bm|t newsletter Q3 2022
Founders, especially of startups with big ideas, tend to believe that they control their own destiny, which is a great mentality and probably a key prerequisite for being a successful founder. However, every company exists in a set of market and environmental conditions. Ideally, those conditions are such that companies can predominantly focus on their mission and execution (Alpha) and not be overly concerned with broader geopolitical, macroeconomic or financial market conditions (Beta). However, as any innovation investor who has been around a while knows, there can be periods (hopefully brief) when external conditions are so impactful that they must take precedence over the internal objectives, at least temporarily.
In this Newsletter
Beware of Beta
This statement is not suggesting that in times of high Beta influence, founders should stop focusing on their businesses and become macro-analysts or day-traders. However, this statement is saying that there are times when ignoring the broader picture (no matter how well a company is executing on its internal objectives) can lead a company off a cliff. In our view, we are in a period when founders need to be extremely cognizant of their environment and the external factors that are beyond their company’s direct control and need to think more about adjusting to those factors rather than focusing only on their own work.
When external factors are foreboding and most warrant attention, many people, understandably, tend to double-down on Alpha, focusing even more on their microcosm and blocking out the unfriendly environment. At bm|t, we are imploring our Investee-Partners to resist this natural inclination to look inward and instead to engage in rigorous stress testing and scenario planning to ensure that the progress made toward achieving company goals is not lost by being caught off-guard when a storm strikes.
In the current environment, storms can come in many forms: supply-chain problems, inflation-related challenges, energy cost difficulties, etc. And in the start-up world, where most companies are reliant on additional investor funding for survival, a clear and present danger is a drying up of the funding markets. To assess this risk, founders need to communicate openly with current investors and conduct extensive scenario planning together. If the existing investors are not in a position to continue funding the current burn rate, and it is not absolutely clear which new investors will be investing in the company, then all measures to extend a company’s runway need to be analyzed.
It can be extremely frustrating, especially for companies that are executing well, to have to modify their plans; however, there are times when it is critical to do so. Founders should not perceive this rethinking, especially if it is investor-induced, as an affront but rather should understand it as an attempt to preserve and protect the value that has been created and to maintain the company’s ability to reach its potential (albeit perhaps on a delayed timeframe).
Steve Jobs promulgated that to be an excellent founder one has to be able to use both the periscope and the telescope. The periscope provides a view of the immediate surroundings, and the telescope allows sight further afield. The best founders are always using both tools/approaches, and right now is a time when it is imperative to keep at least one eye looking through the telescope.
Your bm|t Team
Welcome to the Family
Robotic agriculture is undoubtedly a mega trend, and Weimar based E‑Terry aims to make a large impact in the rapidly growing space with its extremely versatile and light field robot. E‑Terry’s robot will initially target vegetable fields and is able to traverse large areas while making use of multiple functionalities like weed recognition and removal as well as crop monitoring. The company’s business model treats the robot as a platform with an open source approach to the hardware and software modules that can be added to increase the robot’s utility. With top tier corporate development partners already on board, we are confident E‑Terry is well positioned to quickly move forward in the robotic agriculture sector. bm|t led this seven-figure seed round focused on finalizing the technology and conducting initial sales and was joined by several experienced business angels.
Democratizing the power of artificial intelligence (AI) by making it accessible through an intuitive user interface (UI) with drag and drop functionality (no code), and thus allowing companies that do not have large IT departments to benefit from AI, is the promising goal of Ilmenau based AI/UI. The company’s tech stack is already market tested, and the applications are nearly limitless and highly-applicable for a broad swath of companies. Early top-tier partners have focused on quality assurance applications, and are quickly expanding their use of the technology to additional use cases. Companisto and bm|t led this seven-figure seed round focused on quickly gaining market traction for AI/UI’s easy-to-rollout SaaS offering.
As the number of IT-Endpoints grows rapidly, it can be extremely difficult for IT departments to maintain an overview of security, performance, and availability of all IT assets. Jena based Enginsight’s suite of cybersecurity tools works in a well-coordinated manner to monitor all IT-Endpoints in real time and precisely and succinctly display the results to IT staff. Whether it involves servers, desktops, laptops, tablets, smartphones, or websites, Enginsight maintains a constant overview of an organization’s IT infrastructure. Smart Infrastructure and bm|t led this round focused on continuing Enginsight’s rapid growth, and we were joined by Seed & Speed and multiple business angels.