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bm|t newsletter Q3 2020

There is an inher­ent asym­me­try bet­ween foun­ders and ven­ture inves­tors: foun­ders are sin­gu­larly com­mit­ted to their com­pany; whe­reas, inves­tors gene­rally have diver­si­fied invest­ments across mul­ti­ple com­pa­nies. This asym­me­try under­stan­d­a­bly leads to dif­fe­rent per­spec­ti­ves and approa­ches regar­ding buil­ding and gro­wing a company.

In this Newsletter 

Build It and They Will Come (Trusting the Capital Markets)

One sce­na­rio ari­sing from this innate dif­fe­rence that we peri­odi­cally encoun­ter in Ger­many, where smal­ler early-stage tickets for strong ideas are rea­dily available but lar­ger growth tickets are toug­her to attract, is the tempt­a­tion for foun­ders to play ›not to lose‹ as oppo­sed to ›play­ing to win‹. Play­ing not to lose can take many forms but it is essen­ti­ally focu­sing on stay­ing alive as oppo­sed to focu­sing on crea­ting large suc­cess. This approach is often cha­rac­te­ri­zed by pro­lon­ging the cash run­way by saving costs and wai­ting before pushing the com­pany through to the next stage of its deve­lo­p­ment until inves­tors have com­mit­ted to a large investment.

Alt­hough we under­stand this men­ta­lity behind a more cau­tious approach to growth and cor­po­rate deve­lo­p­ment, we believe that in many cases, espe­ci­ally with high-tech, highly-sca­lable ven­tures, cau­tion is ulti­m­ately the much hig­her-risk stra­tegy, as valuable win­dows of oppor­tu­nity can be missed. In fact, bold­ness in gro­wing a com­pany and demons­t­ra­ting strong busi­ness momen­tum at an early stage is pro­ba­bly the sin­gle most important fac­tor for crea­ting inte­rest with ven­ture investors.

The opti­mal way for foun­ders to break through this dyna­mic, and to deve­lop the trust that when they build a thri­ving com­pany that inves­tors will come with capi­tal, is to engage with many inves­tors from an early stage and to main­tain an open dia­lo­gue with inte­res­ted inves­tors about the company´s pro­gress. Foun­ders and inves­tors should openly dis­cuss what mile­sto­nes the com­pany needs to achieve for the inves­tor to invest in the com­pany. In this way, foun­ders can build an under­stan­ding of the variety of inves­tors from whom they could attract capi­tal and bet­ter esti­mate which ele­ments of the com­pany are important to those investors.

Pro­fes­sio­nal ven­ture inves­tors have a strong app­re­cia­tion that buil­ding a com­pany is an extre­mely chal­len­ging endea­vor and that it is impos­si­ble to deter­mine the ideal path ahead of time. Thus, most insti­tu­tio­nal ven­ture inves­tors pre­fer to invest with foun­ders who are wil­ling to test the foot­print of their com­pany by expe­ri­men­ting with various growth and deve­lo­p­ment initia­ti­ves, fully under­stan­ding that some efforts will not work. In early stage ven­tures there should be no fear of fai­led attempts rather a deep com­mit­ment to fin­ding what works most effec­tively and with open com­mu­ni­ca­ti­ons throug­hout the process.

One key deve­lo­p­ment which should make it easier for foun­ders to adopt an expe­ri­men­ta­tion and growth mind­set is the mas­sive increase in the amount of ven­ture capi­tal loo­king for com­pa­nies that are crea­ting strong busi­ness momen­tum, even at very early stages. This explo­sive growth in ven­ture capi­tal and the num­ber of ven­ture capi­tal inves­tors may make it some­what more com­pli­ca­ted to know where to start with fund rai­sing, but it should greatly increase foun­ders’ belief that good per­for­mance will be reco­gni­zed and will attract invest­ment. Build it and they will come!

bm|t’s Thü­rin­gen Startup Fund (TSF) is spe­ci­fi­cally desi­gned to act at an early stage and to enable foun­ders to deve­lop the busi­ness momen­tum that will lead to fur­ther, lar­ger-scale invest­ment. So far 33 of the 35 Inves­tee-Part­ners in which we have inves­ted with the TSF fund have recei­ved addi­tio­nal invest­ment, and the majo­rity have rai­sed lar­ger sub­se­quent rounds with addi­tio­nal insti­tu­tio­nal inves­tors. We are proud that seve­ral of these com­pa­nies and lar­ger invest­ment rounds are high­ligh­ted in our Q3 Fol­low-on Investments.

Your bm|t Team

Follow-on Investments

In Q3 2020, bm|t and co-inves­tors inves­ted more capi­tal in our Inves­tee-Part­ners, inclu­ding many seven-figure finan­cing rounds, than in any of the pre­vious six quar­ters. This strong capi­tal com­mit­ment is an excel­lent con­fir­ma­tion of the strength of our Inves­tee-Part­ners and a strong signal that the chal­lenges of Covid-19 are not pre­ven­ting signi­fi­cant progress.

