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bm|t newsletter Q4 2019

With the start of a new decade, we take stock of bm|t’s past decade and share our thoughts about the upcom­ing years of ven­ture cap­i­tal and pri­vate equity invest­ments in Thüringen.

In this Newsletter

The Decade Past, The Decade Ahead

The 2010s Decade

bm|t and our Investee-Part­ners, who are the true dri­vers of our suc­cess, pro­gressed sig­nif­i­cantly over the last ten years.  At the turn of the last decade, just after the finan­cial cri­sis, we had more insol­ven­cies than evi­dence that our model and efforts were bear­ing fruit.  For­tu­nately, over the last ten years, cul­mi­nat­ing in an excep­tion­ally strong last three years, many sig­nif­i­cant pos­i­tive events occurred, reward­ing the hard work our Investee-Part­ners and bm|t had put in and giv­ing us con­fi­dence that we are ful­fill­ing our impor­tant mis­sion: To strengthen Thüringen´s econ­omy through tar­geted invest­ments in inno­v­a­tive com­pa­nies with high growth potential.

We have gained great con­fi­dence that we are ful­fill­ing our mission.

Note­wor­thy high­lights from the past decade were being the lead investor in Facebook’s first acqui­si­tion in Ger­many (fayteq) and InflaRx, which had a suc­cess­ful Nas­daq IPO and raised more than 200 Mio. USD over the last four years.  Addi­tion­ally, we had a par­tial exit of PDV Sys­tems, real­iz­ing a triple-digit IRR over three years on a size­able invest­ment.  In 2019, we also led two trade sales (HASEC sold to a pub­licly-traded com­pany in Fin­land, Scan­fil, and we sold our stake in Lyna­tox to Dier­sch & Schröder, a large fam­ily-owned busi­ness in Bre­men) to ideal strate­gic part­ners that will invest sig­nif­i­cantly in the acquired com­pa­nies here in Thüringen.

Per­haps sur­pris­ingly for a ven­ture and pri­vate equity investor in Thürin­gen, invest­ments in pub­licly-traded com­pa­nies were also key to our suc­cess over the past decade.  In addi­tion to InflaRx, Ana­lytik Jena and Carl Zeiss Meditec are high-per­form­ing com­pa­nies that pro­vided excel­lent stock returns for our funds. And cer­tainly the most sig­nif­i­cant event of the past decade was that in 2011 bm|t made its largest ever sin­gle invest­ment, in Jenop­tik.  We are cur­rently the largest sin­gle share­holder of the com­pany, and have gen­er­ated a total return (stock appre­ci­a­tion + div­i­dends) for Thürin­gen of 235% on our very size­able investment.

Thürin­gen and bm|t are on the invest­ment map in Ger­many and abroad.

All of these events and devel­op­ments of the last decade have put Thürin­gen and bm|t on the invest­ment map in Ger­many and abroad.  bm|t and our Investee-Part­ners have pow­er­ful momen­tum head­ing into the next decade, and we firmly believe we can build on that momen­tum in the years ahead.  The cumu­la­tive advan­tages of our expe­ri­enced and well-net­worked team, our cur­rent strong port­fo­lio of 59 Investee-Part­ners, and an excel­lent cadre of co-investors that have been built over the last two decades posi­tion us well for the 2020s.

The 2020s and Beyond

We are enter­ing the new decade with high con­fi­dence but also acknowl­edg­ing that we and our Investee-Part­ners have a tremen­dous amount of work ahead to con­tinue to pro­duce strong results for Thürin­gen, espe­cially in light of the chal­lenges that we and com­pa­nies in Thürin­gen will have to over­come.  As in all regions of the world, we face the chal­lenges of increas­ing inter­na­tional com­pe­ti­tion, keep­ing pace with the accel­er­at­ing rate of change, dig­i­tal dis­rup­tion, etc.  How­ever, those fac­tors also offer great oppor­tu­ni­ties if approached boldly and with cre­ativ­ity.  We feel that our Investee-Part­ners, given the high level of inno­va­tion in their prod­ucts and ser­vices and their increas­ing abil­ity to cap­i­tal­ize on global mar­kets, trends, and oppor­tu­ni­ties, will pre­dom­i­nantly ben­e­fit from these factors.

