So here we are at the most interesting White Bull forum 2011, with the panel discussing the resurgence of corporate venture capital in Europe. On the panel are Jorg Sievert from SAP Ventures, Nagraj Kashyap from Qualcomm Ventures, and Anu Shah from ZAG. The panel is immoderated by Toby Lewis, edit of Global Corporate Venturing. Intel, of course was a famous investor in startups so it could sell more chips. Go figure.
ZAG has 18 people – we all know about SAP and Qualcomm, don’t we? ZAG only invests in consumer related ventures. SAP invests in the late stages because of the way it’s set up. In the early stages we don’t have the infrastructure, said Sievert.
Qualcomm says it will invest in early stage companies – including seed and early stage, it has 60 investments. ZAG is in the agency business which has its limitations because it’s only interested in advertisement businesses.
SAP’s Sievert said no two corporate VCs are alike. If you look for three generic buckets they are financial investors, strategic investors or look in the sand and see what happens. SAP has sold companies to just about everyone and has sold twice as many companies as Oracle because SAP is purely financially motivated.
ZAG’s Shah said that a pure strategic investment doesn’t last that long. The only way of a long term investment is to have an ROI focus. ZAG has strategic investments but in terms of M&A it is looking for the right exits. In a few cases, there are corporate driven strategies. ZAG can shrug off companies very quickly.
SAP’s Sievert said that corporate VCs do investments on behalf of the corporation. There was and still is a strategic angle but it’s not necessarily the companies it invests in. Not necessarily. The strategic value is a by-product. SAP Ventures tries to help the senior executives understand the “ego systems” that surround the corporation. Fifty of the companies SAP should invest in and are strategic it tells the senior execs about. SAP won’t throw money at entrepreneurs unless it has a return.
Qualcomm’s Kashyap says his firm sells companies in the $30 million to $50 million. There are good companies that sell for between $30 and 50m but they don’t necessarily make good investments so Qualcomm do not invest in those. However, Qualcomm may buy if there is a fit with current needs. Kashyap says Qualcomm will let the corporation know about the companies but doesn’t necessarily invest in them because of that. ZAG’s Shah said his company will create virtual beehives even from existing employees, if it is a good idea. Qualcomm will help. It will buy companies it is interested in – it doesn’t have to be software, it can be hardware, as long as it’s related to mobile.
Corporate venture capital is not dead, said SAP Ventures’ Sievert. Qualcomm argues that venture as a class has moved away from hard technology. VCs that used to invest in $50 million to $100 million can’t do it any more. VCs have moved away from hardware to software. “VC as a whole isn’t dead but on the hardware front it is.” There’s enough VC money in software, said Qualcomm’s Kashyap.
Corporations invest but there’s some resistance from small company startups that could disrupt a large corporation, said Qualcomm’s Kashyap. Most interesting. Perhaps Kashyap has forgotten how text messages killed WAP. And how Bill Gates’ view of the future was swamped by IP.