The establishment of an optimal investor mix is indeed a process rather than an achieved state and in many cases is never completed, as the optimal investor mix changes as a company progresses through various developmental phases. In the early stages of a company´s development, when the enterprise is rapidly developing and frequently reinventing itself, it is absolutely normal and usually quite healthy for the investor base to evolve as well.
To achieve an optimal investor mix, one key ingredient is having an abundance of investors from which to select the ideal partners. We are confident that our network of co-investors and our ability to attract new investors to our Investee-Partners is a valuable asset for founders and entrepreneurs who partner with us. The vast majority of our funds require the participation of private investors on a pari-passu basis with our investment, and this requirement has fortuitously led to the development of a varied and powerful network of private co-investors, including other institutional venture investors, family offices, business angels, corporates, etc.
Because bm|t is fortunate to have this broad and diverse set of co-investors, entrepreneurs who partner with us can gain access to investors who offer a healthy mix of capital, experience, advice, additional networks, resilience and versatility. We have found that a key element in maintaining a healthy investor mix is including investors who have diverse sources of capital and varying investment philosophies.
While having investors with differing underlying views or mandates can be challenging and strenuous, it is generally an advantage for a company, especially when the investor mix is structured and balanced appropriately. For example, we believe it is extremely wise for entrepreneurs, even those who are able to attract sufficient private capital at an early stage, to have an intelligent mix of private and public capital. Importantly, these two investor groups often have a low correlation in their access to capital.
Generally, private investors are less vulnerable to regulatory or politically-driven changes than public funds. Conversely, public investors are less likely to reduce their investment appetite (and in some instances actually increase it) when broader macroeconomic challenges emerge.
The Corona pandemic over the past two years has, for many of our Investee-Partners, certainly demonstrated the value of having public investors, as bm|t was able to access additional capital in the form of two new funds (Thüringer Zukunftfonds & Thüringer Zukunftfonds II) in the midst of a crisis period. We managed these funds with a very similar approach to our standard funds, and were active in deploying capital to ensure our Investee-Partners´ promising developments were not unduly compromised due to the pandemic.
In fact, Q4 was a remarkably prolific quarter of investment activity for us and capped off a record-breaking year, which we detailed in the following press release:
› A record year 2021 for bm|t’s Investee Partners
We look forward to continuing to work with all our valued Investee-Partners and Co-Investors in the important quest of establishing an optimal investor mix that catalyzes and propels business success,
Your bm|t Team