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.

ife­sca´s intel­li­gent cloud ser­vice and pre­dic­tion and opti­miza­tion engi­nes enable energy com­pa­nies to bet­ter fore­cast demand for elec­tri­city, gas, or heat in near real time. The gai­ned insights allow energy com­pa­nies to make bet­ter decis­i­ons regar­ding their own gene­ra­tion ope­ra­ti­ons and/or energy tra­ding, crea­ting sub­stan­tial savings for cus­to­mers. bm|t led this seven-figure second clo­sing of an invest­ment round focu­sed on gro­wing sales and cus­to­mer ser­vice, and we were joi­ned by a group of renow­ned pri­vate inves­tors with signi­fi­cant soft­ware and energy indus­try experience.

In Ger­many, hos­pi­tals are legally requi­red to find pla­ce­ment in a nur­sing home for pati­ents who are unable to safely return to their home after a hos­pi­tal stay. The search for an available and appro­priate nur­sing home pla­ce­ment is extre­mely time inten­sive for both hos­pi­tals and nur­sing homes. Pfle­ge­platz­ma­na­ger has built a user-fri­endly and easy to ope­rate cloud-based soft­ware plat­form that allows hos­pi­tals and nearby nur­sing homes to quickly iden­tify available and appro­priate faci­li­ties for pati­ents. Pfle­ge­platz­ma­na­ger redu­ces the average time requi­red to match a pati­ent to an appro­priate nur­sing home bed from days to under two hours, thus avo­i­ding much frus­tra­tion for faci­li­ties and fami­lies and saving the sys­tem signi­fi­cant sums of money. With this seven-figure invest­ment from bm|t, the MBG Thü­rin­gen, Treu­en­burg Group, and seve­ral expe­ri­en­ced busi­ness angels, Pfle­ge­platz­ma­na­ger has the resour­ces it needs to fur­ther increase its cus­to­mer den­sity and create a powerful net­work effect.

Red­wave Medi­cal is focu­sed on crea­ting medi­cal algo­rithms that improve pati­ent care. The company´s first appro­ved and mar­ke­ted pro­duct is Ant­ares, an algo­rithm that con­verts data glea­ned from the mea­su­re­ment of peri­phe­ral blood pres­sure to a relia­ble esti­mate of cen­tral (aor­tic) blood pres­sure, which is much more rele­vant for a person´s health and tre­at­ment. In this field, Red­wave has recently ente­red into mul­ti­ple com­mer­cial part­ner­ships with blood pres­sure moni­to­ring com­pa­nies. Red­wave also pos­s­es­ses a com­pel­ling pipe­line of fur­ther life-impro­ving bio­me­tric algo­rithms. bm|t led this near seven-figure invest­ment round focu­sed on mar­ket expan­sion and fur­ther pro­duct deve­lo­p­ment, and we were joi­ned by the MBG Thü­rin­gen, Spar­kasse Jena, the STIFT, and an expe­ri­en­ced busi­ness angel.

onc­gno­stics’ Gyn­Tect test allows women who have tes­ted posi­tive for HPV to quickly gain valuable infor­ma­tion regar­ding the degree of serious­ness of their dia­gno­sis. Gyn­Tect is able to detect even early stages of DNA methy­la­tion which are the first indi­ca­tors of can­cer deve­lo­p­ment. Ear­lier detec­tion of can­cer deve­lo­p­ment allows phy­si­ci­ans to treat pati­ents soo­ner, which can often be lifes­aving. Addi­tio­nally, and very importantly, most HPV infec­tions resolve wit­hout pro­gres­sion to cer­vical can­cer, mea­ning unneces­sary ope­ra­ti­ons, tre­at­ments, and men­tal stress can be avo­ided if it can be demons­tra­ted that an HPV infec­tion has not cau­sed DNA methy­la­tion. This invest­ment was a bridge finan­cing for the pur­pose of fina­li­zing the terms of a large equity round.

Mas­ter­PIM con­ti­nues to gain trac­tion with its sleek and cloud-based Pro­duct Infor­ma­tion Manage­ment (PIM) soft­ware that allows manu­fac­tu­r­ers, trad­ers, retail­ers, and mar­ket­places to effi­ci­ently manage com­plex pro­duct infor­ma­tion data­sets and effort­lessly pro­ject the pro­ces­sed data into online shops and cata­lo­gues. Curr­ently, over 90% of mid-sized manu­fac­tures do not have a PIM solu­tion, so the mar­ket is lar­gely a green­field oppor­tu­nity. bm|t joi­ned mul­ti­ple inves­tors, inclu­ding a highly satis­fied cus­to­mer, for this invest­ment round focu­sed on sca­ling up mar­ke­ting and cus­to­mer service.

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