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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.

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

Our only 100% share­hol­ding is in SAMAG Group, which con­sists of two main busi­ness lines: auto­mo­tive sup­ply and machine tools. In Q4, we car­ved out the machine tools por­tion of the busi­ness in order to sell a majo­rity stake to the ideal stra­te­gic part­ner, Hütt­mann Machine Tools Betei­li­gungs GmbH, repre­sen­ted by Mar­tin Hütt­mann. Mr. Hütt­mann brings a wealth of expe­ri­ence, a tre­men­dous net­work, and a new, revo­lu­tio­nary inno­va­tion to the com­pany. We main­tai­ned a stake in the busi­ness and are loo­king for­ward to see­ing SAMAG Machine Tools thrive under Mr. Hüttmann’s lea­ders­hip and majo­rity owners­hip.

Dash­fac­tory pos­ses­ses a patent and an inno­va­tive idea to help pro­tect bicy­cle riders from hit and run acci­dents. The company´s solu­tion is a rear-moun­ted camera that is GDPR com­pli­ant because it only saves video mate­rial when the legally requi­red distance of pas­sing cars has been breached and the risk of an acci­dent is estab­lis­hed. The device also illu­mi­na­tes, greatly incre­a­sing the visi­bi­lity of cycles on the road. The company´s foun­ders are well net­wor­ked in the tightly-knit world of cycling, which will allow for eased mar­ket entry for this inno­va­tive, life-pro­tec­ting pro­duct that can also easily address tan­gen­tial mar­kets such as e‑scooters.

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, please don’t hesi­tate to share this link.

See also our previous newsletters

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