Munich has grown into the most important hub for business software investments

When a business software company is up for sale, Fortino Capital wants a seat at the negotiation table. Now also in Germany, where the investment fund has quickly made its presence known.

As a calling card, it counts: Fortino Capital's first major investment in Germany was immediately a bullseye. The stake in Symbio, which develops automation software for business processes, delivered a substantial added value in less than a year. It was acquired by its German-American sector peer, Celonis.

"The acquisition by the most valuable B2B software startup in Europe has put us on the map in Germany," says Renaat Berckmoes, CEO of Fortino. And that was just a year after the opening of the Munich office. "In the meantime, we have reached a position where most other investment companies fishing in the same pond find us annoying. Because they see us as a competitor. That’s the best compliment you can get."

Fortino aims to quickly establish a solid position in Germany. "If the owner or founder of a software company is looking for a strategic partner or wants to sell his company, we should be in the top five of parties he thinks of. We always want to be at the table."

German Growth Potential

What kind of companies in Germany can expect the most interest from Fortino? "The same as elsewhere," says Philipp Remy, who is responsible for investments in Germany. "We focus on providers of B2B Software that are so indispensable that their software is the last thing companies would turn off."

Germany is the third country where Fortino is active, after Belgium and the Netherlands. A large domestic market was important in this choice, says Berckmoes. "Software is a business where scalability is crucial to reap the greatest economic benefits. The European Union is indeed one market, but one that consists of 27 countries with their own market dynamics. Success in one country does not guarantee it elsewhere. For example, the French carpooling platform Blablacar does well in France and Spain but doesn’t get off the ground in other European countries."

The choice was between France and Germany, with our eastern neighbors winning out. There were two reasons for this, says Berckmoes. "Firstly, the German market is more accessible to newcomers than the French market. Additionally, the German software market is larger than the French, but with a lower digitization rate, providing more growth potential."

"There are twice as many companies in Germany eligible for private equity investments in the scope of Fortino than in the Benelux," adds Remy. "Besides the United Kingdom, there is no Western European market for software with more mergers and acquisitions than Germany."

International Tech Companies

Why is Fortino's base in Munich and not Berlin, the historic center for start-ups in Germany? "That still applies to software companies focusing on consumers, but in the past years, Munich has increasingly grown into the main hub for B2B software investments in Germany," explains Remy. "The Munich VC ecosystem is well established with multiple funds operating in the city for a decade or longer. VC funds are benefiting from close ties with local universities that have helped to launch a number of high-profile startups like Personio, Finn or Kaia... A whole ecosystem emerged that attracted large international tech companies like Microsoft, Apple, and Google."

Germany is ready for conquest, but Berckmoes is already looking ahead to further expansion. "We are studying several countries. We will always enter a new market from an existing hub. For example, we can approach Italy from Munich, as well as Central Europe. And Scandinavia can be managed from the Netherlands."

Based on article De Tijd