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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!

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