As German industry has passed through the financial crisis comparatively unscathed, my trip last week to the Munich Network’s corporate venturing conference shed light on how one of the most important industrial areas of the country is approaching investing in small companies. The Bavarian region is closely associated with the country’s famous Mittelstand. In an enjoyable supper ahead of the conference sampling the region’s hearty food, with Vodafone Ventures’ Wolfgang Schuster and corporate finance group Clean Capital’s Stephan Decher, Decher recounted the words of a Mittelstand business owner, who had just told him: “Laziness is worse than theft”.

The three of us joked about and discussed what this comment said about the seriously focused attitude driving forward these businesses, as some of the world’s most successful exporters – to our mind stealing was a pretty serious offence, whereas laziness is a sin which we had all been guilty of.

Yet the reality is, this highly focused work discipline which has long driven forward the Bavarian economy, is changing in some respects. In part this is seeing the owners of the region’s Mittelstand companies give up equity, which many have long guarded closely. One corporate venturing executive even said the region provides a unique opportunity for corporates, as he had hatched a deal with a profitable local Bavarian company which would probably never have sold a stake to a solely institutional investor. The unit was able to do the deal because the Mittelstand company’s family owners wanted the strategic benefits a deal with the corporate could bring. Similarly private equity firms have also long-scoured the German Mittelstand in pursuit of companies where the inheriting family of a business’ founder may not have the ambition to continue running the business. This change has gone beyond simply the heirs of a small business.

Decher talked about how some young German people do not desire the technical job for life that their parents’ generation may have aspired to. A trend to watch for is a possible corporate venturing upsurge in early stage activity in Munich.

Tanja Kufner, the head of telecoms company Telefonica’s Wayra Munich, took me across town from the Munich Network conference in a taxi to see its colourful open plan office and early members of the scheme.  Among those who I chatted to, were the founders of 3D printing company Fabbeo, Fleur Augustinus and Karim Hamdi, who said they had bootstrapped the company last year, and that winning the financing from Wayra had provided them with the funds to keep in business, as their personal funds were running low at the time. Similarly another business Cleverlize, an education app company, had received flowers that day from a teacher, who had designed his first app using its technology.

Kufner said she hoped she could create “a Munich start-up scene”, as much of the buzz in Germany is currently surrounding Berlin. If this happens it is likely Wayra Munich and another corporate-backed incubator, that of Deutsche-Telekom-owned Scout24, will play an important role in catalysing entrepreneurial activity from the city’s young business people, which has more of a contemporaneous Silicon Valley-flavour than the typically engineering-focused Mittelstand.

Stefan Lemper, who heads Scout24’s incubator in Munich, said: “There is an initiative from Munich start ups, incubators and VCs to better unite the scene. There are various projects and we are seeing great interest.”

Lemper added: “We started with YOU IS NOW as the incubator as Scout24-Group in Munich at  the end of December. We are pretty early in the whole process. Scout24 operates in various classified portals like in real estate, cars and dating. It originally set up an incubator in Berlin by Immobilienscout24  with focus on real estate business. The Munich operation has a broader  mandate to existing as well as promising new markets as the Munich business  is part of the Scout24 holding company rather than attached to one particular business line. We can invest up to €500,000 ($650,000) and we also provide  a kickstarter package, which specifies the help we give for online marketing, search engine traffic optimisation, general consulting man days, a media package, and lots of other things.”

Min-Kin Mak, who heads Deutsche Telekom’s Berlin-based incubator Hub:raum, was also in attendance at the Munich Network conference. Mak, who previously worked with Kufner, doing early stage venture deals at Munich-based industrial conglomerate Siemens, said: “I have a strong local background from living here. Now I spend most of my time in Berlin.”

Of course Bavarian industry is at the forefront of international business, so corporate venturing in the region is doing far more than just attempting to kickstart a new style of entrepreneurship in the economy. To this end, this month, Siemens Venture Capital, the corporate venturing unit of the Munich-based company, said it was setting up a Renminbi (RMB) onshore China setup, having previously invested from a US Dollar offshore set-up in the deals it has done in the region since 2006. Ralf Schnell, head of Siemens Venture Capital, said: “The market in China currently goes to RMB based investing and this will position us better in the market. We also increased our team from three to five investment professionals in the last year and see ourselves well positioned to fully exploit the opportunities in China.”

The Bavarian Mittelstand continues to be one of the key economic engines of Germany, and to some extent, Europe. It will be interesting to see how this highly disciplined and structured economy evolves as it embraces an exit driven style of capitalism. In some respects, if this trend goes to far, something may be lost of what makes the region special. Yet I would bet many in the region continue a traditional approach, even as financiers take equity in some companies, and the youth develop the next “new, new thing”.