We see great oppor­tu­ni­ties if we and our Investee-Part­ners approach chal­lenges boldly and with creativity.

The most sig­nif­i­cant chal­lenge we presently see – where it is a bit more dif­fi­cult to see an equal or greater oppor­tu­nity on the other side of the coin – is the scarcity of local skilled labor (Fachkräfte­man­gel) across Ger­many.  This chal­lenge is def­i­nitely height­ened in the new fed­eral states due to the migra­tion of young, moti­vated work­ers to the West since reuni­fi­ca­tion.  With a sig­nif­i­cantly higher aver­age age in the new fed­eral states com­pared to the old fed­eral states* it is clear to see the accen­tu­ated per­son­nel chal­lenge we in Thürin­gen are fac­ing.  In fact, the major­ity of our Investee-Part­ners view the dif­fi­culty of find­ing appro­pri­ate tal­ent as one of the major chal­lenges in grow­ing their companies.

Neces­sity is the mother of inven­tion, and founders have responded to this real­ity cre­atively in the design of their busi­ness mod­els.  We undoubt­edly will have many more suc­cess sto­ries of com­pelling tech exits; how­ever, since we also want to see the cre­ation of new Thürin­gen Cham­pi­ons – part of our vision at bm|t – we and our Investee-Part­ners need to be inno­v­a­tive in over­com­ing the hur­dles cre­ated by the scarcity of qual­i­fied local labor.  Think­ing and act­ing more glob­ally, set­ting up satel­lite loca­tions in other geo­gra­phies, dig­i­tal work­spaces, cre­ative recruit­ing tac­tics, being bold and push­ing bound­aries, etc. will need to be part of our col­lec­tive reper­toire in the years ahead.

bm|t has the will­ing­ness and abil­ity to sup­port Investee-Part­ners who think cre­atively and act boldly to sur­mount the var­i­ous chal­lenges ahead.  We have great momen­tum after a strong last decade and have well-founded opti­mism for the future.  We look for­ward to work­ing with our val­ued part­ners to pro­duce many more suc­cess sto­ries made in Thürin­gen in the 2020s and beyond.

Your bm|t Team

* https://www.zeit.de/politik/deutschland/2019–05/east-west-exodus-migration-east-germany-demography

Welcome to the Family

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.

Follow-on Investments

Inter­cus is a highly inno­v­a­tive designer and man­u­fac­turer of trau­ma­tol­ogy solu­tions. The trau­ma­tol­ogy mar­ket is attrac­tive, gen­er­ally car­ry­ing even higher gross mar­gins than the ortho­pe­dics mar­ket, but also highly com­pet­i­tive with sev­eral large play­ers con­trol­ling a sig­nif­i­cant per­cent­age of the global mar­ket. Impor­tantly, over 15 years Inter­cus has repeat­edly proven its abil­ity to develop inno­v­a­tive tech­nolo­gies, which make the company’s prod­ucts highly demanded by physi­cians. This invest­ment round is pre­dom­i­nantly focused on bring­ing three new highly inno­v­a­tive and pro­pri­etary prod­ucts to mar­ket over the next year.These prod­ucts alone have the poten­tial to increase the company’s sales many mul­ti­ples above cur­rent lev­els. We are extremely pleased to have made a fol­low-on invest­ment in a proven, sub­stan­tial com­pany that pos­sesses a very attrac­tive near-term pipeline.

Investor Days Thüringen – June 16 & 17 › Erfurt

We are still buzzing with energy from Investor Days Thürin­gen (IDT) 2019 so it seems some­what hard to believe that we are only five months away from the next ren­di­tion of what has become mid­dle Germany´s pre­mier annual investor/pitch event. This event has grown sub­stan­tially over the last years, but it still is a great event for meet­ing undis­cov­ered gems. We are look­ing for­ward to another ter­rific IDT with all our val­ued part­ners as well as new­com­ers on June 16 & 17 in Erfurt!

If your part­ners or col­leagues might be inter­ested in our reg­u­lar updates,
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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