Are you working with your startup in the software and IT sector and looking for investment? Then you might be interested in what Roman Huber, Managing Director of Bayern Kapital, has to say about software and IT. In this interview, we want to know which software startups are particularly interesting for Bayern Kapital, the venture capital firm of the Free State of Bavaria, what developments in the software and IT industry he's betting on in 2020, and which startups have particularly impressed him recently.
Munich Startup: Wealthpilot, Daypaio or Cliniserve — Bayern Kapital invested several times in Munich-based startups developing software solutions in 2019. What makes a software startup interesting for Bayern Kapital?
Roman Huber: We are particularly interested in B2B business models with clearly identifiable customer benefits. It is crucial that the company has the technical development expertise and that the founders have market experience. And the product must contain genuine innovations. Another important factor we look for is that our co-investors have industry expertise.
Munich Startup: A startup is currently looking for investors—what requirements must it meet to be considered for an investment from Bayern Kapital? What would be the first steps?
Roman Huber: We operate in the deep tech sector and therefore work with startups with innovative technical developments. To make an investment decision, we require a compelling business plan that also includes a detailed technical roadmap. Of course, a fundamental market need for the new products must be evident. The founding team must have the technical expertise for the core elements of the new technology and be able to outline at least the basic structures for future sales.
The first step would be for the startup to send us their business plan or at least a compelling pitch deck. We'll then provide feedback within two weeks and, if appropriate, invite them to an initial meeting.
Consulting days for startups
Little tip: The network Baystartup organizes regular consulting days with the High-Tech Gründerfonds and us. Startups should take advantage of this!
There is one more aspect to consider: For EU legal reasons, we can only conclude the investment agreement in cooperation with a private investor who was not previously involved in the startup.
Munich Startup: Which developments in the software and IT industry do you think we will hear a lot about in 2020?
Roman Huber: I believe we will see many exciting projects and startups in Munich in the coming years, especially in the areas of machine learning and artificial intelligence, augmented reality, autonomous devices, and robotics. This will be of great interest not only to the large companies based here in the city, but also to medium-sized businesses in the region. Another sector that is likely to experience a strong upswing in the coming years is green technology, and in particular green IT.
Munich Startup: Digitalization is not stopping at any area — how do you assess the importance of startups as drivers of innovation?
Roman Huber: Creative and unconventional startups often make easier and faster progress in the field of digitalization than players in long-established companies. Therefore, it's no wonder that companies are increasingly seeking collaboration with startups. These, in turn, can greatly benefit from the established players' extensive market access.
Munich Startup: Is there a startup that has made a lasting impression on you in this regard?
Roman Huber: Not just one — but several. We have accompanied a whole series of successful Munich startups in recent years: Currently, one could eGym, which is digitizing the gym market, as well as Workaround with its intelligent glove Proglovewhich is used in logistics and production.
Important step: Larger domestic VC funds
Munich Startup: Finally, let’s take a look at Germany as a startup location. In your last interview with Munich Startup in 2016, you criticized the fact that investors in countries like the USA were more open to innovative business approachesIn your opinion, has anything changed for the better in this regard in recent years? And if not, what measures would be necessary to change this?
Roman Huber: My comment at the time referred to the financing bottlenecks that existed and still exist, especially for projects with significant technical risk and thus often longer implementation times. There is still a lot to be done, especially with regard to financing for startups in the growth phase, as tens of millions of euros are often required to fully exploit market opportunities at home and abroad.
But there have indeed been some positive changes: Deep Tech is finally being addressed by new private funds. As we see ourselves as partners of private funds, we very much welcome this. Furthermore, the political course set for the billion-euro Future Fund for Germany appears promising. In the foreseeable future, more and, above all, significantly larger domestic VC funds could emerge that are capable of providing the necessary capital for startups' expansion. These would be important steps.
