How to work with corporates
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Presentation held at Infoshare 2016 in Gdansk. Advice to startups how to work with large corporates.
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How to work with corporates
- 1. Dancing with the elephants how can a startup-corporate collaboration be mutually beneficial Ewa Treitz Venture Partner I Black Pearls VC
- 2. Waze vs. Nokia Navteq 2007 2013 iPhone introduced/ Waze founded Waze acquired by google for USD 1.1bn Navteq acquired by Nokia for USD 8.1bn Nokias valuation below Navteq acqusition price
- 3. innovation happens quickly! 89% of the Fortune 500 companies from 1955 are not on the list in 2014! ! the average lifespan of an S&P 500 company has decreased from 67 years (1920) to 15 years (today) ! 200x price reduction in 7 years $20,000 (2009) to $100 (2016)! LIDAR Technology! 100x price reduction in 30 years $30/kWh (1986) to $0.30/kWh (2016)! 20x price reduction in 7 years $200,000 (2009) to $10,000 (2016)! Solar cells! Lightweight robots!
- 4. equity investments from corporate funds into external entities often coupled with collaboration agreements strategic and financial goals a separate fund, an own fund or a division Global Corporate Venturing (2015). Investing in Breakthrough what is corporate venture capital
- 5. CVC has grown steadily since 1990s" and exploded in the past 5 years 1,200 CVC units globally." 25 of 30 Dow Jones companies have one 20% of VC investments in USA" in 2015 involved CVC organizations CVC units by country:" USA (800), Germany (50), China (50), Japan (50), UK (40) BCG (2016) corporate venturing boom Incubators and accelerators grew exponentially since 2010
- 6. 7 3 1 2 7 1 7 8 5 6 7 1 12 11 25 17 9 13 15 17 9 4 16 15 19 0 5 10 15 20 25 30 Other! Manufacturing capability and/or capacity! Supply channels! Technical expertise! Lab facilities and R&D infrastructure! Specific corporate project for which our solution can Experienced CVC professionals on the board! Brand! Well capitalized corporate venturing organisation! Investors network for future investment rounds! Better access to debt finance post investment! Experience in commercializing products similar to Knowledge about the competitor landscape! Distribution channels! Most Important! Stated! access to market * commercialization experience * brand * money why work with the elephants
- 7. not too early, not too late for IP heavy companies (e.g. BASF, 3M) IP position important hypothesis (waze & iPhone) simulation prototype MVP product with basic features commercial product unique insight about the world computer proof representation of features product like unit post customer feedback iteration repeatable sales typical entry point possible entry point if: • company not too large • very close relationship between MVP and product development
- 8. usage in certain applications set up as part of a system exclusivities on system set up, design or core application strictly time limited exclusivity for core application unlimited exclusivity on non core application exclusivity on integration of core IP into a certain specific larger system Core IP different levels of exclusivities no exclusivities on core tech! time limited exclusivity on non core application (usually up to 36 months)
- 9. get to the right people! top down vs bottom up! ! get a “champion”! ! get to the people with budget responsibility! C-level execu4ves Execu4ve VP Vice President Director Senior Manager Manager All other levels (Senior Engineers, etc) Director Vice President Execu4ve VP Execu4ve VP make final decision! people you work with! champions!
- 10. cooperation plan with a budget! the earlier the collaboration starts, the better! collaboration in completely new areas unlikely! 25.9% 29.6% 11.1% 33.3% Collaboration timing (N=58)! Collaboration ongoing already prior to the investment! Collaboration started at investment! Collaboration started 6 or more months after the investment! No collaboration has ever taken place! external and internal budget has to be secured! timeplan!
- 11. investment terms to watch out for! ! right of First Refusal! ! call option! ! blocking majority stake! ! board seat ! !
- 12. 5 pieces of advice on the cooperation! (1) best timing: between MVP and commercial product development! (2) not at any cost! (3) get to the right people, or else - procrastinate! (4) make sure that there is a budget allocated internally for your project! (5) watch out for these investment terms!
- 13. Ewa Treitz Venture Partner I Black Pearls VC et@blackpearls.vc www.blackpearls.vc @BlackPearlsVC @ewencja
- 14. appendix! Global Corporate Venturing (2015). Investing in Breakthrough!