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
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.
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!