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Jenoptik, Germany: Business creation and entrepreneurship


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Business creation and entrepreneurship

Jenoptik is the most successful remaining part of VEB Carl Zeiss Jena, the third largest cooperative of the former East Germany. The privatisation of the optics manufacturing group resulted in major organisational restructuring and decentralisation, including a substantial reduction of jobs. In this difficult context, Jenoptik attempted to establish a sectoral cluster in the central Jena region of Germany. An integral part of this effort was the take-over of DEWB, a venture capital company.

Organisational background

Carl Zeiss Jena, the predecessor of Jenoptik AG, was founded in 1846 as a sole trading company. Due mainly to its close links with the Friedrich Schiller University of Jena, where it identified the needs of the most advanced scientists of the time, it rapidly developed into a world-famous company in the optics industry. After the Second World War, the company divisions which were based in Soviet-occupied East Germany, subsequently the German Democratic Republic (GDR), became state owned. The Zeiss works emerged as the key manufacturer of scientific instruments in the GDR and was organised as a cooperative. In its heyday, the cooperative employed more than 60,000 people, 27,500 of whom worked at the Jena plants in the southwest corner of the GDR.

After the reunification of East and West Germany, the cooperative – as with all state-owned companies – became a so-called ‘intermediary property’ of the Treuhand agency (Treuhandanstalt) in July 1990. As it was the responsibility of the Treuhand to successfully privatise the state-run companies of the former GDR, Jenoptik Carl Zeiss Jena GmbH (as it was then called) was duly privatised in 1991 with the Thüringen state being its first major owner. Lothar Späth, a well-known politician, advised the Thüringen state during the privatisation process and managed to secure more than €1.35 billion from the Treuhand as support for the project. Moreover, he obtained another €430 million from the Thüringen state to help organise the necessary restructuring process after privatisation. Mr Späth also became the first head of the new company.

In the years that followed, substantial restructuring took place within the group. By 1995, some 117 companies had split from the former parent company (77 of those in Jena), and more than 130 newly launched spin-off companies had been set up, nearly 60 of these in Jena. Overall, the Jenoptik group shrank considerably to less than 3,500 employees in 2007. Instead, Jenoptik tried to establish itself as a technology holding in the Jena area and as the focal company of a new optics cluster in the region. In 1998, Jenoptik made its initial public offering (IPO) and became a stock corporation.

Description of the initiative

It was obvious that the smaller-sized Jenoptik would have neither the financial nor the organisational capacity to follow all new and potentially successful developments in the dynamic field of optoelectronics; therefore, it was decided to add a venture capital company to its portfolio. This – it was hoped – would allow Jenoptik to participate indirectly in new technological developments, without having to take the high risks which are usually involved in such activities. The basic idea, besides simply generating extra money for Jenoptik, was to keep the established core business within Jenoptik and to have small and innovative ‘satellites’ loosely linked to Jenoptik through its venture capital company. Jenoptik would then have the option of either completely integrating some of the satellites or of building up close business relations if they proved to be successful and/or contributed to its core business. It was also thought that the existence of venture capital in the region could help to foster the idea of a local cluster around Jenoptik.

In 1997, the decision was taken not to set up a new venture capital company but rather to buy an established company which already had the necessary experience in the complex field of investment banking. The company chosen was Deutsche Effecten- und Wechsel-Beteiligungsgesellschaft AG (DEWB), which had been founded in the nineteenth century and belonged to the portfolio of the Voith family, who were well-known industrialists. In Germany’s developing industrial regions, DEWB has been the largest venture capital company which stands independent of a banking institution.

At first, DEWB invested its venture capital in different growth industries; besides optoelectronics, these were mainly biotechnology and telecommunications and information technology (IT). After a consolidation period – and following the economic crisis in the technology sector in the early 2000s – DEWB’s long-term strategy is to concentrate its investments in optical and sensor technologies, hoping to catch the key innovation drivers over the years ahead.

DEWB pursues an ‘active ownership approach’. As such, it provides not only financial resources for the portfolio companies but also general management support and specific support in the tasks of converting a technology into a product, launching products on the market or opening up additional markets. DEWB actively uses the expertise gathered in the regional optics clusters. It is a member of the ‘OptoNet Jena’, which is a regional network in the optics industry with companies, universities and research institutions as its partners and supported by the Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung, BMBF). The use of local knowledge resources in the field of optical technologies not only helps DEWB in the selection of the best or promising portfolio companies but also in its support service for those companies within the DEWB portfolio.

Since 1997, Jenoptik has considerably reduced its proportion of shares in DEWB. Owning more than 99% of DEWB in 1997, by 2007, Jenoptik owned 11.1% of the venture capital operation. Nevertheless, Jenoptik is still the biggest single shareholder in the investment company.


Since 1997, DEWB has invested more than €300 million in more than 50 companies and has realized more than €400 million in 35 exit transactions. In 2007, the venture capital enterprise had assets of about €66 million under management and investments in 12 companies. DEWB uses all possible types of exit strategy transactions, such as trade sales, mergers or IPOs; since 1997, the internal rate of return on the employed capital has been, on average, 17% a year. As is typical for venture capital companies, there is an ongoing process of investment and de-investment, which leads to considerable changes in the portfolio and the financial performance of DEWB from one year to the next.

It is difficult to measure exactly the number of jobs created in the region by this initiative. DEWB management and the Jenoptik works council agree that it must amount to ‘several hundred’ jobs. Despite the fact that the local unemployment rate of 11.4% in mid 2007 is far below the average in industrially developing parts of Germany, this level is still rather high and every new job is welcomed in the region. Thus, Jenoptik seems to have managed with its venture capital initiative to organise a win-win situation between itself, the local cluster initiative, the community, future entrepreneurs and employees.

Informal social dialogue played an important role in the success of the initiative as it produced a general climate of good cooperation, which has proved to be a success factor for the future development not only of Jenoptik, but also of the whole region.

Exemplary and contextual factors

Despite significant difficulties in the restructuring process after 1990, Jenoptik was always conscious of the fact that it could only survive as one of the world’s leading companies in optoelectronics if it was integrated into a larger network and an innovative region with a certain entrepreneurial spirit. Therefore, it was a consistent strategy to promote the idea of a sectoral cluster in the Jena region around the company and to provide venture capital for promising business ideas centred around the focal technology, in order to foster business creation and entrepreneurship.

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