EIB boosts venture capital for innovative startups in Bavaria

(Source: European Commission)

  • €50 million from the EIB increases the Wachstumsfonds Bayern 2 fund to €165 million.
  • Tech startups such as German Bionic Systems, OroraTech and Wealthpilot will receive growth-stage support.
  • The transaction is guaranteed by the European Fund for Strategic Investments.

Thanks to support from the European Investment Bank (EIB), additional venture capital will be available for innovative, technology-driven startups in Bavaria. Some of the first businesses to benefit are German Bionic Systems (robotics), OroraTech (space) and Wealthpilot (fintech). They will be able to use venture capital from Wachstumsfonds Bayern 2 during their growth stage.

The fund’s resources, thus far managed by LfA Förderbank Bayern and Bayern Kapital GmbH, will increase to €165 million thanks to the EIB’s €50 million commitment, which was already agreed on back in March. Bayern Kapital GmbH, a wholly owned subsidiary of LfA Förderbank Bayern for venture capital investments, will continue to manage the fund going forward.

The signing ceremony with EIB Vice-President Ambroise Fayolle and Bavaria’s Secretary of State for Economic Affairs Roland Weigert on 5 July 2021 was also attended by the founders and managers of Wachstumsfonds Bayern 2’s first three investee companies.

The growth fund has now invested in OroraTech, a company developing a nanosatellite-based early warning system for wildfires. To be able to provide quicker warning of wildfires across the globe, OroraTech plans to send its own shoebox-sized nanosatellites into orbit in the coming years. These will be equipped with very small AI-based infrared cameras. Forest authorities worldwide have already enhanced their early warning systems with the OroraTech wildfire system.

Wachstumsfonds Bayern 2 has also invested in German Bionic Systems and Wealthpilot. Headquartered in Augsburg, German Bionic Systems is a European market and technology leader in the field of robotic exoskeletons. The intelligent, backpack-like power suits help to reduce the risk of musculoskeletal disorders for employees in physically demanding roles, such as those working in warehouses.

The investments emphasise Wachstumsfonds Bayern 2’s innovative, technology-driven approach, underpinned by Bavaria’s large network of universities and research centres that fuel the innovative power of the region.

The EIB’s investment in Wachstumsfonds Bayern 2 is guaranteed by the European Fund for Strategic Investments (EFSI). EFSI is the central pillar of the Investment Plan for Europe, under which the EIB and the European Commission aim to boost investment in Europe.

Under EFSI and EIB criteria, startups in life sciences, medical technology and diagnostics, and IT and robotics are given priority for financing. The commitment in Bavaria is intended to strengthen companies in the growth stage, for which there are too few private investors in Germany — unlike in the United States and China.   

EIB Vice-President Ambroise Fayolle, who is responsible for the Bank’s activities in Germany, said: “I am very pleased about our cooperation with LfA Förderbank Bayern to top up Wachstumsfonds Bayern 2. Highly innovative startups such as OroraTech, German Bionic and Wealthpilot are recognised as key drivers of employment, productivity growth and sustainable jobs. Backed by the Investment Plan for Europe, one of the EIB’s top priorities is to promote investments that strengthen the competitiveness of the European economy. This is even more crucial in the difficult economic environment brought on by the COVID-19 pandemic.”

Executive Vice-President of the European Commission, Valdis Dombrovskis, said: “I am glad that the Investment Plan for Europe is supporting Bavaria’s Wachstumsfonds Bayern 2. This will offer venture capital to start-ups in areas like life science and medical technologies so they can grow and consolidate their operations. We need to support innovative ideas that are a key source of jobs and sustainable growth in Europe. This is forward-looking financing in action.”

Bavaria’s Secretary of State for Economic Affairs Roland Weigert said: “A key objective of our economic policy is to offer risk-taking entrepreneurs with promising ideas the optimal conditions for growth and success. They are the ones driving innovation and strengthening our competitiveness. With the EIB’s additional €50 million for Wachstumsfonds Bayern 2, we can support even more Bavarian startups with highly innovative business models. However, it is also a sign of the EIB’s recognition of Bavaria as a business location. EIB Vice-President Ambroise Fayolle’s personal visit and his delegation to Munich is testimony to this, and we are delighted.”

Roman Huber and Dr Georg Ried, Managing Director of Bayern Kapital GmbH, welcome the EIB’s investment in Wachstumsfonds Bayern 2: “This fund will continue the successful Wachstumsfonds Bayern concept and strengthen it, too,” said Huber. Ried added: “It means that even more innovative and high-growth companies can be financed with investments of up to €10 million. In addition to capital, our ongoing cooperation with national and international investors gives companies access to vital expertise in the international market.

Dr Otto Beierl, Chairman of the Management Board of LfA Förderbank Bayern, said: “Bavaria has a very powerful and innovative startup industry. For promising business models to be successful in the market, though, external funding is often required, especially during the growth stage. As a co-investment partner, Wachstumsfonds Bayern 2 plays a key role in lining up private investors alongside public sector capital in the financing of startups. Bringing EU funds to Bavaria, the European Investment Bank’s €50 million investment in Wachstumsfonds Bayern 2 is a very encouraging sign for Bavaria’s profile as a business and technology hub.”

Background information

Wachstumsfonds Bayern 2

The Bavarian Ministry of Economic Affairs set up Wachstumsfonds Bayern in 2015, through which it has invested more than €71 million in 23 promising Bavarian startups employing 1 850 highly qualified individuals. A further €350 million of private capital was mobilised for the startups through cooperation with domestic and foreign investors. The Free State of Bavaria launched the successor fund Wachstumsfonds Bayern 2 in mid-2020, endowing it with €115 million. The EIB’s commitment brings the fund’s total volume to €165 million.

Germany: EIB provides €50 million in risk financing to Wachstumsfonds Bayern 2

EIB

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. 

EFSI

The European Fund for Strategic Investments is the central pillar of the Investment Plan for Europe. It aims to close investment gaps, create jobs, contribute to GDP growth and improve people’s lives across Europe and in Germany. EFSI guarantees support strategic investments in key areas such as infrastructure, research and innovation, education, renewable energy and energy efficiency, and provide risk finance for small and medium businesses.

LfA Förderbank Bayern

Founded in 1951, LfA Förderbank Bayern is the state-owned specialist promotional bank for small and medium-sized enterprises in Bavaria. In principle, promotional loans are applied for and granted via companies’ core banks. Through its subsidiary Bayern Kapital GmbH and other entities, LfA also makes equity offerings to Bavarian business founders and entrepreneurs.

Bayern Kapital GmbH

Headquartered in Landshut, Bayern Kapital GmbH was founded by the Bavarian state government in 1995 as a wholly owned subsidiary of LfA Förderbank Bayern. As a venture capital company of the Free State of Bavaria, Bayern Kapital provides equity capital to the founders of innovative, high-tech firms and young, innovative tech companies in Bavaria. Bayern Kapital currently manages 13 equity funds with a volume of around €500 million. So far, it has invested around €320 million in equity capital in over 275 innovative tech companies from a wide range of industries, including life sciences, software and IT, materials and new materials, nanotechnology, and environmental technology. This has created more than 7 500 permanent jobs in sustainable companies in Bavaria.

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