We are very often asked about funding opportunities for the Start-Ups – there are various possibilities that exist, some on a small and/ or large scale. Scalable business ideas that require higher amounts of capital will find the right partner in the BMT. Beteiligungsmanagement Thüringen (BMT) is a subsidiary of Thüringer Aufbaubank. We asked the Managing Director, Kevin Reeder, what lies behind this corporation and what requirements Start-Ups have to meet in order to enter negotiations with BMT. A native of the US, Kevin Reeder has a multitude of international contacts and brings international flair to Thuringia – This is why we decided to conduct the interview in his native language.
You can find more information in German in the download on the bottom left.
What is bm-t, what do they do, and what goals do they want to achieve?
We are a venture capital and private equity investor with exclusive focus on Thüringen. As the bulk of our capital is public money pursuing the development of Thüringen´s economy, we have an interesting dual mandate to create positive investment returns and stimulate the economy in Thüringen through investments in innovative companies in the Free State. Our mission statement is: We strengthen Thüringen’s economy through targeted investments in innovative and growth-oriented companies with high potential.
What requirements must companies have in order to meet bm-t interest criteria.
Briefly: hungry entrepreneurs with a strong vision and a business model that is protectable, scaleable, and achievable. Please see the attached presentation “Zusammenarbeit zwischen Gründern und Investoren” for detailed information.
Which industries, products and services are the core focus?
In Thüringen we have strengths in Software, Life Sciences, Optics, Robotics, Machine Tools, etc. We do not invest in non-scaleable businesses, such as real estate, or pure service businesses, such as salons, restaurants, etc. But, we would invest in a software company that makes real estate companies or restaurants more efficient, for example. Our current sector distribution can be seen in our corporate presentation.
Is an Exit Strategy a requirement? And if so, what is the timeframe that an exit is possible?
We will not invest in companies or entrepreneurs that do not want to sell the company they are building, i.e. no lifestyle businesses for us as investors. Generally we would like to see that an exit is possible in 7-10 years. Taking on venture capital is a major decision and should only be done by entrepreneurs that really want to push fast and are also willing to give up at least partial control of the company they are building at some point in the future.
What is the investment sum that bm-t usually invests in a start-up, and are co-investors allowed?
For our TSF (Thüringer Start-Up-Fonds) fund we expect 30% private co-investment. For our WBF (Thüringer WachstumsBeteiligungsFonds) and TIB (Thüringer Industriebeteiligungs GmbH & Co. KG) funds we require 50% private co-investment. We not only need co-investors but also gladly welcome co-investors, and in most instances we are the ones that actually recruit the co-investors for our investee-partners. Networking our investee-partners with other investors is a big part of the extra value that bm-t offers.
What role does bm-t play during the investment process (silent participation vs. active involvement and participation in company decisions)
Most of the time we are lead investor for equity investments. All of our funds can also make bridge loans of up to one year when needed to buy time until another official equity round with a company valuation can be closed. The TIB can also take silent participation, although we do not like to do this when we don´t have a stake in the company as an active shareholder.
How many companies have been supported by bm-t so far and what is its greatest success story?
Over its nearly 17 year history bm-t has invested in over 100 companies. Currently we have 60 Investee-partners. Best IRR: PDV Systems (>100% IRR over 3 years). Most returned capital to date: InflaRx (nearly 40 Mio. EUR). Highest unrealized gain: Jenoptik (> 100 Mio. EUR). Other notable exits and success stories: AnalytikJena, Carl Zeiss Meditec, X-FAB, fayteq (Facebook´s first acquisition in Germany!), HASEC, Lynatox, and more. We have been very fortunate over the years to play an important role with many of the success stories made in Thüringen.
How does the future of Venture Capital look like in Thuringia?
I think the future looks quite bright for VC and founders in Thüringen. We have such a strong technology prowess here and are still in the process of becoming better integrated in the global economy. We are also attracting more and more venture money from outside Thüringen – we are on the investor map now! There are also many options for founders to get started here, including generous grants in most cases. The challenge here in Thüringen (even in Germany as a whole) is more in the larger follow-on tickets from 5-20 Mio. EURs when the business is really ramping, but that is also getting easier.
Does Mr. Reeder’s US background help to pave the way for market access in the United States?
I can certainly help; however, most of my investing experience in the US was in publicly-traded markets. I don´t have a great venture network in the US, but we are actively building that out, and certainly it is helpful for US investors to speak with me to gain confidence in the region, etc. Also I do a lot of help with language and culture coaching for our investee-partners that are pursuing opportunities (commercial or investment) in the US or other parts of the world (I have lived in six different countries for at least one year or more – so don´t necessarily think of myself as an American although I do have the passport and accent :)).
Welcher What impact and consequences did the Covid-19 pandemic have on your company?
Corona certainly caused a lot of communication work with all of our investee-partners to figure out how they should best react to the situation. Most of our early-stage investee-partners are not going to be hit too hard in the first instance commercially, and I think we will be able to put together further investment rounds for the vast majority. How their markets over 24 months+ will be affected is, of course, currently still hard to estimate. Some of our established companies are, not unexpectedly, being hit pretty hard by the effects of the shutdowns.
Who is Kevin Reeder?
Kevin Reeder is the Managing Director at bm-t and a native of Colorado and Montana in the United States of America. Before settling in Thüringia, seven years ago, he lived in six different countries (USA . UK, France, Switzerland, Germany and Kenya) where he was active in international investment management. Between 2013 and 2014 he worked as an investment manager for bm|t and therefore knows Thuringia, the Thuringian companies and the investment landscape in the region well. Before returning to bm|t in 2017 he was a strategic advisor to the management of M KOPA, a high-growth company in Eastern Africa.