 years from now?

In 5 to 10 years, we will have served hundreds of thousands of people through our cool products. Wizard Ventures will be a profitable company with solid businesses that drive great returns for our shareholders. That can even mean that in 10 years we are publicly listed with a valuation greater than a billion dollars and are holding a portfolio of 20-30 strong businesses.

11. Any hot take on the EU venture capital scene?

I think the EU venture capital scene will always be a bit different from the US and many trends will come over a couple of years later.

First, I think we’ll see a rise of solo GPs and operator investors in Europe that will really shape the trajectory of the EU venture capital scene. There were a few big successes in Europe, and now the money will be recycled into the latest startups.

Second, I think there will also be a huge increase in community rounds and founders that will take smaller check investors on board (made possible through SPVs, for example).

If I were to raise money right now, I would bring in the more classic VCs, but also have a part of my round dedicated to my community. There is nothing better than having people really cheering for you - and if they are shareholders of your company you can be sure that they will.

Maximilian & Wizard Ventures Socials:

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✍️ Written by Zachary and Alex