Tips for getting venture capital from the Bavarian Investment Company Ltd. (BayBG) Dr. Marcus Gulder, Head of Venture Capital at BayBG and juror at BayStartUP.
1. The basic requirement
The young technology company has successfully completed the seed phase and can demonstrate initial market success with a fully developed product. Or the startup, as a management team, is facing new challenges in a later phase of the company, such as internationalization or the acquisition of a company. Therefore, you need equity to finance further growth.
2. The business model
Ultimately, it’s about communicating the cornerstones of your business model in an understandable way, from customer benefits to value creation to the revenue model.
BayBG finances business models whose revenue model enables them to reach the break-even point within approximately 24 months. It is quite conceivable that we may jointly decide at a later date to postpone profitability in favor of further growth.
BayBG invests across sectors into a wide variety of business models. We generally exclude only traditional biotech drug development and purely advertising-financed freemium business models due to the above comments on temporary loss financing.
3. The market potential
Your company should first gain a foothold in the DACH market before "rolling up" the global market in the next step. As a rough guideline, you need to demonstrate a global market potential of at least €500 million for your product if you want to raise venture capital from financial investors.
4. The business plan
The business plan should objectively present the essential information on 10 to a maximum of 15 pages. It can also be presented as a PowerPoint presentation and in any case with a comprehensible planning for the current financial year and the
two subsequent years.
5. Your presentation
Convince us with a professional presentation that should last approximately 30 minutes. Focus on your business model.
And expect to be asked about your assessment of the company’s value for the planned financing round.
6. The process
After an initial consultation, we familiarize ourselves with your business model through reference discussions and market and competitor research. Based on a mutual letter of intent outlining the key details of the planned investment, we begin an in-depth due diligence review, possibly involving external experts.
A positively completed due diligence leads to the contractual implementation
and in BayBG’s participation in the startup.
With optimal preparation on the company side, we are generally able to complete the process from the initial meeting within eight weeks. A financing round usually requires a period of four to six months, especially if you are bringing on board an institutional investor for the first time.
BayBG invests in four to six new venture capital companies annually. A Business plan competition participating company.
7. BayBG as a temporary partner
In contrast to traditional venture capital companies, BayBG is not
It is not a time-limited fund, but rather an “evergreen fund”: BayBG can reinvest returns from its investments and is therefore not subject to any selling pressure.
This enables us to offer medium- to long-term investment concepts. However, as a financial investor, we remain a temporary partner and contractually stipulate our exit in the investment agreement.
The acquisition of venture capital therefore requires the company founders to be willing to forgo a joint company sale
or IPO. Convince us that your business model has the potential for a joint, successful exit.
Who is BayBG?
The BayBG Bayerische Beteiligungsgesellschaft mbH (BayBG for short) is one of the largest investment companies for medium-sized businesses in Germany. It currently has investments of more than 310 million euros in around 500 Bavarian companies.
With its Venture Capital team, BayBG invests in Bavarian technology companies that are aiming for a medium-term exit via a trade sale or IPO. BayBG initially invests up to
to 1.5 million euros. In the later-stage phase, investments of up to 7 million euros per company are possible. BayBG's venture capital portfolio currently includes 31 companies, including iThera Medical, mercateo, NavVis, NFON, Open-Xchange,
Proteros Biostructures, tado and THEVA thin film technology.
Contact: marcus.gulder@baybg.de
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