BayBG is one of the leading investment companies in Munich and Bavaria. The company's portfolio comprises almost 500 companies, including startup giants such as tado°, NavVis and ThevaWe asked Managing Director Peter Pauli.
What is BayBG? What distinguishes it from private VC firms?
We are fundamentally a private investment company. The state is one of our main shareholders—via LfA Förderbank Bayern—but its stake is less than 25%. BayBG is a private investment company focused on Bavarian SMEs, primarily investing in established companies. Furthermore, we have also been a very active investor in the startup sector for many years with a specialized team. Our VC team currently manages a portfolio of more than 30 investments with invested capital of €46 million.
What is your investment focus? Why?
Within our VC activities, we focus on ICT, digitalization, internet-based business models, and medical technology. We have experience in these segments and the necessary know-how to be a good sparring partner for founders and to ensure financial success.
Which startups are immediately ruled out for investment? What are the things that immediately put companies seeking capital at a disadvantage?
In particular, so-called white and green biotechnology are not our investment focus. Furthermore, we prefer technology-based business models with robust unique selling points. Ultimately, the founding team is a crucial factor.
How do you find startups you could invest in?
We are a well-known and prominent investor in the Bavarian startup scene, engaging with founders at an early stage. In total, we receive around 250 investment inquiries per year in the VC sector.
Some startups complain that investors are heavily involved in operational matters. How involved is BayBG in the operations of the companies in which it holds investments?
As already mentioned, our goal is to be a good sparring partner for our portfolio companies. As a financial investor, we focus on overarching topics such as strategic development or finding suitable partners for the next financing round. The operational processes are the responsibility of the founding team.
How long does it take from the first contact to the conclusion of the contract?
We've already completed many investments within two months. Of course, the complexity of the business model plays a role, and constructive and effective cooperation from the founders is also important.
What do you think the Munich startup scene is doing right? What could it do better?
I believe that Munich, with its mix of universities, research institutions, technology corporations, and medium-sized companies, is a very good place for technology startups. A networked startup scene has developed in recent years, and support from Bavarian politicians is very good. Of course, it would be desirable to have more private capital available to finance startups; perhaps the city also needs to work on improving living conditions for young people to attract even more young talent.
To be successful, a startup must…
...have a good, resilient and entrepreneurial founding team, address the largest possible market with a sustainable unique selling point and a clear customer benefit in the business model ...and have that bit of luck that always comes with it.
The trend of the year is…
…Virtual Reality, Artificial Intelligence.
How do companies get in touch with BayBG?
Simply call or email.
