Cologne-based early-stage VC firm neoteq has reached the first closing of its second fund, marking a notable milestone for one of Germany's active pre-seed and seed investors. General Partner Simon Schneider sat down with deutsche-startups.de to discuss the current fundraising climate, what separates fundable teams from the rest, and why DeepTech remains central to neoteq's investment strategy.

A Market in Recovery — But Selective

Schneider describes the broader VC landscape as being in a phase of cautious recovery after several difficult years. Deal volumes are stabilizing, and investor appetite is returning — but not indiscriminately.

"I see good chances for teams with clear traction," Schneider says, signaling that the bar for early-stage investment has risen considerably since the peak years of 2021–2022.

The implication is clear: narrative-driven pitches that once attracted term sheets on the strength of a vision alone are no longer sufficient. Investors like neoteq now want to see demonstrable momentum — early customers, technical differentiation, or measurable product-market signal — even at the pre-seed stage.

What neoteq Looks for in Founding Teams

Schneider is candid about the elevated expectations. The firm's focus remains on deep technical teams — founders who typically have domain expertise, research backgrounds, or prior operator experience in the sectors they're targeting.

Key signals neoteq evaluates include:

  • Technical depth: Is the core innovation defensible and non-trivial to replicate?
  • Market clarity: Does the team understand the problem with specificity, not just the opportunity at a high level?
  • Early traction: Even at pre-seed, some form of validation — pilot customers, LOIs, or strong academic partnerships — matters.
  • Team dynamics: Complementary skill sets and evidence that the founding team can execute under pressure.

This framework reflects a broader shift in European early-stage investing, where the flood of generalist capital that defined the 2020–2022 boom has receded, leaving specialist funds with genuine sector expertise in a stronger position.

DeepTech as a Core Thesis

neoteq has consistently positioned itself around DeepTech — a segment that encompasses hardware, advanced materials, life sciences infrastructure, and applied AI with significant technical complexity. Schneider sees this focus as a structural advantage rather than a constraint.

DeepTech investing requires longer horizons and higher tolerance for technical risk, which tends to deter generalist funds and reduces competition for the best deals. For specialized investors willing to do the diligence, the entry valuations can be more rational than in software-only markets that remain hotly contested.

The completion of the Fund II first closing suggests that LPs share this conviction — institutional investors and family offices backing neoteq are effectively betting that Europe's DeepTech pipeline, particularly out of Germany's university and research institute ecosystem, will continue producing fundable companies.

What This Means for Founders

For startup founders approaching investors in the current environment, Schneider's framing offers a useful calibration:

  • Don't lead with market size alone — show you understand the specific customer problem and have evidence of demand.
  • Technical moat matters more than ever — in a tighter capital environment, investors are scrutinizing defensibility harder.
  • Early traction is table stakes, even pre-revenue — pilots, partnerships, or letters of intent carry significant weight.
  • Specialist funds are your best bet if your startup sits at the intersection of deep science and commercial application — they have the vocabulary to evaluate what you're building and the patience the timeline requires.

neoteq's Fund II first closing is a small but meaningful data point that European early-stage capital hasn't dried up — it has simply become more deliberate.