Minister of Economic Affairs Hoffmeister-Kraut: “Another tool to effectively support startups, especially during the high-risk early stages. Investors and startups are in the best hands at MBG.”
The state of Baden-Württemberg has supported MBG Mittelständische Beteiligungsgesellschaft Baden-Württemberg in developing a new venture capital fund. The “Start-up BW Innovation Fund,” the successor to the successful “VC Fonds BW” and part of the “Start-up BW” startup initiative, has been making investments since July. “With the ‘Start-up BW Innovation Fund,’ we now have another tool at our disposal to effectively support startups, especially during the high-risk early stages,” explained Minister of Economic Affairs Dr. Nicole Hoffmeister-Kraut. “I am pleased that MBG, with its entrepreneurial spirit and many years of investment experience, is actively involved in selecting and supporting the fund’s portfolio companies. Investors and startups are in the best of hands there. Startups are drivers of structural change. They make an important contribution to maintaining Baden-Württemberg’s competitiveness and economic strength and to strengthening our state’s reputation as a hub for startups both nationally and internationally.” The goal of the new fund is to make Baden-Württemberg one of the most startup-friendly regions in Europe. MBG will manage the fund.
“For a startup to grow successfully, it needs the right financing. In many cases, traditional loans aren’t a viable option due to a lack of collateral. There is a particularly high demand for venture capital during the growth phase,” emphasized MBG Managing Director Dirk Buddensiek. “With this fund, however, young companies not only receive equity financing, but they also benefit from the investors’ business expertise and extensive network.”
The “VC Fonds BW,” launched seven years ago, has already demonstrated that a venture capital fund can serve as a springboard for startups in the tech industry. In total, this fund has acquired stakes in ten companies, some of which have performed very successfully despite being in the early stages of their development. Since then, six companies—including “EIT,” “Babybe,” and “sevDesk”—have been sold, and the proceeds have been distributed to the investors and, consequently, to the state of Baden-Württemberg.
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Like its predecessor, the “Start-up BW Innovation Fund” is primarily aimed at startups in Baden-Württemberg in the fields of information and communication technology, digital transformation, industrial innovation, and healthcare/medical technology. The state views the investment in the fund as an important boost for the “Start-up BW” campaign of the State of Baden-Württemberg and as a strong signal, both nationally and internationally, for the state as a hub for startups.
The fund’s planned total volume is 50 million euros—of which 35 million euros have already been raised in the so-called first closing from investors such as banks and insurance companies. The state of Baden-Württemberg is also participating as an investor in the first closing. Additional professional investors can join the fund through early 2022. Startups can receive financing ranging from one to three million from the fund—however, the investment is not a grant but is based on the companies’ market potential and is purely profit-oriented. The search for promising investment opportunities has already begun. The first deals are planned for later this year.
