Startup Investor and Sparring Partner: A talk with BayBG
BayBG is one of the leading investment firms in Munich and in Bavaria as a whole. The firm’s portfolio comprises nearly 500 companies, including high-profile startups such as tado°, NavVis and Theva. We talked with CEO Peter Pauli.
What is BayBG? What makes you different from private VC companies?
We are essentially a private equity investor. The State — through the LfA Förderbank Bayern — is one of our main shareholders, but that share is less than 25%. BayBG is an investment firm that focuses on medium-sized Bavarian enterprises with our main focus on established companies. Moreover, we have also been an active investor in the startup sector for many years with a specialized team. Our VC team is currently managing a portfolio that includes more than 30 investments with 46 million euros of invested capital.
What is your investment focus? Why?
With our VC activities, we concentrate on ICT, digitization, internet-based business models, and medical technology. We have the experience and knowledge necessary in these segments, which makes us a qualified sparring partner for founders while also being successful economically.
What kinds of startups would you not even consider? What immediately blacklists a company looking for capital?
White and green biotechnology are definitely not in our line of focus. Furthermore, we prefer technology-based business models with resilient unique selling points. And of course the founding team is also an important factor.
How do you find out about startups for potential investment?
We are firmly established and well-known as an investor in the Bavarian startup scene and make contact with founders early on. In the VC field, we receive nearly 250 investment enquiries each year.
Some startups complain about investors interfering too much with operational matters. How involved is BayBG in company processes after investments have been made?
As mentioned already, our goal is to be a good sparring partner for our portfolio companies. As a financial investor, we concentrate on topics at a higher level such as strategic development or suitable partners for the next round of financing. Operative business is the sole responsibility of the founding team.
After initial contact, how long does it generally take before a contract is established?
We have implemented quite a few investments within two months. The complexity of the business model plays a role of course, as does constructive and effective collaboration with the founders.
From your standpoint, what does the Munich startup scene do well? What could be improved?
I think the combination of universities, research institutions, technology corporations and medium-sized companies makes Munich an excellent location for tech startups. A networked startup scene has developed in recent years, and the Bavarian political sphere provides excellent support. Of course it would be nice to have even more private capital available for financing startups. Perhaps the city could also work on the living conditions for younger individuals to attract even more young talent.
To be successful, a startup needs to…
have a good team that is reliable and entrepreneurial, a sustainable unique selling point or distinct customer value in their business model that ideally appeals to a large market… and of course a bit of luck never hurts.
The trend of the year is…
virtual reality, artificial intelligence.
How can companies contact BayBG?