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bm|t newsletter Q3 2020

There is an inher­ent asym­me­try between founders and ven­ture investors: founders are sin­gu­larly com­mit­ted to their com­pany; whereas, investors gen­er­ally have diver­si­fied invest­ments across mul­ti­ple com­pa­nies. This asym­me­try under­stand­ably leads to dif­fer­ent per­spec­tives and approaches regard­ing build­ing and grow­ing a company.

In this Newsletter

Build It and They Will Come (Trusting the Capital Markets)

One sce­nario aris­ing from this innate dif­fer­ence that we peri­od­i­cally encounter in Ger­many, where smaller early-stage tick­ets for strong ideas are read­ily avail­able but larger growth tick­ets are tougher to attract, is the temp­ta­tion for founders to play ›not to lose‹ as opposed to ›play­ing to win‹. Play­ing not to lose can take many forms but it is essen­tially focus­ing on stay­ing alive as opposed to focus­ing on cre­at­ing large suc­cess. This approach is often char­ac­ter­ized by pro­long­ing the cash run­way by sav­ing costs and wait­ing before push­ing the com­pany through to the next stage of its devel­op­ment until investors have com­mit­ted to a large investment.

Although we under­stand this men­tal­ity behind a more cau­tious approach to growth and cor­po­rate devel­op­ment, we believe that in many cases, espe­cially with high-tech, highly-scal­able ven­tures, cau­tion is ulti­mately the much higher-risk strat­egy, as valu­able win­dows of oppor­tu­nity can be missed. In fact, bold­ness in grow­ing a com­pany and demon­strat­ing strong busi­ness momen­tum at an early stage is prob­a­bly the sin­gle most impor­tant fac­tor for cre­at­ing inter­est with ven­ture investors.

The opti­mal way for founders to break through this dynamic, and to develop the trust that when they build a thriv­ing com­pany that investors will come with cap­i­tal, is to engage with many investors from an early stage and to main­tain an open dia­logue with inter­ested investors about the company´s progress. Founders and investors should openly dis­cuss what mile­stones the com­pany needs to achieve for the investor to invest in the com­pany. In this way, founders can build an under­stand­ing of the vari­ety of investors from whom they could attract cap­i­tal and bet­ter esti­mate which ele­ments of the com­pany are impor­tant to those investors.

Pro­fes­sional ven­ture investors have a strong appre­ci­a­tion that build­ing a com­pany is an extremely chal­leng­ing endeavor and that it is impos­si­ble to deter­mine the ideal path ahead of time. Thus, most insti­tu­tional ven­ture investors pre­fer to invest with founders who are will­ing to test the foot­print of their com­pany by exper­i­ment­ing with var­i­ous growth and devel­op­ment ini­tia­tives, fully under­stand­ing that some efforts will not work. In early stage ven­tures there should be no fear of failed attempts rather a deep com­mit­ment to find­ing what works most effec­tively and with open com­mu­ni­ca­tions through­out the process.

One key devel­op­ment which should make it eas­ier for founders to adopt an exper­i­men­ta­tion and growth mind­set is the mas­sive increase in the amount of ven­ture cap­i­tal look­ing for com­pa­nies that are cre­at­ing strong busi­ness momen­tum, even at very early stages. This explo­sive growth in ven­ture cap­i­tal and the num­ber of ven­ture cap­i­tal investors may make it some­what more com­pli­cated to know where to start with fund rais­ing, but it should greatly increase founders’ belief that good per­for­mance will be rec­og­nized and will attract invest­ment. Build it and they will come!

bm|t’s Thürin­gen Startup Fund (TSF) is specif­i­cally designed to act at an early stage and to enable founders to develop the busi­ness momen­tum that will lead to fur­ther, larger-scale invest­ment. So far 33 of the 35 Investee-Part­ners in which we have invested with the TSF fund have received addi­tional invest­ment, and the major­ity have raised larger sub­se­quent rounds with addi­tional insti­tu­tional investors. We are proud that sev­eral of these com­pa­nies and larger invest­ment rounds are high­lighted in our Q3 Fol­low-on Investments.

Your bm|t Team

Follow-on Investments

In Q3 2020, bm|t and co-investors invested more cap­i­tal in our Investee-Part­ners, includ­ing many seven-fig­ure financ­ing rounds, than in any of the pre­vi­ous six quar­ters. This strong cap­i­tal com­mit­ment is an excel­lent con­fir­ma­tion of the strength of our Investee-Part­ners and a strong sig­nal that the chal­lenges of Covid-19 are not pre­vent­ing sig­nif­i­cant progress.

Smart­Dye­Liv­ery devel­ops func­tion­al­ized nanopar­ti­cles in which ther­a­peu­tic com­pounds are enveloped and safely trans­ported to spe­cific organs, which the med­i­cines are tar­get­ing. This patented plat­form deliv­ery tech­nol­ogy can be uti­lized in a wide range of ther­a­peu­tic appli­ca­tions and also allows for a unique ther­a­nos­tic use case. Cur­rently, the Smart­Dye­Liv­ery team is focus­ing on a ther­apy for sep­sis-induced liver fail­ure with the goal of reduc­ing the mor­tal­ity rate of such cases by 90%. With this multi-mil­lion invest­ment from bm|t, a renowned fam­ily office, the STIFT, and sev­eral savvy busi­ness angels, Smart­Dye­Liv­ery is well posi­tioned to take its unique nan­oth­er­apy through phase one clin­i­cal trials.

