An exo­ge­nous shock, and Covid-19 cer­tainly is a large one, crea­tes a high degree of unfo­re­seen uncer­tainty for com­pa­nies and inves­tors alike. Invest­ments that are con­ti­nuously marked to mar­ket show sharp and extreme los­ses, and inves­tors with poten­tial liqui­dity are forced to think about the appearan­ces of short-term per­for­mance. These inves­tors often feel com­pel­led to make decis­i­ons regar­ding their invest­ments that are dri­ven by fac­tors that only weeks or months prior played no role in their invest­ment thin­king and may not be rela­ted to long-term per­for­mance optimization.

Of course, ven­ture capi­tal and pri­vate equity inves­tors must not lull them­sel­ves into thin­king that because their invest­ments have not suf­fe­red visi­ble price decli­nes that there has not been an equal, or grea­ter, value impact on their port­fo­lios. Indeed there has been great value des­truc­tion for nearly all com­pa­nies due to this exo­ge­nous event. Cer­tainly, the vast majo­rity of early-stage ven­ture-backed com­pa­nies have less finan­cial cushion (on their own balance sheets) to wea­ther lon­ger storms than most publicly-traded com­pa­nies. Howe­ver, it is pre­cis­ely because ven­ture inves­tors are focu­sed on invest­ments with at least a seven-year time hori­zon (and in many cases much lon­ger), and gene­rally have com­mit­ted capi­tal to invest, that they are able to main­tain a strong focus on com­pany- and indus­try-spe­ci­fic fac­tors and on crea­ting value over the long term.

This long-term invest­ment phi­lo­so­phy per­mits a healthy level of calm­ness in the midst of storms, and enables ven­ture inves­tors to make important and neces­sary adjus­t­ments while main­tai­ning a course desi­gned to pro­fit over years not months.

An extre­mely cri­ti­cal ele­ment for inves­tors to tra­verse cri­ses and to reap the bene­fits of long-term inves­t­ing is having com­mit­ted fun­ding wit­hout the risk of limi­ted part­ners (fund inves­tors) rene­ging on their com­mit­ments. bm|t’s early stage funds (Thü­rin­ger Startup Fonds and Thü­rin­ger Wachs­tums­be­tei­li­gung Fonds) are com­pri­sed of 80% fun­ding from the Euro­pean Union and 20% fun­ding from the Free State of Thü­rin­gen, and are fully com­mit­ted from these strong part­ners from day one of the funds´ existence.

bm|t’s funds do have con­di­ti­ons requi­ring pri­vate co-invest­ment, which does reduce our ability to act alone. Howe­ver, this con­di­tion has led to the estab­lish­ment of a strong net­work of like-min­ded pri­vate co-inves­tors that bring addi­tio­nal strength to sup­port our Inves­tee-Part­ners in dif­fi­cult times.

The bene­fits of this extre­mely sta­ble capi­tal base and strong co-inves­tor net­work have become starkly appa­rent in this time of cri­sis, as we have gene­rally been able to main­tain our funds’ phi­lo­so­phy and acti­vity in these chal­len­ging times. Start­up­dec­tor ran­ked bm|t’s early stage funds (Stif­tung Thü­rin­ger Betei­li­gungs­ka­pi­tal) as the third most active startup inves­tor in Ger­many for Q1 2020.*

We aim to con­ti­nue to be a relia­ble and trans­pa­rent inves­tor for our Inves­tee-Part­ners at all times, but are espe­ci­ally plea­sed that we have been able to main­tain our role and invest­ment phi­lo­so­phy in these dif­fi­cult times.

Wis­hing you health, strength and fore­sight in these try­ing times,
Your bm|t Team

* https://lnkd.in/diYU7eN