In recent years, Germany’s venture capital activity has witnessed robust growth, with regions like Thuringia emerging as prominent hubs for investment opportunities. This particular German state reported record investment figures in 2020, which were exceeded even further in subsequent years. This growth is a testament to the diverse and valuable investment opportunities in the region. Additionally, digitalization has enhanced the visibility of innovative companies in Thuringia, making it easier for investors to discover them. As Thuringia’s appeal to investors grows, the region promises vast potential, suggesting it’s a wise area of focus for those seeking strong investment prospects.
At the heart of Thuringia’s investment scene lies bm|t, a venture capital firm established 20 years ago with the aim of bolstering Thuringia’s economy. Closely tied to the Thuringian government and its developing bank, bm|t has, over its history, emerged as a key player in Thuringia’s venture capital landscape. The firm invests in businesses across diverse sectors, including life sciences, manufacturing, and digital/IT, underscoring its profound impact on the regional economy. As they celebrate their 20th anniversary, the depth and breadth of the company’s contributions to Thuringia’s economic fabric are increasingly evident, hinting at the bright future they foresee for the region.
To recognize this significant achievement, we spoke with Kevin Reeder, the CEO of beteiligungsmanagement thüringen GmbH (bm-t). Kevin has a rich background in international investment management, with experience in both the US and Europe. He began his journey at bm|t as an investment manager, acquiring deep insights into Thuringia, its businesses, and the investment landscape of the region.
Could you start by providing us with an overview and the initial motivations behind the creation of bm|t?
20 years ago, there were three different investment funds in Thüringen that were complementary to each other. Matthias Wierlacher, CEO of the Thüringer Aufbaubank, had the idea of bringing these funds together in one company. This was exactly the right decision because we are now one entity serving all phases of the market – early, growth and late stage. In the early days, bm|t worked with numerous now well-known companies, such as Jenoptik, Carl Zeiss Meditec, Analytik Jena and X-FAB. For bm|t it was a great opportunity to invest in larger established companies. This is also an important difference from most other VC companies. bm|t is not exclusively focused on the early stage. Because we have accompanied the above companies and many others over 20 years, we have learned how a small start-up becomes a large company. That’s a wealth of knowledge we have here in the team.
In your opinion, What makes Thüringen attractive to investors?
The business model of Thüringen start-ups is predominantly in the technology-driven business-to-business sector. In such models, capital requirements are generally lower than in business-to-consumer models, which usually have to spend large amounts on marketing, for example. The lower capital requirement provides investors with an attractive risk-return ratio. Investors who are comfortable lower on the risk-return curve will find very exciting investments in Thüringen, but they must also have patience for longer-running technological developments.
Thüringen is home to excellent innovations. Our focus is on Thüringen’s strengths: optics, photonics, robotics, material sciences and life sciences – all areas where very attractive valuations are possible.
On the other hand, What unique features does Thüringen bring to the table as a hub for startups?
Startups benefit from a high-tech ecosystem with numerous research institutions, universities and technical colleges. Thüringen also has a strong startup network of investors and supporters, consisting of bm|t, STIFT with its accelerator and coaching program, numerous consulting services offered by ThEx, the Thüringer Aufbaubank, MBG Thüringen, Sparkassen and Ministries. We all work very closely together. No matter where a founder arrives, they receive the support needed from all parties.
Talking about the general market situation, how is the current market climate impacting the venture capital sector?
With low-interest rates, the last ten years have been a time when many investors have discovered venture capital. We came through the Corona pandemic well – partly because we carried a lot of momentum from the previous years and had the appropriate funds and a strong network with which we could support the companies. Currently, geopolitical discord, the energy crisis and inflation with rising interest rates are presenting challenges, as such conditions create uncertainty for investors. However, we have continued to achieve good financing rounds and exits in 2023.
One of our greatest strengths is that we have built a very innovative portfolio – with strong companies and disruptive technologies. Regardless of whether interest rates are 1% or 5%, I am sure that the interest rate is not the decisive factor in determining if such high-tech companies are attractive to investors. Thüringen is also benefiting from a secular trend, as our technologically strong companies are increasingly being discovered by the world. Of course, we must remain active and generate even more attention for our start-ups. In this sense, bm|t is not only an investor but also an ambassador for the amazing technologies and companies we are blessed with here in Thüringen.
With rooom AG recently closing a financing round of €17 million and Oncgnostics GmbH, technologies developments in Thüringen making waves in the Chinese market. How is the bm|t year 2023 going?
At the beginning of the year, the financing rounds were still very slow. But since April we’ve had a series of many excellent seven-figure+ financing rounds. If someone had told me three years ago that we would experience a pandemic, a war, inflation and supply chain issues, I would have thought we would be in a difficult spot. But bm|t and our Investee Partners are quite well positioned, which is a real testimony to our resilience here in Thüringen.
Mr. Reeder, this year marks not only an institutional milestone for bm|t but also a personal anniversary for you. Starting in 2013 as an investment manager and ascending to the role of managing director by 2017, what accomplishments during your tenure are you especially proud of?
My start as Managing Director of bm|t in 2017 could hardly have been luckier timing. Our Investee Partner InflaRx was listed on the Nasdaq stock exchange just three months later. I think we were the first “Länderbeteiligungsgesellschaft” in Germany to achieve a Nasdaq IPO. In addition to a great return for us, this event raised our profile considerably. That was a tremendous success! On top of that, Facebook’s very first investment in Germany was the acquisition of Thüringen-based fayteq AG, in which we were the lead investor. From then on, we were on the radar of all venture capitalist investors in Germany.
Since 2017, we have completed ten additional exits. Many of these exits were to companies that then established the Thüringen companies they acquired as their base in the DACH region and increased their investment in the region dramatically. We can also be very proud of this. As “venture capital” is a long-term business, the recent successes were, of course, born out of bm|t’s 20-year history. The team’s hard work over two decades is now paying dividends.
Over the past 20 years, our business model has also undergone a transformation. In the beginning, we managed numerous funds that allowed us to invest on our own due to having over 50% private capital at the fund level. Today, we have strong co-investors at our side for every investment. We have successfully transformed into an investor and a key hub for other investors and partners, and have been able to attract them to Thüringen.
To conclude our conversation, what can we anticipate for the future of bm|t? What are your upcoming plans and objectives?
We have a fantastic market position and many high-potential investments. With Thüringer Startup Fonds II and WachstumsBeteiligungsFonds II, we have launched two new funds this year with 55 million euros to invest. Two additional new funds for later-stage investments are also in the near-term pipeline.
Where I still see opportunities for growth for us in Thüringen are in established companies looking for a successor, for example. Here we can support by strengthening the equity base. Our team can also be very effective in this market segment. We have many years of experience in the investment team, which brings an immense understanding of the companies in Thüringen.
I am very positive about the future, as I was fortunate to join a great team at the right time ten years ago. My impact has mainly been to contribute a few new ideas and perspectives to a very strong foundation.