Pre­ven­ti­cus´ orig­i­nal core tech­nol­ogy uses pulse sig­nals and addi­tional bio­met­ric data to diag­nose atrial fib­ril­la­tion using smart­phones and smart­watches. The com­pany has fur­ther evolved into a more com­plete patient care com­pany, using its core tech­nol­ogy to iden­tify high-risk patients and then man­ag­ing those patients´ care with addi­tional sup­port, such as the pro­vi­sion of advanced hard­ware for deeper diag­no­sis and tele­health ser­vices. Priveg­est SA led this seven-fig­ure invest­ment focused on sup­port­ing the company´s patient care roll­out; bm|t and sev­eral addi­tional investors joined the round.

ifesca´s intel­li­gent cloud ser­vice and pre­dic­tion and opti­miza­tion engines enable energy com­pa­nies to bet­ter fore­cast demand for elec­tric­ity, gas, or heat in near real time. The gained insights allow energy com­pa­nies to make bet­ter deci­sions regard­ing their own gen­er­a­tion oper­a­tions and/or energy trad­ing, cre­at­ing sub­stan­tial sav­ings for cus­tomers. bm|t led this seven-fig­ure sec­ond clos­ing of an invest­ment round focused on grow­ing sales and cus­tomer ser­vice, and we were joined by a group of renowned pri­vate investors with sig­nif­i­cant soft­ware and energy indus­try experience.

In Ger­many, hos­pi­tals are legally required to find place­ment in a nurs­ing home for patients who are unable to safely return to their home after a hos­pi­tal stay. The search for an avail­able and appro­pri­ate nurs­ing home place­ment is extremely time inten­sive for both hos­pi­tals and nurs­ing homes. Pflege­platz­man­ager has built a user-friendly and easy to oper­ate cloud-based soft­ware plat­form that allows hos­pi­tals and nearby nurs­ing homes to quickly iden­tify avail­able and appro­pri­ate facil­i­ties for patients. Pflege­platz­man­ager reduces the aver­age time required to match a patient to an appro­pri­ate nurs­ing home bed from days to under two hours, thus avoid­ing much frus­tra­tion for facil­i­ties and fam­i­lies and sav­ing the sys­tem sig­nif­i­cant sums of money. With this seven-fig­ure invest­ment from bm|t, the MBG Thürin­gen, Treuen­burg Group, and sev­eral expe­ri­enced busi­ness angels, Pflege­platz­man­ager has the resources it needs to fur­ther increase its cus­tomer den­sity and cre­ate a pow­er­ful net­work effect.

Red­wave Med­ical is focused on cre­at­ing med­ical algo­rithms that improve patient care. The company´s first approved and mar­keted prod­uct is Antares, an algo­rithm that con­verts data gleaned from the mea­sure­ment of periph­eral blood pres­sure to a reli­able esti­mate of cen­tral (aor­tic) blood pres­sure, which is much more rel­e­vant for a person´s health and treat­ment. In this field, Red­wave has recently entered into mul­ti­ple com­mer­cial part­ner­ships with blood pres­sure mon­i­tor­ing com­pa­nies. Red­wave also pos­sesses a com­pelling pipeline of fur­ther life-improv­ing bio­met­ric algo­rithms. bm|t led this near seven-fig­ure invest­ment round focused on mar­ket expan­sion and fur­ther prod­uct devel­op­ment, and we were joined by the MBG Thürin­gen, Sparkasse Jena, the STIFT, and an expe­ri­enced busi­ness angel.

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 which are the first indi­ca­tors 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 avoided if it can be demon­strated that an HPV infec­tion has not caused DNA methy­la­tion. This invest­ment was a bridge financ­ing for the pur­pose of final­iz­ing the terms of a large equity round.

Mas­ter­PIM con­tin­ues to gain trac­tion with its sleek and cloud-based Prod­uct Infor­ma­tion Man­age­ment (PIM) soft­ware that allows man­u­fac­tur­ers, traders, retail­ers, and mar­ket­places to effi­ciently 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. bm|t joined mul­ti­ple investors, includ­ing a highly sat­is­fied cus­tomer, for this invest­ment round focused on scal­ing up mar­ket­ing and cus­tomer service.

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ALSO SEE OUR OTHER NEWSLETTERS

Q4 2020 | Jan­u­ary, 22 2021
Q3 2020 | Octo­ber, 20 2020
Q2 2020 | Juli, 17 2020
Q1 2020 | April, 17 2020
Q4 2019 | Jan­u­ary, 15 2020
Q3 2019 | Octo­ber, 17 20019
Q2 2019 | August, 14 2019
Q1 2019 | May, 3 2019
Q4 2018 | Feb­ru­ary, 4 2019
Q3 2018 | Octo­ber, 16 2018
Q2 2018 | July, 23 2018
Q1 2018 | May, 24 2018