bm|t newsletter Q4 2018
We recently watched a video on LinkedIn that showed two marbles racing from an identical starting height down different paths to the same finish line. One marble traveled a straight line the entire way and the other marble traveled on an exponential curve, first falling rapidly and then flattening out its trajectory.
In this Newsletter
Momentum and Nonlinearities
In the example mentioned above, the marble that more quickly transformed its potential energy into kinetic energy was able to carry its gained momentum through the flat section and won the race. We quickly drew parallels to the business world and the importance of momentum and non-linear approaches to reaching the ultimate goal. To paraphrase Isaac Newton, businesses at rest tend to stay at rest, and businesses in motion tend to stay in motion.
While momentum plays a critical role for all businesses, startup momentum is perhaps the most interesting phenomenon, as a small group of passionate people is tasked with not just keeping a business moving but starting it from a standstill point of zero inertia. Big vision. High potential energy. No kinetic energy.
Quickly generating kinetic energy is essential for most startups not only to grow and prosper but also to avoid completely losing momentum when the business encounters the inevitable bumps in the road. Many strategies and tactics are employed to create this momentum: hiring more key employees than the current business size might warrant; signing up beta customers at low, zero, or negative margins in order to accelerate learning and market acceptance; engaging in bold partnerships or acquisitions to transform a technology offering; raising more capital than a linear trajectory would require, etc. We at bm|t greatly admire entrepreneurs who can transform energy and create business momentum, and we aim to play a significant role in catalyzing the needed momentum.
We believe the key is recognizing when linearly bootstrapping a business is indeed riskier than consciously creating (indeed sometimes forcing) momentum – maybe even more than one can comfortably control. Of course, each business is unique and the art surely lies in knowing when is the right time to generate greater momentum – certainly one wants to be on an exponential curve, not just falling off a cliff. We, at bm|t, believe we can help young businesses properly time and plan their accelerations in order to have the greatest probability of being on the right growth curve.
Like entrepreneurs, investors can also capitalize on the phenomena of momentum and nonlinearity. In 2018, bm|t worked diligently to transform the powerful 2017 events of fayteq’s sale and InflaRx’s Nasdaq IPO into broad-based energy for all investee-partners and Thüringen. The results were outstanding, as our investee-partners raised over 100 Mio. EUR in capital, and we were able to gain a record number of 16 new investee-partners. You can read further about the strong momentum in 2018 here.
Before presenting the quarter’s investment activity and other significant news, we would like to offer a big THANK YOU to our great investee-partners and co-investors. Working with such brilliant, motivated, visionary people is the fuel that propels us forward!
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.
Jena based TrophoSYS is developing a new innovative method for the gender-specific selection of productive animals, which could dramatically improve productivity and enhance food security, all while making a significant contribution to the ethical handling of animals. Importantly, the innovation is based solely on the physiological differences of the cell surfaces and allows for the gamete separation without any manipulation of genetic material. Development of the technology is ongoing and, when successful, will no doubt make a tremendous impact on the productive animal sector.
Erfurt based Smartplatz has an ambitious plan to take on companies like Amazon by enabling localities to regain physical retail customers from the online world. The company has developed a sleek app and backend interface that allows customers to quickly peruse local offerings and experience the ease and serendipity of the online experience to locate and discover desired products and services. Smartplatz has integrated a unique incentive program that keeps customers engaged and links local businesses together in new ways. The topic is timely, the market is huge, and if Smartplatz achieves critical mass, the rewards for customers, retailers, and the company will be great.
Leyh Pharma has an attractive business model that is only addressable by pharma industry experts. The company purchases off-patent or over-the-counter (OTC) medications, generally from larger pharma companies that are narrowing the focus of their portfolios, and creates value by extending the market reach and life of the products with renewed focus. The business is well managed and highly predictable, and the company has a successful track record with its strategy. bm|t invested via its Mittelstands-Fonds Thüringen (MFT), which is focused on financing established companies on strong growth paths.
Jena based mi2-Factory is one of the deepest tech companies in bm|t’s portfolio. The company is specialized on phenomenally accurate and structured ion implantation in silicon carbide wafers, which dramatically enhances the performance of the microchips. mi2-Factory already collaborates with many of the top chip manufacturers on cutting edge R&D projects. The signs are good that the market will move to silicon carbide chips in the future for certain applications that require high voltages, such as many renewable energy and e‑mobility applications. mi2-Factory is extremely well positioned to contribute significantly to and capitalize greatly on the rise of silicon carbide chips.