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 20^th 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.