Expanding your deep tech business to Bavaria: How Invest in Bavaria can help you get started

At Invest in Bavaria, we work with expansion-ready tech companies from all over the world on a daily basis.

Here we share some of our expertise on how to kick-start a successful expansion project based on our experience.

You can also download our expansion planning cheat sheet to get you started.

Are you ready to expand?
 

Foreign direct investment plans come with many open questions that need to be answered. Typically, the first one is: when is a good time to expand? As a rule of thumb, when 25 percent or more of your business or specific product range originates from international markets, it’s time to scale outside your home country.

Some experts give other key criteria for expanding abroad. These include a comfortable level of liquid assets combined with existing demand in foreign markets, limited demand in your domestic market, and the readiness to localize.

In other cases, expanding into new markets in another country may not be what you are looking for. Instead, you might be looking for talent, to expand your R&D capabilities, or to immerse yourself in a burgeoning innovation ecosystem.

Munich’s emerging Quantum Valley, for example, is currently attracting many global companies in this sector. The initiative promotes quantum science and technologies with the goal to develop and operate competitive quantum computers. Research, corporations and politics work closely together in the ecosystem, making Munich’s Quantum Valley the interface between research and industry – and the launch pad of a world class network with international reach.
 

Define your requirements.
 

If you are ready to expand, the toughest question for you to answer might be: Where should we go?

In our experience, companies that work systematically right from the start to answer this question find it easy to decide in the end.

Doing your homework typically involves three steps:

1.    Define your objectives and requirements
2.    Gather as much information as possible on target locations
3.    Make an informed decision.
 

The importance of the first step is often underestimated for a simple reason: realistically speaking, no expansion location will tick all the boxes. Any decision will involve some kind of concession, making it important to identify areas where you are least willing to compromise.
 

To clarify your priorities, define your requirements in the following eight areas:

• Availability and access to talent
• Availability of and access to R&D
• Availability of and access to collaboration partners
• Proximity to customers
• Quality of infrastructure in terms of reliability and coverage
• Availability of commercial space
• Capital and financing options
• Tax and legal framework
   

Rank the requirements in order of importance. Once you’ve identified your top three, your search will become much more targeted – and easier.

But be aware that criteria may evolve over time. A deep tech company expanding to Bavaria, for example, may most likely choose the location for its F&E resources, access to talent, and the opportunity to collaborate with partners. That would mean looking at the state’s world-class universities and research institutions (such as Max Planck and Fraunhofer Institute) as well as the highly effective networks in the relevant tech sector.

In the mid to long term, however, its requirements may change. Later on, the company may focus more on Bavaria’s economic strength and its large B2B customers’ locations, as well as its location in the heart of the European market and its free-trade economic system.

Plan for resilience.
 

In the current volatile environment, deep tech companies should also look at the following four criteria when defining their requirements:

• A politically and regulatory stable environment: For the confidence of your investors and sustained profitability, it is central to be as well protected as possible from sudden political changes. Europe is well ahead of emerging markets in this area.
• Continuous economic growth: If you are looking for reliable sales markets for your products, a stable economy is essential. Apart from the highest possible purchasing power, you also need a skilled workforce and a functioning infrastructure.
• Prospects for "glocal" business: Current crises show the importance of local supply chains if global ones are disrupted. Nearshoring medicine and computer chips have already become common practice.
• Sustainability and environmental compatibility: It is becoming increasingly attractive for companies to expand into countries and regions that guarantee environmentally compatible business practices as well as energy efficiency and safety in political and regulatory terms.
• Stability and sustainability: Not only growth opportunities but also stability and sustainability are becoming important criteria when evaluating a location.

Do your homework.
 

Once you have defined your criteria, the next step is clear: gather as much data as possible.
As a deep tech company you will most likely be looking closely at a location’s R&D and university landscape, at the innovation capacities and strength of local industries, the willingness of key players to collaborate across industries and promote start-ups as well as local government’s commitment to encourage high tech innovation.

This is the best time to talk to us  if you are considering Bavaria as a possible location for expansion. We can provide you with a wealth of data on relevant expansion criteria and connect you with people who can provide even more insight into your sector. Talking to the right people during the research phase is key.

Just take the current issue of sustainability, a topic on many tech investors‘ agendas at the moment. Our experts have extensive knowledge in this field and can provide companies with insights above and beyond general trends. We share targeted knowledge about specific, local initiatives that people abroad usually don't even know about. Whether it's the Bavarian Energy Action Program, the driver behind over 70 individual measures at the state and federal level since 2019, current investments like the €5.9 million flowing into the Bavarian Windkümmerer  wind energy project, or regional plans such as Memmingen Airport's goal of being climate-neutral by 2023.

Need a resource for desk research? Invest in Bavaria offers an initial so-called "Key to Bavaria" database as a first low-threshold source of information. This allows you to immediately start searching for products, services, and technology partners in Bavaria.