Munich Startup: Wealthpilot, Daypaio or Cliniserve — Bayern Kapital made multiple investments in 2019 in Munich startups that are developing software solutions. What makes a software startup interesting to Bayern Kapital?
Roman Huber: We’re specifically interested in B2B business models with a clearly defined benefit for customers. Decisive factors are for the company to have technical development expertise and for the founders to have experience in the market. The product also needs to offer genuine innovations. What we also look for: Our co-investors should have industry expertise.
Munich Startup: A startup is looking for investors — what conditions does it need to fulfill for Bayern Kapital to consider making an investment? How should they get started?
Roman Huber: We’re active in the field of deep tech, which is why we are interested in startups that offer new technical developments. To decide to participate, we require a sound business plan that includes a comprehensive technical roadmap. There obviously also needs to be a fundamental demand in the market for the new products. The founding team needs to have the technical know-how for the core elements of the new technology and be able to outline at least a general structure for future marketing.
The first step would be for a startup to send us their business plan or at least a sound pitch deck. We provide feedback within two weeks and then, if we’re a good match, set up our first meeting.
Advisory days for startups
A quick tip: The network Baystartup regularly organizes Advisory Days with High-Tech Gründerfonds and Bayern Kapital. Startups should take advantage of the offer!
One more aspect that should be considered: EU law stipulates that we can only conclude a participation agreement in cooperation with a private investor that has not been involved with the startup yet.
Munich Startup: What developments in the software & IT industry do you think we’ll be hearing a lot about in 2020?
Roman Huber: I think in the years ahead, Munich will see a host of exciting projects and startups particularly in the fields of machine learning and artificial intelligence, augmented reality and in autonomous devices and robotics. That will not only be extremely interesting for the major corporations located here in the city, but also for SMEs in the region. A further sector that could show strong growth in coming years is green technology and especially green IT.
Munich Startup: Digitization seems unstoppable — how important are startups as drivers of innovation?
Roman Huber: Creative and unconventional startups often make more rapid progress and have an easier time dealing with digitization than players in long-standing companies. So it comes as no surprise that those companies increasingly look for collaboration with startups. Startups, in turn, can take advantage of the extensive market access provided by established players.
Munich Startup: In that context, has a particular startup left a lasting impression on you?
Roman Huber: Not just one — there are several. We’ve supported a whole series of successful Munich-based startups in the past: Current examples would be eGym, which is digitizing the market for fitness studios, or Workaround with their intelligent glove Proglove, which is used for logistics and production.
Important step: Large domestic VC funds
Munich Startup: To conclude, let’s take a look at Germany as a location for startups. In your last interview with Munich Startup in 2016, your point of critique was that investors in countries like the US are more open to innovative business approaches. Do you think positive progress has been made in that area in recent years? And if not: What needs to happen for things to change?
Roman Huber: The comment I made was referring to a shortage of financing back then that also still exists in particular for projects that entail a significant technical risk, which means it takes longer to implement them. There is still a lot to do when it comes to financing startups in their growth stage, because they often need investments in the double-digit million range to take full advantage of their market opportunities both nationally and internationally.
There has, however, been positive progress in several areas: Deep tech is now finally a subject of interest for new private funds. Because we see ourselves as a partner for private funds, we are very pleased about this development. Moreover, the political shift towards multibillion future funds for Germany is very promising. In the near future, more and, more importantly, much larger domestic VC funds could emerge that will be able to provide the capital necessary to expand startups. These are important steps.