bm|t newsletter Q1 2019
For the majority of companies, the clearest path to creating additional value is growing the size of their business – more sales, more customers, more employees, more locations, etc. However, for some companies, especially those that have a high degree of technological innovation, the way to maximize value is often less clear. These companies face important and challenging decisions regarding which development paths create the most value.*
In this Newsletter
Growing Businesses vs. Creating Value
In certain circumstances, expanding a business in the traditional sense can actually limit value for a company whose technology’s greatest potential is as an enabler. An enabling technology is a technology that may have difficulty succeeding in the marketplace on a standalone basis, but can significantly increase the performance of another technology or company when combined.
Companies possessing enabling technologies must, of course, prove their technology is effective, perhaps through clinical trials, beta customers, or technology partnerships. For these companies, investing heavily in sales efforts or growing their geographic footprint may even be counterproductive. Often these companies are well advised to focus the majority of their efforts on further developing their core technology and increasing its attractiveness for integration into existing products as opposed to building out a standalone business.
We believe that there is an inherent founder and investor bias toward “company building”, largely because that kind of progress is more easily measured (sales, customers, employees), and both founders and investors can find it difficult to recognize and properly assess progress that is less easily measured (patents, new discoveries, advanced know-how, learnings from a test). At bm|t, we recognize this bias and work closely with founders to properly evaluate their unique opportunity set to collaboratively reach an optimal outcome. This requires that the founders and investors share a vision and establish a trust that allows for pursuing paths that might be less measurable but more value creating.
Our appreciation for companies with less measurable paths was recently reinforced, because two of our most successful investee-partners did not generate substantial revenues but possessed technology that was so unique and highly protectable that the companies dramatically increased their value without significantly expanding their business in the traditional sense.
With our underlying goal of catalyzing Thüringen’s economy, bm|t invests across the full spectrum of innovations – those that should indeed be the basis for large, standalone enterprises as well as enabling technologies. Whatever each company’s optimal path may be, we look forward to the shared journey.
Your bm|t Team
* Our use of the term value in this newsletter is intended to be interpreted more broadly than simply shareholder value, as we appreciate that there are many aspects to value creation.
Welcome to the Family
evan.network has developed a user-friendly and flexible software platform that uses the benefits of blockchain technology to create trusted environments for a wide-variety of business applications. The company already has top-tier customers that employ the evan.network for a variety of objectives, such as supply-chain management, digital booking and insurance environments for machine rental, and smart contracts, to name some of the early developments on the platform. The system elegantly combines the advantages of public blockchain environments (Etherium) with the advantages of private environments, with each node-owner able to construct and structure its own network. evan.network is designed for industrial uses, and we strongly believe the company will strike a rich vein with Germany Inc., which will greatly benefit from evan’s technology.
LAXXON is pursuing its innovative and unique 3D screen printing technology to develop novel pharmaceutical dosage forms. The company´s additive manufacturing process allows for the production of multilayered drugs with novel geometric structures, enabling a controlled release of active components. Importantly, the company’s technology also allows for high-throughput printing so that its production capabilities are almost as interesting as the technological possibilities regarding efficacy and safety aspects of conventional drugs. These include optimization of drug release by heterogeneous distribution within the system improving treatment success and patient compliance as well as watermarking to combat counterfeiting. Given the substantial medical improvements and the pharmaceutical industry’s strong interest in prolonging the patent life of key drugs, it is hard to imagine a technology with more potential than mass-produced 3D pharmaceutical printing. We are extremely excited about our investment in LAXXON and see Jena as the perfect place for the company to advance its technology given its strong life sciences cluster, which was a key reason for the company’s choice to bring its product and technology development to Thüringen.
MasterPIM continues to gain traction with its sleek and cloud-based Product Information Management (PIM) software that allows manufactures, traders, retailers, and marketplaces to easily manage complex product information datasets and effortlessly project the processed data into online shops and catalogues. Currently, over 90% of mid-sized manufactures do not have a PIM solution, so the market is largely a greenfield opportunity. One of the key reasons that a large portion of the market has not adopted a PIM system despite the increasing demands of sales partners/channels on product data is that traditional PIM solutions are heavy, hosted software with expensive and invasive installations. MasterPIM’s cloud-based platform allows customers to be online with an effective PIM system within hours and at a fraction of the cost of the old PIM systems on the market.
JeNaCell has won many awards for its innovations in biologically derived wound healing/management products. The company’s base technology lies in the use of microorganisms to create strong, flexible, and moisture-retaining substances ideal for wound and cosmetic applications. The company is also developing a translucent version of its flagship product, Epicite, which will allow for wound monitoring without the removal of the covering – a major improvement for patients and medical staff. bm|t acted as a co-investor to a strategic in this financing round, which will be used to further expand the company’s production capabilities and salesforce.
Zeilenwert has over 5,000 relationships with publishers and has rights to over four million e‑books, making it the e‑book provider with the largest selection worldwide. The company has also developed many market leading assets for the conversion of paper books to e‑books, the seamless distribution of e‑books, and unique e‑book discovery channels. bm|t and other shareholders made this investment to further commercialize several of the company’s new and high-potential technologies.
JenID is focused on the ID verification market and has developed several products that help companies verify customer identity before completing a transaction. The company’s technology has been used to greatly reduce fraud/theft in the rental car space, and it has technology ideally suited for purely digital transactions, such as onboarding customers completely online. JenID was recently named one of Germany’s 100 hottest start-ups by The Hundert. bm|t and other shareholders made this investment to ramp sales of the company’s MobileID product.
oncgnostics’ GynTect test allows women who have tested positive for HPV to quickly gain valuable information regarding the degree of seriousness of their diagnosis. GynTect is able to detect even early stages of DNA methylation that are the first signs of cancer development. Earlier detection of cancer development allows physicians to treat patients sooner, which can often be lifesaving. Additionally, and very importantly, most HPV infections resolve without progression to cervical cancer, meaning unnecessary operations, treatments, and mental stress can be prevented if it can be demonstrated that a HPV infection has not caused DNA methylation. This investment was a second closing of a round led by bm|t and including many business angels from the life sciences community. oncgnositcs will use the proceeds for marketing activities and the further development of additional biomarker-based tests for other forms of cancer.